Range Resources (RRC) Q3 Earnings Top on Lower Total Costs
Range Resources Corporation RRC reported third-quarter 2023 adjusted earnings of 46 cents per share, which beat the Zacks Consensus Estimate of 27 cents. However, the bottom line declined from the prior-year quarter’s level of $1.37.
Total quarterly revenues of $649 million beat the Zacks Consensus Estimate of $619 million. The top line, however, declined from the prior-year quarter’s figure of $1104 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 2,123 million cubic feet equivalent per day (Mcfe/d) in the reported quarter, down 0.4% from the prior-year period’s level. However, the figure beat our estimated total production of 2110.7 Mcfe/d. Natural gas accounted for 68.3% of total production, while NGLs and oil contributed to the rest.
Oil production declined 10% year over year, while NGL output increased 6%. Natural gas production decreased 3%.
Total price realization (excluding derivative settlements and before third-party transportation costs) averaged $2.7 Mcfe, down 63% year over year. Notably, price realization was even lower than our estimate of $2.98 Mcfe. Natural gas prices declined 76% on a year-over-year basis to $1.85 per Mcf. NGL prices declined 31%, while oil prices fell 17%.
Costs & Expenses
Total costs and expenses declined to $544.6 million from $677.8 million recorded in the year-ago quarter. The reported figure came in lower than our expectation of $615.8 million. Transportation, gathering, processing and compression costs, which form a major part of the total costs, came down to $277.2 million from $323 million in the prior-year period.
Capital Expenditure & Balance Sheet
The company’s drilling and completion expenditure amounted to $146 million in the reported quarter. An amount of $5 million was used in acreage and gathering facilities.
RRC had a total debt of $1,773.4 million at the end of the reported quarter.
Outlook
Range Resources reiterated its projection for 2023 total production in the range of 2.12-2.16 billion cubic feet equivalent per day, with 30% attributed to liquid production.
RRC estimated a capital budget of $570-$615 million for the year. Direct operating expenses are estimated in the range of 11-13 cents per Mcfe, while exploration expenses are projected in the band of $22-$28 million.
Zacks Rank & Other Stocks to Consider
Range Resources currently carries a Zacks Rank #2 (Buy).
Some other top-ranked players in the energy sector are APA Corporation APA, currently sporting a Zacks Rank #1 (Strong Buy), and Pioneer Natural Resources Company PXD and Diamondback Energy Inc. FANG, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Houston, TX-based APA Corporation is one of the world's leading independent energy companies engaged in the exploration, development and production of natural gas, crude oil and natural gas liquids. APA boasts of a large geographically diversified reserve base with multi-year trends in reserve replacement. It has witnessed an upward earnings estimate revision for 2023 and 2024 in the past seven days.
APA’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 13.9%.
Pioneer Natural Resources is a leading upstream energy firm with primary operations in the Permian basin, which is among the lucrative oil shale plays in the United States with fewer risks. Its total holding of more than 1 million net acres in the Permian basin will support long-term oil production growth. PXD has witnessed an upward earnings estimate revision for 2023 in the past seven days.
PXD’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 4.34%.
Diamondback Energy is an independent oil and gas exploration and production company with its primary focus on the Permian Basin, where it has around 491,000 net acres. With an attractive production profile, favorable industry trends and FANG’s low breakeven economics, the margin of safety on investment is likely very high. The company has witnessed an upward earnings estimate revision for 2023 in the past seven days.
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