美国
证券交易委员会
华盛顿特区20549
表格
（在以下选项中加上一个）
根据1934年证券交易法第13或15(d)节的季度报告 |
截至季度结束日期的财务报告
或者
根据1934年证券交易法第13或15(d)节的转型报告书 |
过渡期从 对
委托文件编号：001-39866
（按其章程规定的确切注册人名称）
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（注册地或其他组织机构的州或其他辖区） |
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（内部税务服务雇主识别号码） |
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(主要领导机构的地址) |
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(邮政编码) |
在法案第12(b)条的规定下注册的证券：
每一类的名称 |
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交易 符号: |
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在其上注册的交易所的名称 |
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公司电话号码，包括区号
(
请在检查标记处注明注册人（1）是否已在证券交易法第13或15（d）条所规定的过去12个月（或注册人需要提交此类报告的较短期间）内提交了所有必须提交的报告，并且（2）自过去90天以来一直受到此类提交要求的限制。
请使用复选标记表示，注册者是否按照S-t条例第405条的规定提交了每个互动数据文件。 在过去的12个月（或者注册者需要提交这些文件的更短时期内）。
请在以下空格内打勾，表示公司是大型加速审核注册处理者、加速审核注册处理者、非加速审核注册处理者、小型报告公司或新兴成长型公司。详见《证券交易法》规则120亿.2中的“大型加速审核注册处理者”、“加速审核注册处理者”、“小型报告公司”和“新兴成长型公司”的定义。
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加速存取器 |
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非大型快速提交者 |
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较小报告公司 |
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新兴成长公司 |
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如果是新兴成长型公司，请在复选框中打勾，以确定注册人是否选择不使用在1934年证券交易法第13(a)条项下提供的任何新的或修订的财务会计准准则的延长过渡期。 |
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请在复选标志处注明公司是否为壳公司（根据交易所法令第12b-2条的定义）。
是 ☐ 否
山脉资源有限公司
10-Q表格
2024年9月30日季度结束
除非上下文另有说明，本报告中提到的"山脉资源"，"Range"，"我们"，"我们"均指的是山脉资源公司及其直接和间接拥有的子公司. 对于本10-Q表格中使用的特定行业术语，请参阅我们2023年年度报告中的"某些定义术语表"
目录
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页面 |
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第 1 项。 |
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财务报表: |
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3 |
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9 |
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第 2 项。 |
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22 |
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第 3 项。 |
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34 |
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第 4 项。 |
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36 |
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第 1 项。 |
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37 |
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第 1A 项。 |
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第 2 项。 |
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第 5 项。 |
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第 6 项。 |
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38 |
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39 |
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2
第一部分 - 财务信息
项目1。基本报表
山脉资源有限公司
基本报表
（以千为单位，除每股数据外）
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2020年9月30日 |
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12月31日 |
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2024 |
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2023 |
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资产 |
(未经审计) |
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流动资产： |
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现金及现金等价物 |
$ |
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$ |
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应收账款，扣除账损准备余额$ |
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应收待摊款项 |
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衍生工具资产 |
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预付资产 |
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其他资产 |
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总流动资产 |
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衍生工具资产 |
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天然气资产，成功努力法 |
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累计折旧和摊销 |
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其他 |
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累计折旧及摊销费用 |
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经营租赁权使用资产 |
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其他 |
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总资产 |
$ |
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$ |
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负债 |
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流动负债: |
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应付账款 |
$ |
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$ |
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资产养老责任 |
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应计负债 |
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递延薪酬负债 |
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应计利息 |
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衍生工具负债 |
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经营租赁负债 |
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剥离合同义务 |
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长期债务的流动部分 |
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流动负债合计 |
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优先票据 |
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递延税款负债 |
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衍生工具负债 |
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递延薪酬负债 |
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经营租赁负债 |
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资产退役责任和其他负债 |
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剥离合同义务 |
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负债合计 |
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股东权益 |
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优先股，$0.0001 |
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普通股，每股面值为 $0.0001； |
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截至2024年6月30日，公司已回购普通股64,283,710股，成本为 |
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额外实收资本 |
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累计其他综合收益 |
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赤字 |
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股东权益合计 |
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负债和股东权益总额 |
$ |
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$ |
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附注是这些合并财务报表的一部分。
3
山脉资源有限公司
CO 损益表综合表
（未经审计，单位为千，除每股数据外）
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截至9月30日的三个月 |
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截至9月30日的九个月 |
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2024 |
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2023 |
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2024 |
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2023 |
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收入和其他收入： |
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天然气、天然气液体和石油销售 |
$ |
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$ |
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$ |
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$ |
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衍生工具公允价值收益 |
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经纪天然气、推广和其他 |
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总收入和其他收入 |
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成本和费用： |
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直接操作 |
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运输、采集、处理和压缩 |
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所得税以外的税费 |
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经纪天然气及营销 |
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勘探 |
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废弃和未证实资源的减值 |
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ZSCALER, INC. |
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出口成本 |
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推迟的补偿计划 |
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利息 |
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提前偿付债务所获得的收益 |
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折耗、折旧和摊销 |
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Cash flows from financing activities: |
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总成本和费用 |
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税前收入 |
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所得税费用： |
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当前 |
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延期支付 |
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净收入 |
$ |
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$ |
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$ |
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$ |
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每股普通股净收益: |
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基本 |
$ |
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$ |
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$ |
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$ |
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稀释的 |
$ |
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$ |
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$ |
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$ |
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每股分红派息 |
$ |
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$ |
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$ |
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$ |
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加权平均流通股数: |
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基本 |
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稀释的 |
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附注是这些合并财务报表的一部分。
4
山脉资源有限公司
综合损益表综合收益表
(未经审计，以千为单位)
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截至9月30日的三个月 |
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截至9月30日的九个月 |
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2024 |
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2023 |
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2024 |
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2023 |
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净收入 |
$ |
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$ |
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$ |
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$ |
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其他综合收益: |
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离职后福利： |
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以前服务成本/精算收益的摊销 |
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所得税费用（收益） |
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( |
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总综合收益 |
$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
5
RANGE RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
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Nine Months Ended September 30, |
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2024 |
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2023 |
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Operating activities: |
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Net income |
$ |
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$ |
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Adjustments to reconcile net income to net cash provided from operating activities: |
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Deferred income tax expense |
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Depletion, depreciation and amortization |
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Abandonment and impairment of unproved properties |
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Derivative fair value income |
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Cash settlements on derivative financial instruments |
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Divestiture contract obligation, including accretion |
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Amortization of deferred financing costs and other |
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Deferred and stock-based compensation |
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Gain on the sale of assets |
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Gain on early extinguishment of debt |
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Changes in working capital: |
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Accounts receivable |
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Other current assets |
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Accounts payable |
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Accrued liabilities and other |
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Net cash provided from operating activities |
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Investing activities: |
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Additions to natural gas properties |
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Additions to field service assets |
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Acreage purchases |
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Proceeds from disposal of assets |
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Purchases of marketable securities held by the deferred compensation plan |
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Proceeds from the sales of marketable securities held by the deferred |
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Net cash used in investing activities |
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Financing activities: |
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Borrowings on credit facility |
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Repayments on credit facility |
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Repayment of senior notes |
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( |
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Dividends paid |
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( |
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( |
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Treasury stock purchases |
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( |
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( |
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Taxes paid for shares withheld |
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( |
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( |
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Change in cash overdrafts |
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( |
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Proceeds from the sales of common stock held by the deferred |
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Net cash used in financing activities |
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Increase in cash and cash equivalents |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
$ |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
6
RANGE RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited, in thousands, except per share data)
Fiscal Year 2024 |
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Common |
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Accumulated |
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stock |
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Additional |
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other |
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Common stock |
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Treasury |
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held in |
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paid-in |
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comprehensive |
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Retained |
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Shares |
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Par value |
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shares |
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treasury |
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capital |
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income |
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deficit |
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Total |
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Balance as of December 31, 2023 |
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$ |
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( |
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$ |
( |
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$ |
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$ |
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$ |
( |
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$ |
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Issuance of common stock |
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— |
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( |
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( |
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Issuance of common stock upon |
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— |
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( |
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Stock-based compensation expense |
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— |
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— |
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Dividends ($ |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
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Other comprehensive loss |
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— |
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— |
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|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Net income |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance as of March 31, 2024 |
|
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Issuance of common stock |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Stock-based compensation expense |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Dividends ($ |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Treasury stock repurchased |
|
— |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Other comprehensive loss |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Net income |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance as of June 30, 2024 |
|
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Issuance of common stock |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||||
Stock-based compensation expense |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Dividends ($ |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Treasury stock repurchased |
|
— |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Other comprehensive loss |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Net income |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance as of September 30, 2024 |
|
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
The accompanying notes are an integral part of these consolidated financial statements.
7
RANGE RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited, in thousands, except per share data)
Fiscal Year 2023 |
|
|
|
|
|
|
|
|
|
Common |
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
stock |
|
|
Additional |
|
|
other |
|
|
|
|
|
|
|
||||||||
|
Common stock |
|
|
Treasury |
|
|
held in |
|
|
paid-in |
|
|
comprehensive |
|
|
Retained |
|
|
|
|
|||||||||||
|
Shares |
|
|
Par value |
|
|
shares |
|
|
treasury |
|
|
capital |
|
|
income |
|
|
deficit |
|
|
Total |
|
||||||||
Balance as of December 31, 2022 |
|
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Issuance of common stock |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||||
Issuance of common stock |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||
Stock-based compensation expense |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Dividends ($ |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Treasury stock issuance |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||||
Treasury stock repurchased |
|
— |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Excise tax on stock repurchases |
|
— |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Other comprehensive income |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance as of March 31, 2023 |
|
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Issuance of common stock |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Stock-based compensation expense |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Dividends ($ |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Treasury stock repurchased |
|
— |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Excise tax on stock repurchases |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive income |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance as of June 30, 2023 |
|
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Issuance of common stock |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Stock-based compensation expense |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Dividends ($ |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Other comprehensive income |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income |
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance as of September 30, 2023 |
|
|
|
$ |
|
|
|
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
The accompanying notes are an integral part of these consolidated financial statements.
8
RANGE RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) SUMMARY OF ORGANIZATION AND NATURE OF BUSINESS
(2) BASIS OF PRESENTATION
These consolidated financial statements are unaudited but, in the opinion of management, reflect all adjustments necessary for a fair statement of the results for the periods reported. All adjustments are of a normal recurring nature unless otherwise disclosed. These consolidated financial statements, including selected notes, have been prepared in accordance with the applicable rules of the Securities Exchange Commission ("SEC") and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America (U.S. GAAP) for complete financial statements.
(3) NEW ACCOUNTING STANDARDS
Not Yet Adopted
There were no issued or pending accounting standards in third quarter 2024 that are expected to have a material impact on our consolidated financial statements.
(4) REVENUES FROM CONTRACTS WITH CUSTOMERS
Disaggregation of Revenue
We have
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Natural gas sales |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
NGLs sales |
|
|
|
|
|
|
|
|
|
|
|
||||
Oil sales |
|
|
|
|
|
|
|
|
|
|
|
||||
Total natural gas, NGLs and oil sales |
|
|
|
|
|
|
|
|
|
|
|
||||
Sales of purchased natural gas |
|
|
|
|
|
|
|
|
|
|
|
||||
Sales of purchased NGLs |
|
|
|
|
|
|
|
|
|
|
|
||||
Interest income |
|
|
|
|
|
|
|
|
|
|
|
||||
Other marketing revenue |
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
9
(5) INCOME TAXES
(6) INCOME PER COMMON SHARE
Basic income or loss per share attributable to common shareholders is computed as (1) income or loss attributable to common shareholders (2) less income allocable to participating securities (3) divided by weighted average basic shares outstanding. Diluted income or loss per share attributable to common shareholders is computed as (1) basic income or loss attributable to common shareholders (2) plus diluted adjustments to income allocable to participating securities (3) divided by weighted average diluted shares outstanding. The following sets forth a reconciliation of income or loss to basic income or loss attributable to common shareholders to diluted income or loss attributable to common shareholders (in thousands, except per share amounts):
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net income, as reported |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Participating earnings (a) |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Basic net income attributed to common shareholders |
|
|
|
|
|
|
|
|
|
|
|
||||
Reallocation of participating earnings (a) |
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted net income attributed to common shareholders |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Net income per common share: |
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(a) |
Restricted Stock Liability Awards represent participating securities because they participate in non-forfeitable dividends or distributions with common equity owners. Income allocable to participating securities represents the distributed and undistributed earnings attributable to the participating securities. Participating securities, however, do not participate in undistributed net losses. |
The following details weighted average common shares outstanding and diluted weighted average common shares outstanding (in thousands):
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Weighted average common shares outstanding – basic |
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive securities: |
|
|
|
|
|
|
|
|
|
|
|
||||
Director and employee restricted stock and performance based equity awards |
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average common shares outstanding – diluted |
|
|
|
|
|
|
|
|
|
|
|
||||
10
(7) Capitalized Costs and Accumulated Depreciation, Depletion and Amortization (a)
|
September 30, |
|
|
December 31, |
|
||
|
(in thousands) |
|
|||||
Natural gas properties: |
|
|
|
|
|
||
Properties subject to depletion |
$ |
|
|
$ |
|
||
Unproved properties |
|
|
|
|
|
||
Total |
|
|
|
|
|
||
Accumulated depletion and depreciation |
|
( |
) |
|
|
( |
) |
Net capitalized costs |
$ |
|
|
$ |
|
||
(8) INDEBTEDNESS
|
September 30, |
|
|
December 31, |
|
||
Bank debt |
$ |
|
|
$ |
|
||
Senior notes: |
|
|
|
|
|
||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
Total senior notes |
|
|
|
|
|
||
Unamortized debt issuance costs |
|
( |
) |
|
|
( |
) |
Total debt, net of deferred financing costs |
|
|
|
|
|
||
Less current maturities of long-term debt (a) |
|
( |
) |
|
|
|
|
Total long-term debt |
$ |
|
|
$ |
|
||
(a)
Bank Debt
In April 2022, we entered into an amended and restated revolving bank facility, which we refer to as our bank debt or our bank credit facility, which is secured by substantially all of our assets and has a maturity date of
As part of our re-determination completed in October 2024, our borrowing base was reaffirmed at $
Senior Note Redemptions
If we experience a change of control, noteholders may require us to repurchase all or a portion of our senior notes at
11
During the nine months ended September 30, 2024, we repurchased in the open market $
Guarantees
Range is a holding company that owns no operating assets and has no significant operations independent of its subsidiaries. The guarantees by our subsidiaries, which are directly or indirectly owned by Range, of our senior notes and our bank credit facility are full and unconditional and joint and several, subject to certain customary release provisions. The assets, liabilities and results of operations of Range and our guarantor subsidiaries are not materially different than our consolidated financial statements. A subsidiary guarantor may be released from its obligations under the guarantee:
Debt Covenants
(9) ASSET RETIREMENT OBLIGATIONS
Our asset retirement obligations primarily represent the estimated present value of the amounts we will incur to plug, abandon and remediate our producing properties at the end of their productive lives. Significant inputs used in determining such obligations include estimates of plugging and abandonment costs, estimated future inflation rates and well lives. The inputs are calculated based on historical data as well as current estimated costs.
|
Nine Months Ended |
|
|
Year Ended |
|
||
Beginning of period |
$ |
|
|
$ |
|
||
Liabilities incurred |
|
|
|
|
|
||
Liabilities settled |
|
( |
) |
|
|
( |
) |
Accretion expense |
|
|
|
|
|
||
Change in estimate |
|
|
|
|
|
||
End of period |
|
|
|
|
|
||
Less current portion |
|
( |
) |
|
|
( |
) |
Long-term asset retirement obligations |
$ |
|
|
$ |
|
||
Accretion expense is recognized as a component of depreciation, depletion and amortization expense in the accompanying consolidated statements of income.
12
(10) DERIVATIVE ACTIVITIES
We use commodity-based derivative contracts to manage exposure to commodity price fluctuations. We do not enter into these arrangements for speculative or trading purposes. We utilize commodity swaps, collars, three-way collars or swaptions to (1) reduce the effect of price volatility of the commodities we produce and sell and (2) support our annual capital budget, fixed costs and investment plans. The fair value of our derivative contracts, represented by the estimated amount that would be realized upon termination, based on a comparison of the contract price and a reference price, generally the New York Mercantile Exchange (NYMEX) for natural gas and oil or Mont Belvieu for NGLs, approximated a net unrealized gain of $
Period |
|
Contract Type |
|
Volume Hedged |
|
|
Weighted Average Hedge Price |
|
||||||||||||||||
|
|
|
|
|
|
Swap |
|
|
Sold Put |
|
|
Floor |
|
|
Ceiling |
|
||||||||
Natural Gas (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
2024 |
|
Swaps |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2024 |
|
Collars |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|||||
2024 |
|
Three-way Collars |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|||||
2025 |
|
Swaps |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2025 |
|
Three-way Collars |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|||||
2026 |
|
Swaps |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2027 |
|
Swaps |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
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Oil |
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||||
2024 |
|
Swaps |
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|
$ |
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|||||
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||||
NGLs (C3-Propane) |
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||||
2024 |
|
Swaps |
|
|
$ |
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|||||
(a) |
We also sold natural gas swaptions of |
Every derivative instrument is required to be recorded on the balance sheet as either an asset or a liability measured at its fair value. We recognize all changes in fair value of these derivatives as earnings in derivative fair value income or loss in the periods in which they occur.
Basis Swap Contracts
In addition to the commodity derivatives described above, at September 30, 2024, we had natural gas basis swap contracts which lock in the differential between NYMEX Henry Hub and certain of our physical pricing indices. These contracts settle through December 2028 and include a total volume of
Derivative Assets and Liabilities
The combined fair value of derivatives included in the accompanying consolidated balance sheets as of September 30, 2024 and December 31, 2023 is summarized below. The assets and liabilities are netted where derivatives with both gain and loss positions are held by a single counterparty and we have master netting arrangements. The tables below provide additional information relating to our master netting arrangements with our derivative counterparties (in thousands):
|
September 30, |
|
|
December 31, |
|
|
||
Derivative assets: |
|
|
|
|
|
|
||
Gross amounts of recognized assets |
$ |
|
|
$ |
|
|
||
Gross amounts offset in the consolidated balance sheets |
|
( |
) |
|
|
( |
) |
|
Net amounts of assets presented in the consolidated balance sheets |
$ |
|
|
$ |
|
|
||
13
|
September 30, |
|
|
December 31, |
|
||
Derivative (liabilities): |
|
|
|
|
|
||
Gross amounts of recognized (liabilities) |
$ |
( |
) |
|
$ |
( |
) |
Gross amounts offset in the consolidated balance sheets |
|
|
|
|
|
||
Net amounts of (liabilities) presented in the consolidated balance sheets |
$ |
( |
) |
|
$ |
( |
) |
Derivative Fair Value Income
The effects of our derivatives on our consolidated statements of income are summarized below (in thousands):
|
|
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|||||||
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
2024 |
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2023 |
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|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity swaps |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Swaptions |
|
|
|
|
|
|
|
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( |
) |
|||
Three-way collars |
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|
||||
Collars |
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|
||||
Basis swaps |
|
( |
) |
|
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( |
) |
|
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|
||
Divestiture contingent consideration |
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Total derivative fair value income |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(11) FAIR VALUE MEASUREMENTS
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There are three approaches for measuring the fair value of assets and liabilities: the market approach, the income approach and the cost approach, each of which includes multiple valuation techniques. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to measure fair value by converting future amounts, such as cash flows or earnings, into a single present value amount using current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace the service capacity of an asset. This is often referred to as current replacement cost. The cost approach assumes that the fair value would not exceed what it would cost a market participant to acquire or construct a substitute asset of comparable utility, adjusted for obsolescence.
The fair value accounting standards do not prescribe which valuation technique should be used when measuring fair value and does not prioritize among the techniques. These standards establish a fair value hierarchy that prioritizes the inputs used in applying the various valuation techniques. Inputs broadly refer to the assumptions that market participants use to make pricing decisions, including assumptions about risk. Level 1 inputs are given the highest priority in the fair value hierarchy while Level 3 inputs are given the lowest priority. The three levels of the fair value hierarchy are as follows:
Valuation techniques that maximize the use of observable inputs are favored. Assets and liabilities are classified in their entirety based on the lowest priority level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement of assets and liabilities within the levels of the fair value hierarchy.
14
Fair Values – Recurring
We use a market approach for our recurring fair value measurements and endeavor to use the best information available. The following tables present the fair value hierarchy for assets and liabilities measured at fair value, on a recurring basis (in thousands):
|
|
|
Fair Value Measurements at September 30, 2024 using: |
|
|||||||||||||
|
|
|
Quoted Prices |
|
|
Significant |
|
|
Significant |
|
|
Total |
|
||||
Trading securities held in the deferred compensation plan |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Derivatives |
–swaps |
|
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|
||||
|
–collars |
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|
||||
|
–three-way collars |
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|
||||
|
–basis swaps |
|
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|
( |
) |
|
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|
|
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( |
) |
||
|
–swaptions |
|
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|
|
|
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|
|
( |
) |
|
|
( |
) |
||
|
|
|
Fair Value Measurements at December 31, 2023 using: |
|
|||||||||||||
|
|
|
Quoted Prices |
|
|
Significant |
|
|
Significant |
|
|
Total |
|
||||
Trading securities held in the deferred compensation plan |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Derivatives |
–swaps |
|
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|
||||
|
–collars |
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||||
|
–three-way collars |
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|
||||
|
–basis swaps |
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||||
|
–swaptions |
|
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( |
) |
|
|
( |
) |
||
Our trading securities in Level 1 are exchange-traded and measured at fair value with a market approach using end of period market values. Derivatives in Level 2 are measured at fair value with a market approach using third-party pricing services which have been corroborated with data from active markets or broker quotes. Derivatives in Level 3 are also measured at fair value with a market approach using third-party pricing services which have been corroborated with data from active markets or broker quotes. However, the subjectivity in the volatility factors utilized can cause a significant change in the fair value measurement and is considered a significant unobservable input. As of September 30, 2024, a portion of our natural gas instruments contain swaptions where the counterparty has the right, but not the obligation, to enter into a fixed price swap on a pre-determined date. If exercised, the swaption contract becomes a swap treated consistently with our fixed-price swaps. At September 30, 2024, we used a weighted average implied volatility of
|
Nine Months Ended |
|
|
Balance at December 31, 2023 |
$ |
( |
) |
Total gains included in earnings |
|
|
|
Additions |
|
( |
) |
Settlements |
|
|
|
Balance at September 30, 2024 |
$ |
( |
) |
Trading securities. Our trading securities held in the deferred compensation plan are accounted for using the mark-to-market accounting method and are included in other assets in the accompanying consolidated balance sheets. We elected to adopt the fair value option to simplify our accounting for the investments in our deferred compensation plan. Interest, dividends, and mark-to-market gains or losses are included in deferred compensation plan expense in the accompanying consolidated statements of income. For third quarter 2024, interest and dividends were $
15
Fair Values - Non-recurring
Certain assets are measured at fair value on a non-recurring basis. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. Our proved natural gas and oil properties are reviewed for impairment periodically as events or changes in circumstances indicate the carrying amount may not be recoverable. There were no proved property impairment charges in third quarter or first nine months 2024 or 2023.
Fair Values – Reported
The following presents the carrying amounts and the fair values of our financial instruments as of September 30, 2024 and December 31, 2023 (in thousands):
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||||||||||
|
Carrying |
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Fair |
|
|
Carrying |
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Fair |
|
||||
Assets: |
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|
|
|
|
|
|
|
||||
Commodity derivatives |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Marketable securities (a) |
|
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|
||||
(Liabilities): |
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|
||||
Commodity derivatives |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
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( |
) |
Bank credit facility (b) |
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||||
|
( |
) |
|
|
( |
) |
|
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( |
) |
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( |
) |
|
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( |
) |
|
|
( |
) |
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( |
) |
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( |
) |
|
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( |
) |
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( |
) |
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( |
) |
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|
( |
) |
|
Deferred compensation plan (c) |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Our current assets and liabilities include financial instruments, the most significant of which are trade accounts receivable and payable. We believe the carrying values of our current assets and liabilities approximate fair value. Our fair value assessment incorporates a variety of considerations, including (1) the short-term duration of the instruments and (2) our historical and expected incurrence of bad debt expense. Non-financial liabilities initially measured at fair value include asset retirement obligations, operating lease liabilities and the divestiture contract obligation that we incurred in conjunction with the sale of our North Louisiana assets.
Concentrations of Credit Risk
As of September 30, 2024, our primary concentrations of credit risk are the risks of not collecting accounts receivable and the risk of a counterparty’s failure to perform under derivative obligations. Most of our receivables are from a diverse group of companies, including major energy companies, pipeline companies, local distribution companies, financial institutions and end-users in various industries. Letters of credit or other appropriate assurances are obtained as deemed necessary to limit our risk of loss. Our allowance for uncollectible receivables was $
Allowance for Expected Credit Losses. Each reporting period, we assess the recoverability of material receivables using historical data, current market conditions and reasonable and supported forecasts of future economic conditions to determine their expected collectability. The loss given default method is used when, based on management’s judgment, an allowance for expected credit losses should be accrued on a material receivable to reflect the net amount to be collected.
16
(12) STOCK-BASED COMPENSATION PLANS
Description of the Plans
We have
Total Stock-Based Compensation Expense
Stock-based compensation represents amortization of restricted stock and performance units.
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Direct operating expense |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Brokered natural gas and marketing expense |
|
|
|
|
|
|
|
|
|
|
|
||||
Exploration expense |
|
|
|
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|
|
|
|
|
|
|
||||
General and administrative expense |
|
|
|
|
|
|
|
|
|
|
|
||||
Total stock-based compensation expense |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The mark-to-market adjustment of the liability related to the vested restricted stock Liability Awards held in our deferred compensation plan is directly tied to the change in our stock price and not directly related to the functional expenses and, therefore, is not allocated to the functional categories above.
Restricted Stock – Equity Awards
We grant restricted stock units and restricted stock under our equity-based stock compensation plans to our employees, which we refer to as restricted stock Equity Awards. The Equity Awards generally vest over a
Restricted Stock – Liability Awards
The Compensation Committee also grants restricted stock to certain employees and non-employee directors of the board of directors as part of their compensation. Upon grant of these restricted shares, which we refer to as restricted stock Liability Awards, these shares are placed in our deferred compensation plan (see further discussion below) and, upon vesting, withdrawals are allowed in cash or in stock. Compensation expense is recognized over the vesting period, which is typically at the end of three years for employee grants and at the end of a one-year period for non-employee directors. In 2023, the number of shares granted into our deferred compensation plan was reduced in favor of restricted stock Equity Awards. All Liability Awards are issued at prevailing market prices at the time of the grant and the vesting is typically based upon an employee’s continued employment with us. Prior to vesting, Liability Award recipients typically earn dividends payable in cash upon vesting but they have no individual voting rights prior to vesting. These Liability Awards are classified as a liability and are re-measured at fair value each reporting period. This mark-to-market amount is reported in deferred compensation plan expense in the accompanying consolidated statements of income. We recorded compensation expense for these Liability Awards of $
Stock-Based Performance Awards - (PSUs)
We have granted
Each unit granted represents
17
Internal Performance Metric Awards. These awards are expensed ratably over the service period and vest at the end of the
TSR Awards. These awards are earned, or not earned, based on the comparative performance of Range’s common stock measured against a predetermined group of companies in the peer group over a
|
|
Nine Months Ended |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Risk-free interest rate |
|
|
% |
|
|
% |
||
Expected annual volatility |
|
|
% |
|
|
% |
||
Grant date fair value per unit |
|
$ |
|
|
$ |
|
||
Equity and Liability Award Summary
The following is a summary of the activity for our restricted stock and performance awards for the nine months ended September 30, 2024 and 2023:
|
Restricted Stock |
|
|
Restricted Stock |
|
|
Stock-Based |
|
|||||||||||||||
|
Shares |
|
|
Weighted |
|
|
Shares |
|
|
Weighted |
|
|
Number |
|
|
Weighted |
|
||||||
Outstanding at December 31, 2023 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||
Granted |
|
|
|
|
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|
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|
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|
||||||
Vested |
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|||
Forfeited |
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Outstanding at September 30, 2024 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
||||||
Outstanding at December 31, 2022 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
||||||
Vested |
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|||
Forfeited |
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Outstanding at September 30, 2023 |
|
|
|
$ |
|
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||||
(a) |
Amounts granted reflect performance units initially granted. The actual payout will be between |
Deferred Compensation Plan
Our deferred compensation plan gives non-employee directors and officers the ability to defer all or a portion of their salaries, bonuses or director fees and invest in Range common stock or make other investments at the individual’s discretion. Range provides a partial matching contribution to participating officers which generally vests at the end of
18
of the deferred compensation plan liability are charged or credited to deferred compensation plan expense each quarter. We recorded a mark-to-market gain of $
(13) CAPITAL STOCK
We have authorized capital stock of
|
Nine Months Ended |
|
|
Year Ended |
|
||
Beginning balance |
|
|
|
|
|
||
Restricted stock grants |
|
|
|
|
|
||
Restricted stock units vested |
|
|
|
|
|
||
Performance stock units issued |
|
|
|
|
|
||
Performance stock dividends |
|
|
|
|
|
||
Treasury shares |
|
( |
) |
|
|
( |
) |
Ending balance |
|
|
|
|
|
||
Stock Repurchase Program
In 2019, the board of directors approved a stock repurchase program which was increased in size in 2022. At September 30, 2024, we had a remaining authorization to repurchase up to approximately $
|
Three Months Ended |
|
|
Nine Months Ended September 30, 2024 |
|
||
Beginning balance |
|
|
|
|
|
||
Rabbi trust shares distributed/sold |
|
|
|
|
|
||
Shares repurchased |
|
|
|
|
|
||
Ending balance |
|
|
|
|
|
||
(14) EXIT COSTS
In third quarter 2020, we sold our North Louisiana assets and retained certain gathering, transportation and processing obligations which extend into 2030. These are contracts where we will not realize any future benefit. The estimated obligations are included in current and long-term divestiture contract obligation in our consolidated balance sheets. In first nine months 2024, we recorded accretion expense of $
In second quarter 2020, we negotiated capacity releases on certain transportation pipelines in Pennsylvania effective May 31, 2020 and extending through the remainder of the contract. The estimated remaining discounted obligation for these transportation capacity releases as of September 30, 2024 was $
The following summarizes our exit costs (including accretion of discount and any adjustments) for the three and nine months ended September 30, 2024 and 2023 (in thousands):
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Transportation contract capacity releases |
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Divestiture contract obligation |
|
|
|
|
|
|
|
|
|
|
|
||||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
19
The following details the accrued exit cost liability activity for the nine months ended September 30, 2024 (in thousands):
|
Exit Costs (a) |
|
|
Balance at December 31, 2023 |
$ |
|
|
Accretion of discount |
|
|
|
Changes in estimate |
|
( |
) |
Payments |
|
( |
) |
Balance at September 30, 2024 |
$ |
|
|
(a)
(15) SUPPLEMENTAL CASH FLOW INFORMATION
|
Nine Months Ended |
|
|||||
|
2024 |
|
|
2023 |
|
||
|
(in thousands) |
|
|||||
Net cash provided from operating activities included: |
|
|
|
|
|
||
Income taxes refunded from or (paid to) taxing authorities |
$ |
|
|
$ |
( |
) |
|
Interest paid |
|
( |
) |
|
|
( |
) |
Non-cash investing activities included: |
|
|
|
|
|
||
Increase in asset retirement costs capitalized |
|
|
|
|
|
||
Increase in accrued capital expenditures |
|
|
|
|
|
||
(16) COMMITMENTS AND CONTINGENCIES
Litigation
We are the subject of, or party to, various pending or threatened legal actions, administrative proceedings or investigations arising in the ordinary course of our business including, but not limited to, royalty claims, contract claims and environmental claims. While many of these matters involve inherent uncertainty, we believe that the amount of the liability, if any, ultimately incurred with respect to these actions, proceedings or claims will not have a material adverse effect on our consolidated financial position as a whole or on our liquidity, capital resources or future annual results of operations.
When deemed necessary, we establish reserves for certain legal proceedings. The establishment of a reserve is based on an estimation process that includes the advice of legal counsel and subjective judgment of management. While management believes these reserves to be adequate, it is reasonably possible we could incur additional losses with respect to those matters in which reserves have been established. We will continue to evaluate our litigation on a quarterly basis and will establish and adjust any litigation reserves as appropriate to reflect our assessment of the then current status of litigation.
We have incurred and will continue to incur capital, operating and remediation expenditures as a result of environmental laws and regulations. As of September 30, 2024, liabilities for remediation were not material. We are not aware of any environmental claims existing as of September 30, 2024 that have not been provided for or would otherwise have a material impact on our financial position or results of operations. Environmental liabilities normally involve estimates that are subject to revision until final resolution, settlement or remediation occurs.
Transportation, Gathering and Processing Contracts
In first quarter 2024, our transportation and gathering commitments over the next
In addition to the above, we entered into amendments of existing contracts that will expand gathering and processing capacity by
20
(17) SUSPENDED EXPLORATORY WELL COSTS
We capitalize exploratory well costs until a determination is made that the well has either found proved reserves or that it is impaired. Capitalized exploratory well costs are presented in natural gas and oil properties in the accompanying consolidated balance sheets. If an exploratory well is determined to be impaired, the well costs are charged to exploration expense in the accompanying consolidated statements of income. There were
|
|
Nine Months Ended |
|
|
|
|
|
|
|
Balance at beginning of period |
|
$ |
|
|
Additions to capitalized exploratory well costs pending the determination of proved reserves |
|
|
|
|
Reclassifications to wells, facilities and equipment based on determination of proved reserves |
|
|
|
|
Capitalized exploratory well costs, charged to expense |
|
|
|
|
Balance at end of period |
|
$ |
|
|
Less exploratory well costs that have been capitalized for a period of one year or less |
|
$ |
|
|
Capitalized exploratory well costs that have been capitalized for a period greater than one year |
|
$ |
|
|
(18) Costs Incurred for Property Acquisition, Exploration and Development (a)
|
Nine Months Ended |
|
|
Year Ended |
|
||
|
(in thousands) |
|
|||||
Acquisitions: |
|
|
|
|
|
||
Acreage purchases |
$ |
|
|
$ |
|
||
Development |
|
|
|
|
|
||
Exploration: |
|
|
|
|
|
||
Drilling |
|
|
|
|
|
||
Expense |
|
|
|
|
|
||
Stock-based compensation expense |
|
|
|
|
|
||
Gas gathering facilities: |
|
|
|
|
|
||
Development |
|
|
|
|
|
||
Subtotal |
|
|
|
|
|
||
Asset retirement obligations |
|
|
|
|
|
||
Total costs incurred |
$ |
|
|
$ |
|
||
(a) Includes costs incurred whether capitalized or expensed.
21
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview of Our Business
We are an independent natural gas, natural gas liquids and oil company engaged in the exploration, development and acquisition of natural gas and liquids properties in the Appalachian region of the United States. We operate in one segment and have a single company-wide management team that administers all properties as a whole rather than by discrete operating segments. We measure financial performance as a single enterprise and not on a geographical or an area-by-area basis.
Our overarching business objective is to build stockholder value through returns-focused development of properties. Our strategy to achieve our business objective is to generate consistent cash flows from reserves and production through internally generated drilling projects occasionally coupled with complementary acquisitions and divestitures. Currently, our investment portfolio is focused on high-quality natural gas assets in the Commonwealth of Pennsylvania. Our revenues, profitability and future growth depend substantially on prevailing prices for natural gas, NGLs and oil and on our ability to economically find, develop, acquire and produce these reserves.
Commodity prices have been and are expected to remain volatile. We believe we are well-positioned to manage challenges during a low commodity price environment and that we can endure the continued volatility in current and future commodity prices by:
Prices for natural gas, NGLs and oil fluctuate widely and affect:
We prepare our financial statements in conformity with U.S. GAAP which requires us to make estimates and assumptions that affect our reported results of operations and the amount of our reported assets, liabilities and proved reserves. We use the successful efforts method of accounting for our natural gas, NGLs and oil activities. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the preceding consolidated financial statements and notes in Item 1.
Market Conditions
We believe we are positioned for sustainable long-term success. We continue to monitor the impact of the actions of OPEC and other large hydrocarbon producing nations, the Russia-Ukraine conflict, hostilities in the Middle East, global inventories of oil and gas, future monetary and fiscal policy and governmental policies aimed at transitioning towards lower carbon energy, and we expect prices for the commodities we produce to remain volatile given the complex dynamics of supply and demand that exist in the global energy markets. In first quarter 2024, natural gas prices declined primarily due to mild winter weather, but prices partially recovered in third quarter 2024 based on signs of lower industry well completion activity and supply declines, along with growth in demand for natural gas fired electricity generation. Longer term natural gas futures prices remain stronger based on market expectations that associated gas-related activity in oil basins and dry gas basin activity will show modest rates of growth compared with the past due to infrastructure constraints, moderated reinvestment rates and core inventory exhaustion. In addition, the global energy crisis experienced in recent years further highlighted the low cost and low emissions shale gas resource base in North America, supporting continued strong structural demand growth for United States liquefied natural gas exports, domestic industrial gas demand and power generation. Other factors such as geopolitical disruptions, supply chain disruptions, cost inflation, concerns over a potential economic recession and the pace and changes in global monetary policy may impact the demand for natural gas, NGLs and oil. We continue to assess and monitor the impact and consequences of these factors on our operations.
Commodity prices have remained volatile. Benchmarks for natural gas and NGLs decreased in third quarter 2024 and first nine months 2024 compared to the same periods of 2023. As a result, we experienced decreases in our price realizations for the quarter and nine months ended September 30, 2024. Despite overall year-to-date lower prices, we continue to focus on creating long-term value for our stockholders along with positioning ourselves to be a responsible and reliable supplier of natural gas and NGLs.
22
The following table lists related benchmarks for natural gas, oil and NGLs composite prices for the three and nine months ended September 30, 2024 and 2023:
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Benchmarks: |
|
|
|
|
|
|
|
|
|
|
|
||||
Average NYMEX prices (a) |
|
|
|
|
|
|
|
|
|
|
|
||||
Natural gas (per mcf) |
$ |
2.16 |
|
|
$ |
2.55 |
|
|
$ |
2.09 |
|
|
$ |
2.71 |
|
Oil (per bbl) |
|
75.58 |
|
|
|
82.12 |
|
|
|
77.75 |
|
|
|
77.27 |
|
Mont Belvieu NGLs composite (per gallon) (b) |
|
0.52 |
|
|
|
0.57 |
|
|
|
0.55 |
|
|
|
0.56 |
|
(a) |
Based on weighted average of bid week prompt month prices on the New York Mercantile Exchange ("NYMEX"). |
(b) |
Based on our estimated NGLs product composition per barrel. |
Prices for natural gas, NGLs and oil that we produce significantly impact our revenues and cash flows. Our price realizations (not including the impact of our derivatives) may differ from these benchmarks for many reasons, including quality, location or production being sold at different indices.
Consolidated Results of Operations
Overview of Third Quarter 2024 Results
During third quarter 2024, we recognized net income of $50.7 million, or $0.21 per diluted common share compared to net income of $49.4 million, or $0.20 per diluted common share during third quarter 2023. The higher net income in third quarter 2024 compared to third quarter 2023 is primarily due to higher production slightly offset by lower realized prices.
In third quarter 2024, we experienced an increase in revenue from the sale of natural gas, NGLs and oil due to a 4% increase in production. Net realized prices (average prices including all derivative settlements and third-party transportation costs paid by us) when compared to the same quarter of 2023 remained flat. Daily production averaged 2.2 Bcfe in third quarter 2024 and 2.1 Bcfe in the same period of 2023.
Our third quarter 2024 financial and operating performance included the following results:
Third quarter 2024 also included the following highlights to enhance our balance sheet, return capital to investors and preserve liquidity:
We generated $245.9 million of cash from operating activities in third quarter 2024, an increase of $95.7 million from third quarter 2023, which reflects the impact of higher working capital.
23
Overview of First Nine Months 2024 Results
During first nine months 2024, we recognized net income of $171.5 million, or $0.70 per diluted common share compared to net income of $561.1 million, or $2.27 per diluted common share during the same period of 2023. The lower net income in first nine months 2024 compared to the same period of 2023 is primarily due to lower derivative fair value income (non-cash fair value adjustment related to our derivatives) combined with lower realized prices slightly offset by higher production.
For first nine months 2024, we experienced a decrease in revenue from the sale of natural gas, NGLs and oil due to a 5% decrease in net realized prices (average prices including all derivative settlements and third-party transportation costs paid by us) when compared to the same period of 2023. Daily production averaged 2.2 Bcfe in the nine months ended September 30, 2024 compared to 2.1 Bcfe in the same period of the prior year.
Our first nine months 2024 financial and operating performance included the following results:
First nine months 2024 also included the following highlights to enhance our balance sheet, return capital to investors and preserve liquidity:
We generated $726.6 million of cash from operating activities in first nine months 2024, a decrease of $25.2 million from first nine months 2023, which reflects the impact of lower realized prices.
Natural Gas, NGLs and Oil Sales, Production and Realized Price Calculations
Our revenues vary primarily as a result of changes in realized commodity prices and production volumes. Our revenues are generally recognized when control of the product is transferred to the customer and collectability is reasonably assured. The following table illustrates the primary components of natural gas, NGLs and oil sales for the three and nine months ended September 30, 2024 and 2023 (in thousands):
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||||||||||
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
||||||
Natural gas, NGLs and oil sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Natural gas |
$ |
234,139 |
|
|
$ |
246,976 |
|
|
$ |
(12,837 |
) |
|
(5)% |
|
$ |
715,266 |
|
|
$ |
913,915 |
|
|
$ |
(198,649 |
) |
|
(22)% |
NGLs |
|
266,186 |
|
|
|
238,211 |
|
|
|
27,975 |
|
|
12% |
|
|
750,547 |
|
|
|
695,368 |
|
|
|
55,179 |
|
|
8% |
Oil |
|
32,952 |
|
|
|
41,531 |
|
|
|
(8,579 |
) |
|
(21)% |
|
|
112,915 |
|
|
|
122,099 |
|
|
|
(9,184 |
) |
|
(8)% |
Total natural gas, NGLs and oil sales |
$ |
533,277 |
|
|
$ |
526,718 |
|
|
$ |
6,559 |
|
|
1% |
|
$ |
1,578,728 |
|
|
$ |
1,731,382 |
|
|
$ |
(152,654 |
) |
|
(9)% |
24
Production is maintained through drilling success as new wells are placed in production, which is partially offset by the natural decline in production through existing wells. Our production for the three and nine months ended September 30, 2024 and 2023 is set forth in the following table:
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||||||||||
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
||||||
Production (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Natural gas (mcf) |
|
138,193,783 |
|
|
|
133,305,469 |
|
|
|
4,888,314 |
|
|
4% |
|
|
406,943,086 |
|
|
|
396,367,927 |
|
|
|
10,575,159 |
|
|
3% |
NGLs (bbls) |
|
10,254,759 |
|
|
|
9,748,012 |
|
|
|
506,747 |
|
|
5% |
|
|
29,392,292 |
|
|
|
28,368,181 |
|
|
|
1,024,111 |
|
|
4% |
Oil (bbls) |
|
514,659 |
|
|
|
587,488 |
|
|
|
(72,829 |
) |
|
(12)% |
|
|
1,717,958 |
|
|
|
1,818,773 |
|
|
|
(100,815 |
) |
|
(6)% |
Total (mcfe) (b) |
|
202,810,291 |
|
|
|
195,318,469 |
|
|
|
7,491,822 |
|
|
4% |
|
|
593,604,586 |
|
|
|
577,489,651 |
|
|
|
16,114,935 |
|
|
3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Average daily production (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Natural gas (mcf) |
|
1,502,106 |
|
|
|
1,448,972 |
|
|
|
53,134 |
|
|
4% |
|
|
1,485,194 |
|
|
|
1,451,897 |
|
|
|
33,297 |
|
|
2% |
NGLs (bbls) |
|
111,465 |
|
|
|
105,957 |
|
|
|
5,508 |
|
|
5% |
|
|
107,271 |
|
|
|
103,913 |
|
|
|
3,358 |
|
|
3% |
Oil (bbls) |
|
5,594 |
|
|
|
6,386 |
|
|
|
(792 |
) |
|
(12)% |
|
|
6,270 |
|
|
|
6,662 |
|
|
|
(392 |
) |
|
(6)% |
Total (mcfe) (b) |
|
2,204,460 |
|
|
|
2,123,027 |
|
|
|
81,433 |
|
|
4% |
|
|
2,166,440 |
|
|
|
2,115,347 |
|
|
|
51,093 |
|
|
2% |
(a) |
Represents volumes sold regardless of when produced. |
(b) |
Oil and NGLs volumes are converted to mcfe at the rate of one barrel equals six mcf based upon the approximate relative energy content of oil to natural gas, which is not indicative of the relationship between oil and natural gas prices. |
Our average realized price received (including all derivative settlements and third-party transportation costs) during third quarter 2024 was $1.67 per mcfe compared to $1.67 per mcfe in third quarter 2023. Our average realized price received (including all derivative settlements and third-party transportation costs) during first nine months 2024 was $1.79 per mcfe compared to $1.89 per mcfe in first nine months 2023. We believe computed final realized prices should include the total impact of transportation, gathering, processing and compression expense. Our average realized prices (including all derivative settlements and third-party transportation costs) calculation also includes all cash settlements for derivatives. Our average realized prices (excluding derivative settlements) do not include derivative settlements or third-party transportation costs which are reported in transportation, gathering, processing and compression expense in the accompanying consolidated statements of income. Our average realized prices (including derivative settlements) do include transportation costs where we receive net revenue proceeds from purchasers. Our average realized price calculations for three and nine months ended September 30, 2024 and 2023 are shown below:
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||||||||||
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
||||||
Average Prices |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Average realized prices (excluding derivative settlements): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Natural gas (per mcf) |
$ |
1.69 |
|
|
$ |
1.85 |
|
|
$ |
(0.16 |
) |
|
(9)% |
|
$ |
1.76 |
|
|
$ |
2.31 |
|
|
$ |
(0.55 |
) |
|
(24)% |
NGLs (per bbl) |
|
25.96 |
|
|
|
24.44 |
|
|
|
1.52 |
|
|
6% |
|
|
25.54 |
|
|
|
24.51 |
|
|
|
1.03 |
|
|
4% |
Oil (per bbl) |
|
64.03 |
|
|
|
70.69 |
|
|
|
(6.66 |
) |
|
(9)% |
|
|
65.73 |
|
|
|
67.13 |
|
|
|
(1.40 |
) |
|
(2)% |
Total (per mcfe) (a) |
|
2.63 |
|
|
|
2.70 |
|
|
|
(0.07 |
) |
|
(3)% |
|
|
2.66 |
|
|
|
3.00 |
|
|
|
(0.34 |
) |
|
(11)% |
Average realized prices (including all derivative settlements): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Natural gas (per mcf) |
$ |
2.48 |
|
|
$ |
2.47 |
|
|
$ |
0.01 |
|
|
0% |
|
$ |
2.63 |
|
|
$ |
2.80 |
|
|
$ |
(0.17 |
) |
|
(6)% |
NGLs (per bbl) |
|
26.09 |
|
|
|
24.44 |
|
|
|
1.65 |
|
|
7% |
|
|
25.65 |
|
|
|
24.51 |
|
|
|
1.14 |
|
|
5% |
Oil (per bbl) |
|
69.73 |
|
|
|
62.13 |
|
|
|
7.60 |
|
|
12% |
|
|
68.26 |
|
|
|
62.54 |
|
|
|
5.72 |
|
|
9% |
Total (per mcfe) (a) |
|
3.18 |
|
|
|
3.09 |
|
|
|
0.09 |
|
|
3% |
|
|
3.27 |
|
|
|
3.32 |
|
|
|
(0.05 |
) |
|
(2)% |
Average realized prices (including all derivative settlements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Natural gas (per mcf) |
$ |
1.37 |
|
|
$ |
1.40 |
|
|
$ |
(0.03 |
) |
|
(2)% |
|
$ |
1.51 |
|
|
$ |
1.70 |
|
|
$ |
(0.19 |
) |
|
(11)% |
NGLs (per bbl) |
|
11.21 |
|
|
|
10.61 |
|
|
|
0.60 |
|
|
6% |
|
|
11.33 |
|
|
|
10.65 |
|
|
|
0.68 |
|
|
6% |
Oil (per bbl) |
|
68.82 |
|
|
|
61.70 |
|
|
|
7.12 |
|
|
12% |
|
|
67.49 |
|
|
|
62.16 |
|
|
|
5.33 |
|
|
9% |
Total (per mcfe) (a) |
|
1.67 |
|
|
|
1.67 |
|
|
|
— |
|
|
—% |
|
|
1.79 |
|
|
|
1.89 |
|
|
|
(0.10 |
) |
|
(5)% |
(a) |
Oil and NGLs volumes are converted to mcfe at the rate of one barrel equals six mcf based upon the approximate relative energy content of oil to natural gas, which is not indicative of the relationship between oil and natural gas prices. |
25
Realized prices include the impact of basis differentials and gains or losses realized from our basis hedging. The prices we receive for our natural gas can be more or less than the NYMEX price because of adjustments for delivery location, relative quality and other factors. The following table provides this impact on a per mcf basis:
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Average natural gas differentials below NYMEX |
$ |
(0.47 |
) |
|
$ |
(0.70 |
) |
|
$ |
(0.33 |
) |
|
$ |
(0.40 |
) |
Realized (losses) gains on basis hedging |
$ |
(0.03 |
) |
|
$ |
0.14 |
|
|
$ |
(0.01 |
) |
|
$ |
0.02 |
|
The following tables reflect our production and average sales prices (excluding derivative settlements and third-party transportation costs paid by Range) (in thousands, except prices):
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||||||||||
|
2023 |
|
|
Price |
|
|
Volume |
|
|
2024 |
|
|
2023 |
|
|
Price |
|
|
Volume |
|
|
2024 |
|
||||||||
Natural gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Price (per mcf) |
$ |
1.85 |
|
|
$ |
(0.16 |
) |
|
$ |
— |
|
|
$ |
1.69 |
|
|
$ |
2.31 |
|
|
$ |
(0.55 |
) |
|
$ |
— |
|
|
$ |
1.76 |
|
Production (Mmcf) |
|
133,305 |
|
|
|
— |
|
|
|
4,889 |
|
|
|
138,194 |
|
|
|
396,368 |
|
|
|
— |
|
|
|
10,575 |
|
|
|
406,943 |
|
Natural gas sales |
$ |
246,976 |
|
|
$ |
(21,893 |
) |
|
$ |
9,056 |
|
|
$ |
234,139 |
|
|
$ |
913,915 |
|
|
$ |
(223,032 |
) |
|
$ |
24,383 |
|
|
$ |
715,266 |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||||||||||
|
2023 |
|
|
Price |
|
|
Volume |
|
|
2024 |
|
|
2023 |
|
|
Price |
|
|
Volume |
|
|
2024 |
|
||||||||
NGLs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Price (per bbl) |
$ |
24.44 |
|
|
$ |
1.52 |
|
|
$ |
— |
|
|
$ |
25.96 |
|
|
$ |
24.51 |
|
|
$ |
1.03 |
|
|
$ |
— |
|
|
$ |
25.54 |
|
Production (Mbbls) |
|
9,748 |
|
|
|
— |
|
|
|
507 |
|
|
|
10,255 |
|
|
|
28,368 |
|
|
|
— |
|
|
|
1,024 |
|
|
|
29,392 |
|
NGLs sales |
$ |
238,211 |
|
|
$ |
15,592 |
|
|
$ |
12,383 |
|
|
$ |
266,186 |
|
|
$ |
695,368 |
|
|
$ |
30,076 |
|
|
$ |
25,103 |
|
|
$ |
750,547 |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||||||||||
|
2023 |
|
|
Price |
|
|
Volume |
|
|
2024 |
|
|
2023 |
|
|
Price |
|
|
Volume |
|
|
2024 |
|
||||||||
Oil |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Price (per bbl) |
$ |
70.69 |
|
|
$ |
(6.66 |
) |
|
$ |
— |
|
|
$ |
64.03 |
|
|
$ |
67.13 |
|
|
$ |
(1.40 |
) |
|
$ |
— |
|
|
$ |
65.73 |
|
Production (Mbbls) |
|
587 |
|
|
|
— |
|
|
|
(72 |
) |
|
|
515 |
|
|
|
1,819 |
|
|
|
— |
|
|
|
(101 |
) |
|
|
1,718 |
|
Oil sales |
$ |
41,531 |
|
|
$ |
(3,431 |
) |
|
$ |
(5,148 |
) |
|
$ |
32,952 |
|
|
$ |
122,099 |
|
|
$ |
(2,416 |
) |
|
$ |
(6,768 |
) |
|
$ |
112,915 |
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||||||||||||||||||
|
2023 |
|
|
Price |
|
|
Volume |
|
|
2024 |
|
|
2023 |
|
|
Price |
|
|
Volume |
|
|
2024 |
|
||||||||
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Price (per mcfe) |
$ |
2.70 |
|
|
$ |
(0.07 |
) |
|
$ |
— |
|
|
$ |
2.63 |
|
|
$ |
3.00 |
|
|
$ |
(0.34 |
) |
|
$ |
— |
|
|
$ |
2.66 |
|
Production (Mmcfe) |
|
195,318 |
|
|
|
— |
|
|
|
7,492 |
|
|
|
202,810 |
|
|
|
577,490 |
|
|
|
— |
|
|
|
16,115 |
|
|
|
593,605 |
|
Total natural gas, |
$ |
526,718 |
|
|
$ |
(13,644 |
) |
|
$ |
20,203 |
|
|
$ |
533,277 |
|
|
$ |
1,731,382 |
|
|
$ |
(200,969 |
) |
|
$ |
48,315 |
|
|
$ |
1,578,728 |
|
26
Transportation, gathering, processing and compression expense was $306.2 million in third quarter 2024 compared to $277.2 million in third quarter 2023. These third-party costs are higher in third quarter 2024 when compared to third quarter 2023 primarily due to an increase in NGLs volumes and prices.
Transportation, gathering, processing and compression expense was $878.5 million in first nine months 2024 compared to $830.9 million in the same period of the prior year. These third-party costs are higher in first nine months 2024 when compared to the same period of 2023 due to an increase in NGLs volumes and prices. We have included these costs in the calculation of average realized prices (including all derivative settlements and third-party transportation expenses paid by Range). The following table summarizes transportation, gathering, processing and compression expense for the three and nine months ended September 30, 2024 and 2023 on a per mcf and per barrel basis (in thousands, except for costs per unit):
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||||||||||
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
||||||
Transportation, gathering |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Natural gas |
$ |
153,063 |
|
|
$ |
142,202 |
|
|
$ |
10,861 |
|
|
8% |
|
$ |
456,215 |
|
|
$ |
436,912 |
|
|
$ |
19,303 |
|
|
4% |
NGLs |
|
152,624 |
|
|
|
134,754 |
|
|
|
17,870 |
|
|
13% |
|
|
420,975 |
|
|
|
393,281 |
|
|
|
27,694 |
|
|
7% |
Oil |
|
467 |
|
|
|
251 |
|
|
|
216 |
|
|
86% |
|
|
1,334 |
|
|
|
687 |
|
|
|
647 |
|
|
94% |
Total |
$ |
306,154 |
|
|
$ |
277,207 |
|
|
$ |
28,947 |
|
|
10% |
|
$ |
878,524 |
|
|
$ |
830,880 |
|
|
$ |
47,644 |
|
|
6% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Natural gas (per mcf) |
$ |
1.11 |
|
|
$ |
1.07 |
|
|
$ |
0.04 |
|
|
4% |
|
$ |
1.12 |
|
|
$ |
1.10 |
|
|
$ |
0.02 |
|
|
2% |
NGLs (per bbl) |
$ |
14.88 |
|
|
$ |
13.83 |
|
|
$ |
1.05 |
|
|
8% |
|
$ |
14.32 |
|
|
$ |
13.86 |
|
|
$ |
0.46 |
|
|
3% |
Oil (per bbl) |
$ |
0.91 |
|
|
$ |
0.43 |
|
|
$ |
0.48 |
|
|
112% |
|
$ |
0.78 |
|
|
$ |
0.38 |
|
|
$ |
0.40 |
|
|
105% |
Derivative fair value income was $47.1 million in third quarter 2024 compared to $38.4 million in third quarter 2023. Derivative fair value income was $110.5 million in first nine months 2024 compared to $530.1 million in the same period of the prior year. All of our derivatives are accounted for using the mark-to-market accounting method. Mark-to-market accounting treatment can result in more volatility of our revenues as the change in the fair value of our commodity derivative positions is included in total revenue. As commodity prices increase or decrease, such changes will have an opposite effect on the mark-to-market value of our derivatives. Gains on our derivatives generally indicate potentially lower wellhead revenues in the future while losses indicate potentially higher future wellhead revenues. The following table summarizes the impact of our commodity derivatives for the three and nine months ended September 30, 2024 and 2023 (in thousands):
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Derivative fair value income per consolidated statements of income |
$ |
47,124 |
|
|
$ |
38,394 |
|
|
$ |
110,530 |
|
|
$ |
530,095 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-cash fair value (loss) income: ⁽ᵃ⁾ |
|
|
|
|
|
|
|
|
|
|
|
||||
Natural gas derivatives |
$ |
(75,011 |
) |
|
$ |
(26,222 |
) |
|
$ |
(248,826 |
) |
|
$ |
343,779 |
|
NGLs derivatives |
|
4,282 |
|
|
|
— |
|
|
|
1,666 |
|
|
|
— |
|
Oil derivatives |
|
5,588 |
|
|
|
(12,036 |
) |
|
|
(5,005 |
) |
|
|
3,550 |
|
Divestiture contingent consideration |
|
— |
|
|
|
(790 |
) |
|
|
— |
|
|
|
(5,730 |
) |
Total non-cash fair value (loss) income ⁽ᵃ⁾ |
$ |
(65,141 |
) |
|
$ |
(39,048 |
) |
|
$ |
(252,165 |
) |
|
$ |
341,599 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net cash receipt (payment) on derivative settlements: |
|
|
|
|
|
|
|
|
|
|
|
||||
Natural gas derivatives |
$ |
107,923 |
|
|
$ |
82,472 |
|
|
$ |
355,031 |
|
|
$ |
196,847 |
|
NGLs derivatives |
|
1,409 |
|
|
|
— |
|
|
|
3,309 |
|
|
|
— |
|
Oil derivatives |
|
2,933 |
|
|
|
(5,030 |
) |
|
|
4,355 |
|
|
|
(8,351 |
) |
Total net cash receipt |
$ |
112,265 |
|
|
$ |
77,442 |
|
|
$ |
362,695 |
|
|
$ |
188,496 |
|
(a) |
Non-cash fair value adjustments on commodity derivatives is a non-U.S. GAAP measure. Non-cash fair value adjustments on commodity derivatives only represent the net change between periods of the fair market values of commodity derivative positions and exclude the impact of settlements on commodity derivatives during the period. We believe that non-cash fair value adjustments on commodity derivatives is a useful supplemental disclosure to differentiate non-cash fair market value adjustments from settlements on commodity derivatives during the period. Non-cash fair value adjustments on commodity derivatives is not a measure of financial or operating performance under U.S. GAAP, nor should it be considered a substitute for derivative fair value income or loss as reported in our consolidated statements of income. This also includes the change in fair value of our divestiture contingent consideration. |
27
Brokered natural gas, marketing and other revenue in third quarter 2024 was $34.6 million compared to $44.6 million in third quarter 2023, which is the result of lower broker sales volumes (volumes not related to our production) combined with lower broker sales prices. We continue to optimize our transportation portfolio using these volumes. Other revenue in third quarter 2024 also includes $3.2 million of interest income compared to $1.3 million in the same period of the prior year.
Brokered natural gas, marketing and other revenue was $101.2 million in first nine months 2024 compared to $171.6 million in first nine months 2023, which is the result of lower broker sales volumes combined with lower broker sales prices. Other revenue in first nine months 2024 also includes $9.5 million of interest income compared to $4.0 million in the same period of the prior year. The nine months ended September 30, 2023 also includes $5.1 million in make-whole payments. See also Brokered natural gas and marketing expense below for more information on our net brokered margin.
Operating Costs per Mcfe
We believe some of our expense fluctuations are best analyzed on a unit-of-production or per mcfe basis. The following table presents information about certain of our expenses on a per mcfe basis for the three and nine months ended September 30, 2024 and 2023:
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||||||||||
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
||||||
Direct operating expense |
$ |
0.12 |
|
|
$ |
0.12 |
|
|
$ |
— |
|
|
—% |
|
$ |
0.12 |
|
|
$ |
0.13 |
|
|
$ |
(0.01 |
) |
|
(8)% |
Taxes other than income |
|
0.03 |
|
|
|
0.02 |
|
|
|
0.01 |
|
|
50% |
|
|
0.03 |
|
|
|
0.03 |
|
|
|
— |
|
|
—% |
General and administrative expense |
|
0.20 |
|
|
|
0.20 |
|
|
|
— |
|
|
—% |
|
|
0.21 |
|
|
|
0.21 |
|
|
|
— |
|
|
—% |
Interest expense |
|
0.14 |
|
|
|
0.16 |
|
|
|
(0.02 |
) |
|
(13)% |
|
|
0.15 |
|
|
|
0.16 |
|
|
|
(0.01 |
) |
|
(6)% |
Depletion, depreciation and amortization expense |
|
0.45 |
|
|
|
0.45 |
|
|
|
— |
|
|
—% |
|
|
0.45 |
|
|
|
0.45 |
|
|
|
— |
|
|
—% |
Direct operating expense was $25.3 million in third quarter 2024 compared to $22.6 million in third quarter 2023. Direct operating expenses include normally recurring expenses to operate and produce our wells, non-recurring workover costs and repair-related expenses. Our direct operating costs increased in third quarter 2024 primarily due to higher water hauling costs, pumping expenses and contract labor and service expenses. We incurred $690,000 of workover costs in third quarter 2024 compared to $603,000 in third quarter 2023.
Direct operating expense was $70.2 million in first nine months 2024 compared to $73.4 million in the same period of the prior year. Our direct operating costs decreased in first nine months 2024 when compared to the same period of the prior year due to lower workover costs and lower water hauling costs. We incurred $2.2 million of workover costs in first nine months 2024 compared to $4.3 million of workover costs in first nine months 2023. These costs are expected to enhance production from existing wells. The following table summarizes direct operating expense per mcfe for the three and nine months ended September 30, 2024 and 2023:
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||||||||||
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
||||||
Direct operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Lease operating expense |
$ |
0.12 |
|
|
$ |
0.11 |
|
|
$ |
0.01 |
|
|
9% |
|
$ |
0.12 |
|
|
$ |
0.12 |
|
|
$ |
— |
|
|
—% |
Workovers |
|
— |
|
|
|
— |
|
|
|
— |
|
|
—% |
|
|
— |
|
|
|
0.01 |
|
|
|
(0.01 |
) |
|
(100)% |
Stock-based compensation |
|
— |
|
|
|
0.01 |
|
|
|
(0.01 |
) |
|
(100)% |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
—% |
Total direct operating expense |
$ |
0.12 |
|
|
$ |
0.12 |
|
|
$ |
— |
|
|
—% |
|
$ |
0.12 |
|
|
$ |
0.13 |
|
|
$ |
(0.01 |
) |
|
(8)% |
Taxes other than income expense is predominately comprised of the Pennsylvania impact fee which is paid based on market commodity prices. In 2012, the Commonwealth of Pennsylvania enacted an "impact fee" which functions as a tax on unconventional natural gas and oil production from the Marcellus Shale in Pennsylvania. This impact fee was $4.9 million in third quarter 2024 compared to $4.5 million in third quarter 2023. This impact fee was $15.3 million in first nine months 2024 compared to $18.0 million in first nine months 2023, which reflects lower natural gas prices. The impact fee is based on drilling activities and is adjusted based on prevailing natural gas prices. This category also includes franchise, real estate and other applicable taxes. The following table summarizes taxes other than income per mcfe for the three and nine months ended September 30, 2024 and 2023:
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||||||||||
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
||||||
Taxes other than income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Impact fee |
$ |
0.03 |
|
|
$ |
0.02 |
|
|
$ |
0.01 |
|
|
50% |
|
$ |
0.03 |
|
|
$ |
0.03 |
|
|
$ |
— |
|
|
—% |
Other |
|
— |
|
|
|
— |
|
|
|
— |
|
|
—% |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
—% |
Total taxes other than income |
$ |
0.03 |
|
|
$ |
0.02 |
|
|
$ |
0.01 |
|
|
50% |
|
$ |
0.03 |
|
|
$ |
0.03 |
|
|
$ |
— |
|
|
—% |
28
General and administrative (G&A) expense was $41.5 million in third quarter 2024 compared to $38.1 million in third quarter 2023. The third quarter 2024 increase of $3.4 million when compared to the same period of 2023 is primarily due to aggregate impacts of cost inflation.
G&A expense for first nine months 2024 was $125.6 million compared to $120.8 million in the same period of 2023. The increase of $4.8 million is primarily due to aggregate impacts of cost inflation. The following table summarizes G&A expenses on a per mcfe basis for the three and nine months ended September 30, 2024 and 2023:
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||||||||||
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
||||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
General and administrative |
$ |
0.16 |
|
|
$ |
0.15 |
|
|
$ |
0.01 |
|
|
7% |
|
$ |
0.16 |
|
|
$ |
0.16 |
|
|
$ |
— |
|
|
—% |
Stock-based compensation |
|
0.04 |
|
|
|
0.05 |
|
|
|
(0.01 |
) |
|
(20)% |
|
|
0.05 |
|
|
|
0.05 |
|
|
|
— |
|
|
—% |
Total general and administrative |
$ |
0.20 |
|
|
$ |
0.20 |
|
|
$ |
— |
|
|
—% |
|
$ |
0.21 |
|
|
$ |
0.21 |
|
|
$ |
— |
|
|
—% |
Interest expense was $29.3 million in third quarter 2024 compared to $30.6 million in third quarter 2023. Interest expense was $89.5 million in first nine months 2024 compared to $93.9 million in first nine months 2023. The following table presents information about interest expense per mcfe for the three and nine months ended September 30, 2024 and 2023:
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||||||||||
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
||||||
Bank credit facility (a) |
$ |
0.01 |
|
|
$ |
0.01 |
|
|
$ |
— |
|
|
—% |
|
$ |
0.01 |
|
|
$ |
0.01 |
|
|
$ |
— |
|
|
—% |
Senior notes |
|
0.13 |
|
|
|
0.14 |
|
|
|
(0.01 |
) |
|
(7)% |
|
|
0.13 |
|
|
|
0.14 |
|
|
|
(0.01 |
) |
|
(7)% |
Amortization of deferred financing |
|
— |
|
|
|
0.01 |
|
|
|
(0.01 |
) |
|
(100)% |
|
|
0.01 |
|
|
|
0.01 |
|
|
|
— |
|
|
—% |
Total interest expense |
$ |
0.14 |
|
|
$ |
0.16 |
|
|
$ |
(0.02 |
) |
|
(13)% |
|
$ |
0.15 |
|
|
$ |
0.16 |
|
|
$ |
(0.01 |
) |
|
(6)% |
Average debt outstanding ($000s) |
$ |
1,718,644 |
|
|
$ |
1,788,388 |
|
|
$ |
(69,744 |
) |
|
(4)% |
|
$ |
1,750,394 |
|
|
$ |
1,833,125 |
|
|
$ |
(82,731 |
) |
|
(5)% |
Average interest rate (b) |
|
6.5 |
% |
|
|
6.5 |
% |
|
|
— |
% |
|
—% |
|
|
6.5 |
% |
|
|
6.5 |
% |
|
|
— |
% |
|
—% |
(a) (b) |
Includes commitment fees. Excludes deferred financing costs. |
The decrease in interest expense for third quarter 2024 from the same period of 2023 was primarily due to lower average outstanding debt balances. We had no debt outstanding on the bank credit facility for third quarter 2024 or the same period of 2023.
The decrease in interest expense for first nine months 2024 from the same period of 2023 was primarily due to lower average outstanding debt balances. We had no debt outstanding on the bank credit facility for first nine months 2024 compared to a $10.7 million average debt balance for first nine months 2023 and the weighted average interest rate on the credit facility was 8.4% in first nine months 2023.
Depletion, depreciation and amortization (DD&A) expense was $91.1 million in third quarter 2024 compared to $87.6 million in third quarter 2023. This increase is due to slightly higher production volumes. Depletion expense, the largest component of DD&A expense, was $0.44 per mcfe in third quarter 2024 compared to $0.44 per mcfe in third quarter 2023.
DD&A expense was $265.9 million in first nine months 2024 compared to $259.2 million in the same period of 2023. This increase is due to a slight increase in production volumes. Depletion expense was $0.44 per mcfe in first nine months 2024 compared to $0.44 in the same period of 2023. We have historically adjusted our depletion rates in the fourth quarter of each year based on the year-end reserve report and at other times during the year when circumstances indicate there has been a significant change in reserves or costs. The following table summarizes DD&A expense per mcfe for the three and nine months ended September 30, 2024 and 2023:
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||||||||||
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
||||||
DD&A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Depletion and amortization |
$ |
0.44 |
|
|
$ |
0.44 |
|
|
$ |
— |
|
|
—% |
|
$ |
0.44 |
|
|
$ |
0.44 |
|
|
$ |
— |
|
|
—% |
Depreciation |
|
— |
|
|
|
— |
|
|
|
— |
|
|
—% |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
—% |
Accretion and other |
|
0.01 |
|
|
|
0.01 |
|
|
|
— |
|
|
—% |
|
|
0.01 |
|
|
|
0.01 |
|
|
|
— |
|
|
—% |
Total DD&A expense |
$ |
0.45 |
|
|
$ |
0.45 |
|
|
$ |
— |
|
|
—% |
|
$ |
0.45 |
|
|
$ |
0.45 |
|
|
$ |
— |
|
|
—% |
29
Other Operating Expenses
Our total operating expenses also include other expenses that generally do not trend with production. These expenses include stock-based compensation, brokered natural gas and marketing expense, exploration expense, abandonment and impairment of unproved properties, exit costs, deferred compensation plan expense and gain on early extinguishment of debt. Stock-based compensation includes the amortization of restricted stock grants and performance units. The following table details the allocation of stock-based compensation to functional expense categories for the three and nine months ended September 30, 2024 and 2023 (in thousands):
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Direct operating expense |
$ |
486 |
|
|
$ |
439 |
|
|
$ |
1,454 |
|
|
$ |
1,280 |
|
Brokered natural gas and marketing expense |
|
571 |
|
|
|
483 |
|
|
|
1,862 |
|
|
|
1,604 |
|
Exploration expense |
|
346 |
|
|
|
312 |
|
|
|
1,005 |
|
|
|
935 |
|
General and administrative expense |
|
8,639 |
|
|
|
8,446 |
|
|
|
27,099 |
|
|
|
26,461 |
|
Total stock-based compensation expense |
$ |
10,042 |
|
|
$ |
9,680 |
|
|
$ |
31,420 |
|
|
$ |
30,280 |
|
Brokered natural gas and marketing expense was $32.6 million in third quarter 2024 compared to $46.2 million in third quarter 2023 due to lower broker purchase volumes (volumes not related to our production) and lower commodity prices. Brokered natural gas and marketing expense was $98.3 million in first nine months 2024 compared to $158.1 million in first nine months 2023 due to lower commodity prices and lower broker purchase volumes. The following table details our brokered natural gas, marketing and other net margin for the three and nine months ended September 30, 2024 and 2023 (in thousands):
|
Three Months Ended |
|
|
Nine Months Ended |
||||||||||||
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|
||||
Brokered natural gas, marketing and other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Brokered natural gas sales |
$ |
28,692 |
|
|
$ |
40,267 |
|
|
$ |
80,518 |
|
|
$ |
154,361 |
|
|
Brokered NGLs sales |
|
660 |
|
|
|
937 |
|
|
|
4,847 |
|
|
|
1,605 |
|
|
Interest income |
|
3,188 |
|
|
|
1,279 |
|
|
|
9,507 |
|
|
|
4,016 |
|
|
Other marketing revenue and other income |
|
2,092 |
|
|
|
2,129 |
|
|
|
6,315 |
|
|
|
11,602 |
|
|
Brokered natural gas purchases and transportation |
|
(28,990 |
) |
|
|
(43,218 |
) |
|
|
(85,092 |
) |
|
|
(149,565 |
) |
|
Brokered NGLs purchases |
|
(494 |
) |
|
|
(787 |
) |
|
|
(4,415 |
) |
|
|
(1,389 |
) |
|
Other marketing expense |
|
(3,104 |
) |
|
|
(2,201 |
) |
|
|
(8,780 |
) |
|
|
(7,120 |
) |
|
Net brokered natural gas, marketing and other net margin |
$ |
2,044 |
|
|
$ |
(1,594 |
) |
|
$ |
2,900 |
|
|
$ |
13,510 |
|
|
Exploration expense was $7.3 million in third quarter 2024 compared to $7.0 million in third quarter 2023 due to higher delay rental costs slightly offset by lower seismic costs. Exploration expense was $18.5 million in first nine months 2024 compared to $19.0 million in first nine months 2023 due to lower seismic costs slightly offset by higher delay rentals. The following table details our exploration expense for the three and nine months ended September 30, 2024 and 2023 (in thousands):
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||||||||||||||
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
|
2024 |
|
|
2023 |
|
|
Change |
|
|
% |
||||||
Exploration |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Seismic |
$ |
54 |
|
|
$ |
331 |
|
|
$ |
(277 |
) |
|
(84)% |
|
$ |
79 |
|
|
$ |
1,662 |
|
|
$ |
(1,583 |
) |
|
(95)% |
Delay rentals and other |
|
5,679 |
|
|
|
5,177 |
|
|
|
502 |
|
|
10% |
|
|
13,313 |
|
|
|
12,328 |
|
|
|
985 |
|
|
8% |
Personnel expense |
|
1,255 |
|
|
|
1,150 |
|
|
|
105 |
|
|
9% |
|
|
4,114 |
|
|
|
4,097 |
|
|
|
17 |
|
|
—% |
Stock-based compensation expense |
|
346 |
|
|
|
312 |
|
|
|
34 |
|
|
11% |
|
|
1,005 |
|
|
|
935 |
|
|
|
70 |
|
|
7% |
Total exploration expense |
$ |
7,334 |
|
|
$ |
6,970 |
|
|
$ |
364 |
|
|
5% |
|
$ |
18,511 |
|
|
$ |
19,022 |
|
|
$ |
(511 |
) |
|
(3)% |
Abandonment and impairment of unproved properties expense was $4.7 million in third quarter 2024 compared to $11.0 million in third quarter 2023. Abandonment and impairment of unproved properties was $8.6 million in first nine months 2024 compared to $44.3 million in the same period of 2023. Abandonment and impairment of unproved properties for third quarter 2024 and first nine months 2024 decreased when compared to the same periods of 2023 due to lower expected lease expirations in Pennsylvania. When we do not intend to drill on a property prior to expiration, we have allowed acreage to expire and we expect to allow acreage to expire in the future. However, we also believe acreage needed for our future development plans can be leased again.
30
Exit costs were $7.6 million in third quarter 2024 compared to $10.7 million in third quarter 2023. In third quarter 2024, we recorded $9.7 million accretion expense primarily related to retained liabilities for certain gathering, transportation and processing obligations extending through 2030 compared to accretion expense of $10.7 million in the same quarter of the prior year. Third quarter 2024 includes an adjustment of $2.1 million to decrease this obligation mainly due to a decrease in forecasted electricity costs.
Exit costs were $28.1 million in first nine months 2024 compared to $71.7 million in first nine months 2023. We recorded accretion expense of $30.2 million in first nine months 2024 compared to accretion expense of $31.9 million in the same period of 2023. First nine months 2024 includes an adjustment of $2.1 million to decrease this obligation mainly due to a decrease in forecasted electricity costs compared to adjustments of $39.8 million in first nine months 2023 to increase this obligation primarily for an increase in forecasted rates due to inflation.
Deferred compensation plan was a gain of $1.9 million in third quarter 2024 compared to a loss of $9.0 million in third quarter 2023. This non-cash item relates to the increase or decrease in value of the liability associated with our common stock that is vested and held in our deferred compensation plan. The deferred compensation liability is adjusted to fair value by a charge or a credit to deferred compensation plan expense based on the number of vested shares in the plan at the time. Our stock price decreased from $33.53 at June 30, 2024 to $30.76 at September 30, 2024. In the same period of the prior year our stock price increased from $29.40 at June 30, 2023 to $32.41 at September 30, 2023.
During first nine months 2024, deferred compensation plan expense was a loss of $5.7 million compared to a loss of $29.5 million in the same period of 2023. Our stock price increased from $30.44 at December 31, 2023 to $30.76 at September 30, 2024. In the same period of the prior year, our stock price increased from $25.02 at December 31, 2022 to $32.41 at September 30, 2023.
Income tax expense was $15.6 million in third quarter 2024 compared to $15.7 million in third quarter 2023. Income tax expense was $15.1 million in first nine months 2024 compared to an $152.3 million in the same period of 2023. The 2024 and 2023 effective tax rates were different than the statutory tax rates due to state income taxes, tax credits, equity compensation and the limitation of our executive compensation expense.
Management’s Discussion and Analysis of Financial Condition, Capital Resources and Liquidity
Commodity prices are the most significant factor impacting our revenues, net income, operating cash flows, the amount of capital we invest in our business, payment of dividends and funding of share or debt repurchases. Commodity prices have been and are expected to remain volatile. Our top priorities for using cash provided by operations are to fund our capital budget program, debt repayments and return capital to stockholders. We currently believe we have sufficient liquidity and capital resources to execute our business plan for the foreseeable future and across a wide range of commodity price environments. We continue to manage the duration and level of our drilling and completion commitments in order to maintain flexibility with regard to our activity level and capital expenditures.
Cash Flows
The following table presents sources and uses of cash and cash equivalents for the nine months ended September 30, 2024 and 2023 (in thousands):
|
Nine Months Ended |
|
|||||
|
2024 |
|
|
2023 |
|
||
Sources of cash and cash equivalents |
|
|
|
|
|
||
Operating activities |
$ |
726,624 |
|
|
$ |
751,797 |
|
Disposal of assets |
|
273 |
|
|
|
823 |
|
Borrowing on credit facility |
|
— |
|
|
|
185,000 |
|
Other |
|
60,062 |
|
|
|
103,986 |
|
Total sources of cash and cash equivalents |
$ |
786,959 |
|
|
$ |
1,041,606 |
|
|
|
|
|
|
|
||
Uses of cash and cash equivalent |
|
|
|
|
|
||
Additions to natural gas properties |
$ |
(432,264 |
) |
|
$ |
(421,087 |
) |
Repayments on credit facility |
|
— |
|
|
|
(204,000 |
) |
Acreage purchases |
|
(44,787 |
) |
|
|
(27,422 |
) |
Additions to field service assets |
|
(1,371 |
) |
|
|
(321 |
) |
Repayment of senior notes |
|
(69,846 |
) |
|
|
(60,934 |
) |
Treasury stock purchases |
|
(44,136 |
) |
|
|
(9,663 |
) |
Dividends paid |
|
(58,127 |
) |
|
|
(57,949 |
) |
Other |
|
(70,952 |
) |
|
|
(97,636 |
) |
Total uses of cash and cash equivalents |
$ |
(721,483 |
) |
|
$ |
(879,012 |
) |
31
Sources of Cash and Cash Equivalents
Cash flows provided from operating activities in first nine months 2024 were $726.6 million compared to $751.8 million in first nine months 2023. Cash provided from operating activities is largely dependent upon commodity prices and production volumes, net of the effects of settlement of our derivative contracts. The decrease in cash provided from operating activities from first nine months 2023 to first nine months 2024 reflects lower realized prices. As of September 30, 2024, we have hedged more than 50% of our projected natural gas production for the remainder of 2024. Changes in working capital (as reflected in our consolidated statements of cash flows) for first nine months 2024 was a negative $49.8 million compared to a negative $54.9 million for first nine months 2023.
Uses of Cash and Cash Equivalents
Additions to natural gas properties for first nine months 2024 were consistent with expectations relative to our announced 2024 capital budget.
Repayment of senior notes for first nine months 2024 includes the repurchase and settlement of $70.2 million principal amount of our 4.875% senior notes due 2025 at a discount.
Treasury stock purchases for first nine months 2024 include the repurchase and settlement of 1.4 million shares for a total of $44.1 million as part of our previously announced stock repurchase program.
Liquidity and Capital Resources
Our main sources of liquidity are cash on hand, internally generated cash flow from operations, capital market transactions and our bank credit facility. At September 30, 2024, we had approximately $1.6 billion of liquidity consisting of $277.5 million of cash on hand and $1.3 billion of availability under our bank credit facility. Our borrowing base can be adjusted as a result of changes in commodity prices, acquisitions or divestitures of proved properties or financing activities. We may draw on our bank credit facility to meet short-term cash requirements.
We expect our 2024 capital program to be funded by cash flows from operations. During the nine months ended September 30, 2024, we generated $726.6 million of cash flows from operating activities.
Bank Credit Facility
Our bank credit facility is secured by substantially all of our assets. As of September 30, 2024, we had no outstanding borrowings under our bank credit facility and we maintained a borrowing base of $3.0 billion and aggregate lender commitments of $1.5 billion. We have undrawn letters of credit of $169.4 million as of September 30, 2024, which reduce our borrowing capacity under our bank credit facility.
The borrowing base is subject to regular, semi-annual re-determinations and is dependent on a number of factors but primarily the lenders' assessment of our future cash flows. Our scheduled borrowing base re-determination was completed in October 2024 with our borrowing base and lender commitments reaffirmed. We currently must comply with certain financial and non-financial covenants, including limiting dividend payments, debt incurrence and requirements that we maintain certain financial ratios (as defined in our bank credit facility agreement). We were in compliance with all such covenants at September 30, 2024.
Capital Requirements
We use cash for the development, exploration and acquisition of natural gas properties and for the payment of gathering, transportation and processing costs, operating, general and administrative costs, taxes and debt obligations, including interest, dividends and share repurchases. Expenditures for the development, exploration and acquisition of natural gas properties are the primary use of our capital resources. During first nine months 2024, we used operating cash flows to fund $478.4 million of capital expenditures as reported in our consolidated statement of cash flows within investing activities. The amount of our future capital expenditures will depend upon a number of factors including our cash flows from operating, investing and financing activities, infrastructure availability, supply and demand fundamentals and our ability to execute our development program. In addition, the impact of commodity prices on investment opportunities, the availability of capital and the timing and results of our development activities may lead to changes in funding requirements for future development. We periodically review our budget to assess changes in current and projected cash flows, debt requirements and other factors.
We may from time to time repurchase or redeem all or portions of our outstanding debt securities for cash, through exchanges for other securities or a combination of both. Such repurchases or redemptions may be made in open market transactions and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. Our next significant long-term debt maturity is in the principal amount of $618.1 million due 2025 and is therefore classified as current on the balance sheet.
32
Cash Dividend Payments
On August 30, 2024, our board of directors approved a dividend of $0.08 per share payable on September 27, 2024 to stockholders of record at the close of business on September 13, 2024. The determination of the amount of future dividends, if any, to be declared and paid is at the sole discretion of the board of directors and primarily depends on cash flow, capital expenditures, debt covenants and various other factors.
Stock Repurchase Program
Our total remaining share repurchase authorization was approximately $1.0 billion at September 30, 2024.
Other Sources of Liquidity
We have a universal shelf registration statement filed with the SEC under which we, as a well-known seasoned issuer for purposes of SEC rules, have the future ability to sell an indeterminate amount of various types of debt and equity securities.
Cash Contractual Obligations
Our contractual obligations include long-term debt, operating leases, derivative obligations, asset retirement obligations and transportation, processing and gathering commitments including the divestiture contractual commitment. See Note 16 to our unaudited consolidated financial statements entitled "Commitments and Contingencies" for more information on commitments.
Interest Rates
At September 30, 2024, we had approximately $1.7 billion of debt outstanding which bore interest at fixed rates averaging 6.0%. We had no variable rate debt outstanding at September 30, 2024.
Off-Balance Sheet Arrangements
We do not currently utilize any significant off-balance sheet arrangements with unconsolidated entities to enhance our liquidity or capital resource position, or for any other purpose. However, as is customary in the oil and gas industry, we have various contractual work commitments, some of which are described above under Cash Contractual Obligations.
Inflation and Changes in Prices
Our revenues, the value of our assets and our ability to obtain bank loans or additional capital on attractive terms have been and will continue to be affected by changes in natural gas, NGLs and oil prices and the costs to produce our reserves. Natural gas, NGLs and oil prices are subject to significant fluctuations that are beyond our ability to control or predict. Certain of our costs and expenses are affected by general inflation and we expect costs for the remainder of 2024 to continue to be a function of supply and demand.
Forward-Looking Statements
Certain sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations include forward-looking statements concerning trends or events potentially affecting our business. These statements typically contain words such as "anticipates," "believes," "expects," "targets," "plans," "estimates," "predicts," "may," "should," "would" or similar words indicating that future outcomes are uncertain. In accordance with "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, these statements are accompanied by cautionary language identifying important factors, though not necessarily all such factors, which could cause future outcomes to differ materially from those set forth in the forward-looking statements. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our current forecasts for our existing operations and do not include the potential impact of any future events. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise. For additional risk factors affecting our business, see Item 1A. Risk Factors as set forth in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 21, 2024.
33
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our potential exposure to market risks. The term "market risk" refers to the risk of loss arising from adverse changes in natural gas, NGLs and oil prices and interest rates. The disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonably possible losses. This forward-looking information provides indicators of how we view and manage our ongoing market-risk exposure. All of our market-risk sensitive instruments were entered into for purposes other than trading. All accounts are U.S. dollar denominated.
Market Risk
We are exposed to market risks related to the volatility of natural gas, NGLs and oil prices. We employ various strategies, including the use of commodity derivative instruments, to manage the risks related to these price fluctuations. These derivative instruments apply to a varying portion of our production and provide partial price protection. These arrangements can limit the benefit to us of increases in prices but offer protection in the event of price declines. Further, if our counterparties defaulted, this protection might be limited as we might not receive the benefits of the derivatives. Realized prices are primarily driven by worldwide prices for oil and regional index prices for North American natural gas production. However, natural gas and NGLs prices are becoming global commodities similar to oil. Natural gas and oil prices have been volatile and unpredictable for many years. Changes in natural gas prices affect us more than changes in oil prices because approximately 64% of our December 31, 2023 proved reserves are natural gas and 2% of proved reserves are oil. In addition, a portion of our NGLs, which are 34% of proved reserves, are also impacted by changes in oil prices. At times, we are also exposed to market risks related to changes in interest rates. These risks did not change materially from December 31, 2023 to September 30, 2024.
Commodity Price Risk
We use commodity-based derivative contracts to manage exposures to commodity price fluctuations. We do not enter into these arrangements for speculative or trading purposes. At times, certain of our derivatives are swaps where we receive a fixed price for our production and pay market prices to the counterparty. Our derivatives program can also include collars, which establish a minimum floor price and a predetermined ceiling price. Our program may also include a three-way collar which is a combination of three options. We have also entered into natural gas derivative instruments containing a fixed price swap and a sold option (which we refer to as a swaption). At September 30, 2024, our derivative program includes swaps, collars, three-way collars and swaptions. The fair value of these contracts, represented by the estimated amount that would be realized upon immediate liquidation based on a comparison of the contract price and a reference price, generally NYMEX for natural gas and oil or Mont Belvieu for NGLs, approximated a net unrealized gain of $207.4 million as of September 30, 2024. These contracts expire monthly through December 2027. At September 30, 2024, the following commodity derivative contracts were outstanding, excluding our basis swaps which are separately discussed below:
Period |
|
Contract Type |
|
Volume Hedged |
|
|
Weighted Average Hedge Price |
|
|
|
|
|||||||||||||||||
|
|
|
|
|
|
Swap |
|
|
Sold Put |
|
|
Floor |
|
|
Ceiling |
|
|
Fair Market Value |
|
|||||||||
Natural Gas (a) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2024 |
|
Swaps |
|
300,000 Mmbtu/day |
|
$ |
|
4.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
34,562 |
|
|||
2024 |
|
Collars |
|
416,848 Mmbtu/day |
|
|
|
|
|
|
|
|
|
$ |
|
3.49 |
|
|
$ |
|
5.63 |
|
|
$ |
25,701 |
|
||
2024 |
|
Three-way Collars |
|
133,152 Mmbtu/day |
|
|
|
|
|
$ |
|
2.61 |
|
|
$ |
|
3.36 |
|
|
$ |
|
4.34 |
|
|
$ |
4,772 |
|
|
2025 |
|
Swaps |
|
400,000 Mmbtu/day |
|
$ |
|
4.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
103,398 |
|
|||
2025 |
|
Three-way Collars |
|
138,959 Mmbtu/day |
|
|
|
|
|
$ |
|
2.52 |
|
|
$ |
|
3.33 |
|
|
$ |
|
4.93 |
|
|
$ |
11,020 |
|
|
2026 |
|
Swaps |
|
100,000 Mmbtu/day |
|
$ |
|
4.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
15,779 |
|
|||
2027 |
|
Swaps |
|
30,000 Mmbtu/day |
|
$ |
|
4.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
4,285 |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Oil |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2024 |
|
Swaps |
|
5,000 bbls/day |
|
$ |
|
81.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
6,195 |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
NGLs (C3-Propane) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
2024 |
|
Swaps |
|
7,000 bbls/day |
|
$ |
|
33.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
1,666 |
|
|||
(a)
|
We also sold natural gas swaptions of 20,000 Mmbtu/day for calendar year 2026 at a weighted average price of $4.05/Mmbtu that expire in October 2024 and 30,000 MMbtu/day for 2027 at a weighted average price of $4.10 Mmbtu/day that expire in October 2024. The fair value of these swaptions at September 30, 2024 was a net derivative liability of $9,000. |
|
|
34
We believe NGLs prices are somewhat seasonal, particularly for propane. Therefore, the relationship of NGLs prices to NYMEX WTI (or West Texas Intermediate) will vary due to product components, seasonality and geographic supply and demand. We sell NGLs in several regional and international markets. If we are not able to sell or store NGLs, we may be required to curtail production or shift our drilling activities to dry gas areas.
The Appalachian region has limited local demand and infrastructure to accommodate ethane. We have agreements where we have contracted to either sell or transport ethane from our Marcellus Shale area. We cannot ensure that these facilities will remain available. If we are not able to sell ethane under at least one of these agreements, we may be required to curtail production or, as we have done in the past, purchase or divert natural gas to blend with our rich residue gas.
Other Commodity Risk
We are impacted by basis risk, caused by factors that affect the relationship between commodity futures prices reflected in derivative commodity instruments and the cash market price of the underlying commodity. Natural gas transaction prices are frequently based on industry reference prices that may vary from prices experienced in local markets. If commodity price changes in one region are not reflected in other regions, derivative commodity instruments may no longer provide the expected hedge, resulting in increased basis risk. Therefore, in addition to the swaps, collars, three-way collars and swaptions discussed above, we have entered into natural gas basis swap agreements. The price we receive for our gas production can be more or less than the NYMEX Henry Hub price because of basis adjustments, relative quality and other factors. Basis swap agreements effectively fix the basis adjustments. The fair value of the natural gas basis swaps was a loss of $16.9 million at September 30, 2024, and they settle through December 2028.
Commodity Sensitivity Analysis
The following table shows the fair value of our derivatives and the hypothetical changes in fair value that would result from a 10% and a 25% change in commodity prices at September 30, 2024. We remain at risk for possible changes in the market value of commodity derivative instruments; however, such risks should be mitigated by price changes in the underlying physical commodity (in thousands):
|
|
|
|
Hypothetical Change in Fair Value |
|
||||||||||||||
|
|
|
|
Increase in Commodity |
|
|
Decrease in Commodity |
|
|||||||||||
|
Fair Value |
|
|
10% |
|
|
25% |
|
|
10% |
|
|
25% |
|
|||||
Swaps |
$ |
165,885 |
|
|
$ |
(77,034 |
) |
|
$ |
(192,584 |
) |
|
$ |
77,034 |
|
|
$ |
192,584 |
|
Collars |
|
25,701 |
|
|
|
(8,219 |
) |
|
|
(17,822 |
) |
|
|
9,115 |
|
|
|
24,301 |
|
Three-way collars |
|
15,792 |
|
|
|
(9,932 |
) |
|
|
(25,312 |
) |
|
|
9,225 |
|
|
|
20,620 |
|
Basis swaps |
|
(16,892 |
) |
|
|
17,113 |
|
|
|
42,783 |
|
|
|
(17,113 |
) |
|
|
(42,783 |
) |
Swaptions |
|
(9 |
) |
|
|
(842 |
) |
|
|
(9,024 |
) |
|
|
9 |
|
|
|
9 |
|
Our commodity-based derivative contracts expose us to the credit risk of non-performance by the counterparty to the contracts. Our exposure is diversified primarily among major investment grade financial institutions and we have master netting agreements with our counterparties that provide for offsetting payables against receivables from separate derivative contracts. Our derivative contracts are with multiple counterparties to minimize our exposure to any individual counterparty. At September 30, 2024, our derivative counterparties include fifteen financial institutions, of which ten are secured lenders in our bank credit facility. Counterparty credit risk is considered when determining the fair value of our derivative contracts. While our counterparties are primarily major investment grade financial institutions, the fair value of our derivative contracts has been adjusted to account for the risk of non-performance by certain of our counterparties, which was immaterial.
Interest Rate Risk
At September 30, 2024, we had total debt of approximately $1.7 billion. All of our outstanding debt is based on fixed interest rates and, as a result, we do not have significant exposure to movements in market interest rates. Our bank credit facility provides for variable interest rate borrowings; however, we did not have any borrowings outstanding as of September 30, 2024.
35
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of September 30, 2024 at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
There was no change in our system of internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the three months ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
36
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 16 to our unaudited consolidated financial statements entitled "Commitments and Contingencies" included in Part I Item 1 above for a summary of our legal proceedings, such information being incorporated herein by reference.
Environmental Proceedings
From time to time, we receive notices of violation from governmental and regulatory authorities in areas in which we operate relating to alleged violations of environmental statutes or the rules and regulations promulgated thereunder. While we cannot predict with certainty whether these notices of violation will result in fines and/or penalties, if fines and/or penalties are imposed, they may result in monetary sanctions, individually or in the aggregate, in excess of $250,000.
ITEM 1A. RISK FACTORS
We are subject to various risks and uncertainties in the course of our business. In addition to the factors discussed elsewhere in this report, you should carefully consider the risks and uncertainties described under Item 1A. Risk Factors filed in our Annual Report on Form 10-K for the year ended December 31, 2023.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
In 2019, our board of directors authorized a common stock repurchase program. In 2022, our board of directors increased the authorization under the program. Shares repurchased as of September 30, 2024 were held as treasury stock and we have approximately $1.0 billion of remaining authorization under the program. These repurchases are based on trade date, although certain purchases may not have settled until the following month.
Purchases of our common stock during third quarter 2024 are as follows:
Period |
|
Total Number |
|
|
Average Price |
|
|
Total Number |
|
|
Approximate |
|
||||
July 2024 |
|
|
325,000 |
|
|
$ |
31.62 |
|
|
|
325,000 |
|
|
$ |
1,051,027,787 |
|
August 2024 |
|
|
285,000 |
|
|
$ |
29.39 |
|
|
|
285,000 |
|
|
$ |
1,042,651,591 |
|
September 2024 |
|
|
190,000 |
|
|
$ |
28.57 |
|
|
|
190,000 |
|
|
$ |
1,037,223,625 |
|
|
|
|
800,000 |
|
|
|
|
|
|
800,000 |
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
(a) Includes any fees, commissions, or other expenses associated with the share repurchases |
|
|||||||||||||||
ITEM 5. OTHER INFORMATION
During third quarter 2024, no director or officer
37
ITEM 6. EXHIBITS
Exhibit index
|
|
|
|
Incorporated by Reference (File No. 001-12209) |
|||||
Exhibit Number |
|
Exhibit Description |
|
Form |
|
Exhibit |
|
Filing Date |
|
|
|
|
|
|
|
|
|
|
|
3.1 |
|
Restated Certificate of Incorporation of Range Resources Corporation |
|
10-Q |
|
3.1.1 |
|
05/05/2004 |
|
|
|
|
|
|
|
|
|
|
|
3.1.1 |
|
First Amendment to Restated Certificate of Incorporation of Range Resources Corporation |
|
10-Q |
|
3.1 |
|
07/28/2005 |
|
|
|
|
|
|
|
|
|
|
|
3.1.2 |
|
Second Amendment to Restated Certificate of Incorporation of Range Resources Corporation |
|
10-Q |
|
3.1 |
|
07/24/2008 |
|
|
|
|
|
|
|
|
|
|
|
3.1.3 |
|
Third Amendment to Restated Certificate of Incorporation of Range Resources Corporation |
|
8-K |
|
3.1 |
|
05/08/2024 |
|
|
|
|
|
|
|
|
|
|
|
3.2 |
|
|
8-K |
|
3.1 |
|
05/19/2016 |
|
|
|
|
|
|
|
|
|
|
|
|
31.1* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.2** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101. INS* |
|
Inline XBRL Instance Document – the XBRL Instance Document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101. SCH* |
|
Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Document |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104 * |
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
|
|
|
|
|
|
|
* ** |
|
Filed herewith Furnished herewith |
|
|
|
|
|
|
|
38
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: October 22, 2024
RANGE RESOURCES CORPORATION |
||
|
|
|
By: |
|
/s/ MARK S. SCUCCHI |
|
|
Mark S. Scucchi |
|
|
Executive Vice President and |
Date: October 22, 2024
RANGE RESOURCES CORPORATION |
||
|
|
|
By: |
|
/s/ ASHLEY S. KAVANAUGH |
|
|
Ashley S. Kavanaugh |
|
|
Vice President – Controller and |
39