Range Resources Corporation Earnings: Reversing to a Loss Following Two Consecutive Quarters of Profit

The Cheat Sheet

S&P 500 component Range Resources Corporation’s fourth quarter loss narrowed due mainly to positive revenue growth. Range Resources is an independent natural gas company that primarily explores and develops gas properties in the Southwestern and Appalachian regions of the United States.

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Range Resources Earnings Cheat Sheet for the Fourth Quarter

Results: Loss narrowed to $3 million (loss of 2 cents per diluted share) from $317.7 million (loss of $2.02 per share) in the same quarter a year earlier.

Revenue: Rose 33.9% to $300.1 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Range Resources Corporation reported adjusted net income of 33 cents per share. By that measure, the company beat the mean estimate of 18 cents per share. It fell short of the average revenue estimate of $314.9 million.

Quoting Management: Commenting, Jeff Ventura, the Company`s President and CEO, said, “Range had an outstanding 2011. Despite selling the Barnett properties which at the time, contributed over 20% of our production and resources, we again achieved double-digit per share (debt-adjusted) growth in production and reserves. Our growth was achieved at very low all-in finding cost of $0.89 per mcfe. This represents our sixth consecutive year of double-digit per share (debt-adjusted) growth in production and reserves. Consistent growth at low cost is directly related to the quality of our drilling inventory. We also are very pleased with our ability to continue to drive down our unit costs. In particular, the 38% year-over-year decrease in fourth quarter lease operating costs per mcfe is a significant achievement and reflects not only the low-cost nature of our properties but the “growth at low cost” focus of the entire Range team. Looking forward to 2012, we are in excellent position to continue to drive up per share value. The Barnett sale significantly strengthened our balance sheet, providing us $1.3 billion of liquidity at year-end 2011. Our excellent hedge position has approximately 75% of our 2012 natural gas production locked in at a floor price nearly 50% above the current market. Most importantly, we have a drilling inventory that generates attractive returns even in the current low natural gas price environment. Lastly, we have an extraordinary team of people focused on consistently delivering on our strategy of “growth at low cost”.”

Key Stats:

The company has now surpassed analyst estimates for four quarters in a row. It beat the mark by 4 cents in the third quarter, by 15 cents in the second quarter, and by 17 cents in the first quarter.

The company’s loss in the latest quarter follows profits in the previous two quarters. The company reported a profit of $34.8 million in the third quarter and a profit of $51.3 million in the second quarter.

Looking Forward: Expectations for the company’s next-quarter results are lower than they have been. Over the past sixty days, the average estimate for first quarter of the next fiscal year has fallen from 19 cents per share to 16 cents. The average estimate for the fiscal year is 54 cents per share, falling from 59 cents thirty days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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