S&P upgrades Range Resources

Standard & Poor's upgraded Range Resources Corp. including raising its $100 million 7.375% senior subordinated notes due 2013 and $55 million 6% convertible subordinated debentures due 2007 to B from B-, $225 million secured credit facility to BB from BB- and $120 million 5% convertible trust preferreds due 2027 to B- from CCC+. The outlook is stable.

S&P said the action reflects the strides Range Resources' management has taken to improve the firm's financial profile. Prospectively, commitment to continued debt reduction is factored into the new ratings.

Specific actions and factors that benefit the company include:

* Hedging: the company has aggressively hedged about 65% to 75% and 35% to 45% of expected natural gas production for 2004 and 2005, respectively, at prices in excess of $4 per thousand cubic feet (mcf). The company has also hedged about 45% to 55% of 2004 expected oil production at about $24.50 per barrel.

* Convertible debt retirement: the retirement of convertible debt at a discount allowed Range Resources to reduce its debt burden by about $20 million in the first nine months of 2003.

* Commodity prices: Range Resources continues to benefit from elevated natural gas and oil prices on its unhedged production. This has allowed the company to accelerate its debt reduction schedule over the past 12 months.

* Trust-preferred retirement: in September, the company replaced roughly $80 million of trust-preferred securities with $50 million cumulative convertible preferred stock. The action improved Range Resources' balance sheet and reduced the company's financing costs by $1.3 million per year.

S&P said Range Resources' ratings reflect a below-average business profile, largely due to the cyclical and capital-intensive nature of the petroleum industry, and an aggressive, albeit significantly improved, financial profile.

Management's emphasis on debt reduction during the past few years came at the expense of its capital program, making it difficult for Range Resources to replace production, as evidenced by a decline in reserves to roughly 513 billion cubic feet equivalent (bcfe) in 2001 from 796 bcfe in 1998, S&P noted.

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