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Range Resources’ Production Mix and Realized Prices

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Range Resources’ production mix

As seen in the below chart, for 3Q15, Range Resources’ (RRC) production mix was ~73% natural gas, ~23% natural gas liquids, and only ~4% crude oil. This means that RRC is mainly a natural gas producer.

Range Resources’ total liquids production comes in at ~27%. Typically, upstream companies with more liquids production have better operating margins.

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RRC’s production mix trend

In 3Q15, Range Resources’ (RRC) natural gas percentage in its production mix increased by ~8% when compared with 3Q14.

Since 1Q11, RRC’s natural gas percentage in its production mix oscillated between ~65%–80%. RRC’s natural gas percentage in its production mix averaged around 74% during the same period.

RRC’s realized prices

Including the effect of hedges, Range Resources’ average realized natural gas price in 3Q15 was $2.77 per Mcf (thousand cubic feet), down ~23% from $3.63 per Mcf in 3Q14.

For 3Q15, RRC’s average realized price for natural gas liquids production decreased by ~58% to $9.45 per barrel compared to $22.53 per barrel for the same period in 2014.

For 3Q15, Range Resources’ average realized price for crude oil production decreased by ~3% to $76.25 per barrel compared to $78.66 per barrel for the same period in 2014.

RRC’s natural gas realized prices benefited from its gains on commodity hedges. We will study RRC’s hedges in the next article.

Oil and gas producers

Other upstream companies from the S&P 500 (SPY) that have a higher natural gas percentage in their production mix are Southwestern Energy (SWN), EQT Corporation (EQT), and Consol Energy (CNX). These companies contain ~92%, ~90%, and ~86%, respectively, natural gas in their production mixes.

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