Range Resources to Redeem Senior Notes - Analyst Blog

Independent oil and gas company, Range Resources Corporation RRC announced that it would redeem all outstanding Senior Subordinated Notes due 2019, at a coupon rate of 8.0%. The aggregate principal amount of the notes is $300.0 million.

The redemption price of the notes would be equal to 104% of the aggregate principal amount of the notes along with accrued but unpaid interest prior to the redemption date. At the end of the first quarter, long-term debt of the company was $3.2billion, representing a debt-to-capitalization ratio of 56.9%.

A notice of redemption is being sent by the Trustee, The Bank of New York Mellon Trust Company, N.A., to all registered holders of the notes. The company declared that the option will be effective Jun 26, 2014.

Range Resources' diversified asset portfolio is spread between low-risk/long reserve-life Appalachian assets and large-volume/rapid-payout Gulf Coast properties. The company has an impressive inventory in the Marcellus Shale, one of the prominent emerging shale plays in the U.S. lower 48 states.

The company's first-quarter production averaged almost 1,056.2 million cubic feet equivalent per day (MMcfe/d), comprising 65% natural gas, while natural gas liquids (NGLs) and oil were 35%. Total production volume experienced a 20.6% improvement from the year-earlier quarter, mainly on the back of sustained accomplishment from the company's drilling program.

For the second quarter, the company expects production between 1,065 Mmcfe and 1,075 Mmcfe per day, of which liquids will be 30% to 35%. The company expects production for the third and fourth quarters between 1,160 Mmcfe and 1,210 Mmcfe per day and 1,280 Mmcfe and 1,340 Mmcfe per day, respectively. Liquids would comprise 30% to 35% for both the quarters.

For 2014, the company has maintained its production growth guidance of 20% to 25% and capital budget at $1.3 billion with stress on liquids-rich and oil projects mainly in the Marcellus Shale and horizontal Mississippian plays.

Range Resources currently retains a Zacks Rank #4 (Sell). However, there are other stocks in the oil and gas industry like Talisman Energy Inc. TLM, CVR Refining, LP CVRR and Boardwalk Pipeline Partners, LP BWP, which appear more promising with a Zacks Rank #1 (Strong Buy).