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Ranger Oil Corp. Third Quarter 2022 Results

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   |    Wednesday,November 02,2022

Ranger Oil Corporation announced financial and operational results for the third quarter of 2022.

Third Quarter Highlights:

  • Exceeded high end of guidance for total sales volumes at 42.6 thousand barrels of oil equivalent per day ("Mboe/d"); crude oil sales exceeded the mid-point of guidance at 30.7 thousand barrels per day ("Mbbl/d")
  • Posted net income of $227.6 million and adjusted net income1 of $125.0 million
  • Generated adjusted EBITDAX1 of $208.7 million and net cash provided by operating activities of $190.3 million
  • Produced pro forma adjusted free cash flow1 of $57.8 million
  • Drilling and completion ("D&C") capital expenditures were in-line with guidance at $151.9 million, of which $3.4 million was associated with incremental capital due to D&C operations completed ahead of schedule
  • Increased expectations for full-year total sales volumes to 41.1 - 41.5 Mboe/d and oil sales volumes to 29.4 - 29.7 Mbbl/d
  • Year-to-date, Ranger closed eight transactions in the Eagle Ford totaling approximately $139 million, subject to customary post- closing adjustments. The transactions added 2 Mboe/d of low decline production, approximately 20,000 net acres, and over 60 identified gross drilling locations with further potential development opportunities being reviewed
  • Including the future payment of the third quarter dividend declared today, approximately $80 million will have been returned to shareholders through Ranger's share repurchase and dividend programs since May 2022. As of November 1, 2022, 5% of the Company's total common stock outstanding, or about 2.1 million shares of Class A common stock, has been repurchased (average repurchase price: $34.73 per share)
  • Continued strengthening of capital structure with a leverage ratio2 of approximately 0.75x at quarter end

President and CEO, Darrin Henke commented: "2022 is proving to be another incredible year for Ranger Oil. Our team navigated a challenging macro-environment and has created significant long-term value for our shareholders. Our continued capital discipline and focus on high-return development drilling allowed us to generate significant free cash, expand our cash return framework and significantly strengthen our capital structure. In addition, we captured a number of accretive bolt-ons this year that deepened our inventory of top-tier development projects. In the third quarter, we again achieved higher than expected sales volumes with D&C capital expenditures within guidance and were able to increase our full-year sales volumes outlook."

Henke continued, "As we turn to the fourth quarter, we have a number of exciting opportunities to continue Ranger's strong trajectory of growing value per share, while simultaneously returning cash to shareholders and strengthening the balance sheet. At the beginning of the fourth quarter, in addition to our third rig, we were able to acquire significant additional working interest in upcoming pads immediately ahead of the drill bit as well as partner with a separate offset operator on a large shared pad development to maximize capital efficiency. These opportunities set Ranger up for a very strong start to 2023, where we expect to reach over 50 Mboe/d in the first half of the year."

3Q2022 Financial and Operating Results

Ranger reported third quarter 2022 net income of $227.6 million. Adjusted net income1 was $125.0 million for the third quarter of 2022. Ranger posted adjusted EBITDAX1 of $208.7 million, net cash provided by operating activities of $190.3 million and generated pro forma adjusted free cash flow1 of $57.8 million during the quarter.

Total operating expenses for the third quarter of 2022 were $126.6 million, or $32.30 per boe. Lease operating expenses ("LOE") for the third quarter of 2022 were $24.1 million, of which $2.7 million was due to incremental high rate of return workover activity anticipated to contribute to increased production in the fourth quarter of 2022 and beyond. Adjusted direct operating expenses1 were $58.6 million, or $14.94 per boe, in the third quarter of 2022 which consist of 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 third quarter of 2022 were above the high end of guidance at 42.6 Mboe/d (72% crude oil/87% liquids). Oil sales during the period were 30.7 Mbbl/d, above the mid-point of guidance.

Shareholder Return Program

Ranger has a well-defined framework to return cash to shareholders. Highlights are below:

  • As of November 1, 2022, Ranger has repurchased approximately 2.1 million shares of its Class A common stock, or 5% of total equity outstanding, at an average price of approximately $34.73 per share. Total shares of common stock outstanding as of November 1, 2022 were approximately 41.6 million3.
  • The Board declared a cash dividend for the third quarter of $0.075 per share of Class A common stock payable November 28, 2022 to Class A common stockholders of record as of the close of business on November 16, 2022.

2022 Outlook

With the recent decision to operate a third drilling rig through year-end 2022, the Company expects that its D&C capital expenditures for the fourth quarter will be $150 - $170 million, including approximately $25 million of capital expenditures related to non-operated development and higher working interests due to acquisitions in the fourth quarter as discussed above. Ranger's decision to continue with a three rig program in 2023 will be based on the service cost environment, the rig's performance, market conditions, and capital allocation plans for next year.

With continued strong performance from recent completions, the Company increased expectations for full-year sales volumes to 41.1 - 41.5 Mboe/d, which is 4% above midpoint of guidance provided in March 2022 of 39.75 Mboe/d.

The table below sets forth the Company's updated operational and financial guidance for the fourth quarter and full-year 2022:

  Full Year 2022     4Q 2022
Total Sales Volumes (boe/d)
41,100 - 41,500     45,300 - 46,900
Oil Sales Volumes (bbl/d)
29,400 - 29,700     32,300 - 33,500
Direct Operating Expenses
LOE (per boe)
$5.48 - $5.62     $5.05 - $5.55
GPT expenses (per boe)
$2.50 - $2.61     $2.40 - $2.80
Ad valorem and production taxes (% of product revenue)
5.25% - 5.55%     5.25% - 5.75%
Adjusted Cash G&A expenses (per boe) 1
$2.20 - $2.34     $2.35 - $2.85
Capital Expenditures (millions)
Total Drilling & Completion
$507 - $527     $150 - $170

Balance Sheet and Liquidity

As of September 30, 2022, Ranger had $400 million of senior unsecured notes and approximately $195 million drawn, net of cash, on its revolving credit facility.

The Company's borrowing base under its revolving credit facility was recently increased to $950 million ($500 million of elected commitments), reflecting its ongoing growth in proved reserves and reduced leverage. This was the third announced increase year-to-date, totaling approximately 60%.

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