Range Resources (RRC) Q2 Earnings Top on Lower Total Costs
Range Resources Corporation RRC reported second-quarter 2023 adjusted earnings of 27 cents per share, which beat the Zacks Consensus Estimate of 17 cents. However, the bottom line declined from the prior-year quarter’s level of $1.23.
Total quarterly revenues of $586 million beat the Zacks Consensus Estimate of $584 million. The top line, however, declined from the prior-year quarter’s $1057 million.
Better-than-expected quarterly results were driven by lower total costs and expenses. However, lower realizations of commodity prices partially offset the positives.
Range Resources Corporation Price, Consensus and EPS Surprise
Range Resources Corporation price-consensus-eps-surprise-chart | Range Resources Corporation Quote
Operational Performance
The company’s production averaged 2,080.8 million cubic feet equivalent per day (Mcfe/d) in the reported quarter, up 0.3% from the prior-year period’s level. The figure beat our estimated total production of 2070.4 Mcfe/d. Natural gas accounted for 68.3% of total production, while NGLs and oil contributed to the rest.
Oil production declined 8% year over year, while NGL output increased 6%. Natural gas production decreased 2%.
Its total price realization (excluding derivative settlements and before third-party transportation costs) averaged $2.47 Mcfe, down 66% year over year. Notably, price realization was even lower than our estimate of $2.91 Mcfe. Natural gas prices declined 75% on a year-over-year basis to $1.74 per Mcf. NGL prices declined 50%, while oil prices fell 36%.
Costs & Expenses
Total costs and expenses declined to $592 million from $668.9 million in the year-ago quarter. Transportation, gathering, processing and compression costs, which form a major part of the total costs, came down to $268.2 million from $320.4 million in the prior-year period.
Capital Expenditure & Balance Sheet
The company’s drilling and completion expenditure amounted to $166 million in the reported quarter. An amount of $9 million was used in acreage and gathering facilities.
It had a total debt of $1,772.6 million at the end of the quarter.
Outlook
For 2023, Range Resources reiterated its total production of 2.12-2.16 billion cubic feet equivalent per day, with 30% attributed to liquid production.
RRC projected a capital budget of $570-$615 million for the year. Direct operating expenses are estimated to be in the range of 11-13 cents per Mcfe, while exploration expenses are projected in the band of $22-$28 million.
Zacks Rank & Stocks to Consider
Range Resources currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy space are Evolution Petroleum Corporation EPM, Murphy USA Inc. MUSA and MPLX LP MPLX. While EPM sports a Zacks Rank #1 (Strong Buy), both MUSA and MPLX carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Through its ownership interests in onshore oil and natural gas properties in the United States, Evolution Petroleum is touted as a key independent energy player.
Murphy USA serves 1.6 million customers daily and owns a dedicated line space on the Colonial Pipeline. MUSA operates stations close to Walmart supercenters and is a low-cost, high-volume fuel seller. This enables the company to attract significantly more transactions than its peers.
MPLX generates stable fee-based revenues from diverse midstream energy assets via long-term contracts and is least exposed to commodity price fluctuations. The partnership is well positioned to capitalize on the growing demand for fresh midstream assets in order to support increasing volumes of crude oil, natural gas and NGLs in the prolific shale plays in the United States.
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