A month has gone by since the last earnings report for Range Resources (RRC - Free Report) . Shares have lost about 9.7% 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 its most recent earnings report in order to get a better handle on the important drivers.
Range Resources Q3 Earnings & Revenues Beat Estimates
Range Resourcesposted third-quarter 2019 adjusted loss of 7 cents per share, narrower than the Zacks Consensus Estimate of a loss of 9 cents. However, in the year-ago quarter, the company had reported earnings of 26 cents per share.
In the third quarter, total revenues amounted to $622.5 million, which beat the Zacks Consensus Estimate of $596 million. However, the top line deteriorated from the prior-year quarter sales of $811.2 million.
The better-than-expected results were supported by higher natural gas equivalent production volumes from the Appalachian Basin. This was partially offset by lower price realizations of commodities.
During the third quarter, the company’s production averaged almost 2243.8 million cubic feet equivalent per day (MMcfe/d), down a marginal 1% from the prior-year quarter. Natural gas contributed 70% to total production while natural gas liquid (NGL) and oil accounted for the remaining 30%.
Oil and NGL production dropped 10% and 7.3%, respectively, on a year-over-year basis. However, natural gas production increased 2.1%.
Although total gas equivalent production witnessed a nominal drop, volumes from the Appalachian Basin increased 3% year over year.
The company’s total price realization (including derivative settlements and after third-party transportation costs) averaged $1.25 per thousand cubic feet equivalent (Mcfe), down 34.2% year over year.
While natural gas price declined 21% on a year-over-year basis to $1.23 per thousand cubic feet, NGL and oil prices deteriorated 69% and 5%, respectively.
The exploration cost rose to $10.5 million from the prior-year number of $7.9 million. Moreover, direct operating costs increased to almost $35 million from the year-ago figure of $30.4 million.
Capital Expenditure & Financials
The company incurred drilling and completion expenditures worth $148 million in the reported quarter.
At the end of the third quarter, the company had long-term debt of approximately $3,134 million, with a debt-to-capitalization ratio of 43%.
For the fourth quarter of 2019, the company estimates production in the range of 2.33-2.35 billion cubic feet equivalent (Bcfe) per day. For 2019, production is reaffirmed at 2.28 Bcfe per day, suggesting an increase from 2.2 Bcfe per day in 2018.
Moreover, the upstream energy player has lowered its 2019 capital budget by $20 million to $736 million, suggesting a decline from $910 million in 2018.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -66.67% due to these changes.
Currently, Range Resources has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Range Resources has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.