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Range Reports Record Third Quarter Results

Posted on: Thursday, 25 October 2007, 00:00 CDT

RANGE RESOURCES CORPORATION (NYSE: RRC) today announced third quarter results. Record highs were achieved in production, oil and gas sales and cash flow. Oil and gas sales, including cash-settled derivatives, reached $234 million, a 35% increase over the prior year. Results were driven by a 13% increase in production and a 20% increase in cash realized prices. Cash flow from operations before changes in working capital, a non-GAAP measure, rose 45% to $165 million. Reported net income totaled $59 million with earnings per share (diluted) increasing 8% to $0.39. Net income comparable to analyst estimates was $64.4 million while diluted earnings per share was $0.42, 83% greater than the prior year. (See the accompanying tables reconciling these non-GAAP measures.)

Commenting on the announcement, John Pinkerton, Range's President and CEO, said, "The third quarter results reflect the best quarterly performance in our Company's history as production and cash flow from operations both reached all-time highs. Our 19th consecutive quarter of sequential production growth is evidence of another superb effort turned in by our operating teams. The foundation for these results is our large, transparent drilling inventory that includes more than 10,000 locations. Looking forward, we are extremely well positioned, as our drilling program is generating excellent returns, our balance sheet continues to strengthen and we have built a very strong hedge position. Through 2008, we have 77% of our anticipated natural gas production hedged at an average floor price of $8.63 per mcf. We believe that our consistent and disciplined approach will continue to drive shareholder value in the future."

For the quarter, production totaled 326 Mmcfe per day, comprised of 253 Mmcf per day of gas (78%) and 12,217 barrels per day of oil and liquids. Wellhead prices, including cash-settled derivatives, averaged $7.79 per mcfe, a 20% increase over the prior-year period. The average gas price rose 16% to $7.20 per mcf, and the average oil price rose 40% to $64.37 a barrel. Our hedging program increased the average price by $0.78 per mcfe.

Third quarter development and exploration expenditures totaled $193 million, funding the drilling of 240 (187 net) wells and 38 (29 net) recompletions. A 97% success rate was achieved with 233 (181 net) wells productive. In the first nine months of the year, 609 (465 net) of the newly drilled wells had been placed on production, with the remainder in various stages of completion or waiting on pipeline connection. In addition, $28 million was spent on acreage and $6 million on expanding gas gathering systems. Drilling activity in the fourth quarter remains high with 34 rigs currently running. For the year, Range anticipates drilling 980 (740 net) wells and 84 (64 net) recompletions as part of the Company's $890 million capital budget. During the third quarter, Range also continued to expand several of its key drilling areas and emerging plays.

In the Permian division, 48 (43 net) wells were drilled. In the North Texas Barnett Shale play, production reached 97 (66 net) Mmcfe per day, and we expect to exit the year at 110 (75 net) Mmcfe per day. We entered the year producing 30 Mmcfe per day, so we are anticipating roughly a 150% production increase for the region. The Barnett test well in Ellis County was completed and went online at a rate of 1.5 Mmcfe per day, which was within the expected range. The well encountered a 314-foot section of Barnett shale and confirmed the gas productivity of the formation in this region. A second well will be spud in the area during the fourth quarter to further test the productive section. Range currently has about 20,000 net acres in Ellis County and a total acreage position of about 90,000 net acres in the Fort Worth Basin. In addition, our field redevelopment efforts in West Texas and New Mexico made steady progress due to continued drilling success.

In the Appalachia division, 157 (113 net) wells were drilled. The Nora field in Virginia continues to be a key area of focus. To date, our program to test downspacing of coal bed methane wells in the field has met with encouraging results. Forty wells have been drilled on 30-acre spacing and initial results indicate no communication with the existing 60-acre wells. Later this year, Range plans to test reduced spacing of the tight gas sands in the Nora field. Finally, a horizontal shale well is planned for the fourth quarter to test the potential of shale gas development in the field, which encompasses approximately 300,000 acres. In Pennsylvania, Range continues to expand its leasehold position in the Devonian Shale play with more than 500,000 net acres currently under lease. Significantly, the Company's program to test the shale gas potential in this region is meeting with encouraging results. After testing various drilling and completion techniques, two recent horizontal wells came online at commercial rates of 1.4 and 3.2 Mmcfe per day. In total, 15 horizontal wells are planned in the play in 2007, of which five have been drilled and three completed to date.

Other significant drilling in the quarter included the drilling of two horizontal Granite Wash wells in the Texas Panhandle and one vertical Granite Wash well in central Oklahoma. The three wells came online at a combined production rate of 8.2 (4.3 net) Mmcfe per day. As many as 200 locations may exist on Range's 27,000 (13,000 net) acres in the two project areas.

Third quarter 2007 results included several non-cash items. A $5.6 million non-cash mark-to-market gain on unrealized derivatives and $14.0 million of non-cash compensation expense were recorded. Excluding these items, net income would have been $64.4 million or $0.44 per share ($0.42 fully diluted). Excluding similar non-cash items from the prior-year quarter, net income would have been $32.1 million or $0.23 per share ($0.23 fully diluted). (See accompanying table for calculation of these non-GAAP measures.)

Direct operating expenses for the quarter were $0.92 per mcfe, the same as the prior-year period. Production taxes at $0.38 per mcfe were also the same as the prior year. Exploration expense in the third quarter totaled $5.3 million, down from $15.8 million in the prior year. General and administrative expenses were $0.44 per mcfe, an increase of $0.13 per mcfe due to higher personnel cost, occupancy expense and professional fees as the Company continues to expand its technical staff. Approximately one-half of the increase is related to new Appalachian activity, including increased staffing in our Abingdon, Virginia office as a result of the recent Nora acquisition and the opening of an office in Pittsburgh, Pennsylvania to focus on the Devonian Shale play. The mcfe amount is the same as the second quarter of 2007. Interest expense was $0.66 per mcfe, three cents higher than the prior year due to Range refinancing short-term floating rate debt for long-term fixed rate debt. Depreciation, depletion and amortization was $1.90 per mcfe, compared to $1.74 in the prior year. An undeveloped leasehold impairment in the Gulf Coast division accounted for $0.06 of the increase, with the remainder due to a varying mix of production from higher-cost properties.

The Company will host a conference call on Thursday, October 25 at 1:00 p.m. ET to review these results. To participate in the call, please dial 877-407-8035 and ask for the Range Resources third quarter financial results conference call. A replay of the call will be available through November 1 at 877-660-6853. The account number is 286 and the conference ID for the replay is 257167.

A simultaneous webcast of the call may be accessed over the Internet at www.rangeresources.com or www.vcall.com. To listen, please go to either website in time to register and install any necessary software. The webcast will be archived for replay on the Company's website for 15 days.

Non-GAAP Financial Measures and Supplemental Tables:

Effective with the third quarter, Range has reclassified within total revenues its financial reporting of the cash settlement of its commodity derivatives. Under this presentation those hedges considered "effective" under SFAS No. 133 (Appalachia oil and gas hedges and Southwest oil hedges) are included in "Oil and gas sales" when settled. For those hedges designated to regions where the historical correlation between NYMEX and regional prices is "non-highly effective" (Southwest gas) or is "volumetric ineffective" due to sale of the underlying reserves (Gulf Coast oil and gas), they are deemed to be "derivatives" and the cash settlements are included in a separate line item shown as "Derivative fair value income (loss)" along with the change in mark-to-market valuations of such unrealized derivatives. The Company has provided additional information regarding oil and gas sales in a supplemental table included with this release.

Under GAAP, due to the sale of all the Company's Gulf of Mexico properties at the end of the first quarter of 2007, all Gulf of Mexico operations during the first quarter 2007 and in prior years have been reclassified to "Discontinued operations" in the reported GAAP financial statements. The Company has presented a supplemental table which reconciles these reported GAAP financial amounts to the amounts if the operations of the Gulf of Mexico properties for both the 2007 and 2006 periods were combined with the amounts from the continuing operations. The Company believes that the combined results, by including the Gulf of Mexico properties, corresponds to the methodology used by professional research analysts and, therefore, are useful in evaluating operational trends of the Company and its actual historical performance relative to other oil and gas producing companies by investors in making investment decisions. (See the reconciliation of reported continuing operations under GAAP to the combined operations, a non-GAAP presentation in the accompanying table.)

Earnings for third quarter 2007 include non-cash ineffective and mark-to-market derivative gains of $5.6 million and a non-cash stock compensation expense of $14.0 million. Excluding such items, income before income taxes would have been $102.4 million, a 96% increase from the prior year. Adjusting for the after-tax effect of these items, the Company's earnings would have been $64.4 million or $0.44 per share ($0.42 fully diluted). If similar items were excluded, 2006 earnings would have been $32.1 million or $0.23 per share ($0.23 per diluted share). In 2006, results were impacted by a net $55.1 million ineffective and mark-to-market on derivative gains on commodities and interest and a $2.5 million stock compensation expense. (See reconciliation of non-GAAP earnings in the accompanying table.) The Company believes results excluding these items are more comparable to estimates provided by professional research analysts and, therefore, are useful in evaluating operational trends of the Company and its performance relative to other oil and gas producing companies by investors in making investment decisions.

"Cash flow from operations before changes in working capital" as defined in this release represents net cash provided by operations before changes in working capital and exploration expense adjusted for certain non-cash compensation items. Cash flow from operations before changes in working capital is widely accepted by the investment community as a financial indicator of an oil and gas company's ability to generate cash to internally fund exploration and development activities and to service debt. Cash flow from operations before changes in working capital is also useful because it is widely used by professional research analysts in valuing, comparing, rating and providing investment recommendations of companies in the oil and gas exploration and production industry. In turn, many investors use this published research in making investment decisions. Cash flow from operations before changes in working capital is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operations, investing, or financing activities as an indicator of cash flows, or as a measure of liquidity. A table is included which reconciles net cash provided by operations to cash flow from operations before changes in working capital as used in this release. On its website, the Company provides additional comparative information on prior periods.

Except for historical information, statements made in this release, including those relating to significant potential, future earnings, cash flow, capital expenditures, production growth and planned number of wells are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management's assumptions and the Company's future performance are subject to a wide range of business risks and uncertainties and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to, the volatility of oil and gas prices, the results of our hedging transaction, the costs and results of drilling and operations, the timing of production, mechanical and other inherent risks associated with oil and gas production, weather, the availability of drilling equipment, changes in interest rates, litigation, uncertainties about reserve estimates and environmental risks. The Company undertakes no obligation to publicly update or revise any forward-looking statements. Further information on risks and uncertainties is available in the Company's filings with the Securities and Exchange Commission, which are incorporated by reference.

Range's internal estimates of reserves may be subject to revision and may be different from estimates by our external reservoir engineers at year-end. Although we believe the expectations and forecasts reflected in these and other forward-looking statements are reasonable, we can give no assurance they will prove to have been correct. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties.

RANGE RESOURCES CORPORATION

STATEMENTS OF INCOME

Based on GAAP reported earnings

with additional details included in

each line item in Form 10-Q

(Unaudited, in thousands, except per share data)

Three Months EndedSeptember 30,

Nine Months EndedSeptember 30,

2007

2006

2007

2006

Revenues

Oil and gas sales (a)

$

214,424

$

153,054

$

621,636

$

443,143

Transportation and gathering

611

1,101

1,500

2,170

Transportation and gathering - non-cash stock compensation (b)

(103

)

(86

)

(297

)

(237

)

Cash-settled derivative gains (a) (c)

19,384

10,356

50,789

36,180

Change in mark-to-market on unrealized derivatives (c)

5,618

54,950

(40,171

)

83,734

Ineffective hedging gain (loss) (d)

(28

)

184

502

3,490

Gain (loss) on sale of properties (d)

2

93

22

(155

)

Other (d)

2,445

(27

)

4,727

(80

)

$

242,353

$

219,625

10

%

$

638,708

$

568,245

12

%

Expenses

Direct operating

27,518

21,958

76,880

56,373

Direct operating -- non-cash stock compensation (b)

485

378

1,353

1,029

Production and ad valorem taxes

11,316

9,874

32,958

27,970

Exploration

5,302

15,751

27,079

30,997

Exploration -- non-cash stock compensation (b)

931

757

2,589

2,196

General and administrative

13,349

8,260

36,861

25,667

General and administrative -- non-cash stock compensation (b)

4,709

3,910

13,713

10,347

Deferred compensation plan (e)

7,761

(2,638

)

28,342

(347

)

Interest

19,935

16,389

56,356

38,266

Depletion, depreciation and amortization

57,001

40,606

155,798

106,252

148,307

115,245

29

%

431,929

298,750

45

%

Income from continuing operations before income taxes

94,046

104,380

-10

%

206,779

269,495

-23

%

Income taxes

Current

133

615

416

1,815

Deferred

34,802

38,707

73,698

99,533

34,935

39,322

74,114

101,348

Income from continuing operations

59,111

65,058

-9

%

132,665

168,147

-21

%

Discontinued operations, net of taxes

(196

)

(13,728

)

63,593

(9,872

)

Net income

$

58,915

$

51,330

15

%

$

196,258

$

158,275

24

%

Basic

Income from continuing operations

$

0.40

$

0.47

$

0.92

$

1.27

Discontinued operations

$

-

(0.10

)

0.45

(0.07

)

Net income

$

0.40

$

0.37

8

%

$

1.37

$

1.20

14

%

Diluted

Income from continuing operations

$

0.39

$

0.46

$

0.89

$

1.22

Discontinued operations

-

(0.10

)

0.43

(0.07

)

Net income

$

0.39

$

0.36

8

%

$

1.32

$

1.15

15

%

Weighted average shares outstanding, as reported

Basic

147,182

136,983

7

%

143,508

132,426

8

%

Diluted

152,391

142,022

7

%

148,671

137,466

8

%

(a) See separate oil and gas sales information table.

(b) Costs associated with FASB 123R which have been reflected in the categories associated with the direct personnel costs.

(c) Included in Derivative fair value income in 10-Q.

(d) Included in Other revenues in the 10-Q.

(e) Reflects the change in the market value of the Company stock and other investments during the period held in the deferred compensation plan.

RANGE RESOURCES CORPORATION

STATEMENTS OF INCOME

Restated for Gulf of Mexico Discontinued

Three Months Ended September 30,

Three Months Ended September 30,

Operations, a non-GAAP Presentation

(in thousands)

(Unaudited)

2007

As reported

GOM Discontinued Operations

2007 Including GOM

2006

As reported

GOM Discontinued Operations

2006 Including GOM

Revenues

Oil and gas sales (a)

$

214,424

$

-

$

214,424

$

153,054

$

9,237

$

162,291

Transportation and gathering

611

-

611

1,101

19

1,120

Transportation and gathering -- stock based compensation

(103

)

-

(103

)

(86

)

-

(86

)

Cash-settled derivatives gain (a)

19,384

-

19,384

10,356

-

10,356

Change in mark-to-market on unrealized derivatives

5,618

-

5,618

54,950

-

54,950

Ineffective hedging gain (loss)

(28

)

-

(28

)

184

-

184

Equity method investment

484

-

484

(98

)

-

(98

)

Gain (loss) on sale of properties

2

-

2

93

-

93

Interest and other

1,961

-

1,961

71

(1

)

70

242,353

-

242,353

219,625

9,255

228,880

Expenses

Direct operating

27,518

-

27,518

21,958

2,448

24,406

Direct operating -- stock based compensation

485

485

378

-

378

Production and ad valorem taxes

11,316

-

11,316

9,874

111

9,985

Exploration

5,302

-

5,302

15,751

4

15,755

Exploration -- stock based compensation

931

-

931

757

-

757

General and administrative

13,349

-

13,349

8,260

-

8,260

General and administrative -- stock based compensation

4,709

-

4,709

3,910

-

3,910

Non-cash compensation deferred compensation plan

7,761

-

7,761

(2,638

)

-

(2,638

)

Interest expense

19,935

-

19,935

16,389

507

16,896

Depletion, depreciation and amortization

57,001

-

57,001

40,606

5,637

46,243

148,307

-

148,307

115,245

8,707

123,952

Income from continuing operations before income taxes

94,046

-

94,046

104,380

548

104,928

Income taxes provision

Current

133

-

133

615

-

615

Deferred

34,802

-

34,802

38,707

192

38,899

34,935

-

34,935

39,322

192

39,514

Income from continuing operations

59,111

-

59,111

65,058

356

65,414

Discontinued operations -- Austin Chalk, net of tax

128

-

128

(14,084

)

-

(14,084

)

Discontinued operations -- Gulf of Mexico, net of tax

(324

)

-

(324

)

356

(356

)

-

Net income

$

58,915

$

-

$

58,915

$

51,330

$

-

$

51,330

OPERATING HIGHLIGHTS

2007

GOM Discontinued Operations

2007 Including GOM

2006

GOM Discontinued Operations

2006 Including GOM

Average Daily Production

Oil (bbl)

9,129

-

9,129

8,357

374

8,731

Natural gas liquids (bbl)

3,088

-

3,088

3,013

-

3,013

Gas (mcf)

252,845

-

252,845

205,317

13,473

218,790

Equivalents (mcfe) (b)

326,146

-

326,146

273,534

15,716

289,250

Average Prices Realized (c)

Oil (bbl)

$

64.37

$

-

$

64.37

$

46.32

$

41.03

$

46.10

Natural gas liquids (bbl)

$

43.15

$

-

$

43.15

$

39.48

$

-

$

39.48

Gas (mcf)

$

7.20

$

-

$

7.20

$

6.19

$

6.31

$

6.19

Equivalents (mcfe) (b)

$

7.79

$

-

$

7.79

$

6.49

$

6.39

$

6.49

Direct Operating Costs per mcfe (d)

Field expenses

$

0.86

$

-

$

0.86

$

0.84

$

1.03

$

0.86

Workovers

$

0.06

$

-

$

0.06

$

0.03

$

0.66

$

0.06

Total operating costs

$

0.92

$

-

$

0.92

$

0.87

$

1.69

$

0.92

(a) See separate oil and gas sales information table.

(b) Oil and natural gas liquids are converted to gas equivalents on a basis of six mcf per barrel.

(c) Average prices, including cash-settled derivatives.

(d) Excludes non-cash stock compensation.

RANGE RESOURCES CORPORATION

STATEMENTS OF INCOME

Restated for Gulf of Mexico Discontinued

Nine Months Ended September 30,

Nine Months Ended September 30,

Operations, a non-GAAP Presentation

(in thousands)

(Unaudited)

2007

As reported

GOM Discontinued Operations

2007 Including GOM

2006

As reported

GOM Discontinued Operations

2006 Including GOM

Revenues

Oil and gas sales (a)

$

621,636

$

9,938

$

631,574

$

443,143

$

27,282

$

470,425

Transportation and gathering

1,500

10

1,510

2,170

76

2,246

Transportation and gathering -- stock based compensation

(297

)

-

(297

)

(237

)

-

(237

)

Cash-settled derivatives gain (a)

50,789

-

50,789

36,180

-

36,180

Change in mark-to-market on unrealized derivatives

(40,171

)

-

(40,171

)

83,734

-

83,734

Ineffective hedging gain (loss)

502

-

502

3,490

-

3,490

Equity method investment

1,280

-

1,280

(61

)

-

(61

)

Gain (loss) on sale of properties

22

-

22

(155

)

-

(155

)

Interest and other

3,447

(1

)

3,446

(19

)

(2

)

(21

)

638,708

9,947

648,655

568,245

27,356

595,601

Expenses

Direct operating

76,880

2,477

79,357

56,373

7,585

63,958

Direct operating -- stock based compensation

1,353

-

1,353

1,029

-

1,029

Production and ad valorem taxes

32,958

105

33,063

27,970

411

28,381

Exploration

27,079

-

27,079

30,997

1,174

32,171

Exploration -- stock based compensation

2,589

-

2,589

2,196

-

2,196

General and administrative

36,861

47

36,908

25,667

-

25,667

General and administrative -- stock based compensation

13,713

-

13,713

10,347

-

10,347

Non-cash compensation deferred compensation plan

28,342

-

28,342

(347

)

-

(347

)

Interest expense

56,356

594

56,950

38,266

1,184

39,450

Depletion, depreciation and amortization

155,798

3,325

159,123

106,252

11,391

117,643

431,929

6,548

438,477

298,750

21,745

320,495

Income from continuing operations before income taxes

206,779

3,399

210,178

269,495

5,611

275,106

Income taxes provision

Current

416

-

416

1,815

-

1,815

Deferred

73,698

1,190

74,888

99,533

1,964

101,497

74,114

1,190

75,304

101,348

1,964

103,312

Income from continuing operations

132,665

2,209

134,874

168,147

3,647

171,794

Discontinued operations -- Austin Chalk, net of tax

(411

)

-

(411

)

(13,519

)

-

(13,519

)

Discontinued operations -- Gulf of Mexico, net of tax

64,004

(2,209

)

61,795

3,647

(3,647

)

-

Net income

$

196,258

$

-

$

196,258

$

158,275

$

-

$

158,275

OPERATING HIGHLIGHTS

2007

GOM Discontinued Operations

2007 Including GOM

2006

GOM Discontinued Operations

2006 Including GOM

Average Daily Production

Oil (bbl)

9,377

142

9,519

8,296

332

8,628

Natural gas liquids (bbl)

3,068

-

3,068

3,047

-

3,047

Gas (mcf)

236,153

3,492

239,645

187,390

12,795

200,185

Equivalents (mcfe) (b)

310,826

4,346

315,172

255,448

14,784

270,232

Average Prices Realized (c)

Oil (bbl)

$

60.13

$

58.17

$

60.10

$

46.80

$

43.28

$

46.66

Natural gas liquids (bbl)

$

37.95

$

-

$

37.95

$

34.88

$

-

$

34.88

Gas (mcf)

$

7.55

$

8.06

$

7.56

$

6.73

$

6.69

$

6.73

Equivalents (mcfe) (b)

$

7.92

$

7.56

$

7.93

$

6.87

$

6.76

$

6.87

Direct Operating Costs per mcfe (d)

Field expenses

$

0.85

$

1.78

$

0.86

$

0.78

$

1.39

$

0.81

Workovers

$

0.06

$

0.31

$

0.06

$

0.03

$

0.49

$

0.06

Total operating costs

$

0.91

$

2.09

$

0.92

$

0.81

$

1.88

$

0.87

(a) See separate oil and gas sales information table.

(b) Oil and natural gas liquids are converted to gas equivalents on a basis of six mcf per barrel.

(c) Average prices, including cash-settled derivatives.

(d) Excludes non-cash stock compensation.

RANGE RESOURCES CORPORATION

BALANCE SHEETS

(Unaudited, in thousands)

September 30, 2007

December 31, 2006

Assets

Current assets

$

158,907

$

137,872

Current unrealized derivative gain

72,153

93,588

Assets held for sale

-

79,304

Assets of discontinued operation

-

78,161

Oil and gas properties

3,362,024

2,608,088

Transportation and field assets

58,679

47,143

Unrealized derivative gain

10,590

61,068

Other

186,073

82,450

$

3,848,426

$

3,187,674

Liabilities and Stockholders' Equity

Current liabilities

$

235,059

$

214,878

Liabilities of discontinued operation

-

28,333

Current asset retirement obligation

1,251

3,853

Current unrealized derivative loss

7,657

4,621

Bank debt

266,000

452,000

Subordinated notes

847,062

596,782

Total long-term debt

1,113,062

1,048,782

Deferred taxes

562,703

468,643

Unrealized derivative loss

4,967

266

Deferred compensation liability

133,962

90,094

Long-term asset retirement obligation

80,953

72,043

Common stock and retained earnings

1,737,404

1,241,696

Stock in deferred compensation plan and treasury

(41,566

)

(22,056

)

Other comprehensive income

12,974

36,521

Total stockholders' equity

1,708,812

1,256,161

$

3,848,426

$

3,187,674

RANGE RESOURCES CORPORATION

CASH FLOWS FROM OPERATIONS

(Unaudited, in thousands)

Three Months Ended September 30,

Nine Months Ended

September 30,

2007

2006

2007

2006

Net income

$

58,915

$

51,330

$

196,258

$

158,275

Adjustments to reconcile net income to

net cash provided by operations:

Gain from discontinued operations

196

13,728

(63,593

)

9,872

Gain from equity investment

(484

)

98

(1,280

)

61

Deferred income tax (benefit)

34,802

38,707

73,698

99,533

Depletion, depreciation and amortization

57,001

40,606

155,798

106,252

Exploration dry hole costs

174

5,566

9,072

9,291

Change in mark-to-market on unrealized derivatives

(5,618

)

(54,950

)

40,171

(83,734

)

Ineffective hedging (gain) loss

28

(184

)

(502

)

(3,178

)

Amortization of deferred issuance costs

591

376

1,667

1,221

Non-cash compensation

14,081

2,085

46,770

13,839

(Gain) loss on sale of assets and other

2,128

86

2,247

1,009

Changes in working capital:

Accounts receivable

(2,416

)

(8,975

)

(29,595

)

29,323

Inventory and other

(1,932

)

(49

)

(1,672

)

(1,911

)

Accounts payable

20,081

(12,285

)

11,597

(17,801

)

Accrued liabilities

1,509

2,761

4,894

(2,387

)

Net changes in working capital

17,242

(18,548

)

(14,776

)

7,224

Net cash provided from continuing operations

$

179,056

$

78,900

$

445,530

$

319,665

RECONCILIATION OF CASH FLOWS

(In thousands)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2007

2006

2007

2006

Net cash provided from continuing operations, as reported

$

179,056

$

78,900

$

445,530

$

319,665

Net change in working capital

(17,242

)

18,548

14,776

(7,224

)

Exploration expense

5,128

10,185

18,007

21,706

Cash flow from Gulf of Mexico properties

-

6,189

6,829

18,176

Other

(1,738

)

212

(1,465

)

(1,293

)

Cash flow from operations before changes in working capital, non-GAAP measure

$

165,204

$

114,034

$

483,677

$

351,030

ADJUSTED WEIGHTED AVERAGE SHARES OUTSTANDING

(Unaudited, in thousands)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2007

2006

2007

2006

Basic:

Weighted average shares outstanding

148,586

138,318

144,706

133,767

Stock held by deferred compensation plan

(1,404

)

(1,335

)

(1,198

)

(1,341

)

147,182

136,983

143,508

132,426

Dilutive:

Weighted average shares outstanding

148,586

138,318

144,706

133,767

Dilutive stock options under treasury method

3,805

3,704

3,991

3,699

152,391

142,022

148,697

137,466

RANGE RESOURCES CORPORATION

Oil and gas sales information:

(Unaudited, in thousands, except per unit data)

Based upon Statements of Income IncludingGulf of Mexico Discontinued Operations

Three Months EndedSeptember 30,

Nine Months EndedSeptember 30,

2007

2006

2007

2006

Oil and gas sales components:

Oil sales

$

59,218

$

51,961

$

163,280

$

149,820

NGL sales

12,259

10,942

31,791

29,012

Gas sales

138,832

123,254

422,435

374,361

Cash-settled hedges (effective):

Crude oil

(5,120

)

(14,931

)

(7,068

)

(39,928

)

Natural gas

9,235

(8,935

)

21,136

(42,840

)

Total oil and gas sales, as reported

$

214,424

$

162,291

32

%

$

631,574

$

470,425

34

%

Derivative fair value income (loss) components:

Cash-settled derivatives (ineffective):

Crude oil

$

(33

)

$

-

$

(29

)

$

-

Natural gas

19,417

10,356

50,818

36,180

Change in mark-to-market on unrealized derivatives

5,618

54,950

(40,171

)

83,734

Total derivative fair value income, as reported

$

25,002

$

65,306

$

10,618

$

119,914

Oil and gas sales, including cash-settled derivatives:

Oil sales

$

54,065

$

37,030

$

156,183

$

109,892

NGL sales

12,259

10,942

31,791

29,012

Gas sales

167,484

124,675

494,389

367,701

Total

$

233,808

$

172,647

35

%

$

682,363

$

506,605

35

%

Production of oil and gas during the periods:

Oil (bbl)

839,863

803,224

5

%

2,598,858

2,355,348

10

%

NGL (bbl)

284,088

277,161

2

%

837,625

831,814

1

%

Gas (mcf)

23,261,704

20,128,662

16

%

65,423,001

54,650,369

20

%

Gas equivalent (mcfe) (a)

30,005,410

26,610,972

13

%

86,041,899

73,773,341

17

%

Average prices realized, including cash-settled hedges and derivatives:

Crude oil (per bbl)

$

64.37

$

46.10

40

%

$

60.10

$

46.66

29

%

NGL (per bbl)

$

43.15

$

39.48

9

%

$

37.95

$

34.88

9

%

Natural gas (per mcf)

$

7.20

$

6.19

16

%

$

7.56

$

6.73

12

%

Equivalent (per mcfe) (a)

$

7.79

$

6.49

20

%

$

7.93

$

6.87

15

%

(a) Oil and natural gas liquids are converted to gas equivalents on a basis of six mcf per barrel.

RANGE RESOURCES CORPORATION

Reconciliation of income from continuing operations before income taxes as reported to income from continuing operations before income taxes excluding certain non-cash items, a non-GAAP measure

(Unaudited, in thousands, except per share data)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2007

2006

2007

2006

As reported

$

94,046

$

104,380

-10

%

$

206,779

$

269,495

-23

%

Adjustment for certain non-cash items

(Gain) loss on sale of properties

(2

)

(93

)

(22

)

155

Gulf of Mexico -- discontinued operations

-

548

3,399

5,611

Change in mark-to-market on unrealized derivatives

(5,618

)

(54,950

)

40,171

(83,734

)

Ineffective hedging (gain) loss

28

(184

)

(502

)

(3,490

)

Amortization of ineffective interest hedges

-

-

-

311

Transportation and gathering -- non-cash stock compensation

103

86

297

237

Direct operating -- non-cash stock compensation

485

378

1,353

1,029

Exploration expenses -- non-cash stock compensation

931

757

2,589

2,196

General & administrative -- non-cash stock compensation

4,709

3,910

13,713

10,347

Deferred compensation plan -- non-cash stock compensation

7,761

(2,638

)

28,342

(347

)

As adjusted

102,443

52,194

96

%

296,119

201,810

47

%

Income taxes, adjusted

Current

133

615

416

1,815

Deferred

37,875

19,440

104,049

74,452

Net income excluding certain items, a non-GAAP measure

$

64,435

$

32,139

100

%

$

191,654

$

125,543

53

%

Non-GAAP earnings per share

Basic

$

0.44

$

0.23

91

%

$

1.34

$

0.95

41

%

Diluted

$

0.42

$

0.23

83

%

$

1.29

$

0.91

42

%

HEDGING POSITION

As of October 24, 2007

(Unaudited)

Gas

Oil

Volume

Average

Volume

Average

Hedged

Hedge

Hedged

Hedge

(Mmbtu/d)

Prices

(Bbl/d)

Prices

4Q 2007

Swaps

107,500

$9.49

-

-

4Q 2007

Collars

98,500

$7.12 - $9.93

8,300

$57.69 - $68.98

Calendar 2008

Swaps

155,000

$8.97

-

-

Calendar 2008

Collars

55,000

$7.93 - $11.39

9,000

$59.34 - $75.48

Calendar 2009

Swaps

40,000

$8.24

-

-

Calendar 2009

Collars

60,000

$8.07 - $8.70

8,000

$64.01 - $76.00

Note: Details as to the Company's hedges are posted on its website and are updated periodically.

Source: Business Wire

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