Range Resources(US:RRC)2024-10-22 20:45PART I – FINANCIAL INFORMATION Financial Statements The unaudited consolidated financial statements detail the company's financial position, operations, and cash flows, showing asset growth and reduced net income Consolidated Balance Sheets The consolidated balance sheets reflect a slight increase in total assets to $7.24 billion, a decrease in total liabilities, and an increase in stockholders' equity Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2024 (Unaudited) | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $277,450 | $211,974 | | Total current assets | $655,541 | $870,124 | | Total assets | $7,241,303 | $7,203,885 | | Liabilities & Equity | | | | Total current liabilities | $1,223,904 | $583,086 | | Total liabilities | $3,373,216 | $3,438,334 | | Total stockholders' equity | $3,868,087 | $3,765,551 | | Total liabilities and stockholders' equity | $7,241,303 | $7,203,885 | Consolidated Statements of Income (Unaudited) Net income for Q3 2024 slightly increased, while the nine-month net income sharply declined to $171.5 million due to lower derivative income and reduced sales Income Statement Summary (in thousands, except per share data) | Metric | Q3 2024 | Q3 2023 | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Natural gas, NGLs and oil sales | $533,277 | $526,718 | $1,578,728 | $1,731,382 | | Total revenues and other income | $609,724 | $609,724 | $1,790,445 | $2,433,061 | | Net income | $50,656 | $49,430 | $171,498 | $561,108 | | Diluted EPS | $0.21 | $0.20 | $0.70 | $2.27 | Consolidated Statements of Cash Flows (Unaudited) Net cash from operating activities decreased to $726.6 million, with significant cash used in investing and financing activities, leading to a $65.5 million increase in cash Cash Flow Summary for Nine Months Ended Sept 30 (in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided from operating activities | $726,624 | $751,797 | | Net cash used in investing activities | ($472,605) | ($443,889) | | Net cash used in financing activities | ($188,543) | ($145,314) | | Increase in cash and cash equivalents | $65,476 | $162,594 | Consolidated Statements of Stockholders' Equity (Unaudited) Stockholders' equity increased to $3.87 billion, driven by net income of $171.5 million, partially offset by dividends and treasury stock repurchases - Key activities affecting stockholders' equity in the first nine months of 2024 included net income of $171.5 million, dividend payments totaling $58.5 million ($0.24 per share), and treasury stock repurchases of $44.1 million1071 Notes to Consolidated Financial Statements (Unaudited) The notes detail accounting policies and financial items, including revenue disaggregation, total debt of $1.71 billion, derivative hedging with a $207.4 million unrealized gain, and a $1.0 billion stock repurchase authorization Revenue by Product - Nine Months Ended Sept 30 (in thousands) | Product | 2024 | 2023 | | :--- | :--- | :--- | | Natural gas sales | $715,266 | $913,915 | | NGLs sales | $750,547 | $695,368 | | Oil sales | $112,915 | $122,099 | | Total | $1,578,728 | $1,731,382 | Outstanding Debt (in thousands) | Debt Instrument | Sept 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | 4.875% senior notes due 2025 | $618,140 | $688,388 | | 8.25% senior notes due 2029 | $600,000 | $600,000 | | 4.75% senior notes due 2030 | $500,000 | $500,000 | | Total senior notes | $1,718,140 | $1,788,388 | - The company repurchased $70.2 million of its 4.875% senior notes due 2025 in the open market during the first nine months of 2024, recognizing a gain of $254,00022 - As of September 30, 2024, the company had commodity derivative contracts with a net unrealized gain of $207.4 million, expiring monthly through December 202727 - The company has approximately $1.0 billion remaining under its stock repurchase authorization as of September 30, 202453 Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the significant drop in nine-month net income to lower commodity prices and derivative fair value income, while maintaining strong liquidity and executing capital return strategies - The company's strategy focuses on returns-focused development, capital discipline, operational efficiency, hedging, and balance sheet management to navigate volatile commodity prices64 - Natural gas prices declined in Q1 2024 due to mild weather but partially recovered in Q3, with long-term prices supported by expectations of strong demand from U.S. LNG exports66 - In the first nine months of 2024, the company paid $58.1 million in dividends and repurchased $44.1 million of its common stock71 - As of September 30, 2024, the company had approximately $1.6 billion of liquidity, including $277.5 million in cash and $1.3 billion available under its credit facility103 Consolidated Results of Operations Q3 2024 net income slightly increased due to higher production, while nine-month net income sharply declined to $171.5 million, primarily from lower derivative income and commodity prices Q3 2024 vs Q3 2023 Performance | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Net Income | $50.7M | $49.4M | +2.6% | | Production (Bcfe/d) | 2.2 | 2.1 | +4% | | Realized Price (pre-hedge, $/mcfe) | $2.63 | $2.70 | -3% | | Transportation Costs ($/mcfe) | $1.51 | $1.42 | +6.3% | Nine Months 2024 vs Nine Months 2023 Performance | Metric | 9M 2024 | 9M 2023 | Change | | :--- | :--- | :--- | :--- | | Net Income | $171.5M | $561.1M | -69.4% | | Derivative Fair Value Income | $110.5M | $530.1M | -79.2% | | Production (Bcfe/d) | 2.2 | 2.1 | +2% | | Realized Price (pre-hedge, $/mcfe) | $2.66 | $3.00 | -11% | Liquidity and Capital Resources The company maintains strong liquidity of $1.6 billion from cash and credit facilities, with operating cash flow funding capital programs and a $618.1 million debt maturity in 2025 - Operating cash flow for the first nine months of 2024 was $726.6 million, a decrease from $751.8 million in the prior-year period due to lower realized prices100102 - The bank credit facility has a borrowing base of $3.0 billion and lender commitments of $1.5 billion, with no outstanding borrowings as of September 30, 2024104 - The company's next major debt maturity is $618.1 million of senior notes due in 2025105 - The board approved a dividend of $0.08 per share in August 2024, and the remaining stock repurchase authorization is approximately $1.0 billion107 Quantitative and Qualitative Disclosures about Market Risk The company's primary market risks are volatile commodity prices, mitigated by derivatives with a $207.4 million unrealized gain, while fixed-rate debt minimizes interest rate risk - The company uses swaps, collars, three-way collars, and swaptions to manage commodity price volatility, with these contracts having a net unrealized gain of $207.4 million as of September 30, 2024, expiring monthly through December 2027117 Commodity Derivative Volumes Hedged (as of Sept 30, 2024) | Period | Product | Type | Volume Hedged | Weighted Avg. Price/Range | | :--- | :--- | :--- | :--- | :--- | | 2024 | Natural Gas | Swaps | 300,000 Mmbtu/day | $4.21 | | 2024 | Natural Gas | Collars | 416,848 Mmbtu/day | $3.49 - $5.63 | | 2025 | Natural Gas | Swaps | 400,000 Mmbtu/day | $4.12 | | 2024 | Oil | Swaps | 5,000 bbls/day | $81.35 | - The company is exposed to basis risk and uses basis swap agreements to fix the differential between NYMEX Henry Hub and local market prices, which had a fair value loss of $16.9 million at September 30, 2024120 - All of the company's $1.7 billion in debt carries fixed interest rates, resulting in no significant exposure to market interest rate movements122 Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of September 30, 2024, with no material changes to internal control over financial reporting during Q3 2024 - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2024124 - No changes in internal control over financial reporting occurred during the third quarter of 2024 that materially affected, or are reasonably likely to materially affect, these controls125 PART II – OTHER INFORMATION Legal Proceedings The company is involved in various legal and environmental proceedings, but management believes these will not materially affect its financial position or operations - The company is subject to various legal actions, but management believes the outcomes will not have a material adverse effect on its financial position or operations58127 Risk Factors No material changes to previously disclosed risk factors are reported, referring stakeholders to the 2023 Form 10-K for detailed information - No new risk factors are reported in this 10-Q; stakeholders are referred to the risk factors in the 2023 Form 10-K129 Unregistered Sales of Equity Securities and Use of Proceeds In Q3 2024, the company repurchased 800,000 shares for $24.0 million, with approximately $1.0 billion remaining under its stock repurchase authorization Common Stock Repurchases - Q3 2024 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | July 2024 | 325,000 | $31.62 | | August 2024 | 285,000 | $29.39 | | September 2024 | 190,000 | $28.57 | | Total Q3 | 800,000 | N/A | - As of September 30, 2024, the company has approximately $1.0 billion remaining under its stock repurchase authorization130 Other Information No director or officer adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the third quarter of 2024 - No director or officer adopted, modified, or terminated a Rule 10b5-1 trading plan in Q3 2024131 Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - Exhibits filed include Sarbanes-Oxley Section 302 and 906 certifications from the CEO and CFO131