It has been about a month since the last earnings report for Range Resources (RRC). Shares have added about 25.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Range Resources due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Range Resources Q4 Earnings Lag Estimates, Revenues Top
Range Resourcesreported fourth-quarter 2021 adjusted earnings of 96 cents per share, missing the Zacks Consensus Estimate of 98 cents. The bottom line improved from earnings of 2 cents per share in the prior-year quarter.
Total revenues for the reported quarter were $1,567 million, beating the Zacks Consensus Estimate of $967 million. The top line improved from the prior-year $599 million.
The lower-than-expected quarterly earnings were owing to increased direct operating expenses. This was offset partially by higher gas equivalent production.
Operational Performance
For fourth-quarter 2021, the company’s production averaged 2,198.4 million cubic feet equivalent per day, up 5% from the prior-year period. Natural gas contributed almost 70% to total production, while NGLs and oil accounted for the remaining.
Oil production increased 36% for the quarter from the year-ago period, while NGL and natural gas output increased 5%.
Its total price realization (excluding derivative settlements and before third-party transportation costs) averaged $5.64 per thousand cubic feet equivalent (Mcfe), up 143% year over year. Natural gas prices rose 169% on a year-over-year basis to $5.27 per Mcf. NGL and oil prices increased 101% and 120%, respectively.
Costs & Expenses
Total costs and expenses rose to $656.9 million from $556.3 million in the year-ago quarter. Total transportation, gathering, processing and compression costs as well as direct operating expenses increased in the quarter. Lower exploration costs offset the rise of the expenses partially.
On a per-unit basis, direct operating costs increased to 9 cents per Mcfe from 8 cents per Mcfe in the December quarter of 2020. Transportation, gathering, processing and compression expenses were recorded at $1.59 per Mcfe, higher than $1.34 in the prior-year quarter.
Capital Expenditure & Balance Sheet
The company’s drilling and completion expenditure totaled $83.7 million for fourth-quarter 2021. An amount of $8.6 million was used in acreage and gathering facilities.
At fourth quarter-end, it had total debt of $2,707.8 million. It had a debt to capitalization of 56.5%.
Outlook
Range Resources has reinstated its regular quarterly cash dividend, expected to start in the second half of this year. Range Resources anticipated its annual dividend rate at 32 cents per share.
RRC has announced the authorization of a $500-million share repurchase program. The upstream energy firm has projected free cash flow to exceed $1 billion this year.
RRC anticipates capital spending for this year in the band of $460 million to $480 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, Range Resources has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Range Resources has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
