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Range Resources (RRC) Up 7.2% Since Q1 Earnings: Here's Why

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Since the announcement of first-quarter results on Apr 30, Range Resources Corporation (RRC - Free Report) has seen a 7.2% rise in share price. It is to be noted that the growth was undeterred by coronavirus impacts on the upstream energy player’s quarterly results. The stock, in fact, gained from its stable production volumes despite a reduction in capital expenditures.

Better-Than-Expected Q1 Earnings

Range Resources posted first-quarter 2020 adjusted earnings of 4 cents per share against the Zacks Consensus Estimate of a loss of 2 cents. However, the year-ago quarter’s profit was 37 cents.

In the first quarter, total revenues amounted to $693.9 million, beating the Zacks Consensus Estimate of $582 million. However, the top line deteriorated from the prior-year quarter’s $748.1 million.

The better-than-expected results were supported by higher natural gas equivalent production volumes and decreased expenses. This was partially offset by lower price realizations of natural gas and natural gas liquids (NGLs).

Range Resources Corporation Price, Consensus and EPS Surprise

Range Resources Corporation Price, Consensus and EPS Surprise

Range Resources Corporation price-consensus-eps-surprise-chart | Range Resources Corporation Quote

Operational Performance

During the first quarter, the company’s production averaged 2,294.2 million cubic feet equivalent per day (MMcfe/d), up 2% from the prior-year period. Natural gas contributed 69.8% to total production, while NGL and oil accounted for the remaining.

Oil and natural gas production increased 7% and 3%, respectively, on a year-over-year basis. However, NGL production decreased 1% from the prior-year quarter.

Its total price realization (including derivative settlements and after third-party transportation costs) averaged $1.18 per thousand cubic feet equivalent (Mcfe), down 39% year over year.

Natural gas price declined 36% on a year-over-year basis to $1.12 per Mcf and NGL prices dropped 65%, while oil prices rose 5%.

Expenses Decline

Total exploration cost declined to $6.7 million from the prior-year number of $7.7 million. Moreover, on a unit basis, transportation, gathering and compression expense was recorded at $1.36 per Mcfe, lower than $1.49 in the prior-year quarter. Also, direct operating costs contracted to 15 cents per Mcfe from the year-ago figure of 16 cents.

Share Repurchase

In the first quarter, the company bought back 8 million shares at an average price of $2.80. At quarter-end, it had $71 million remaining under the $100-million share buyback program.

Capital Expenditure & Financials

The company’s drilling and completion expenditures totaled $124 million in the reported quarter.

At first quarter-end, it had a long-term debt of $3,187 million, with a debt-to-capitalization ratio of 56.3%. This January, the company suspended dividend payouts, which will lead to savings of around $20 million per annum and will be used to reduce debt. Absolute debt reduction remains a priority for the company, as is evident from almost $111 million decrease in the same in the first quarter.

Guidance

For 2020, Range Resources expects production volumes of 2.3 billion cubic feet equivalent per day (Bcfe/D), which indicates no change from 2019 production volumes. The company expects 2020 capital expenditure to be $430 million, suggesting a decline from $728 million in 2019.

Zacks Rank & Other Stocks to Consider

Currently, Range Resources has a Zacks Rank #2 (Buy). Other top-ranked players in the energy space include RGC Resources Inc. (RGCO - Free Report) , CNX Resources Corporation (CNX - Free Report) and Comstock Resources, Inc. (CRK - Free Report) , each holding a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

RGC Resources’ 2020 earnings per share are expected to rise 14.8% year over year.

CNX Resources beat earnings estimates thrice and met once in the last four quarters, with average positive surprise of 111.5%.

Comstock Resources’ 2020 sales are expected to gain 30.8% year over year.

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