It has been about a month since the last earnings report for Range Resources Corporation (RRC - Free Report) . Shares have added about 14.3% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is RRC due for a pullback? 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 catalysts.
Range Resources reported first-quarter 2018 earnings (adjusted for one-time items) of 46 cents per share, in line with the Zacks Consensus Estimate. The bottom line was up 84% than the year-ago period’s figure of 25 cents.
Total revenues of $742.6 million beat the Zacks Consensus Estimate of $720.5 million. However, the top line declined 4.4% year over year from $776.7 million.
First-quarter 2018 results were boosted by an increase in oil and gas equivalent production and price realizations, partially offset by higher expenses.
During the first quarter, the company’s production averaged almost 2,188.4 million cubic feet equivalent per day (MMcfe/d). Natural gas made up for 68.5% of total production, while natural gas liquids (NGLs) and oil accounted for the remaining 31.5%. Range Resources’ net natural gas output surpassed 1.2 billion cubic feet per day mark, making a quarterly record.
Total production volume improved 13% from the year-ago quarter and surpassed the Zacks Consensus Estimate of 2,175 MMcfe/d, primarily due to improvement in the Appalachia division, partially offset by decline in North Louisiana output.
On a year-over-year basis, oil production remained almost in line, while NGL production rose 9%. Moreover, natural gas production jumped 16% year over year.
In the quarter, the company drilled two longest laterals ever, at 17,875 and 18,129 feet.
The company’s total price realization (including the effects of hedges and derivative settlements) averaged $2.34 per thousand cubic feet equivalent (Mcfe), up 8% from the prior-year quarter. Of this, NGL prices surged 35% to $10.77 per barrel while crude oil prices rose 3% to $50.98 per barrel, both on a year-over-year basis. Natural gas prices were up 3% year over year to $2.27 per Mcf.
Direct operating cost in this quarter was $37.5 million, increasing 36.5% from the year-ago quarter. Total expenses were $650.7 million, up 32% year over year.
At the end of the quarter, the company had a total debt of approximately $4,081.7 million, with a debt-to-capitalization ratio of 41.2%. The company incurred expenditure of $227 million in the first quarter for drilling and completion of 27.5 net wells.
The company also recently renewed its revolving credit facility with a syndicate of 27 financial institutions. The credit facility has a maximum size of $4 billion and borrowing base of $3 billion.
For the second quarter of 2018, the company estimates production at about 2.19 billion cubic feet equivalent (Bcfe) per day. For 2018, production is projected at about 2.2 Bcfe per day. With this, the annual output is likely to rise 11%. The company intends to increase its cash flow by 11% through 2018.
The upstream energy player reiterated its 2018 capital budget of $941 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been six revisions lower for the current quarter.
At this time, RRC has an average Growth Score of C, however its Momentum is doing a lot better with an A. The stock was also allocated a grade of A on the value side, putting it in the top quintile 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.
Based on our scores, the stock is more suitable for value and momentum investors than growth investors.
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, RRC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.