RRC Beats on Q3 Earnings & Revenues, Ups '24 Production View

Range Resources Corporation RRC reported third-quarter 2024 adjusted earnings of 48 cents per share, which beat the Zacks Consensus Estimate of 35 cents. The bottom line also improved from the prior-year level of 46 cents. 

Total quarterly revenues of $680 million beat the Zacks Consensus Estimate of $627 million. The top line also increased from the prior-year figure of $649 million.

The strong quarterly results can be primarily attributed to higher gas equivalent production volumes.

Operational Performance

The company’s production averaged 2,204.5 million cubic feet equivalent per day (Mcfe/d), higher than the prior-year level of 2,123 Mcfe/d. The figure was also above our projection of 2,118.3 Mcfe/d. Natural gas contributed approximately 68% to the company’s total production, while NGLs and oil accounted for the rest. 

Natural gas production increased 4% year over year. Oil production decreased 12%, while NGL output increased 5% in the same time frame.

Total price realization (excluding derivative settlements and before third-party transportation costs) averaged $2.63 per Mcfe, down 3% year over year. Notably, price realization was higher than our estimate of $2.59 per Mcfe. Natural gas price declined 9% on a year-over-year basis to $1.69 per Mcf. NGL price increased 6%, while oil price fell 9%.

Costs & Expenses

Total costs and expenses increased 1% year over year to $549 million. The reported figure was higher than our expectation of $528.2 million. Transportation, gathering, processing and compression costs, which form a major part of the total costs, increased to $306.2 million from $277.2 million in the prior-year quarter.

Capital Expenditure & Balance Sheet

The company’s drilling and completion expenditure amounted to $146 million in the reported quarter. Additionally, $10 million was used for acreage leasehold, gathering systems and other expenses.

RRC had a total debt of $1,706.5 million at the end of the reported quarter.

Outlook

Range Resources has increased its total production guidance for 2024 to 2.17 billion cubic feet equivalent per day, with more than 30% attributed to liquids production. It has also estimated a capital budget of $645-$670 million for the year.

RRC’s Zacks Rank and Key Picks

Currently, RRC carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the energy sector are PEDEVCO Corp. PED, Archrock Inc. AROC and FuelCell Energy FCEL. PEDEVCO and Archrock presently sport a Zacks Rank #1 (Strong Buy) each, while FuelCell Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PEDEVCO is engaged in the acquisition and development of energy assets in the United States and Pacific Rim countries. PED stands to benefit significantly from its holdings in the Permian Basin, one of the most prolific oil-producing regions in the United States and the D-J Basin in Colorado, which includes more than 150 high-quality drilling locations. Combined with bullish oil prices, this is expected to boost the company's production and overall profitability.

Archrock is an energy infrastructure company based in the United States, with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.

FuelCell Energy is a clean energy company offering low-carbon energy solutions. It produces power using flexible fuel sources such as biogas, natural gas and hydrogen. The company designs fuel cells that generate electricity through an electrochemical process that combines fuel with air, reducing carbon emissions and minimizing the environmental impact of power generation. As such, it is anticipated to play a crucial role in the energy transition by enabling industries and communities to shift from traditional fossil fuels to low-carbon alternatives.

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