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Item 1. Financial Statements

2023-07-24 compared with 2023-04-24 · 396 added, 251 removed, 900 unchanged (42% of the section changed)

36 unchanged sentences

Common stock, $ 0.01 par, 475,000,000 shares authorized, 265,751,577 issued at

March 31, 2023 and 262,887,265 issued at December 31, 2022

Common stock held in treasury, 24,324,065 shares at March 31, 2023 and 24,001,535 shares

June 30, 2023 and 262,887,265 issued at December 31, 2022

Common stock held in treasury, 24,401,065 shares at June 30, 2023 and 24,001,535 shares

at December 31, 2022

8 unchanged sentences

(Unaudited, in thousands, except per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Revenues and other income:

11 unchanged sentences

Deferred compensation plan

Loss on early extinguishment of debt

(Gain) loss on early extinguishment of debt

Depletion, depreciation and amortization

2 unchanged sentences

Income (loss) before income taxes

Income tax expense (benefit):

Income tax (benefit) expense:

Net income (loss)

6 unchanged sentences

(Unaudited, in thousands)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Net income (loss)

2 unchanged sentences

Amortization of prior service costs/actuarial gain

Income tax (benefit) expense

Income tax benefit

Total comprehensive income (loss)

3 unchanged sentences

(Unaudited, in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating activities:

Net income (loss)

Adjustments to reconcile net loss to net cash provided from operating activities:

Adjustments to reconcile net income (loss) to net cash

provided from operating activities:

Deferred income tax expense (benefit)

Depletion, depreciation and amortization and impairment of proved properties

Depletion, depreciation and amortization

Abandonment and impairment of unproved properties

1 unchanged sentence

Cash settlements on derivative financial instruments

Divestiture contract obligation, including accretion, net of gain

Divestiture contract obligation, including accretion

Amortization of deferred financing costs and other

1 unchanged sentence

Gain on the sale of assets

Loss on early extinguishment of debt

(Gain) loss on early extinguishment of debt

Changes in working capital:

14 unchanged sentences

Financing activities:

Borrowings on credit facilities

Repayments on credit facilities

Borrowings on credit facility

Repayments on credit facility

Issuance of senior notes

5 unchanged sentences

Change in cash overdrafts

Proceeds from the sales of common stock held by the deferred compensation

Proceeds from the sales of common stock held by the deferred

compensation plan

Net cash used in financing activities

18 unchanged sentences

Balance as of March 31, 2023

Issuance of common stock

Stock-based compensation

Cash dividends paid ($ 0.08 per

Treasury stock

Excise tax on stock repurchases

Other comprehensive income

Balance as of June 30, 2023

The accompanying notes are an integral part of these consolidated financial statements.

12 unchanged sentences

Balance as of March 31, 2022

Issuance of common stock

Stock-based compensation

Treasury stock

Other comprehensive income

Balance as of June 30, 2022

The accompanying notes are an integral part of these consolidated financial statements.

4 unchanged sentences

Our objective is to build stockholder value through returns-focused development of natural gas properties.

Range is a Delaware corporation with our common stock listed and traded on the New York Stock Exchange under the symbol “RRC.”

Range is a Delaware corporation with our common stock listed and traded on the New York Stock Exchange under the symbol "RRC."

(2) BASIS OF PRESENTATION

4 unchanged sentences

These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2022 Annual Report on Form 10-K filed with the SEC on February 27, 2023.

The results of operations for first quarter ended March 31, 2023 are not necessarily indicative of the results to be expected for the full year.

The results of operations for second quarter and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the full year.

We make certain reclassifications to prior year statements to conform with the current year presentation.

These reclassifications have no impact on previously reported stockholders' equity, net income or cash flows.

(3) NEW ACCOUNTING STANDARDS

Not Yet Adopted

No accounting standards were adopted in first quarter 2023 that had a material impact on our consolidated financial statements.

There were no issued pending accounting standards expected to have a material impact on our consolidated financial statements.

(4) REVENUES FROM CONTRACTS WITH CUSTOMERS

3 unchanged sentences

Brokered revenue attributable to each product sales type is included here because the volume of product that we purchase is subsequently sold to separate counterparties in accordance with existing sales contracts under which we also sell our production.

Other marketing revenue for the three months ended March 31, 2023 includes the receipt of a $ 3.6 million make-whole payment.

Accounts receivable attributable to our revenue contracts with customers was $ 243.9 million at March 31, 2023 and $ 463.3 million at December 31, 2022.

Other marketing revenue for the three months ended June 30, 2023 includes the receipt of a $ 1.5 million make-whole payment and the six months ended June 30, 2023 includes a total of $ 5.1 million in make-whole payments.

Accounts receivable attributable to our revenue contracts with customers was $ 165.8 million at June 30, 2023 and $ 463.3 million at December 31, 2022.

Revenue attributable to each of our identified revenue streams is disaggregated below (in thousands):

Three Months Ended

Six Months Ended

Natural gas sales

2 unchanged sentences

Sales of purchased NGLs

Interest income

Other marketing revenue

4 unchanged sentences

Income taxes for discrete items are computed and recorded in the period that a specific transaction occurs.

For three months ended March 31, 2023 and 2022, our overall effective tax rate was different than the federal statutory rate due primarily to state income taxes, equity compensation, valuation allowances and other tax items.

For three months and six months ended June 30, 2023 and 2022, our overall effective tax rate was different than the federal statutory rate due primarily to state income taxes, equity compensation, valuation allowances and other tax items.

Current income taxes reflect estimated state income taxes due for 2023 which is based on our estimated earnings, taking into account state tax rates and laws regarding NOL limitations.

4 unchanged sentences

Three Months Ended

Six Months Ended

Net income (loss), as reported

9 unchanged sentences

Three Months Ended

Six Months Ended

Weighted average common shares outstanding –

4 unchanged sentences

Weighted average common shares outstanding –

basic for first quarter 2023 excludes 5.6 million shares of restricted stock held in our deferred compensation plan compared to 6.2 million shares in first quarter 2022 (although all awards are issued and outstanding upon grant).

For the three months ended March 31, 2023, equity grants of 4,000 shares were outstanding but not included in the computation of diluted net income because the grant prices were greater than the average market price of the common shares and would be anti-dilutive to the computations.

Due to our net loss for first quarter 2022, we excluded all equity grants from the computation of net loss per share because the effect would have been anti-dilutive to the computations.

basic for second quarter 2023 excludes 5.4 million shares of restricted stock held in our deferred compensation plan compared to 6.7 million shares in second quarter 2022 (although all awards are issued and outstanding upon grant).

Weighted average common shares outstanding –

basic for first six months 2023 excludes 5.5 million shares of restricted stock held in our deferred compensation plan compared to 6.4 million shares for first six months 2022.

For the three months ended June 30, 2022, 2,000 equity grants were outstanding but not included in the computation of diluted net income because the grant prices were greater than the average market price of the common shares and would be anti-dilutive to the computation.

Due to our net loss for first six months 2022, we excluded all equity grants from the computation of net loss per share because the effect would have been anti-dilutive to the computations.

(7) Capitalized Costs and Accumulated Depreciation, Depletion and Amortization (a)

5 unchanged sentences

Net capitalized costs

Includes capitalized asset retirement costs and the associated accumulated amortization.

(a) Includes capitalized asset retirement costs and the associated accumulated amortization.

(8) INDEBTEDNESS

We had the following debt outstanding as of the dates shown below.

No interest was capitalized during three months ended March 31, 2023 or the year ended December 31, 2022 (in thousands).

No interest was capitalized during the six months ended June 30, 2023 or the year ended December 31, 2022 (in thousands).

Senior notes:

8 unchanged sentences

The bank credit facility also provides for a borrowing base subject to periodic redeterminations and for event-driven unscheduled redeterminations.

As of March 31, 2023, our bank group was composed of seventeen financial institutions.

As of June 30, 2023, our bank group was composed of seventeen financial institutions.

The borrowing base may be increased or decreased based on our request and sufficient proved reserves, as determined by the bank group.

3 unchanged sentences

We may elect, from time to time, to convert all or any part of our SOFR loans to base rate loans or to convert all or any of the base rate loans to SOFR loans.

The weighted average interest rate was 8.4 % for first quarter 2023 compared to 2.5 % for first quarter 2022.

We had no outstanding balance on our credit facility during second quarter 2023.

The weighted average interest rate was 4.1 % for second quarter 2022.

The weighted average interest rate was 8.4 % for first six months 2023 compared to 3.4 % for first six months of 2022.

A commitment fee is paid on the undrawn balance based on an annual rate of 0.375 % to 0.50 %.

At March 31, 2023, the commitment fee was 0.375 % and the interest rate margin was 1.75 % on our SOFR loans and 0.75 % on our ABR loans.

At June 30, 2023, the commitment fee was 0.375 % and the interest rate margin was 1.75 % on our SOFR loans and 0.75 % on our ABR loans.

As part of our redetermination completed in March 2023, our borrowing base was reaffirmed for $ 3.0 billion and our bank commitment was also reaffirmed at $ 1.5 billion.

On March 31, 2023, we had no outstanding borrowings on our bank credit facility.

On June 30, 2023, we had no outstanding borrowings on our bank credit facility.

Additionally, we had $ 292.9 million of undrawn letters of credit, leaving $ 1.2 billion of committed borrowing capacity available under the facility.

Senior Note Redemption

Early Extinguishment of Debt

In second quarter 2023, we repurchased in the open market $ 61.6 million principal amount of our 4.875 % senior notes due 2025 at a discount.

We recognized a gain on early extinguishment of debt of $ 439,000 , net of the remaining deferred financing costs on the repurchased debt.

Although we have no obligation to do so, we may continue, from time-to-time, to retire our outstanding debt through privately negotiated transactions, open market repurchases, redemptions or otherwise.

If we experience a change of control, noteholders may require us to repurchase all or a portion of our senior notes at 101 % of the aggregate principal amount plus accrued and unpaid interest, if any.

8 unchanged sentences

We are required to maintain a maximum consolidated debt to EBITDAX ratio (as defined in the bank credit facility agreement) of 3.75 x and a minimum current ratio (as defined in the bank credit facility agreement) of 1.0 x.

We were in compliance with applicable covenants under the bank credit facility as of and for the three months ended March 31, 2023.

We were in compliance with applicable covenants under the bank credit facility at June 30, 2023.

(9) ASSET RETIREMENT OBLIGATIONS

2 unchanged sentences

The inputs are calculated based on historical data as well as current estimated costs.

A reconciliation of our liability for plugging and abandonment costs for three months ended March 31, 2023 and the year ended December 31, 2022 is as follows (in thousands):

A reconciliation of our liability for plugging and abandonment costs for the six months ended June 30, 2023 and the year ended December 31, 2022 is as follows (in thousands):

Beginning of period

10 unchanged sentences

We do not enter into these arrangements for speculative or trading purposes.

We utilize commodity swaps, collars or three-way collars to (1) reduce the effect of price volatility of the commodities we produce and sell and (2) support our annual capital budget and investment plans.

The fair value of our derivative contracts, represented by the estimated amount that would be realized upon termination, based on a comparison of the contract price and a reference price, generally the New York Mercantile Exchange (NYMEX) for natural gas and crude oil or Mont Belvieu for NGLs, approximated a net gain of $ 249.6 million at March 31, 2023.

We utilize commodity swaps, collars, three-way collars or swaptions to (1) reduce the effect of price volatility of the commodities we produce and sell and (2) support our annual capital budget, fixed costs and investment plans.

These contracts expire monthly through December 2026.

The following table sets forth our commodity-based derivative volumes by year as of March 31, 2023, excluding our basis swaps and divestiture contingent consideration which are discussed separately below:

The following table sets forth our commodity-based derivative volumes by year as of June 30, 2023, excluding our basis swaps and divestiture contingent consideration which are discussed separately below:

Contract Type

1 unchanged sentence

Weighted Average Hedge Price

Natural Gas (a)

381,658 Mmbtu/day

4 unchanged sentences

436,694 Mmbtu/day

Three-way Collars

50,000 Mmbtu/day

360,000 Mmbtu/day

32,500 Mmbtu/day

5,000 bbls/day

January-September 2024

We sold natural gas swaptions on 90,000 Mmbtu/day for 2025 at a weighted average price of $ 4.25 /Mmbtu.

These swaptions expire December 31, 2023 .

Every derivative instrument is required to be recorded on the balance sheet as either an asset or a liability measured at its fair value.

1 unchanged sentence

Basis Swap Contracts

In addition to the swaps and collars described above, at March 31, 2023, we had natural gas basis swap contracts which lock in the differential between NYMEX Henry Hub and certain of our physical pricing indices.

In addition to the commodity derivatives described above, at June 30, 2023, we had natural gas basis swap contracts which lock in the differential between NYMEX Henry Hub and certain of our physical pricing indices.

These contracts settle monthly through December 2026 and include a total volume of 371,577,500 Mmbtu.

The fair value of these contracts was a loss of $ 50.3 million at March 31, 2023.

The fair value of these contracts was a gain of $ 30.7 million at June 30, 2023.

Divestiture Contingent Consideration

In addition to the derivatives described above, our right to receive contingent consideration in conjunction with the sale of our North Louisiana assets in third quarter 2020 was determined to be a derivative financial instrument that is not designated as a hedging instrument.

We have the right to receive contingent consideration in conjunction with the sale of our North Louisiana assets in third quarter 2020 that is a derivative financial instrument not designated as a hedging instrument.

The remaining contingent consideration of up to $ 21.0 million is based on future achievement of natural gas and oil prices based on published indexes and realized NGLs prices of the buyer for 2023.

All changes in the fair value are recognized as a gain or loss in earnings in the period they occur in derivative fair value income or loss in our consolidated statements of operations.

For first three months 2023, this fair value has decreased $ 3.9 million for a fair value of $ 9.2 million as of March 31, 2023.

We currently expect to receive $ 24.5 million for the year ended December 31, 2022 which is reflected in current assets in the accompanying consolidated balance sheet.

For first six months 2023, this fair value has decreased $ 4.9 million for a fair value of $ 8.1 million as of June 30, 2023.

Derivative Assets and Liabilities

The combined fair value of derivatives included in the accompanying consolidated balance sheets as of March 31, 2023 and December 31, 2022 is summarized below.

The combined fair value of derivatives included in the accompanying consolidated balance sheets as of June 30, 2023 and December 31, 2022 is summarized below.

The assets and liabilities are netted where derivatives with both gain and loss positions are held by a single counterparty and we have master netting arrangements.

The tables below provide additional information relating to our master netting arrangements with our derivative counterparties (in thousands):

March 31, 2023

June 30, 2023

Offset in the

5 unchanged sentences

–swaps

–swaptions

–collars

4 unchanged sentences

Divestiture contingent consideration

March 31, 2023

June 30, 2023

(Liabilities)

7 unchanged sentences

–swaps

–swaptions

–collars

–three-way collars

–basis swaps

30 unchanged sentences

Three Months Ended

Six Months Ended

Commodity swaps

32 unchanged sentences

The following tables present the fair value hierarchy for assets and liabilities measured at fair value, on a recurring basis (in thousands):

Fair Value Measurements at March 31, 2023 using:

Fair Value Measurements at June 30, 2023 using:

Quoted Prices

7 unchanged sentences

–basis swaps

–swaptions

Divestiture contingent consideration

12 unchanged sentences

Derivatives in Level 2 are measured at fair value with a market approach using third-party pricing services which have been corroborated with data from active markets or broker quotes.

Derivatives in Level 3 are also measured at fair value with a market approach using third-party pricing services which have been corroborated with data from active markets or broker quotes.

However, the subjectivity in the volatility factors utilized can cause a significant change in the fair value measurement and is considered a significant unobservable input.

As of June 30, 2023, a portion of our natural gas instruments contain swaptions where the counterparty has the right, but not the obligation, to enter into a fixed price swap on a pre-determined date.

If exercised, the swaption contract becomes a swap treated consistently with our fixed-price swaps.

At June 30, 2023, we used a weighted average implied volatility of 19 % for natural gas for our swaptions.

The following is a reconciliation of the beginning and ending balances for derivative instruments classified as Level 3 in the fair value hierarchy (in thousands):

Six Months Ended

Balance at December 31, 2022

Total losses:

Included in earnings

Balance at June 30, 2023

Trading securities.

2 unchanged sentences

Interest, dividends, and mark-to-market gains or losses are included in deferred compensation plan expense in the accompanying consolidated statements of operations.

For first quarter 2023, interest and dividends were $ 179,000 and the mark-to-market adjustment was a gain of $ 3.1 million compared to interest and dividends of $ 115,000 and a mark-to-market loss of $ 4.3 million in first quarter 2022.

For second quarter 2023, interest and dividends were $ 435,000 and the mark-to-market adjustment was a gain of $ 2.6 million compared to interest and dividends of $ 175,000 and a mark-to-market loss of $ 9.6 million in second quarter 2022.

For first six months 2023, interest and dividends were $ 614,000 and the mark-to-market adjustment was a gain of $ 5.7 million compared to interest and dividends of $ 291,000 and a mark-to-market loss of $ 14.0 million in first six months 2022.

Divestiture Contingent Consideration.

1 unchanged sentence

We used an option pricing model to estimate the fair value of the contingent consideration using significant Level 2 inputs that include quoted future commodity prices based on active markets.

Fair Values - Non-recurring

Certain assets are measured at fair value on a non-recurring basis.

These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances.

Our proved natural gas and oil properties are reviewed for impairment periodically as events or changes in circumstances indicate the carrying amount may not be recoverable.

There were no proved property impairment charges in second quarter or first six months 2023.

Fair Values –

The following presents the carrying amounts and the fair values of our financial instruments as of March 31, 2023 and December 31, 2022 (in thousands):

March 31, 2023

The following presents the carrying amounts and the fair values of our financial instruments as of June 30, 2023 and December 31, 2022 (in thousands):

June 30, 2023

December 31, 2022

Commodity swaps, collars and basis swaps

Commodity derivatives

Divestiture contingent consideration

1 unchanged sentence

(Liabilities):

Commodity swaps, collars and basis swaps

Commodity derivatives

Bank credit facility (b)

9 unchanged sentences

We believe the carrying values of our current assets and liabilities approximate fair value.

Our fair value assessment incorporates a variety of considerations, including (1) the short-term duration of the instruments and (2) our historical and expected incurrence of bad debt expense.

Our fair value assessment incorporates a variety of considerations, including (1) the short-term duration of the instruments and (2) our historical and expected occurrence of bad debt expense.

Non-financial liabilities initially measured at fair value include asset retirement obligations, operating lease liabilities and the divestiture contract obligation that we incurred in conjunction with the sale of our North Louisiana assets.

Concentrations of Credit Risk

As of March 31, 2023, our primary concentrations of credit risk are the risks of not collecting accounts receivable and the risk of a counterparty’s failure to perform under derivative obligations.

As of June 30, 2023, our primary concentrations of credit risk are the risks of not collecting accounts receivable and the risk of a counterparty’s failure to perform under derivative obligations.

Most of our receivables are from a diverse group of companies, including major energy companies, pipeline companies, local distribution companies, financial institutions and end-users in various industries.

Letters of credit or other appropriate assurances are obtained as deemed necessary to limit our risk of loss.

Our allowance for uncollectable receivables was $ 308,000 at March 31, 2023 and $ 314,000 at December 31, 2022.

Our allowance for uncollectable receivables was $ 308,000 at June 30, 2023 and $ 314,000 at December 31, 2022.

Our derivative exposure to credit risk is diversified primarily among major investment grade financial institutions, where we have master netting agreements which provide for offsetting payables against receivables from separate derivative contracts.

1 unchanged sentence

We may also limit the level of exposure with any single counterparty.

At March 31, 2023, our derivative counterparties include fourteen financial institutions, of which all but six are secured lenders in our bank credit facility.

At March 31, 2023, our net derivative asset includes an aggregate net payable of $ 22.0 million to five counterparties not included in our bank credit facility and a receivable from the remaining counterparty of $ 6.8 million.

At June 30, 2023, our derivative counterparties include fourteen financial institutions, of which all but six are secured lenders in our bank credit facility.

At June 30, 2023, our net derivative asset includes an aggregate net receivable of $ 20.5 million from five counterparties not included in our bank credit facility and a payable to the remaining counterparty of $ 190,000 .

Allowance for Expected Credit Losses.

11 unchanged sentences

Three Months Ended

Six Months Ended

Direct operating expense

28 unchanged sentences

Equity Awards

In first three months 2023, we granted 1.6 million restricted stock Equity Awards to employees at an average grant date fair value of $ 25.01 compared to 1.4 million at an average grant date fair value of $ 18.47 in first three months 2022.

We recorded compensation expense for these outstanding awards of $ 7.5 million in first three months 2023 compared to $ 5.9 million in the same period of 2022.

In first six months 2023, we granted 1.6 million restricted stock Equity Awards to employees at an average grant date fair value of $ 25.01 compared to 1.4 million at an average grant date fair value of $ 18.50 in first six months 2022.

We recorded compensation expense for these outstanding awards of $ 15.3 million in first six months 2023 compared to $ 10.9 million in the same period of 2022.

Restricted stock Equity Awards are not issued until such time as they are vested and grantees do not have the option to receive cash.

1 unchanged sentence

Liability Awards

In first three months 2023, we granted 11,000 shares of restricted stock Liability Awards as compensation to employees at an average grant date fair value of $ 24.70 which generally vest at the end of a three-year period.

In first three months 2022, we granted 602,000 shares of restricted stock Liability Awards as compensation to employees at an average grant date fair value of $ 20.42 with vesting generally at the end of a three-year period.

We recorded compensation expense for these Liability Awards of $ 1.8 million in first three months 2023 compared to $ 3.6 million in first three months 2022.

In first six months 2023, we granted 11,000 shares of restricted stock Liability Awards as compensation to employees at an average grant date fair value of $ 24.70 which generally vest at the end of a three-year period and 8,000 shares were granted to non-employee directors at an average price of $ 25.07 with vesting at the end of one year .

In first six months 2022, we granted 602,000 shares of restricted stock Liability Awards as compensation to employees at an average grant date fair value of $ 20.43 with vesting generally at the end of a three-year period and 47,000 shares were granted to non-employee directors at an average price of $ 27.52 with vesting at the end of one year .

We recorded compensation expense for these Liability Awards of $ 2.7 million in first six months 2023 compared to $ 6.9 million in first six months 2022.

These awards are held in our deferred compensation plan, are classified as a liability and are remeasured at fair value each reporting period.

This mark-to-market amount is reported as deferred compensation expense in our consolidated statements of operations (see additional discussion below).

Stock-Based Performance Units

Stock-Based Performance Awards

Internal Performance Metric Awards.

2 unchanged sentences

If the performance metric for the applicable period is not met, that portion is considered forfeited and there is an adjustment to the expense recorded.

In first three months 2023, we granted 81,000 internal performance units compared to 153,000 in the same period of the prior year.

We recorded compensation expense for these awards of $ 948,000 in first three months 2023 compared to expense of $ 1.7 million in first three months 2022.

In first six months 2023, we granted 81,000 internal performance units compared to 153,000 in the same period of the prior year.

We recorded compensation expense for these awards of $ 1.4 million in first six months 2023 compared to expense of $ 3.5 million in first six months 2022.

These awards granted are earned, or not earned, based on the comparative performance of Range’s common stock measured against a predetermined group of companies in the peer group over a three-year performance period.

3 unchanged sentences

The risk-free interest rate was based on the United States Treasury rate for a term commensurate with the life of the grant.

The following assumptions were used to estimate the fair value of these awards granted during first three months 2023 and 2022:

Three Months Ended

The following assumptions were used to estimate the fair value of these awards granted during first six months 2023 and 2022:

Six Months Ended

Risk-free interest rate

1 unchanged sentence

Grant date fair value per unit

In first three months 2023, we granted 64,000 TSR Awards compared to 112,000 in the same period of the prior year.

We recorded compensation expense of $ 482,000 in first three months 2023 compared to $ 773,000 in the same period of 2022.

In first six months 2023, we granted 64,000 TSR Awards compared to 112,000 in the same period of the prior year.

We recorded compensation expense of $ 886,000 in first six months 2023 compared to $ 1.5 million in the same period of 2022.

Fair value is amortized over the performance period with no adjustment to the expense recorded for actual targets achieved.

The following is a summary of the activity for our restricted stock and performance awards at March 31, 2023:

The following is a summary of the activity for our restricted stock and performance awards at June 30, 2023:

Restricted Stock

9 unchanged sentences

Date Fair Value

Outstanding at December 31, 2022

Outstanding at March 31, 2023

Outstanding at

December 31, 2022

Outstanding at June 30, 2023

Amounts granted reflect performance units initially granted.

9 unchanged sentences

Changes in the market value of the marketable securities and changes in the fair value of the deferred compensation plan liability are charged or credited to deferred compensation plan expense each quarter.

We recorded a mark-to-market loss of $ 9.4 million in first quarter 2023 compared to a mark-to-market loss of $ 73.3 million in first quarter 2022.

The Rabbi Trust held 5.5 million shares ( 5.2 million of which were vested) of Range stock at March 31, 2023 compared to 5.6 million shares ( 5.3 million of which were vested) at December 31, 2022.

We recorded a mark-to-market loss of $ 11.2 million in second quarter 2023 compared to a mark-to-market gain of $ 19.2 million in second quarter 2022.

We recorded a mark-to-market loss of $ 20.5 million in first six months 2023 compared to a mark-to-market loss of $ 54.1 million in first six months 2022.

The Rabbi Trust held 3.1 million shares ( 2.9 million of which were vested) of Range stock at June 30, 2023 compared to 5.6 million shares ( 5.3 million of which were vested) at December 31, 2022.

(13) EXIT COSTS

2 unchanged sentences

The estimated obligations are included in current and long-term divestiture contract obligation in our consolidated balance sheets.

In first three months 2023, we recorded accretion expense of $ 10.2 million compared to $ 11.0 million in the same period of the prior year.

The estimated discounted divestiture contract obligation was $ 375.1 million at March 31, 2023.

In second quarter 2023, we recorded a net adjustment of $ 37.8 million to increase this obligation primarily for higher rates due to inflation.

In second quarter 2022, we recorded a net adjustment of $ 24.8 million to increase the obligation for a change in our forecasted drilling plans of the buyer.

In first six months 2023, we recorded accretion expense of $ 21.0 million compared to $ 22.1 million in the same period of the prior year.

The estimated discounted divestiture contract obligation was $ 400.0 million at June 30, 2023.

In second quarter 2020, we negotiated capacity releases on certain transportation pipelines in Pennsylvania effective May 31, 2020 and extending through the remainder of the contract.

The estimated remaining discounted obligation for these transportation capacity releases as of March 31, 2023 was $ 4.5 million.

The following summarizes our exit costs for the three months ended March 31, 2023 and 2022 (in thousands):

The estimated remaining discounted obligation for these transportation capacity releases as of June 30, 2023 was $ 3.8 million.

The following summarizes our exit costs for the three and six months ended June 30, 2023 and 2022 (in thousands):

Three Months Ended

Six Months Ended

Transportation contract capacity releases

1 unchanged sentence

Divestiture contract obligation (including accretion

The following details the accrued exit cost liability activity for the three months ended March 31, 2023 (in thousands):

The following details the accrued exit cost liability activity for the six months ended June 30, 2023 (in thousands):

Balance at December 31, 2022

1 unchanged sentence

Changes in estimate

Balance at March 31, 2023

Balance at June 30, 2023

Includes the divestiture contract obligation and the transportation contract capacity release obligation.

3 unchanged sentences

The following is a schedule of changes in the number of common shares outstanding since the beginning of 2022:

Six Months Ended

Beginning balance

10 unchanged sentences

Under this program, we may repurchase shares in open market transactions, from time to time, in accordance with applicable SEC rules and federal securities laws.

In first three months 2023, we repurchased 400,000 shares at an aggregate cost of $ 9.7 million, including repurchases of $ 1.9 million ( 77,000 shares) that were purchased in March and settled in April.

The following is a schedule of the change in treasury shares for the three months ended March 31, 2023:

Purchases under the program are made at our discretion and may change based upon market conditions.

In first six months 2023, we repurchased 400,000 shares at an aggregate cost of $ 9.7 million.

The following is a schedule of the change in treasury shares for the three and six months ended June 30, 2023:

Three Months Ended

Six Months Ended

Beginning balance

3 unchanged sentences

(15) SUPPLEMENTAL CASH FLOW INFORMATION

Three Months Ended

Six Months Ended

(in thousands)

4 unchanged sentences

Increase in asset retirement costs capitalized

Increase in accrued capital expenditures

Increase (decrease) in accrued capital expenditures

(16) COMMITMENTS AND CONTINGENCIES

6 unchanged sentences

We have incurred and will continue to incur capital, operating and remediation expenditures as a result of environmental laws and regulations.

As of March 31, 2023, liabilities for remediation were not material.

We are not aware of any environmental claims existing as of March 31, 2023 that have not been provided for or would otherwise have a material impact on our financial position or results of operations.

As of June 30, 2023, liabilities for remediation were not material.

We are not aware of any environmental claims existing as of June 30, 2023 that have not been provided for or would otherwise have a material impact on our financial position or results of operations.

Environmental liabilities normally involve estimates that are subject to revision until final resolution, settlement or remediation occurs.

(17) Costs Incurred for Property Acquisition, Exploration and Development (a)

Six Months Ended

(in thousands)

36 unchanged sentences

Market Conditions

As we begin 2023, 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, global inventories of oil and natural gas, future monetary policy and governmental policies aimed at transitioning towards lower carbon energy and we expect prices for some or all of the commodities we produce to remain volatile.

For the short-term, natural gas prices declined based on the relatively mild winter and down time at an LNG export facility.

We believe we are positioned for sustainable long-term success.

In first quarter 2023, natural gas prices declined based on the relatively mild winter and extended down time at a liquefied natural gas export facility.

Subsequently, high levels of domestic U.S.

gas storage compared with the five-year average kept natural gas prices below $3.00 in second quarter 2023.

Longer term natural gas futures have remained strong based on market expectations that associated gas-related activity in oil basins and dry gas basin activity will show modest rates of growth when compared with the past due to infrastructure constraints, capital discipline and core inventory exhaustion.

In addition, the global energy crisis further highlighted the low cost and low emissions shale gas resource base in North America, supporting continued strong structural demand growth for U.S.

liquified natural gas exports, domestic industrial gas demand and power generation.

Other factors such as geopolitical disruptions, supply chain disruptions, cost inflation and the pace and

extent of tightening global monetary policy may impact the supply and demand for oil, natural gas and NGLs.

liquefied natural gas exports, domestic industrial gas demand and power

Other factors such as geopolitical disruptions, supply chain disruptions, cost inflation, concerns over a potential economic recession and the pace and extent of tightening global monetary policy may impact the supply and demand for oil, natural gas and NGLs.

We continue to assess and monitor the impact and consequences of these factors on our operations.

While expected commodity prices have declined in 2023 compared to prior year, we believe market data supports a positive outlook given significant new demand is currently under construction.

Our reduced debt levels combined with risk reduction through hedging have us well positioned within the industry.

While expected commodity prices have declined in 2023 compared to prior year, we believe market data supports a positive outlook given significant new demand and export infrastructure currently under construction.

We believe that our competitive full-cycle cost structure, robust drilling inventory, reduced debt levels and risk reduction through hedging have us well positioned within the industry.

Prices for natural gas, NGLs and oil that we produce significantly impact our revenues and cash flows.

Natural gas, NGLs and oil benchmarks decreased in first quarter 2023 when compared to the same period of 2022.

As a result, we experienced a decrease in price realizations.

The following table lists related benchmarks for natural gas, oil and NGLs composite prices for the three months ended March 31, 2023 and 2022:

Natural gas, NGLs and oil benchmarks significantly decreased in second quarter 2023 when compared to the same period of 2022 and also decreased in first six months 2023 compared to the same period of 2022.

As a result, we experienced a significant decrease in price realizations.

The following table lists related benchmarks for natural gas, oil and NGLs composite prices for the three and six months ended June 30, 2023 and 2022:

Three Months Ended

Six Months Ended

Average NYMEX prices (a)

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Consolidated Results of Operations

Overview of First Quarter 2023 Results

During first quarter 2023, we recognized net income of $481.4 million, or $1.95 per diluted common share compared to a loss of $456.8 million, or $1.86 per diluted common share during first quarter 2022.

The higher net income in first quarter 2023 compared to first quarter 2022 reflects the impact of lower commodity prices on our reported derivative fair value income (loss) partially offset by the impact of lower commodity prices on our natural gas, NGLs and oil sales.

Overview of Second Quarter 2023 Results

During second quarter 2023, we recognized net income of $30.2 million, or $0.12 per diluted common share compared to net income of $452.9 million, or $1.77 per diluted common share during second quarter 2022.

The lower net income in second quarter 2023 compared to second quarter 2022 reflects the impact of significantly lower commodity prices on our natural gas, NGLs and oil sales and on our reported derivative fair value income (loss).

In addition, we recorded a mark-to-market loss on our deferred compensation plan compared to a gain in the same period of the prior year.

See page 30 for more information on our derivative fair value income (loss).

For first quarter 2023, we experienced a decrease in revenue from the sale of natural gas, NGLs and oil due to a 22% decrease in net realized prices (average prices including all derivative settlements and third-party transportation costs paid by us) when compared to the same quarter of 2022 somewhat offset by slightly higher production volumes.

Daily production averaged 2.1 Bcfe in both first quarter 2023 and 2022.

Our first quarter 2023 financial and operating performance included the following results:

cash flow from operating activities increased $68.5 million from first quarter 2022;

paid $19.3 million of dividends, or $0.08 per share;

repurchased $7.8 million of our common stock;

enhanced liquidity with the accumulation of cash totaling $227.6 million;

For second quarter 2023, we experienced a decrease in revenue from the sale of natural gas, NGLs and oil due to a 56% decrease in net realized prices (average prices including all derivative settlements and third-party transportation costs paid by us) when compared to the same quarter of 2022.

Daily production averaged 2.1 Bcfe in both the second quarter 2023 and 2022.

Our second quarter 2023 financial and operating performance included the following results:

revenue from the sale of natural gas, NGLs and oil decreased 65% from the same period of 2022 with a 66% decrease in average realized prices (before cash settlements on our derivatives);

revenue from the sale of natural gas, NGLs and oil (including cash settlements on our derivatives) decreased 43% from the same period of 2022;

transportation, gathering, processing and compression per mcfe was $1.48 in first quarter 2023 compared to $1.60 in the same period of 2022;

direct operating expense per mcfe was $0.14 in first quarter 2023 compared to $0.11 in the same period of 2022 primarily due to higher production enhancing workover projects and higher water handling/hauling costs;

general and administrative expense per mcfe decreased 4% from same period of 2022 primarily due to the impact of higher production volumes;

reduced depletion, depreciation and amortization (“DD&A”) rate per mcfe by 2% from the same period of 2022.

Our cash flow from operating activities in first quarter 2023 was $475.0 million, an increase of $68.5 million from first quarter 2022 with a favorable impact from the change in working capital partially offset by lower commodity prices.

transportation, gathering, processing and compression per mcfe was $1.42 in second quarter 2023 compared to $1.74 in the same period of 2022 primarily due to lower prices;

direct operating expense per mcfe was $0.13 in second quarter 2023 compared to $0.11 in the same period of 2022 primarily due to higher equipment costs, higher water handling/hauling costs, higher contract labor and services and higher workovers;

general and administrative expense per mcfe decreased 9% from same period of 2022 primarily due to lower stock-based compensation costs and lower legal fees;

interest expense per mcfe decreased 27% from the same period of 2022 due to lower debt balances;

depletion, depreciation and amortization ("DD&A") rate per mcfe decreased 2% from the same period of 2022.

During second quarter 2023, we continued to enhance our balance sheet, return capital to investors and preserve liquidity:

paid $19.3 million of dividends, or $0.08 per share compared to none in second quarter 2022;

repurchased $1.9 million of our common stock;

repurchased in the open market $61.6 million face value of our 4.875% senior notes due 2025 at a discount;

as of June 30, we have $162.1 million of cash along with $1.2 billion available under our credit facility.

Our cash flow from operating activities in second quarter 2023 was $126.6 million, a decrease of $198.1 million from the second quarter 2022 with significantly lower commodity prices partially offset by a favorable impact from the change in working capital.

Overview of First Six Months 2023 Results

During first six months 2023, we recognized net income of $511.7 million, or $2.07 per diluted common share compared to a net loss of $4.0 million, or $0.02 per diluted common share during first six months 2022.

The improvement in our net income for first six months 2023 compared to 2022 reflects the impact of significantly lower commodity prices on our reported derivative fair value income or loss.

Given the significant decrease in commodity prices, our derivative fair value income or loss, which includes the non-cash fair value adjustment related to our derivatives, was a gain of $491.7 million in first six months 2023 compared to a loss of $1.2 billion in first six months of the prior year.

In addition, first six months 2023 includes a gain on extinguishment of debt compared to a loss in the same period of the prior year offset by the impact of significantly lower commodity prices on our natural gas, NGLs and oil sales.

For additional information on our derivative fair value income (loss), see page 30.

For first six months 2023, we experienced a decrease in revenue from the sale of natural gas, NGLs and oil due to a 39% decrease in net realized prices (average prices including all derivative settlements and third-party transportation costs paid by us) somewhat offset by slightly higher production volumes when compared to the same period of 2022.

Daily production averaged 2.1 Bcfe in both the first six months 2023 and 2022.

Our first six months 2023 financial and operating performance included the following results:

revenue from the sale of natural gas, NGLs and oil decreased 50% from the same period of 2022 with a 51% decrease in average realized prices (before cash settlements on our derivatives) partially offset by slightly higher production volumes;

revenue from the sale of natural gas, NGLs and oil (including cash settlements on our derivatives) decreased 29% from the same period of 2022;

transportation, gathering, processing and compression per mcfe was $1.45 in first six months 2023 compared to $1.67 in the same period of 2022 due to lower prices;

direct operating expense per mcfe was $0.13 in first six months 2023 compared to $0.11 in the same period of 2022 due to higher workovers along with higher water handling/hauling costs and higher contract labor and service costs;

general and administrative expense per mcfe for the first six months 2023 decreased 4% from the same period of 2022 primarily due to lower stock-based compensation and lower legal fees;

interest expense per mcfe decreased 29% from the same period of 2022 due to lower debt balances;

DD&A rate per mcfe decreased 2% from the same period of 2022.

First six months 2023 also included the following highlights to enhance our balance sheet, return capital to investors and preserve liquidity:

paid $38.6 million in dividends or $0.16 per share compared to none in first six months 2022;

repurchased $9.7 million of our common stock;

repurchased in the open market $61.6 million face value of our 4.875% senior notes due 2025 at a discount;

enhanced liquidity with the accumulation of cash totaling $162.1 million along with $1.2 billion available under our credit facility.

Our cash flow from operating activities in first six months 2023 was $601.5 million, a decrease of $129.6 million from the same period of 2022 with significantly lower realized prices partially offset by slightly higher production volumes and a favorable impact from the change in working capital.

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

1 unchanged sentence

Our revenues are generally recognized when control of the product is transferred to the customer and collectability is reasonably assured.

In first quarter 2023, natural gas, NGLs and oil sales decreased 29% compared to first quarter 2022 with a 31% decrease in average realized prices (before cash settlements on our derivatives) partially offset by a 3% increase in production.

The following table illustrates the primary components of natural gas, NGLs and oil sales for the three months ended March 31, 2023 and 2022 (in thousands):

In second quarter 2023, natural gas, NGLs and oil sales decreased 65% compared to second quarter 2022 with a 66% decrease in average realized prices (before cash settlements on our derivatives) and slightly higher production.

In first six months 2023, natural gas, NGLs and oil sales decreased 50% compared to the same period of 2022 with a 51% decrease in average realized prices (before cash settlements on derivatives) partially offset by a 2% increase in production.

The following table illustrates the primary components of natural gas, NGLs and oil sales for the three and six months ended June 30, 2023 and 2022 (in thousands):

Three Months Ended

Natural gas, NGLs and oil sales

Total natural gas, NGLs and oil sales

Six Months Ended

Natural gas, NGLs

and oil sales

Total natural gas,

NGLs and oil sales

Our production is determined by drilling success which offsets the natural decline of our natural gas and oil reserves through production.

Our production for the three months ended March 31, 2023 and 2022 is set forth in the following table:

Our production for the three and six months ended June 30, 2023 and 2022 is set forth in the following table:

Three Months Ended

Six Months Ended

Production (a)

2 unchanged sentences

Total (mcfe) (b)

Average daily production (a)

Average daily

production (a)

Natural gas (mcf)

3 unchanged sentences

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 to natural gas, which is not indicative of the relationship between oil and natural gas prices.

Our average realized price received (including all derivative settlements and third-party transportation costs) during first quarter 2023 was $2.52 per mcfe compared to $3.23 per mcfe in first quarter 2022.

Our average realized price received (including all derivative settlements and third-party transportation costs) during second quarter 2023 was $1.46 per mcfe compared to $3.29 per mcfe in second quarter 2022.

Our average realized price received (including all derivative settlements and third-party transportation costs) during first six months 2023 was $1.99 per mcfe compared to $3.26 per mcfe in first six months 2022.

We believe computed final realized prices should include the total impact of transportation, gathering, processing and compression expense.

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Average realized prices (excluding derivative settlements) do include transportation costs where we receive net revenue proceeds from purchasers.

Average realized price calculations for three months ended March 31, 2023 and 2022 are shown below:

Average realized price calculations for three and six months ended June 30, 2023 and 2022 are shown below:

Three Months Ended

Six Months Ended

Average Prices

23 unchanged sentences

Three Months Ended

Six Months Ended

Average natural gas differentials below NYMEX

Realized gains on basis hedging

Realized (losses) gains on basis hedging

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):

Three Months Ended

Six Months Ended

Price (per mcf)

Production (Mmcf)

Natural gas sales

Three Months Ended

Six Months Ended

Price (per bbl)

Production (Mbbls)

Three Months Ended

Six Months Ended

Price (per bbl)

Production (Mbbls)

Crude oil sales

Three Months Ended

Six Months Ended

Price (per mcfe)

Production (Mmcfe)

Total natural gas,

NGLs and oil sales

Transportation, gathering, processing and compression expense was $285.5 million in first quarter 2023 compared to $297.8 million in first quarter 2022.

These third-party costs are lower in first quarter 2023 when compared to first quarter 2022 due to lower fuel prices, lower electricity costs and the impact of lower NGLs prices which result in lower processing costs.

Transportation, gathering, processing and compression expense was $268.2 million in second quarter 2023 compared to $327.9 million in second quarter 2022.

These third-party costs are lower in second quarter 2023 when compared to second quarter 2022 due to lower fuel prices, lower electricity costs and the impact of lower NGLs prices which result in lower processing costs.

The second quarter 2022 included a one-time adjustment of $7.5 million for a settlement regarding transportation, gathering and processing charges.

Transportation, gathering, processing and compression expense was $553.7 million in the first six months 2023 compared to $625.7 million in the same period of the prior year.

These third party costs are lower in first six months 2023 when compared to the same period of 2022 due to the impact of lower NGL prices which result in lower processing costs, lower electricity and fuel costs.

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 three months ended March 31, 2023 and 2022 on a per mcf and per barrel basis (in thousands, except for costs per unit):

The following table summarizes transportation, gathering, processing and compression expense for the three and six months ended June 30, 2023 and 2022 on a per mcf and per barrel basis (in thousands, except for costs per unit):

Three Months Ended

Six Months Ended

Transportation, gathering,

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Oil (per bbl)

Derivative fair value income (loss) was income of $368.0 million in first quarter 2023 compared to a loss of $939.1 million in first quarter 2022.

Derivative fair value income (loss) was income of $123.7 million in second quarter 2023 compared to a loss of $239.9 million in second quarter 2022.

Derivative fair value income was $491.7 million in first six months 2023 compared to a loss of $1.2 billion in the same period of the prior year.

All of our derivatives are accounted for using the mark-to-market accounting method.

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Gains on our derivatives generally indicate potentially lower wellhead revenues in the future while losses indicate potentially higher future wellhead revenues.

The following table summarizes the impact of our commodity derivatives for the three months ended March 31, 2023 and 2022 (in thousands):

The following table summarizes the impact of our commodity derivatives for the three and six months ended June 30, 2023 and 2022 (in thousands):

Three Months Ended

Derivative fair value income (loss) per consolidated

statements of operations

Six Months Ended

Derivative fair value income (loss) per

consolidated statements of operations

Non-cash fair value income (loss):

4 unchanged sentences

Divestiture contingent consideration

Total non-cash fair value income (loss) (1)

Total non-cash fair value income (loss) (a)

Net cash receipt (payment) on derivative settlements:

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This also includes the change in fair value of our divestiture contingent consideration.

Brokered natural gas, marketing and other revenue in first quarter 2023 was $82.1 million compared to $87.4 million in first quarter 2022 which is the result of significantly lower broker sales prices somewhat offset by significantly higher broker sales volumes (volumes not related to our production).

The three months ended March 31, 2023 includes the receipt of a $3.6 million make-whole payment.

Brokered natural gas, marketing and other revenue in second quarter 2023 was $44.9 million compared to $108.2 million in second quarter 2022 which is the result of significantly lower broker sales prices somewhat offset by higher broker sales volumes (volumes not related to our production).

The revenue in second quarter 2023 also includes the receipt of a $1.5 million make-whole payment and $1.8 million of interest income.

Brokered natural gas, marketing and other revenue was $127.0 million in first six months 2023 compared to $195.6 million in first six months 2022 which is the result of significantly lower broker sales prices somewhat offset by higher broker sales volumes.

The six months ended June 30, 2023 also includes the receipt of $5.1 million in make-whole payments and $2.7 million of interest income.

We continue to optimize our transportation portfolio using these volumes.

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We believe some of our expense fluctuations are best analyzed on a unit-of-production or per mcfe basis.

The following table presents information about certain of our expenses on a per mcfe basis for the three months ended March 31, 2023 and 2022:

Our costs for certain services, labor and supplies have remained high due to on-going demand and, to a lesser extent, inflation and supply chain disruptions, all of which affected the cost of our operations throughout 2022.

Market conditions suggest these costs will continue to stabilize in the second half of 2023.

The following table presents information about certain of our expenses on a per mcfe basis for the three and six months ended June 30, 2023 and 2022:

Three Months Ended

Six Months Ended

Direct operating expense

Taxes other than income

General and administrative expense

General and administrative

Interest expense

Depletion, depreciation and amortization expense

Direct operating expense was $27.0 million in first quarter 2023 compared to $20.3 million in first quarter 2022.

Depletion, depreciation and

amortization expense

Direct operating expense was $23.9 million in second quarter 2023 compared to $20.1 million in second quarter 2022.

Direct operating expenses include normally recurring expenses to operate and produce our wells, non-recurring well workovers and repair-related expenses.

Our direct operating costs increased in first quarter 2023 primarily due to higher workover costs, higher water handling/hauling costs and higher contract labor and services.

Our costs for services, labor and supplies have increased due to increased demand for those items, supply chain disruptions and inflation.

Our production volumes were slightly higher in first quarter 2023 compared to the same period of the prior year.

We incurred $2.9 million of workover costs in first quarter 2023 compared to $881,000 in first quarter 2022.

Our direct operating costs increased in second quarter 2023 primarily due to higher water handling/hauling costs, higher equipment costs and higher contract labor and services along with higher workover costs.

Our production volumes were slightly higher in second quarter 2023 compared to the same period of the prior year.

We incurred $784,000 of workover costs in second quarter 2023 compared to $203,000 in second quarter 2022.

These costs are expected to enhance production from existing wells.

On a per mcfe basis, direct operating expense was $0.14 in first quarter 2023 compared to $0.11 in the same quarter of the prior year due to higher workover costs and higher water handling/hauling costs.

The following table summarizes direct operating expense per mcfe for the three months ended March 31, 2023 and 2022:

On a per mcfe basis, direct operating expense was $0.13 in second quarter 2023 compared to $0.11 in the same quarter of the prior year due to higher equipment costs and higher water handling/hauling costs.

Direct operating expense was $50.9 million in the first six months 2023 compared to $40.3 million in the same period of the prior year.

Our direct operating costs increased in the first six months 2023 when compared to the same period of the prior year due to higher workover costs, higher water handling/hauling costs and higher contract labor and services.

We incurred $3.7 million of workover costs in first six months 2023 compared to $1.1 million of workover costs in first six months 2022.

These costs are expected to enhance production from existing wells.

On a per mcfe basis direct operating costs increased $0.02 from $0.11 to $0.13 due to higher workover costs and higher water/hauling costs.

The following table summarizes direct operating expense per mcfe for the three and six months ended June 30, 2023 and 2022:

Three Months Ended

Six Months Ended

Direct operating

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Stock-based compensation

Total direct operating expense

Total direct operating

Taxes other than income expense is predominately comprised of the Pennsylvania impact fee which is paid based on market commodity prices.

In February 2012, the Commonwealth of Pennsylvania enacted an “impact fee”

which functions as a tax on unconventional natural gas and oil production from the Marcellus Shale in Pennsylvania.

This impact fee was $6.8 million in first quarter 2023 compared to $6.6 million in first quarter 2022.

In February 2012, the Commonwealth of Pennsylvania enacted an "impact fee" which functions as a tax on unconventional natural gas and oil production from the Marcellus Shale in Pennsylvania.

This impact fee was $6.7 million in second quarter 2023 compared to $7.5 million in second quarter 2022.

The impact fee is based on drilling activities and is adjusted based on prevailing natural gas prices.

Taxes other than income includes an impact fee of $13.5 million in first six months 2023 compared to $14.1 million in the first six months 2022 which reflects lower natural gas prices.

This category also includes franchise, real estate and other taxes.

The following table summarizes taxes other than income per mcfe for the three months ended March 31, 2023 and 2022:

The following table summarizes taxes other than income per mcfe for the three and six months ended June 30, 2023 and 2022:

Three Months Ended

Six Months Ended

Taxes other than income

Total taxes other than income

General and administrative (G&A) expense was $43.1 million in first quarter 2023 compared to $42.5 million in first quarter 2022.

The first quarter 2023 increase of $609,000 when compared to the same period of 2022 is primarily due to higher salaries and benefits of $3.0 million partially offset by lower stock-based compensation and lower legal fees.

On a per mcfe basis, first quarter 2023 G&A expense was 4% lower than first quarter 2022 primarily due to the impact of higher production volumes and lower stock-based compensation.

The following table summarizes G&A expenses on a per mcfe basis for the three months ended March 31, 2023 and 2022:

Total taxes other than

General and administrative (G&A) expense was $39.5 million in second quarter 2023 compared to $42.9 million in second quarter 2022.

The second quarter 2023 decrease of $3.4 million when compared to the same period of 2022 is primarily due to lower stock-based compensation expense and lower legal fees.

On a per mcfe basis, second quarter 2023 G&A expense was 9% lower than second quarter 2022 primarily due to lower stock-based compensation and lower legal fees.

G&A expense for first six months 2023 decreased $2.8 million when compared to the same period of 2022 due to lower stock-based compensation expense of $3.8 million and lower legal fees partially offset by higher salaries and benefits.

On a per mcfe basis first six months 2023 G&A expense decreased 4% from the first six months of the prior year due to lower stock-based compensation.

The following table summarizes G&A expenses on a per mcfe basis for the three and six months ended June 30, 2023 and 2022:

Three Months Ended

General and administrative

Six Months Ended

General and administrative

Stock-based compensation

Total general and administrative expense

Interest expense was $32.2 million in first quarter 2023 compared to $47.2 million in first quarter 2022.

The following table presents information about interest expense per mcfe for the three months ended March 31, 2023 and 2022:

administrative

Total general and

administrative expense

Interest expense was $31.1 million in second quarter 2023 compared to $42.0 million in second quarter 2022.

Interest expense was $63.3 million for first six months 2023 compared to $89.2 million for first six months of 2022.

The following table presents information about interest expense per mcfe for the three and six months ended June 30, 2023 and 2022:

Three Months Ended

Six Months Ended

Bank credit facility

4 unchanged sentences

Average interest rate (a)

Includes commitment fees but excludes debt issue costs and amortization of discounts and premiums.

On an absolute basis, the decrease in interest expense for first quarter 2023 from the same period of 2022 was primarily due to lower overall average outstanding debt balances.

Average debt outstanding on the bank credit facility for first quarter 2023 was $32.0 million compared to $65.3 million in first quarter 2022 and the weighted average interest rate on the bank credit facility was 8.4% in first quarter 2023 compared to 2.5% in first quarter 2022.

Depletion, depreciation and amortization expense was $86.6 million in first quarter 2023 compared to $85.6 million in first quarter 2022.

This increase is due to a 3% increase in production volumes partially offset by a 2% decrease in depletion rates.

Depletion expense, the largest component of DD&A expense, was $0.44 per mcfe in first quarter 2023 compared to $0.45 per mcfe in first quarter 2022.

Includes commitment fees but excludes debt issuance costs.

On an absolute basis, the decrease in interest expense for second quarter 2023 from the same period of 2022 was primarily due to lower overall average outstanding debt balances.

We had no debt outstanding on the bank credit facility for second quarter 2023 compared to $90.0 million in second quarter 2022 and the weighted average interest rate on the bank credit facility was 4.1% in second quarter 2022.

On an absolute basis, the decrease in interest expense for first six months 2023 from the same period in 2022 was primarily due to lower overall outstanding debt balances.

Average debt balance outstanding on the bank credit facility was $16.0 million for first six months 2023 compared to $77.6 million for first six months 2022 and the weighted average interest rates on the bank credit facility was 8.4% in first six months 2023 compared to 3.4% in first six months 2022.

Depletion, depreciation and amortization expense was $85.0 million in second quarter 2023 compared to $86.5 million in second quarter 2022.

This decrease is due to a 2% decrease in depletion rates.

Depletion expense, the largest component of DD&A expense, was $0.44 per mcfe in second quarter 2023 compared to $0.45 per mcfe in second quarter 2022.

DD&A expense was $171.6 million in first six months 2023 compared to $172.1 million in the same period of 2022.

This decrease is due to a 2% decrease in depletion rates somewhat offset by a slight increase in production volumes.

Depletion expense per mcfe was $0.44 in first six months 2023 compared to a $0.45 in the same period of 2022.

We have historically adjusted our depletion rates in the fourth quarter of each year based on the 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 expense per mcfe for the three months ended March 31, 2023 and 2022:

The following table summarizes DD&A expense per mcfe for the three and six months ended June 30, 2023 and 2022:

Three Months Ended

Six Months Ended

Depletion and amortization

5 unchanged sentences

Stock-based compensation includes the amortization of restricted stock grants and PSUs.

The following table details the allocation of stock-based compensation to functional expense categories for the three months ended March 31, 2023 and 2022 (in thousands):

The following table details the allocation of stock-based compensation to functional expense categories for the three and six months ended June 30, 2023 and 2022 (in thousands):

Three Months Ended

Six Months Ended

Direct operating expense

3 unchanged sentences

Total stock-based compensation

Brokered natural gas and marketing expense was $67.1 million in first quarter 2023 compared to $93.1 million in first quarter 2022 due to significantly lower commodity prices partially offset by significantly higher broker purchase volumes (volumes not related to our production).

Other marketing revenue for the three months ended March 31, 2023 includes the receipt of a $3.6 million make-whole payment.

The following table details our brokered natural gas, marketing and other net margin for the three months ended March 31, 2023 and 2022 (in thousands):

Brokered natural gas and marketing expense was $44.8 million in second quarter 2023 compared to $110.1 million in second quarter 2022 due to significantly lower commodity prices partially offset by higher broker purchase volumes (volumes not related to our production).

Brokered natural gas and marketing expense was $111.9 million in first six months 2023 compared to $203.2 million in first six months 2022 due to significantly lower commodity prices partially offset by higher broker purchase volumes.

The following table details our brokered natural gas, marketing and other net margin for the three and six months ended June 30, 2023 and 2022 (in thousands):

Three Months Ended

Six Months Ended

Brokered natural gas and

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Brokered NGLs sales

Interest income

Other marketing revenue

Brokered natural gas purchases (1)

Brokered natural

gas purchases (a)

Brokered NGLs purchases

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Includes transportation costs.

Exploration expense was $4.6 million in first quarter 2023 compared to $4.7 million in first quarter 2022 due to lower delay rentals and other expense.

The following table details our exploration expense for the three months ended March 31, 2023 and 2022 (in thousands):

Exploration expense was $7.4 million in second quarter 2023 compared to $7.5 million in second quarter 2022 with lower delay rentals and other expense offset by higher seismic costs.

Exploration expense was $12.1 million in first six months 2023 compared to $12.2 million in first six months 2022 with lower delay rentals and other expense offset by higher seismic costs.

The following table details our exploration expense for the three and six months ended June 30, 2023 and 2022 (in thousands):

Three Months Ended

Six Months Ended

Delay rentals and other

Personnel expense

Stock-based compensation expense

Stock-based compensation

Total exploration expense

Abandonment and impairment of unproved properties expense was $7.5 million in first quarter 2023 compared to $2.0 million in first quarter 2022.

Abandonment and impairment of unproved properties for first quarter 2023 increased when compared to the same period of 2022 due to higher estimated lease expirations in Pennsylvania.

Exit costs were $12.3 million in first quarter 2023 compared to $11.1 million in first quarter 2022.

In first quarter 2023, we recorded $10.3 million accretion expense primarily related to retained liabilities for certain gathering, transportation and processing obligations extending until 2030 compared to accretion expense of $11.1 million in the same quarter of the prior year.

Deferred compensation plan expense was a loss of $9.4 million in first quarter 2023 compared to a loss of $73.3 million in first quarter 2022.

Abandonment and impairment of unproved properties expense was $25.8 million in second quarter 2023 compared to $7.1 million in second quarter 2022.

Abandonment and impairment of unproved properties was $33.3 million in first six months 2023 compared to $9.1 million in the same period of 2022.

Abandonment and impairment of unproved properties for second quarter and first six months 2023 increased when compared to the same period of 2022 due to higher expected lease expirations in Pennsylvania.

When we do not intend to drill on a property prior to expiration, we have allowed acreage to expire and we expect to allow acreage to expire in the future.

However, we also believe acres needed for future development can be leased again.

Exit costs were $48.7 million in second quarter 2023 compared to $36.1 million in second quarter 2022.

In second quarter 2023, we recorded $10.9 million accretion expense primarily related to retained liabilities for certain gathering, transportation and processing obligations extending until 2030 compared to accretion expense of $11.3 million in the same quarter of the prior year.

The second quarter 2023 also includes an adjustment of $37.8 million to increase this obligation primarily due to an increase in forecasted rates due to inflation.

The second quarter 2022 also included an adjustment of $24.8 million to increase the obligation for a change in our forecasted drilling plans of the buyer and other adjustments.

Exit costs were $61.0 million in first six months 2023 compared to $47.2 million in first six months 2022.

We recorded accretion expense of $21.2 million in first six months 2023 compared to accretion expense of $22.4 million in the same period of 2022.

The first six months 2023 also includes an adjustment of $39.8 million to increase this obligation primarily for an

increase in forecasted rates due to inflation compared to an adjustment of $24.8 million in the same period of the prior year to increase this obligation for a change in forecasted drilling plans of the buyer and other adjustments.

Deferred compensation plan expense was a loss of $11.2 million in second quarter 2023 compared to income of $19.2 million in second quarter 2022.

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.

Our stock price increased from $25.02 at December 31, 2022 to $26.47 at March 31, 2023.

In the same period of the prior year, our stock price increased from $17.83 at December 31, 2021 to $30.38 at March 31, 2022.

Loss on early extinguishment of debt was a loss of $69.2 million in first three months 2022.

Our stock price increased from $26.47 at March 31, 2023 to $29.40 June 30, 2023.

In the same period of the prior year our stock price decreased from $30.38 at March 31, 2022 to $24.75 at June 30, 2022.

During first six months 2023, deferred compensation was a loss of $20.5 million compared to a loss of $54.1 million in the same period in 2022.

Our stock price increased from $25.02 at December 31, 2022 to $29.40 at June 30, 2023.

In the same period of the prior year, our stock price increased from $17.83 at December 31, 2021 to $24.75 at June 30, 2022.

(Gain) loss on early extinguishment of debt was a gain of $439,000 in both second quarter and six months ended 2023 compared to a loss of $69.2 million in first six months 2022.

In second quarter 2023, we purchased in the open market $61.6 million principal amount of 4.875% senior notes due 2025 at a discount and recorded a gain of $439,000, net of transaction costs and the expensing of deferred financing costs on the repurchased debt.

In first quarter 2022, we announced a call for the redemption of $850.0 million of our outstanding 9.25% senior notes due 2026.

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We recognized a loss on early extinguishment of debt in first quarter 2022 of $69.2 million, net of transaction costs and the expensing of the remaining deferred financing costs on the repurchased debt.

Income tax expense (benefit) was an expense of $121.9 million in first quarter 2023 compared to benefit of $116.1 million in first quarter 2022.

Income tax expense (benefit) was an expense of $14.7 million in second quarter 2023 compared to expense of $103.3 million in second quarter 2022.

Income tax expense was $136.6 million in first six months 2023 compared to a benefit of $12.8 million in the same period of 2022.

The 2023 and 2022 effective tax rates were different than the statutory tax rate due to state income taxes, equity compensation, valuation allowances and other discrete tax items.

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The production we hedge has varied and will continue to vary from year to year depending on, among other things, our expectation of future commodity prices and capital requirements.

Any payments due to counterparties under our derivative contracts should ultimately be funded by prices received from the sale of our production.

Any payments due to counterparties under our derivative contracts should ultimately be funded by proceeds received from the sale of our production.

Production receipts, however, often lag payments to the counterparties.

As of March 31, 2023, we have entered into derivative agreements covering 226.1 Bcfe for the remainder of 2023 and 213.4 Bcfe for 2024, not including our basis swaps.

The following table presents sources and uses of cash and cash equivalents for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended

As of June 30, 2023, we have entered into derivative agreements covering 148.7 Bcfe for the remainder of 2023, 291.1 Bcfe for 2024, 149.7 Bcfe for 2025 and 11.9 Bcfe for 2026, not including our basis swaps.

The following table presents sources and uses of cash and cash equivalents for the six months ended June 30, 2023 and 2022 (in thousands):

Six Months Ended

Sources of cash and cash equivalents

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Additions to field service assets

Repayment of senior and senior subordinated notes

Repayment of senior notes

Treasury stock purchases

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Sources of Cash and Cash Equivalents

Cash flows provided from operating activities in first three months 2023 was $475.0 million compared to $406.4 million in first three months 2022.

Cash flows provided from operating activities in first six months 2023 was $601.5 million compared to $731.1 million in first six months 2022.

Cash provided from operating activities is largely dependent upon commodity prices and production volumes, net of the effects of settlement of our derivative contracts.

The increase in cash provided from operating activities from first three months 2022 to first three months 2023 reflects the impact of a favorable change in working capital (the timing of cash receipts and disbursements) and slightly higher production volumes partially offset by lower realized prices.

As of March 31, 2023, we have hedged more than 40% of our projected total production for the remainder of 2023, with more than 50% of our projected natural gas production hedged.

Changes in working capital (as reflected in our consolidated statements of cash flows) for first three months 2023 were positive $79.7 million compared to a negative $77.4 million for first three months 2022.

The decrease in cash provided from operating activities from first six months 2022 to first six months 2023 reflects lower realized prices partially offset by the impact of a favorable change in working capital (the timing of cash receipts and disbursements).

As of June 30, 2023, we have hedged more than 45% of our projected total production for the remainder of 2023, with more than 50% of our projected natural gas production hedged.

Changes in working capital (as reflected in our consolidated statements of cash flows) for first six months 2023 were a positive $27.4 million compared to a negative $256.8 million for first six months 2022.

Uses of Cash and Cash Equivalents

Additions to natural gas properties for first three months 2023 were consistent with expectations relative to our announced 2023 capital budget.

We continue to monitor inflationary pressures given the labor market, commodity prices and supply chain challenges.

Treasury stock purchases for first three months 2023 include the repurchase of 323,000 shares as part of our previously announced stock repurchase program.

Additions to natural gas properties for first six months 2023 were consistent with expectations relative to our announced 2023 capital budget.

Repayment of senior notes for first six months 2023 includes the repurchase in the open market $61.6 million principal amount of our 4.875% senior notes due 2025, at a discount.

Treasury stock purchases for first six months 2023 include the repurchase of 400,000 shares for a total of $9.7 million as part of our previously announced stock repurchase program.

Liquidity and Capital Resources

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We continue to manage the duration and level of our drilling and completion commitments in order to maintain flexibility with regard to our activity level and capital expenditures.

As of March 31, 2023, we had cash on hand in the amount of $227.6 million and availability under our credit facility of $1.2 billion.

As of June 30, 2023, we had cash on hand in the amount of $162.1 million and availability under our credit facility of $1.2 billion.

Sources of Cash

We expect our 2023 capital program to be funded by cash flows from operations.

During the three months ended March 31, 2023, we generated $475.0 million of cash flows from operating activities.

As of March 31, 2023, we had approximately $1.4 billion of liquidity, consisting of $1.2 billion available under our bank credit facility and $227.6 million of cash on hand.

During the six months ended June 30, 2023, we generated $601.5 million of cash flows from operating activities.

As of June 30, 2023, we had approximately $1.4 billion of liquidity, consisting of $1.2 billion available under our bank credit facility and $162.1 million of cash on hand.

Our borrowing base can be adjusted as a result of changes in commodity prices, acquisitions or divestitures of proved properties or financing activities.

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Our bank credit facility is secured by substantially all of our assets.

As of March 31, 2023, we had no outstanding borrowings under our bank credit facility and we maintained a borrowing base of $3.0 billion and aggregate lender commitments of $1.5 billion.

We also have undrawn letters of credit of $292.3 million as of March 31, 2023.

We were in compliance with the applicable covenants under the bank credit facility as of March 31, 2023.

As of June 30, 2023, we had no outstanding borrowings under our bank credit facility and we maintained a borrowing base of $3.0 billion and aggregate lender commitments of $1.5 billion.

We also have undrawn letters of credit of $292.9 million as of June 30, 2023.

We were in compliance with the applicable covenants under the bank credit facility as of June 30, 2023.

The borrowing base is subject to regular, semi-annual redeterminations and is dependent on a number of factors but primarily the lender’s assessment of our future cash flows.

Our scheduled borrowing base redetermination was completed in March 2023 with our borrowing base and commitments reaffirmed.

Our daily weighted-average bank credit facility debt balance was $32.0 million for first three months ended March 31, 2023 compared to $65.3 million for the same period of the prior year.

Our scheduled borrowing base redetermination was completed in March 2023 with our borrowing base and lender commitments reaffirmed.

Our daily weighted-average bank credit facility debt balance was $16.0 million for first six months ended June 30, 2023 compared to $77.6 million for the same period of the prior year.

Borrowings under the amended and restated revolving bank credit facility can either be at the alternate base rate (ABR, as defined in the bank credit facility agreement) plus a spread ranging from 0.75% to 1.75% or at the secured overnight financing rate (SOFR, as defined in the bank credit facility agreement) plus a spread ranging from 1.75% to 2.75%.

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Expenditures for the development, exploration and acquisition of natural gas properties are the primary use of our capital resources.

During first three months 2023, we funded $138.3 million of capital expenditures as reported in our consolidated statement of cash flows with operating cash flows.

During first six months 2023, we funded $296.7 million of capital expenditures as reported in our consolidated statement of cash flows with operating cash flows.

The amount of our future capital expenditures will depend upon a number of factors including our cash flows from operating, investing and financing activities, infrastructure availability, supply and demand fundamentals and our ability to execute our development program.

6 unchanged sentences

As part of our strategy for 2023, we will continue to focus on improving our financial strength.

Our quarterly cash dividend was reinstated in third quarter of 2022.

Our quarterly cash dividend was reinstated in third quarter 2022.

What changed 10-Q

Item 1. Financial Statements