ITEM 9. Regulation FD
Disclosure.
On
August 5, 2003, Range
Resources Corporation issued a press release announcing its second quarter of
2003 results. A copy of the press
release in attached hereto as Exhibit 99.1.
ITEM 7. Financial Statements and Exhibits.
(c) Exhibits:
99.1 Press Release dated August 5, 2003
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 hereunto
duly authorized.
RANGE
RESOURCES CORPORATION
Rodney
L. Waller
Senior Vice President
Date: August
6, 2003
EXHIBIT INDEX
Exhibit Number Description
99.1
Press Release dated August 5, 2003
EXHIBIT 99.1
NEWS
RELEASE
RANGE
REPORTS HIGHER PRODUCTION AND CASH FLOW
FORT WORTH, TEXAS, AUGUST 5, 2003…RANGE RESOURCES CORPORATION (NYSE: RRC) today reported second
quarter results. Revenues in the quarter
totaled $54.7 million, a 9% increase from the prior-year period. Cash flow from
operations before changes in working capital rose 15% to $34.4 million, which
is the second highest level in the Company’s history. Pretax income totaled $7.1 million, a
27% increase. Results benefited from a
5% increase in production and an 8% increase in realized prices. Net income for the quarter totaled $4.6
million or $0.08 per share, 37% lower than the prior year due to a deferred tax
provision. The Company finished
utilizing certain tax benefits in 2002 and is now providing deferred taxes at a
35% rate due to increased profitability.
Excluding certain non-cash accounting items (see table below), earnings
would have been $6.4 million, or $0.12 per share ($0.11 fully diluted).
Production
in the quarter rose 5% to an average of 158 Mmcfe per day, comprised of 117
Mmcf and 6,930 barrels of oil and liquids.
Production increased 4.3 Mmcfe per day or 3% from first quarter 2003
levels. The production growth was
achieved through the exploitation of the Company’s development drilling
inventory and several meaningful exploratory successes. Wellhead prices, after hedging, averaged
$3.84 per mcfe, an 8% increase. Gas prices
increased 8% to $3.88 per mcf, as oil prices increased 4% to $23.14 per
barrel. Hedging decreased realized gas prices by $1.27 per mcf and oil prices by $3.57 per
barrel.
Despite a
9% increase in revenues, expenses rose only 7% in the quarter. Direct operating costs increased $2.7 million
due to higher production taxes, field expenses and workover costs. Field expenses and workover costs per mcfe
were $0.66 for the quarter compared to $0.56 for the prior period and $0.68 for
first quarter 2003. Exploration expense
increased $515,000 principally due to higher dry hole cost. General and administrative expenses rose
$206,000 as a result of higher personnel costs and professional fees. Interest expense fell $1.1 million due to
lower debt balances and rates.
Depletion, depreciation and amortization expense increased $808,000 due
to higher volumes. Accretion expense
related to the new accounting rule covering asset retirement obligations
totaled $1.2 million for the quarter.
IPF expenses decreased $1.6 million due to lower valuation allowance,
interest and administrative expenses.
The income tax provision increased $4.3 million between periods. During the quarter, $2.5 million of deferred
tax expense was recorded. In the
previous year period, a deferred tax benefit of $1.8 million was
recognized. For the remainder of the
year, the deferred tax provision is expected to approximate 35% of pretax
income.
During the quarter, debt decreased $16.7
million. Subsequent to quarter-end, the
Company issued $100 million of 7-3/8% senior subordinated notes due 2013. Proceeds from the offering will be used to
redeem all outstanding
8-3/4% senior subordinated notes on August
20. The remaining $25 million of
proceeds will reduce bank debt. The
issue reduces ongoing interest expense and extends the maturity of the
Company’s debt. Most importantly, the
financing eliminates certain onerous covenants in the 8-3/4% notes that, among
other things, prevented the Company from repurchasing more of its convertible
securities. Stockholders’ equity
declined $8.9 million during the quarter, as $4.6 million of net income was
offset by a $15.2 million increase in Other comprehensive loss. The Other comprehensive loss reflected the
impact of higher oil and gas futures prices on outstanding hedges at
quarter-end.
In the second quarter, $29 million of the Company’s
$105 million 2003 capital budget was expended.
These expenditures funded the drilling of 103 (59.4 net) wells. Only 3 (2.0 net) of the wells proved
unproductive. In the first half of 2003,
156 (91.5 net) wells were successfully drilled.
By June 30, 116 (71.8 net) of the wells had
been placed on production. The remaining
40 (19.7 net) wells were in various stages of completion or waiting on pipeline
connection. Drilling activity in the
third quarter will remain high as the Company has 12 rigs currently
running. During the quarter, $1.3
million was spent on acquisitions, bringing the total for the year to $6.3
million.
Production
increased 5% in the quarter, primarily due to the success of the Company’s
drilling program. In the Gulf Coast,
Ship Shoal 28 #40, an offshore discovery, came on line in April and is
currently producing 16.0 (3.1 net) Mmcfe per day. An onshore discovery in South Louisiana, the
Faulk #1, was placed on stream in late May, and is currently producing 14.5
(4.6 net) Mmcfe per day. A workover at
West Cameron 45 #20 repaired a down hole mechanical problem, returning the well
to production in June. The well is
currently producing 20.7 (4.1 net) Mmcfe per day. In the Texas Panhandle, five wells were
drilled during the quarter targeting the Morrow Sands. One well was brought on line in June at a
rate of 1.8 (1.0 net) Mmcfe per day.
Another well, the Ben Hill #15, was completed in July for 1.5 (1.3 net)
Mmcfe per day. Two wells are currently
being completed with first sales expected in late August, while the last well
was dry. Fourteen additional wells are
planned in the Texas Panhandle during the second half of the year. In West Texas, a 16-well
in-fill program utilizing two drillings rigs was completed in May at the
Fuhrman-Mascho field where an enhanced waterflood program is underway. At quarter-end production at Fuhrman was
1,805 (1,356 net) barrels of oil equivalent per day, a 51% increase over the
January rate. Another 12-well drilling
program at Fuhrman consisting of eight producers and four injectors began in
July. A six-well drilling program in the
Sterling field was completed in June adding 3.6 (2.9 net)
Mmcfe per day. During the second half of
2003, a five-well program is slated at Sterling. In Appalachia, our drilling program is progressing as planned. First half drilling included 102 (45.3 net)
wells, with an additional 131 (59.1 net) wells scheduled for the second half of
the year.
Commenting, John H. Pinkerton, the Company’s
President, noted, “We were pleased with the second quarter performance. Through the first half of the year, our
drilling program exceeded expectations causing second quarter production to
grow faster than initially planned. As a
result, we anticipate production to grow at an increasing rate in the third and
fourth quarters. We also continued to
add technical staff and expand our inventory of drilling prospects. Simultaneously, we are steadily reducing debt
and increasing financial flexibility.
Looking ahead, we remain focused on growing production and reserves
through internally generated drilling projects as well as complementary
acquisitions.”
The Company will host a conference call on Wednesday,
August 6 at 2:00 p.m. ET to review its results. To participate, please dial 877-207-5526
about 5-10 minutes prior to the start of the call and ask for the Range
Resources Second Quarter Conference Call.
A simultaneous webcast of the call may be accessed over the Internet at www.rangeresources.com or www.vcall.com. The webcast will be archived
for replay on the Company’s website for 60 days. A replay of the call will be available
through August 13 at 800-642-1687. The
conference ID is 1792868.
Non-GAAP Financial Measures:
Second
quarter 2003 earnings include derivative ineffective hedging loss of $2.1
million, non-cash deferred compensation expense of $912,000, amortization of
interest rate swap gains of $154,000 and a $10,000 loss on retirement of
debt. Adjusting for the after tax effect
of these items, the Company’s earnings would have been $6.4 million in the
second quarter 2003 or $0.12 per share ($0.11 per diluted share). If similar items were excluded, second
quarter 2002 earnings would have been $7.3 million or $0.14 per share ($0.13
per diluted share). (See reconciliation
of earnings in the table below.) The
Company believes results excluding these items are more comparable to estimates
provided by security analysts and, therefore, are useful in evaluating
operational trends of the Company and its performance relative to other oil and
gas producing companies. In addition,
with the adoption effective January 1, 2003 of the new accounting rule
regarding asset retirement obligations, the Company provided $1.2 million of
accretion expense in the second quarter or $756,600 after tax ($0.01 per share)
which was not similarly provided in the prior period.
Cash flow from operations before changes in working
capital represents net cash provided by operations before changes in working
capital adjusted for certain non-cash compensation items. Cash flow from operations before changes in
working capital is widely accepted by the investment community as a financial
indicator of an oil and gas company’s ability to generate cash to internally
fund exploration and development activities and to service debt. Cash flow from operations before changes in
working capital is also useful because it is widely used by professional
research analysts in valuing, comparing, rating and providing investment
recommendations of companies in the oil and gas exploration and production
industry. In turn, many investors use
this published research in making investment decisions. Cash flow from operations before changes in
working capital is not a measure of financial performance under GAAP and should
not be considered as an alternative to cash flows from operations, investing,
or financing activities as an indicator of cash flows, or as a measure of
liquidity. A table is included which
reconciles net cash provided by operations to Cash flow from operations before
changes in working capital as used in this release. On its website, the Company provides
additional comparative information on prior periods.
RANGE
RESOURCES CORPORATION (NYSE: RRC) is an independent oil and gas company operating in
the Permian, Midcontinent, Appalachian and Gulf Coast regions of the United States.
___________________________________________________________________________________________
2003-19
Contact: Rodney Waller, Senior Vice President
Karen Giles
(817)
870-2601
www.rangeresources.com
Except for historical information, statements made in this release, including
those relating to future earnings, capital expenditures, production, expenses,
and reserve replacement targets are forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These
statements are based on assumptions and estimates that management believes are
reasonable based on currently available information; however, management’s
assumptions and the Company’s future performance are subject to a wide range of
business risks and uncertainties and there is no assurance that these goals and
projections can or will be met. Any
number of factors could cause actual results to differ materially from those in
the forward-looking statements, including, but not limited to, the volatility
of oil and gas prices, the costs and results of drilling and operations, the
timing of production, mechanical and other inherent risks associated with oil
and gas production, weather, the availability of drilling equipment, changes in
interest rates, litigation, uncertainties about reserve estimates, and
environmental risks. The Company
undertakes no obligation to publicly update or revise any forward-looking
statements. Further information on risks
and uncertainties is available in the Company’s filings with the Securities and
Exchange Commission, which are incorporated by reference.
RANGE RESOURCES CORPORATION
|
STATEMENTS OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
(In
thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
2003
|
|
2002
|
|
|
2003
|
|
2002
|
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Oil and gas sales.................................................
|
|
$ 55,273
|
|
$ 48,626
|
|
|
$ 109,603
|
|
$ 92,909
|
|
|
Transportation and
processing...........................
|
|
940
|
|
924
|
|
|
1,967
|
|
1,698
|
|
|
IPF....................................................................
|
|
428
|
|
992
|
|
|
967
|
|
2,163
|
|
|
Gain
on retirement of securities.........................
|
|
(10)
|
|
845
|
|
|
140
|
|
2,030
|
|
|
Ineffective hedging loss (a)................................
|
|
(2,075)
|
|
(463)
|
|
|
(1,271)
|
|
(2,162)
|
|
|
Interest and other (a).........................................
|
|
162
|
|
(772)
|
|
|
286
|
|
(1,082)
|
|
|
|
|
54,718
|
|
50,152
|
+9%
|
|
111,692
|
|
95,556
|
+17%
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Direct operating................................................
|
|
12,644
|
|
9,938
|
|
|
25,672
|
|
19,142
|
|
|
IPF expenses.....................................................
|
|
568
|
|
2,178
|
|
|
1,186
|
|
3,950
|
|
|
Exploration.......................................................
|
|
2,687
|
|
2,172
|
|
|
5,140
|
|
7,443
|
|
|
General and administrative.................................
|
|
4,401
|
|
4,195
|
|
|
8,863
|
|
7,883
|
|
|
Non-cash deferred
compensation adjustment (b)
|
|
912
|
|
538
|
|
|
1,296
|
|
1,320
|
|
|
Interest..............................................................
|
|
5,175
|
|
6,274
|
|
|
10,719
|
|
11,631
|
|
|
Debt conversion expense...................................
|
|
-
|
|
-
|
|
|
465
|
|
-
|
|
|
Accretion expense
(c)……………………………….
|
|
1,164
|
|
-
|
|
|
2,271
|
|
-
|
|
|
Depletion, depreciation and
amortization..........
|
|
20,112
|
|
19,304
|
|
|
39,972
|
|
37,404
|
|
|
|
|
47,663
|
|
44,599
|
+7%
|
|
95,584
|
|
88,773
|
+8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pretax income.....................................................
|
|
7,055
|
|
5,553
|
+27%
|
|
16,108
|
|
6,783
|
+137%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes (benefit)
|
|
|
|
|
|
|
|
|
|
|
|
Current..............................................................
|
|
(6)
|
|
45
|
|
|
(2)
|
|
45
|
|
|
Deferred............................................................
|
|
2,470
|
|
(1,802)
|
|
|
6,556
|
|
(4,913)
|
|
|
|
|
2,464
|
|
(1,757)
|
|
|
6,554
|
|
(4,868)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before accounting change........................
|
|
4,591
|
|
7,310
|
-37%
|
|
9,554
|
|
11,651
|
-18%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative effect of accounting change, net
of tax.......................................................................
|
|
-
|
|
-
|
|
|
4,491
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income..........................................................
|
|
$ 4,591
|
|
$ 7,310
|
-37%
|
|
$ 14,045
|
|
$ 11,651
|
+21%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share.................................
|
|
|
|
|
|
|
|
|
|
|
|
Before accounting change -
basic.....................
|
|
$ 0.08
|
|
$ 0.14
|
-43%
|
|
$ 0.18
|
|
$ 0.22
|
-14%
|
|
- diluted.................
|
|
$ 0.08
|
|
$ 0.13
|
-38%
|
|
$ 0.17
|
|
$ 0.22
|
-23%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After accounting change -
basic.....................
|
|
$ 0.08
|
|
$ 0.14
|
-43%
|
|
$ 0.26
|
|
$ 0.22
|
+18%
|
|
- diluted.................
|
|
$ 0.08
|
|
$ 0.13
|
-38%
|
|
$ 0.25
|
|
$ 0.22
|
+14%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, as
reported
|
|
|
|
|
|
|
|
|
|
|
|
Basic............................................................................ .
|
|
54,162
|
|
53,368
|
+1%
|
|
54,016
|
|
52,657
|
+3%
|
|
Diluted............................................................
|
|
56,168
|
|
54,939
|
+2%
|
|
55,844
|
|
54,108
|
+3%
|
(a)
Included in Other
revenues in 10-Q.
(b)
Included in
General and administrative expenses in 10-Q.
It is based upon increases in Company’s stock price between
periods.
(c)
Applicable to the
new accounting rule adopted on January 1, 2003 regarding asset retirement obligations.
RANGE RESOURCES CORPORATION
|
OPERATING HIGHLIGHTS
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
|
|
|
|
|
|
|
|
2003
|
|
2002
|
|
|
|
2003
|
|
2002
|
|
|
|
|
Average
Daily Production
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil (bbl).........................................
|
|
5,807
|
|
5,008
|
|
+16%
|
|
5,622
|
|
4,949
|
|
+14%
|
|
|
Natural gas liquids (bbl)...................
|
|
1,123
|
|
1,141
|
|
-2%
|
|
1,084
|
|
1,093
|
|
-1%
|
|
|
Gas (mcf).......................................
|
|
116,698
|
|
113,834
|
|
+3%
|
|
115,902
|
|
113,664
|
|
+2%
|
|
|
Equivalents (mcfe) (a)....................
|
|
158,276
|
|
150,728
|
|
+5%
|
|
156,134
|
|
149,920
|
|
+4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prices
Realized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
(bbl).........................................
|
|
$ 23.14
|
|
$ 22.27
|
|
+4%
|
|
$ 23.38
|
|
$ 22.46
|
|
+4%
|
|
|
Natural gas liquids (bbl)...................
|
|
$ 18.46
|
|
$ 12.58
|
|
+47%
|
|
$ 19.28
|
|
$ 11.79
|
|
+64%
|
|
|
Gas (mcf).......................................
|
|
$ 3.88
|
|
$ 3.59
|
|
+8%
|
|
$ 3.91
|
|
$ 3.42
|
|
+14%
|
|
|
Equivalents (mcfe) (a).......................
|
|
$ 3.84
|
|
$ 3.55
|
|
+8%
|
|
$ 3.88
|
|
$ 3.42
|
|
+13%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Costs per mcfe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Field expenses...................................
|
|
$ 0.58
|
|
$ 0.53
|
|
+9%
|
|
$ 0.63
|
|
$ 0.54
|
|
+17%
|
|
|
Workovers........................................................... .
|
|
0.08
|
|
0.03
|
|
+166%
|
|
0.05
|
|
0.03
|
|
+67%
|
|
|
Production/ad valorem taxes........................................................... .
|
|
0.22
|
|
0.16
|
|
+38%
|
|
0.23
|
|
0.14
|
|
+64%
|
|
|
Total Operating Costs............................................................. .
|
|
$ 0.88
|
|
$ 0.72
|
|
+21%
|
|
$ 0.91
|
|
$ 0.71
|
|
+29%
|
|
|
|
|
|
(a) Oil
and natural gas liquids are converted to gas equivalents on a basis of six
mcf per barrel.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE SHEETS
(In thousands)
|
|
|
|
|
|
|
June 30,
2003
|
|
December 31, 2002
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Current assets............................................
|
$
|
48,520
|
|
$
|
37,354
|
|
|
Current deferred tax asset..........................
|
|
25,284
|
|
|
-
|
|
|
IPF receivables..........................................
|
|
10,767
|
|
|
18,351
|
|
|
Oil and gas properties................................
|
|
635,300
|
|
|
564,406
|
|
|
Transportation and field assets..................
|
|
18,194
|
|
|
18,072
|
|
|
Unrealized hedging gain and other.............
|
|
5,372
|
|
|
20,301
|
|
|
|
$
|
743,437
|
|
$
|
658,484
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity
|
|
|
|
|
|
|
|
Current liabilities ......................................
|
$
|
40,224
|
|
$
|
41,171
|
|
|
Current asset retirement obligation...........
|
|
16,399
|
|
|
-
|
|
|
Current unrealized hedging loss..................
|
|
54,304
|
|
|
26,035
|
|
|
Senior debt................................................
|
|
110,600
|
|
|
115,800
|
|
|
Nonrecourse debt of subsidiary..................
|
|
73,500
|
|
|
76,500
|
|
|
Subordinated notes....................................
|
|
89,521
|
|
|
90,901
|
|
|
Trust preferred .........................................
|
|
84,440
|
|
|
84,840
|
|
|
Deferred taxes...........................................
|
|
1,991
|
|
|
-
|
|
|
Unrealized hedging loss.............................
|
|
29,186
|
|
|
9,079
|
|
|
Deferred compensation liability................
|
|
11,262
|
|
|
8,049
|
|
|
Long-term asset retirement obligation......
|
|
38,825
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity..................................
|
|
252,847
|
|
|
233,573
|
|
|
Stock in deferred compensation plan.........
|
|
(8,024)
|
|
|
(6,313)
|
|
|
|
