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Ranger Oil Corp. Second Quarter 2022 Results

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   |    Thursday,August 04,2022

Ranger Oil Corp. announced financial and operational results for the second quarter of 2022.

Second Quarter Highlights:

  • Achieved upper-end of quarterly sales guidance with total sales of 38.5 thousand barrels of oil equivalent per day ("Mboe/d") and crude oil sales of 27.5 thousand barrels per day ("Mbbl/d")
  • Posted net income of $148.0 million and adjusted net income1 of $120.4 million
  • Generated adjusted EBITDAX1 of $189.8 million and net cash provided by operating activities of $165.0 million
  • Produced pro forma adjusted free cash flow1 of $61.6 million
  • Drilling and completion ("D&C") capital expenditures were $122.1 million
  • Strong second quarter sales volumes, recent acquisitions and increased activity associated with the acquisitions have allowed the Company to increase the mid-point of its full-year 2022 total sales volumes outlook by more than 1.2 Mboe/d
  • Recently closed additional bolt-on transactions, bringing year-to-date acquisitions in the Eagle Ford to eight transactions with initial purchase prices totaling approximately $139 million, subject to customary adjustments. The transactions, which closed late in the second quarter and early in the third quarter, added current production, approximately 20,000 net acres and additional high-return development opportunities
  • As of July 29, 2022, approximately $46 million had been returned to shareholders through share repurchases since program initiation in May 2022
  • Continued strengthening of capital structure with a leverage ratio2 of approximately 0.8x at quarter-end, incorporating approximately $50 million reduction in total net debt1 since year-end 2021

Ranger President and CEO, Darrin Henke said: "We continue to perform exceptionally well year-to-date, generating significant free cash flow through disciplined investments while capturing numerous accretive bolt-ons that are expected to add value for years to come. For the second quarter, our capital investments remained on track and our sales volumes were at the high-end of our guidance. During the quarter, we were able to expand our cash return framework as we reloaded and extended our share buyback program and initiated our first quarterly dividend. We have significantly increased our cash flow through both organic growth and strategic consolidation while simultaneously decreasing our share count and leverage. This has resulted in significant growth in cash-on-cash returns for our investors."

2Q2022 Financial and Operating Results

Ranger reported a second quarter 2022 net income of $148.0 million. Adjusted net income1 was $120.4 million for the second quarter of 2022. Ranger posted adjusted EBITDAX1 of $189.8 million, net cash provided by operating activities of $165.0 million and generated pro forma adjusted free cash flow1 of $61.6 million during the quarter.

Total operating expenses for the second quarter of 2022 were $109.2 million, or $31.20 per boe. Adjusted direct operating expenses1 were $52.5 million, or $14.98 per boe, in the second quarter of 2022 which consist of lease operating expenses ("LOE"), gathering, processing and transportation expenses ("GPT"), production and ad valorem taxes, and adjusted cash general and administrative expenses1 ("G&A"), excluding depreciation, depletion and amortization ("DD&A") and significant special charges. A breakdown of operating expenses, as well as guidance for the remainder of the year, can be found in additional tables included in this release.

Total sales volumes for the second quarter of 2022 were at the upper-end of Ranger's guidance at 38.5 Mboe/d (71% crude oil/86% liquids). Oil sales during the quarter were 27.5 Mbbl/d, also toward the high-end of Ranger's previous guidance (26.6 - 27.8 Mbbl/d).

Expanded Shareholder Return Program

Ranger recently expanded its cash return framework for shareholders, increasing its share buyback authorization and declaring a cash dividend.

  • As of July 29, 2022, Ranger has repurchased approximately $46 million (1.35 million shares) of its Class A common stock, or more than 3% of total equity outstanding, at an average price of approximately $33.67 per share.
  • In early July, Ranger's Board of Directors increased its share repurchase authorization by $40 million to $140 million and extended the program term through June 30, 2023.
  • The Board declared an inaugural cash dividend of $0.075 per share of Class A common stock, payable August 4, 2022 to Class A common stockholders of record as of the close of business on July 25, 2022.

2022 Outlook

Along with the increase in anticipated sales volumes for 2022 noted above, Ranger expects its capital expenditures for the original 2022 development plan ("Initial D&C") to remain within the previously announced range at approximately $425 million, due to the Company effectively managing the ongoing inflationary environment. In addition, as a result of sustained operating efficiencies driving accelerated development activity, combined with increased working interests and longer laterals following recent bolt-ons, Ranger is increasing its capital expenditures outlook by an incremental $30 million ("Incremental D&C"). The Incremental D&C is expected to benefit future sales volumes and increase development efficiencies.

Ranger's third quarter capital expenditure guidance reflects its temporary use of a third drilling rig, which is developing assets located in LaSalle County, approximately 180 miles southwest of Ranger's development activity in Gonzales and Lavaca counties. After the wells in LaSalle are completed, which is anticipated to conclude in the third quarter, Ranger expects to maintain a two-rig development pace in the fourth quarter. The Company is considering adding a third rig to its development program in early 2023 based on its decreasing leverage, increased acreage position, and the strong projected returns and free cash flow generated by its deep inventory at current commodity prices. This potential increase in activity would create additional momentum in early 2023 and significantly benefit full-year 2023 sales volumes.

Balance Sheet and Liquidity

As of June 30, 2022, Ranger had $400 million of senior unsecured notes and approximately $137 million drawn, net of cash, on its revolving credit facility. This represents a reduction in net debt1 from year-end 2021 to June 30, 2022 of approximately $50 million. The Company's borrowing base under its revolving credit facility was recently increased to $875 million, with elected commitments of $400 million. Ranger is currently undergoing an additional borrowing base redetermination to reflect the Company's recent increase in producing reserves and bolt-on acquisitions.

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