Range Resources Corp. said Thursday that it expects to cut full-year spending by $20 million on a combination of factors including water savings, efficiency gains and service cost improvements.
The company expects to spend $736 million instead of the $756 million previously guided for the year. The move aligns with ongoing efforts to curb spending and strengthen its balance sheet.
It also comes after a third quarter in which production declined, average realized prices fell and revenue dropped.
The company produced 2.244 Bcfe/d in 3Q2019, down from 2.267 Bcfe/d in the year-ago period and 2.287 Bcfe in 2Q2019. The company said it remains on track to produce an average 2.28 Bcfe/d this year that it previously guided for after incorporating asset sales and reduced ethane recovery this month and last.
Range sold a 2.5% overriding royalty interest in its core acreage in southwest Pennsylvania during the third quarter to help cut debt. It was also forced to reject ethane into the gas stream toward the end of the quarter after the Mariner East (ME) 1 pipeline shut down to make upgrades at the Marcus Hook Industrial Complex near Philadelphia.
The company tested an electric fracture fleet over a three-month period this year that helped it save $1.2 million, joining a trend across the Lower 48 that finds more operators deploying the technology to squeeze savings from their assets.
COO Dennis Degner also said that attacks on Saudi oil infrastructure in September resulted in higher export values for propane, which prompted the company to maximize its exports via pipeline and rail despite the brief ME 1 outage. As a result, the company’s third quarter natural gas liquids differential was 29 cents below the Mont Belvieu benchmark, or what Range said was the “best in recent company history.”
Even still, average realized prices, including the impact of derivative settlements, averaged $2.68/Mcfe, down from $3.36/MMcfe in the year-ago period as commodity prices have continued to seesaw this year.
The Appalachian Basin continued to drive production volumes, accounting for 2.042 Bcfe/d of third quarter volumes, up 3% from year-ago period. The company’s North Louisiana division, which operates in the Cotton Valley Sands Terryville Complex, reported yet another decline in quarterly volumes of 202 MMcfe/d, compared to 278 MMcfe/d in 3Q2018 and 225 MMcfe/d in 2Q2019. North Louisiana output has fallen in every quarter over the last year as the company continues to focus more on Appalachia.
Range reported a third quarter net loss of $28 million (minus 11 cents/share), compared with net income of $48.5 million (19 cents) at the same time last year. Third quarter results included a $75 million derivative gain from decreases in commodity prices and a $36 million loss related to asset sales. Revenue declined to $622 million from $811 million in the year-ago period.