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A month has gone by since the last earnings report for Range Resources (RRC). Shares have lost about 2.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Range Resources due for a breakout? 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 drivers.
Range Resources’ Q2 Earnings Top Estimates, Revenues Lag
Range Resources Corporation posted second-quarter 2020 adjusted loss of 10 cents per share, narrower than the Zacks Consensus Estimate of a loss of 17 cents. In the year-ago quarter, the company reported profit of 2 cents per share.
In the second quarter, total revenues amounted to $377 million, missing the Zacks Consensus Estimate of $457 million. Moreover, the top line deteriorated from the prior-year quarter’s $851 million.
The narrower-than-expected loss was supported by higher natural gas equivalent production volumes and decreased direct operating expenses. This was partially offset by lower price realizations of commodities.
During the second quarter, the company’s production averaged 2,348.9 million cubic feet equivalent per day (MMcfe/d), up 3% from the prior-year period. Natural gas contributed 70.7% to total production, while natural gas liquids (NGLs) and oil accounted for the remaining.
Oil and NGL production fell 27% and 1%, respectively, on a year-over-year basis. However, natural gas production increased 6% from the prior-year quarter.
Its total price realization (including derivative settlements and after third-party transportation costs) averaged 89 cents per thousand cubic feet equivalent (Mcfe), down 38% year over year.
Natural gas price declined 27% on a year-over-year basis to 91 cents per Mcf and NGL prices dropped 69%, while oil prices fell 14%.
Total exploration cost declined marginally 0.9% year over year to $7.7 million. Moreover, on a unit basis, transportation, gathering, processing and compression expenses were recorded at $1.30 per Mcfe, lower than $1.45 in the prior-year quarter. Also, direct operating costs contracted to 11 cents per Mcfe from the year-ago figure of 16 cents.
Share Repurchase & Capital Expenditure
In the second quarter, the company bought back 200,000 shares at an average price of $2.22.
The company’s drilling and completion expenditures totaled $99 million in the reported quarter. At the end of the second quarter, it had total debt of $3,165.1 million, with a debt-to-capitalization of 57.5%.
For 2020, Range Resources expects production volumes of 2.3 billion cubic feet equivalent per day (Bcfe/D), which indicates no change from 2019 production volume. The company expects 2020 capital expenditure to be $430 million or lower, suggesting a decline from $728 million in 2019.
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 80.5% due to these changes.
Currently, Range Resources has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. 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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