Range Resources(US:RRC)2021-04-26 21:02Financial Performance - For Q1 2021, the company reported a net income of $27.2 million, or $0.11 per diluted share, down from $166.2 million, or $0.66 per diluted share in Q1 2020[119]. - Revenue from the sale of natural gas, NGLs, and oil increased by 40% year-over-year, totaling $603.3 million, driven by a 56% increase in average realized prices[121]. - Daily production averaged 2.1 Bcfe in Q1 2021, a decrease of 9% compared to 2.3 Bcfe in Q1 2020[118]. - Cash flow from operating activities was $109.3 million in Q1 2021, a decrease of $15.3 million from Q1 2020[120]. - NGLs sales increased to $230.4 million in Q1 2021, up from $100.4 million in Q1 2020, reflecting a variance of $130 million or 129%[125]. - Crude oil sales rose to $37.1 million in Q1 2021, compared to $35.6 million in Q1 2020, marking an increase of $1.5 million or 4%[125]. - Total natural gas, NGLs, and oil sales reached $603.3 million in Q1 2021, up from $432.1 million in Q1 2020, representing a variance of $171.2 million or 40%[125]. Expenses and Costs - The company achieved a 40% reduction in direct operating expenses per mcfe compared to the same period in 2020[120]. - Transportation, gathering, processing, and compression expenses decreased to $274.3 million in Q1 2021 from $284.8 million in Q1 2020, a reduction of $10.4 million or 4%[126]. - Direct operating expenses fell to $17.7 million in Q1 2021, down from $32.0 million in Q1 2020, a decrease of $14.3 million or 45%[130]. - General and administrative expenses were $38.0 million in Q1 2021, down from $42.3 million in Q1 2020, a decline of $4.3 million or 10%[130]. - Interest expense increased to $56.9 million in Q1 2021 from $47.5 million in Q1 2020, an increase of $9.4 million or 20%[131]. - Depletion, depreciation, and amortization expense decreased to $88.4 million in Q1 2021 from $103.0 million in Q1 2020, primarily due to a 4% decrease in depletion rates and a 10% decrease in production volumes[133]. - Brokered natural gas and marketing expense increased to $72.3 million in Q1 2021 from $32.6 million in Q1 2020, driven by significantly higher broker purchase volumes and prices[134]. Debt and Financing - The company issued $600 million in new senior notes to reduce its bank credit facility[120]. - Long-term debt as of March 31, 2021, totaled $3.1 billion, with $124.0 million outstanding on the bank credit facility and $3.0 billion in senior notes[150]. - The available committed borrowing capacity under the bank credit facility was $1.9 billion at the end of Q1 2021[152]. - The average interest rate increased to 6.8% in Q1 2021 from 5.6% in Q1 2020, reflecting a rise of 1.2 percentage points or 21%[132]. - As of March 31, 2021, the company had $3.1 billion in total debt, with $3.0 billion at fixed rates averaging 6.8% and $124.0 million at floating rates averaging 2.3%[170]. - A 1% increase in short-term interest rates on the floating-rate debt would result in approximately $1.2 million in additional annual interest expense[170]. Operational Strategy - The company aims to achieve net-zero direct emissions by 2025 as part of its operational strategy[115]. - The company plans to focus on organic growth through disciplined capital investments while preserving liquidity and improving financial strength[115]. - The initial capital budget for 2021 was set at $425.0 million, with expectations to fund capital expenditures primarily through operating cash flow[150]. - The company plans to continue optimizing drilling and operational efficiencies to improve profitability and manage debt metrics[151]. Risk Management - The company entered into derivative agreements covering 317.2 Bcfe for the remainder of 2021 and 4.9 Bcfe for 2022 to hedge against commodity price risks[142]. - The company’s commodity-based derivative contracts expose it to credit risk, primarily diversified among major investment grade financial institutions[169]. - The fair value of natural gas basis swaps was a gain of $9.5 million at March 31, 2021, settling monthly through December 2024[166]. - The fair value of swaps showed a hypothetical decrease of $60.658 million with a 25% increase in commodity prices[169]. - The fair value of collars indicated a hypothetical decrease of $11.493 million with a 10% increase in commodity prices[169]. - The fair value of basis swaps showed a hypothetical decrease of $21.978 million with a 25% decrease in commodity prices[169]. - The fair value of divestiture contingent consideration indicated a hypothetical decrease of $13.680 million with a 25% decrease in commodity prices[169]. Other Financial Metrics - The company recorded a loss of $19.8 million in deferred compensation plan expense in Q1 2021, compared to a gain of $8.5 million in Q1 2020, due to stock price fluctuations[137]. - Total sources of cash and cash equivalents were $1.19 billion in Q1 2021, slightly down from $1.23 billion in Q1 2020[144]. - The company had total assets of $6.2 billion and cash of $449,000 as of March 31, 2021[149]. - Income tax expense decreased to $2.7 million in Q1 2021 from $29.0 million in Q1 2020, with an effective tax rate of 9.0% compared to 14.9% in the prior year[141]. - Approximately 65% of the company's proved reserves as of December 31, 2020, were natural gas, with 2% being oil and condensate[162]. - Total stock-based compensation increased to $10.6 million in Q1 2021 from $9.2 million in Q1 2020, with general and administrative expenses rising to $9.4 million from $8.0 million[134].