Range Resources(RRC) - 2024 Q2 - Quarterly Results

Second Quarter 2024 Results Overview Range Resources delivered strong Q2 2024 results, demonstrating financial resilience and operational efficiency despite challenging commodity prices Financial and Operational Highlights Range Resources achieved resilient Q2 2024 results, generating free cash flow and strengthening its balance sheet despite low natural gas prices - CEO Dennis Degner highlighted the company's resilience, delivering free cash flow through efficient operations, strong well performance, and thoughtful hedging, despite low natural gas prices. The company is positioned for long-term competitive free cash flow generation[4] Q2 2024 Key Metrics | Metric | Value | | :--- | :--- | | Cash flow from operating activities | $149 million | | Cash flow from operations (before working capital) | $237 million | | Capital spending | $175 million | | Production | 2.15 Bcfe per day | | Senior notes repurchased (face value) | ~$48 million | | Shares repurchased | 600,000 shares | Financial Performance Range reported Q2 2024 GAAP net income of $29 million and non-GAAP adjusted net income of $111 million Q2 2024 Financial Results (GAAP vs. Non-GAAP) | Metric | GAAP Amount | Non-GAAP Amount | | :--- | :--- | :--- | | Revenues | $530 million | $641 million | | Net Cash from Operating Activities | $149 million | N/A | | Cash Flow from Operations (before working capital) | N/A | $237 million | | Net Income | $29 million | $111 million | | Diluted EPS | $0.12 | $0.46 | - Earnings for the second quarter included a $17 million mark-to-market derivative gain resulting from decreases in commodity prices[6] Operational Performance Q2 2024 production averaged 2.15 Bcfe per day, with total cash unit costs decreasing to $1.88 per mcfe Q2 2024 Production and Realized Pricing | Category | Production (per day) | Realized Price (after hedges) | | :--- | :--- | :--- | | Natural Gas | 1,495,594 mcf/day | $2.47 per mcf | | NGLs | 103,042 bbls/day | $24.56 per bbl | | Oil | 6,517 bbls/day | $68.12 per bbl | | Total Equivalent | 2,152,946 mcfe/day | $3.10 per mcfe | Unit Cost Comparison (per mcfe) | Expense Category | Q2 2024 ($/mcfe) | Q2 2023 ($/mcfe) | Change (%) | | :--- | :--- | :--- | :--- | | Direct operating | $0.11 | $0.13 | (15%) | | Transportation, gathering, processing & compression | $1.44 | $1.42 | 1% | | Interest expense | $0.14 | $0.16 | (13%) | | Total cash unit costs | $1.88 | $1.90 | (1%) | | Total unit costs plus DD&A | $2.33 | $2.35 | (1%) | - Pre-hedge NGL realizations were $24.35 per barrel, a premium of $1.26 over the Mont Belvieu equivalent. Natural gas differentials, including basis hedging, averaged ($0.41) per mcf to NYMEX[8][12] Financial Position and Capital Management Range Resources maintained a strong financial position in Q2 2024 through strategic debt reduction, share repurchases, and disciplined capital spending Balance Sheet and Debt Reduction As of June 30, 2024, Range's net debt was approximately $1.47 billion, bolstered by strategic senior note repurchases - As of June 30, 2024, net debt was approximately $1.47 billion, composed of $1.72 billion in senior notes and $251 million in cash[13] - In Q2, the company repurchased $47.9 million principal amount of its 4.875% senior notes due 2025 at a discount in the open market[13] Shareholder Returns Range repurchased 600,000 shares in Q2, with approximately $1.1 billion remaining under its share repurchase program - During Q2, Range repurchased 600,000 shares at an average price of approximately $33.42[14] - The company has approximately $1.1 billion of availability remaining under its share repurchase program[14] Capital Expenditures and Operations Q2 capital expenditures totaled $175 million, with 26 wells turned to sales in 1H 2024 and 23 planned for 2H - Q2 2024 drilling and completion expenditures were $162 million, with an additional $14 million invested in acreage. First half capital spending represents about 53% of the total 2024 budget[15] 2024 Wells Turned-in-Line (TIL) Plan | Area | 1H 2024 TIL (wells) | Remaining 2024 TIL (wells) | Total 2024 Planned TIL (wells) | | :--- | :--- | :--- | :--- | | SW PA Super-Rich | 9 | 0 | 9 | | SW PA Wet | 17 | 10 | 27 | | SW PA Dry | 0 | 11 | 11 | | NE PA Dry | 0 | 2 | 2 | | Total Wells | 26 | 23 | 49 | 2024 Outlook and Guidance Range Resources provides updated 2024 guidance, maintaining capital budget while raising production and NGL price expectations due to strong performance Capital and Production Guidance Range maintains its 2024 capital budget of $620-$670 million, with annual production expected near the high end of guidance - The 2024 all-in capital budget remains $620 million - $670 million[18] - Annual production is now expected to be near the high end of the 2.12 – 2.16 Bcfe per day guidance range, with liquids production comprising over 30%[18] Updated Expense and Price Guidance Range updated its full-year 2024 expense and price differential guidance, improving NGL price expectations due to outperformance Updated Full Year 2024 Expense Guidance (per mcfe) | Expense Category | Guidance Range ($/mcfe) | | :--- | :--- | | Direct operating | $0.11 - $0.13 | | Transportation, gathering, processing & compression | $1.45 - $1.55 | | G&A expense | $0.17 - $0.18 | | Net interest expense | $0.13 - $0.14 | | DD&A expense | $0.45 - $0.46 | Updated Full Year 2024 Price Differential Guidance | Commodity | Guidance (vs. Benchmark) | | :--- | :--- | | Natural Gas | NYMEX minus $0.40 to $0.45 | | NGLs | Mont Belvieu plus $0.75 to $1.50 per barrel | | Oil/Condensate | WTI minus $10.00 to $13.00 | Hedging Status Range utilizes hedging for cash flow predictability, with natural gas basis hedges showing a $13.9 million net gain as of June 30, 2024 - The company hedges future production to increase cash flow predictability and maintain a strong financial position[23] - As of June 30, 2024, the fair value of natural gas basis hedges was a net gain of $13.9 million[24] Financial Statements and Reconciliations This section presents Range Resources' Q2 2024 financial statements and reconciliations, detailing income, balance sheet, and cash flow Statement of Income Q2 2024 revenues totaled $530.0 million, resulting in a net income of $28.7 million, or $0.12 per diluted share Q2 2024 vs Q2 2023 Income Statement Highlights (in thousands) | Metric | Q2 2024 ($ thousands) | Q2 2023 ($ thousands) | | :--- | :--- | :--- | | Total revenues and other income | $530,043 | $636,977 | | Total costs and expenses | $520,033 | $592,034 | | Income before income taxes | $10,010 | $44,943 | | Net income | $28,704 | $30,231 | Balance Sheet As of June 30, 2024, Range reported total assets of $7.27 billion and total stockholders' equity of $3.86 billion Balance Sheet Summary (in thousands) | Category | June 30, 2024 ($ thousands) | Dec 31, 2023 ($ thousands) | | :--- | :--- | :--- | | Total Assets | $7,266,223 | $7,203,885 | | Total Current Liabilities | $1,232,772 | $580,469 | | Total Debt | $1,088,655 | $1,774,229 | | Total Liabilities | $3,405,195 | $3,438,334 | | Total Stockholders' Equity | $3,861,028 | $3,765,551 | Cash Flow Statement Q2 2024 net cash from operating activities was $148.8 million, with non-GAAP cash flow from operations at $236.9 million Q2 2024 vs Q2 2023 Cash Flow Highlights (in thousands) | Metric | Q2 2024 ($ thousands) | Q2 2023 ($ thousands) | | :--- | :--- | :--- | | Net income | $28,704 | $30,231 | | Net cash provided from operating activities | $148,775 | $126,589 | | Cash flow from operations before working capital (Non-GAAP) | $236,902 | $187,004 | Non-GAAP Reconciliations Detailed non-GAAP reconciliations are provided, with Q2 2024 adjusted net income reaching $110.9 million, a 55% increase - The company provides non-GAAP measures like adjusted net income and adjusted cash flow to help investors evaluate operational trends and performance relative to peers, as these are commonly used by analysts[26][28] Reconciliation of Net Income (in thousands) | Metric | Q2 2024 ($ thousands) | Q2 2023 ($ thousands) | | :--- | :--- | :--- | | Net income, as reported (GAAP) | $28,704 | $30,231 | | Net income, excluding certain items (Non-GAAP) | $110,903 | $71,760 | Reconciliation of Cash Margin (per mcfe) | Metric | Q2 2024 ($/mcfe) | Q2 2023 ($/mcfe) | | :--- | :--- | :--- | | Cash margin, a non-GAAP measure | $1.22 | $0.99 |