Lower prices hurt Range
Range Resources broke production records for its natural gas output in the first quarter, but because of depressed prices, earned much less than it did a year ago.
For the quarter ended March 31, the Fort Worth, Texas-based company reported record production volume that averaged 1.3 billion cubic feet per day, but its products, which include natural gas, gas liquids and oil, produced sales that were 43 percent lower than the comparable quarter of a year ago.
The company reported results following the close of Tuesday’s stock market.
Range, which has its Southern Marcellus Shale regional headquarters in Southpointe, was able to boost total revenue through hedging, seeing a 1.16 percent rise from a year ago to $462.6 million.
Helping the company to set another quarterly production record was the drilling of the Southern Marcellus Shale division’s first Washington County Utica shale well – Claysville’s Sportsman’s Club Unit #11H – that tested at an initial 24-hour rate of 59 million cubic feet per day in late December. The well was brought on line in late January, at a constrained rate of 20 Mmcf per day on an interrupted basis.
The company said that to date, production results are encouraging, with the well showing cumulative production of 1.2 billion cubic feet of gas.
The company said its unit costs declined 53 cents per mcfe, or 15 percent compared to the prior year.
Despite continuing its goal of being a low-cost producer, Range Resources Chief Executive Officer Jeff Ventura acknowledged that the glut of natural gas creates challenges for income, but is hopeful infrastructure projects will enable the company to take advantage of greater takeaway of its output later this year.
“The oversupply of natural gas and (natural gas liquids) in Appalachia have created a challenging price environment, but we see signs of improvement coming, and until then, our hedges help to improve financial results,” Ventura said in a statement. “Later this year, the Mariner East project is expected to commence, providing Range another premium outlet for ethane sales, plus substantial savings on propane transportation costs.”
During the quarter, Range said it signed an additional long-term LNG sales agreement, bringing total LNG sales agreements to 200,000 Mmbtu per day.
Range reaffirmed its 20 percent production growth target for the year.