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Range Resources Fourth Quarter, Full Year 2021 Results

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   |    Wednesday,February 23,2022

Range Resources Corp. announced its fourth quarter 2021 financial results and plans for 2022.

4Q and Full-Year 2021 Highlights:

  • Reduced net debt in 2021 by $379 million compared to year-end 2020
  • All-in 2021 capital spending was $414 million, approximately $11 million less than original budget
  • 2021 daily production averaged 2.13 Bcfe per day
  • 2021 NGL realizations averaged a premium of $1.18 per barrel above Mont Belvieu, a Company record
  • 2021 Direct Operating Expense averaged less than $0.10 per mcfe, a Company record
  • Realized maximum payout of $29.5 million from contingent derivative based on 2021 commodity prices
  • PV10 of year-end proved reserves of $12.7 billion, or approximately $40 per share net of debt, assuming NYMEX strip prices at year-end 2021

Commenting on the results and 2022 plans, Jeff Ventura, the Company's CEO said, "During 2021, Range generated significant free cash flow, reduced debt, refinanced near-term maturities, lowered well costs, expanded cash margins and delivered our operational plan safely and for less than budgeted. These results reflect the organization's continuing focus on capital discipline and further strengthening our financial position as we develop the most prolific natural gas and NGL play in North America. In 2022, we expect to build upon these achievements, generating over $1 billion of free cash flow at recent strip pricing. Range's improved financial positioning supports our plan to reinstate our dividend program with a yield that is competitive with the broader market, in addition to authorizing a share repurchase program. Given that our equity is currently valued at approximately one-half of proved reserve value, which excludes any value attributable to multiple decades of core inventory, we believe that share repurchases provide an excellent opportunity to create significant, long-term shareholder value. We look forward to the year ahead, as we generate significant free cash flow, further strengthen our balance sheet, return capital to shareholders and maintain our leadership position on environmental efforts."

Reinstatement of Cash Dividend

Range's Board of Directors has approved the reinstatement of the Company's regular quarterly cash dividend, with payments expected to start in the second half of 2022, at an anticipated annual dividend rate of $0.32 per share of the Company's common stock ($0.08 per quarter). Details regarding the record and payment dates for quarterly dividends will be announced as each quarterly dividend is formally declared by the Board.

Authorization of $500 Million Share Repurchase Program

Range's Board of Directors approved an expansion of the Company's share repurchase program with $500 million available and effective immediately. This repurchase program, which is equivalent to approximately 10% of Range's market capitalization, is expected to be funded with free cash flow generation.

As deemed appropriate by Range management, Range may repurchase shares in the open market from time to time, or in privately negotiated transactions, in compliance with SEC rules and federal securities laws. The authorization under the program does not have a stated expiration date. The repurchase program does not obligate Range to acquire any particular amount of common stock and, in Range's discretion, it may be modified or discontinued at any time.

Financial Discussion

Except for generally accepted accounting principles ("GAAP") reported amounts, specific expense categories exclude non-cash impairments, unrealized mark-to-market adjustment on derivatives, non-cash stock compensation and other items shown separately on the attached tables. "Unit costs" as used in this release are composed of direct operating, transportation, gathering, processing and compression, production and ad valorem taxes, general and administrative, interest and depletion, depreciation and amortization costs divided by production. See "Non-GAAP Financial Measures" for a definition of each of the non-GAAP financial measures and the tables that reconcile each of the non-GAAP measures to their most directly comparable GAAP financial measure.

Capital Expenditures

Fourth quarter 2021 drilling and completions expenditures were $83.7 million and $8.6 million was invested in acreage and gathering facilities. Total 2021 capital expenditures were $414 million, including $388 million on drilling and completion, and a combined $26 million on acreage, gas gathering systems and other investments.

Financial Position

In 2021, Range reduced net debt by $379 million. As of December 31, 2021, Range had total debt outstanding of $2.95 billion and $214 million of cash on hand. This was the Company's fourth consecutive year of debt reduction. Range had zero borrowings under its credit facility as of year-end 2021, providing liquidity in excess of $2 billion.

In fourth quarter 2021, Range realized a total of $29.5 million in contingent derivative settlement gains related to the North Louisiana divestiture. This represents the maximum amount that Range could receive pertaining to 2021 commodity prices, and Range expects to receive the cash proceeds in the first half of 2022. Range has the potential to receive an additional $45.5 million in contingent payments based on natural gas, NGL and oil prices in 2022 and 2023. At year-end 2021, the fair value of these remaining contingent payments was approximately $26.6 million.

In January 2022, Range issued $500 million aggregate principal amount of 4.75% senior notes due 2030 and used proceeds and cash on hand to redeem all outstanding 9.25% senior notes due 2026. As a result, Range's interest expense is expected to improve by 25% year-over-year in 2022 to an approximate $0.21 per mcfe annual midpoint average.

Fourth Quarter 2021 Results

GAAP revenues for fourth quarter 2021 totaled $1.57 billion, GAAP net cash provided from operating activities (including changes in working capital) was $318 million, and GAAP net income was $891 million ($3.47 per diluted share). Fourth quarter earnings results include a $310 million mark-to-market derivative gain due to decreases in commodity prices.

Non-GAAP revenues for fourth quarter 2021 totaled $976 million, and cash flow from operations before changes in working capital, a non-GAAP measure, was $424 million. Adjusted net income comparable to analysts' estimates, a non-GAAP measure, was $242 million ($0.96 per diluted share) in fourth quarter 2021.

The following table details Range's fourth quarter 2021 unit costs per mcfe(a):

Expenses   4Q 2021
(per mcfe)
  3Q 2021
(per mcfe)
    Increase (Decrease)
Direct operating   $ 0.09   $ 0.10     (10%)
Transportation, gathering,
processing and compression
    1.59     1.51     5%
Production and ad valorem taxes     0.05     0.04     25%
General and administrative(a)     0.15     0.16     (6%)
Interest expense(a)     0.27     0.28     (4%)
Total cash unit costs(b)     2.14     2.08     3%
Depletion, depreciation and
amortization (DD&A)
    0.46     0.47     (2%)
Total unit costs plus DD&A(b)   $ 2.59   $ 2.56     1%

(a) Excludes stock-based compensation, legal settlements and amortization of deferred financing costs.
(b) May not add due to rounding.

The following table details Range's average production and realized pricing for fourth quarter 2021:

  4Q21 Production & Realized Pricing
    Natural Gas
  Oil (Bbl)
  Natural Gas
Equivalent (Mcfe)
Net production per day   1,533,609   8,674   102,126   2,198,413
Average NYMEX price   $5.82   $77.02   $36.44    
Differential, including basis hedging   (0.44)   (6.95)   (0.18)    
Realized prices before NYMEX hedges   5.38   70.07   36.26   $5.71
Settled NYMEX hedges   (2.11)   (17.51)   (1.48)   (1.61)
Average realized prices after hedges   $ 3.27   $ 52.56   $ 34.77   $ 4.10

Fourth quarter 2021 natural gas, NGLs and oil price realizations (including the impact of cash-settled hedges and derivative settlements) averaged $4.10 per mcfe.

  • The average natural gas price, including the impact of basis hedging, was $5.38 per mcf, or a ($0.44) per mcf differential to NYMEX. This represents the highest quarterly pre-hedge natural gas realization since 2014. In addition, Range realized a contingent derivative settlement gain of $20 million related to natural gas prices in 2021.

  • Crude oil and condensate price realizations, before realized hedges, averaged $70.07 per barrel, or $6.95 below WTI (West Texas Intermediate). This represents the highest quarterly pre-hedge condensate realization since 2014. In addition, Range realized a contingent derivative settlement gain of $3.5 million related to WTI prices in 2021.

  • Pre-hedge NGL realizations were $36.26 per barrel, an improvement of $2.21 per barrel versus the third quarter of 2021 and approximately 47% of WTI. This represents the highest quarterly pre-hedge NGL realization since 2013. In addition, Range realized a contingent derivative settlement gain of $6 million related to NGL prices in 2021.

2021 Proved Reserves

Summary of Changes in Proved Reserves
(in Bcfe)
Balance at December 31, 2020 17,203  
Extensions, discoveries and additions 1,603  
Performance revisions 134  
Locations re-entered to development plan 913  
Reclassification of PUD to unproved under SEC 5-year rule (1,323 )
Price revisions 23  
Production (778 )
Balance at December 31, 2021 17,775  

As shown in the table below, the present value (PV10) of reserves under SEC methodology was $14.9 billion at December 31, 2021. For comparison, the PV10 using year-end 2021 NYMEX strip average prices of $3.27 per Mmbtu for natural gas and $60.76 per barrel of oil would have been $12.7 billion, assuming the same proven reserve volumes.

  2021 SEC

2021 Strip
Natural Gas Price ($/Mmbtu) $3.60 $3.27
WTI Oil Price ($/Bbl) $66.34 $60.76
Proved Reserves PV10 ($ billions) $14.9 $12.7


(a) Average realized prices for estimating year-end 2021 reserves and PV10 were $3.30 per mcf, $59.35 per barrel of crude oil and $28.41 per barrel of NGLs. Updated from prior press release.
(b) Average realized prices for calculating PV10, based on year-end strip pricing, were $3.09 per mcf, $53.40 per barrel of crude oil and $25.63 per barrel of NGLs. Updated from prior press release.

Year-end 2021 reserves included 7.4 Tcfe of proved undeveloped reserves from 360 wells planned to be developed within the next five years with an expected development cost of $0.29 per mcfe. Beyond the five-year reserve calculation window, Range has thousands of high-quality wells in the Marcellus, Utica and Upper Devonian horizons.

Hedging Status

Range hedges portions of its expected future production volumes to increase the predictability of cash flow and to help maintain a strong, flexible financial position. In aggregate, Range has approximately 50% of its expected 2022 net revenue hedged. Please see the detailed hedging schedule posted on the Range website under Investor Relations - Financial Information.

Range has also hedged Marcellus and other basis differentials for natural gas and NGL exports to limit volatility between benchmarks and regional prices. The combined fair value of the natural gas basis, NGL freight and spread hedges as of December 31, 2021 was a net gain of $16.2 million.

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