RANGE RESOURCES CORP

Commodity prices have remained volatile. Benchmarks for natural gas and oil decreased in 2024 compared to 2023 while NGLs benchmarks remained comparable. As a result, we experienced decreases in our price realizations when compared to the same period of 2023. Despite lower prices, we continued to focus on creating long-term value for our stockholders along with positioning ourselves to be a responsible and reliable supplier of natural gas, NGLs and oil.

Overview of 2024 Results

During 2024, we recognized net income of $266.3 million, or $1.09 per diluted common share compared to $871.1 million, or $3.57 per diluted common share during 2023. The decrease in net income for the year ended December 31, 2024 when compared to 2023 is primarily due to lower realized prices and lower derivative fair value income which are partially offset by higher production.

For the year ended December 31, 2024, we experienced a decrease in revenue from the sale of natural gas, NGLs and oil due to a 2% decrease in net realized prices (average prices including all derivative settlements and third-party transportation costs paid by us) when compared to 2023. Daily production in 2024 averaged 2.18 Bcfe compared to 2.14 Bcfe in 2023.

During 2024, our financial and operating performance included the following results:

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revenue from the sale of natural gas, NGLs and oil decreased 5% from the same period of 2023 with a 7% decrease in average realized prices (before cash settlements on our derivatives) partially offset by slightly higher production volumes;

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revenue from the sale of natural gas, NGLs and oil (including cash settlements on our derivatives) increased 3% from the same period of 2023;

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transportation, gathering, processing and compression expense per mcfe was $1.48 in 2024 compared to $1.43 in the same period of 2023 primarily due to the increase of NGLs volumes and prices;

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direct operating expense per mcfe was $0.12 in 2024 compared to $0.12 in the same period of 2023;

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general and administrative expense per mcfe for 2024 increased 5% from the same period of 2023 primarily due to higher employee costs;

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interest expense per mcfe for 2024 decreased 6% from the same period of 2023 due to lower debt balances;

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our DD&A rate per mcfe for 2024 remained the same when compared to the same period of 2023;

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drilled 52 net wells with a 100% success rate; and

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our capital investment for 2024 was $654.0 million, which was within our initially announced range of $620.0 million to $670.0 million.

The year ended December 31, 2024 also included the following highlights to enhance our balance sheet, return capital to investors and preserve liquidity:

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paid $77.5 million in dividends or $0.32 per common share compared to $0.32 per common share in 2023;

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repurchased $65.3 million of our common stock compared to $19.0 million in 2023;

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repurchased in the open market $79.7 million face value of our 4.875% senior notes due 2025 at a discount; and

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enhanced liquidity with the accumulation of cash on hand of $304.5 million along with $1.3 billion available under our credit facility.

We generated $944.5 million of cash from operating activities in 2024, which is $33.4 million lower when compared to 2023 and reflects lower realized prices combined with higher comparative working capital outflows.

The year ended December 31, 2024 also included the following highlights that emphasized our corporate sustainability and initiatives:

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completed the MiQ certification for our Southwest Pennsylvania assets and re-certified an "A" grade;

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continued to recycle approximately 100% of our produced water; and

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expanded the installation and use of compressed air pneumatic controllers.

Acquisitions

During 2024, we invested $57.9 million to acquire unproved acreage compared to $40.1 million in 2023. We continue selective acreage leasing and lease renewals to consolidate our acreage positions in the Marcellus Shale play in Pennsylvania.

Outlook for 2025

As we enter 2025, we believe we are positioned for sustainable long-term success. For 2025, we expect our capital budget to be in the range of $650 million to $690 million for natural gas, NGLs and oil related activities, excluding any potential acquisitions, for which we do not budget. As has been our historical practice, we will periodically review our capital expenditures throughout the year and may adjust the budget based on commodity prices, drilling success and other factors. We expect our 2025 capital budget to achieve modest growth in production relative to 2024 production, while also supporting our longer-term operational plans. Our 2025 capital budget is focused on generating free cash flow while efficiently developing our resource base to achieve competitive full cycle returns for our stockholders. The prices we receive for our natural gas, NGLs and oil production are largely based on current market prices, which are beyond our control. The price risk on a portion of our forecasted natural gas, NGLs and oil production for 2025 is partially mitigated by entering into commodity derivative contracts, and we intend to continue to enter into these types of contracts. We believe it is likely that commodity prices will continue to be volatile during 2025.

Market Conditions

We believe we are positioned for sustainable long-term success. We continue to monitor the impact of the actions of OPEC and other large producing nations, the Russia-Ukraine conflict, hostilities in the Middle East, global inventories of gas, NGLs and oil, future monetary and fiscal policy and governmental policies aimed at transitioning towards lower carbon energy, and we expect prices for commodities we produce to remain volatile given the complex dynamics of supply and demand that exist in the global energy markets. In fourth quarter 2024, natural gas prices declined based on the relatively mild early days of winter in the United States. Longer term natural gas futures prices remain stronger based on market expectations that associated gas-related activity in oil basins and dry gas basin activity will show modest rates of growth due to infrastructure constraints, moderated reinvestment rates and core inventory exhaustion. In addition, the global energy crisis experienced in recent years further highlighted the low cost and low emissions shale gas resource base in North America, supporting continued strong structural demand growth for United States liquefied natural gas exports, domestic industrial gas demand and power generation. Other factors such as geopolitical disruptions, supply chain disruptions, cost inflation, concerns over a potential economic recession and the pace and changes in global monetary policy may impact the demand for natural gas, NGLs and oil. We continue to assess and monitor the impact and consequences of these factors on our operations.

Prices for various quantities of natural gas, NGLs and oil that we produce significantly impact our revenues and cash flows. Prices for commodities, such as hydrocarbons, are inherently volatile. Recently, natural gas prices have increased when compared to the fourth quarter 2024, with the average NYMEX monthly settlement price for natural gas increasing to $3.51 per mcf for January and $3.54 per mcf for February 2025 following cold winter weather. Oil prices slightly increased from December 2024, to $75.10 per barrel in January 2025. The following table lists related benchmarks for natural gas, oil and NGLs composite prices for the years ended December 31, 2024 and 2023.

(a)

Based on average of monthly last day settlement prices on the New York Mercantile Exchange ("NYMEX").

(b)

Based on our estimated NGLs product composition per barrel.

Our price realizations (not including the impact of our derivatives) may differ from the benchmarks for many reasons, including quality, location, or production being sold at different prices.

Natural Gas, NGLs and Oil Sales, Production and Realized Price Calculations

Our revenues vary from year to year as a result of changes in realized commodity prices and production volumes. In 2024, natural gas, NGLs and oil sales decreased 5% from 2023 with a 7% decrease in realized prices (excluding cash settlements on our derivatives) partially offset by slightly higher production volumes. The following table illustrates the primary components of natural gas, NGLs and oil sales for the last two years (in thousands):

Production is maintained through drilling success as we place new wells on production, which is partially offset by the natural decline of our natural gas, NGLs and oil reserves through production. Our production for the last two years is set forth in the following table:

(a)

Represents volumes sold regardless of when produced.

(b)

Oil and NGLs volumes are converted to mcfe at the rate of one barrel equals six mcf based upon the approximate relative energy content of oil and natural gas, which is not indicative of the relationship between oil and natural gas prices.

Our average realized price (including all derivative settlements and third-party transportation costs paid by Range) received during 2024 was $1.84 per mcfe compared to $1.88 per mcfe in 2023. The majority of our production is sold at market-sensitive prices. We believe computed final realized prices should include the impact of transportation, gathering, processing and compression expense. Average sales prices (excluding derivative settlements) do not include any derivative settlements or third-party transportation costs which are reported in transportation, gathering and compression expense on the accompanying consolidated statements of income. Average sales prices (excluding derivative settlements) do include transportation costs where we receive net proceeds from the purchaser. Our average realized price (including all derivative settlements and third-party transportation costs paid by Range) calculation includes all cash settlements for derivatives. Average realized price calculations for the last two years are shown below:

(a)

Oil and NGLs volumes are converted at the rate of one barrel equals six mcf based upon the approximate relative energy content of oil to natural gas, which is not indicative of the relationship between oil and natural gas prices.

Realized prices include the impact of basis differentials and gains or losses realized from our basis hedging. The prices we receive for our natural gas can be more or less than the NYMEX price because of adjustments for delivery location, relative quality and other factors. The following table provides this impact on a per mcf basis:

The following tables reflect our production and average realized commodity prices (excluding derivative settlements and third-party transportation costs paid by Range) (in thousands, except prices):

Transportation, gathering, processing and compression expense was $1.2 billion in 2024 and $1.1 billion in 2023. These third-party costs are higher than the prior year due to an increase in NGLs volumes and higher prices throughout the year which increases processing cost. Gas transportation and gathering also increased with the use of new facilities in the current year. We have included these costs in the calculation of average realized prices (including all derivative settlements and third-party transportation expenses paid by Range). The following table summarizes transportation, gathering, processing and compression expense for the last two years (in thousands) and on a per mcf and per barrel basis:

Derivative fair value incomewas $56.7 million in 2024 compared to income of $821.2 million in 2023. All of our derivatives are accounted for using the mark-to-market accounting method. Mark-to-market accounting treatment can result in more volatility in our revenues as the change in fair value of our commodity derivative positions is included in total revenue. As commodity prices increase or decrease, such changes will have an opposite effect on the mark-to-market value of our derivatives. Gains on our derivatives generally indicate lower wellhead revenues in the future while losses indicate higher future wellhead revenues. The following table summarizes the impact of our commodity derivatives for the last two years (in thousands):

(a)

Non-cash fair value adjustments on commodity derivatives is a non-GAAP measure. Non-cash fair value adjustments on commodity derivatives only represent the net change between periods of the fair market values of commodity derivative positions and exclude the impact of settlements on commodity derivatives during the period. We believe that non-cash fair value adjustments on commodity derivatives is a useful supplemental disclosure to differentiate non-cash fair market value adjustments from settlements on commodity derivatives during the period. Non-cash fair value adjustments on commodity derivatives is not a measure of financial or operating performance under GAAP, nor should it be considered a substitute for derivative fair value income or loss as reported in our consolidated statements of income.

Brokered natural gas and marketing revenue was $133.0 million in 2024 compared to $206.6 million in 2023. We enter into purchase transactions with third parties and separate sale transactions with third parties at different times to utilize available pipeline capacity and to fulfill sales commitments in the event of operational upsets. These brokered revenues decreased compared to 2023 due to lower brokered volumes and sales prices. See also Brokered natural gas and marketing expense below for more information on our net brokered margin.

Other income was $13.5 million in 2024 compared to $12.5 million in 2023. This includes $12.7 million of interest income and $311,000 of gain on sale of assets in 2024 compared to $5.9 million of interest income and $455,000 gain on sale of assets in 2023. The 2023 period also includes the receipt of $5.1 million in make-whole payments. In 2023 and prior, interest income was included within brokered natural gas and marketing revenue and other and gain on sale of assets was its own discrete line item within our annual report on Form 10-K for the year ended December 31, 2023. In 2024, and for the prior years presented in the accompanying consolidated statements of income, we reclassified both of these items into other income on the accompanying consolidated statements of income.

Costs and Expenses per mcfe

We believe some of our expense fluctuations are best analyzed on a unit-of-production, or per mcfe, basis. The following presents information about certain of our expenses on a per mcfe basis for the last two years:

Direct operating expense was $95.3 million in 2024 compared to $96.1 million in 2023. Direct operating expenses include normally recurring expenses to operate and produce our wells, non-recurring workover and repair-related expenses. Our direct operating expenses for 2024 decreased from the prior year primarily due to lower water hauling/handling costs and lower workover costs, partially offset by higher labor expense. We incurred $3.3 million of workover costs in 2024 compared to $4.5 million of workover costs in 2023. Stock-based compensation expense represents the amortization of equity grants as part of the compensation of field employees. The following table summarizes direct operating expenses per mcfe for the last two years:

Taxes other than income expense was $21.6 million in 2024 compared to $23.7 million in 2023. This expense category is primarily the Pennsylvania impact fee. In 2012, Pennsylvania enacted an "impact fee" on unconventional natural gas and oil production which includes the Marcellus Shale. The impact fee is based upon the year wells are drilled and the fee varies, like a severance tax, based upon natural gas prices. The year ended December 31, 2024 includes a $21.2 million impact fee compared to $21.8 million in the year ended December 31, 2023, with the decrease primarily due to a decrease in the average fee per well. This category also includes other taxes such as franchise, real estate and commercial activity taxes. The following table summarizes taxes other than income per mcfe for the last two years:

General and administrative expense was $172.1 million for 2024 compared to $164.7 million for 2023. The increase in 2024, when compared to 2023, is primarily due to higher salary and benefit related costs and higher stock-based compensation. As of December 31, 2024, the number of general and administrative employees increased by 1% when compared to December 31, 2023. Stock-based compensation expense represents the amortization of stock-based compensation awards granted to our employees and our non-employee directors as part of their compensation. The following table summarizes general and administrative expenses per mcfe for the last two years:

Interest expense was $118.8 million for 2024 compared to $124.0 million for 2023. The following table summarizes interest expense per mcfe for the last two years:

(a)

Includes commitment fees.

(b)

Excludes deferred financing costs.

The decrease in interest expense from 2023 to 2024 was primarily due to lower overall outstanding average debt balances. See Note 6 to our consolidated financial statements for additional information. We had no debt outstanding on the bank credit facility during 2024. Average debt outstanding on the bank credit facility for 2023 was $8.0 million and the weighted average interest rate on the bank credit facility was 8.4% in 2023.

Depletion, depreciation and amortization ("DD&A") was $358.4 million in 2024 compared to $350.2 million in 2023. The increase in 2024 when compared to 2023 is due to higher production volumes. Depletion expense, the largest component of DD&A, was $0.44 per mcfe in 2024 compared to $0.44 per mcfe in 2023. We have historically adjusted our depletion rates in the fourth quarter of each year based on our year-end reserve report and at other times during the year when circumstances indicate there has been a significant change in reserves or costs. The following table summarizes DD&A expenses per mcfe for the last two years:

Other Operating Expenses

Our total operating expenses also include other expenses that generally do not trend with production. These expenses include stock-based compensation (including the amortization of restricted stock and performance-based grants), brokered natural gas and marketing, exploration expense, abandonment and impairment of unproved properties, exit costs, deferred compensation plan and gain or loss on early extinguishment of debt. See Note 10 to our consolidated financial statements for more information on allocation of stock-based compensation to functional expense categories.

Brokered natural gas and marketing expense was $140.5 million in 2024 compared to $202.9 million in 2023. We enter into purchase transactions with third parties and separate sale transactions with third parties at different times to utilize available pipeline capacity and fulfill sales commitments in the event of operational upsets. The decrease in these costs reflects lower purchase prices and lower purchased volumes. The following table details our brokered natural gas and marketing net margin which includes the net effect of these third-party transactions for the last two years (in thousands):

Exploration expense was $26.8 million in 2024 compared to $26.5 million in 2023. Exploration expense in 2024 was higher when compared to the prior year due to higher delay rentals partially offset by lower seismic costs. Stock-based compensation represents the amortization of equity stock grants as part of the compensation of our exploration staff. The following table details our exploration related expenses for the last two years (in thousands):

Abandonment and impairment of unproved properties was $8.4 million in 2024 compared to $46.4 million in 2023. These costs decreased when compared to 2023 due to lower estimated lease expirations in Pennsylvania. Impairment of individually insignificant unproved properties is assessed and amortized on an aggregate basis based on our average holding period, expected forfeiture rate and anticipated drilling success. We assess individually significant unproved properties for impairment on a quarterly basis and recognize a loss where circumstances indicate impairment in value. In determining whether a significant unproved property is impaired we consider numerous factors including, but not limited to, current exploration plans, favorable or unfavorable activity on the property being evaluated and/or adjacent properties, our geologists’ evaluation of the property and the remaining months in the lease term for the property.

Exit costs were $37.2 million in 2024 compared to $99.9 million in 2023. In August 2020, we completed the sale of our North Louisiana operations in a transaction that included the retention of certain related gathering, transportation and processing obligations extending until 2030. The present value of these estimated future obligations totaled $479.8 million which was recorded in third quarter 2020. In the year ended December 31, 2024, we recorded $39.2 million of accretion expense related to these retained liabilities, and during 2024, we recorded an adjustment of $2.1 million to decrease this obligation mainly due to a decrease in forecasted electricity costs. In the year ended December 31, 2023, we recorded $41.9 million of accretion expense related to these retained liabilities, and we recorded adjustments of $57.7 million to increase this obligation for a change in forecasted drilling plans of the buyer and an increase in forecasted rates due to inflation. See Note 14 to our consolidated financial statements for further detail.

Deferred compensation plan expense was $9.6 million in 2024 compared to $26.6 million in 2023. Our stock price increased to $35.98 at December 31, 2024 from $30.44 at December 31, 2023. This non-cash item relates to the increase or decrease in value of the liability associated with our common stock that is vested and held in our deferred compensation plan. The deferred compensation liability is adjusted to fair value by a charge or a credit to deferred compensation plan expense. Although the stock price increased, the amount of vested shares decreased as we are no longer contributing annual employee stock awards into the deferred compensation plan. The deferred compensation plan held 724,000 vested shares at December 31, 2024 compared to 1.5 million shares at December 31, 2023. See Note 10 to our consolidated financial statements for further detail.

Gain (loss) on early extinguishment of debtwas a gain of $257,000 in 2024 compared to a gain of $438,000 in 2023. During 2024, we purchased on the open market $79.7 million principal amount of 4.875% senior notes due 2025 at a discount and recorded a gain of $257,000, net of transaction costs and the expensing of deferred financing costs on the repurchased debt. During 2023, we purchased on the open market $61.6 million principal amount of 4.875% senior notes due in May of 2025. We recognized a gain on early extinguishment of debt of $438,000 net of transaction costs and the expensing of deferred financing costs on the repurchased debt.

Income tax benefit was $15.7 million in 2024 compared to an expense of $229.2 million in 2023. Income tax expense was lower than prior year due to lower operating income combined with the impact of changes in our valuation allowances and generation of tax credits in 2024. See Note 4 to our consolidated financial statements for further detail. The following is a summary of income tax expense (in thousands):