Edgar Filing: RANGE RESOURCES CORP

rrc-10q_20190331.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-12209

RANGE RESOURCES CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Delaware		34-1312571
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)
100 Throckmorton Street, Suite 1200 Fort Worth, Texas		76102
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code

(817) 870-2601

Former Name, Former Address and Former Fiscal Year, if changed since last report: Not applicable

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☑	Accelerated Filer	☐

Non-Accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

251,148,010 Common Shares were outstanding on April 19, 2019

RANGE RESOURCES CORPORATION

FORM 10-Q

Quarter Ended March 31, 2019

Unless the context otherwise indicates, all references in this report to “Range Resources,” “Range,” “we,” “us,” or “our” are to Range Resources Corporation and its directly and indirectly owned subsidiaries. For certain industry specific terms used in the Form 10-Q, please see “Glossary of Certain Defined Terms” in our 2018 Annual Report on Form 10-K.

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION
ITEM 1.	Financial Statements	3
	Consolidated Balance Sheets (Unaudited)	3
	Consolidated Statements of Operations (Unaudited)	4
	Consolidated Statements of Comprehensive Income (Unaudited)	5
	Consolidated Statements of Cash Flows (Unaudited)	6
	Consolidated Statements of Stockholders’ Equity (Unaudited)	7
	Selected Notes to Consolidated Financial Statements (Unaudited)	8
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	41
ITEM 4.	Controls and Procedures	44
PART II – OTHER INFORMATION
ITEM 1.	Legal Proceedings	44
ITEM 1A.	Risk Factors	44
ITEM 6.	Exhibits	45

	SIGNATURES	46

PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

RANGE RESOURCES CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

	March 31,			December 31,
	2019			2018
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	488		$	545
Accounts receivable, less allowance for doubtful accounts of $6,118 and $6,118		356,716			490,723
Derivative assets		6,146			87,953
Inventory and other		25,128			22,964
Total current assets		388,478			602,185
Derivative assets		8,406			4,842
Natural gas and oil properties, successful efforts method		13,300,145			13,085,206
Accumulated depletion and depreciation		(4,194,876	)		(4,062,021	)
		9,105,269			9,023,185
Other property and equipment		112,373			111,908
Accumulated depreciation and amortization		(103,548	)		(102,132	)
		8,825			9,776
Operating lease right-of-use assets		49,329			—
Other assets		74,757			68,166
Total assets	$	9,635,064		$	9,708,154

Liabilities
Current liabilities:
Accounts payable	$	215,073		$	227,344
Asset retirement obligations		5,485			5,485
Accrued liabilities		399,822			475,848
Accrued interest		37,051			41,990
Derivative liabilities		13,369			4,144
Total current liabilities		670,800			754,811
Bank debt		884,652			932,018
Senior notes		2,857,297			2,856,166
Senior subordinated notes		48,700			48,677
Deferred tax liabilities		672,376			666,668
Derivative liabilities		2,559			3,462
Deferred compensation liabilities		75,179			67,542
Operating lease liabilities		41,759			—
Asset retirement obligations and other liabilities		319,079			319,379
Total liabilities		5,572,401			5,648,723
Commitments and contingencies

Stockholders’ Equity
Preferred stock, $1 par, 10,000,000 shares authorized, none issued and outstanding		—			—
Common stock, $0.01 par, 475,000,000 shares authorized, 251,147,799 issued at March 31, 2019 and 249,519,687 issued at December 31, 2018		2,512			2,495
Common stock held in treasury, 9,665 shares at March 31, 2019 and 9,665 shares at December 31, 2018		(391	)		(391	)
Additional paid-in capital		5,635,210			5,628,447
Accumulated other comprehensive loss		(598	)		(658	)
Retained deficit		(1,574,070	)		(1,570,462	)
Total stockholders’ equity		4,062,663			4,059,431
Total liabilities and stockholders’ equity	$	9,635,064		$	9,708,154

The accompanying notes are an integral part of these consolidated financial statements.

RANGE RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

	Three Months Ended March 31,
	2019			2018

Revenues and other income:
Natural gas, NGLs and oil sales	$	671,654		$	696,629
Derivative fair value loss		(61,731	)		(14,009	)
Brokered natural gas, marketing and other		138,214			59,979
Total revenues and other income		748,137			742,599
Costs and expenses:
Direct operating		33,227			38,122
Transportation, gathering, processing and compression		302,655			244,628
Production and ad valorem taxes		11,310			9,926
Brokered natural gas and marketing		132,305			55,594
Exploration		8,211			7,719
Abandonment and impairment of unproved properties		12,659			11,773
General and administrative		46,638			68,417
Termination costs		—			(37	)
Deferred compensation plan		3,581			(7,397	)
Interest		51,537			52,385
Depletion, depreciation and amortization		138,718			162,266
Impairment of proved properties		—			7,312
Loss (gain) on the sale of assets		189			(23	)
Total costs and expenses		741,030			650,685
Income before income taxes		7,107			91,914
Income tax expense:
Current		—			—
Deferred		5,688			42,676
		5,688			42,676
Net income	$	1,419		$	49,238
Net income per common share:
Basic	$	0.01		$	0.20
Diluted	$	0.01		$	0.20
Dividends paid per common share	$	0.02		$	0.02
Weighted average common shares outstanding:
Basic		247,776			245,709
Diluted		249,154			246,594

The accompanying notes are an integral part of these consolidated financial statements.

RANGE RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited, in thousands)

	Three Months Ended March 31,
	2019			2018

Net income	$	1,419		$	49,238
Other comprehensive income:
Postretirement benefits
Prior service cost		92			92
Actuarial gain		(12	)		—
Income tax expense		(20	)		(23	)
Total comprehensive income	$	1,479		$	49,307

The accompanying notes are an integral part of these consolidated financial statements.

RANGE RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

	Three Months Ended March 31,
	2019			2018

Operating activities:
Net income	$	1,419		$	49,238
Adjustments to reconcile net income to net cash provided from operating activities:
Deferred income tax expense		5,688			42,676
Depletion, depreciation and amortization and impairment		138,718			169,578
Exploration dry hole costs		—			2
Abandonment and impairment of unproved properties		12,659			11,773
Derivative fair value loss		61,731			14,009
Cash settlements on derivative financial instruments		24,834			8,925
Amortization of deferred financing costs and other		1,807			1,312
Deferred and stock-based compensation		14,112			18,527
Loss (gain) on the sale of assets		189			(23	)
Changes in working capital:
Accounts receivable		134,006			53,913
Inventory and other		(4,763	)		(5,294	)
Accounts payable		(30,431	)		47,453
Accrued liabilities and other		(99,275	)		(41,517	)
Net cash provided from operating activities		260,694			370,572
Investing activities:
Additions to natural gas and oil properties		(190,014	)		(308,641	)
Additions to field service assets		(576	)		(239	)
Acreage purchases		(23,646	)		(25,355	)
Proceeds from disposal of assets		332			40
Purchases of marketable securities held by the deferred compensation plan		(4,259	)		(13,153	)
Proceeds from the sales of marketable securities held by the deferred compensation plan		6,204			11,928
Net cash used in investing activities		(211,959	)		(335,420	)
Financing activities:
Borrowings on credit facilities		566,000			528,000
Repayments on credit facilities		(614,000	)		(557,000	)
Dividends paid		(5,023	)		(4,971	)
Taxes paid for shares withheld		(3,161	)		(2,659	)
Change in cash overdrafts		7,218			922
Proceeds from the sales of common stock held by the deferred compensation plan		174			635
Net cash used in financing activities		(48,792	)		(35,073	)
(Decrease) increase in cash and cash equivalents		(57	)		79
Cash and cash equivalents at beginning of period		545			448
Cash and cash equivalents at end of period	$	488		$	527

The accompanying notes are an integral part of these consolidated financial statements.

RANGE RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per share data)

														Accumulated
					Common stock									other
	Common stock				held in			Additional paid-			Retained			comprehensive
	Shares		Par value		treasury			in capital			(deficit)/earnings			(loss) income			Total
Balance as of December 31, 2018		249,520	$	2,495	$	(391	)	$	5,628,447		$	(1,570,462	)	$	(658	)	$	4,059,431
Issuance of common stock		1,628		17		—			(2,396	)		—			—			(2,379	)
Issuance of common stock upon vesting of PSUs		—		—		—			4			(4	)		—			—
Stock-based compensation expense		—		—		—			9,155			—			—			9,155
Cash dividends paid ($0.02 per share)		—		—		—			—			(5,023	)		—			(5,023	)
Other comprehensive income		—		—		—			—			—			60			60
Net income		—		—		—			—			1,419			—			1,419
Balance as of March 31, 2019		251,148	$	2,512	$	(391	)	$	5,635,210		$	(1,574,070	)	$	(598	)	$	4,062,663


														Accumulated
					Common stock									other
	Common stock				held in			Additional paid-			Retained			comprehensive
	Shares		Par value		treasury			in capital			(deficit)/earnings			(loss) income			Total
Balance as of December 31, 2017		248,144	$	2,481	$	(599	)	$	5,577,732		$	195,990		$	(1,332	)	$	5,774,272
Issuance of common stock		1,092		11		—			(1,228	)		—			—			(1,217	)
Stock-based compensation expense		—		—		—			17,201			—			—			17,201
Cash dividends paid ($0.02 per share)		—		—		—			—			(4,971	)		—			(4,971	)
Treasury stock issuance		—		—		30			(30	)		—			—			—
Other comprehensive income		—		—		—			—			—