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Range Resources (RRC) Dips 15.1% Since Q3 Earnings Miss

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Range Resources Corporation (RRC - Free Report) stock dipped 15.1% since it reported wider-than-expected third-quarter 2020 loss on Oct 29. Notably, it further decreased the full-year capital spending plan by $15 million. Total 2020 production is expected to decline marginally from 2019 levels.

The company posted third-quarter 2020 adjusted loss of 5 cents per share, wider than the Zacks Consensus Estimate of a loss of 4 cents. However, the metric improved from a loss of 7 cents per share in the year-ago quarter.  

For the third quarter, total revenues amounted to $299.3 million, missing the Zacks Consensus Estimate of $486 million. Moreover, the top line deteriorated from the prior-year quarter’s $622.4 million.

The wider-than-expected loss was due to lower natural gas equivalent production volumes and decreased gas price realization. This was partially offset by higher oil and natural gas liquids (NGLs) price realizations, as well as lower direct operating costs.

Range Resources Corporation Price, Consensus and EPS Surprise

Range Resources Corporation Price, Consensus and EPS Surprise

Range Resources Corporation price-consensus-eps-surprise-chart | Range Resources Corporation Quote

Operational Performance

For the third quarter, the company’s production averaged 2,194.3 million cubic feet equivalent per day (MMcfe/d), down 2% from the prior-year period. Natural gas contributed 70.8% to total production, while NGLs and oil accounted for the remaining.

Oil and NGL production fell 30% and 4%, respectively, on a year-over-year basis. Moreover, natural gas production decreased 1% from the prior-year quarter.

Its total price realization (including derivative settlements and after third-party transportation costs) averaged 99 cents per thousand cubic feet equivalent (Mcfe), down 21% year over year. Natural gas price declined 27% on a year-over-year basis to 90 cents per Mcf. However, NGL and oil prices rose 12% and 2%, respectively.

Expenses Decline

Total exploration cost declined to $7.9 million from $10.5 million a year ago. Moreover, on a unit basis, transportation, gathering, processing and compression expenses were recorded at $1.33 per Mcfe, lower than $1.43 in the prior-year quarter. Also, direct operating costs contracted to 10 cents per Mcfe from the year-ago figure of 17 cents.

Capital Expenditure & Balance Sheet

The company’s drilling and completion expenditures totaled $60 million for the reported quarter. Total capex was recorded at $63.5 million for the quarter.

At third quarter-end, it had total debt of $3,042.1 million, down sequentially from $3,165.1 million, with a debt-to-capitalization of 64.7%. The company reaffirmed the existing $3-billion borrowing base.

Guidance

For 2020, Range Resources expects production volumes of 2.24 billion cubic feet equivalent per day (Bcfe/d), which indicates a marginal decrease from 2019 production volume of 2.3 Bcfe/d. The company expects 2020 capital expenditure to be $415 million or lower, reflecting a further decline of $15 million from the prior guidance due to increased efficiencies.

Full-year 2020 exploration expense is estimated in the range of $28-$34 million. On a per unit basis, direct operating expense for the year is expected in the range of 11-13 cents per Mcfe. Transport, gathering, processing and compression expenses are estimated within $1.32-$1.36 per Mcfe.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #4 (Sell). Some better-ranked players in the energy space include Matador Resources Company (MTDR - Free Report) , Antero Resources Corporation (AR - Free Report) and NuStar Energy L.P. (NS - Free Report) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Matador Resources’ bottom line for 2021 is expected to surge 187% year over year.

Antero Resources’ bottom line for 2021 is expected to rise 29.2% year over year.

NuStar Energy’s bottom line for 2021 is expected to rise 177.5% year over year.

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