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Why Is Range Resources (RRC) Down 11.9% Since Last Earnings Report?
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It has been about a month since the last earnings report for Range Resources (RRC - Free Report) . Shares have lost about 11.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Range Resources due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Range Resources Q2 Earnings Meet Estimates
Range Resources Corporation reported second-quarter 2021 adjusted earnings of 24 cents per share, in line with the Zacks Consensus Estimate. The bottom line significantly improved from a loss of 10 cents per share in the prior-year quarter.
Total revenues for the reported quarter were $434.7 million, missing the Zacks Consensus Estimate of $573 million. However, the top line improved from the prior-year number of $376.5 million.
The bottom line was supported by a massive increase in commodity prices, and decreased exploration costs as well as direct operating expenses. This was partially offset by lower production volumes.
Operational Performance
For second-quarter 2021, the company’s production averaged 2,104.1 million cubic feet equivalent per day, down 10% from the prior-year period. Natural gas contributed 68.9% to total production, while NGLs and oil accounted for the remaining.
Oil production increased 8% for the quarter from the year-ago period, while NGL and natural gas output decreased 6% and 13%, respectively.
Its total price realization (excluding derivative settlements and before third-party transportation costs) averaged $3.25 per thousand cubic feet equivalent (Mcfe), up 99% year over year. Natural gas prices rose 72% on a year-over-year basis to $2.44 per Mcf. NGL and oil prices also increased 118% and 289%, respectively.
Costs & Expenses
Total costs and expenses rose to $592.5 million from $566.4 million in the year-ago quarter. Total transportation, gathering, processing and compression costs as well as general and administrative expenses increased in the quarter. The rise in costs was offset by lower exploration costs and direct operating expenses.
On a per unit basis, direct operating costs contracted to 10 cents per Mcfe from the year-ago figure of 11 cents. However, transportation, gathering, processing and compression expenses were recorded at $1.48 per Mcfe, higher than $1.30 in the prior-year quarter.
Capital Expenditure & Balance Sheet
The company’s drilling and completion expenditure totaled $115.7 million for second-quarter 2021. Moreover, $4.5 million was used in acreage leasehold, gathering and others.
At second quarter-end, it had total debt of $3,036.7 million, down from $3,055.2 million at first quarter-end. It had a debt to capitalization of 66.6%. The company has around $750 million in senior notes, expected to mature through 2023. At second quarter-end, it had more than $1.9 billion borrowing capacity.
Outlook
For 2021, Range Resources reiterated its production guidance at an average of 2.15 Bcfe per day, with 30% allocated to liquids production. The company’s overall capital budget is expected to be $425 million.
Exploration expense for 2021 is estimated within $20-$25 million, down from the previous limit of $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 now estimated in the range of $1.43-$1.47 per Mcfe, higher than previous range of $1.35-$1.40 per Mcfe.
As of Jul 16, the company had more than 75% of second-half 2021 remaining production volume hedged.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 29.25% due to these changes.
VGM Scores
Currently, Range Resources has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. 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
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Range Resources has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Range Resources (RRC) Down 11.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Range Resources (RRC - Free Report) . Shares have lost about 11.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Range Resources due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Range Resources Q2 Earnings Meet Estimates
Range Resources Corporation reported second-quarter 2021 adjusted earnings of 24 cents per share, in line with the Zacks Consensus Estimate. The bottom line significantly improved from a loss of 10 cents per share in the prior-year quarter.
Total revenues for the reported quarter were $434.7 million, missing the Zacks Consensus Estimate of $573 million. However, the top line improved from the prior-year number of $376.5 million.
The bottom line was supported by a massive increase in commodity prices, and decreased exploration costs as well as direct operating expenses. This was partially offset by lower production volumes.
Operational Performance
For second-quarter 2021, the company’s production averaged 2,104.1 million cubic feet equivalent per day, down 10% from the prior-year period. Natural gas contributed 68.9% to total production, while NGLs and oil accounted for the remaining.
Oil production increased 8% for the quarter from the year-ago period, while NGL and natural gas output decreased 6% and 13%, respectively.
Its total price realization (excluding derivative settlements and before third-party transportation costs) averaged $3.25 per thousand cubic feet equivalent (Mcfe), up 99% year over year. Natural gas prices rose 72% on a year-over-year basis to $2.44 per Mcf. NGL and oil prices also increased 118% and 289%, respectively.
Costs & Expenses
Total costs and expenses rose to $592.5 million from $566.4 million in the year-ago quarter. Total transportation, gathering, processing and compression costs as well as general and administrative expenses increased in the quarter. The rise in costs was offset by lower exploration costs and direct operating expenses.
On a per unit basis, direct operating costs contracted to 10 cents per Mcfe from the year-ago figure of 11 cents. However, transportation, gathering, processing and compression expenses were recorded at $1.48 per Mcfe, higher than $1.30 in the prior-year quarter.
Capital Expenditure & Balance Sheet
The company’s drilling and completion expenditure totaled $115.7 million for second-quarter 2021. Moreover, $4.5 million was used in acreage leasehold, gathering and others.
At second quarter-end, it had total debt of $3,036.7 million, down from $3,055.2 million at first quarter-end. It had a debt to capitalization of 66.6%. The company has around $750 million in senior notes, expected to mature through 2023. At second quarter-end, it had more than $1.9 billion borrowing capacity.
Outlook
For 2021, Range Resources reiterated its production guidance at an average of 2.15 Bcfe per day, with 30% allocated to liquids production. The company’s overall capital budget is expected to be $425 million.
Exploration expense for 2021 is estimated within $20-$25 million, down from the previous limit of $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 now estimated in the range of $1.43-$1.47 per Mcfe, higher than previous range of $1.35-$1.40 per Mcfe.
As of Jul 16, the company had more than 75% of second-half 2021 remaining production volume hedged.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 29.25% due to these changes.
VGM Scores
Currently, Range Resources has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. 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
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Range Resources has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.