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Range Resources (RRC) Misses on Q2 Earnings, Revenues Beat

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Range Resources Corporation (RRC - Free Report) reported second-quarter 2017 adjusted earnings of 6 cents per share which lagged the Zacks Consensus Estimate of 8 cents. Notably, the company incurred a loss of 14 cents per share in the year-ago quarter. The improvement is mainly due to an increase in production and higher price realizations, partially offset by higher expenses.
 
Total revenue of $673.1 million beat the Zacks Consensus Estimate of $525.9 million and also jumped 561% year over year from $101.8 million.
 

Range Resources Corporation Price, Consensus and EPS Surprise

 

Range Resources Corporation Price, Consensus and EPS Surprise | Range Resources Corporation Quote

Operational Performance

The company’s second-quarter production averaged almost 1,944.5 million cubic feet equivalent per day (MMcfe/d). Natural gas made up for 67.5% of the total production, while natural gas liquids (NGLs) and oil accounted for the remaining 32.5%. Total production volume improved 37% from the year-earlier quarter due to the company’s highly successful drilling program.

On a year-over-year basis, oil production increased 24%, while NGL production rose 24%. Moreover, natural gas production jumped 44% year over year.

The company’s total price realization (including the effects of hedges and derivative settlements) averaged $1.80 per Mcfe, up 25% year over year. Of this, NGL prices surged 21% to $6.88 per barrel while crude oil prices rose 21% to $48.82 per barrel, both on a year-over-year basis. Natural gas prices were up 28% year over year to $1.74 per Mcf.

Expenses

Total second-quarter 2017 expense was $545.9 million, up 20% year over year.
 
Financials

At the end of the quarter, the company had long-term debt of approximately $3,848.6 million with a debt-to-capitalization ratio of 40.5%. The company incurred expenditures of $280 million in the second quarter for drilling and the completion of 35 wells.  

Second-Quarter Price Performance

During the April–June quarter of 2017, Range Resources’ shares underperformed the industry. During the aforesaid period, the company’s shares have lost 20.4% compared with the industry’s increase of 2.7%.

Guidance

For the third quarter of 2017, the company estimates production of 1.97 billion cubic feet equivalent (Bcfe) per day. Fourth-quarter production is estimated at 2.2 Bcfe per day, up 17% from prior-year quarter. This will result in annual production growth of 30%, which has decreased from earlier guidance of 33–35%. The decline is mainly due to early 2017 production results from North Louisiana, along with non-recurring timing delays on several well pads in southwest Pennsylvania.

The company’s 2017 capital budget is set at $1.15 billion. It is to be noted that almost 67% of the budget will be allocated for the Marcellus region, while the remaining will be spent for North Louisiana.

Zacks Rank

Currently, Range Resources carries a Zacks Rank #1 (Strong Buy). Some other stocks in the same space include Global Partners LP (GLP - Free Report) , Braskem S.A. (BAK - Free Report) and TransCanada Corp (TRP - Free Report) . You can see the complete list of today’s Zacks #1 Rank stocks here.

Global Partners delivered a positive earnings surprise of 1200.00% in the preceding quarter. The company beat estimates in three of the trailing four quarters with an average positive earnings surprise of 415.30%.

Braskem delivered a positive earnings surprise of 107.79% in the quarter ending September 2016.

TransCanada delivered a negative earnings surprise of 7.58% in the preceding quarter. It surpassed estimates in two of the trailing four quarters with an average positive earnings surprise of 1.06%.

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