Q3false0000315852--12-312023-12-312024-06-300000315852rrc:FourPointSevenFivePercentSeniorSubordinatedNotesDueTwoThousandThirtyMember2023-09-300000315852us-gaap:CommonStockMember2022-03-310000315852country:PA2022-01-012022-09-300000315852us-gaap:SwapMemberus-gaap:CommodityContractMember2023-07-012023-09-300000315852rrc:EmployeesMemberrrc:RestrictedStockLiabilityAwardsMember2023-01-012023-09-300000315852us-gaap:NotesPayableToBanksMemberrrc:FourPointSevenFivePercentSeniorNotesDueTwoThousandThirtyMember2022-12-310000315852us-gaap:CommonStockMember2022-01-012022-03-310000315852us-gaap:SwapMemberrrc:TwoThousandTwentyThreeCommodityContractMembersrt:CrudeOilMember2023-09-300000315852us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300000315852rrc:NaturalsGasMemberrrc:CollarsMemberus-gaap:CommodityContractMember2022-12-310000315852rrc:EightPointTwoFivePercentageSeniorNotesDueTwoThousandTwentyNine1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-09-300000315852rrc:RestrictedStockEquityAwardsMember2022-12-310000315852us-gaap:TreasuryStockCommonMember2022-12-310000315852rrc:ContingentConsiderationMember2023-09-300000315852us-gaap:PerformanceSharesMember2023-01-012023-09-300000315852rrc:DerivativesCallsMember2023-01-012023-09-300000315852rrc:NaturalsGasMemberrrc:TwoThousandTwentyFiveCommodityContractMember2023-09-300000315852rrc:FourPointSevenFivePercentSeniorSubordinatedNotesDueTwoThousandThirtyMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-09-300000315852us-gaap:CommonStockMember2023-07-012023-09-300000315852rrc:NaturalsGasMemberus-gaap:CommodityContractMemberrrc:ThreeWayCollarsMember2023-09-300000315852us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310000315852srt:NaturalGasLiquidsReservesMemberrrc:NaturalGasNaturalGasLiquidsAndOilSalesMember2022-01-012022-09-300000315852us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-09-300000315852rrc:BrokeredNaturalGasMarketingAndOtherMember2022-07-012022-09-300000315852rrc:CollarsMembersrt:CrudeOilMemberus-gaap:CommodityContractMember2023-09-3000003158522023-10-200000315852rrc:RestrictedStockLiabilityAwardsMember2023-01-012023-09-300000315852us-gaap:SwapMemberrrc:FreightContractMember2023-01-012023-09-300000315852us-gaap:FairValueInputsLevel1Memberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMemberrrc:ThreeWayCollarsMember2023-09-300000315852us-gaap:FairValueInputsLevel1Memberrrc:CollarsMemberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000315852us-gaap:BasisSwapMemberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000315852rrc:NaturalGasBasisSwapMemberus-gaap:CommodityContractMember2023-09-300000315852rrc:CounterpartiesNotInFacilityMemberus-gaap:FinanceReceivablesMember2023-09-300000315852us-gaap:CarryingReportedAmountFairValueDisclosureMemberrrc:ContingentConsiderationMember2022-12-310000315852us-gaap:RetainedEarningsMember2023-06-3000003158522022-07-012022-09-300000315852us-gaap:AdditionalPaidInCapitalMember2022-12-310000315852rrc:BankCreditFacilityMemberus-gaap:BaseRateMember2023-01-012023-09-300000315852us-gaap:NotesPayableToBanksMemberrrc:EightPointTwoFivePercentSeniorNotesDueTwoThousandTwentyNineMember2023-09-300000315852us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300000315852us-gaap:TreasuryStockCommonMember2023-04-012023-06-300000315852srt:NaturalGasLiquidsReservesMemberrrc:BrokeredNaturalGasMarketingAndOtherMember2023-07-012023-09-300000315852us-gaap:RetainedEarningsMember2023-03-310000315852rrc:BankCreditFacilityMember2023-01-012023-09-300000315852us-gaap:FairValueInputsLevel1Memberrrc:CollarsMemberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852rrc:NaturalsGasMemberus-gaap:BasisSwapMemberus-gaap:CommodityContractMember2023-09-300000315852rrc:PerformanceSharesAwardsBasedOnProductionPerShareAwardsAndReservePerShareAwardsMember2023-01-012023-09-300000315852rrc:BrokeredNaturalGasAndMarketingExpenseMember2023-01-012023-09-300000315852srt:MinimumMemberrrc:BankCreditFacilityMember2023-01-012023-09-300000315852us-gaap:CommonStockMember2022-04-012022-06-300000315852rrc:CollarsMember2023-01-012023-09-300000315852rrc:DerivativesCallsMember2023-07-012023-09-300000315852rrc:NaturalsGasMemberrrc:TwoThousandTwentySixCommodityContractMember2023-09-300000315852us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310000315852us-gaap:FairValueInputsLevel1Memberus-gaap:BasisSwapMemberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000315852rrc:CollarsMember2022-07-012022-09-300000315852rrc:DerivativesExcludingBasisSwapsAndFreightSwapsMember2023-09-300000315852srt:NaturalGasReservesMemberrrc:BrokeredNaturalGasMarketingAndOtherMember2022-01-012022-09-300000315852rrc:NaturalsGasMemberrrc:TwoThousandTwentyFourCommodityContractMemberrrc:ThreeWayCollarsMember2023-09-3000003158522023-03-310000315852rrc:NonEmployeeDirectorMemberrrc:RestrictedStockLiabilityAwardsMember2023-01-012023-09-300000315852rrc:NorthLouisianaMember2022-01-012022-09-300000315852rrc:DirectOperatingExpenseMember2022-01-012022-09-300000315852us-gaap:CommonStockMember2022-07-012022-09-300000315852us-gaap:AdditionalPaidInCapitalMember2022-06-300000315852srt:NaturalGasReservesMemberrrc:BrokeredNaturalGasMarketingAndOtherMember2023-01-012023-09-300000315852us-gaap:FairValueInputsLevel3Memberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMemberrrc:ThreeWayCollarsMember2022-12-310000315852srt:MinimumMemberrrc:BankCreditFacilityMemberus-gaap:BaseRateMember2023-09-300000315852us-gaap:TreasuryStockCommonMember2022-03-310000315852us-gaap:SwapMemberrrc:NaturalsGasMemberus-gaap:CommodityContractMember2023-09-300000315852rrc:FourPointSevenFivePercentSeniorSubordinatedNotesDueTwoThousandThirtyMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-12-310000315852rrc:StockBasedPerformanceAwardsMember2023-09-300000315852rrc:TwoThousandTwentyThreeCommodityContractMemberrrc:NaturalsGasMemberrrc:CollarsMember2023-09-300000315852us-gaap:SwapMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000315852rrc:BrokeredNaturalGasMarketingAndOtherMembersrt:NaturalGasLiquidsReservesMember2023-01-012023-09-300000315852us-gaap:SwapMemberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000315852us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-012023-06-300000315852us-gaap:CommonStockMember2023-04-012023-06-300000315852us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-300000315852rrc:CapacityReleasesOnTransportationPipelinesMemberstpr:PA2023-09-3000003158522022-01-012022-12-310000315852rrc:ContingentConsiderationMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852rrc:NorthLouisianaMember2022-04-012022-06-300000315852rrc:NorthLouisianaContractReleaseMember2023-01-012023-09-300000315852rrc:ThreeWayCollarsMember2023-07-012023-09-300000315852us-gaap:AdditionalPaidInCapitalMember2021-12-310000315852us-gaap:FairValueInputsLevel1Memberrrc:ContingentConsiderationMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000315852us-gaap:FairValueInputsLevel2Memberrrc:CollarsMemberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000315852us-gaap:FairValueMeasurementsRecurringMember2022-12-310000315852us-gaap:SwapMemberrrc:NaturalsGasMemberrrc:TwoThousandTwentyThreeCommodityContractMember2023-09-300000315852rrc:OtherMarketingRevenueMemberrrc:BrokeredNaturalGasMarketingAndOtherMember2023-07-012023-09-300000315852srt:OilReservesMemberrrc:NaturalGasNaturalGasLiquidsAndOilSalesMember2023-07-012023-09-300000315852rrc:ExitCostsMember2023-09-300000315852us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000315852us-gaap:PerformanceSharesMember2022-01-012022-09-300000315852us-gaap:SwapMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310000315852us-gaap:RestrictedStockMember2022-01-012022-09-300000315852us-gaap:EstimateOfFairValueFairValueDisclosureMember2022-12-310000315852us-gaap:CommonStockMember2021-12-310000315852rrc:EightPointTwoFivePercentSeniorNotesDueTwoThousandTwentyNineMember2022-12-310000315852rrc:ContingentConsiderationMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-12-310000315852us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310000315852rrc:ExplorationExpenseMember2022-07-012022-09-300000315852rrc:EquityGrantsMember2022-07-012022-09-300000315852us-gaap:CarryingReportedAmountFairValueDisclosureMember2023-09-300000315852us-gaap:SwapMembersrt:CrudeOilMemberus-gaap:CommodityContractMember2023-09-300000315852us-gaap:TreasuryStockCommonMember2023-01-012023-03-310000315852us-gaap:BasisSwapMemberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852rrc:ExplorationExpenseMember2022-01-012022-12-310000315852rrc:BankCreditFacilityMember2023-09-300000315852rrc:FourPointSevenFivePercentSeniorNotesDueTwoThousandThirtyMember2023-09-300000315852rrc:NaturalsGasMemberus-gaap:BasisSwapMemberus-gaap:CommodityContractMember2022-12-310000315852rrc:NaturalsGasMemberrrc:TwoThousandTwentyThreeCommodityContractMemberrrc:ThreeWayCollarsMember2023-09-3000003158522023-01-012023-03-310000315852rrc:NaturalsGasMemberrrc:CollarsMemberus-gaap:CommodityContractMember2023-09-300000315852us-gaap:CommonStockMember2023-03-310000315852us-gaap:InterestIncomeMemberrrc:BrokeredNaturalGasMarketingAndOtherMember2023-01-012023-09-300000315852us-gaap:RetainedEarningsMember2023-01-012023-03-310000315852rrc:CollarsMember2022-01-012022-09-300000315852us-gaap:FairValueInputsLevel2Memberrrc:ContingentConsiderationMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852rrc:BrokeredNaturalGasAndMarketingExpenseMember2023-07-012023-09-300000315852us-gaap:TreasuryStockCommonMember2023-07-012023-09-300000315852country:PA2023-07-012023-09-300000315852rrc:EightPointTwoFivePercentageSeniorNotesDueTwoThousandTwentyNine1Member2022-12-310000315852rrc:NaturalGasNaturalGasLiquidsAndOilSalesMember2022-07-012022-09-300000315852us-gaap:AccountsPayableAndAccruedLiabilitiesMemberrrc:CounterpartiesNotInFacilityMember2023-09-3000003158522023-09-300000315852us-gaap:RestrictedStockMember2023-07-012023-09-300000315852us-gaap:SwapMembersrt:CrudeOilMemberrrc:JanuaryToSeptemberTwoThousandTwentyFourCommodityContractMember2023-09-3000003158522023-06-300000315852rrc:BrokeredNaturalGasAndMarketingExpenseMember2022-07-012022-09-300000315852rrc:EquityGrantsMember2023-07-012023-09-300000315852us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310000315852us-gaap:RetainedEarningsMember2021-12-310000315852us-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852us-gaap:FairValueInputsLevel1Memberrrc:ContingentConsiderationMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852rrc:CollarsMembersrt:CrudeOilMemberus-gaap:CommodityContractMember2022-12-310000315852rrc:OtherMarketingRevenueMemberrrc:BrokeredNaturalGasMarketingAndOtherMember2023-01-012023-09-300000315852us-gaap:InterestIncomeMemberrrc:BrokeredNaturalGasMarketingAndOtherMember2022-07-012022-09-300000315852us-gaap:FairValueInputsLevel3Member2023-09-300000315852us-gaap:SwapMemberrrc:NaturalsGasMemberus-gaap:CommodityContractMember2022-12-310000315852us-gaap:TreasuryStockCommonMember2023-09-300000315852us-gaap:RestrictedStockMember2022-07-012022-09-300000315852us-gaap:SwapMemberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852us-gaap:CommonStockMember2023-09-300000315852us-gaap:SwapMemberrrc:NaturalsGasMemberrrc:TwoThousandTwentyFourCommodityContractMember2023-09-300000315852rrc:CounterpartiesNotInFacilityMemberus-gaap:FinanceReceivablesMember2023-01-012023-09-300000315852us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300000315852rrc:RestrictedStockEquityAwardsMember2023-01-012023-09-300000315852us-gaap:FairValueInputsLevel3Memberrrc:ContingentConsiderationMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000315852rrc:ContingentConsiderationMember2023-07-012023-09-300000315852rrc:EmployeesMemberrrc:RestrictedStockLiabilityAwardsMember2022-01-012022-09-300000315852srt:NaturalGasLiquidsReservesMemberrrc:BrokeredNaturalGasMarketingAndOtherMember2022-07-012022-09-300000315852us-gaap:AdditionalPaidInCapitalMember2022-09-300000315852us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852rrc:PerformanceSharesAwardsBasedOnProductionPerShareAwardsAndReservePerShareAwardsMember2022-01-012022-09-300000315852us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852us-gaap:InterestIncomeMemberrrc:BrokeredNaturalGasMarketingAndOtherMember2022-01-012022-09-300000315852us-gaap:OperatingExpenseMember2023-01-012023-09-300000315852us-gaap:SwapMemberus-gaap:CommodityContractMember2022-01-012022-09-300000315852us-gaap:FairValueInputsLevel1Memberus-gaap:BasisSwapMemberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852us-gaap:NotesPayableToBanksMemberrrc:EightPointTwoFivePercentSeniorNotesDueTwoThousandTwentyNineMember2022-12-310000315852rrc:NaturalGasNaturalGasLiquidsAndOilSalesMember2022-01-012022-09-300000315852rrc:PerformanceBasedTSRPSUsMember2022-01-012022-09-300000315852us-gaap:BasisSwapMember2022-07-012022-09-300000315852us-gaap:FairValueInputsLevel2Memberus-gaap:BasisSwapMemberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852rrc:ThreeWayCollarsMember2023-01-012023-09-3000003158522023-04-012023-06-300000315852rrc:OtherMarketingRevenueMemberrrc:BrokeredNaturalGasMarketingAndOtherMember2022-07-012022-09-300000315852us-gaap:CarryingReportedAmountFairValueDisclosureMemberrrc:ContingentConsiderationMember2023-09-3000003158522023-07-012023-09-300000315852us-gaap:SwapMembersrt:CrudeOilMemberus-gaap:CommodityContractMember2022-12-310000315852srt:NaturalGasLiquidsReservesMemberrrc:NaturalGasNaturalGasLiquidsAndOilSalesMember2023-01-012023-09-300000315852rrc:FourPointSevenFivePercentSeniorSubordinatedNotesDueTwoThousandThirtyMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-12-310000315852rrc:ContingentConsiderationMember2022-01-012022-09-300000315852us-gaap:RevenueFromContractWithCustomerMember2023-09-300000315852us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300000315852us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-300000315852us-gaap:CommonStockMember2022-12-310000315852srt:OilReservesMemberrrc:NaturalGasNaturalGasLiquidsAndOilSalesMember2022-07-012022-09-300000315852srt:NaturalGasReservesMemberrrc:BrokeredNaturalGasMarketingAndOtherMember2022-07-012022-09-300000315852rrc:NorthLouisianaContractReleaseMember2023-07-012023-09-300000315852us-gaap:NaturalGasGatheringTransportationMarketingAndProcessingMember2023-01-012023-09-300000315852us-gaap:AdditionalPaidInCapitalMember2023-09-300000315852us-gaap:TreasuryStockCommonMember2022-09-300000315852us-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMemberrrc:ThreeWayCollarsMember2022-12-3100003158522022-09-300000315852rrc:NaturalGasNaturalGasLiquidsAndOilSalesMember2023-01-012023-09-300000315852us-gaap:OperatingExpenseMember2023-07-012023-09-300000315852us-gaap:TreasuryStockCommonMember2023-06-300000315852rrc:NaturalGasNaturalGasLiquidsAndOilSalesMember2023-07-012023-09-300000315852us-gaap:NotesPayableToBanksMember2023-09-300000315852us-gaap:FairValueInputsLevel3Memberus-gaap:SwaptionMemberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852srt:NaturalGasReservesMemberrrc:NaturalGasNaturalGasLiquidsAndOilSalesMember2023-01-012023-09-300000315852us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000315852us-gaap:CarryingReportedAmountFairValueDisclosureMember2022-12-310000315852rrc:FourPointEightSevenFivePercentSeniorNotesDueTwoThousandTwentyFiveMember2023-01-012023-09-300000315852us-gaap:FairValueInputsLevel3Member2022-12-310000315852rrc:NorthLouisianaMember2023-04-012023-06-3000003158522023-01-012023-09-300000315852srt:MinimumMemberrrc:PerformanceBasedTSRPSUsMember2023-01-012023-09-300000315852us-gaap:RetainedEarningsMember2022-07-012022-09-300000315852us-gaap:FairValueInputsLevel2Memberus-gaap:SwaptionMemberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852rrc:OtherMarketingRevenueMemberrrc:BrokeredNaturalGasMarketingAndOtherMember2022-01-012022-09-3000003158522022-12-3100003158522021-12-310000315852us-gaap:NaturalGasGatheringTransportationMarketingAndProcessingMember2023-07-012023-09-300000315852us-gaap:SwaptionMember2023-01-012023-09-300000315852rrc:NorthLouisianaMember2023-09-300000315852rrc:ContingentConsiderationMember2022-07-012022-09-3000003158522022-04-012022-06-300000315852rrc:EightPointTwoFivePercentSeniorNotesDueTwoThousandTwentyNineMember2023-09-300000315852us-gaap:RetainedEarningsMember2022-03-310000315852rrc:BrokeredNaturalGasMarketingAndOtherMember2023-01-012023-09-300000315852us-gaap:SwapMemberrrc:FreightContractMember2023-07-012023-09-300000315852us-gaap:FairValueInputsLevel3Member2023-01-012023-09-300000315852rrc:PerformanceBasedTSRPSUsMember2023-01-012023-09-300000315852us-gaap:RetainedEarningsMember2022-04-012022-06-300000315852rrc:BankCreditFacilityMember2022-07-012022-09-300000315852us-gaap:AdditionalPaidInCapitalMember2023-06-300000315852us-gaap:SwapMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000315852us-gaap:CommodityContractMemberrrc:ThreeWayCollarsMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852us-gaap:FairValueInputsLevel2Memberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMemberrrc:ThreeWayCollarsMember2022-12-310000315852us-gaap:SwapMemberrrc:FreightContractMember2022-07-012022-09-300000315852us-gaap:SwaptionMember2022-01-012022-09-300000315852us-gaap:FairValueInputsLevel2Memberus-gaap:CommodityContractMemberrrc:ThreeWayCollarsMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-3000003158522022-01-012022-09-300000315852srt:NaturalGasReservesMemberrrc:BrokeredNaturalGasMarketingAndOtherMember2023-07-012023-09-300000315852us-gaap:FairValueInputsLevel2Memberrrc:ContingentConsiderationMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000315852rrc:FourPointEightSevenFivePercentSeniorNotesDueTwoThousandTwentyFiveMemberus-gaap:NotesPayableToBanksMember2023-09-300000315852us-gaap:CommonStockMember2022-06-300000315852rrc:NonEmployeeDirectorMemberrrc:RestrictedStockLiabilityAwardsMember2022-01-012022-09-300000315852us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310000315852us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852rrc:DirectOperatingExpenseMember2023-01-012023-09-300000315852us-gaap:FairValueInputsLevel2Memberrrc:CollarsMemberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852rrc:NaturalsGasMemberus-gaap:CommodityContractMemberrrc:ThreeWayCollarsMember2022-12-310000315852us-gaap:SwapMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000315852us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300000315852rrc:RestrictedStockLiabilityAwardsMember2022-12-310000315852us-gaap:SubordinatedDebtMember2023-01-012023-09-300000315852rrc:ContingentConsiderationMember2022-12-310000315852rrc:StockBasedPerformanceAwardsMember2023-01-012023-09-300000315852rrc:EightPointTwoFivePercentageSeniorNotesDueTwoThousandTwentyNine1Member2023-09-300000315852us-gaap:RestrictedStockMember2023-01-012023-09-300000315852us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000315852us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300000315852us-gaap:SwapMemberrrc:NaturalsGasMemberrrc:TwoThousandTwentySixCommodityContractMember2023-09-300000315852rrc:NaturalsGasMemberrrc:TwoThousandTwentySixCommodityContractMember2023-01-012023-09-300000315852srt:MaximumMemberrrc:BankCreditFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2023-09-300000315852rrc:NorthLouisianaContractReleaseMember2022-07-012022-09-300000315852us-gaap:SwapMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852us-gaap:SwapMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852us-gaap:RetainedEarningsMember2023-04-012023-06-300000315852rrc:ThreeWayCollarsMember2022-07-012022-09-300000315852rrc:CollarsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852rrc:ContingentConsiderationMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852rrc:NaturalsGasMemberus-gaap:SwaptionMemberus-gaap:CommodityContractMember2023-09-300000315852us-gaap:CommonStockMemberus-gaap:PerformanceSharesMember2023-01-012023-09-300000315852rrc:CollarsMembersrt:CrudeOilMemberrrc:JanuaryToSeptemberTwoThousandTwentyFourCommodityContractMember2023-09-300000315852srt:MaximumMemberrrc:StockBasedPerformanceAwardsMember2023-01-012023-09-300000315852us-gaap:EstimateOfFairValueFairValueDisclosureMember2023-09-300000315852us-gaap:SwaptionMember2022-07-012022-09-300000315852rrc:EquityGrantsMember2022-01-012022-09-300000315852srt:MaximumMemberrrc:BankCreditFacilityMemberus-gaap:BaseRateMember2023-09-300000315852us-gaap:BasisSwapMember2023-07-012023-09-300000315852srt:MinimumMemberrrc:BankCreditFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2023-09-300000315852us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310000315852rrc:ContingentConsiderationMember2023-01-012023-09-300000315852us-gaap:RetainedEarningsMember2022-09-300000315852us-gaap:RetainedEarningsMember2023-07-012023-09-300000315852us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300000315852rrc:FourPointEightSevenFivePercentSeniorNotesDueTwoThousandTwentyFiveMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-09-300000315852rrc:DerivativesCallsMember2022-07-012022-09-300000315852srt:OilReservesMemberrrc:NaturalGasNaturalGasLiquidsAndOilSalesMember2023-01-012023-09-300000315852srt:NaturalGasLiquidsReservesMemberrrc:NaturalGasNaturalGasLiquidsAndOilSalesMember2022-07-012022-09-300000315852rrc:StockBasedPerformanceAwardsMember2022-12-310000315852us-gaap:TreasuryStockCommonMember2022-06-300000315852us-gaap:BasisSwapMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852rrc:ThreeWayCollarsMember2022-01-012022-09-300000315852us-gaap:OperatingExpenseMember2022-01-012022-09-300000315852rrc:RestrictedStockEquityAwardsMember2023-09-300000315852rrc:FourPointSevenFivePercentSeniorSubordinatedNotesDueTwoThousandThirtyMember2022-12-310000315852srt:MinimumMemberrrc:BankCreditFacilityMember2023-09-300000315852us-gaap:CommonStockMember2023-06-300000315852srt:NaturalGasReservesMemberrrc:NaturalGasNaturalGasLiquidsAndOilSalesMember2022-01-012022-09-300000315852us-gaap:RevenueFromContractWithCustomerMember2022-12-310000315852us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310000315852rrc:FourPointSevenFivePercentSeniorNotesDueTwoThousandThirtyMember2022-12-310000315852srt:NaturalGasLiquidsReservesMemberrrc:BrokeredNaturalGasMarketingAndOtherMember2022-01-012022-09-300000315852srt:NaturalGasReservesMemberrrc:NaturalGasNaturalGasLiquidsAndOilSalesMember2023-07-012023-09-300000315852rrc:ContingentConsiderationMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-09-300000315852us-gaap:BasisSwapMember2022-01-012022-09-300000315852us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300000315852rrc:FourPointEightSevenFivePercentSeniorNotesDueTwoThousandTwentyFiveMemberus-gaap:NotesPayableToBanksMember2022-12-310000315852rrc:EmployeesMemberrrc:RestrictedStockEquityAwardsMember2023-01-012023-09-300000315852us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300000315852us-gaap:CommonStockMember2023-01-012023-03-310000315852rrc:BrokeredNaturalGasAndMarketingExpenseMember2022-01-012022-09-300000315852rrc:ExplorationExpenseMember2023-07-012023-09-300000315852rrc:DirectOperatingExpenseMember2022-07-012022-09-300000315852us-gaap:SwapMemberus-gaap:CommodityContractMember2022-07-012022-09-300000315852us-gaap:AdditionalPaidInCapitalMember2023-03-310000315852country:PA2023-01-012023-09-300000315852rrc:ExplorationExpenseMember2022-01-012022-09-300000315852rrc:RestrictedStockLiabilityAwardsMember2022-01-012022-09-3000003158522022-06-300000315852rrc:EightPointTwoFivePercentageSeniorNotesDueTwoThousandTwentyNine1Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2023-09-300000315852us-gaap:NaturalGasGatheringTransportationMarketingAndProcessingMember2022-01-012022-09-300000315852country:PA2022-07-012022-09-300000315852srt:MaximumMemberrrc:BankCreditFacilityMember2023-01-012023-09-300000315852srt:NaturalGasReservesMemberrrc:NaturalGasNaturalGasLiquidsAndOilSalesMember2022-07-012022-09-300000315852rrc:FourPointEightSevenFivePercentSeniorNotesDueTwoThousandTwentyFiveMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-12-310000315852us-gaap:PerformanceSharesMember2022-01-012022-12-310000315852srt:MaximumMemberrrc:BankCreditFacilityMember2023-09-300000315852us-gaap:SwaptionMemberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852us-gaap:CarryingReportedAmountFairValueDisclosureMemberrrc:FourPointSevenFivePercentSeniorSubordinatedNotesDueTwoThousandThirtyMember2023-09-300000315852us-gaap:RetainedEarningsMember2022-12-310000315852rrc:EightPointTwoFivePercentageSeniorNotesDueTwoThousandTwentyNine1Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-12-310000315852rrc:NorthLouisianaMember2023-01-012023-09-300000315852rrc:NaturalsGasMemberrrc:TwoThousandTwentyFiveCommodityContractMember2023-01-012023-09-300000315852us-gaap:NotesPayableToBanksMemberrrc:FourPointSevenFivePercentSeniorNotesDueTwoThousandThirtyMember2023-09-300000315852us-gaap:TreasuryStockCommonMember2021-12-310000315852us-gaap:SwaptionMember2023-07-012023-09-300000315852rrc:NaturalsGasMemberrrc:CollarsMemberrrc:TwoThousandTwentyFourCommodityContractMember2023-09-300000315852rrc:FourPointEightSevenFivePercentSeniorNotesDueTwoThousandTwentyFiveMember2022-12-310000315852rrc:CollarsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000315852us-gaap:TreasuryStockCommonMember2023-03-310000315852us-gaap:RestrictedStockMember2022-01-012022-12-310000315852rrc:FourPointEightSevenFivePercentSeniorNotesDueTwoThousandTwentyFiveMemberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-12-310000315852srt:MaximumMemberrrc:NorthLouisianaMemberrrc:ContingentConsiderationMember2023-01-012023-09-300000315852rrc:EquityGrantsMember2023-01-012023-09-300000315852us-gaap:RetainedEarningsMember2023-09-300000315852us-gaap:SwapMemberrrc:NaturalsGasMemberrrc:TwoThousandTwentyFiveCommodityContractMember2023-09-300000315852us-gaap:OperatingExpenseMember2022-07-012022-09-300000315852rrc:FourPointEightSevenFivePercentSeniorNotesDueTwoThousandTwentyFiveMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-09-300000315852us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-09-300000315852us-gaap:InterestIncomeMemberrrc:BrokeredNaturalGasMarketingAndOtherMember2023-07-012023-09-300000315852rrc:BrokeredNaturalGasMarketingAndOtherMember2023-07-012023-09-300000315852us-gaap:RetainedEarningsMember2022-01-012022-03-310000315852us-gaap:NotesPayableToBanksMember2022-12-310000315852rrc:ContingentConsiderationMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000315852srt:MinimumMemberrrc:StockBasedPerformanceAwardsMember2023-01-012023-09-300000315852us-gaap:FairValueInputsLevel1Memberus-gaap:SwaptionMemberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852srt:MaximumMemberrrc:PerformanceBasedTSRPSUsMember2023-01-012023-09-300000315852rrc:ExplorationExpenseMember2023-01-012023-09-300000315852rrc:BankCreditFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2023-01-012023-09-300000315852us-gaap:SwapMemberus-gaap:CommodityContractMember2023-01-012023-09-300000315852srt:NaturalGasLiquidsReservesMemberrrc:NaturalGasNaturalGasLiquidsAndOilSalesMember2023-07-012023-09-3000003158522022-01-012022-03-310000315852rrc:DerivativesCallsMember2022-01-012022-09-300000315852us-gaap:NaturalGasGatheringTransportationMarketingAndProcessingMember2022-07-012022-09-300000315852us-gaap:BasisSwapMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000315852us-gaap:CommonStockMember2022-09-300000315852rrc:EightPointTwoFivePercentageSeniorNotesDueTwoThousandTwentyNine1Memberus-gaap:CarryingReportedAmountFairValueDisclosureMember2022-12-310000315852rrc:RestrictedStockEquityAwardsMember2022-01-012022-09-300000315852us-gaap:AdditionalPaidInCapitalMember2022-03-310000315852us-gaap:TreasuryStockCommonMember2022-04-012022-06-300000315852us-gaap:BasisSwapMember2023-01-012023-09-300000315852us-gaap:TreasuryStockCommonMember2022-01-012022-03-310000315852rrc:CollarsMemberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000315852rrc:ExitCostsMember2023-01-012023-09-300000315852rrc:NorthLouisianaContractReleaseMember2022-01-012022-09-300000315852rrc:FourPointEightSevenFivePercentSeniorNotesDueTwoThousandTwentyFiveMember2023-09-300000315852us-gaap:GeneralAndAdministrativeExpenseMember2023-07-012023-09-300000315852us-gaap:TreasuryStockCommonMember2022-07-012022-09-300000315852rrc:BankCreditFacilityMember2022-01-012022-09-3000003158522022-03-310000315852us-gaap:SwaptionMemberus-gaap:MeasurementInputPriceVolatilityMembersrt:WeightedAverageMember2023-01-012023-09-300000315852us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300000315852us-gaap:FairValueInputsLevel1Memberus-gaap:CommodityContractMemberrrc:ThreeWayCollarsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000315852us-gaap:RetainedEarningsMember2022-06-300000315852rrc:DirectOperatingExpenseMember2023-07-012023-09-300000315852us-gaap:FairValueInputsLevel3Memberus-gaap:CommodityContractMemberrrc:ThreeWayCollarsMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852us-gaap:FairValueInputsLevel2Memberus-gaap:BasisSwapMemberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000315852rrc:ExitCostsMember2022-12-310000315852rrc:OtherMarketingRevenueMember2023-01-012023-09-300000315852rrc:RestrictedStockLiabilityAwardsMember2023-09-300000315852rrc:CollarsMember2023-07-012023-09-300000315852rrc:FourPointEightSevenFivePercentSeniorNotesDueTwoThousandTwentyFiveMember2023-06-300000315852srt:OilReservesMemberrrc:NaturalGasNaturalGasLiquidsAndOilSalesMember2022-01-012022-09-300000315852rrc:RestrictedStockEquityAwardsMemberrrc:NonEmployeesDirectorsAndEmployeesMember2023-01-012023-09-300000315852rrc:CollarsMemberus-gaap:CommodityContractMemberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000315852us-gaap:SwapMemberrrc:FreightContractMember2022-01-012022-09-300000315852rrc:BrokeredNaturalGasMarketingAndOtherMember2022-01-012022-09-30rrc:Commercialbankiso4217:USDxbrli:sharesxbrli:pureutr:MMBTUrrc:BarrelsPerDayrrc:Streamxbrli:sharesiso4217:USDutr:MMBTUrrc:Awardrrc:Plansrrc:Counterpartyiso4217:USDutr:bblrrc:MmbtuPerDayiso4217:USD

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-12209

RANGE RESOURCES CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Delaware

34-1312571

(State or Other Jurisdiction of Incorporation or Organization)

(IRS Employer Identification No.)

100 Throckmorton Street, Suite 1200

Fort Worth, Texas

76102

(Address of Principal Executive Offices)

(Zip Code)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, (Par Value $0.01)

 

RRC

 

New York Stock Exchange

Registrant’s telephone number, including area code

(817) 870-2601

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer

 

 

 

Non-Accelerated Filer

Smaller Reporting Company

 

 

 

Emerging Growth Company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No

241,304,882 shares of common stock were outstanding on October 20, 2023

 


 

RANGE RESOURCES CORPORATION

FORM 10-Q

Quarter Ended September 30, 2023

Unless the context otherwise indicates, all references in this report to "Range Resources," "Range," "we," "us," or "our" are to Range Resources Corporation and its directly and indirectly owned subsidiaries. For certain industry specific terms used in this Form 10-Q, please see "Glossary of Certain Defined Terms" in our 2022 Annual Report on Form 10-K.

TABLE OF CONTENTS

 

 

 

 

 

Page

PART I – FINANCIAL INFORMATION

 

 

ITEM 1.

Financial Statements:

3

Consolidated Balance Sheets

3

Consolidated Statements of Operations (Unaudited)

 

4

 

 

Consolidated Statements of Comprehensive Income (Unaudited)

 

5

Consolidated Statements of Cash Flows (Unaudited)

 

7

 

 

Consolidated Statements of Stockholders’ Equity (Unaudited)

 

8

Notes to Consolidated Financial Statements (Unaudited)

 

10

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

25

ITEM 3.

Quantitative and Qualitative Disclosures about Market Risk

 

39

ITEM 4.

Controls and Procedures

 

41

 

PART II – OTHER INFORMATION

 

 

ITEM 1.

Legal Proceedings

42

ITEM 1A.

Risk Factors

 

42

ITEM 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

42

ITEM 6.

Exhibits

 

43

 

SIGNATURES

 

44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2


 

PART I – FINANCIAL INFORMATION

 

ITEM 1. Financial Statements

RANGE RESOURCES CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

 

 

September 30,

 

 

December 31,

 

 

2023

 

 

2022

 

Assets

(Unaudited)

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

162,801

 

 

$

207

 

Accounts receivable, less allowance for doubtful accounts of $308 and $314

 

217,335

 

 

 

481,050

 

Contingent consideration receivable

 

 

 

 

24,500

 

Derivative assets

 

173,406

 

 

 

925

 

Other current assets

 

42,435

 

 

 

32,905

 

Total current assets

 

595,977

 

 

 

539,587

 

Derivative assets

 

43,614

 

 

 

40,990

 

Natural gas properties, successful efforts method

 

11,090,501

 

 

 

10,655,879

 

Accumulated depletion and depreciation

 

(5,019,169

)

 

 

(4,765,475

)

 

 

6,071,332

 

 

 

5,890,404

 

Other property and equipment

 

74,871

 

 

 

74,638

 

Accumulated depreciation and amortization

 

(73,309

)

 

 

(72,204

)

 

 

1,562

 

 

 

2,434

 

Operating lease right-of-use assets

 

37,801

 

 

 

84,070

 

Other assets

 

95,649

 

 

 

68,077

 

Total assets

$

6,845,935

 

 

$

6,625,562

 

Liabilities

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

132,230

 

 

$

206,738

 

Asset retirement obligations

 

4,570

 

 

 

4,570

 

Accrued liabilities

 

302,348

 

 

 

442,922

 

Deferred compensation liabilities

 

85,592

 

 

 

89,334

 

Accrued interest

 

28,714

 

 

 

39,138

 

Divestiture contract obligation

 

90,059

 

 

 

86,546

 

Derivative liabilities

 

 

 

 

151,417

 

Total current liabilities

 

643,513

 

 

 

1,020,665

 

Bank debt

 

 

 

 

9,509

 

Senior notes

 

1,773,436

 

 

 

1,832,451

 

Deferred tax liabilities

 

482,869

 

 

 

333,571

 

Derivative liabilities

 

417

 

 

 

15,495

 

Deferred compensation liabilities

 

65,404

 

 

 

99,907

 

Operating lease liabilities

 

17,605

 

 

 

20,903

 

Asset retirement obligations and other liabilities

 

115,243

 

 

 

112,981

 

Divestiture contract obligation

 

299,868

 

 

 

304,074

 

Total liabilities

 

3,398,355

 

 

 

3,749,556

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

Preferred stock, $1 par, 10,000,000 shares authorized, none issued and outstanding

 

 

 

 

 

Common stock, $0.01 par, 475,000,000 shares authorized, 265,755,947 issued at
   September 30, 2023 and
262,887,265 issued at December 31, 2022

 

2,658

 

 

 

2,629

 

Common stock held in treasury, 24,401,065 shares at September 30, 2023 and
   
24,001,535 shares at December 31, 2022

 

(439,302

)

 

 

(429,659

)

Additional paid-in capital

 

5,843,249

 

 

 

5,764,970

 

Accumulated other comprehensive income

 

495

 

 

 

467

 

Retained deficit

 

(1,959,520

)

 

 

(2,462,401

)

Total stockholders' equity

 

3,447,580

 

 

 

2,876,006

 

Total liabilities and stockholders’ equity

$

6,845,935

 

 

$

6,625,562

 

The accompanying notes are an integral part of these consolidated financial statements.

3


 

RANGE RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues and other income:

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas, NGLs and oil sales

 

$

526,718

 

 

$

1,435,152

 

 

$

1,731,382

 

 

$

3,824,395

 

Derivative fair value income (loss)

 

 

38,394

 

 

 

(457,708

)

 

 

530,095

 

 

 

(1,636,687

)

Brokered natural gas, marketing and other

 

 

44,612

 

 

 

133,101

 

 

 

171,584

 

 

 

328,716

 

Total revenues and other income

 

 

609,724

 

 

 

1,110,545

 

 

 

2,433,061

 

 

 

2,516,424

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating

 

 

22,562

 

 

 

21,290

 

 

 

73,442

 

 

 

61,628

 

Transportation, gathering, processing and compression

 

 

277,207

 

 

 

323,019

 

 

 

830,880

 

 

 

948,713

 

Taxes other than income

 

 

4,756

 

 

 

9,057

 

 

 

19,643

 

 

 

24,189

 

Brokered natural gas and marketing

 

 

46,206

 

 

 

127,285

 

 

 

158,074

 

 

 

330,517

 

Exploration

 

 

6,970

 

 

 

7,498

 

 

 

19,022

 

 

 

19,703

 

Abandonment and impairment of unproved properties

 

 

11,012

 

 

 

3,186

 

 

 

44,308

 

 

 

12,319

 

General and administrative

 

 

38,093

 

 

 

40,568

 

 

 

120,765

 

 

 

126,013

 

Exit costs

 

 

10,684

 

 

 

11,065

 

 

 

71,661

 

 

 

58,249

 

Deferred compensation plan

 

 

8,997

 

 

 

5,795

 

 

 

29,546

 

 

 

59,917

 

Interest

 

 

30,599

 

 

 

38,736

 

 

 

93,918

 

 

 

127,912

 

(Gain) loss on early extinguishment of debt

 

 

 

 

 

 

 

 

(439

)

 

 

69,232

 

Depletion, depreciation and amortization

 

 

87,619

 

 

 

90,471

 

 

 

259,197

 

 

 

262,573

 

Gain on the sale of assets

 

 

(109

)

 

 

(135

)

 

 

(353

)

 

 

(548

)

Total costs and expenses

 

 

544,596

 

 

 

677,835

 

 

 

1,719,664

 

 

 

2,100,417

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

65,128

 

 

 

432,710

 

 

 

713,397

 

 

 

416,007

 

Income tax expense:

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

601

 

 

 

6,981

 

 

 

3,000

 

 

 

20,732

 

Deferred

 

 

15,097

 

 

 

52,642

 

 

 

149,289

 

 

 

26,141

 

 

 

 

15,698

 

 

 

59,623

 

 

 

152,289

 

 

 

46,873

 

Net income

 

$

49,430

 

 

$

373,087

 

 

$

561,108

 

 

$

369,134

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.20

 

 

$

1.52

 

 

$

2.30

 

 

$

1.48

 

Diluted

 

$

0.20

 

 

$

1.49

 

 

$

2.27

 

 

$

1.45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share

 

$

0.08

 

 

$

0.08

 

 

$

0.24

 

 

$

0.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

241,338

 

 

 

239,768

 

 

 

239,455

 

 

 

242,850

 

Diluted

 

 

243,937

 

 

 

245,023

 

 

 

242,144

 

 

 

248,360

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

4


 

RANGE RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited, in thousands)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

49,430

 

 

$

373,087

 

 

$

561,108

 

 

$

369,134

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

Postretirement benefits:

 

 

 

 

 

 

 

 

 

 

 

Amortization of prior service costs/actuarial gain

 

12

 

 

 

73

 

 

 

36

 

 

 

219

 

Income tax benefit

 

(2

)

 

 

(17

)

 

 

(8

)

 

 

(32

)

Total comprehensive income

$

49,440

 

 

$

373,143

 

 

$

561,136

 

 

$

369,321

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5


 

The accompanying notes are an integral part of these consolidated financial statements.

6


 

RANGE RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 

 

Nine Months Ended September 30,

 

 

2023

 

 

2022

 

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

Net income

$

561,108

 

 

$

369,134

 

Adjustments to reconcile net income to net cash provided from operating activities:

 

 

 

 

 

Deferred income tax expense

 

149,289

 

 

 

26,141

 

Depletion, depreciation and amortization

 

259,197

 

 

 

262,573

 

Abandonment and impairment of unproved properties

 

44,308

 

 

 

12,319

 

Derivative fair value (income) loss

 

(530,095

)

 

 

1,636,687

 

Cash settlements on derivative financial instruments

 

188,496

 

 

 

(1,005,522

)

Divestiture contract obligation, including accretion

 

71,380

 

 

 

57,791

 

Amortization of deferred financing costs and other

 

3,591

 

 

 

6,521

 

Deferred and stock-based compensation

 

60,166

 

 

 

95,397

 

Gain on the sale of assets

 

(353

)

 

 

(548

)

(Gain) loss on early extinguishment of debt

 

(439

)

 

 

69,232

 

Changes in working capital:

 

 

 

 

 

Accounts receivable

 

288,415

 

 

 

(132,644

)

Other current assets

 

(9,520

)

 

 

(19,478

)

Accounts payable

 

(84,291

)

 

 

52,292

 

Accrued liabilities and other

 

(249,455

)

 

 

(177,806

)

Net cash provided from operating activities

 

751,797

 

 

 

1,252,089

 

Investing activities:

 

 

 

 

 

Additions to natural gas properties

 

(421,087

)

 

 

(351,813

)

Additions to field service assets

 

(321

)

 

 

(535

)

Acreage purchases

 

(27,422

)

 

 

(23,968

)

Proceeds from disposal of assets

 

823

 

 

 

463

 

Purchases of marketable securities held by the deferred compensation plan

 

(39,545

)

 

 

(39,362

)

Proceeds from the sales of marketable securities held by the deferred
   compensation plan

 

43,663

 

 

 

40,531

 

Net cash used in investing activities

 

(443,889

)

 

 

(374,684

)

Financing activities:

 

 

 

 

 

Borrowings on credit facility

 

185,000

 

 

 

813,000

 

Repayments on credit facility

 

(204,000

)

 

 

(813,000

)

Issuance of senior notes

 

 

 

 

500,000

 

Repayment of senior notes

 

(60,934

)

 

 

(1,071,867

)

Dividends paid

 

(57,949

)

 

 

(19,526

)

Treasury stock purchases

 

(9,663

)

 

 

(308,891

)

Debt issuance costs

 

 

 

 

(16,177

)

Taxes paid for shares withheld

 

(39,475

)

 

 

(25,492

)

Change in cash overdrafts

 

(18,616

)

 

 

(14,203

)

Proceeds from the sales of common stock held by the deferred
  compensation plan

 

60,323

 

 

 

21,473

 

Net cash used in financing activities

 

(145,314

)

 

 

(934,683

)

Increase (decrease) in cash and cash equivalents

 

162,594

 

 

 

(57,278

)

Cash and cash equivalents at beginning of period

 

207

 

 

 

214,422

 

Cash and cash equivalents at end of period

$

162,801

 

 

$

157,144

 

 

 

 

 

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

 

 

Retained

 

 

comprehensive

 

 

 

 

 

Shares

 

 

Par value

 

 

shares

 

 

treasury

 

 

capital

 

 

deficit

 

 

income

 

 

Total

 

Balance as of December 31, 2022

 

262,887

 

 

$

2,629

 

 

 

24,002

 

$

(429,659

)

 

$

5,764,970

 

 

$

(2,462,401

)

 

$

467

 

 

$

2,876,006

 

Issuance of common stock

 

2,794

 

 

 

28

 

 

 

 

 

 

 

 

 

(33,963

)

 

 

 

 

 

 

 

 

(33,935

)

Issuance of common stock upon
   vesting of PSUs

 

6

 

 

 

 

 

 

 

 

 

 

 

 

278

 

 

 

(278

)

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

9,096

 

 

 

 

 

 

 

 

 

9,096

 

Cash dividends paid
   ($
0.08 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,334

)

 

 

 

 

 

(19,334

)

Treasury stock

 

 

 

 

 

 

 

322

 

 

 

(7,717

)

 

 

(20

)

 

 

 

 

 

 

 

 

(7,737

)

Excise tax on stock repurchases

 

 

 

 

 

 

 

 

 

 

(97

)

 

 

 

 

 

 

 

 

 

 

 

(97

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

9

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

481,447

 

 

 

 

 

 

481,447

 

Balance as of March 31, 2023

 

265,687

 

 

 

2,657

 

 

 

24,324

 

 

(437,473

)

 

 

5,740,361

 

 

 

(2,000,566

)

 

 

476

 

 

 

3,305,455

 

Issuance of common stock

 

65

 

 

 

 

 

 

 

 

 

 

 

 

64,360

 

 

 

 

 

 

 

 

 

64,360

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

8,687

 

 

 

 

 

 

 

 

 

8,687

 

Cash dividends paid
   ($
0.08 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,306

)

 

 

 

 

 

(19,306

)

Treasury stock

 

 

 

 

 

 

 

77

 

 

 

(1,926

)

 

 

 

 

 

 

 

 

 

 

 

(1,926

)

Excise tax on stock repurchases

 

 

 

 

 

 

 

 

 

 

97

 

 

 

 

 

 

 

 

 

 

 

 

97

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

9

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30,231

 

 

 

 

 

 

30,231

 

Balance as of June 30, 2023

 

265,752

 

 

 

2,657

 

 

 

24,401

 

 

(439,302

)

 

 

5,813,408

 

 

 

(1,989,641

)

 

 

485

 

 

 

3,387,607

 

Issuance of common stock

 

4

 

 

 

1

 

 

 

 

 

 

 

 

 

20,985

 

 

 

 

 

 

 

 

 

20,986

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

8,856

 

 

 

 

 

 

 

 

 

8,856

 

Cash dividends paid
   ($
0.08 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,309

)

 

 

 

 

 

(19,309

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

 

 

 

10

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

49,430

 

 

 

 

 

 

49,430

 

Balance as of September 30, 2023

 

265,756

 

 

$

2,658

 

 

 

24,401

 

 

$

(439,302

)

 

$

5,843,249

 

 

$

(1,959,520

)

 

$

495

 

 

$

3,447,580

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

8


 

RANGE RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, in thousands)

 

Fiscal Year 2022

 

 

 

 

 

 

 

 

 

Common

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

stock

 

 

Additional

 

 

 

 

 

other

 

 

 

 

 

Common stock

 

 

Treasury

 

 

held in

 

 

paid-in

 

 

Retained

 

 

comprehensive

 

 

 

 

 

Shares

 

 

Par value

 

 

shares

 

 

treasury

 

 

capital

 

 

deficit

 

 

(loss) income

 

 

Total

 

Balance as of December 31, 2021

 

259,796

 

 

$

2,598

 

 

 

10,003

 

 

$

(30,007

)

 

$

5,720,277

 

 

$

(3,607,055

)

 

$

(150

)

 

$

2,085,663

 

Issuance of common stock

 

2,980

 

 

 

29

 

 

 

 

 

 

 

 

 

(21,276

)

 

 

 

 

 

 

 

 

(21,247

)

Issuance of common stock
   upon vesting of PSUs

 

2

 

 

 

 

 

 

 

 

 

 

 

 

78

 

 

 

(78

)

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

8,619

 

 

 

 

 

 

 

 

 

8,619

 

Treasury stock

 

 

 

 

 

 

 

599

 

 

 

(16,152

)

 

 

(46

)

 

 

 

 

 

 

 

 

(16,198

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

75

 

 

 

75

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(456,808

)

 

 

 

 

 

(456,808

)

Balance as of March 31, 2022

 

262,778

 

 

 

2,627

 

 

 

10,602

 

 

 

(46,159

)

 

 

5,707,652

 

 

 

(4,063,941

)

 

 

(75

)

 

 

1,600,104

 

Issuance of common stock

 

108

 

 

 

1

 

 

 

 

 

 

 

 

 

33,132

 

 

 

 

 

 

 

 

 

33,133

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

7,733

 

 

 

 

 

 

 

 

 

7,733

 

Treasury stock

 

 

 

 

 

 

 

4,000

 

 

 

(116,695

)

 

 

(1

)

 

 

 

 

 

 

 

 

(116,696

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

56

 

 

 

56

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

452,855

 

 

 

 

 

 

452,855

 

Balance as of June 30, 2022

 

262,886

 

 

 

2,628

 

 

 

14,602

 

 

 

(162,854

)

 

 

5,748,516

 

 

 

(3,611,086

)

 

 

(19

)

 

 

1,977,185

 

Issuance of common stock

 

1

 

 

 

1

 

 

 

 

 

 

 

 

 

833

 

 

 

 

 

 

 

 

 

834

 

Cash dividends paid
   ($
0.08 per share)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,526

)

 

 

 

 

 

(19,526

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

7,845

 

 

 

 

 

 

 

 

 

7,845

 

Treasury stock

 

 

 

 

 

 

 

6,002

 

 

 

(175,997

)

 

 

 

 

 

 

 

 

 

 

 

(175,997

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

56

 

 

 

56

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

373,087

 

 

 

 

 

 

373,087

 

Balance as of September 30, 2022

 

262,887

 

 

$

2,629

 

 

 

20,604

 

$

(338,851

)

 

$

5,757,194

 

 

$

(3,257,525

)

 

$

37

 

 

$

2,163,484

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

9


 

RANGE RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(1) SUMMARY OF ORGANIZATION AND NATURE OF BUSINESS

Range Resources Corporation is a Fort Worth, Texas-based independent natural gas, natural gas liquids (NGLs) and crude oil and condensate company engaged in the exploration, development and acquisition of natural gas and liquids properties in the Appalachian region of the United States. Our objective is to build stockholder value through returns-focused development of natural gas properties. Range is a Delaware corporation with our common stock listed and traded on the New York Stock Exchange under the symbol "RRC."

(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 (the 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.

These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2022 Annual Report on Form 10-K filed with the SEC on February 27, 2023. The results of operations for third quarter and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year. We make certain reclassifications to prior year statements to conform with the current year presentation. These reclassifications have no impact on previously reported stockholders' equity, net income or cash flows.

(3) NEW ACCOUNTING STANDARDS

Not Yet Adopted

There were no issued or pending accounting standards expected to have a material impact on our consolidated financial statements.

(4) REVENUES FROM CONTRACTS WITH CUSTOMERS

Disaggregation of Revenue

We have three material revenue streams in our business: natural gas sales, NGLs sales and condensate sales (referred to below as oil sales). Brokered revenue attributable to each product sales type is included here because the volume of product that we purchase is subsequently sold to separate counterparties in accordance with existing sales contracts under which we also sell our production. Other marketing revenue for the nine months ended September 30, 2023 includes the receipt of $5.1 million in make-whole payments. Accounts receivable attributable to our revenue contracts with customers was $208.6 million at September 30, 2023 and $463.3 million at December 31, 2022. Revenue attributable to each of our identified revenue streams is disaggregated below (in thousands):

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Natural gas sales

$

246,976

 

 

$

1,053,863

 

 

$

913,915

 

 

$

2,593,540

 

NGLs sales

 

238,211

 

 

 

325,989

 

 

 

695,368

 

 

 

1,039,057

 

Oil sales

 

41,531

 

 

 

55,300

 

 

 

122,099

 

 

 

191,798

 

Total natural gas, NGLs and oil sales

 

526,718

 

 

 

1,435,152

 

 

 

1,731,382

 

 

 

3,824,395

 

Sales of purchased natural gas

 

40,267

 

 

 

130,466

 

 

 

154,361

 

 

 

317,896

 

Sales of purchased NGLs

 

937

 

 

 

(6

)

 

 

1,605

 

 

 

2,274

 

Interest income

 

1,279

 

 

 

381

 

 

 

4,016

 

 

 

422

 

Other marketing revenue

 

2,129

 

 

 

2,260

 

 

 

11,602

 

 

 

8,124

 

Total

$

571,330

 

 

$

1,568,253

 

 

$

1,902,966

 

 

$

4,153,111

 

 

 

 

10


 

(5) INCOME TAXES

We evaluate and update our annual effective income tax rate on a quarterly basis based on current and forecasted operating results and tax laws. Consequently, based upon the mix and timing of our actual earnings compared to annual projections, our effective tax rate may vary quarterly and may make comparisons not meaningful. The effective income tax rate is influenced by a variety of factors including geographic sources and relative magnitude of these sources of income. Income taxes for discrete items are computed and recorded in the period that a specific transaction occurs. For three months and nine months ended September 30, 2023 and 2022, our overall effective tax rate was different than the federal statutory rate due primarily to state income taxes, equity compensation, valuation allowances and other tax items. Current income taxes reflect estimated state income taxes due for 2023 which is based on our estimated earnings, taking into account state tax rates and laws regarding NOL limitations.

(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
September 30,

 

 

Nine Months Ended
September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Net income, as reported

$

49,430

 

 

$

373,087

 

 

$

561,108

 

 

$

369,134

 

Participating earnings (a)

 

(632

)

 

 

(8,667

)

 

 

(10,868

)

 

 

(9,183

)

Basic net income attributed to common
   shareholders

 

48,798

 

 

 

364,420

 

 

 

550,240

 

 

 

359,951

 

Reallocation of participating earnings (a)

 

4

 

 

 

172

 

 

 

106

 

 

 

188

 

Diluted net income attributed to common
   shareholders

$

48,802

 

 

$

364,592

 

 

$

550,346

 

 

$

360,139

 

Net income per common share:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.20

 

 

$

1.52

 

 

$

2.30

 

 

$

1.48

 

Diluted

$

0.20

 

 

$

1.49

 

 

$

2.27

 

 

$

1.45

 

 

 

(a)

Restricted Stock Liability Awards represent participating securities because they participate in nonforfeitable 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
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Weighted average common shares outstanding – basic

 

 

241,338

 

 

 

239,768

 

 

 

239,455

 

 

 

242,850

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

 

 

 

Director and employee restricted stock and performance
   based equity awards

 

 

2,599

 

 

 

5,255

 

 

 

2,689

 

 

 

5,510

 

Weighted average common shares outstanding – diluted

 

 

243,937

 

 

 

245,023

 

 

 

242,144

 

 

 

248,360

 

 

 

Weighted average common shares outstanding basic for third quarter 2023 excludes 3.1 million shares of restricted stock held in our deferred compensation plan compared to 5.7 million shares in third quarter 2022 (although all awards are issued and outstanding upon grant). Weighted average common shares outstandingbasic for first nine months 2023 excludes 4.7 million shares of restricted stock held in our deferred compensation plan compared to 6.2 million shares for first nine months 2022. For the three months ended September 30, 2023, equity grants of 9,000 shares compared to 2,000 shares in the same period of the prior year were outstanding but not included in the computation of diluted net income because the grant prices were greater than the average market price of the common shares and would be anti-dilutive to the computations. For both the nine months ended September 30, 2023 and September 30, 2022, equity grants of 3,000 shares were outstanding but not included in the computation of diluted net income because the shares would be anti-dilutive to the computations.

11


 

(7) Capitalized Costs and Accumulated Depreciation, Depletion and Amortization (a)

 

 

 

September 30,
2023

 

 

December 31,
2022

 

 

 

(in thousands)

 

Natural gas properties:

 

 

 

 

 

 

Properties subject to depletion

 

$

10,312,071

 

 

$

9,855,287

 

Unproved properties

 

 

778,430

 

 

 

800,592

 

Total

 

 

11,090,501

 

 

 

10,655,879

 

Accumulated depletion and depreciation

 

 

(5,019,169

)

 

 

(4,765,475

)

Net capitalized costs

 

$

6,071,332

 

 

$

5,890,404

 

 

(a)
Includes capitalized asset retirement costs and the associated accumulated amortization.

 

(8) INDEBTEDNESS

We had the following debt outstanding as of the dates shown below. No interest was capitalized during the nine months ended September 30, 2023 or the year ended December 31, 2022 (in thousands).

 

 

September 30,
2023

 

 

December 31,
2022

 

Bank debt

$

 

 

$

19,000

 

Senior notes:

 

 

 

 

 

4.875% senior notes due 2025

 

688,388

 

 

 

750,000

 

8.25% senior notes due 2029

 

600,000

 

 

 

600,000

 

4.75% senior notes due 2030

 

500,000

 

 

 

500,000

 

Total senior notes

 

1,788,388

 

 

 

1,850,000

 

Unamortized debt issuance costs

 

(14,952

)

 

 

(27,040

)

Total debt, net of debt issuance costs

$

1,773,436

 

 

$

1,841,960

 

 

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 April 14, 2027. The bank credit facility provides for a maximum facility amount of $4.0 billion and an initial borrowing base of $3.0 billion. The bank credit facility also provides for a borrowing base subject to periodic redeterminations and for event-driven unscheduled redeterminations. As of September 30, 2023, our bank group was composed of seventeen financial institutions. The borrowing base may be increased or decreased based on our request and sufficient proved reserves, as determined by the bank group. The commitment amount may be increased to the borrowing base, subject to payment of a mutually acceptable commitment fee to those banks agreeing to participate in the facility increase. Borrowings under the bank credit facility can either be at the alternate base rate (ABR, as defined in the bank credit facility agreement) plus a spread ranging from 0.75% to 1.75% or at the secured overnight financing rate (SOFR, as defined in the bank credit facility agreement) plus a spread ranging from 1.75% to 2.75%. The applicable spread is dependent upon borrowings relative to the borrowing base. We may elect, from time to time, to convert all or any part of our SOFR loans to base rate loans or to convert all or any of the base rate loans to SOFR loans. We had no outstanding balance on our credit facility during third quarter 2023. The weighted average interest rate was 5.7% for third quarter 2022. The weighted average interest rate was 8.4% for first nine months 2023 compared to 3.7% for first nine months of 2022. A commitment fee is paid on the undrawn balance based on an annual rate of 0.375% to 0.50%. At September 30, 2023, the commitment fee was 0.375% and the interest rate margin was 1.75% on our SOFR loans and 0.75% on our ABR loans.

As part of our redetermination completed in September 2023, our borrowing base was reaffirmed for $3.0 billion and our bank commitment was also reaffirmed at $1.5 billion. On September 30, 2023, we had no outstanding borrowings on our bank credit facility. Additionally, we had $262.8 million of undrawn letters of credit, leaving $1.2 billion of committed borrowing capacity available under the facility.

12


 

Early Extinguishment of Debt

In second quarter 2023, we repurchased in the open market $61.6 million principal amount of our 4.875% senior notes due 2025 at a discount. We recognized a gain on early extinguishment of debt of $439,000 net of the remaining deferred financing costs on the repurchased debt. Although we have no obligation to do so, we may continue, from time-to-time, to retire our outstanding debt through privately negotiated transactions, open market repurchases, redemptions or otherwise.

Senior Notes

If we experience a change of control, noteholders may require us to repurchase all or a portion of our senior notes at 101% of the aggregate principal amount plus accrued and unpaid interest, if any.

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:

in the event of a sale or other disposition of all or substantially all of the assets of the subsidiary guarantor or a sale or other disposition of all the capital stock of the subsidiary guarantor, to any corporation or other person (including an unrestricted subsidiary of Range) by way of merger, consolidation, or otherwise; or
if Range designates any restricted subsidiary that is a guarantor to be an unrestricted subsidiary in accordance with the terms of the indenture.

Debt Covenants

Our bank credit facility contains negative covenants that limit our ability, among other things, to pay cash dividends, incur additional indebtedness, sell assets, enter into certain hedging contracts, change the nature of our business or operations, merge, consolidate or make certain investments. We are required to maintain a maximum consolidated debt to EBITDAX ratio (as defined in the bank credit facility agreement) of 3.75x and a minimum current ratio (as defined in the bank credit facility agreement) of 1.0x. We were in compliance with applicable covenants under the bank credit facility at September 30, 2023.

(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. A reconciliation of our liability for plugging and abandonment costs for the nine months ended September 30, 2023 and the year ended December 31, 2022 is as follows (in thousands):

 

 

 

Nine Months
Ended
September 30,
 2023

 

 

Year
Ended
December 31,
2022

 

Beginning of period

$

109,851

 

 

$

95,836

 

Liabilities incurred

 

2,209

 

 

 

2,589

 

Liabilities settled

 

(2,606

)

 

 

(10,650

)

Accretion expense

 

4,465

 

 

 

6,569

 

Change in estimate

 

168

 

 

 

15,507

 

End of period

 

114,087

 

 

 

109,851

 

Less current portion

 

(4,570

)

 

 

(4,570

)

Long-term asset retirement obligations

$

109,517

 

 

$

105,281

 

 

Accretion expense is recognized as a component of depreciation, depletion and amortization expense in the accompanying consolidated statements of operations.

13


 

(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 crude oil or Mont Belvieu for NGLs, approximated a net gain of $192.1 million at September 30, 2023. These contracts expire monthly through December 2026. The following table sets forth our commodity-based derivative volumes by year as of September 30, 2023, excluding our basis swaps and divestiture contingent consideration which are discussed separately below:

 

Period

 

Contract Type

 

Volume Hedged

 

Weighted Average Hedge Price

 

 

 

 

 

 

 

Swap

 

 

Sold Put

 

 

Floor

 

 

Ceiling

 

Natural Gas (a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2023

 

Swaps

 

383,315 Mmbtu/day

 

$

 

3.50

 

 

 

 

 

 

 

 

 

 

 

 

2023

 

Collars

 

253,370 Mmbtu/day

 

 

 

 

 

 

 

 

$

 

3.37

 

 

$

 

4.48

 

2023

 

Three-way Collars

 

159,891 Mmbtu/day

 

 

 

 

$

 

2.28

 

 

$

 

3.26

 

 

$

 

4.29

 

2024

 

Swaps

 

304,973 Mmbtu/day

 

$

 

4.01

 

 

 

 

 

 

 

 

 

 

 

 

2024

 

Collars

 

436,694 Mmbtu/day

 

 

 

 

 

 

 

 

$

 

3.50

 

 

$

 

5.63

 

2024

 

Three-way Collars

 

50,000 Mmbtu/day

 

 

 

 

$

 

2.50

 

 

$

 

3.50

 

 

$

 

4.24

 

2025

 

Swaps

 

360,000 Mmbtu/day

 

$

 

4.12

 

 

 

 

 

 

 

 

 

 

 

 

2026

 

Swaps

 

52,500 Mmbtu/day

 

$

 

4.14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude Oil

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2023

 

Swaps

 

5,582 bbls/day

 

$

 

72.61

 

 

 

 

 

 

 

 

 

 

 

 

January-September 2024

 

Swaps

 

3,664 bbls/day

 

$

 

80.21

 

 

 

 

 

 

 

 

 

 

 

 

January-September 2024

 

Collars

 

832 bbls/day

 

 

 

 

 

 

 

 

$

 

80.00

 

 

$

 

90.12

 

 

(a)

We also sold natural gas swaptions of 90,000 Mmbtu/day for calendar year 2025 at a weighted average price of $4.25/Mmbtu that expire December 2023. Additionally, we sold natural gas swaptions of 20,000 Mmbtu/day for calendar year 2026 at a weighted average price of $4.10/Mmbtu that expire June 2024.

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, 2023, 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 monthly through December 2026 and include a total volume of 357,645,000 Mmbtu. The fair value of these contracts was a gain of $17.1 million at September 30, 2023.

Divestiture Contingent Consideration

We have the right to receive contingent consideration in conjunction with the sale of our North Louisiana assets in August 2020 that is a derivative financial instrument not designated as a hedging instrument. The remaining contingent consideration of up to $21.0 million is based on future achievement of natural gas and oil prices based on published indexes and realized NGLs prices of the buyer for 2023. All changes in the fair value are recognized as a gain or loss in earnings in the period they occur in derivative fair value income or loss in our consolidated statements of operations. For first nine months 2023, this fair value has decreased $5.7 million for a fair value of $7.4 million as of September 30, 2023.

14


 

Derivative Assets and Liabilities

The combined fair value of derivatives included in the accompanying consolidated balance sheets as of September 30, 2023 and December 31, 2022 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, 2023

 

 

 

 

Gross
Amounts of
Recognized
Assets

 

 

Gross
Amounts
Offset in the
Balance Sheet

 

 

Net Amounts of
Assets
Presented in the
Balance Sheet

 

Derivative assets:

 

 

 

 

 

 

 

 

 

 

Natural gas

–swaps

 

$

110,242

 

 

$

(2,726

)

 

$

107,516

 

 

–swaptions

 

 

 

 

 

(2,435

)

 

 

(2,435

)

 

–collars

 

 

90,325

 

 

 

(2,536

)

 

 

87,789

 

 

–three-way collars

 

 

8,430

 

 

 

(640

)

 

 

7,790

 

 

–basis swaps

 

 

30,020

 

 

 

(12,459

)

 

 

17,561

 

Crude oil

–swaps

 

 

354

 

 

 

(9,420

)

 

 

(9,066

)

 

–collars

 

 

515

 

 

 

 

 

 

515

 

Divestiture contingent consideration

 

 

7,350

 

 

 

 

 

 

7,350

 

 

 

 

$

247,236

 

 

$

(30,216

)

 

$

217,020

 

 

 

 

 

September 30, 2023

 

 

 

 

Gross
Amounts of
Recognized
(Liabilities)

 

 

Gross
Amounts
Offset in the
Balance Sheet

 

 

Net Amounts of
(Liabilities)
Presented in the
Balance Sheet

 

Derivative (liabilities):

 

 

 

 

 

 

 

 

 

Natural gas

–swaps

 

$

(2,726

)

 

$

2,726

 

 

$

 

 

–swaptions

 

 

(2,435

)

 

 

2,435

 

 

 

 

 

–collars

 

 

(2,536

)

 

 

2,536

 

 

 

 

 

–three-way collars

 

 

(640

)

 

 

640

 

 

 

 

 

–basis swaps

 

 

(12,876

)

 

 

12,459

 

 

 

(417

)

Crude oil

–swaps

 

 

(9,420

)

 

 

9,420

 

 

 

 

 

 

 

$

(30,633

)

 

$

30,216

 

 

$

(417

)

 

 

 

 

December 31, 2022

 

 

 

 

Gross
Amounts of
Recognized
Assets

 

 

Gross
Amounts
Offset in the
Balance Sheet

 

 

Net Amounts of
Assets
Presented in the
Balance Sheet

 

Derivative assets:

 

 

 

 

 

 

 

 

 

 

Natural gas

 

–swaps

$

19,438

 

 

$

(6,236

)

 

$

13,202

 

 

 

–collars

 

54,222

 

 

 

(45,452

)

 

 

8,770

 

 

 

–three-way collars

 

12,424

 

 

 

(12,424

)

 

 

 

 

 

–basis swaps

 

25,493

 

 

 

(20,437

)

 

 

5,056

 

Crude oil

 

–collars

 

1,807

 

 

 

 

 

 

1,807

 

Divestiture contingent consideration

 

13,080

 

 

 

 

 

 

13,080

 

 

 

 

$

126,464

 

 

$

(84,549

)

 

$

41,915

 

 

15


 

 

 

 

 

December 31, 2022

 

 

 

 

Gross
Amounts of
Recognized (Liabilities)

 

 

Gross
Amounts
Offset in the
Balance Sheet

 

 

Net Amounts of
(Liabilities)
Presented in the
Balance Sheet

 

Derivative (liabilities):

 

 

 

 

 

 

 

 

 

 

Natural gas

–swaps

 

$

(115,374

)

 

$

6,236

 

 

$

(109,138

)

 

–collars

 

 

(72,866

)

 

 

45,452

 

 

 

(27,414

)

 

–three-way collars

 

 

(24,341

)

 

 

12,424

 

 

 

(11,917

)

 

–basis swaps

 

 

(24,972

)

 

 

20,437

 

 

 

(4,535

)

Crude oil

–swaps

 

 

(13,908

)

 

 

 

 

 

(13,908

)

 

 

 

$

(251,461

)

 

$

84,549

 

 

$

(166,912

)

 

 

The effects of our derivatives on our consolidated statements of operations are summarized below (in thousands):

 

 

 

Derivative Fair Value Income (Loss)

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Commodity swaps

$

14,513

 

 

$

(241,437

)

 

$

266,672

 

 

$

(890,741

)

Swaptions

 

57

 

 

 

26,003

 

 

 

(2,435

)

 

 

11,149

 

Three-way collars

 

7,071

 

 

 

(117,151

)

 

 

63,285

 

 

 

(324,583

)

Collars

 

12,566

 

 

 

(161,739

)

 

 

184,924

 

 

 

(477,284

)

Calls

 

 

 

 

 

 

 

 

 

 

(1,363

)

Basis swaps

 

4,977

 

 

 

36,966

 

 

 

23,379

 

 

 

38,398

 

Freight swaps

 

 

 

 

 

 

 

 

 

 

(33

)

Divestiture contingent consideration

 

(790

)

 

 

(350

)

 

 

(5,730

)

 

 

7,770

 

Total

$

38,394

 

 

$

(457,708

)

 

$

530,095

 

 

$

(1,636,687

)

 

 

 

 

 

 

 

 

 

 

 

 

 

(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:

Level 1 – Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 – Observable market-based inputs or unobservable inputs that are corroborated by market data. These are inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3 – Unobservable inputs for which there is little, if any, market activity for the asset or liability being measured. These inputs reflect management’s best estimates of the assumptions market participants would use in determining fair value. Our Level 3 measurements consist of instruments using standard pricing models and other valuation methods that utilize unobservable pricing inputs that are significant to the overall fair value.

16


 

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.

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, 2023 using:

 

 

 

 

Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

 

Total
Carrying
Value as of
September 30,
2023

 

Trading securities held in the deferred compensation plans

 

$

77,118

 

 

$

 

 

$

 

 

$

77,118

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity price derivatives

–swaps

 

 

 

 

 

98,450

 

 

 

 

 

 

98,450

 

 

–collars

 

 

 

 

 

88,304

 

 

 

 

 

 

88,304

 

 

–three-way collars

 

 

 

 

 

7,790

 

 

 

 

 

 

7,790

 

 

–basis swaps

 

 

 

 

 

17,144

 

 

 

 

 

 

17,144

 

 

–swaptions

 

 

 

 

 

 

 

 

(2,435

)

 

 

(2,435

)

Divestiture contingent consideration

 

 

 

 

 

7,350

 

 

 

 

 

 

7,350

 

 

 

 

 

Fair Value Measurements at December 31, 2022 using:

 

 

 

 

Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs
(Level 3)

 

 

Total
Carrying
Value as of
December 31,
2022

 

Trading securities held in the deferred compensation plans

 

$

57,717

 

 

$

 

 

$

 

 

$

57,717

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity price derivatives

–swaps

 

 

 

 

 

(109,844

)

 

 

 

 

 

(109,844

)

 

–collars

 

 

 

 

 

(16,837

)

 

 

 

 

 

(16,837

)

 

–three-way collars

 

 

 

 

 

(11,917

)

 

 

 

 

 

(11,917

)

 

–basis swaps

 

 

 

 

 

521

 

 

 

 

 

 

521

 

Divesture contingent consideration

 

 

 

 

 

13,080

 

 

 

 

 

 

13,080

 

 

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, 2023, 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, 2023, we used a weighted average implied volatility of 19% for natural gas for our swaptions. The following is a reconciliation of the beginning and ending balances for derivative instruments classified as Level 3 in the fair value hierarchy (in thousands):

 

 

 

Nine Months Ended
September 30,
 2023

 

Balance at December 31, 2022

 

$

 

Total losses:

 

 

 

Included in earnings

 

 

 

Additions

 

 

(2,435

)

Balance at September 30, 2023

 

$

(2,435

)

 

17


 

 

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 operations. For third quarter 2023, interest and dividends were $331,000 and the mark-to-market adjustment was a loss of $3.5 million compared to interest and dividends of $318,000 and a mark-to-market loss of $2.6 million in third quarter 2022. For first nine months 2023, interest and dividends were $945,000 and the mark-to-market adjustment was a gain of $2.2 million compared to interest and dividends of $609,000 and a mark-to-market loss of $16.6 million in first nine months 2022.

Divestiture Contingent Consideration. In August 2020, we completed the sale of our North Louisiana assets where we are entitled to receive contingent consideration based on future achievement of natural gas and oil prices based on published indexes along with NGLs prices based on the realized NGLs prices of the buyer. We used an option pricing model to estimate the fair value of the contingent consideration using significant Level 2 inputs that include quoted future commodity prices based on active markets.

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 2023.

Fair Values – Reported

The following presents the carrying amounts and the fair values of our financial instruments as of September 30, 2023 and December 31, 2022 (in thousands):

 

 

September 30, 2023

 

 

December 31, 2022

 

 

Carrying
Value

 

 

Fair
Value

 

 

Carrying
Value

 

 

Fair
Value

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

Commodity derivatives

$

209,670

 

 

$

209,670

 

 

$

28,835

 

 

$

28,835

 

Divestiture contingent consideration

 

7,350

 

 

 

7,350

 

 

 

13,080

 

 

 

13,080

 

Marketable securities (a)

 

77,118

 

 

 

77,118

 

 

 

57,717

 

 

 

57,717

 

(Liabilities):

 

 

 

 

 

 

 

 

 

 

 

Commodity derivatives

 

(417

)

 

 

(417

)

 

 

(166,912

)

 

 

(166,912

)

Bank credit facility (b)

 

 

 

 

 

 

 

(19,000

)

 

 

(19,000

)

4.875% senior notes due 2025 (b)

 

(688,388

)

 

 

(667,392

)

 

 

(750,000

)

 

 

(714,870

)

8.25% senior notes due 2029 (b)

 

(600,000

)

 

 

(616,272

)

 

 

(600,000

)

 

 

(618,312

)

4.75% senior notes due 2030 (b)

 

(500,000

)

 

 

(443,195

)

 

 

(500,000

)

 

 

(442,350

)

Deferred compensation plan (c)

 

(150,996

)

 

 

(150,996

)

 

 

(189,241

)

 

 

(189,241

)

 

(a)
Marketable securities, which are held in our deferred compensation plans, are actively traded on major exchanges.
(b)
The book value of our bank debt approximates fair value because of its floating rate structure. The fair value of our senior notes is based on end of period market quotes which are Level 2 inputs.
(c)
The fair value of our deferred compensation plan is updated to the closing price on the balance sheet date which is a Level 1 input.

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, 2023, 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 $308,000 at September 30, 2023 and $314,000 at December 31, 2022. Our derivative exposure to credit risk is diversified primarily among major investment grade financial institutions, where we have master netting

18


 

agreements which provide for offsetting payables against receivables from separate derivative contracts. To manage counterparty risk associated with our derivatives, we select and monitor our counterparties based on our assessment of their financial strength and/or credit ratings. We may also limit the level of exposure with any single counterparty. At September 30, 2023, our derivative counterparties include fourteen financial institutions, of which all but six are secured lenders in our bank credit facility. At September 30, 2023, our net derivative asset includes an aggregate net receivable of $15.8 million from five counterparties not included in our bank credit facility and a payable to the remaining counterparty of $48,000.

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.

(12) STOCK-BASED COMPENSATION PLANS

Description of the Plans

We have two active equity-based stock plans: our Amended and Restated 2005 Equity-Based Incentive Compensation Plan and our Amended and Restated 2019 Equity-Based Compensation Plan. Under these plans, various awards may be issued to non-employee directors and employees pursuant to decisions of the Compensation Committee, which is composed of only non-employee, independent directors.

Total Stock-Based Compensation Expense

Stock-based compensation represents amortization of restricted stock and performance units. Unlike the other forms of stock-based compensation, the mark-to-market adjustment of the liability related to the vested restricted stock 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. The following details the allocation of stock-based compensation to functional expense categories (in thousands):

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Direct operating expense

$

439

 

 

$

372

 

 

$

1,280

 

 

$

1,083

 

Brokered natural gas and marketing expense

 

483

 

 

 

663

 

 

 

1,604

 

 

 

1,868

 

Exploration expense

 

312

 

 

 

393

 

 

 

935

 

 

 

1,163

 

General and administrative expense

 

8,446

 

 

 

10,402

 

 

 

26,461

 

 

 

32,245

 

Total stock-based compensation expense

$

9,680

 

 

$

11,830

 

 

$

30,280

 

 

$

36,359

 

 

Stock-Based Awards

Restricted Stock Awards. We grant restricted stock units under our equity-based stock compensation plans to our employees. These restricted stock units, which we refer to as restricted stock Equity Awards, generally vest over a three-year period, contingent on the recipient’s continued employment. The grant date fair value of the Equity Awards is based on the fair market value of our common stock on the date of grant. Beginning in 2023, we began granting restricted stock under our equity-based compensation plans that vests at the end of a three-year period for employee grants and at the end of a one-year period for non-employee directors. Vesting is also based upon the employee's continued employment with us. The grant date fair value of these Equity Awards is based on the fair market value of our common stock on the date of grant. Prior to vesting, recipients of restricted stock typically earn dividends payable in cash upon vesting but they have no voting rights prior to vesting.

19


 

The Compensation Committee also grants restricted stock to certain employees and non-employee directors of the board of directors as part of their compensation. Compensation expense is recognized over the balance of 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. All restricted stock awards are issued at prevailing market prices at the time of the grant and the vesting is based upon an employee’s continued employment with us. Prior to vesting, all restricted stock award recipients have the right to vote such stock and receive dividends thereon. Upon grant of these restricted shares, which we refer to as restricted stock Liability Awards, these shares are placed in our deferred compensation plan and, upon vesting, withdrawals are allowed in either cash or in stock. These Liability Awards are classified as a liability and are remeasured at fair value each reporting period. This mark-to-market amount is reported in deferred compensation plan expense in the accompanying consolidated statements of operations.

Stock-Based Performance Awards - (PSUs). We grant two types of performance share awards: one based on performance conditions measured against internal performance metrics and one based on market conditions measured based on Range’s performance relative to a predetermined peer group (TSR Awards).

Each unit granted represents one share of our common stock. These units are settled in stock and the amount of the payout is based on the vesting percentage, which can range from zero to 200% and (1) the internal performance metrics achieved, which is determined by the Compensation Committee and (2) for our TSR Awards, the value of our common stock on the vesting date compared to our peers. Dividend equivalents accrue during the performance period and are paid in stock at the end of the performance period. The performance period is three years.

Restricted Stock – Equity Awards

In first nine months 2023, we granted 1.6 million restricted stock Equity Awards to employees at an average grant date fair value of $25.09 compared to 1.4 million at an average grant date fair value of $18.59 in first nine months 2022. We recorded compensation expense for these outstanding awards of $23.4 million in first nine months 2023 compared to $15.9 million in the same period of 2022. Restricted stock Equity Awards are not issued until such time as they are vested and grantees do not have the option to receive cash.

Restricted Stock – Liability Awards

In first nine months 2023, we granted 13,000 shares of restricted stock Liability Awards as compensation to employees at an average grant date fair value of $25.61 which generally vest at the end of a three-year period and 8,000 shares were granted to non-employee directors at an average price of $25.07 with vesting at the end of one year. In first nine months 2022, we granted 603,000 shares of restricted stock Liability Awards as compensation to employees at an average grant date fair value of $20.43 with vesting generally at the end of a three-year period and 47,000 shares were granted to non-employee directors at an average price of $27.52 with vesting at the end of one year. We recorded compensation expense for these Liability Awards of $3.3 million in first nine months 2023 compared to $10.3 million in first nine months 2022. These awards are held in our deferred compensation plan, are classified as a liability and are remeasured at fair value each reporting period. This mark-to-market amount is reported as deferred compensation expense in our consolidated statements of operations (see additional discussion below).

Stock-Based Performance Awards

Internal Performance Metric Awards. These awards vest at the end of the three-year performance period. The performance metrics are set by the Compensation Committee. If the performance metric for the applicable period is not met, that portion is considered forfeited and there is an adjustment to the expense recorded. In first nine months 2023, we granted 81,000 internal performance units compared to 153,000 in the same period of the prior year. We recorded compensation expense for these awards of $1.8 million in first nine months 2023 compared to expense of $5.3 million in first nine months 2022.

20


 

TSR Awards. These awards granted 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 three-year performance period. The fair value of the TSR Awards is estimated on the date of grant using a Monte Carlo simulation model which utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award grant and calculates the fair value of the award. The fair value is recognized as stock-based compensation expense over the three-year performance period. Expected volatilities utilized in the model were estimated using a combination of a historical period consistent with the remaining performance period of three years and option implied volatilities. The risk-free interest rate was based on the United States Treasury rate for a term commensurate with the life of the grant. The following assumptions were used to estimate the fair value of these awards granted during first nine months 2023 and 2022:

 

 

 

Nine Months Ended
September 30,

 

 

 

2023

 

 

2022

 

Risk-free interest rate

 

 

3.8

%

 

 

1.4

%

Expected annual volatility

 

 

61

%

 

 

68

%

Grant date fair value per unit

 

$

30.37

 

 

$

27.90

 

 

 

 

In first nine months 2023, we granted 64,000 TSR Awards compared to 112,000 in the same period of the prior year. We recorded compensation expense of $1.3 million in first nine months 2023 compared to $2.3 million in the same period of 2022. Fair value is amortized over the performance period with no adjustment to the expense recorded for actual targets achieved.

The following is a summary of the activity for our restricted stock and performance awards at September 30, 2023:

 

 

Restricted Stock
Equity Awards

 

 

Restricted Stock
Liability Awards

 

 

Stock-Based
Performance Awards

 

 

Shares

 

 

Weighted
Average Grant
Date Fair Value

 

 

Shares

 

 

Weighted
Average Grant
Date Fair Value

 

 

Number
of Units
(a)

 

 

Weighted
Average Grant
Date Fair Value

 

Outstanding at December 31, 2022

 

1,736,688

 

 

$

14.44

 

 

 

379,633

 

 

$

14.71

 

 

 

1,950,632

 

 

$

9.02

 

Granted

 

1,626,670

 

 

 

25.09

 

 

 

21,170

 

 

 

25.41

 

 

 

145,747

 

 

 

26.86

 

Vested

 

(1,408,676

)

 

 

16.88

 

 

 

(251,063

)

 

 

14.11

 

 

 

(1,158,797

)

 

 

4.80

 

Forfeited

 

(29,546

)

 

 

17.73

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding at September 30, 2023

 

1,925,136

 

 

$

21.60

 

 

 

149,740

 

 

$

17.22

 

 

 

937,582

 

 

$

17.01

 

 

(a)

Amounts granted reflect performance units initially granted. The actual payout will be between zero and 200% depending on achievement of either total stockholder return ranking compared to our peers at the vesting date or on the achievement of internal performance targets.

 

21


 

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 officers which generally vests at the end of three years. The assets of the plan are held in a grantor trust, which we refer to as the Rabbi Trust, and are therefore available to satisfy the claims of our general creditors in the event of bankruptcy or insolvency. Our common stock held in the Rabbi Trust is treated as a liability award as employees are allowed to take withdrawals from the Rabbi Trust either in cash or in Range stock. The liability for the vested portion of the stock held in the Rabbi Trust is reflected as deferred compensation liability in the accompanying consolidated balance sheets and is adjusted to fair value each reporting period by a charge or credit to deferred compensation plan expense on our consolidated statements of operations. The assets of the Rabbi Trust, other than our common stock, are invested in marketable securities and reported at their market value as other assets in the accompanying consolidated balance sheets. The deferred compensation liability reflects the vested market value of the marketable securities and Range stock held in the Rabbi Trust. Changes in the market value of the marketable securities and changes in the fair value of the deferred compensation plan liability are charged or credited to deferred compensation plan expense each quarter. We recorded a mark-to-market loss of $9.0 million in third quarter 2023 compared to a mark-to-market loss of $5.8 million in third quarter 2022. We recorded a mark-to-market loss of $29.5 million in first nine months 2023 compared to a mark-to-market loss of $59.9 million in first nine months 2022. The Rabbi Trust held 2.4 million shares (2.3 million of which were vested) of Range stock at September 30, 2023 compared to 5.6 million shares (5.3 million of which were vested) at December 31, 2022.

(13) EXIT COSTS

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 2023, we recorded accretion expense of $31.6 million compared to $33.0 million in the same period of the prior year. In second quarter 2023, we recorded a net adjustment of $37.8 million to increase this obligation primarily for higher rates due to inflation. In second quarter 2022, we recorded a net adjustment of $24.8 million to increase the obligation for a change in our forecasted drilling plans of the buyer. The estimated discounted divestiture contract obligation was $389.9 million at September 30, 2023.

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, 2023 was $3.2 million.

 

The following summarizes our exit costs for the three and nine months ended September 30, 2023 and 2022 (in thousands):

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Transportation contract capacity releases
  (including accretion of discount)

$

79

 

 

$

135

 

 

$

281

 

 

$

458

 

Divestiture contract obligation
   (including accretion of discount)

 

10,605

 

 

 

10,930

 

 

 

71,380

 

 

 

57,791

 

 

$

10,684

 

 

$

11,065

 

 

$

71,661

 

 

$

58,249

 

The following details the accrued exit cost liability activity for the nine months ended September 30, 2023 (in thousands):

 

 

 

Exit
Costs
(a)

 

Balance at December 31, 2022

 

$

395,680

 

Accretion of discount

 

 

31,900

 

Changes in estimate

 

 

39,761

 

Payments

 

 

(74,224

)

Balance at September 30, 2023

 

$

393,117

 

 

(a)

 Includes the divestiture contract obligation and the transportation contract capacity release obligation.

 

22


 

(14) CAPITAL STOCK

We have authorized capital stock of 485.0 million shares which includes 475.0 million shares of common stock and 10.0 million shares of preferred stock. We currently have no preferred stock issued or outstanding. The following is a schedule of changes in the number of common shares outstanding since the beginning of 2022:

 

 

 

Nine Months Ended
September 30,
2023

 

 

Year Ended
December 31,
2022

 

Beginning balance

 

 

238,885,730

 

 

 

249,792,908

 

Restricted stock grants

 

 

50,238

 

 

 

671,303

 

Restricted stock units vested

 

 

1,754,923

 

 

 

1,827,625

 

Performance stock units issued

 

 

1,057,245

 

 

 

590,940

 

Performance stock dividends

 

 

6,276

 

 

 

1,843

 

Treasury shares

 

 

(399,530

)

 

 

(13,998,889

)

Ending balance

 

 

241,354,882

 

 

 

238,885,730

 

 

 

Stock Repurchase Program

In 2019, the board of directors approved a stock repurchase program which was increased in size in 2022. At September 30, 2023, we had a remaining authorization to repurchase up to approximately $1.1 billion of our common stock. Under this program, we may repurchase shares in open market transactions, from time to time, in accordance with applicable SEC rules and federal securities laws. Purchases under the program are made at our discretion and may change based upon market conditions. In first nine months 2023, we repurchased 400,000 shares at an aggregate cost of $9.7 million. The following is a schedule of the change in treasury shares for the three and nine months ended September 30, 2023:

 

 

 

Three Months Ended
September 30,
2023

 

 

Nine Months Ended
September 30,
2023

 

Beginning balance

 

 

24,401,065

 

 

 

24,001,535

 

Rabbi trust shares distributed/sold

 

 

 

 

 

(470

)

Shares repurchased

 

 

 

 

 

400,000

 

Ending balance

 

 

24,401,065

 

 

 

24,401,065

 

 

 

 

 

 

 

 

 

(15) SUPPLEMENTAL CASH FLOW INFORMATION

 

 

 

Nine Months Ended
September 30,

 

 

 

2023

 

 

2022

 

 

 

(in thousands)

 

Net cash provided from operating activities included:

 

 

 

 

 

 

Income taxes paid to taxing authorities

 

$

(2,200

)

 

$

(19,735

)

Interest paid

 

 

(100,151

)

 

 

(165,774

)

Non-cash investing and financing activities included:

 

 

 

 

 

 

Increase in asset retirement costs capitalized

 

 

2,377

 

 

 

3,389

 

Increase in accrued capital expenditures

 

 

27,818

 

 

 

4,538

 

 

23


 

(16) COMMITMENTS AND CONTINGENCIES

Litigation

We are the subject of, or party to, a number of 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, 2023, liabilities for remediation were not material. We are not aware of any environmental claims existing as of September 30, 2023 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.

(17) Costs Incurred for Property Acquisition, Exploration and Development (a)

 

 

 

Nine Months Ended
September 30,
2023

 

 

Year Ended
December 31,
2022

 

 

 

(in thousands)

 

Acquisitions:

 

 

 

 

 

 

Acreage purchases

 

$

25,475

 

 

$

28,735

 

Development

 

 

450,115

 

 

 

460,668

 

Exploration:

 

 

 

 

 

 

Drilling

 

 

 

 

 

 

Expense

 

 

18,087

 

 

 

25,194

 

Stock-based compensation expense

 

 

935

 

 

 

1,578

 

Gas gathering facilities:

 

 

 

 

 

 

Development

 

 

1,008

 

 

 

1,466

 

Subtotal

 

 

495,620

 

 

 

517,641

 

Asset retirement obligations

 

 

2,377

 

 

 

18,096

 

Total costs incurred

 

$

497,997

 

 

$

535,737

 

 

(a) Includes costs incurred whether capitalized or expensed.

24


 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview of Our Business

We are a Fort Worth, Texas-based independent natural gas, natural gas liquids (NGLs) and crude oil and condensate company primarily engaged in the exploration, development and acquisition of natural gas 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 natural gas 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 of non-core assets. 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, produce and market these reserves. Commodity prices have been and are expected to remain volatile. Our primary near-term focus includes the following:

operate safely while being good stewards of the environment;
achieve competitive returns on investments;
manage liquidity and further improve financial strength;
focus on organic opportunities through disciplined capital investments;
improve operational efficiencies and economic returns;
reduce emissions and target net-zero Scope 1 and Scope 2 greenhouse gas emissions by year-end 2025;
attract and retain quality employees; and
align employee incentives with our stockholders’ interests and key business objectives.

 

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.

Prices for natural gas, NGLs and oil fluctuate widely and affect:

revenues, profitability and cash flow;
the quantity of natural gas, NGLs and oil we can economically produce;
the quantity of natural gas, NGLs and oil shown as proved reserves;
the amount of cash flows available for reinvestment; and
our ability to borrow and raise additional capital.

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 producing nations, the Russia-Ukraine conflict, hostilities in the Middle East, global inventories of oil and natural gas, future monetary policy and governmental policies aimed at transitioning towards lower carbon energy and we expect prices for some or all of the commodities we produce to remain volatile given the complex dynamics of supply and demand that exist in the market. In first quarter 2023, natural gas prices declined based on the relatively mild winter and extended down time at a liquefied natural gas export facility. Subsequently, high levels of domestic U.S. gas storage compared with the five-year average kept natural gas prices below $3.00 in both the second and third quarter 2023. Longer term natural gas futures have remained stronger based on market expectations that associated gas-related activity in oil basins and dry gas basin activity will show modest rates of growth when compared with the past due to infrastructure constraints, capital discipline and core inventory exhaustion. In addition, the global energy crisis further highlighted the low cost and low emissions shale gas resource base in North America, supporting continued strong structural demand growth for U.S. 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

25


 

pace and extent of tightening global monetary policy may impact the supply and demand for oil, natural gas and NGLs. We continue to assess and monitor the impact and consequences of these factors on our operations.

While expected commodity prices have declined in 2023 compared to prior year, we believe market data supports a positive outlook given significant new demand and export infrastructure currently under construction. We believe that our competitive full-cycle cost structure, robust drilling inventory, reduced debt levels and risk reduction through hedging have us well positioned within the industry.

Prices for natural gas, NGLs and oil that we produce significantly impact our revenues and cash flows. Natural gas, NGLs and oil benchmarks significantly decreased in third quarter 2023 when compared to the same period of 2022 and also decreased in first nine months 2023 compared to the same period of 2022. As a result, we experienced a significant decrease in price realizations. The following table lists related benchmarks for natural gas, oil and NGLs composite prices for the three and nine months ended September 30, 2023 and 2022:

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Benchmarks:

 

 

 

 

 

 

 

 

 

 

 

Average NYMEX prices (a)

 

 

 

 

 

 

 

 

 

 

 

Natural gas (per mcf)

$

2.55

 

 

$

8.19

 

 

$

2.71

 

 

$

6.77

 

Oil (per bbl)

 

82.12

 

 

 

91.55

 

 

 

77.27

 

 

 

98.47

 

Mont Belvieu NGLs composite (per gallon) (b)

 

0.57

 

 

 

0.90

 

 

 

0.56

 

 

 

0.97

 

 

(a)

Based on weighted average of bid week prompt month prices on the New York Mercantile Exchange.

(b)

Based on our estimated NGLs product composition per barrel.

 

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 2023 Results

During third quarter 2023, we recognized net income of $49.4 million, or $0.20 per diluted common share compared to net income of $373.1 million, or $1.49 per diluted common share during third quarter 2022. The lower net income in third quarter 2023 compared to third quarter 2022 reflects the impact of significantly lower commodity prices on our natural gas, NGLs and oil sales, on our reported derivative fair value income (loss) and on our transportation gathering, processing and compression expense. See page 29 for more information on our derivative fair value income (loss).

For third quarter 2023, we experienced a decrease in revenue from the sale of natural gas, NGLs and oil due to a 49% decrease in net realized prices (average prices including all derivative settlements and third-party transportation costs paid by us) when compared to the same quarter of 2022. Daily production averaged 2.1 Bcfe in both the third quarter 2023 and 2022.

Our third quarter 2023 financial and operating performance included the following results:

revenue from the sale of natural gas, NGLs and oil decreased 63% from the same period of 2022 with a 63% decrease in average realized prices (before cash settlements on our derivatives) and slightly lower production volumes;
revenue from the sale of natural gas, NGLs and oil (including cash settlements on our derivatives) decreased 38% from the same period of 2022;
transportation, gathering, processing and compression per mcfe was $1.42 in third quarter 2023 compared to $1.65 in the same period of 2022 primarily due to lower commodity prices;
direct operating expense per mcfe was $0.12 in third quarter 2023 compared to $0.11 in the same period of 2022 primarily due to higher water handling/hauling costs along with higher workovers and stock-based compensation;
general and administrative expense per mcfe decreased 5% from same period of 2022 primarily due to lower general office expenses, including technology costs;
interest expense per mcfe decreased 20% from the same period of 2022 due to lower debt balances; and
depletion, depreciation and amortization ("DD&A") rate per mcfe decreased 2% from the same period of 2022.

 

26


 

Third quarter 2023 also included the following highlights to enhance our balance sheet, return capital to investors and preserve liquidity:

paid $19.3 million of dividends, or $0.08 per share compared to $19.5 million, or $0.08 per share in third quarter 2022; and
as of September 30, we have $162.8 million of cash on hand along with $1.2 billion available under our credit facility.

Our cash flow from operating activities in third quarter 2023 was $150.3 million, a decrease of $370.7 million from the third quarter 2022 with significantly lower commodity prices and the impact from the change in working capital.

Overview of First Nine Months 2023 Results

During first nine months 2023, we recognized net income of $561.1 million, or $2.27 per diluted common share compared to a net income of $369.1 million, or $1.45 per diluted common share during first nine months 2022. The improvement in our net income for first nine months 2023 compared to 2022 reflects the impact of significantly lower commodity prices on our reported derivative fair value income or loss. Given the significant decrease in commodity prices, our derivative fair value income or loss, which includes the non-cash fair value adjustment related to our derivatives, was a gain of $530.1 million in first nine months 2023 compared to a loss of $1.6 billion in first nine months of the prior year. In addition, first nine months 2023 includes the impact of significantly lower commodity prices on our natural gas, NGLs and oil sales partially offset by a gain on extinguishment of debt compared to a loss in the same period of the prior year. For additional information on our derivative fair value income (loss), see page 29.

For first nine months 2023, we experienced a decrease in revenue from the sale of natural gas, NGLs and oil due to a 42% decrease in net realized prices (average prices including all derivative settlements and third-party transportation costs paid by us) somewhat offset by slightly higher production volumes when compared to the same period of 2022. Daily production averaged 2.1 Bcfe in both the first nine months 2023 and 2022.

Our first nine months 2023 financial and operating performance included the following results:

revenue from the sale of natural gas, NGLs and oil decreased 55% from the same period of 2022 with a 55% decrease in average realized prices (before cash settlements on our derivatives) partially offset by slightly higher production volumes;
revenue from the sale of natural gas, NGLs and oil (including cash settlements on our derivatives) decreased 32% from the same period of 2022;
transportation, gathering, processing and compression expense per mcfe was $1.44 in first nine months 2023 compared to $1.66 in the same period of 2022 primarily due to lower commodity prices;
direct operating expense per mcfe was $0.13 in first nine months 2023 compared to $0.11 in the same period of 2022 due to higher workovers along with higher water handling/hauling costs and higher contract labor and service costs;
general and administrative expense per mcfe for the first nine months 2023 decreased 5% from the same period of 2022 primarily due to lower stock-based compensation costs;
interest expense per mcfe decreased 27% from the same period of 2022 due to lower debt balances; and
DD&A rate per mcfe decreased 2% from the same period of 2022.

First nine months 2023 also included the following highlights to enhance our balance sheet, return capital to investors and preserve liquidity:

paid $57.9 million in dividends or $0.24 per share compared to $19.5 million or $0.08 per share in first nine months 2022;
repurchased $9.7 million of our common stock compared to $308.9 million in the same period of 2022;
repurchased in the open market $61.6 million face value of our 4.875% senior notes due 2025 at a discount; and
enhanced liquidity with the accumulation of cash totaling $162.8 million along with $1.2 billion available under our credit facility.

Our cash flow from operating activities in first nine months 2023 was $751.8 million, a decrease of $500.3 million from the same period of 2022 with significantly lower realized prices partially offset by slightly higher production volumes and the impact from the change in working capital.

27


 

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. In third quarter 2023, natural gas, NGLs and oil sales decreased 63% compared to third quarter 2022 with a 63% decrease in average realized prices (before cash settlements on our derivatives). In first nine months 2023, natural gas, NGLs and oil sales decreased 55% compared to the same period of 2022 with a 55% decrease in average realized prices (before cash settlements on derivatives) partially offset by slightly higher production volumes. The following table illustrates the primary components of natural gas, NGLs and oil sales for the three and nine months ended September 30, 2023 and 2022 (in thousands):

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2023

 

 

2022

 

 

Change

 

 

%

 

2023

 

 

2022

 

 

Change

 

 

%

Natural gas, NGLs
   and oil sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas

$

246,976

 

 

$

1,053,863

 

 

$

(806,887

)

 

(77)%

 

$

913,915

 

 

$

2,593,540

 

 

$

(1,679,625

)

 

(65)%

NGLs

 

238,211

 

 

 

325,989

 

 

 

(87,778

)

 

(27)%

 

 

695,368

 

 

 

1,039,057

 

 

 

(343,689

)

 

(33)%

Oil

 

41,531

 

 

 

55,300

 

 

 

(13,769

)

 

(25)%

 

 

122,099

 

 

 

191,798

 

 

 

(69,699

)

 

(36)%

Total natural gas,
   NGLs and oil sales

$

526,718

 

 

$

1,435,152

 

 

$

(908,434

)

 

(63)%

 

$

1,731,382

 

 

$

3,824,395

 

 

$

(2,093,013

)

 

(55)%

 

 

Our production is determined by drilling success which offsets the natural decline of our natural gas and oil reserves through production. Our production for the three and nine months ended September 30, 2023 and 2022 is set forth in the following table:

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2023

 

 

2022

 

 

Change

 

 

%

 

2023

 

 

2022

 

 

Change

 

 

%

Production (a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas (mcf)

 

133,305,469

 

 

 

136,862,857

 

 

 

(3,557,388

)

 

(3)%

 

 

396,367,927

 

 

 

399,834,208

 

 

 

(3,466,281

)

 

(1)%

NGLs (bbls)

 

9,748,012

 

 

 

9,235,626

 

 

 

512,386

 

 

6%

 

 

28,368,181

 

 

 

26,473,922

 

 

 

1,894,259

 

 

7%

Crude oil (bbls)

 

587,488

 

 

 

653,000

 

 

 

(65,512

)

 

(10)%

 

 

1,818,773

 

 

 

2,099,630

 

 

 

(280,857

)

 

(13)%

Total (mcfe) (b)

 

195,318,469

 

 

 

196,194,613

 

 

 

(876,144

)

 

—%

 

 

577,489,651

 

 

 

571,275,520

 

 

 

6,214,131

 

 

1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average daily
    production
(a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas (mcf)

 

1,448,972

 

 

 

1,487,640

 

 

 

(38,668

)

 

(3)%

 

 

1,451,897

 

 

 

1,464,594

 

 

 

(12,697

)

 

(1)%

NGLs (bbls)

 

105,957

 

 

 

100,387

 

 

 

5,570

 

 

6%

 

 

103,913

 

 

 

96,974

 

 

 

6,939

 

 

7%

Crude oil (bbls)

 

6,386

 

 

 

7,098

 

 

 

(712

)

 

(10)%

 

 

6,662

 

 

 

7,691

 

 

 

(1,029

)

 

(13)%

Total (mcfe) (b)

 

2,123,027

 

 

 

2,132,550

 

 

 

(9,523

)

 

—%

 

 

2,115,347

 

 

 

2,092,584

 

 

 

22,763

 

 

1%

 

(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.

 

 

28


 

Our average realized price received (including all derivative settlements and third-party transportation costs) during third quarter 2023 was $1.67 per mcfe compared to $3.30 per mcfe in third quarter 2022. Our average realized price received (including all derivative settlements and third-party transportation costs) during first nine months 2023 was $1.89 per mcfe compared to $3.27 per mcfe in first nine months 2022. We believe computed final realized prices should include the total impact of transportation, gathering, processing and compression expense. Our average realized price (including all derivative settlements and third-party transportation costs) calculation also includes all cash settlements for derivatives. 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 operations. Average realized prices (excluding derivative settlements) do include transportation costs where we receive net revenue proceeds from purchasers. Average realized price calculations for three and nine months ended September 30, 2023 and 2022 are shown below:

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2023

 

 

2022

 

 

Change

 

 

%

 

2023

 

 

2022

 

 

Change

 

 

%

Average Prices

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average realized prices (excluding
   derivative settlements):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas (per mcf)

$

1.85

 

 

$

7.70

 

 

$

(5.85

)

 

(76)%

 

$

2.31

 

 

$

6.49

 

 

$

(4.18

)

 

(64)%

NGLs (per bbl)

 

24.44

 

 

 

35.30

 

 

 

(10.86

)

 

(31)%

 

 

24.51

 

 

 

39.25

 

 

 

(14.74

)

 

(38)%

Crude oil and condensate (per bbl)

 

70.69

 

 

 

84.69

 

 

 

(14.00

)

 

(17)%

 

 

67.13

 

 

 

91.35

 

 

 

(24.22

)

 

(27)%

Total (per mcfe) (a)

 

2.70

 

 

 

7.31

 

 

 

(4.61

)

 

(63)%

 

 

3.00

 

 

 

6.69

 

 

 

(3.69

)

 

(55)%

Average realized prices (including all
  derivative settlements):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas (per mcf)

$

2.47

 

 

$

4.41

 

 

$

(1.94

)

 

(44)%

 

$

2.80

 

 

$

4.19

 

 

$

(1.39

)

 

(33)%

NGLs (per bbl)

 

24.44

 

 

 

35.75

 

 

 

(11.31

)

 

(32)%

 

 

24.51

 

 

 

38.54

 

 

 

(14.03

)

 

(36)%

Crude oil and condensate (per bbl)

 

62.13

 

 

 

55.42

 

 

 

6.71

 

 

12%

 

 

62.54

 

 

 

57.85

 

 

 

4.69

 

 

8%

Total (per mcfe) (a)

 

3.09

 

 

 

4.95

 

 

 

(1.86

)

 

(38)%

 

 

3.32

 

 

 

4.93

 

 

 

(1.61

)

 

(33)%

Average realized prices (including all
   derivative settlements and third-party
     transportation costs paid by Range):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas (per mcf)

$

1.40

 

 

$

3.13

 

 

$

(1.73

)

 

(55)%

 

$

1.70

 

 

$

2.91

 

 

$

(1.21

)

 

(42)%

NGLs (per bbl)

 

10.61

 

 

 

19.86

 

 

 

(9.25

)

 

(47)%

 

 

10.65

 

 

 

22.11

 

 

 

(11.46

)

 

(52)%

Crude oil and condensate (per bbl)

 

61.70

 

 

 

55.41

 

 

 

6.29

 

 

11%

 

 

62.16

 

 

 

57.85

 

 

 

4.31

 

 

7%

Total (per mcfe) (a)

 

1.67

 

 

 

3.30

 

 

 

(1.63

)

 

(49)%

 

 

1.89

 

 

 

3.27

 

 

 

(1.38

)

 

(42)%

 

(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.

 

 

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
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Average natural gas differentials below NYMEX

 

$

(0.70

)

 

$

(0.49

)

 

$

(0.40

)

 

$

(0.28

)

Realized gains on basis hedging

 

$

0.14

 

 

$

0.11

 

 

$

0.02

 

 

$

0.08

 

 

The following tables reflect our production and average realized commodity prices (excluding derivative settlements and third-party transportation costs paid by Range) (in thousands, except prices):

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

2022

 

 

Price
Variance

 

 

Volume
Variance

 

 

2023

 

 

2022

 

 

Price
Variance

 

 

Volume
Variance

 

 

2023

 

Natural gas

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Price (per mcf)

$

7.70

 

 

$

(5.85

)

 

$

 

 

$

1.85

 

 

$

6.49

 

 

$

(4.18

)

 

$

 

 

$

2.31

 

Production (Mmcf)

 

136,863

 

 

 

 

 

 

(3,558

)

 

 

133,305

 

 

 

399,834

 

 

 

 

 

 

(3,466

)

 

 

396,368

 

Natural gas sales

$

1,053,863

 

 

$

(779,495

)

 

$

(27,392

)

 

$

246,976

 

 

$

2,593,540

 

 

$

(1,657,141

)

 

$

(22,484

)

 

$

913,915

 

 

29


 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

2022

 

 

Price
Variance

 

 

Volume
Variance

 

 

2023

 

 

2022

 

 

Price
Variance

 

 

Volume
Variance

 

 

2023

 

NGLs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Price (per bbl)

$

35.30

 

 

$

(10.86

)

 

$

 

 

$

24.44

 

 

$

39.25

 

 

$

(14.74

)

 

$

 

 

$

24.51

 

Production (Mbbls)

 

9,236

 

 

 

 

 

 

512

 

 

 

9,748

 

 

 

26,474

 

 

 

 

 

 

1,894

 

 

 

28,368

 

NGLs sales

$

325,989

 

 

$

(105,863

)

 

$

18,085

 

 

$

238,211

 

 

$

1,039,057

 

 

$

(418,035

)

 

$

74,346

 

 

$

695,368

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

2022

 

 

Price
Variance

 

 

Volume
Variance

 

 

2023

 

 

2022

 

 

Price
Variance

 

 

Volume
Variance

 

 

2023

 

Crude oil

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Price (per bbl)

$

84.69

 

 

$

(14.00

)

 

$

 

 

$

70.69

 

 

$

91.35

 

 

$

(24.22

)

 

$

 

 

$

67.13

 

Production (Mbbls)

 

653

 

 

 

 

 

 

(66

)

 

 

587

 

 

 

2,100

 

 

 

 

 

 

(281

)

 

 

1,819

 

Crude oil sales

$

55,300

 

 

$

(8,221

)

 

$

(5,548

)

 

$

41,531

 

 

$

191,798

 

 

$

(44,043

)

 

$

(25,656

)

 

$

122,099

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

2022

 

 

Price
Variance

 

 

Volume
Variance

 

 

2023

 

 

2022

 

 

Price
Variance

 

 

Volume
Variance

 

 

2023

 

Consolidated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Price (per mcfe)

$

7.31

 

 

$

(4.61

)

 

$

 

 

$

2.70

 

 

$

6.69

 

 

$

(3.69

)

 

$

 

 

$

3.00

 

Production (Mmcfe)

 

196,195

 

 

 

 

 

 

(877

)

 

 

195,318

 

 

 

571,275

 

 

 

 

 

 

6,215

 

 

 

577,490

 

Total natural gas,
    NGLs and oil sales

$

1,435,152

 

 

$

(902,025

)

 

$

(6,409

)

 

$

526,718

 

 

$

3,824,395

 

 

$

(2,134,613

)

 

$

41,600

 

 

$

1,731,382

 

 

 

Transportation, gathering, processing and compression expense was $277.2 million in third quarter 2023 compared to $323.0 million in third quarter 2022. These third-party costs are lower in third quarter 2023 when compared to third quarter 2022 due to lower fuel prices, lower electricity costs and the impact of lower NGLs prices which result in lower processing costs.

Transportation, gathering, processing and compression expense was $830.9 million in the first nine months 2023 compared to $948.7 million in the same period of the prior year. These third party costs are lower in first nine months 2023 when compared to the same period of 2022 due to the impact of lower NGL prices which result in lower processing costs, lower electricity and fuel costs. 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, 2023 and 2022 on a per mcf and per barrel basis (in thousands, except for costs per unit):

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2023

 

 

2022

 

 

Change

 

 

%

 

2023

 

 

2022

 

 

Change

 

 

%

Transportation, gathering,
     processing and compression

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas

$

142,202

 

 

$

176,324

 

 

$

(34,122

)

 

(19)%

 

$

436,912

 

 

$

513,548

 

 

$

(76,636

)

 

(15)%

NGLs

 

134,754

 

 

 

146,695

 

 

 

(11,941

)

 

(8)%

 

 

393,281

 

 

 

435,154

 

 

 

(41,873

)

 

(10)%

Oil

 

251

 

 

 

 

 

 

251

 

 

100%

 

 

687

 

 

 

11

 

 

 

676

 

 

6,145%

Total

$

277,207

 

 

$

323,019

 

 

$

(45,812

)

 

(14)%

 

$

830,880

 

 

$

948,713

 

 

$

(117,833

)

 

(12)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas (per mcf)

$

1.07

 

 

$

1.29

 

 

$

(0.22

)

 

(17)%

 

$

1.10

 

 

$

1.28

 

 

$

(0.18

)

 

(14)%

NGLs (per bbl)

$

13.83

 

 

$

15.88

 

 

$

(2.05

)

 

(13)%

 

$

13.86

 

 

$

16.44

 

 

$

(2.58

)

 

(16)%

Oil (per bbl)

$

0.43

 

 

$

 

 

$

0.43

 

 

100%

 

$

0.38

 

 

$

0.01

 

 

$

0.37

 

 

3,700%

 

 

 

Derivative fair value income (loss) was income of $38.4 million in third quarter 2023 compared to a loss of $457.7 million in

30


 

third quarter 2022. Derivative fair value income was $530.1 million in first nine months 2023 compared to a loss of $1.6 billion 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, 2023 and 2022 (in thousands):

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Derivative fair value income (loss) per
    consolidated statements of operations

$

38,394

 

 

$

(457,708

)

 

$

530,095

 

 

$

(1,636,687

)

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash fair value (loss) income: (a)

 

 

 

 

 

 

 

 

 

 

 

Natural gas derivatives

$

(26,222

)

 

$

(64,126

)

 

$

343,779

 

 

$

(667,131

)

Oil derivatives

 

(12,036

)

 

 

62,936

 

 

 

3,550

 

 

 

18,985

 

NGLs derivatives

 

 

 

 

8,509

 

 

 

 

 

 

9,325

 

Freight derivatives

 

 

 

 

 

 

 

 

 

 

(114

)

Divestiture contingent consideration

 

(790

)

 

 

(350

)

 

 

(5,730

)

 

 

7,770

 

Total non-cash fair value (loss) income (a)

$

(39,048

)

 

$

6,969

 

 

$

341,599

 

 

$

(631,165

)

 

 

 

 

 

 

 

 

 

 

 

 

Net cash receipt (payment) on derivative settlements:

 

 

 

 

 

 

 

 

 

 

 

Natural gas derivatives

$

82,472

 

 

$

(449,713

)

 

$

196,847

 

 

$

(916,518

)

Oil derivatives

 

(5,030

)

 

 

(19,114

)

 

 

(8,351

)

 

 

(70,331

)

NGLs derivatives

 

 

 

 

4,150

 

 

 

 

 

 

(18,673

)

Total net cash receipt (payment)

$

77,442

 

 

$

(464,677

)

 

$

188,496

 

 

$

(1,005,522

)

 

(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 operations. This also includes the change in fair value of our divestiture contingent consideration.

 

Brokered natural gas, marketing and other revenue in third quarter 2023 was $44.6 million compared to $133.1 million in third quarter 2022 which is the result of significantly lower broker sales prices somewhat offset by higher broker sales volumes (volumes not related to our production). The revenue in third quarter 2023 also includes the receipt of $1.3 million of interest income. Brokered natural gas, marketing and other revenue was $171.6 million in first nine months 2023 compared to $328.7 million in first nine months 2022 which is the result of significantly lower broker sales prices somewhat offset by higher broker sales volumes. The nine months ended September 30, 2023 also includes the receipt of $5.1 million in make-whole payments and $4.0 million of interest income. We continue to optimize our transportation portfolio using these volumes. 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. Our costs for certain services, labor and supplies have been impacted by on-going demand and, to a lesser extent, inflation and supply chain disruptions, all of which affected the cost of our operations in 2022 and first nine months of 2023. The following table presents information about certain of our expenses on a per mcfe basis for the three and nine months ended September 30, 2023 and 2022:

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2023

 

 

2022

 

 

Change

 

 

%

 

2023

 

 

2022

 

 

Change

 

 

%

Direct operating expense

$

0.12

 

 

$

0.11

 

 

$

0.01

 

 

9%

 

$

0.13

 

 

$

0.11

 

 

$

0.02

 

 

18%

Taxes other than income

 

0.02

 

 

 

0.05

 

 

 

(0.03

)

 

(60)%

 

 

0.03

 

 

 

0.04

 

 

 

(0.01

)

 

(25)%

General and administrative expense

 

0.20

 

 

 

0.21

 

 

 

(0.01

)

 

(5)%

 

 

0.21

 

 

 

0.22

 

 

 

(0.01

)

 

(5)%

Interest expense

 

0.16

 

 

 

0.20

 

 

 

(0.04

)

 

(20)%

 

 

0.16

 

 

 

0.22

 

 

 

(0.06

)

 

(27)%

Depletion, depreciation and
     amortization expense

 

0.45

 

 

 

0.46

 

 

 

(0.01

)

 

(2)%

 

 

0.45

 

 

 

0.46

 

 

 

(0.01

)

 

(2)%

 

31


 

Direct operating expense was $22.6 million in third quarter 2023 compared to $21.3 million in third quarter 2022. Direct operating expenses include normally recurring expenses to operate and produce our wells, well workovers and repair-related expenses. Our direct operating costs increased in third quarter 2023 primarily due to higher water handling/hauling costs, higher equipment costs and higher contract labor and services along with higher workover costs. Our production volumes were slightly lower in third quarter 2023 compared to the same period of the prior year. We incurred $603,000 of workover costs in third quarter 2023 compared to $223,000 in third quarter 2022. These costs are expected to enhance production from existing wells. On a per mcfe basis, direct operating expense was $0.12 in third quarter 2023 compared to $0.11 in the same quarter of the prior year due to higher workovers and stock-based compensation expense.

Direct operating expense was $73.4 million in the first nine months 2023 compared to $61.6 million in the same period of the prior year. Our direct operating costs increased in the first nine months 2023 when compared to the same period of the prior year due to higher workover costs, higher water handling/hauling costs, higher contract labor and services along with higher equipment costs. We incurred $4.3 million of workover costs in first nine months 2023 compared to $1.3 million of workover costs in first nine months 2022. These costs are expected to enhance production from existing wells. On a per mcfe basis, direct operating costs increased $0.02 from $0.11 to $0.13 due to higher workover costs and higher water handling/hauling costs. The following table summarizes direct operating expense per mcfe for the three and nine months ended September 30, 2023 and 2022:

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2023

 

 

2022

 

 

Change

 

 

%

 

2023

 

 

2022

 

 

Change

 

 

%

Direct operating

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease operating expense

$

0.11

 

 

$

0.11

 

 

$

 

 

—%

 

$

0.12

 

 

$

0.11

 

 

$

0.01

 

 

9%

Workovers

 

 

 

 

 

 

 

 

 

—%

 

 

0.01

 

 

 

 

 

 

0.01

 

 

100%

Stock-based compensation

 

0.01

 

 

 

 

 

 

0.01

 

 

100%

 

 

 

 

 

 

 

 

 

 

—%

Total direct operating expense

$

0.12

 

 

$

0.11

 

 

$

0.01

 

 

9%

 

$

0.13

 

 

$

0.11

 

 

$

0.02

 

 

18%

 

Taxes other than income expense is predominately comprised of the Pennsylvania impact fee which is paid based on market commodity prices. In February 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 $4.5 million in third quarter 2023 compared to $8.4 million in third quarter 2022. The impact fee is based on drilling activities and is adjusted based on prevailing natural gas prices. Taxes other than income includes an impact fee of $18.0 million in first nine months 2023 compared to $22.5 million in first nine months 2022 which reflects lower natural gas prices. This category also includes franchise, real estate and other taxes. The following table summarizes taxes other than income per mcfe for the three and nine months ended September 30, 2023 and 2022:

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2023

 

 

2022

 

 

Change

 

 

%

 

2023

 

 

2022

 

 

Change

 

 

%

Taxes other than income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impact fee

$

0.02

 

 

$

0.05

 

 

$

(0.03

)

 

(60)%

 

$

0.03

 

 

$

0.04

 

 

$

(0.01

)

 

(25)%

Other

 

 

 

 

 

 

 

 

 

—%

 

 

 

 

 

 

 

 

 

 

—%

Total taxes other than income

$

0.02

 

 

$

0.05

 

 

$

(0.03

)

 

(60)%

 

$

0.03

 

 

$

0.04

 

 

$

(0.01

)

 

(25)%

General and administrative (G&A) expense was $38.1 million in third quarter 2023 compared to $40.6 million in third quarter 2022. The third quarter 2023 decrease of $2.5 million when compared to the same period of 2022 is primarily due to lower stock-based compensation expense and lower general office costs, including technology costs. On a per mcfe basis, third quarter 2023 G&A expense was 5% lower than third quarter 2022 primarily due to lower general office expenses.

 

 

 

 

 

32


 

G&A expense for first nine months 2023 decreased $5.2 million when compared to the same period of 2022 due to lower stock-based compensation expense of $5.8 million and lower legal fees partially offset by higher salaries and benefits. On a per mcfe basis, first nine months 2023 G&A expense decreased 5% from first nine months of the prior year due to lower stock-based compensation. The following table summarizes G&A expenses on a per mcfe basis for the three and nine months ended September 30, 2023 and 2022:

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2023

 

 

2022

 

 

Change

 

 

%

 

2023

 

 

2022

 

 

Change

 

 

%

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

$

0.15

 

 

$

0.16

 

 

$

(0.01

)

 

(6)%

 

$

0.16

 

 

$

0.16

 

 

$

 

 

—%

Stock-based compensation

 

0.05

 

 

 

0.05

 

 

 

 

 

—%

 

 

0.05

 

 

 

0.06

 

 

 

(0.01

)

 

(17)%

Total general and
    administrative expense

$

0.20

 

 

$

0.21

 

 

$

(0.01

)

 

(5)%

 

$

0.21

 

 

$

0.22

 

 

$

(0.01

)

 

(5)%

 

 

 

Interest expense was $30.6 million in third quarter 2023 compared to $38.7 million in third quarter 2022. Interest expense was $93.9 million for first nine months 2023 compared to $127.9 million for first nine months of 2022. The following table presents information about interest expense per mcfe for the three and nine months ended September 30, 2023 and 2022:

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2023

 

 

2022

 

 

Change

 

 

%

 

2023

 

 

2022

 

 

Change

 

 

%

Bank credit facility

$

0.01

 

 

$

0.02

 

 

$

(0.01

)

 

(50)%

 

$

0.01

 

 

$

0.02

 

 

$

(0.01

)

 

(50)%

Senior notes

 

0.14

 

 

 

0.17

 

 

 

(0.03

)

 

(18)%

 

 

0.14

 

 

 

0.19

 

 

 

(0.05

)

 

(26)%

Amortization of deferred
   financing costs and other

 

0.01

 

 

 

0.01

 

 

 

 

 

—%

 

 

0.01

 

 

 

0.01

 

 

 

 

 

—%

Total interest expense

$

0.16

 

 

$

0.20

 

 

$

(0.04

)

 

(20)%

 

$

0.16

 

 

$

0.22

 

 

$

(0.06

)

 

(27)%

Average debt outstanding
   ($000s)

$

1,788,388

 

 

$

2,404,038

 

 

$

(615,650

)

 

(26)%

 

$

1,833,125

 

 

$

2,580,876

 

 

$

(747,751

)

 

(29)%

Average interest rate (a)

 

6.5

%

 

 

6.2

%

 

 

0.3

%

 

5%

 

 

6.5

%

 

 

6.3

%

 

 

0.2

%

 

3%

 

(a)

 Includes commitment fees but excludes debt issuance costs.

 

On an absolute basis, the decrease in interest expense for third quarter 2023 from the same period of 2022 was primarily due to lower overall average outstanding debt balances. We had no debt outstanding on the bank credit facility for third quarter 2023 compared to $21.9 million in third quarter 2022 and the weighted average interest rate on the bank credit facility was 5.7% in third quarter 2022.

On an absolute basis, the decrease in interest expense for first nine months 2023 from the same period of 2022 was primarily due to lower overall outstanding debt balances. Average debt balance outstanding on the bank credit facility was $10.7 million for first nine months 2023 compared to $59.0 million for first nine months 2022 and the weighted average interest rates on the bank credit facility was 8.4% in first nine months 2023 compared to 3.7% in first nine months 2022.

Depletion, depreciation and amortization expense was $87.6 million in third quarter 2023 compared to $90.5 million in third quarter 2022. This decrease is due to a 2% decrease in depletion rates. Depletion expense, the largest component of DD&A expense, was $0.44 per mcfe in third quarter 2023 compared to $0.45 per mcfe in third quarter 2022.

DD&A expense was $259.2 million in first nine months 2023 compared to $262.6 million in the same period of 2022. This decrease is due to a 2% decrease in depletion rates somewhat offset by a slight increase in production volumes. Depletion expense per mcfe was $0.44 in first nine months 2023 compared to a $0.45 in the same period of 2022.

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, 2023 and 2022:

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2023

 

 

2022

 

 

Change

 

 

%

 

2023

 

 

2022

 

 

Change

 

 

%

DD&A

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depletion and amortization

$

0.44

 

 

$

0.45

 

 

$

(0.01

)

 

(2)%

 

$

0.44

 

 

$

0.45

 

 

$

(0.01

)

 

(2)%

Depreciation

 

 

 

 

 

 

 

 

 

—%

 

 

 

 

 

 

 

 

 

 

—%

Accretion and other

 

0.01

 

 

 

0.01

 

 

 

 

 

—%

 

 

0.01

 

 

 

0.01

 

 

 

 

 

—%

Total DD&A expense

$

0.45

 

 

$

0.46

 

 

$

(0.01

)

 

(2)%

 

$

0.45

 

 

$

0.46

 

 

$

(0.01

)

 

(2)%

 

33


 

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 expenses and gain or loss on early extinguishment of debt. Stock-based compensation includes the amortization of restricted stock grants and PSUs. The following table details the allocation of stock-based compensation to functional expense categories for the three and nine months ended September 30, 2023 and 2022 (in thousands):

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Direct operating expense

$

439

 

 

$

372

 

 

$

1,280

 

 

$

1,083

 

Brokered natural gas and marketing expense

 

483

 

 

 

663

 

 

 

1,604

 

 

 

1,868

 

Exploration expense

 

312

 

 

 

393

 

 

 

935

 

 

 

1,163

 

General and administrative expense

 

8,446

 

 

 

10,402

 

 

 

26,461

 

 

 

32,245

 

Total stock-based compensation

$

9,680

 

 

$

11,830

 

 

$

30,280

 

 

$

36,359

 

 

 

Brokered natural gas and marketing expense was $46.2 million in third quarter 2023 compared to $127.3 million in third quarter 2022 due to significantly lower commodity prices partially offset by higher broker purchase volumes (volumes not related to our production). Brokered natural gas and marketing expense was $158.1 million in first nine months 2023 compared to $330.5 million in first nine months 2022 due to significantly lower commodity prices partially offset by higher 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, 2023 and 2022 (in thousands):

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2023

 

 

2022

 

 

Change

 

 

%

 

2023

 

 

2022

 

 

Change

 

 

%

Brokered natural gas and
      marketing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brokered natural gas sales

$

40,267

 

 

$

130,466

 

 

$

(90,199

)

 

(69)%

 

$

154,361

 

 

$

317,896

 

 

$

(163,535

)

 

(51)%

Brokered NGLs sales

 

937

 

 

 

(6

)

 

 

943

 

 

15,717%

 

 

1,605

 

 

 

2,274

 

 

 

(669

)

 

(29)%

Interest income

 

1,279

 

 

 

381

 

 

 

898

 

 

236%

 

 

4,016

 

 

 

422

 

 

 

3,594

 

 

852%

Other marketing revenue

 

2,129

 

 

 

2,260

 

 

 

(131

)

 

(6)%

 

 

11,602

 

 

 

8,124

 

 

 

3,478

 

 

43%

Brokered natural gas purchases (a)

 

(43,218

)

 

 

(124,756

)

 

 

81,538

 

 

65%

 

 

(149,565

)

 

 

(320,180

)

 

 

170,615

 

 

53%

Brokered NGLs purchases

 

(787

)

 

 

3

 

 

 

(790

)

 

(26,333)%

 

 

(1,389

)

 

 

(2,326

)

 

 

937

 

 

40%

Other marketing expense

 

(2,201

)

 

 

(2,532

)

 

 

331

 

 

13%

 

 

(7,120

)

 

 

(8,011

)

 

 

891

 

 

11%

Net brokered natural gas and
      marketing margin

$

(1,594

)

 

$

5,816

 

 

$

(7,410

)

 

(127)%

 

$

13,510

 

 

$

(1,801

)

 

$

15,311

 

 

850%

 

(a)

 

Includes transportation costs.

 

Exploration expense was $7.0 million in third quarter 2023 compared to $7.5 million in third quarter 2022 with lower delay rentals and other expense partially offset by higher seismic costs. Exploration expense was $19.0 million in first nine months 2023 compared to $19.7 million in first nine months 2022 with lower delay rentals and other expense partially offset by higher seismic costs. The following table details our exploration expense for the three and nine months ended September 30, 2023 and 2022 (in thousands):

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2023

 

 

2022

 

 

Change

 

 

%

 

2023

 

 

2022

 

 

Change

 

 

%

Exploration

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delay rentals and other

$

5,177

 

 

$

5,925

 

 

$

(748

)

 

(13)%

 

$

12,328

 

 

$

14,767

 

 

$

(2,439

)

 

(17)%

Personnel expense

 

1,150

 

 

 

1,060

 

 

 

90

 

 

8%

 

 

4,097

 

 

 

3,574

 

 

 

523

 

 

15%

Stock-based compensation expense

 

312

 

 

 

393

 

 

 

(81

)

 

(21)%

 

 

935

 

 

 

1,163

 

 

 

(228

)

 

(20)%

Seismic

 

331

 

 

 

120

 

 

 

211

 

 

176%

 

 

1,662

 

 

 

199

 

 

 

1,463

 

 

735%

Total exploration expense

$

6,970

 

 

$

7,498

 

 

$

(528

)

 

(7)%

 

$

19,022

 

 

$

19,703

 

 

$

(681

)

 

(3)%

 

34


 

Abandonment and impairment of unproved properties expense was $11.0 million in third quarter 2023 compared to $3.2 million in third quarter 2022. Abandonment and impairment of unproved properties was $44.3 million in first nine months 2023 compared to $12.3 million in the same period of 2022. Abandonment and impairment of unproved properties for third quarter and first nine months 2023 increased when compared to the same period of 2022 due to higher 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 acres needed for our future development plans can be leased again.

Exit costs were $10.7 million in third quarter 2023 compared to $11.1 million in third quarter 2022. In third quarter 2023, we recorded $10.7 million accretion expense primarily related to retained liabilities for certain gathering, transportation and processing obligations extending until 2030 compared to accretion expense of $11.1 million in the same quarter of the prior year.

Exit costs were $71.7 million in first nine months 2023 compared to $58.2 million in first nine months 2022. We recorded accretion expense of $31.9 million in first nine months 2023 compared to accretion expense of $33.5 million in the same period of 2022. The first nine months 2023 also includes an adjustment of $39.8 million to increase this retained liability primarily for an increase in forecasted rates due to inflation compared to an adjustment of $24.8 million in the same period of the prior year to increase this obligation for a change in forecasted drilling plans of the buyer and other adjustments.

Deferred compensation plan expense was a loss of $9.0 million in third quarter 2023 compared to a loss of $5.8 million in third quarter 2022. 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. Our stock price increased from $29.40 at June 30, 2023 to $32.41 September 30, 2023. In the same period of the prior year our stock price increased from $24.75 at June 30, 2022 to $25.26 at September 30, 2022. During first nine months 2023, deferred compensation was a loss of $29.5 million compared to a loss of $59.9 million in the same period of 2022. Our stock price increased from $25.02 at December 31, 2022 to $32.41 at September 30, 2023. In the same period of the prior year, our stock price increased from $17.83 at December 31, 2021 to $25.26 at September 30, 2022.

(Gain) loss on early extinguishment of debt was a gain of $439,000 in first nine months 2023, compared to a loss of $69.2 million in first nine months 2022. In second quarter 2023, we purchased in the open market $61.6 million principal amount of 4.875% senior notes due 2025 at a discount and recorded a gain of $439,000, net of transaction costs and the expensing of deferred financing costs on the repurchased debt. In first quarter 2022, we announced a call for the redemption of $850.0 million of our outstanding 9.25% senior notes due 2026. The redemption price equaled 106.938% of par plus accrued and unpaid interest. We recognized a loss on early extinguishment of debt in first quarter 2022 of $69.2 million, net of transaction costs and the expensing of the remaining deferred financing costs on the repurchased debt.

Income tax expense (benefit) was an expense of $15.7 million in third quarter 2023 compared to expense of $59.6 million in third quarter 2022. Income tax expense was $152.3 million in first nine months 2023 compared to an expense of $46.9 million in the same period of 2022. The 2023 and 2022 effective tax rates were different than the statutory tax rate due to state income taxes, equity compensation, valuation allowances and other discrete tax items.

Management’s Discussion and Analysis of Financial Condition, Capital Resources and Liquidity

Cash Flows

Cash flows from operations are primarily affected by production volumes and commodity prices, net of the effects of settlements of our derivatives. Our cash flows from operations are also impacted by changes in working capital. Short-term liquidity needs are satisfied by borrowings under our bank credit facility and/or cash on hand. Because of this, and because our principal source of operating cash flows (proved reserves to be produced in future years) cannot be reported as working capital, we often have low or negative working capital. From time to time, we enter into various derivative contracts to provide an economic hedge of our exposure to commodity price risk associated with anticipated future natural gas, NGLs and oil production. The production we hedge has varied and will continue to vary from year to year depending on, among other things, our expectation of future commodity prices and capital budget, fixed costs or other investment requirements. Any payments due to counterparties under our derivative contracts should ultimately be funded by proceeds received from the sale of our production. Production receipts, however, often lag payments to the counterparties. As of September 30, 2023, we have entered into derivative agreements covering 76.4 Bcfe for the remainder of 2023, 297.1 Bcfe for 2024, 131.4 Bcfe for 2025 and 19.2 Bcfe for 2026, not including our basis swaps.

35


 

The following table presents sources and uses of cash and cash equivalents for the nine months ended September 30, 2023 and 2022 (in thousands):

 

 

Nine Months Ended
September 30,

 

 

 

2023

 

 

2022

 

Sources of cash and cash equivalents:

 

 

 

 

 

 

Operating activities

 

$

751,797

 

 

$

1,252,089

 

Disposal of assets

 

 

823

 

 

 

463

 

Issuance of senior notes

 

 

 

 

 

500,000

 

Borrowing on credit facility

 

 

185,000

 

 

 

813,000

 

Other

 

 

103,986

 

 

 

62,005

 

Total sources of cash and cash equivalents

 

$

1,041,606

 

 

$

2,627,557

 

 

 

 

 

 

 

 

Uses of cash and cash equivalents:

 

 

 

 

 

 

Additions to natural gas properties

 

$

(421,087

)

 

$

(351,813

)

Repayment on credit facility

 

 

(204,000

)

 

 

(813,000

)

Acreage purchases

 

 

(27,422

)

 

 

(23,968

)

Additions to field service assets

 

 

(321

)

 

 

(535

)

Repayment of senior notes

 

 

(60,934

)

 

 

(1,071,867

)

Treasury stock purchases

 

 

(9,663

)

 

 

(308,891

)

Dividends paid

 

 

(57,949

)

 

 

(19,526

)

Debt issuance costs

 

 

 

 

 

(16,177

)

Other

 

 

(97,636

)

 

 

(79,058

)

Total uses of cash and cash equivalents

 

$

(879,012

)

 

$

(2,684,835

)

 

Sources of Cash and Cash Equivalents

Cash flows provided from operating activities in first nine months 2023 was $751.8 million compared to $1.3 billion in first nine months 2022. 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 2022 to first nine months 2023 reflects significantly lower realized prices partially offset by the impact of a favorable change in working capital (the timing of cash receipts and disbursements). As of September 30, 2023, we have hedged more than 40% of our projected total production for the remainder of 2023, with more than 50% of our projected natural gas production hedged. Changes in working capital (as reflected in our consolidated statements of cash flows) for first nine months 2023 was a negative $54.9 million compared to a negative $277.6 million for first nine months 2022.

Uses of Cash and Cash Equivalents

Additions to natural gas properties for first nine months 2023 were consistent with expectations relative to our announced 2023 capital budget.

Repayment of senior notes for first nine months 2023 includes the repurchase in the open market $61.6 million principal amount of our 4.875% senior notes due 2025 at a discount.

Treasury stock purchases for first nine months 2023 include the repurchase of 400,000 shares for a total of $9.7 million as part of our previously announced stock repurchase program.

Liquidity and Capital Resources

Based on the current commodity price environment, we believe we have sufficient liquidity and capital resources to execute our business plan for the foreseeable future. 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. As of September 30, 2023, we had cash on hand in the amount of $162.8 million and availability under our credit facility of $1.2 billion.

 

Sources of Cash

We expect our 2023 capital program to be funded by cash flows from operations. During the nine months ended September 30, 2023, we generated $751.8 million of cash flows from operating activities. As of September 30, 2023, we had approximately $1.4 billion of liquidity, consisting of $1.2 billion available under our bank credit facility and $162.8 million of cash on hand. 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.

36


 

Although we expect cash flows and capacity under the existing credit facility to be sufficient to fund our expected current capital program, we may also have the option to raise funds through new debt or equity offerings or from other sources of financing. All of our sources of liquidity can be affected by the general conditions of the broader economy, force majeure events and fluctuations in commodity prices, operating costs and volumes produced, all of which affect us and our industry. We have no control over market prices for natural gas, NGLs or oil, although we may be able to influence realized revenues through the use of derivative contracts as part of our commodity price risk management.

Bank Credit Facility

Our bank credit facility is secured by substantially all of our assets. As of September 30, 2023, 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 also have undrawn letters of credit of $262.8 million as of September 30, 2023. We were in compliance with the applicable covenants under the bank credit facility as of September 30, 2023.

The borrowing base is subject to regular, semi-annual redeterminations and is dependent on a number of factors but primarily the lender’s assessment of our future cash flows. Our scheduled borrowing base redetermination was completed in September 2023 with our borrowing base and lender commitments reaffirmed.

Our daily weighted-average bank credit facility debt balance was $10.7 million for first nine months ended September 30, 2023 compared to $59.0 million for the same period of the prior year. Borrowings under the revolving bank credit facility can either be at the alternate base rate (ABR, as defined in the bank credit facility agreement) plus a spread ranging from 0.75% to 1.75% or at the secured overnight financing rate (SOFR, as defined in the bank credit facility agreement) plus a spread ranging from 1.75% to 2.75%. The applicable spread is dependent upon borrowings relative to the borrowing base. We may elect, from time to time, to convert all or any part of our SOFR loans to base rate loans or to convert all or any of the base rate loans to SOFR loans.

Uses of Cash

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 2023, we funded $448.8 million of capital expenditures as reported in our consolidated statement of cash flows with operating cash flows. 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 amount of $688.4 million due 2025. As part of our strategy for 2023, we will continue to focus on improving our financial strength.

Our quarterly cash dividend was reinstated in third quarter 2022. See also Cash Dividend Payments below. During first nine months 2023, we repurchased 400,000 shares of our common stock at an aggregate cost of $9.7 million. The total remaining share repurchase authorization was approximately $1.1 billion at September 30, 2023.

Shelf Registration

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 ability to sell an indeterminate amount of various types of debt and equity securities.

 

Cash Dividend Payments

On August 31, 2023, the dividend committee of our board of directors approved a dividend of $0.08 per share payable on September 29, 2023 to stockholders of record at the close of business on September 15, 2023. 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.

 

 

37


 

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. As of September 30, 2023, we do not have any significant off-balance sheet debt or other such unrecorded obligations and we have not guaranteed any debt of any unrelated party. As of September 30, 2023, we had a total of $262.8 million of undrawn letters of credit under our bank credit facility.

Since December 31, 2022, there have been no material changes to our contractual obligations.

Interest Rates

At September 30, 2023, we had approximately $1.8 billion of debt outstanding which bore interest at fixed rates averaging 6.0%. We had no variable rate debt outstanding at September 30, 2023.

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 2023 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, 2022, as filed with the SEC on February 27, 2023.

38


 

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 65% of our December 31, 2022 proved reserves are natural gas and 2% of proved reserves are oil and condensate. In addition, a portion of our NGLs, which are 33% of proved reserves, are also impacted by changes in oil prices. We are also exposed to market risks related to changes in interest rates, based on our credit facility balance. These risks did not change materially from December 31, 2022 to September 30, 2023.

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, 2023, 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 crude oil or Mont Belvieu for NGLs, as of September 30, 2023, approximated a net unrealized pretax gain of $192.1 million. These contracts expire monthly through December 2026. At September 30, 2023, the following commodity derivative contracts were outstanding, excluding our basis swaps which are discussed below:

 

Period

 

Contract Type

 

Volume Hedged

 

 

Weighted Average Hedge Price

 

 

 

 

 

 

 

 

 

 

 

Swap

 

 

Sold Put

 

 

 

Floor

 

 

 

Ceiling

 

 

Fair Market Value (in thousands)

 

Natural Gas (a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2023

 

Swaps

 

383,315 Mmbtu/day

 

$

 

3.50

 

 

 

 

 

 

 

 

 

 

 

 

 

$

17,258

 

2023

 

Collars

 

253,370 Mmbtu/day

 

 

 

 

 

 

 

 

$

 

3.37

 

 

$

 

4.48

 

 

$

10,845

 

2023

 

Three-way Collars

 

159,891 Mmbtu/day

 

 

 

 

 

$

2.28

 

 

$

 

3.26

 

 

$

 

4.29

 

 

$

5,065

 

2024

 

Swaps

 

304,973 Mmbtu/day

 

$

 

4.01

 

 

 

 

 

 

 

 

 

 

 

 

 

$

67,263

 

2024

 

Collars

 

436,694 Mmbtu/day

 

 

 

 

 

 

 

 

$

 

3.50

 

 

$

 

5.63

 

 

$

76,944

 

2024

 

Three-way Collars

 

50,000 Mmbtu/day

 

 

 

 

 

$

2.50

 

 

$

 

3.50

 

 

$

 

4.24

 

 

$

2,725

 

2025

 

Swaps

 

360,000 Mmbtu/day

 

$

 

4.12

 

 

 

 

 

 

 

 

 

 

 

 

 

$

20,993

 

2026

 

Swaps

 

52,500 Mmbtu/day

 

$

 

4.14

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2,002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crude Oil

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2023

 

Swaps

 

5,582 bbls/day

 

$

 

72.61

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(7,894

)

January-September 2024

 

Swaps

 

3,664 bbls/day

 

$

 

80.21

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(1,172

)

January-September 2024

 

Collars

 

832 bbls/day

 

 

 

 

 

 

 

 

$

 

80.00

 

 

$

 

90.12

 

 

$

515

 

 

(a)

 

We also sold natural gas swaptions of 90,000 Mmbtu/day for calendar year 2025 at a weighted average price of $4.25/Mmbtu that expire December 2023. Additionally, we sold natural gas swaptions of 20,000 Mmbtu/day for calendar year 2026 at a weighted average price of $4.10/Mmbtu that expire June 2024. The fair value of these swaptions at September 30, 2023 was a net derivative liability of $2.4 million.

 

39


 

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 gain of $17.1 million at September 30, 2023 and they settle monthly through December 2026.

At September 30, 2023, we are entitled to receive contingent consideration associated with the sale of our North Louisiana assets, for the year ended 2023, of up to $21.0 million based on future achievement of certain natural gas and oil prices based on published indexes along with the realized NGLs prices of the buyer. The fair value at September 30, 2023 was a gain of $7.4 million.

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, 2023. 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

 

 

Hypothetical Change in Fair Value

 

 

 

 

 

Increase in Commodity
Price of

 

 

Decrease in Commodity
Price of

 

 

Fair Value

 

 

10%

 

 

25%

 

 

10%

 

 

25%

 

Swaps

$

98,450

 

 

$

(112,878

)

 

$

(282,195

)

 

$

112,878

 

 

$

282,195

 

Collars

 

88,304

 

 

 

(39,315

)

 

 

(94,347

)

 

 

41,981

 

 

 

111,836

 

Three-way collars

 

7,790

 

 

 

(7,023

)

 

 

(16,677

)

 

 

6,995

 

 

 

15,747

 

Swaptions

 

(2,435

)

 

 

(6,463

)

 

 

(26,941

)

 

 

1,879

 

 

 

2,403

 

Basis swaps

 

17,144

 

 

 

23,715

 

 

 

59,286

 

 

 

(23,715

)

 

 

(59,286

)

Divestiture contingent consideration

 

7,350

 

 

 

70

 

 

 

380

 

 

 

(150

)

 

 

(590

)

 

 

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, 2023, our derivative counterparties include fourteen financial institutions, of which all but six 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, 2023, we had total debt of $1.8 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 credit facility provides for variable interest rate borrowings; however, we did not have any borrowings outstanding as of September 30, 2023.

40


 

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, 2023 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, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

41


 

PART II – OTHER INFORMATION

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, 2022.

 

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 for repurchases under the program. The share repurchase authority does not obligate us to acquire any specific number of shares. The program may be changed based upon our financial condition and is subject to termination by the board of directors prior to completion. Shares repurchased as of September 30, 2023 were held as treasury stock and we have approximately $1.1 billion of remaining authorization under the program. We did not repurchase any shares pursuant to the share repurchase authority during the three months ended September 30, 2023.

 

 

42


 

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

 

 

 

 

 

 

 

 

 

 

 

3.2

 

Amended and Restated By-laws of Range Resources Corporation

 

8-K

 

3.1

 

05/19/2016

 

 

 

 

 

 

 

 

 

 

 

31.1*

 

Certification by the President and Chief Executive Officer of Range Resources Corporation Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31.2*

 

Certification by the Chief Financial Officer of Range Resources Corporation Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32.1**

 

Certification by the President and Chief Executive Officer of Range Resources Corporation Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

32.2**

 

Certification by the Chief Financial Officer of Range Resources Corporation Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

101. CAL*

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

101. DEF*

 

Inline XBRL Taxonomy Extension Definition Linkbase Document

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

101. LAB*

 

Inline XBRL Taxonomy Extension Label Linkbase Document

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

101. PRE*

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

104 *

 

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

 

 

 

 

 

 

 

 

*

**

 

 

Filed herewith

Furnished herewith

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

43


 

 

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 24 , 2023

 

RANGE RESOURCES CORPORATION

 

 

By:

/s/ MARK S. SCUCCHI

Mark S. Scucchi

Executive Vice President and
Chief Financial Officer

Date: October 24, 2023

 

RANGE RESOURCES CORPORATION

 

 

By:

/s/ DORI A. GINN

Dori A. Ginn

Senior Vice President – Controller and
Principal Accounting Officer

 

 

44