RANGE RESOURCES CORPORATION (NYSE: RRC) today announced third quarter results. Record highs were achieved in production, oil and gas sales and cash flow. Oil and gas sales, including cash-settled derivatives, reached $234 million, a 35% increase over the prior year. Results were driven by a 13% increase in production and a 20% increase in cash realized prices. Cash flow from operations before changes in working capital, a non-GAAP measure, rose 45% to $165 million. Reported net income totaled $59 million with earnings per share (diluted) increasing 8% to $0.39. Net income comparable to analyst estimates was $64.4 million while diluted earnings per share was $0.42, 83% greater than the prior year. (See the accompanying tables reconciling these non-GAAP measures.)
Commenting on the announcement, John Pinkerton, Range’s President and CEO, said, “The third quarter results reflect the best quarterly performance in our Company’s history as production and cash flow from operations both reached all-time highs. Our 19th consecutive quarter of sequential production growth is evidence of another superb effort turned in by our operating teams. The foundation for these results is our large, transparent drilling inventory that includes more than 10,000 locations. Looking forward, we are extremely well positioned, as our drilling program is generating excellent returns, our balance sheet continues to strengthen and we have built a very strong hedge position. Through 2008, we have 77% of our anticipated natural gas production hedged at an average floor price of $8.63 per mcf. We believe that our consistent and disciplined approach will continue to drive shareholder value in the future.”
For the quarter, production totaled 326 Mmcfe per day, comprised of 253 Mmcf per day of gas (78%) and 12,217 barrels per day of oil and liquids. Wellhead prices, including cash-settled derivatives, averaged $7.79 per mcfe, a 20% increase over the prior-year period. The average gas price rose 16% to $7.20 per mcf, and the average oil price rose 40% to $64.37 a barrel. Our hedging program increased the average price by $0.78 per mcfe.
Third quarter development and exploration expenditures totaled $193 million, funding the drilling of 240 (187 net) wells and 38 (29 net) recompletions. A 97% success rate was achieved with 233 (181 net) wells productive. In the first nine months of the year, 609 (465 net) of the newly drilled wells had been placed on production, with the remainder in various stages of completion or waiting on pipeline connection. In addition, $28 million was spent on acreage and $6 million on expanding gas gathering systems. Drilling activity in the fourth quarter remains high with 34 rigs currently running. For the year, Range anticipates drilling 980 (740 net) wells and 84 (64 net) recompletions as part of the Company’s $890 million capital budget. During the third quarter, Range also continued to expand several of its key drilling areas and emerging plays.
In the Permian division, 48 (43 net) wells were drilled. In the North Texas Barnett Shale play, production reached 97 (66 net) Mmcfe per day, and we expect to exit the year at 110 (75 net) Mmcfe per day. We entered the year producing 30 Mmcfe per day, so we are anticipating roughly a 150% production increase for the region. The Barnett test well in Ellis County was completed and went online at a rate of 1.5 Mmcfe per day, which was within the expected range. The well encountered a 314-foot section of Barnett shale and confirmed the gas productivity of the formation in this region. A second well will be spud in the area during the fourth quarter to further test the productive section. Range currently has about 20,000 net acres in Ellis County and a total acreage position of about 90,000 net acres in the Fort Worth Basin. In addition, our field redevelopment efforts in West Texas and New Mexico made steady progress due to continued drilling success.
In the Appalachia division, 157 (113 net) wells were drilled. The Nora field in Virginia continues to be a key area of focus. To date, our program to test downspacing of coal bed methane wells in the field has met with encouraging results. Forty wells have been drilled on 30-acre spacing and initial results indicate no communication with the existing 60-acre wells. Later this year, Range plans to test reduced spacing of the tight gas sands in the Nora field. Finally, a horizontal shale well is planned for the fourth quarter to test the potential of shale gas development in the field, which encompasses approximately 300,000 acres. In Pennsylvania, Range continues to expand its leasehold position in the Devonian Shale play with more than 500,000 net acres currently under lease. Significantly, the Company’s program to test the shale gas potential in this region is meeting with encouraging results. After testing various drilling and completion techniques, two recent horizontal wells came online at commercial rates of 1.4 and 3.2 Mmcfe per day. In total, 15 horizontal wells are planned in the play in 2007, of which five have been drilled and three completed to date.
Other significant drilling in the quarter included the drilling of two horizontal Granite Wash wells in the Texas Panhandle and one vertical Granite Wash well in central Oklahoma. The three wells came online at a combined production rate of 8.2 (4.3 net) Mmcfe per day. As many as 200 locations may exist on Range’s 27,000 (13,000 net) acres in the two project areas.
Third quarter 2007 results included several non-cash items. A $5.6 million non-cash mark-to-market gain on unrealized derivatives and $14.0 million of non-cash compensation expense were recorded. Excluding these items, net income would have been $64.4 million or $0.44 per share ($0.42 fully diluted). Excluding similar non-cash items from the prior-year quarter, net income would have been $32.1 million or $0.23 per share ($0.23 fully diluted). (See accompanying table for calculation of these non-GAAP measures.)
Direct operating expenses for the quarter were $0.92 per mcfe, the same as the prior-year period. Production taxes at $0.38 per mcfe were also the same as the prior year. Exploration expense in the third quarter totaled $5.3 million, down from $15.8 million in the prior year. General and administrative expenses were $0.44 per mcfe, an increase of $0.13 per mcfe due to higher personnel cost, occupancy expense and professional fees as the Company continues to expand its technical staff. Approximately one-half of the increase is related to new Appalachian activity, including increased staffing in our Abingdon, Virginia office as a result of the recent Nora acquisition and the opening of an office in Pittsburgh, Pennsylvania to focus on the Devonian Shale play. The mcfe amount is the same as the second quarter of 2007. Interest expense was $0.66 per mcfe, three cents higher than the prior year due to Range refinancing short-term floating rate debt for long-term fixed rate debt. Depreciation, depletion and amortization was $1.90 per mcfe, compared to $1.74 in the prior year. An undeveloped leasehold impairment in the Gulf Coast division accounted for $0.06 of the increase, with the remainder due to a varying mix of production from higher-cost properties.
The Company will host a conference call on Thursday, October 25 at 1:00 p.m. ET to review these results. To participate in the call, please dial 877-407-8035 and ask for the Range Resources third quarter financial results conference call. A replay of the call will be available through November 1 at 877-660-6853. The account number is 286 and the conference ID for the replay is 257167.
A simultaneous webcast of the call may be accessed over the Internet at www.rangeresources.com or www.vcall.com. To listen, please go to either website in time to register and install any necessary software. The webcast will be archived for replay on the Company’s website for 15 days.
Non-GAAP Financial Measures and Supplemental Tables:
Effective with the third quarter, Range has reclassified within total revenues its financial reporting of the cash settlement of its commodity derivatives. Under this presentation those hedges considered “effective” under SFAS No. 133 (Appalachia oil and gas hedges and Southwest oil hedges) are included in “Oil and gas sales” when settled. For those hedges designated to regions where the historical correlation between NYMEX and regional prices is “non-highly effective” (Southwest gas) or is “volumetric ineffective” due to sale of the underlying reserves (Gulf Coast oil and gas), they are deemed to be “derivatives” and the cash settlements are included in a separate line item shown as “Derivative fair value income (loss)” along with the change in mark-to-market valuations of such unrealized derivatives. The Company has provided additional information regarding oil and gas sales in a supplemental table included with this release.
Under GAAP, due to the sale of all the Company’s Gulf of Mexico properties at the end of the first quarter of 2007, all Gulf of Mexico operations during the first quarter 2007 and in prior years have been reclassified to “Discontinued operations” in the reported GAAP financial statements. The Company has presented a supplemental table which reconciles these reported GAAP financial amounts to the amounts if the operations of the Gulf of Mexico properties for both the 2007 and 2006 periods were combined with the amounts from the continuing operations. The Company believes that the combined results, by including the Gulf of Mexico properties, corresponds to the methodology used by professional research analysts and, therefore, are useful in evaluating operational trends of the Company and its actual historical performance relative to other oil and gas producing companies by investors in making investment decisions. (See the reconciliation of reported continuing operations under GAAP to the combined operations, a non-GAAP presentation in the accompanying table.)
Earnings for third quarter 2007 include non-cash ineffective and mark-to-market derivative gains of $5.6 million and a non-cash stock compensation expense of $14.0 million. Excluding such items, income before income taxes would have been $102.4 million, a 96% increase from the prior year. Adjusting for the after-tax effect of these items, the Company’s earnings would have been $64.4 million or $0.44 per share ($0.42 fully diluted). If similar items were excluded, 2006 earnings would have been $32.1 million or $0.23 per share ($0.23 per diluted share). In 2006, results were impacted by a net $55.1 million ineffective and mark-to-market on derivative gains on commodities and interest and a $2.5 million stock compensation expense. (See reconciliation of non-GAAP earnings in the accompanying table.) The Company believes results excluding these items are more comparable to estimates provided by professional research analysts and, therefore, are useful in evaluating operational trends of the Company and its performance relative to other oil and gas producing companies by investors in making investment decisions.
“Cash flow from operations before changes in working capital” as defined in this release represents net cash provided by operations before changes in working capital and exploration expense adjusted for certain non-cash compensation items. Cash flow from operations before changes in working capital is widely accepted by the investment community as a financial indicator of an oil and gas company’s ability to generate cash to internally fund exploration and development activities and to service debt. Cash flow from operations before changes in working capital is also useful because it is widely used by professional research analysts in valuing, comparing, rating and providing investment recommendations of companies in the oil and gas exploration and production industry. In turn, many investors use this published research in making investment decisions. Cash flow from operations before changes in working capital is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operations, investing, or financing activities as an indicator of cash flows, or as a measure of liquidity. A table is included which reconciles net cash provided by operations to cash flow from operations before changes in working capital as used in this release. On its website, the Company provides additional comparative information on prior periods.
Except for historical information, statements made in this release, including those relating to significant potential, future earnings, cash flow, capital expenditures, production growth and planned number of wells are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management’s assumptions and the Company’s future performance are subject to a wide range of business risks and uncertainties and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to, the volatility of oil and gas prices, the results of our hedging transaction, the costs and results of drilling and operations, the timing of production, mechanical and other inherent risks associated with oil and gas production, weather, the availability of drilling equipment, changes in interest rates, litigation, uncertainties about reserve estimates and environmental risks. The Company undertakes no obligation to publicly update or revise any forward-looking statements. Further information on risks and uncertainties is available in the Company’s filings with the Securities and Exchange Commission, which are incorporated by reference.
Range’s internal estimates of reserves may be subject to revision and may be different from estimates by our external reservoir engineers at year-end. Although we believe the expectations and forecasts reflected in these and other forward-looking statements are reasonable, we can give no assurance they will prove to have been correct. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties.
RANGE RESOURCES CORPORATION | ||||||||||||||||||||||
| STATEMENTS OF INCOME | ||||||||||||||||||||||
|
Based on GAAP reported earnings
with additional details included in each line item in Form 10-Q | ||||||||||||||||||||||
| (Unaudited, in thousands, except per share data) | ||||||||||||||||||||||
Three Months Ended |
Nine Months Ended | |||||||||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||||||||
| Revenues | ||||||||||||||||||||||
| Oil and gas sales (a) | $ | 214,424 | $ | 153,054 | $ | 621,636 | $ | 443,143 | ||||||||||||||
| Transportation and gathering | 611 | 1,101 | 1,500 | 2,170 | ||||||||||||||||||
Transportation and gathering - non-cash stock compensation (b) | (103 | ) | (86 | ) | (297 | ) | (237 | ) | ||||||||||||||
Cash-settled derivative gains (a) (c) | 19,384 | 10,356 | 50,789 | 36,180 | ||||||||||||||||||
Change in mark-to-market on unrealized derivatives (c) | 5,618 | 54,950 | (40,171 | ) | 83,734 | |||||||||||||||||
| Ineffective hedging gain (loss) (d) | (28 | ) | 184 | 502 | 3,490 | |||||||||||||||||
| Gain (loss) on sale of properties (d) | 2 | 93 | 22 | (155 | ) | |||||||||||||||||
| Other (d) | 2,445 | (27 | ) | 4,727 | (80 | ) | ||||||||||||||||
| $ | 242,353 | $ | 219,625 | 10 | % | $ | 638,708 | $ | 568,245 | 12 | % | |||||||||||
| Expenses | ||||||||||||||||||||||
| Direct operating | 27,518 | 21,958 | 76,880 | 56,373 | ||||||||||||||||||
| Direct operating – non-cash stock compensation (b) | 485 | 378 | 1,353 | 1,029 | ||||||||||||||||||
| Production and ad valorem taxes | 11,316 | 9,874 | 32,958 | 27,970 | ||||||||||||||||||
| Exploration | 5,302 | 15,751 | 27,079 | 30,997 | ||||||||||||||||||
| Exploration – non-cash stock compensation (b) | 931 | 757 | 2,589 | 2,196 | ||||||||||||||||||
| General and administrative | 13,349 | 8,260 | 36,861 | 25,667 | ||||||||||||||||||
General and administrative – non-cash stock compensation (b) | 4,709 | 3,910 | 13,713 | 10,347 | ||||||||||||||||||
| Deferred compensation plan (e) | 7,761 | (2,638 | ) | 28,342 | (347 | ) | ||||||||||||||||
| Interest | 19,935 | 16,389 | 56,356 | 38,266 | ||||||||||||||||||
| Depletion, depreciation and amortization | 57,001 | 40,606 | 155,798 | 106,252 | ||||||||||||||||||
| 148,307 | 115,245 | 29 | % | 431,929 | 298,750 | 45 | % | |||||||||||||||
| Income from continuing operations before income taxes | 94,046 | 104,380 | -10 | % | 206,779 | 269,495 | -23 | % | ||||||||||||||
| Income taxes | ||||||||||||||||||||||
| Current | 133 | 615 | 416 | 1,815 | ||||||||||||||||||
| Deferred | 34,802 | 38,707 | 73,698 | 99,533 | ||||||||||||||||||
| 34,935 | 39,322 | 74,114 | 101,348 | |||||||||||||||||||
| Income from continuing operations | 59,111 | 65,058 | -9 | % | 132,665 | 168,147 | -21 | % | ||||||||||||||
| Discontinued operations, net of taxes | (196 | ) | (13,728 | ) | 63,593 | (9,872 | ) | |||||||||||||||
| Net income | $ | 58,915 | $ | 51,330 | 15 | % | $ | 196,258 | $ | 158,275 | 24 | % | ||||||||||
Basic | ||||||||||||||||||||||
| Income from continuing operations | $ | 0.40 | $ | 0.47 | $ | 0.92 | $ | 1.27 | ||||||||||||||
| Discontinued operations | $ | - | (0.10 | ) | 0.45 | (0.07 | ) | |||||||||||||||
| Net income | $ | 0.40 | $ | 0.37 | 8 | % | $ | 1.37 | $ | 1.20 | 14 | % | ||||||||||
| Diluted | ||||||||||||||||||||||
| Income from continuing operations | $ | 0.39 | $ | 0.46 | $ | 0.89 | $ | 1.22 | ||||||||||||||
| Discontinued operations | - | (0.10 | ) | 0.43 | (0.07 | ) | ||||||||||||||||
| Net income | $ | 0.39 | $ | 0.36 | 8 | % | $ | 1.32 | $ | 1.15 | 15 | % | ||||||||||
| Weighted average shares outstanding, as reported | ||||||||||||||||||||||
Basic | 147,182 | 136,983 | 7 | % | 143,508 | 132,426 | 8 | % | ||||||||||||||
| Diluted | 152,391 | 142,022 | 7 | % | 148,671 | 137,466 | 8 | % | ||||||||||||||
|
(a) See separate oil and gas sales information table.
(b) Costs associated with FASB 123R which have been reflected in the categories associated with the direct personnel costs. (c) Included in Derivative fair value income in 10-Q. (d) Included in Other revenues in the 10-Q. (e) Reflects the change in the market value of the Company stock and other investments during the period held in the deferred compensation plan. | ||||||||||||||||||||||
RANGE RESOURCES CORPORATION | |||||||||||||||||||||||
| STATEMENTS OF INCOME | |||||||||||||||||||||||
| Restated for Gulf of Mexico Discontinued | Three Months Ended September 30, | Three Months Ended September 30, | |||||||||||||||||||||
Operations, a non-GAAP Presentation (in thousands) (Unaudited) |
2007
As reported | GOM Discontinued Operations | 2007 Including GOM |
2006
As reported | GOM Discontinued Operations | 2006 Including GOM | |||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Oil and gas sales (a) | $ | 214,424 | $ | - | $ | 214,424 | $ | 153,054 | $ | 9,237 | $ | 162,291 | |||||||||||
| Transportation and gathering | 611 | - | 611 | 1,101 | 19 | 1,120 | |||||||||||||||||
| Transportation and gathering – stock based compensation | (103 | ) | - | (103 | ) | (86 | ) | - | (86 | ) | |||||||||||||
Cash-settled derivatives gain (a) | 19,384 | - | 19,384 | 10,356 | - | 10,356 | |||||||||||||||||
Change in mark-to-market on unrealized derivatives | 5,618 | - | 5,618 | 54,950 | - | 54,950 | |||||||||||||||||
| Ineffective hedging gain (loss) | (28 | ) | - | (28 | ) | 184 | - | 184 | |||||||||||||||
| Equity method investment | 484 | - | 484 | (98 | ) | - | (98 | ) | |||||||||||||||
| Gain (loss) on sale of properties | 2 | - | 2 | 93 | - | 93 | |||||||||||||||||
| Interest and other | 1,961 | - | 1,961 | 71 | (1 | ) | 70 | ||||||||||||||||
| 242,353 | - | 242,353 | 219,625 | 9,255 | 228,880 | ||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Direct operating | 27,518 | - | 27,518 | 21,958 | 2,448 | 24,406 | |||||||||||||||||
| Direct operating – stock based compensation | 485 | 485 | 378 | - | 378 | ||||||||||||||||||
| Production and ad valorem taxes | 11,316 | - | 11,316 | 9,874 | 111 | 9,985 | |||||||||||||||||
| Exploration | 5,302 | - | 5,302 | 15,751 | 4 | 15,755 | |||||||||||||||||
| Exploration – stock based compensation | 931 | - | 931 | 757 | - | 757 | |||||||||||||||||
| General and administrative | 13,349 | - | 13,349 | 8,260 | - | 8,260 | |||||||||||||||||
| General and administrative – stock based compensation | 4,709 | - | 4,709 | 3,910 | - | 3,910 | |||||||||||||||||
| Non-cash compensation deferred compensation plan | 7,761 | - | 7,761 | (2,638 | ) | - | (2,638 | ) | |||||||||||||||
| Interest expense | 19,935 | - | 19,935 | 16,389 | 507 | 16,896 | |||||||||||||||||
| Depletion, depreciation and amortization | 57,001 | - | 57,001 | 40,606 | 5,637 | 46,243 | |||||||||||||||||
| 148,307 | - | 148,307 | 115,245 | 8,707 | 123,952 | ||||||||||||||||||
| Income from continuing operations before income taxes | 94,046 | - | 94,046 | 104,380 | 548 | 104,928 | |||||||||||||||||
| Income taxes provision | |||||||||||||||||||||||
| Current | 133 | - | 133 | 615 | - | 615 | |||||||||||||||||
| Deferred | 34,802 | - | 34,802 | 38,707 | 192 | 38,899 | |||||||||||||||||
| 34,935 | - | 34,935 | 39,322 | 192 | 39,514 | ||||||||||||||||||
| Income from continuing operations | 59,111 | - | 59,111 | 65,058 | 356 | 65,414 | |||||||||||||||||
| Discontinued operations – Austin Chalk, net of tax | 128 | - | 128 | (14,084 | ) | - | (14,084 | ) | |||||||||||||||
| Discontinued operations – Gulf of Mexico, net of tax | (324 | ) | - | (324 | ) | 356 | (356 | ) | - | ||||||||||||||
| Net income | $ | 58,915 | $ | - | $ | 58,915 | $ | 51,330 | $ | - | $ | 51,330 | |||||||||||
| OPERATING HIGHLIGHTS | 2007 | GOM Discontinued Operations | 2007 Including GOM | 2006 | GOM Discontinued Operations | 2006 Including GOM | |||||||||||||||||
| Average Daily Production | |||||||||||||||||||||||
| Oil (bbl) | 9,129 | - | 9,129 | 8,357 | 374 | 8,731 | |||||||||||||||||
| Natural gas liquids (bbl) | 3,088 | - | 3,088 | 3,013 | - | 3,013 | |||||||||||||||||
| Gas (mcf) | 252,845 | - | 252,845 | 205,317 | 13,473 | 218,790 | |||||||||||||||||
| Equivalents (mcfe) (b) | 326,146 | - | 326,146 | 273,534 | 15,716 | 289,250 | |||||||||||||||||
Average Prices Realized (c) | |||||||||||||||||||||||
| Oil (bbl) | $ | 64.37 | $ | - | $ | 64.37 | $ | 46.32 | $ | 41.03 | $ | 46.10 | |||||||||||
| Natural gas liquids (bbl) | $ | 43.15 | $ | - | $ | 43.15 | $ | 39.48 | $ | - | $ | 39.48 | |||||||||||
| Gas (mcf) | $ | 7.20 | $ | - | $ | 7.20 | $ | 6.19 | $ | 6.31 | $ | 6.19 | |||||||||||
| Equivalents (mcfe) (b) | $ | 7.79 | $ | - | $ | 7.79 | $ | 6.49 | $ | 6.39 | $ | 6.49 | |||||||||||
| Direct Operating Costs per mcfe (d) | |||||||||||||||||||||||
| Field expenses | $ | 0.86 | $ | - | $ | 0.86 | $ | 0.84 | $ | 1.03 | $ | 0.86 | |||||||||||
| Workovers | $ | 0.06 | $ | - | $ | 0.06 | $ | 0.03 | $ | 0.66 | $ | 0.06 | |||||||||||
| Total operating costs | $ | 0.92 | $ | - | $ | 0.92 | $ | 0.87 | $ | 1.69 | $ | 0.92 | |||||||||||
|
(a) See separate oil and gas sales information table.
(b) Oil and natural gas liquids are converted to gas equivalents on a basis of six mcf per barrel. (c) Average prices, including cash-settled derivatives. (d) Excludes non-cash stock compensation. | |||||||||||||||||||||||
RANGE RESOURCES CORPORATION | ||||||||||||||||||||||||
| STATEMENTS OF INCOME | ||||||||||||||||||||||||
| Restated for Gulf of Mexico Discontinued | Nine Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
|
Operations, a non-GAAP Presentation
(in thousands) (Unaudited) |
2007
As reported | GOM Discontinued Operations | 2007 Including GOM |
2006
As reported | GOM Discontinued Operations | 2006 Including GOM | ||||||||||||||||||
| Revenues | ||||||||||||||||||||||||
| Oil and gas sales (a) | $ | 621,636 | $ | 9,938 | $ | 631,574 | $ | 443,143 | $ | 27,282 | $ | 470,425 | ||||||||||||
| Transportation and gathering | 1,500 | 10 | 1,510 | 2,170 | 76 | 2,246 | ||||||||||||||||||
| Transportation and gathering – stock based compensation | (297 | ) | - | (297 | ) | (237 | ) | - | (237 | ) | ||||||||||||||
Cash-settled derivatives gain (a) | 50,789 | - | 50,789 | 36,180 | - | 36,180 | ||||||||||||||||||
| Change in mark-to-market on unrealized derivatives | (40,171 | ) | - | (40,171 | ) | 83,734 | - | 83,734 | ||||||||||||||||
| Ineffective hedging gain (loss) | 502 | - | 502 | 3,490 | - | 3,490 | ||||||||||||||||||
| Equity method investment | 1,280 | - | 1,280 | (61 | ) | - | (61 | ) | ||||||||||||||||
| Gain (loss) on sale of properties | 22 | - | 22 | (155 | ) | - | (155 | ) | ||||||||||||||||
| Interest and other | 3,447 | (1 | ) | 3,446 | (19 | ) | (2 | ) | (21 | ) | ||||||||||||||
| 638,708 | 9,947 | 648,655 | 568,245 | 27,356 | 595,601 | |||||||||||||||||||
| Expenses | ||||||||||||||||||||||||
| Direct operating | 76,880 | 2,477 | 79,357 | 56,373 | 7,585 | 63,958 | ||||||||||||||||||
| Direct operating – stock based compensation | 1,353 | - | 1,353 | 1,029 | - | 1,029 | ||||||||||||||||||
| Production and ad valorem taxes | 32,958 | 105 | 33,063 | 27,970 | 411 | 28,381 | ||||||||||||||||||
| Exploration | 27,079 | - | 27,079 | 30,997 | 1,174 | 32,171 | ||||||||||||||||||
| Exploration – stock based compensation | 2,589 | - | 2,589 | 2,196 | - | 2,196 | ||||||||||||||||||
| General and administrative | 36,861 | 47 | 36,908 | 25,667 | - | 25,667 | ||||||||||||||||||
| General and administrative – stock based compensation | 13,713 | - | 13,713 | 10,347 | - | 10,347 | ||||||||||||||||||
| Non-cash compensation deferred compensation plan | 28,342 | - | 28,342 | (347 | ) | - | (347 | ) | ||||||||||||||||
| Interest expense | 56,356 | 594 | 56,950 | 38,266 | 1,184 | 39,450 | ||||||||||||||||||
| Depletion, depreciation and amortization | 155,798 | 3,325 | 159,123 | 106,252 | 11,391 | 117,643 | ||||||||||||||||||
| 431,929 | 6,548 | 438,477 | 298,750 | 21,745 | 320,495 | |||||||||||||||||||
| Income from continuing operations before income taxes | 206,779 | 3,399 | 210,178 | 269,495 | 5,611 | 275,106 | ||||||||||||||||||
| Income taxes provision | ||||||||||||||||||||||||
| Current | 416 | - | 416 | 1,815 | - | 1,815 | ||||||||||||||||||
| Deferred | 73,698 | 1,190 | 74,888 | 99,533 | 1,964 | 101,497 | ||||||||||||||||||
| 74,114 | 1,190 | 75,304 | 101,348 | 1,964 | 103,312 | |||||||||||||||||||
| Income from continuing operations | 132,665 | 2,209 | 134,874 | 168,147 | 3,647 | 171,794 | ||||||||||||||||||
| Discontinued operations – Austin Chalk, net of tax | (411 | ) | - | (411 | ) | (13,519 | ) | - | (13,519 | ) | ||||||||||||||
| Discontinued operations – Gulf of Mexico, net of tax | 64,004 | (2,209 | ) | 61,795 | 3,647 | (3,647 | ) | - | ||||||||||||||||
| Net income | $ | 196,258 | $ | - | $ | 196,258 | $ | 158,275 | $ | - | $ | 158,275 | ||||||||||||
| OPERATING HIGHLIGHTS | 2007 | GOM Discontinued Operations | 2007 Including GOM | 2006 | GOM Discontinued Operations | 2006 Including GOM | ||||||||||||||||||
| Average Daily Production | ||||||||||||||||||||||||
| Oil (bbl) | 9,377 | 142 | 9,519 | 8,296 | 332 | 8,628 | ||||||||||||||||||
| Natural gas liquids (bbl) | 3,068 | - | 3,068 | 3,047 | - | 3,047 | ||||||||||||||||||
| Gas (mcf) | 236,153 | 3,492 | 239,645 | 187,390 | 12,795 | 200,185 | ||||||||||||||||||
| Equivalents (mcfe) (b) | 310,826 | 4,346 | 315,172 | 255,448 | 14,784 | 270,232 | ||||||||||||||||||
Average Prices Realized (c) | ||||||||||||||||||||||||
| Oil (bbl) | $ | 60.13 | $ | 58.17 | $ | 60.10 | $ | 46.80 | $ | 43.28 | $ | 46.66 | ||||||||||||
| Natural gas liquids (bbl) | $ | 37.95 | $ | - | $ | 37.95 | $ | 34.88 | $ | - | $ | 34.88 | ||||||||||||
| Gas (mcf) | $ | 7.55 | $ | 8.06 | $ | 7.56 | $ | 6.73 | $ | 6.69 | $ | 6.73 | ||||||||||||
| Equivalents (mcfe) (b) | $ | 7.92 | $ | 7.56 | $ | 7.93 | $ | 6.87 | $ | 6.76 | $ | 6.87 | ||||||||||||
| Direct Operating Costs per mcfe (d) | ||||||||||||||||||||||||
| Field expenses | $ | 0.85 | $ | 1.78 | $ | 0.86 | $ | 0.78 | $ | 1.39 | $ | 0.81 | ||||||||||||
| Workovers | $ | 0.06 | $ | 0.31 | $ | 0.06 | $ | 0.03 | $ | 0.49 | $ | 0.06 | ||||||||||||
| Total operating costs | $ | 0.91 | $ | 2.09 | $ | 0.92 | $ | 0.81 | $ | 1.88 | $ | 0.87 | ||||||||||||
(a) See separate oil and gas sales information table. (b) Oil and natural gas liquids are converted to gas equivalents on a basis of six mcf per barrel. (c) Average prices, including cash-settled derivatives. (d) Excludes non-cash stock compensation. | ||||||||||||||||||||||||
RANGE RESOURCES CORPORATION | ||||||||
| BALANCE SHEETS (Unaudited, in thousands) | ||||||||
September 30, 2007 | December 31, 2006 | |||||||
| Assets | ||||||||
| Current assets | $ | 158,907 | $ | 137,872 | ||||
| Current unrealized derivative gain | 72,153 | 93,588 | ||||||
| Assets held for sale | - | 79,304 | ||||||
| Assets of discontinued operation | - | 78,161 | ||||||
| Oil and gas properties | 3,362,024 | 2,608,088 | ||||||
| Transportation and field assets | 58,679 | 47,143 | ||||||
Unrealized derivative gain | 10,590 | 61,068 | ||||||
| Other | 186,073 | 82,450 | ||||||
| $ | 3,848,426 | $ | 3,187,674 | |||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities | $ | 235,059 | $ | 214,878 | ||||
| Liabilities of discontinued operation | - | 28,333 | ||||||
| Current asset retirement obligation | 1,251 | 3,853 | ||||||
| Current unrealized derivative loss | 7,657 | 4,621 | ||||||
| Bank debt | 266,000 | 452,000 | ||||||
| Subordinated notes | 847,062 | 596,782 | ||||||
| Total long-term debt | 1,113,062 | 1,048,782 | ||||||
| Deferred taxes | 562,703 | 468,643 | ||||||
| Unrealized derivative loss | 4,967 | 266 | ||||||
| Deferred compensation liability | 133,962 | 90,094 | ||||||
| Long-term asset retirement obligation | 80,953 | 72,043 | ||||||
| Common stock and retained earnings | 1,737,404 | 1,241,696 | ||||||
| Stock in deferred compensation plan and treasury | (41,566 | ) | (22,056 | ) | ||||
| Other comprehensive income | 12,974 | 36,521 | ||||||
Total stockholders’ equity | 1,708,812 | 1,256,161 | ||||||
| $ | 3,848,426 | $ | 3,187,674 | |||||
RANGE RESOURCES CORPORATION | ||||||||||||||||
| CASH FLOWS FROM OPERATIONS | ||||||||||||||||
| (Unaudited, in thousands) | Three Months Ended September 30, |
Nine Months Ended
September 30, | ||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| Net income | $ | 58,915 | $ | 51,330 | $ | 196,258 | $ | 158,275 | ||||||||
|
Adjustments to reconcile net income to
net cash provided by operations: | ||||||||||||||||
| Gain from discontinued operations | 196 | 13,728 | (63,593 | ) | 9,872 | |||||||||||
| Gain from equity investment | (484 | ) | 98 | (1,280 | ) | 61 | ||||||||||
| Deferred income tax (benefit) | 34,802 | 38,707 | 73,698 | 99,533 | ||||||||||||
| Depletion, depreciation and amortization | 57,001 | 40,606 | 155,798 | 106,252 | ||||||||||||
| Exploration dry hole costs | 174 | 5,566 | 9,072 | 9,291 | ||||||||||||
| Change in mark-to-market on unrealized derivatives | (5,618 | ) | (54,950 | ) | 40,171 | (83,734 | ) | |||||||||
| Ineffective hedging (gain) loss | 28 | (184 | ) | (502 | ) | (3,178 | ) | |||||||||
| Amortization of deferred issuance costs | 591 | 376 | 1,667 | 1,221 | ||||||||||||
| Non-cash compensation | 14,081 | 2,085 | 46,770 | 13,839 | ||||||||||||
| (Gain) loss on sale of assets and other | 2,128 | 86 | 2,247 | 1,009 | ||||||||||||
| Changes in working capital: | ||||||||||||||||
| Accounts receivable | (2,416 | ) | (8,975 | ) | (29,595 | ) | 29,323 | |||||||||
| Inventory and other | (1,932 | ) | (49 | ) | (1,672 | ) | (1,911 | ) | ||||||||
| Accounts payable | 20,081 | (12,285 | ) | 11,597 | (17,801 | ) | ||||||||||
| Accrued liabilities | 1,509 | 2,761 | 4,894 | (2,387 | ) | |||||||||||
| Net changes in working capital | 17,242 | (18,548 | ) | (14,776 | ) | 7,224 | ||||||||||
| Net cash provided from continuing operations | $ | 179,056 | $ | 78,900 | $ | 445,530 | $ | 319,665 | ||||||||
| RECONCILIATION OF CASH FLOWS | ||||||||||||||||
| (In thousands) |
Three Months Ended
September 30, |
Nine Months Ended
September 30, | ||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
Net cash provided from continuing operations, as reported | $ | 179,056 | $ | 78,900 | $ | 445,530 | $ | 319,665 | ||||||||
| Net change in working capital | (17,242 | ) | 18,548 | 14,776 | (7,224 | ) | ||||||||||
| Exploration expense | 5,128 | 10,185 | 18,007 | 21,706 | ||||||||||||
| Cash flow from Gulf of Mexico properties | - | 6,189 | 6,829 | 18,176 | ||||||||||||
| Other | (1,738 | ) | 212 | (1,465 | ) | (1,293 | ) | |||||||||
| Cash flow from operations before changes in working capital, non-GAAP measure | $ | 165,204 | $ | 114,034 | $ | 483,677 | $ | 351,030 | ||||||||
| ADJUSTED WEIGHTED AVERAGE SHARES OUTSTANDING | ||||||||||||||||
| (Unaudited, in thousands) |
Three Months Ended
September 30, |
Nine Months Ended
September 30, | ||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| Basic: | ||||||||||||||||
| Weighted average shares outstanding | 148,586 | 138,318 | 144,706 | 133,767 | ||||||||||||
| Stock held by deferred compensation plan | (1,404 | ) | (1,335 | ) | (1,198 | ) | (1,341 | ) | ||||||||
| 147,182 | 136,983 | 143,508 | 132,426 | |||||||||||||
| Dilutive: | ||||||||||||||||
| Weighted average shares outstanding | 148,586 | 138,318 | 144,706 | 133,767 | ||||||||||||
| Dilutive stock options under treasury method | 3,805 | 3,704 | 3,991 | 3,699 | ||||||||||||
| 152,391 | 142,022 | 148,697 | 137,466 | |||||||||||||
RANGE RESOURCES CORPORATION | ||||||||||||||||||||||
| Oil and gas sales information: | ||||||||||||||||||||||
(Unaudited, in thousands, except per unit data) | ||||||||||||||||||||||
Based upon Statements of Income Including | ||||||||||||||||||||||
Three Months Ended |
Nine Months Ended | |||||||||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||||||||
| Oil and gas sales components: | ||||||||||||||||||||||
| Oil sales | $ | 59,218 | $ | 51,961 | $ | 163,280 | $ | 149,820 | ||||||||||||||
| NGL sales | 12,259 | 10,942 | 31,791 | 29,012 | ||||||||||||||||||
| Gas sales | 138,832 | 123,254 | 422,435 | 374,361 | ||||||||||||||||||
Cash-settled hedges (effective): | ||||||||||||||||||||||
| Crude oil | (5,120 | ) | (14,931 | ) | (7,068 | ) | (39,928 | ) | ||||||||||||||
| Natural gas | 9,235 | (8,935 | ) | 21,136 | (42,840 | ) | ||||||||||||||||
| Total oil and gas sales, as reported | $ | 214,424 | $ | 162,291 | 32 | % | $ | 631,574 | $ | 470,425 | 34 | % | ||||||||||
| Derivative fair value income (loss) components: | ||||||||||||||||||||||
Cash-settled derivatives (ineffective): | ||||||||||||||||||||||
| Crude oil | $ | (33 | ) | $ | - | $ | (29 | ) | $ | - | ||||||||||||
| Natural gas | 19,417 | 10,356 | 50,818 | 36,180 | ||||||||||||||||||
| Change in mark-to-market on unrealized derivatives | 5,618 | 54,950 | (40,171 | ) | 83,734 | |||||||||||||||||
| Total derivative fair value income, as reported | $ | 25,002 | $ | 65,306 | $ | 10,618 | $ | 119,914 | ||||||||||||||
| Oil and gas sales, including cash-settled derivatives: | ||||||||||||||||||||||
| Oil sales | $ | 54,065 | $ | 37,030 | $ | 156,183 | $ | 109,892 | ||||||||||||||
| NGL sales | 12,259 | 10,942 | 31,791 | 29,012 | ||||||||||||||||||
| Gas sales | 167,484 | 124,675 | 494,389 | 367,701 | ||||||||||||||||||
| Total | $ | 233,808 | $ | 172,647 | 35 | % | $ | 682,363 | $ | 506,605 | 35 | % | ||||||||||
| Production of oil and gas during the periods: | ||||||||||||||||||||||
| Oil (bbl) | 839,863 | 803,224 | 5 | % | 2,598,858 | 2,355,348 | 10 | % | ||||||||||||||
| NGL (bbl) | 284,088 | 277,161 | 2 | % | 837,625 | 831,814 | 1 | % | ||||||||||||||
| Gas (mcf) | 23,261,704 | 20,128,662 | 16 | % | 65,423,001 | 54,650,369 | 20 | % | ||||||||||||||
Gas equivalent (mcfe) (a) | 30,005,410 | 26,610,972 | 13 | % | 86,041,899 | 73,773,341 | 17 | % | ||||||||||||||
Average prices realized, including cash-settled hedges and derivatives: | ||||||||||||||||||||||
| Crude oil (per bbl) | $ | 64.37 | $ | 46.10 | 40 | % | $ | 60.10 | $ | 46.66 | 29 | % | ||||||||||
| NGL (per bbl) | $ | 43.15 | $ | 39.48 | 9 | % | $ | 37.95 | $ | 34.88 | 9 | % | ||||||||||
Natural gas (per mcf) | $ | 7.20 | $ | 6.19 | 16 | % | $ | 7.56 | $ | 6.73 | 12 | % | ||||||||||
| Equivalent (per mcfe) (a) | $ | 7.79 | $ | 6.49 | 20 | % | $ | 7.93 | $ | 6.87 | 15 | % | ||||||||||
(a) Oil and natural gas liquids are converted to gas equivalents on a basis of six mcf per barrel. | ||||||||||||||||||||||
RANGE RESOURCES CORPORATION | ||||||||||||||||||||||
Reconciliation of income from continuing operations before income taxes as reported to income from continuing operations before income taxes excluding certain non-cash items, a non-GAAP measure | ||||||||||||||||||||||
(Unaudited, in thousands, except per share data) | ||||||||||||||||||||||
|
Three Months Ended
September 30, |
Nine Months Ended
September 30, | |||||||||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||||||||
| As reported | $ | 94,046 | $ | 104,380 | -10 | % | $ | 206,779 | $ | 269,495 | -23 | % | ||||||||||
| Adjustment for certain non-cash items | ||||||||||||||||||||||
| (Gain) loss on sale of properties | (2 | ) | (93 | ) | (22 | ) | 155 | |||||||||||||||
| Gulf of Mexico – discontinued operations | - | 548 | 3,399 | 5,611 | ||||||||||||||||||
| Change in mark-to-market on unrealized derivatives | (5,618 | ) | (54,950 | ) | 40,171 | (83,734 | ) | |||||||||||||||
| Ineffective hedging (gain) loss | 28 | (184 | ) | (502 | ) | (3,490 | ) | |||||||||||||||
| Amortization of ineffective interest hedges | - | - | - | 311 | ||||||||||||||||||
| Transportation and gathering – non-cash stock compensation | 103 | 86 | 297 | 237 | ||||||||||||||||||
| Direct operating – non-cash stock compensation | 485 | 378 | 1,353 | 1,029 | ||||||||||||||||||
| Exploration expenses – non-cash stock compensation | 931 | 757 | 2,589 | 2,196 | ||||||||||||||||||
| General & administrative – non-cash stock compensation | 4,709 | 3,910 | 13,713 | 10,347 | ||||||||||||||||||
| Deferred compensation plan – non-cash stock compensation | 7,761 | (2,638 | ) | 28,342 | (347 | ) | ||||||||||||||||
| As adjusted | 102,443 | 52,194 | 96 | % | 296,119 | 201,810 | 47 | % | ||||||||||||||
| Income taxes, adjusted | ||||||||||||||||||||||
| Current | 133 | 615 | 416 | 1,815 | ||||||||||||||||||
| Deferred | 37,875 | 19,440 | 104,049 | 74,452 | ||||||||||||||||||
| Net income excluding certain items, a non-GAAP measure | $ | 64,435 | $ | 32,139 | 100 | % | $ | 191,654 | $ | 125,543 | 53 | % | ||||||||||
| Non-GAAP earnings per share | ||||||||||||||||||||||
Basic | $ | 0.44 | $ | 0.23 | 91 | % | $ | 1.34 | $ | 0.95 | 41 | % | ||||||||||
| Diluted | $ | 0.42 | $ | 0.23 | 83 | % | $ | 1.29 | $ | 0.91 | 42 | % | ||||||||||
| HEDGING POSITION | ||||||||||
As of October 24, 2007 (Unaudited) | ||||||||||
| Gas | Oil | |||||||||
| Volume | Average | Volume | Average | |||||||
| Hedged | Hedge | Hedged | Hedge | |||||||
| (Mmbtu/d) | Prices | (Bbl/d) | Prices | |||||||
4Q 2007 | Swaps | 107,500 | $9.49 | - | - | |||||
4Q 2007 | Collars | 98,500 | $7.12 - $9.93 | 8,300 | $57.69 - $68.98 | |||||
Calendar 2008 | Swaps | 155,000 | $8.97 | - | - | |||||
Calendar 2008 | Collars | 55,000 | $7.93 - $11.39 | 9,000 | $59.34 - $75.48 | |||||
Calendar 2009 | Swaps | 40,000 | $8.24 | - | - | |||||
Calendar 2009 | Collars | 60,000 | $8.07 - $8.70 | 8,000 | $64.01 - $76.00 | |||||
Note: Details as to the Company’s hedges are posted on its website and are updated periodically. | ||||||||||
Contacts:
Rodney Waller, Sr. Vice
President, 817-869-4258
or
David Amend, IR
Manager, 817-869-4266
or
Karen Giles, Sr. IR
Specialist, 817-869-4238
or
Main number: 817-870-2601
www.rangeresources.com
