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RANGE RESOURCES CORP (RRC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered resilient results despite low gas prices: GAAP revenues were $626.4M, GAAP net income $95.0M ($0.39 diluted EPS), and cash flow from operations before working capital was $311.7M; adjusted EPS was $0.68 as reported “comparable to analysts’ estimates” .
  • 2025 plan targets $650–$690M capex and ~2.2 Bcfe/d production, with a three‑year outlook to 2.6 Bcfe/d by 2027 on similar annual capex ($650–$700M) and a reinvestment rate <50% at $3.75 gas; breakeven guided at ~$2 NYMEX .
  • Liquids remain a strategic differentiator: Q4 pre‑hedge NGL price $26.43/bbl (~$1.96 above Mont Belvieu); realized prices averaged $3.48/mcfe including hedges; company expects 2025 NGL differential at MB +$0.00 to +$1.25/bbl .
  • Board approved a 12.5% dividend increase to $0.09/share (annualized $0.36), with buybacks continuing ($1.0B remaining authorization); company repurchased 650K shares in Q4 at ~$32.50 and reduced net debt to $1.40B .
  • Estimate comparisons from S&P Global were unavailable at time of retrieval; management‑reported adjusted EPS of $0.68 framed as comparable to analysts’ estimates, but consensus could not be confirmed .

What Went Well and What Went Wrong

  • What Went Well

    • Strong Q4 cash generation and adjusted earnings: Cash flow from operations before working capital of $311.7M and adjusted EPS $0.68, supported by liquids uplift and disciplined costs .
    • Strategic multi‑year growth plan with contracted midstream/export capacity beginning in 2026; CEO emphasized “resilience” and access to premium NGL markets aiding through‑cycle returns .
    • Liquids pricing advantage: pre‑hedge NGLs at $26.43/bbl (+$1.96 vs Mont Belvieu weighted equivalent) with 2025 guidance for continued positive differentials; management highlighted international export premiums and flexibility .

  • What Went Wrong

    • Unit cash costs up Y/Y: total cash unit costs rose to $1.94/mcfe vs $1.83/mcfe in Q4 2023 (+6%), primarily from TGPC costs; DD&A also modestly higher .
    • Derivative headwind: Q4 included a $53.8M derivative fair value loss due to commodity price increases, reducing reported revenues and earnings volatility .
    • Natural gas differentials remained below NYMEX: Q4 average gas price before hedges was $2.36/mcf, ($0.44) vs NYMEX; 2025 guidance continues to assume ($0.40) to ($0.48) basis .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Total Revenues & Other Income ($M)$941.5 $615.0 $626.4
GAAP Diluted EPS ($)$1.27 $0.21 $0.39
Adjusted Diluted EPS ($)$0.63 $0.48 $0.68
Cash Margin per mcfe ($)$1.47 $1.24 $1.55
Total Cash Unit Costs ($/mcfe)$1.83 $1.96 $1.94
Avg Production (mcfe/d)2,207,446 2,204,460 2,202,500
Production & Realized Prices (incl. hedges, before third‑party transport)Q4 2023Q3 2024Q4 2024
Natural Gas (mcf/d)1,540,399 1,502,106 1,505,140
NGLs (bbl/d)104,038 111,465 111,199
Oil (bbl/d)7,136 5,594 5,028
Gas Realized Price ($/mcf)$2.68 $2.48 $2.90
NGL Realized Price ($/bbl)$24.91 $26.09 $26.47
Oil Realized Price ($/bbl)$63.42 $69.73 $70.66
TGPC Expense ($/mcfe)$1.39 $1.51 $1.48
Additional Q4 2024 KPIsValue
GAAP Net Income ($M)$95.0
CFO (GAAP, incl. WC) ($M)$217.9
CFO before WC ($M)$311.7
D&C Capex ($M)$124
Net Debt ($B)$1.404
Share Repurchases (shares, avg price)650,000 at ~$32.50
Notes Repurchased ($M face)$9.4 due 2025

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
All‑in Capital ($M)FY 2025n/a$650–$690 New
Production (Bcfe/d)FY 2025n/a~2.2 New
Liquids Mix (%)FY 2025n/a>30% New
Direct Operating ($/mcfe)FY 2025$0.11–$0.12 (FY24 updated) $0.12–$0.14 Slightly raised range
TGPC ($/mcfe)FY 2025$1.48–$1.50 (FY24 updated) $1.50–$1.55 Slightly raised range
Taxes other than income ($/mcfe)FY 2025$0.03–$0.04 (FY24 updated) $0.03–$0.04 Maintained
G&A ($/mcfe)FY 2025$0.17–$0.18 (FY24 updated) $0.17–$0.19 Slightly wider
Net Interest ($/mcfe)FY 2025$0.13–$0.14 (FY24 updated) $0.12–$0.13 Slightly lower
DD&A ($/mcfe)FY 2025$0.45–$0.46 (FY24 updated) $0.45–$0.46 Maintained
Net Brokered Gas Marketing ($M)FY 2025$8–$12 (FY24 updated) $8–$12 Maintained
Gas Differential vs NYMEX ($/mcf)FY 2025($0.39)–($0.40) (FY24) ($0.40)–($0.48) Slightly wider downside
NGL Differential vs MB ($/bbl)FY 2025MB +$2.10–+$2.35 (FY24) MB +$0.00–+$1.25 Lower premium expected
Dividend per share (quarterly)Q1 2025$0.08 (prior)$0.09 (12.5% increase) Raised

Earnings Call Themes & Trends

TopicQ2 2024 (previous‑2)Q3 2024 (previous‑1)Q4 2024 (current)Trend
Multi‑year growth plan (to 2.6 Bcfe/d)Building in‑process inventory; maintenance plus strategy Reinforced operational efficiency; 2.2 Bcfe/d baseline Detailed 3‑yr plan, breakeven ~$2, reinvestment <50% at $3.75 Firming growth roadmap
Liquids/NGL premiumsInternational LPG/ethane marketing; $24.35 pre‑hedge; premium vs MB Highest NGL premium in company history; export constraints drive arb Continued premium (+$1.96); 2025 differential guided MB +$0–+$1.25 Sustained advantage; premium moderating
Gas takeaway & end marketsDiverse sales to Midwest/Gulf; disciplined hedging 80% gas out of basin; potential cost roll‑offs New capacity secured (processing, transport, NGL export) starting 2026 Capacity visibility improving
AI/data centers & in‑basin demandEarly commentary on power burn & demand growth PJM auction signals power need; data centers highlighted Expect robust power/industrial demand; optionality to serve PJM Increasing emphasis
Capital efficiency / long lateralsD&C per foot $800–$900; e‑frac stages/day improving Shallow base decline (~19%); reuse pads, optimize gathering Maintenance capital improved ~$50M; breakeven ~$2 gas Efficiency compounding
Hedging philosophyCover fixed costs; ~55% H2’24, ~35% 2025 hedged Modest hedging; flexibility maintained Continue modest hedging; structural hedge from liquids mix Stable approach

Management Commentary

  • CEO on resilience and premium markets: “Our ability to market ethane, propane and butane into the international market drove the highest NGL premiums in company history… We expect premiums versus the Mont Belvieu index once again in 2025.”
  • CEO on growth plan: “This capital plan will result in modest production growth in 2025… Looking beyond 2025, we are planning to add approximately 400 million cubic foot equivalent of daily production over the 3 years… at $650M–$700M per year.”
  • CFO on capital returns and NOLs: “Range generated $453M in free cash flow… Over the past 3 years, range has reduced net debt by over $1.3B… federal NOL carryforwards totaling $1.4B… enhance after‑tax cash flows over the next 2 years by more than $300M.”
  • Marketing lead on NGLs: “We like our position… capable of exporting up to 80% of our production… portfolio allows us to pivot between domestic and export markets.”

Q&A Highlights

  • Growth pacing to 2027: Management prioritized clear line‑of‑sight demand and contracted capacity; growth optionality via DUCs and spot crews if fundamentals warrant .
  • Hedging stance: Maintain modest hedging to cover fixed costs, preserve optionality; structural hedge from 70% gas / 30% liquids mix .
  • Transport costs and capacity: New transport aligns with current GPT cost structure; expect some cost relief over time as contracts roll off; 80% gas out of basin, ~50% to Gulf .
  • Dividend approach: Plan to grow the fixed dividend “slowly but steadily” while emphasizing opportunistic buybacks within target net debt range .
  • DUC inventory: Expect ~400,000 lateral feet (about 30 wells) above maintenance by end of 2025 to support ramp with midstream commissioning .

Estimates Context

  • S&P Global Wall Street consensus data were unavailable at time of retrieval; as a result, we cannot quantify beats/misses vs consensus for Q4 2024 or prior periods.
  • Management reported adjusted EPS of $0.68 and adjusted net income of $163.8M for Q4 2024 “comparable to analysts’ estimates,” but we did not receive S&P Global consensus to validate comparison .

Key Takeaways for Investors

  • Through‑cycle durability: Liquids uplift, disciplined costs, and diversified marketing continue to support positive cash margins and adjusted earnings even at trough gas prices .
  • Visible growth cadence: 2025 modest growth and multi‑year ramp to 2.6 Bcfe/d are underpinned by secured processing/transport/export capacity starting 2026; DUC inventory provides near‑term flexibility .
  • Cost focus: Slightly higher TGPC cost band for 2025 is offset by lower net interest guidance and continued operational efficiencies; maintenance capex requirements improving on longer laterals and infrastructure optimization .
  • Capital returns: Dividend up 12.5% to $0.09/share and continued buybacks highlight shareholder return commitment within a strengthened balance sheet (net debt $1.40B) .
  • Narrative catalysts: Growing power/industrial and LNG demand, plus East Coast NGL export optionality, support medium‑term pricing and margin expansion potential; management frames breakeven near ~$2 NYMEX .
  • Watch items: NGL premium likely moderates vs 2024 highs; gas basis remains ($0.40)–($0.48) in 2025; derivative fair value swings can affect reported results near term .
  • Execution bar: Delivering 2025 guidance and on‑time midstream commissioning in 2026 are key milestones to realize the 2027 production and margin targets .

Sources

  • Q4 2024 8‑K and press release:
  • Q4 2024 earnings call transcript:
  • Prior quarters: Q3 2024 8‑K/PR/Call ; Q2 2024 8‑K/PR/Call
  • Dividend press release:

Note on estimates: S&P Global consensus data were unavailable at time of retrieval; therefore, consensus comparisons could not be provided.