UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
July 26, 2007 (July 25, 2007)
RANGE RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 001-12209 | 34-1312571 | ||
| (State or other jurisdiction of | (Commission | (IRS Employer | ||
| incorporation) | File Number) | Identification No.) |
| 777 Main Street, Suite 800 | ||
| Ft. Worth, Texas | 76102 | |
| (Address of principal executive | (Zip Code) | |
| offices) |
Registrant’s telephone number, including area code: (817) 870-2601
(Former name or former address, if changed since last report): Not applicable
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligations of the registrant under any of the following provisions (see General
Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02 Results of Operations and Financial Condition
On July 25, 2007 Range Resources Corporation issued a press release announcing its second
quarter results. A copy of this press release is being furnished as an exhibit to this report on
Form 8-K.
ITEM 9.01 Financial Statements and Exhibits
(c) Exhibits:
99.1 Press Release dated July 25, 2007
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| RANGE RESOURCES CORPORATION |
||||
| By: | /s/ Roger S. Manny | |||
| Roger S. Manny | ||||
| Senior Vice President | ||||
Date: July 26, 2007
3
EXHIBIT INDEX
| Exhibit Number | Description | |
99.1
|
Press Release dated July 25, 2007 | |
4
EXHIBIT 99.1
NEWS RELEASE
RANGE REPORTS RECORD SECOND QUARTER RESULTS
FORT WORTH, TEXAS, JULY 25, 2007...RANGE RESOURCES CORPORATION (NYSE: RRC) today announced second
quarter results. Record highs were achieved in production and oil and gas revenues. Oil and gas
revenues reached $221 million, a 40% increase over the prior year. Results were driven by a 19%
increase in production and an 18% increase in realized prices. Cash flow from operations before
changes in working capital, a non-GAAP measure, rose 44% to $156 million. Reported net income
totaled $64 million. Earnings per share (diluted) increased 13% to $0.43.
Commenting on the announcement, John Pinkerton, Range’s President and CEO, said, “The second
quarter results reflect the best operational performance in our Company’s history. Overcoming the
loss of production from the sale of the Gulf of Mexico properties and posting our 18th
consecutive quarter of sequential production growth was an extraordinary accomplishment by our
operating teams. The record production results were achieved while also reducing operating costs
by more than 10% versus the first quarter. The combination of record production, low costs and
higher realized prices fueled 44% and 25% increases, respectively, in cash flow and earnings.
Looking forward, we have 81% of anticipated second half 2007 gas production hedged at $8.00 per
mcf, so we are in excellent shape to post superior results for the third and fourth quarters of
2007. Importantly, we continue to execute our drilling program of nearly 1,000 wells and are
realizing high returns on invested capital. With our lower post-Gulf of Mexico sale decline curve,
large transparent drilling inventory and low cost structure, we are superbly positioned to continue
to add substantial per share value in the future.”
For the quarter, production totaled 313 Mmcfe per day, comprised of 236 Mmcf per day of gas (76%)
and 12,769 barrels per day of oil and liquids. Wellhead prices, after adjustment for hedging,
averaged $7.75 per mcfe, a 18% increase over the prior-year period. The average realized gas price
rose 17% to $7.32 per mcf, and the average realized oil price rose 27% to $60.00 a barrel. Hedging
increased the average realized price by $0.21 per mcfe. Currently, 81% of anticipated second half
2007 gas production is hedged at a weighted average gas floor of $8.00 per mcf, while 58% of 2008
gas production is hedged at a weighted average gas floor of $8.91 per mcf.
Second quarter development and exploration expenditures totaled $232 million, funding the drilling
of 302 (228 net) wells and 14 (14 net) recompletions. A 99% success rate was achieved with 299
(226 net) wells productive. In the first half of the year, 337 (268 net) of the newly drilled
wells had been placed on production, with the remainder in various stages of completion or waiting
on pipeline connection. In addition, $15.1 million was spent on acreage purchases and $4.8 million
on expanding gas gathering systems.
Drilling activity in the third quarter remains high with 37 rigs currently running. For the year,
Range anticipates drilling 971 (704.3 net) wells and undertaking 84 (64 net) recompletions as part
of the Company’s $834 million capital budget. During the second quarter, Range also continued to
expand several of its key drilling areas and emerging plays.
In the Permian division, 55 (51 net) wells were drilled. In the North Texas Barnett Shale play,
production reached 85 (60 net) Mmcfe per day, a three-fold increase versus a year ago. The Barnett
test well in southern Ellis County has reached total depth and completion operations are scheduled
for August. Throughout the play, approximately 20,000 acres were added during the second quarter,
bringing our total net acreage position to 86,250. In addition, our field redevelopment efforts in
West Texas and New Mexico made steady headway due to continued drilling success.
In the Appalachia division, 210 (148 net) wells were drilled. The Nora field in Virginia continues
to be a key area of focus. The recent transaction in which Range acquired additional interests in
the field coupled with continued drilling success raised production from the Nora area to 45 Mmcfe
per day, up from 25 Mmcfe at the end of the first quarter. To date, two pilot projects have been
drilled to test tighter coal bed methane spacing. So far, results are encouraging. Later this
year, Range plans to test reduced spacing of the tight gas sands in the Nora field. Lastly, a
horizontal shale well is planned for the fourth quarter to test the potential of shale gas
development in the
field, which encompasses approximately 300,000 acres. Range continues to expand
its leasehold position in the Appalachia Basin Devonian Shale play with 470,000 net acres currently
under contract. The Company expects to drill an additional 10 to 12
vertical wells and 15 to 18
horizontal wells in the play during the remainder of the year.
As previously reported on March 31, 2007, Range sold its Gulf of Mexico properties for $155
million, recognizing a $95.6 million first quarter gain ($62.2 million net of deferred taxes).
These properties represented 2% of Range’s 2006 year-end total proved reserves. Despite closing
the sale on March 31, under generally accepted accounting principles (“GAAP”), the Gulf of Mexico
properties have been reclassified as “Discontinued operations” for 2007 and all the prior-year
periods. As a result, production, revenues and expenses associated with the properties have been
removed from continuing operations and reclassified to discontinued operations. (Supplemental
non-GAAP tables are presented that reconcile the reported GAAP amounts to the amounts that would
have been reported if the Gulf of Mexico operations were included in continuing operations in prior
periods.) All variances discussed in this release include the Gulf of Mexico operations with
respect to prior periods.
Second quarter 2007 results included several non-cash items. A $21.1 million non-cash
mark-to-market gain on commodity derivatives and $16.2 million of non-cash compensation expense
were recorded. Excluding these items, net income would have been $61.2 million or $0.42 per share
($0.41 fully diluted). Excluding similar non-cash items from the prior-year quarter, net income
would have been $40.6 million or $0.31 per share ($0.30 fully diluted). (See accompanying table
for calculation of these non-GAAP measures.)
Direct operating expenses for the quarter were $0.86 per mcfe, a $0.02 increase over the prior-year
period. However, second quarter direct operating expenses were 13% lower than first quarter 2007.
The reduction from first quarter to second quarter was due to the sale of the higher cost Gulf of
Mexico properties and higher volumes from two of our lowest cost operating areas, the Nora field in
Virginia and the North Texas Barnett shale play. Production taxes per mcfe increased $0.03 to
$0.39 per mcfe on higher market prices. Exploration expense totaled $10.8 million, including $4.5
million of dry hole expense and $2.9 million of seismic purchases.
The Company will host a conference call on Thursday, July 26 at 1:00 p.m. ET to review these
results. To participate in the call, please dial 877-407-8035 and ask for the Range Resources
second quarter financial results conference call. A replay of the call will be available through
August 2 at 877-660-6853. The account number is 286 and the conference ID for the replay is
249357.
A simultaneous webcast of the call may be accessed over the Internet at www.rangeresources.com or
www.vcall.com. To listen, please go to either website in time to register and install any
necessary software. The webcast will be archived for replay on the Company’s website for 15 days.
Non-GAAP Financial Measures:
Under GAAP, due to the sale of all the Company’s Gulf of Mexico properties at the end of the first
quarter of 2007, all Gulf of Mexico operations during the first quarter 2007 and in prior-years
have been reclassified to “Discontinued operations” in the reported GAAP financial statements. The
Company has presented a supplemental table which reconciles these reported GAAP financial amounts
to the amounts if the operations of the Gulf of Mexico properties for both the 2007 and 2006
periods were combined with the amounts from the continuing operations. The Company believes that
the combined results, by including the Gulf of Mexico properties, corresponds to the methodology
used by professional research analysts and, therefore, are useful in evaluating operational trends
of the Company and its actual historical performance relative to other oil and gas producing
companies by investors in making investment decisions. (See the reconciliation of reported
continuing operations under GAAP to the combined operations, a non-GAAP presentation in the
accompanying table.)
Earnings for second quarter 2007 include non-cash ineffective and mark-to-market derivatives of
$21.1 million and a non-cash stock compensation expense of $16.2 million. Excluding such items,
income before income taxes would have been $93.5 million, a 43% increase from the prior year.
Adjusting for the after-tax effect of these items the Company’s earnings would have been $61.2
million or $0.42 per share ($0.41 fully diluted). If similar items were excluded, 2006 earnings
would have been $40.6 million or $0.31 per share ($0.30 per diluted share). In 2006 results were
impacted by a net $19.2 million ineffective and mark-to-market derivatives on commodities and
interest and a $3.2 million stock compensation expense. (See reconciliation of non-GAAP earnings
in the accompanying table.) The Company believes results excluding these items are more comparable
to
2
estimates provided by professional research analysts and, therefore, are useful in evaluating
operational trends of the Company and its performance relative to other oil and gas producing
companies by investors in making investment decisions.
Cash flow from operations before changes in working capital as defined in this release represents
net cash provided by operations before changes in working capital and exploration expense adjusted
for certain non-cash compensation items. Cash flow from operations before changes in working
capital is widely accepted by the investment community as a financial indicator of an oil and gas
company’s ability to generate cash to internally fund exploration and development activities and to
service debt. Cash flow from operations before changes in working capital is also useful because
it is widely used by professional research analysts in
valuing, comparing, rating and providing investment recommendations of companies in the oil and gas
exploration and production industry. In turn, many investors use this published research in making
investment decisions. Cash flow from operations before changes in working capital is not a measure
of financial performance under GAAP and should not be considered as an alternative to cash flows
from operations, investing, or financing activities as an indicator of cash flows, or as a measure
of liquidity. A table is included which reconciles net cash provided by operations to cash flow
from operations before changes in working capital as used in this release. On its website, the
Company provides additional comparative information on prior periods.
RANGE RESOURCES CORPORATION (NYSE: RRC) is an independent oil and gas company operating in the
Southwestern, Appalachian and Gulf Coast regions of the United States.
Except for historical information, statements made in this release, including those relating
to significant potential, future earnings, cash flow, capital expenditures, production growth and
planned number of wells are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements
are based on assumptions and estimates that management believes are reasonable based on currently
available information; however, management’s assumptions and the Company’s future performance are
subject to a wide range of business risks and uncertainties and there is no assurance that these
goals and projections can or will be met. Any number of factors could cause actual results to
differ materially from those in the forward-looking statements, including, but not limited to, the
volatility of oil and gas prices, the costs and results of drilling and operations, the timing of
production, mechanical and other inherent risks associated with oil and gas production, weather,
the availability of drilling equipment, changes in interest rates, litigation, uncertainties about
reserve estimates and environmental risks. The Company undertakes no obligation to publicly update
or revise any forward-looking statements. Further information on risks and uncertainties is
available in the Company’s filings with the Securities and Exchange Commission, which are
incorporated by reference.
Range’s internal estimates of reserves may be subject to revision and may be different from
estimates by our external reservoir engineers at year-end. Although we believe the expectations and
forecasts reflected in these and other forward-looking statements are reasonable, we can give no
assurance they will prove to have been correct. They can be affected by inaccurate assumptions or
by known or unknown risks and uncertainties.
| 2007-22 | ||||||
Contacts:
|
Rodney Waller, Sr. Vice President | 817-869-4268 | ||||
| David Amend, IR Manager | 817-869-4266 |
| Karen Giles, Sr. IR Specialist | 817-869-4238 |
| Main number: | 817-870-2601 | |||||
| www.rangeresources.com |
3
RANGE RESOURCES CORPORATION
STATEMENTS OF INCOME
(Unaudited, in thousands, except per share data)
(Unaudited, in thousands, except per share data)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||||||||||
Revenues |
||||||||||||||||||||||||
Oil and gas sales |
$ | 221,591 | $ | 149,358 | $ | 438,617 | $ | 315,913 | ||||||||||||||||
Transportation and gathering |
612 | 1,043 | 889 | 1,069 | ||||||||||||||||||||
Transportation and gathering — non-cash stock
compensation (a) |
(101 | ) | (86 | ) | (194 | ) | (151 | ) | ||||||||||||||||
Mark-to-market hedging gain |
20,322 | 17,503 | (45,789 | ) | 28,784 | |||||||||||||||||||
Ineffective hedging gain (loss) (b) |
749 | 1,886 | 530 | 3,306 | ||||||||||||||||||||
Gain (loss) on sale of properties (b) |
17 | (53 | ) | 20 | (248 | ) | ||||||||||||||||||
Other (b) |
324 | (261 | ) | 2,282 | (53 | ) | ||||||||||||||||||
| 243,514 | 169,390 | 44 | % | 396,355 | 348,620 | 14 | % | |||||||||||||||||
Expenses |
||||||||||||||||||||||||
Direct operating |
24,345 | 16,567 | 49,362 | 34,415 | ||||||||||||||||||||
Direct operating – non-cash stock compensation (a) |
471 | 366 | 868 | 651 | ||||||||||||||||||||
Production and ad valorem taxes |
11,230 | 8,545 | 21,642 | 18,096 | ||||||||||||||||||||
Exploration |
10,806 | 6,933 | 21,777 | 15,246 | ||||||||||||||||||||
Exploration – non-cash stock compensation (a) |
919 | 830 | 1,658 | 1,439 | ||||||||||||||||||||
General and administrative |
12,468 | 8,430 | 23,512 | 17,407 | ||||||||||||||||||||
General and administrative – non-cash stock
compensation (a) |
5,370 | 4,084 | 9,004 | 6,437 | ||||||||||||||||||||
Deferred compensation plan (c) |
9,334 | (2,188 | ) | 20,581 | 2,291 | |||||||||||||||||||
Interest |
17,573 | 11,643 | 36,421 | 21,877 | ||||||||||||||||||||
Depletion, depreciation and amortization |
51,465 | 33,995 | 98,797 | 65,646 | ||||||||||||||||||||
| 143,981 | 89,205 | 61 | % | 283,622 | 183,505 | 55 | % | |||||||||||||||||
Income from continuing operations before income
taxes |
99,533 | 80,185 | 24 | % | 112,733 | 165,115 | -32 | % | ||||||||||||||||
Income taxes |
||||||||||||||||||||||||
Current |
(101 | ) | 622 | 283 | 1,200 | |||||||||||||||||||
Deferred |
34,449 | 29,676 | 38,896 | 60,826 | ||||||||||||||||||||
| 34,348 | 30,298 | 39,179 | 62,026 | |||||||||||||||||||||
Income from continuing operations |
65,185 | 49,887 | 31 | % | 73,554 | 103,089 | -29 | % | ||||||||||||||||
Discontinued operations, net of taxes |
(979 | ) | 1,383 | 63,789 | 3,856 | |||||||||||||||||||
Net income |
$ | 64,206 | $ | 51,270 | 25 | % | $ | 137,343 | $ | 106,945 | 28 | % | ||||||||||||
Basic |
||||||||||||||||||||||||
Income from continuing operations |
$ | 0.45 | $ | 0.38 | $ | 0.52 | $ | 0.79 | ||||||||||||||||
Discontinued operations |
(0.01 | ) | 0.01 | 0.45 | 0.03 | |||||||||||||||||||
Net income |
$ | 0.44 | $ | 0.39 | 13 | % | $ | 0.97 | $ | 0.82 | 18 | % | ||||||||||||
Diluted |
||||||||||||||||||||||||
Income from continuing operations |
$ | 0.43 | $ | 0.37 | $ | 0.50 | $ | 0.76 | ||||||||||||||||
Discontinued operations |
— | 0.01 | 0.44 | 0.03 | ||||||||||||||||||||
Net income |
$ | 0.43 | $ | 0.38 | 13 | % | $ | 0.94 | $ | 0.79 | 19 | % | ||||||||||||
Weighted average shares outstanding, as reported |
||||||||||||||||||||||||
Basic |
145,169 | 130,753 | 11 | % | 141,644 | 130,040 | 9 | % | ||||||||||||||||
Diluted |
150,182 | 135,958 | 10 | % | 146,616 | 135,278 | 8 | % | ||||||||||||||||
| (a) | Costs associated with FASB 123R which have been reflected in the categories associated with the direct personnel costs. | |
| (b) | Included in Other revenues in the 10-Q. | |
| (c) | Reflects the change in the market value of the Company stock and other investments during the period held in the deferred compensation plan. |
4
RANGE RESOURCES CORPORATION
STATEMENTS OF INCOME
Restated for Gulf of Mexico Discontinued
Operations, a Non-GAAP Presentation
Restated for Gulf of Mexico Discontinued
Operations, a Non-GAAP Presentation
| Three Months Ended June 30, | Three Months Ended June 30, | |||||||||||||||||||||||
| GOM | 2007 | 2006 | GOM | 2006 | ||||||||||||||||||||
| (in thousands) | 2007 | Discontinued | Including | As | Discontinued | Including | ||||||||||||||||||
| (Unaudited) | As reported | Operations | GOM | reported | Operations | GOM | ||||||||||||||||||
Revenues |
||||||||||||||||||||||||
Oil and gas sales |
$ | 221,591 | $ | (932 | ) | $ | 220,659 | $ | 149,358 | $ | 8,262 | $ | 157,620 | |||||||||||
Transportation and gathering |
612 | (58 | ) | 554 | 1,043 | (59 | ) | 984 | ||||||||||||||||
Transportation and gathering – stock
based
compensation |
(101 | ) | — | (101 | ) | (86 | ) | — | (86 | ) | ||||||||||||||
Mark-to-market on oil and gas
derivatives (loss) |
20,322 | — | 20,322 | 17,503 | — | 17,503 | ||||||||||||||||||
Ineffective derivative gain (loss) |
749 | — | 749 | 1,886 | — | 1,886 | ||||||||||||||||||
Equity method investment |
385 | — | 385 | 37 | — | 37 | ||||||||||||||||||
Gain (loss) on sale of properties |
17 | — | 17 | (53 | ) | — | (53 | ) | ||||||||||||||||
Interest and other |
(61 | ) | (1 | ) | (62 | ) | (298 | ) | — | (298 | ) | |||||||||||||
| 243,514 | (991 | ) | 242,523 | 169,390 | 8,203 | 177,593 | ||||||||||||||||||
Expenses |
||||||||||||||||||||||||
Direct operating |
24,345 | 108 | 24,453 | 16,567 | 3,608 | 20,175 | ||||||||||||||||||
Direct operating – stock based
compensation |
471 | — | 471 | 366 | — | 366 | ||||||||||||||||||
Production and ad valorem taxes |
11,230 | — | 11,230 | 8,545 | 124 | 8,669 | ||||||||||||||||||
Exploration |
10,806 | 47 | 10,806 | 6,933 | 15 | 6,948 | ||||||||||||||||||
Exploration – stock based compensation |
919 | — | 919 | 830 | — | 830 | ||||||||||||||||||
General and administrative |
12,468 | — | 12,515 | 8,430 | — | 8,430 | ||||||||||||||||||
General and administrative – stock based
compensation |
5,370 | — | 5,370 | 4,084 | — | 4,084 | ||||||||||||||||||
Non-cash compensation deferred
compensation plan |
9,334 | — | 9,334 | (2,188 | ) | — | (2,188 | ) | ||||||||||||||||
Interest expense |
17,573 | — | 17,573 | 11,643 | 360 | 12,003 | ||||||||||||||||||
Depletion, depreciation and amortization |
51,465 | — | 51,465 | 33,995 | 2,838 | 36,833 | ||||||||||||||||||
| 143,981 | 155 | 144,136 | 89,205 | 6,945 | 96,150 | |||||||||||||||||||
Income from continuing operations before
income taxes |
99,533 | (1,146 | ) | 98,387 | 80,185 | 1,258 | 81,443 | |||||||||||||||||
Income taxes provision |
||||||||||||||||||||||||
Current |
(101 | ) | — | (101 | ) | 622 | — | 622 | ||||||||||||||||
Deferred |
34,449 | (401 | ) | 34,048 | 29,676 | 440 | 30,116 | |||||||||||||||||
| 34,348 | (401 | ) | 33,947 | 30,298 | 440 | 30,738 | ||||||||||||||||||
Income from continuing operations |
65,185 | (745 | ) | 64,440 | 49,887 | 818 | 50,705 | |||||||||||||||||
Discontinued operations – Austin Chalk,
net of tax |
(234 | ) | — | (234 | ) | 565 | — | 565 | ||||||||||||||||
Discontinued operations – Gulf of
Mexico,
net of tax |
(745 | ) | 745 | — | 818 | (818 | ) | — | ||||||||||||||||
Net income |
$ | 64,206 | $ | — | $ | 64,206 | $ | 51,270 | $ | — | $ | 51,270 | ||||||||||||
| GOM | 2007 | GOM | 2006 | |||||||||||||||||||||
| Discontinued | Including | Discontinued | Including | |||||||||||||||||||||
| OPERATING HIGHLIGHTS | 2007 | Operations | GOM | 2006 | Operations | GOM | ||||||||||||||||||
Average Daily Production
|
||||||||||||||||||||||||
Oil (bbl) |
9,688 | — | 9,688 | 8,269 | 329 | 8,598 | ||||||||||||||||||
Natural gas liquids (bbl) |
3,081 | — | 3,081 | 3,160 | — | 3,160 | ||||||||||||||||||
Gas (mcf) |
236,418 | — | 236,418 | 181,368 | 12,056 | 193,424 | ||||||||||||||||||
Equivalents (mcfe) |
313,036 | — | 313,036 | 249,945 | 14,031 | 263,976 | ||||||||||||||||||
Prices Realized |
||||||||||||||||||||||||
5
| GOM | 2007 | GOM | 2006 | |||||||||||||||||||||
| Discontinued | Including | Discontinued | Including | |||||||||||||||||||||
| OPERATING HIGHLIGHTS | 2007 | Operations | GOM | 2006 | Operations | GOM | ||||||||||||||||||
Oil (bbl) |
$ | 60.01 | $ | — | $ | 60.00 | $ | 47.52 | $ | 41.62 | $ | 47.30 | ||||||||||||
Natural gas liquids (bbl) |
$ | 40.31 | $ | — | $ | 40.31 | $ | 35.19 | $ | — | $ | 35.19 | ||||||||||||
Gas (mcf) |
$ | 7.32 | $ | — | $ | 7.32 | $ | 6.27 | $ | 6.39 | $ | 6.28 | ||||||||||||
Equivalents (mcfe) (a) |
$ | 7.78 | $ | — | $ | 7.75 | $ | 6.57 | $ | 6.47 | $ | 6.56 | ||||||||||||
Direct Operating Costs per mcfe (b)
Field expenses |
$ | 0.78 | $ | — | $ | 0.79 | $ | 0.70 | $ | 2.32 | $ | 0.78 | ||||||||||||
Workovers |
$ | 0.07 | $ | — | $ | 0.07 | $ | 0.03 | $ | 0.51 | $ | 0.06 | ||||||||||||
Total operating costs |
$ | 0.85 | $ | — | $ | 0.86 | $ | 0.73 | $ | 2.83 | $ | 0.84 | ||||||||||||
| (a) | Oil and natural gas liquids are converted to gas equivalents on a basis of six mcf per barrel. | |
| (b) | Excludes non-cash stock compensation. |
RANGE RESOURCES CORPORATION
STATEMENTS OF INCOME
Restated for Gulf of Mexico Discontinued
Operations, a Non-GAAP Presentation
Restated for Gulf of Mexico Discontinued
Operations, a Non-GAAP Presentation
| Six Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
| GOM | 2007 | GOM | 2006 | |||||||||||||||||||||
| (in thousands) | 2007 | Discontinued | Including | 2006 | Discontinued | Including | ||||||||||||||||||
| (Unaudited) | As reported | Operations | GOM | As reported | Operations | GOM | ||||||||||||||||||
Revenues
|
||||||||||||||||||||||||
Oil and gas sales |
$ | 438,617 | $ | 9,938 | $ | 448,555 | $ | 315,913 | $ | 18,045 | $ | 333,958 | ||||||||||||
Transportation and gathering |
889 | 10 | 899 | 1,069 | 57 | 1,126 | ||||||||||||||||||
Transportation and gathering – stock
based
compensation |
(194 | ) | — | (194 | ) | (151 | ) | — | (151 | ) | ||||||||||||||
Mark-to-market on oil and gas
derivatives (loss) |
(45,789 | ) | — | (45,789 | ) | 28,784 | — | 28,784 | ||||||||||||||||
Ineffective derivative gain (loss) |
530 | — | 530 | 3,306 | — | 3,306 | ||||||||||||||||||
Equity method investment |
796 | 796 | 37 | — | 37 | |||||||||||||||||||
Gain (loss) on sale of properties |
20 | — | 20 | (248 | ) | — | (248 | ) | ||||||||||||||||
Interest and other |
1,486 | (1 | ) | 1,485 | (90 | ) | (1 | ) | (91 | ) | ||||||||||||||
| 396,355 | 9,947 | 406,302 | 348,620 | 18,101 | 366,721 | |||||||||||||||||||
Expenses
|
||||||||||||||||||||||||
Direct operating |
49,362 | 2,477 | 51,839 | 34,415 | 5,137 | 39,552 | ||||||||||||||||||
Direct operating – stock based
compensation |
868 | — | 868 | 651 | — | 651 | ||||||||||||||||||
Production and ad valorem taxes |
21,642 | 105 | 21,747 | 18,096 | 300 | 18,396 | ||||||||||||||||||
Exploration |
21,777 | — | 21,777 | 15,246 | 1,170 | 16,416 | ||||||||||||||||||
Exploration – stock based compensation |
1,658 | — | 1,658 | 1,439 | — | 1,439 | ||||||||||||||||||
General and administrative |
23,512 | 47 | 23,559 | 17,407 | — | 17,407 | ||||||||||||||||||
General and administrative – stock based
compensation |
9,004 | — | 9,004 | 6,437 | — | 6,437 | ||||||||||||||||||
Non-cash compensation deferred
compensation plan |
20,581 | — | 20,581 | 2,291 | — | 2,291 | ||||||||||||||||||
Interest expense |
36,421 | 594 | 37,015 | 21,877 | 677 | 22,554 | ||||||||||||||||||
Depletion, depreciation and amortization |
98,797 | 3,325 | 102,122 | 65,646 | 5,754 | 71,400 | ||||||||||||||||||
| 283,622 | 6,548 | 290,170 | 183,505 | 13,038 | 196,543 | |||||||||||||||||||
Income from continuing operations before
income taxes |
112,733 | 3,399 | 116,132 | 165,115 | 5,063 | 170,178 | ||||||||||||||||||
Income taxes provision |
||||||||||||||||||||||||
Current |
283 | — | 283 | 1,200 | — | 1,200 | ||||||||||||||||||
Deferred |
38,896 | 1,190 | 40,086 | 60,826 | 1,772 | 62,598 | ||||||||||||||||||
| 39,179 | 1,190 | 40,369 | 62,026 | 1,772 | 63,798 | |||||||||||||||||||
Income from continuing operations |
73,554 | 2,209 | 75,763 | 103,089 | 3,291 | 106,380 | ||||||||||||||||||
Discontinued operations – Austin Chalk,
net of tax |
(539 | ) | — | (539 | ) | 565 | — | 565 | ||||||||||||||||
Discontinued operations – Gulf of
Mexico,
net of tax |
64,328 | (2,209 | ) | 62,119 | 3,291 | (3,291 | ) | — | ||||||||||||||||
Net income |
$ | 137,343 | $ | — | $ | 137,343 | $ | 106,945 | $ | — | $ | 106,945 | ||||||||||||
6
| GOM | 2007 | GOM | 2006 | |||||||||||||||||||||
| Discontinued | Including | Discontinued | Including | |||||||||||||||||||||
| OPERATING HIGHLIGHTS | 2007 | Operations | GOM | 2006 | Operations | GOM | ||||||||||||||||||
Average Daily Production |
||||||||||||||||||||||||
Oil (bbl) |
9,503 | 214 | 9,717 | 8,265 | 310 | 8,575 | ||||||||||||||||||
Natural gas liquids (bbl) |
3,058 | — | 3,058 | 3,064 | — | 3,064 | ||||||||||||||||||
Gas (mcf) |
227,669 | 5,267 | 232,936 | 178,278 | 12,450 | 190,728 | ||||||||||||||||||
Equivalents (mcfe) |
303,039 | 6,555 | 309,594 | 246,255 | 14,311 | 260,566 | ||||||||||||||||||
Prices Realized
|
||||||||||||||||||||||||
Oil (bbl) |
$ | 58.05 | $ | 58.17 | $ | 58.07 | $ | 47.03 | $ | 44.65 | $ | 46.94 | ||||||||||||
Natural gas liquids (bbl) |
$ | 35.29 | $ | — | $ | 35.29 | $ | 32.58 | $ | — | $ | 32.58 | ||||||||||||
Gas (mcf) |
$ | 7.75 | $ | 9.03 | $ | 7.75 | $ | 7.05 | $ | 6.90 | $ | 7.04 | ||||||||||||
Equivalents (mcfe) (a) |
$ | 8.00 | $ | 9.16 | $ | 8.00 | $ | 7.09 | $ | 6.97 | $ | 7.08 | ||||||||||||
Direct Operating Costs per mcfe (b)
Field expenses |
$ | 0.84 | $ | 2.01 | $ | 0.87 | $ | 0.74 | $ | 1.50 | $ | 0.79 | ||||||||||||
Workovers |
$ | 0.06 | $ | 0.35 | $ | 0.06 | $ | 0.03 | $ | 0.48 | $ | 0.05 | ||||||||||||
Total operating costs |
$ | 0.90 | $ | 2.36 | $ | 0.93 | $ | 0.77 | $ | 1.98 | $ | 0.84 | ||||||||||||
| (a) | Oil and natural gas liquids are converted to gas equivalents on a basis of six mcf per barrel. | |
| (b) | Excludes non-cash stock compensation. |
7
RANGE RESOURCES CORPORATION
BALANCE SHEETS
(Unaudited, in thousands)
(Unaudited, in thousands)
| June 30, | December 31, | |||||||
| 2007 | 2006 | |||||||
Assets |
||||||||
Current assets |
$ | 171,805 | $ | 137,872 | ||||
Current unrealized derivative gain |
65,285 | 93,588 | ||||||
Assets held for sale |
— | 79,304 | ||||||
Assets of discontinued operation |
— | 78,161 | ||||||
Oil and gas properties |
3,194,450 | 2,608,088 | ||||||
Transportation and field assets |
55,145 | 47,143 | ||||||
Unrealized derivative gain |
8,425 | 61,068 | ||||||
Other |
180,566 | 82,450 | ||||||
| $ | 3,675,676 | $ | 3,187,674 | |||||
Liabilities and Stockholders’ Equity |
||||||||
Current liabilities |
$ | 239,912 | $ | 214,878 | ||||
Liabilities of discontinued operation |
— | 28,333 | ||||||
Current asset retirement obligation |
3,509 | 3,853 | ||||||
Current unrealized derivative loss |
6,894 | 4,621 | ||||||
Bank debt |
446,500 | 452,000 | ||||||
Subordinated notes |
596,967 | 596,782 | ||||||
Total long-term debt |
1,043,467 | 1,048,782 | ||||||
Deferred taxes |
527,036 | 468,643 | ||||||
Unrealized derivative loss |
4,213 | 266 | ||||||
Deferred compensation liability |
123,484 | 90,094 | ||||||
Long-term asset retirement obligation |
79,052 | 72,043 | ||||||
Common stock and retained earnings |
1,673,231 | 1,241,696 | ||||||
Stock in deferred compensation plan
and treasury |
(36,361 | ) | (22,056 | ) | ||||
Other comprehensive income |
11,239 | 36,521 | ||||||
Total stockholders’ equity |
1,648,109 | 1,256,161 | ||||||
| $ | 3,675,676 | $ | 3,187,674 | |||||
8
RANGE RESOURCES CORPORATION
CASH FLOWS FROM OPERATIONS
(Unaudited, in thousands)
(Unaudited, in thousands)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
Net income |
$ | 64,206 | $ | 51,270 | $ | 137,343 | $ | 106,945 | ||||||||
Adjustments to reconcile net income to
net cash provided by operations: |
||||||||||||||||
Gain from discontinued operations |
979 | (1,383 | ) | (63,789 | ) | (3,856 | ) | |||||||||
Gain from equity investment |
(385 | ) | (37 | ) | (796 | ) | (37 | ) | ||||||||
Deferred income tax (benefit) |
34,449 | 29,676 | 38,896 | 60,826 | ||||||||||||
Depletion, depreciation and amortization |
51,465 | 33,995 | 98,797 | 65,646 | ||||||||||||
Exploration dry hole costs |
4,490 | 2,025 | 8,898 | 3,725 | ||||||||||||
Mark-to-market derivative (gain) |
(20,322 | ) | (17,503 | ) | 45,789 | (28,784 | ) | |||||||||
Unrealized derivative (gains) losses |
(749 | ) | (1,742 | ) | (530 | ) | (2,994 | ) | ||||||||
Amortization of deferred issuance costs |
550 | 439 | 1,076 | 845 | ||||||||||||
Non-cash compensation |
16,252 | 3,698 | 32,689 | 11,754 | ||||||||||||
Loss (gain) on sale of assets and other |
67 | 505 | 119 | 923 | ||||||||||||
Changes in working capital: |
||||||||||||||||
Accounts receivable |
(19,786 | ) | 6,035 | (27,179 | ) | 38,298 | ||||||||||
Inventory and other |
2,520 | (232 | ) | 260 | (1,862 | ) | ||||||||||
Accounts payable |
40,427 | 9,754 | (8,484 | ) | (5,516 | ) | ||||||||||
Accrued liabilities |
8,249 | 7,838 | 3,385 | (5,148 | ) | |||||||||||
Net changes in working capital |
31,410 | 23,395 | (32,018 | ) | 25,772 | |||||||||||
Net cash provided from continuing operations |
$ | 182,412 | $ | 124,338 | $ | 266,474 | $ | 240,765 | ||||||||
RECONCILIATION OF CASH FLOWS
(In thousands)
(In thousands)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
Net cash provided from continuing operations |
$ | 182,412 | 124,338 | 266,474 | 240,765 | |||||||||||
Net change in working capital |
(31,410 | ) | (23,395 | ) | 32,018 | (25,772 | ) | |||||||||
Exploration expense |
6,315 | 4,908 | 12,879 | 11,520 | ||||||||||||
Cash flow from Gulf of Mexico properties |
(1,134 | ) | 4,111 | 6,724 | 11,987 | |||||||||||
Other |
245 | (1,017 | ) | 273 | (1,504 | ) | ||||||||||
Cash flow from operations before changes in working capital, non-GAAP measure |
$ | 156,428 | $ | 108,945 | $ | 318,368 | $ | 236,996 | ||||||||
ADJUSTED WEIGHTED AVERAGE SHARES OUTSTANDING
(Unaudited, in thousands)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
Basic: |
||||||||||||||||
Weighted average shares outstanding |
146,214 | 132,156 | 142,733 | 131,453 | ||||||||||||
Stock held by deferred compensation plan |
(1,045 | ) | (1,403 | ) | (1,089 | ) | (1,413 | ) | ||||||||
| 145,169 | 130,753 | 141,644 | 130,040 | |||||||||||||
Dilutive: |
||||||||||||||||
Weighted average shares outstanding |
146,214 | 132,156 | 142,733 | 131,453 | ||||||||||||
Dilutive stock options under treasury method |
3,968 | 3,802 | 3,883 | 3,825 | ||||||||||||
| 150,182 | 135,958 | 146,616 | 135,278 | |||||||||||||
9
RANGE RESOURCES CORPORATION
RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
AS REPORTED TO INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
EXCLUDING CERTAIN NON-CASH ITEMS
(Unaudited, in thousands, except per share data)
AS REPORTED TO INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
EXCLUDING CERTAIN NON-CASH ITEMS
(Unaudited, in thousands, except per share data)
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||||||||||
As reported |
$ | 99,533 | $ | 80,185 | 24 | % | $ | 112,733 | $ | 165,115 | -32 | % | ||||||||||||
Adjustment for certain non-cash items
|
||||||||||||||||||||||||
(Gain) loss on sale of properties |
(17 | ) | 53 | (20 | ) | 248 | ||||||||||||||||||
Gulf of Mexico – discontinued operations |
(1,133 | ) | 1,258 | 3,399 | 5,063 | |||||||||||||||||||
Mark-to-market on derivative (gain) |
(20,322 | ) | (17,503 | ) | 45,789 | (28,784 | ) | |||||||||||||||||
Ineffective commodity derivative (gain) loss |
(749 | ) | (1,886 | ) | (530 | ) | (3,306 | ) | ||||||||||||||||
Amortization of ineffective interest hedges |
— | 143 | — | 311 | ||||||||||||||||||||
Transportation and gathering – non-cash stock compensation |
101 | 86 | 194 | 151 | ||||||||||||||||||||
Direct operating – non-cash stock compensation |
471 | 366 | 868 | 651 | ||||||||||||||||||||
Exploration expenses – non-cash stock compensation |
919 | 830 | 1,658 | 1,439 | ||||||||||||||||||||
General & administrative – non-cash stock compensation |
5,370 | 4,084 | 9,004 | 6,437 | ||||||||||||||||||||
Deferred compensation plan – non-cash stock compensation |
9,334 | (2,188 | ) | 20,581 | 2,291 | |||||||||||||||||||
As adjusted |
93,507 | 65,428 | 43 | % | 193,676 | 149,616 | 29 | % | ||||||||||||||||
Income taxes, adjusted
|
||||||||||||||||||||||||
Current |
(101 | ) | 622 | 283 | 1,200 | |||||||||||||||||||
Deferred |
32,359 | 24,217 | 66,173 | 55,035 | ||||||||||||||||||||
Net income excluding certain items |
$ | 61,249 | $ | 40,589 | 51 | % | $ | 127,220 | $ | 93,381 | 36 | % | ||||||||||||
Non-GAAP earnings per share
|
||||||||||||||||||||||||
Basic |
$ | 0.42 | $ | 0.31 | 35 | % | $ | 0.90 | $ | 0.72 | 25 | % | ||||||||||||
Diluted |
$ | 0.41 | $ | 0.30 | 37 | % | $ | 0.87 | $ | 0.69 | 26 | % | ||||||||||||
HEDGING POSITION
As of July 24, 2007
(Unaudited)
As of July 24, 2007
(Unaudited)
| Gas | Oil | |||||||||||||||||||
| Volume | Average | Volume | Average | |||||||||||||||||
| Hedged | Hedge | Hedged | Hedge | |||||||||||||||||
| (MMBtu/d) | Prices | (Bbl/d) | Prices | |||||||||||||||||
2H 2007 |
Swaps | 105,000 | $ | 9.03 | — | — | ||||||||||||||
2H 2007 |
Collars | 98,500 | $ | 6.87 - $9.66 | 6,300 | $ | 53.46 - $65.33 | |||||||||||||
Calendar 2008 |
Swaps | 105,000 | $ | 9.42 | — | — | ||||||||||||||
Calendar 2008 |
Collars | 55,000 | $ | 7.93 - $11.39 | 9,000 | $ | 59.34 - $75.48 | |||||||||||||
Calendar 2009 |
Collars | — | — | 8,000 | $ | 64.01 - $76.00 | ||||||||||||||
Note: Details as to the Company’s hedges are posted on its website and are updated periodically.
10