|
|
|
|
||
Range posts big Q3 cash flows on high prices but tells shareholders to wait from SNL Daily Gas Report Range posts big Q3 cash flows on high prices but tells shareholders to waitByline: Bill Holland Range Resources Corp. investors will have to wait until 2022 to see any cash from the Appalachian shale gas producer as the company uses a huge jump in third-quarter cash flows, driven by high gas and NGL prices, to pay down more debt, executives said. Analysts have expected the spike in realized commodity prices and revenues to spur an increase in the number of shale gas producers announcing share buyback and dividend increases. "Tangible shareholder value accretion is first being driven by using free cash flow to reduce absolute debt," CFO Mark Scucchi said on an Oct. 27 earnings conference call. "As target leverage levels are achieved, potentially as early as the first half of next year, the discussion of Range's return of capital framework becomes a logical next step in a balanced macro environment." Range posted adjusted net income of $130 million in the third quarter with a positive $276 million in cash flows, compared to $11 million in adjusted losses and $91 million in positive cash flows in the same quarter a year ago. The rosier results came after Range kept capital spending within its maintenance budget at $96 million and realized gas prices, including hedging, increased 35% to $2.69/Mcf compared to the same period of 2020. Adding to the results was a near doubling in the realized price for NGLs year over year to $31.17 per barrel, responsible for more than a third of Range's revenue. Without committing to any specific path for cash going back to shareholders, Scucchi said a dividend announcement in 2022 would likely be the first step. "A modest base dividend makes sense, a variable component makes sense," Scucchi said. "It's also a mathematical exercise of whether it should be share repurchases or incremental dividend and what is most valued by investors." Analysts were confident that Range would eventually start paying its shareholders. "Range appears well-positioned to initiate a dividend next year as better than expected margin expansion should cause the balance sheet to de-leverage more quickly than Street forecasts," Stifel Nicolaus & Co. oil and gas analyst Michael Scialla said before the call. Range planned to spend slightly less in its 2021 capital budget $415 million than the $435 million it spent in 2020. While the company did not issue formal guidance for 2022, COO Dennis Degner said there would be little change in the company's pace of drilling, even with the higher prices. "Despite the recent improvements in strip pricing for oil, natural gas and natural gas liquids, we remain committed to maintaining production at current levels with a focus on harvesting cash flow, reducing debt and further strengthening our balance sheet," Degner told analysts. How patient investors will be remains to be seen. On a GAAP basis, Range posted a $350 million loss compared to $749 million in red ink in 2020. A $652 million noncash charge against the value of oil and gas hedges drove the headline number as rising prices raced past Range's hedge values. Range shares, which have tripled in value over the past year, slipped 6% to $24.45 per share in moderate trading by midafternoon Oct. 27. |
return to message board, top of board |