Range Resources (RRC) Q4 Earnings Beat Estimates, Fall Y/Y
Upstream energy company Range Resources Corporation RRC reported better-than-expected fourth-quarter 2016 earnings owing to significantly low expenses and increased production. This was partially offset by lower oil and gas prices realizations.
The company’s adjusted profit of 23 cents a share surpassed than the Zacks Consensus Estimate of earnings of 10 cents. The bottom line, however, came in below the year-ago quarter figure of 25 cents a share.
Total revenue of $253.5 million missed the Zacks Consensus Estimate of $532 million and also declined 38% year over year from $410.7 million.
Operational Performance
The company’s fourth-quarter production averaged almost 1,854.2 million cubic feet equivalent per day (MMcfe/d). Natural gas made up for 67% of the total production, while natural gas liquids (NGLs) and oil accounted for the remaining 33%. Total production volume improved 29% from the year-earlier quarter due to the company’s highly successful drilling program.
On a year-over-year basis, oil production increased 23%, while NGL rose 68%. Moreover, natural gas production increased 18% year over year.
The company’s total price realization (including the effects of hedges and derivative settlements) averaged $2.23 per Mcfe, down 6% year over year. Of this, NGL prices surged 43% to $11.20 per barrel, whereas crude oil prices plunged 23% to $61.30 per barrel and natural gas prices were down 8% to $1.93 per Mcf, all on a year-over-year basis.
Expenses
Total fourth-quarter 2016 expense was $509.8 million, down 43% year over year.
Financials
At the end of the quarter, the company had long-term debt of approximately $3,773.5 million with a debt-to-capitalization ratio of 41.1%. The company incurred drilling expenditures of $195 million in the fourth quarter to drill 22 wells.
Fourth-Quarter Price Performance
During the October–December quarter of 2016, Range Resources underperformed the Zacks categorized Oil & Gas-U.S Exploration & Production industry. During the aforesaid period, the company’s shares lost 12.2% compared with the broader industry’s gain of 0.6%.
Reserves
As of Dec 31, 2016, Range Resources had total proved reserves of 12,072 billion cubic feet equivalent (Bcfe), significantly higher than 9,892 Bcfe at the end of Dec 31, 2015.
Guidance
For the first quarter of 2017, the company estimates production of 1.92 billion cubic feet equivalent (Bcfe) per day, with liquid comprising 30–32%.
For 2017, the company has set its production guidance at 2.07 Bcfe per day, which equates to an annual growth rate of 33–35%.
The company also projects 2017 capital budget to be $1.15 billion. It is to be noted that almost 67% of the budget will be allocated for the Marcellus region, while the remaining will be spent for North Louisiana.
Zacks Rank & Other Stocks to Consider
Currently, Range Resources sports a Zacks Rank #1 (Strong Buy). Other energy stocks that warrant a look include Ultra Petroleum Corp. UPLMQ, Cheniere Energy Inc. LNG and W&T Offshore Inc. WTI. While Ultra Petroleum sports a Zacks Rank #1, Cheniere Energy and W&T Offshore carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ultra Petroleum is expected to report revenue growth of 57.7% in 2017.
In 2017, Cheniere Energy is likely to report year-over-year growth of almost 287.5% and 76.9% in revenues and earnings, respectively.
W&T Offshore reported a positive earnings surprise in each of the last four quarters with an average beat of 31.49%.
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Range Resources Corporation (RRC): Free Stock Analysis Report
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