Jul 27, 2016 3 min read

Range Resources Corp. reported a second-quarter loss of $225 million, or $1.35 per share, as the Ft. Worth, Texas-based oil and gas company saw its revenue decrease by 58 percent.

In a quarter that saw Range complete a sale of its central Oklahoma properties for $77.7 million, it also announced a pending merger with Memorial Resource Development Corp.

Range, which reported its results following the close of Tuesday’s stock market, attributed much of the second-quarter earnings decline to a $163 million derivative loss because of increased commodity prices, compared to a $35 million loss in 2015 and deferred compensation plan expense of $26 million, because of an increase in the company’s stock price during the quarter, compared to a $7 million gain in the prior-year quarter.

The company said revenues for the second quarter totaled $102 million, a 58 percent decline from the comparable quarter of 2015.

Range’s results surpassed Wall Street expectations. The average estimate of 15 analysts surveyed by Zacks Investment Research was for a loss of 18 cents per share.

Ten analysts surveyed by Zacks expected revenue of $326.2 million.

Range Resources shares climbed 70 percent since the beginning of the year, while the Standard & Poor’s 500 index climbed 6 percent.

Despite the loss, Range said its second-quarter production of natural gas average 1,421 million cubic feet per day, up 4 percent from the quarter of a year ago, with Marcellus Shale production averaging a record 1,379 Mmcfe per day, up 16 percent from the prior-year quarter.

“Range continues to perform at a high level operationally,” said CEO Jeff Ventura in a statement. “Our Marcellus assets continue to deliver excellent results, as drilling and completion activities become more efficient, and recoveries are increasing as we drill longer laterals. We are encouraged by the recent improvement in commodity prices, particularly natural gas and natural gas liquids.”

The company said its unit cost of drilling a well was reduced by 8 percent, or 24 cents per mcfe, compared to the prior-year quarter.

“Range is well-positioned to take advantage of an improving price environment with an industry-leading inventory of high-quality drilling opportunities, a diversified portfolio of transportation alternative for our products, an existing footprint of over 200 well pads in Appalachia,” Ventura said.

During the second quarter, Range spent $120 million to drill 26 net wells, with a 100 percent success rate. Other capital expenditures included $3.5 million for acreage purchases, $6.4 million on exploration expenses and $200,000 on gas gathering systems. It said it is on target with its $495 million capital budget for 2016, and expects to average three rigs running for the second half of the year.

In mid-May, Range said it was buying natural gas production rival Memorial Resource Development for $3.3 billion to expand its reach in the East and in the Gulf.

The company expects to close on the deal in the second half of this year.