Range Resources Corporation (RRC) Bundle
Understanding Range Resources Corporation (RRC) Revenue Streams
Understanding Range Resources Corporation’s Revenue Streams
Range Resources Corporation generates revenue primarily from the sale of natural gas, natural gas liquids (NGLs), and oil. The revenue breakdown for the three and nine months ended September 30, 2024, is as follows:
| Revenue Source | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Change (%) | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 | Change (%) |
|---|---|---|---|---|---|---|
| Natural Gas Sales | $234,139 | $246,976 | (5%) | $715,266 | $913,915 | (22%) |
| NGLs Sales | $266,186 | $238,211 | 12% | $750,547 | $695,368 | 8% |
| Oil Sales | $32,952 | $41,531 | (21%) | $112,915 | $122,099 | (8%) |
| Total Revenue | $533,277 | $526,718 | 1% | $1,578,728 | $1,731,382 | (9%) |
The total revenue from natural gas, NGLs, and oil sales in the third quarter of 2024 saw a slight increase of 1% compared to the same period in 2023, primarily driven by a 12% increase in NGL sales. However, natural gas and oil sales experienced a decline of 5% and 21%, respectively. For the first nine months of 2024, total revenue decreased by 9% compared to the same period in 2023, with natural gas sales dropping by 22%.
In terms of production, the daily production for the third quarter of 2024 averaged 2.2 Bcfe, compared to 2.1 Bcfe in the same period of 2023. The increase in production contributed to the overall revenue performance despite the decrease in realized prices for natural gas and oil.
The realized prices for the three months ended September 30, 2024, were as follows:
| Commodity | Average Realized Price (per mcfe) | Change (%) |
|---|---|---|
| Natural Gas | $1.69 | (9%) |
| NGLs | $25.96 | 6% |
| Oil | $64.03 | (9%) |
As shown in the tables, the average realized price for natural gas decreased by 9% in the third quarter of 2024 compared to the previous year, while NGLs saw a 6% increase. The average realized price of oil also dropped by 9%.
Overall, the revenue analysis indicates that while there was a modest increase in total revenue in the third quarter of 2024, significant declines in natural gas and oil sales revenue reflect the volatility in commodity prices and challenges in the market.
A Deep Dive into Range Resources Corporation (RRC) Profitability
A Deep Dive into Range Resources Corporation's Profitability
Gross Profit Margin: For the first nine months of 2024, the gross profit margin was approximately 42.7%, down from 56.0% in the same period of 2023. This decline is attributed to a 9% decrease in total revenue from natural gas, NGLs, and oil sales, totaling $1.58 billion compared to $1.73 billion in 2023.
Operating Profit Margin: The operating profit margin for the first nine months of 2024 was 23.0%, compared to 36.5% in 2023. Operating income decreased due to increased operational costs, including transportation and gathering expenses.
Net Profit Margin: The net profit margin for the first nine months of 2024 was 10.9%, significantly lower than the 32.4% margin reported for the same period in 2023. This reflects a decrease in net income to $171.5 million from $561.1 million year-over-year.
Trends in Profitability Over Time
In Q3 2024, the net income was $50.7 million, slightly up from $49.4 million in Q3 2023. The revenue for Q3 2024 reached $533.3 million, a 1% increase from $526.7 million in Q3 2023, driven by a 4% increase in production volumes.
Comparison of Profitability Ratios with Industry Averages
The following table compares the profitability metrics of Range Resources Corporation with industry averages for 2024:
| Metric | Range Resources Corporation 2024 | Industry Average 2024 |
|---|---|---|
| Gross Profit Margin | 42.7% | 50.0% |
| Operating Profit Margin | 23.0% | 30.0% |
| Net Profit Margin | 10.9% | 15.0% |
Analysis of Operational Efficiency
Direct operating expenses per mcfe for the first nine months of 2024 were $0.12, a slight decrease from $0.13 in the same period of 2023. However, transportation and gathering costs increased to $1.48 per mcfe, compared to $1.44 in 2023, reflecting rising NGLs volumes and prices.
General and administrative expenses remained steady at $0.20 per mcfe for both 2024 and 2023. Interest expenses decreased by 5% due to lower debt balances, supporting improved operational efficiency.
The following table summarizes key operational efficiency metrics:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Direct Operating Expense per mcfe | $0.12 | $0.12 |
| Transportation and Gathering Expense per mcfe | $1.51 | $1.42 |
| General and Administrative Expense per mcfe | $0.20 | $0.20 |
| Interest Expense Change | -5% | +4% |
Debt vs. Equity: How Range Resources Corporation (RRC) Finances Its Growth
Debt vs. Equity Structure
As of September 30, 2024, the company reported total outstanding debt of $1,706.5 million, which includes:
- 4.875% senior notes due 2025: $618.1 million
- 8.25% senior notes due 2029: $600 million
- 4.75% senior notes due 2030: $500 million
The company had no bank debt outstanding as of this date.
The debt-to-equity ratio stands at 0.44, calculated as total debt of $1,706.5 million over total stockholders' equity of $3,868.1 million. This ratio is below the industry average, which typically ranges from 0.5 to 1.5 for similar companies in the sector.
Recent debt activity includes the repurchase of $70.2 million principal amount of the 4.875% senior notes due 2025 at a discount, which resulted in a gain on early extinguishment of debt of approximately $254,000. The company also maintained a substantial liquidity position with $277.5 million in cash and $1.3 billion available under its credit facility as of September 30, 2024.
Credit ratings for the company have remained stable, with recent evaluations suggesting a solid financial position capable of managing its debt obligations. The company has not reported any downgrades from major credit rating agencies.
Below is a summary table of the company’s debt structure:
| Debt Type | Outstanding Amount (in millions) | Interest Rate | Maturity Date |
|---|---|---|---|
| 4.875% Senior Notes | $618.1 | 4.875% | 2025 |
| 8.25% Senior Notes | $600.0 | 8.25% | 2029 |
| 4.75% Senior Notes | $500.0 | 4.75% | 2030 |
The company effectively balances its financing through a combination of debt and equity funding. In the first nine months of 2024, it utilized cash flows from operations to fund capital expenditures totaling $478.4 million. The approach ensures that the company can finance growth while maintaining a manageable debt level.
Overall, the company’s financial health appears robust, with a clear strategy for managing debt alongside equity financing, positioning it favorably for future growth opportunities.
Assessing Range Resources Corporation (RRC) Liquidity
Assessing Liquidity and Solvency
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $410.1 million | $220.5 million | 1.86 |
Quick Ratio: The quick ratio, excluding inventories, is:
| Quick Assets | Current Liabilities | Quick Ratio |
|---|---|---|
| $390.0 million | $220.5 million | 1.77 |
Working Capital Trends: The working capital as of September 30, 2024 stands at:
| Current Assets | Current Liabilities | Working Capital |
|---|---|---|
| $410.1 million | $220.5 million | $189.6 million |
Cash Flow Overview:
- Operating Cash Flow (Q3 2024): $245.9 million
- Investing Cash Flow (Q3 2024): $(432.3 million)
- Financing Cash Flow (Q3 2024): $(188.5 million)
Cash Flow Analysis: In the first nine months of 2024, the cash flows from operating activities were:
| Cash Flow Type | Amount |
|---|---|
| Operating Activities | $726.6 million |
| Investing Activities | $(472.6 million) |
| Financing Activities | $(188.5 million) |
Liquidity Concerns: As of September 30, 2024, the company maintains:
- Cash on Hand: $277.5 million
- Credit Facility Availability: $1.3 billion
Debt Management: The company has no outstanding borrowings under its credit facility and has a borrowing base of $3.0 billion. Compliance with financial covenants is maintained as of the latest reporting period.
Is Range Resources Corporation (RRC) Overvalued or Undervalued?
Valuation Analysis
In assessing the financial health of the company, several key valuation metrics are analyzed, including the price-to-earnings (P/E) ratio, price-to-book (P/B) ratio, and enterprise value-to-EBITDA (EV/EBITDA) ratio.
Price-to-Earnings (P/E) Ratio
The current P/E ratio stands at 43.8 based on a trailing twelve months (TTM) net income of $171.5 million and a market capitalization of approximately $7.5 billion.
Price-to-Book (P/B) Ratio
The P/B ratio is calculated at 1.7, reflecting a book value of equity of approximately $4.4 billion.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is estimated at 10.5, with EBITDA reported at approximately $710 million for the last twelve months.
Stock Price Trends
Over the last 12 months, the stock price has experienced fluctuations, starting at around $30.44 at the beginning of the period and reaching a peak of $33.53 before closing at approximately $30.76 as of September 30, 2024.
| Period | Stock Price ($) | Change (%) |
|---|---|---|
| September 2023 | 30.44 | - |
| December 2023 | 33.53 | 6.5% |
| March 2024 | 32.41 | -3.34% |
| June 2024 | 33.53 | 3.45% |
| September 2024 | 30.76 | -8.25% |
Dividend Yield and Payout Ratios
The current dividend yield is 0.26%, with a quarterly dividend payment of $0.08 per share. The payout ratio is approximately 38% of the net income.
Analyst Consensus
Analyst consensus indicates a "Hold" rating. Out of 15 analysts, 7 recommend buying, 6 suggest holding, and 2 advise selling the stock based on current valuation metrics and market conditions.
| Analyst Recommendation | Number of Analysts |
|---|---|
| Buy | 7 |
| Hold | 6 |
| Sell | 2 |
Overall, the valuation analysis reflects a mixed outlook, with key ratios suggesting the company may be overvalued at current price levels.
Key Risks Facing Range Resources Corporation (RRC)
Key Risks Facing Range Resources Corporation
Range Resources Corporation faces several internal and external risks that could impact its financial health and operational performance.
Industry Competition
The natural gas and oil industry is highly competitive. As of September 30, 2024, the company reported a 9% decrease in revenue from the sale of natural gas, NGLs, and oil compared to the same period in 2023, attributed to lower realized prices despite an increase in production.
Commodity Price Volatility
Commodity prices have exhibited significant volatility, impacting revenue, net income, and cash flows. The average NYMEX prices for natural gas decreased from $2.55 per mcf in Q3 2023 to $2.16 per mcf in Q3 2024, and oil prices dropped from $82.12 per bbl to $75.58 per bbl over the same period. This volatility is a critical risk factor that directly affects the company's revenues.
Regulatory Changes
The company operates in a heavily regulated environment. Changes in laws and regulations could impact operational costs and compliance burdens. The effective tax rate for Q3 2024 was 30.7%, a notable change from 27.5% in Q3 2023.
Operational Risks
Operational challenges, including drilling success and production efficiency, are crucial. Daily production averaged 2.2 Bcfe in the first nine months of 2024, up from 2.1 Bcfe in the same period of 2023, indicating operational improvements. However, the natural decline in existing wells remains a persistent risk.
Financial Risks
The company reported a 4% decrease in interest expense in Q3 2024 due to lower debt balances, highlighting financial management as a critical factor. Nonetheless, the total debt obligations and the ability to meet these obligations remain a risk, especially in a volatile commodity environment.
Strategic Risks
Strategically, the company has focused on maintaining liquidity, with $277.5 million in cash on hand and $1.3 billion available under its credit facility as of September 30, 2024. However, reliance on cash flows from operations, which were $726.6 million in the first nine months of 2024, poses a risk if commodity prices decline further.
Risk Mitigation Strategies
To mitigate risks, the company has hedged more than 50% of its projected natural gas production for the remainder of 2024, which could help stabilize revenues against price fluctuations. Additionally, the company maintains a stock repurchase program with a remaining authorization of $1.0 billion, which can support share price stability during volatile market conditions.
| Risk Factor | Description | Impact on Financials |
|---|---|---|
| Commodity Price Volatility | Fluctuations in natural gas and oil prices | Revenue and cash flow variability |
| Regulatory Changes | Changes in laws affecting operations | Increased compliance costs |
| Operational Risks | Drilling success and production decline | Impact on production levels |
| Financial Risks | Debt management and interest expenses | Net income affected by interest payments |
| Strategic Risks | Liquidity management and cash flow reliance | Ability to fund operations and growth |
Future Growth Prospects for Range Resources Corporation (RRC)
Future Growth Prospects for Range Resources Corporation
Analysis of Key Growth Drivers
The company is focusing on several key growth drivers, including:
- Product Innovations: The introduction of advanced drilling technologies aims to enhance efficiency and reduce costs.
- Market Expansions: Expansion into new geographical markets is a priority, particularly in emerging markets where demand for natural gas is increasing.
- Acquisitions: Strategic acquisitions of smaller firms in complementary sectors are being pursued to enhance market share and operational capabilities.
Future Revenue Growth Projections and Earnings Estimates
For the fiscal year 2024, the company anticipates revenue from the sale of natural gas, NGLs, and oil to reach approximately $1.58 billion, representing a decline of 9% compared to $1.73 billion in 2023. The expected net income for 2024 is projected at $171.5 million, or $0.70 per diluted share, down from $561.1 million or $2.27 per diluted share in 2023.
| Financial Metrics | 2024 Estimate | 2023 Actual | Change (%) |
|---|---|---|---|
| Revenue | $1.58 billion | $1.73 billion | -9% |
| Net Income | $171.5 million | $561.1 million | -69% |
| EPS (Diluted) | $0.70 | $2.27 | -69% |
Strategic Initiatives or Partnerships That May Drive Future Growth
The company is actively pursuing partnerships that leverage technological innovations in natural gas extraction and processing. Collaborative agreements with technology firms aim to enhance operational efficiency and sustainability practices, which are increasingly important to stakeholders.
Competitive Advantages That Position the Company for Growth
The company maintains a competitive edge through:
- Strong Liquidity Position: As of September 30, 2024, the company reported cash on hand of $277.5 million and an available credit facility of $1.3 billion, providing substantial liquidity to fund growth initiatives.
- Cost Management: Direct operating expenses per mcfe were $0.12 in Q3 2024, consistent with the prior year, indicating effective cost control measures.
- Hedging Strategy: The company has hedged over 50% of its projected natural gas production for the remainder of 2024, which mitigates risks associated with commodity price volatility.
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Article updated on 8 Nov 2024
Resources:
- Range Resources Corporation (RRC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Range Resources Corporation (RRC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Range Resources Corporation (RRC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.