Current RRC Stock Info

Production approaching 2 Bcfe per day
During its second quarter of 2017, Range Resources (ticker: RRC) reported a net income of $70 million as compared to a net loss of $225 million a year ago. The company’s cash margins grew to $1.09 per Mcfe up from $0.70 per Mcfe in Q2, 2016.

Range reached a new record in production at an average of 1.945 Bcfe per day—37% higher than the production for Q2, 2016.  The company highlighted a seven-well pad in the liquids-rich portion of the Marcellus with an average initial production of approximately 29.1 ...

Analyst Commentary

Stephens

RRC reported another solid production quarter highlighted by very strong operations in the Marcellus including a 7 well Super-Rich pad that averaged IP rates of 29.1 Mmcfepd (73% liquids). Despite the continued success in Appalachia, the Company did lower full year guidance slightly as a result of ongoing integration of Terryville assets.
The Company continued to experiment with completion changes in Terryville and was still completing wells drilled by the previous operator which proved somewhat disappointing. With that said, it is still early in the Terryville, and the evolution of RRC's Marcellus development is enough to remind us that the Company remains and will remain a low cost nat. gas provider for years to come. We reiterate our OW rating.

Stifel

Range reported negative 2Q earnings, missing consensus EBITDA by 11% on in-line production despite slightly higher capex and stronger liquids pricing due to higher operating expenses. Further, we do not anticipate the street receiving the full year production guide down positively. We anticipate shares to be weak tomorrow as the main sticking point for investors - Terryville productivity concerns - is exacerbated by the lower production guidance despite commentary on understimulated 2Q wells and impact of legacy drilling and completion designs in Terryville, as well as SW PA timing delays.

Johnson Rice & Company

Despite continued strong well performance in the Appalachian Basin, Range was negatively impacted by lower than expected well performance in north Louisiana due primarily to under-stimulation and by permitting delays in Pennsylvania. As a result, Range lowered its 2017 growth target to 30% (down from 33%-35%). While the permitting delays have been resolved, Range is counting on the return to a higher fluid-intensity completion design in north Louisiana to achieve expected well performance. Importantly, recent strong results on both the western and eastern flanks of its Appalachian position have essentially fully de-risked its entire 515,000 net acre position in southwest PA. With 60% of its 2017 Applachian wells still anticipated to come on-line over the remainder of the year, the Appalachian basin will be the primary driver behind its upcoming growth. Given our lowered production outlook and estimates, we now expect Range to exit 2017 and 2018 with higher leverage ratios of 3.8x and 3.3x, respectively. Given this release contained one of the largest guidance decreases we can recall, investors will likely take a “show-me” approach related to its growth outlook (especially in north Louisiana), which will likely put the shares under pressure in the short-term.

KLR

Range reported 2Q/17 recurring EPS of $0.06 in line with our $0.06 estimate due to slightly higher NGL price realizations offset by slightly higher LOE/transport expense. Production of ~1.94 Bcfepd (~32% liquids) in 2Q/17 approximates our ~1.94 Bcefpd (~33% liquids) estimate and is ~1% above consensus (~1.93 Bcefpd). The company anticipates 3Q/17 and 4Q/17 production of ~1.97 Bcfepd and ~2.17 Bcfepd respectively. As a result, Range lowered its ’17 production growth from 33%-35% to 30% due to lower production expectations for Terryville and timing delays on several well pads in southwest Pennsylvania. We expect to be fractionally above 3Q/17 and full year production growth guidance. In 2H/17, we anticipate a ~90 Mmcfepd reduction in forecasted production versus prior expectation. Southwest Appalachia net production was flat q/q at 1,344 Mmcfepd. Northeast Appalachia net production decreased 4% q/q to 155 Mmcfpd. Northern Louisiana net production increased 5% q/q to 416 Mmcfepd. The company expects to increase average southwest Pennsylvania well lateral lengths from ~7,500’ (1H/17) to over ~9,500’ in the second half of the year. In southwest Pennsylvania, delineation wells are performing comparable to core execution. In Terryville, Range has experimented with changes to completion design and more specifically, fluid intensity. These wells on average were stimulated with ~40% less fluid per foot than typical Terryville completions, while utilizing the same proppant per foot, and the initial production response in the wells has been below expectations by a similar percentage, though with a flatter decline profile. Range is planning to return to the larger fluid design as the wells appear to be understimulated.  


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