Range Resources (RRC) Up 4% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Range Resources (RRC). Shares have added about 4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Range Resources due for a pullback? 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 catalysts.
Range Resources Q4 Earnings Beat Estimates on Lower Costs
Range Resources Corporation reported fourth-quarter 2023 adjusted earnings of 63 cents per share, which beat the Zacks Consensus Estimate of 42 cents. However, the bottom line declined from the prior-year quarter’s level of $1.26.
Total quarterly revenues of $715 million beat the Zacks Consensus Estimate of $677 million. The top line, however, declined from the prior-year quarter’s figure of $998 million.
Better-than-expected quarterly results were driven by higher production and lower total costs and expenses. However, lower realizations of commodity prices partially offset the positives.
Operational Performance
The company’s production averaged 2,207 million cubic feet equivalent per day (Mcfe/d) in the reported quarter, up from 2,204 Mcfe/d reported in the prior-year period. The figure also beat our projection of 2139.2 Mcfe/d. Natural gas accounted for 69.8% of total production, while NGLs and oil contributed to the rest.
Oil production increased 7% year over year, while NGL output declined 3%. Natural gas production increased 2% during the same time frame.
Total price realization (excluding derivative settlements and before fourth-party transportation costs) averaged $2.97 Mcfe, down 45% year over year. Notably, price realization was on par with our estimate of $2.97 Mcfe. Natural gas prices declined 59% on a year-over-year basis to $2.26 per Mcf. NGL prices declined 8%, while oil prices fell 10%.
Costs & Expenses
Total costs and expenses declined to $554.4 million from $632.6 million in the year-ago quarter. The reported figure came in lower than our expectation of $644.5 million. Transportation, gathering, processing and compression costs, which form a major part of the total costs, came down to $283.1 million from $294.2 million in the prior-year period.
Capital Expenditure & Balance Sheet
The company’s drilling and completion expenditure amounted to $118.3 million in the reported quarter. An amount of $16.7 million was used in acreage and gathering facilities.
RRC had a total debt of $1,774.2 million at the end of the reported quarter.
Outlook
Range Resources projects 2024 total production in the range of 2.12-2.16 billion cubic feet equivalent per day, with 30% attributed to liquids production.
RRC estimated a capital budget of $620-$670 million for the year. Direct operating expenses are estimated to be in the range of 13-14 cents per Mcfe. Exploration expenses are projected to be in the band of $22-$28 million for fiscal 2024.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -12.18% due to these changes.
VGM Scores
Currently, Range Resources has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Range Resources has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Range Resources belongs to the Zacks Oil and Gas - Exploration and Production - United States industry. Another stock from the same industry, Viper Energy Partners (VNOM), has gained 3.3% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Viper Energy reported revenues of $204.71 million in the last reported quarter, representing a year-over-year change of +0.5%. EPS of $0.67 for the same period compares with $0.28 a year ago.
Viper Energy is expected to post earnings of $0.37 per share for the current quarter, representing a year-over-year change of -30.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -6.6%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Viper Energy. Also, the stock has a VGM Score of D.
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