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Why Is Range Resources (RRC) Up 38.4% Since Last Earnings Report?

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A month has gone by since the last earnings report for Range Resources (RRC - Free Report) . Shares have added about 38.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Range Resources due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Range Resources Q1 Earnings & Revenues Beat Estimates

Range Resources Corporation reported first-quarter 2021 adjusted earnings of 30 cents per share, which beat the Zacks Consensus Estimate of 22 cents. Moreover, the bottom line surged from 4 cents per share in the prior-year quarter.

Total revenues for the reported quarter were $626 million, surpassing the Zacks Consensus Estimate of $566 million. However, the top line deteriorated from the prior-year number of $693.9 million.

The strong quarterly earnings can be attributed to increased commodity prices and decreased direct operating costs. This was partially offset by lower production volumes.

Operational Performance

For first-quarter 2021, the company’s production averaged 2,081.5 million cubic feet equivalent per day, down 9% from the prior-year period. Natural gas contributed 69.6% to total production, while NGLs and oil accounted for the remaining.

Oil and NGL production fell 12% and 8%, respectively, on a year-over-year basis. Moreover, natural gas production decreased 10% from the prior-year quarter.

Its total price realization (excluding derivative settlements and before third-party transportation costs) averaged $3.22 per thousand cubic feet equivalent (Mcfe), up 56% year over year. Natural gas prices rose 48% on a year-over-year basis to $2.58 per Mcf. Moreover, NGL and oil prices increased 77% and 19%, respectively.

Costs & Expenses

Total costs and expenses rose to $596.2 million from $498.7 million in the year-ago quarter. Total exploration costs declined to $5.2 million from $6.7 million a year ago.

On a per unit basis, direct operating costs contracted to 9 cents per Mcfe from the year-ago figure of 15 cents. However, transportation, gathering, processing and compression expenses were recorded at $1.46 per Mcfe, higher than $1.36 in the prior-year quarter.

Capital Expenditure & Balance Sheet

The company’s drilling and completion expenditure totaled $97.1 million for first-quarter 2021. Moreover, $6.4 million was used in acreage leasehold, while $1.9 million was utilized in gathering.

At first quarter-end, it had total debt of $3,055.2 million, with a debt to capitalization of 64.7%.

Outlook

For 2021, Range Resources reiterated its production guidance at an average of 2.15 Bcfe per day, with 30% allocated to liquids production. Moreover, the company’s overall capital budget is expected to be $425 million.

Notably, exploration expense for 2021 is estimated to be $20-$28 million. On a per-unit basis, direct operating expenses for the year are expected within 9-11 cents per Mcfe. Transport, gathering, processing and compression expenses are estimated in the range of $1.35-$1.40 per Mcfe.

As of Apr 16, the company had around 70% of its 2021 remaining production volume hedged at a floor price of $2.60 per million British thermal units and ceiling price of $2.79. Similarly, it hedged 70% of crude production at $52 per barrel.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month. The consensus estimate has shifted -10.45% due to these changes.

VGM Scores

Currently, Range Resources has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Range Resources has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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