Range Resources reports Q4 losses, 2016 capex reduced by 45%

Substantially all activity is focused in Marcellus for 2016, Range Resources expects 8-10% increase in production

Fort Worth, TX – Range Resources Corporation says it lost money in Q4 and is cutting its capex by 45 per cent for 2016.

“Range continued to perform well operationally during the fourth quarter, despite the challenges from declining commodity prices,” said CEO Jeff Ventura.

“We will continue to focus on reducing costs, high-grading our operations and staying disciplined financially.”

Q4 2015

“As a result of excellent well performance, reduced capital and operating costs and improved differentials across all products, Range continues to achieve accretive returns on our Marcellus acreage, ” said Ventura.

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GAAP revenues for Q4 2015 totaled $411 million (53% decrease compared to Q4 2014), GAAP net cash provided from operating activities including changes in working capital was $168 million (a 44% decrease as compared to Q4 2014) and GAAP earnings were a loss of $322 million ($1.93 per diluted share) versus earnings of $284 million ($1.68 per diluted share) in the prior-year quarter.

Q4 2015 results included a $409 million loss on sale of assets, while 2014 included a gain of $4 million. Q4 2015 also included $126 million in derivative gains due to decreased commodity prices, compared to a $412 million gain in 2014 and $88 million impairment of proved property compared to $3 million in the prior year.

2016 Capital Spending Plans and Cost Overview/Outlook

“We have set our 2016 capital budget at $495 million, a 45 per cent reduction compared to 2015 capital expenditures,” said Ventura.

Range says the capital budget is aligned with expected 2016 cash flow plus anticipated proceeds from 2016 asset sales.

“Although we cannot be certain when prices will recover, we believe Range’s relative netbacks will continue to improve with Mariner East, Uniontown to Gas City and other projects that move products to new markets. With our high quality, low-cost asset base, Range is well-positioned to not only persevere, but add shareholder value in 2016,” said Ventura.

The capital budget includes approximately $470 million for drilling and recompletions, $20 million for leasehold and renewals and $5 million for seismic, facilities and other. Substantially all the activity is focused in the Marcellus for 2016. Adjusted for the Nora and Bradford County sales, production growth is projected to be 8 per cent to 10 per cent year-over-year.

Full Year 2015

“At the end of December, we closed the sale of our Nora properties with cash proceeds of $865 million reducing debt. The sale accomplished several objectives: reducing leverage, increasing liquidity, high-grading the portfolio and reducing operating and overhead costs,” said Ventura.

GAAP revenues for 2015 totaled $1.6 billion (34 per cent decrease compared to 2014), GAAP net cash provided from operating activities including changes in working capital reached $684 million (28% decrease compared to 2014) and GAAP earnings were a loss of $714 million ($4.29 per diluted share) versus $634 million of earnings ($3.79 per diluted share) in 2014.

“Additionally, we recently signed an agreement to sell our non-operated Bradford County Marcellus interest for approximately $112 million and are currently marketing our central Oklahoma properties,” said Ventura.

Full year 2015 results included a loss of $407 million from asset sales compared to a gain of $286 million in 2014, $416 million in derivative gains due to decreases in future commodity prices compared to a $384 million gain in the prior year and a $590 million impairment of non-Marcellus proved property compared to $28 million in the prior year.

Highlights

• Q4 unit costs reduced by 15%, or $0.46 per mcfe compared to prior-year quarter
• Q4 natural gas differential improved $0.20, or 35%, compared to prior-year quarter, driven by additional takeaway projects
• Record annual average daily production of 1.4 Bcfe per day
• Reserve replacement of 436% at $0.37 per mcfe drill-bit finding cost
• Peer-leading Marcellus EURs and well costs on a normalized lateral length basis
• Completed Nora asset sale for cash proceeds of $865 million, used to reduce debt at year-end
• Mariner East in final commissioning phase, expected to improve NGL netbacks
• Signed agreement to sell Bradford County non-operated interest for approximately $112 million
• 2016 capital budget set at $495 million; within expected cash flow and anticipated 2016 asset sales