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Range Resources (RRC) Q3 Earnings Beat on Record Production

Zacks Equity Research
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Factors Setting the Tone for Papa John (PZZA) Earnings in Q3

Papa John's (PZZA) higher costs, soft comps trend and a challenging sales environment are likely to reflect on third-quarter 2018 earnings.

Range Resources Corporation RRC recently reported third-quarter 2018 earnings (adjusted for one-time items) of 26 cents per share, beating the Zacks Consensus Estimate of 18 cents. The bottom line surged 420% from the year-ago quarter’s figure of 5 cents.

Earnings in third-quarter 2018 were boosted by increase in oil and gas equivalent production as well as price realizations, partially offset by higher expenses.

Total revenues of $811.2 million beat the Zacks Consensus Estimate of $721 million. Moreover, the top line surged 683% year over year from $482 million in the prior-year quarter.
 

Range Resources Corporation Price, Consensus and EPS Surprise

 

Range Resources Corporation Price, Consensus and EPS Surprise | Range Resources Corporation Quote

 

Operational Performance

Production

During the third quarter, the company’s production touched record level of around 2,266.7 million cubic feet equivalent per day (MMcfe/d). Natural gas contributed 67.5% to the total production, while natural gas liquids (NGLs) and oil accounted for the remaining 32.5%.

Total production improved 14% from the year-ago quarter’s tally and surpassed the Zacks Consensus Estimate of 2,220 MMcfe/d, primarily owing to improvement in the Appalachia division.

On a year-over-year basis, oil production declined 19%, while NGL production rose 15%. Natural gas production jumped 16% year over year.

Price Realization

The company’s total price realization (including the effects of hedges and derivative settlements) averaged $1.90 per thousand cubic feet equivalent (Mcfe), up 5% from the prior-year quarter’s figure. Of this, NGL prices surged 40% to $11.92 per barrel and crude oil prices rose 8% to $52.33 per barrel, both on a year-over-year basis. However, natural gas prices were down 2% year over year to $1.56 per Mcf.

Expenses

Direct operating costs in the third quarter was $30.4 million, down 16.4% from the year-ago quarter’s tally. Total expenses were $738.5 million, up 8% year over year.

Financials

At the end of the quarter, the company had a total debt of approximately $4,160.9 million, with a debt-to-capitalization ratio of 41.7%. The company’s expenditure totaled $191 million in the third quarter for drilling and completion of 24 net wells.    

Guidance

For the fourth quarter of 2018, the company projects production between 2,255-2,265 Mmcfe per day. Given this, the annual output is likely to rise 11%.

The upstream energy player reiterated 2018 capital budget of $941 million. The budget will be funded by the company’s cash flow.

Q3 Price Performance

During the quarter, Range Resources’ shares gained 1.6%, against the industry’s 3.5% decline.



 

Zacks Rank & Other Key Picks

Range Resources currently sports a Zacks Rank #1 (Strong Buy).

A few other top-ranked players in the same sector are Denbury Resources Inc DNR, Shell Midstream Partners, L.P SHLX and Eni SpA E. All these stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Denbury is an exploration and production (E&P) company engaged in the acquisition, development, operation, and exploration of oil and natural gas properties. It pulled off an average positive earnings surprise of 162.9% in the last four quarters.

Shell Midstream Partners is involved in owning, operating, developing and acquiring pipelines and other midstream assets. The partnership delivered an average positive earnings surprise of 7.9% in the trailing four quarters.

Based in Rome, Italy, Eni is among the leading integrated energy players in the world. The partnership reported a negative earnings surprise of 0.3% in the last four quarters.

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