Range cuts debt via divestiture funds, intends to keep reducing debt

By Devika Patel

Knoxville, Tenn., Oct. 24 – Range Resources Corp. reduced debt further last quarter with proceeds generated from asset sales, buying back about $94 million of notes and lowering its bank line of credit balance to $328 million.

The company has lowered its absolute debt by over $1 billion in the last 15 months and plans to reduced debt further.

“Since the middle of last year, Range has completed over $1 billion in asset sales,” president and chief executive officer Jeffrey L Ventura said on the company’s third quarter ended Sept. 30 earnings conference call on Thursday.

“Range has aligned its capital spending with cash flow from operations, so these asset sale proceeds have allowed us to reduce absolute debt by over $1 billion in the last 15 months,” Ventura said.

“Third quarter activity focused on enhancing financial strength, increasing liquidity, reducing debt, reducing costs and maximizing cash flow generated by judicious capital investments,” senior vice president and chief financial officer Mark S. Scucchi said on the call.

“During the quarter, we closed on the sale of royalty interests for gross proceeds of $750 million.

“This brings divestiture proceeds over the past year to approximately $1.1 billion, which has directly gone to reduce debt,” Scucchi said.

The company reduced bank debt borrowings and Range repurchased and retired about $94 million of its senior notes during the quarter for a total cash spend of approximately $90 million.

“Divestiture proceeds were used to reduce borrowings, with the bank line of credit declining to $328 million at the end of the third quarter,” Scucchi said.

“The balance of the revolving line of credit also reflects the results of open-market repurchases of approximately $94 million of face value of bonds with maturities in 2021 and 2022.

“During the quarter, we began opportunistically repurchasing these near-term maturities at a modest discount.

“It is our intention to continue strengthening the balance sheet through debt reduction and through proactively addressing nearer term maturities.

“Repurchasing these bonds and any future bond repurchases serve to facilitate refinancing in a cost-effective manner,” Scucchi said.

The company also improved its liquidity, which will help further manage debt maturities.

“Liquidity was improved with divestiture proceeds, but as recently announced we also increased liquidity through the expansion of lender commitments under the revolver by 20%, an incremental $400 million, to a total of $2.4 billion,” Scucchi said.

“This brings available liquidity after borrowings and letters of credit to $1.8 billion.

“It should also be noted that Range’s borrowing base remains at $3 billion, with asset cover potential above that figure providing additional cushion.

“While there is time before the first bond maturity in June 2021, this incremental liquidity serves as a potential backstop to help manage maturities,” Scucchi said.

The company plans to keep reducing debt.

“We remain focused on reducing debt, reducing borrowing costs and maintaining a thoughtful maturity ladder,” Scucchi said.

The company had $318,919,000 of bank debt as of Sept. 30, 2019, compared to $932,018,000 of bank debt as of Dec. 31, 2018.

The company had $2,766,322,000 of outstanding senior notes as of Sept. 30, 2019, compared to $2,856,166,000 of notes as of Dec. 31, 2018.

In October, the company increased its credit facility commitment from $2 billion to $2.4 billion.

Range Resources is an oil and natural gas producer based in Fort Worth.

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