Range Resources Corporation (RRC) has demonstrated its ability to navigate the volatile energy landscape with resilience and operational efficiency. The company's second quarter 2024 results showcase its commitment to generating consistent cash flows, prudent capital allocation, and strategic positioning for long-term success.
Financials
In the second quarter of 2024, Range Resources reported net income of $28.7 million, or $0.12 per diluted share, compared to $30.2 million, or $0.12 per diluted share, in the same period of the prior year. For the first six months of 2024, the company generated net income of $120.8 million, or $0.49 per diluted share, compared to $511.7 million, or $2.07 per diluted share, in the first six months of 2023. The decrease in net income was primarily due to lower derivative fair value income, partially offset by higher realized prices.
Range Resources' annual net income for 2023 was $871.1 million, while its annual revenue reached $2.55 billion. The company's annual operating cash flow was $977.9 million, and its annual free cash flow amounted to $371.7 million.
The company's second quarter 2024 revenue from the sale of natural gas, NGLs, and oil increased 2% from the same period of 2023, driven by a 3% increase in production volumes, partially offset by a 1% decrease in average realized prices (before cash settlements on derivatives). Revenue from the sale of natural gas, NGLs, and oil (including cash settlements on derivatives) increased 11% from the same period of 2023.
Range Resources' production for the second quarter of 2024 averaged 2.2 Bcfe per day, compared to 2.1 Bcfe per day in the same period of 2023, representing a 3% increase. For the first six months of 2024, the company's production averaged 2.1 Bcfe per day, consistent with the same period of 2023.
The company's direct operating expense per Mcfe was $0.12 in the second quarter of 2024, compared to $0.13 in the same period of 2023, primarily due to lower water hauling costs, lower workovers, and lower equipment costs. Transportation, gathering, processing, and compression expense per Mcfe was $1.44 in the second quarter of 2024, compared to $1.42 in the same period of 2023, primarily due to an increase in fixed gathering and transportation costs.
Range Resources' general and administrative expense increased 2% in the second quarter of 2024 compared to the same period of 2023, primarily due to the aggregate impacts of cost inflation. Interest expense decreased 5% in the second quarter of 2024 from the same period of 2023 due to lower debt balances.
Second Quarter 2024 Highlights
The company's second quarter 2024 financial and operational highlights include:
- Paid $19.5 million of dividends, or $0.08 per share - Repurchased $20.1 million of its common stock, of which $10.2 million settled during the quarter - Repurchased in the open market $47.1 million face value of its 4.875% senior notes due 2025 at a discount - Maintained substantial liquidity with $251.1 million in cash on hand and $1.3 billion available under its credit facility
Liquidity
Range Resources' balance sheet remains strong, with total debt of approximately $1.7 billion as of June 30, 2024. The company's next significant long-term debt maturity is the $621.1 million principal amount of its 4.875% senior notes due 2025, which is classified as current on the balance sheet.
The company's hedging program continues to provide stability and predictability to its cash flows. As of June 30, 2024, Range Resources had approximately 55% of its second half 2024 natural gas production hedged with an average floor price of $3.70 per Mcf. For 2025, the company has approximately 35% of its natural gas production hedged with an average floor price of $3.90 per Mcf.
Business Overview
Range Resources' operational efficiency and capital discipline have been key drivers of its success. The company's drilling and completion costs remain among the best in the industry, with an average well cost of $800 to $900 per foot. The company's ability to return to existing pads with existing production has also contributed to its operational efficiency, allowing it to minimize its surface footprint and reutilize existing infrastructure.
Outlook
Looking ahead, Range Resources remains constructive on the outlook for natural gas and NGLs. The company believes the fundamentals continue to be in place for improving natural gas pricing, driven by declining U.S. natural gas production and durable demand from areas such as LNG exports and increased gas power generation. Additionally, the company expects its NGL price realizations to remain a positive differentiator, benefiting from its flexible marketing and transportation portfolio that allows it to access premium export markets.
Range Resources' vast inventory of derisked, high-quality Marcellus wells positions the company to continue generating substantial free cash flow for decades to come. The company's focus on maintaining financial discipline, optimizing its operations, and prudently allocating capital has been instrumental in navigating the volatile energy landscape and creating value for its shareholders.
Conclusion
Overall, Range Resources' second quarter 2024 results and its strategic positioning demonstrate the resilience and efficiency of its business model. The company's commitment to safe and responsible operations, cost control, and disciplined capital allocation has enabled it to weather market volatility and position itself for long-term success in the evolving energy landscape.