Why Is Range Resources (RRC) Up 4.7% Since Last Earnings Report?
A month has gone by since the last earnings report for Range Resources (RRC). Shares have added about 4.7% 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 the most recent earnings report in order to get a better handle on the important drivers.
Range Resources Q2 Earnings Top on Lower Total Costs
Range Resources reported second-quarter 2023 adjusted earnings of 30 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.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted -9.61% due to these changes.
VGM Scores
At this time, Range Resources has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Range Resources has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Range Resources Corporation (RRC) : Free Stock Analysis Report
