RRC Range Resources Corp

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): January 5, 2016 (December 30, 2015)

 

 

RANGE RESOURCES CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		001-12209		34-1312571
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

100 Throckmorton, Suite 1200 Ft. Worth, Texas		76102
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (817) 870-2601

 

(Former name or former address, if changed since last report): Not applicable

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

---

Range Resources Corporation

ITEM 2.01 Completion of Acquisition or Disposition of Assets

As previously announced, a subsidiary of Range Resources Corporation (the “Company”) entered into a definitive sales agreement on November 3, 2015 to sell its Virginia and West Virginia producing properties and other assets. We closed on the sale of these assets on December 30, 2015. Unaudited pro forma consolidated financial information of the Company to give effect to the disposition of these assets pursuant to such agreement is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.

ITEM 9.01. Financial Statements and Exhibits

 

(b)	Pro Forma Financial information:

Unaudited pro forma information of the Company to give effect to the disposition of our Virginia and West Virginia assets is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference:

 

-

Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2015

 

-

Unaudited Pro Forma Consolidated Statements of Operations for the year ended December 31, 2014 and for the nine months ended September 30, 2015

 

(c)

Exhibits

99.1 Unaudited Pro Forma Consolidated Financial Statements.

 

2

---

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: January 5, 2016

 

3

---

Exhibit index

 

Exhibit Number		Exhibit Description
99.1		Unaudited Pro Forma Consolidated Financial Statements.

 

4

Exhibit 99.1

Range Resources Corporation

Unaudited Pro Forma Consolidated Financial Statements

The following unaudited pro forma consolidated financial information is presented to illustrate the effect of Range Resources Corporation’s (“Range”, “our”, “we”) sale of certain assets in Virginia and West Virginia on our historical financial position and operating results. The sale closed on December 30, 2015. The accompanying unaudited pro forma consolidated balance sheet and unaudited pro forma consolidated statements of operations have been prepared to assist in the analysis of the financial effects of the divestiture. This divestiture does not qualify as a discontinued operation under ASC 205 after our 2014 adoption of Accounting Standards Update 2014-08. This pro forma information is based on the historical consolidated financial statements of Range and should be read in conjunction with the accompanying footnotes and the financial statements included in the Range Resources Corporation Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on February 24, 2015 and Quarterly Report on Form 10-Q for the three and the nine months ended September 30, 2015, filed with the SEC on October 28, 2015.

The accompanying unaudited pro forma consolidated balance sheet as of September 30, 2015 has been prepared to give effect to the divestiture as if it had occurred on September 30, 2015. The unaudited pro forma consolidated statements of operations for the year ended December 31, 2014 and the nine months ended September 30, 2015 have been prepared to give effect to the divestiture as if it had occurred on January 1, 2014.

The unaudited pro forma consolidated balance sheet and statements of operations included herein are for information purposes only and are not necessarily indicative of the results that might have occurred had the divestiture taken place on the respective dates assumed. Actual results may differ significantly from those reflected here in the unaudited consolidated pro forma financial statements for various reasons, including but not limited to, the differences between the assumptions used to prepare the unaudited pro forma consolidated financial statements and actual results. The pro forma adjustments in the unaudited pro forma consolidated balance sheet and the statements of operations included herein include the use of estimates and assumptions as described in the accompanying notes. The pro forma adjustments are based on information available to management at the time these unaudited pro forma consolidated financial statements were prepared. We believe our current estimates provide a reasonable basis of presenting the significant effects of the transaction. However, the estimates and assumptions are subject to change as additional information becomes available. The unaudited pro forma consolidated financial statements only include adjustments related to the disposition of the Virginia and West Virginia assets.

---

RANGE RESOURCES CORPORATION

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

(Unaudited, in thousands, except per share data)

September 30, 2015

 

		As Reported				Pro Forma Adjustments				As Adjusted
Assets
Current assets:
Cash and cash equivalents		$	490			$	865,331	(a)		$	865,821
Accounts receivable less allowance for doubtful accounts of $3,306			110,792				—				110,792
Derivative asset			289,108				—				289,108
Inventory and other			23,038				(102	) (b)			22,936
Total current assets			423,428				865,229				1,288,657
Derivative asset			44,067				—				44,067
Natural gas and oil properties, successful efforts method			10,656,621				(1,671,500	) (b)			8,985,121
Accumulated depletion and depreciation			(2,871,827	)			351,848	(b)			(2,519,979	)
			7,784,794				(1,319,652	)			6,465,142
Other property and equipment			128,535				(19,236	) (b)			109,299
Accumulated depreciation and amortization			(98,700	)			10,238	(b)			(88,462	)
			29,835				(8,998	)			20,837
Other assets			115,780				(74	) (b)			115,706
Total assets		$	8,397,904			$	(463,495	)		$	7,934,409
Liabilities
Current liabilities:
Accounts payable		$	147,870			$	—			$	147,870
Asset retirement obligations			17,689				(375	) (b)			17,314
Accrued liabilities			172,702				(2,022	) (b)			170,680
Derivative liabilities			293				—				293
Accrued interest			31,756				—				31,756
Deferred tax liabilities			95,502				—				95,502
Total current liabilities			465,812				(2,397	)			463,415
Bank debt			987,000				—				987,000
Senior notes			750,000				—				750,000
Subordinated notes			1,850,000				—				1,850,000
Deferred tax liabilities			843,189				(161,235	) (b)			681,954
Derivative liabilities			111				—				111
Deferred compensation liabilities			117,137				—				117,137
Asset retirement obligations and other liabilities			299,973				(47,676	) (b)			252,297
Total liabilities			5,313,222				(211,308	)			5,101,914
Commitments and contingencies
Stockholders’ Equity
Preferred stock, $1 par, 10,000,000 shares authorized, none issued and outstanding			—				—				—
Common stock, $0.01 par, 475,000,000 shares authorized, 169,369,535 issued at September 30, 2015			1,693				—				1,693
Common stock held in treasury, 60,015 shares at September 30, 2015			(2,275	)			—				(2,275	)
Additional paid-in capital			2,439,075				—				2,439,075
Retained earnings			646,189				(252,187	) (b)			394,002
Total stockholders’ equity			3,084,682				(252,187	)			2,832,495
Total liabilities and stockholders’ equity		$	8,397,904			$	(463,495	)		$	7,934,409

See accompanying notes.

 

2

---

RANGE RESOURCES CORPORATION

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015

(Unaudited, in thousands, except per share data)

 

		As Reported				Pro Forma Adjustments (c)				As Adjusted
Revenues and other income:
Natural gas, NGL and oil sales		$	835,601			$	(90,902	)		$	744,699
Derivative fair value income			290,052				—				290,052
Gain on the sale of assets			2,053				—				2,053
Brokered natural gas, marketing and other			61,688				(9,617	)			52,071
Total revenues and other income			1,189,394				(100,519	)			1,088,875
Costs and expenses:
Direct operating			106,975				(15,283	)			91,692
Transportation, gathering and compression			284,258				(6,008	)			278,250
Production and ad valorem taxes			26,506				(5,160	)			21,346
Brokered natural gas and marketing			80,924				(22,796	)			58,128
Exploration			17,146				(759	)			16,387
Abandonment and impairment of unproved properties			36,187				—				36,187
General and administrative			150,471				(7,548	)			142,923
Termination costs			6,290				—				6,290
Deferred compensation plan			(56,611	)			—				(56,611	)
Interest expense			125,590				(34,190	)			91,400
Loss on early extinguishment of debt			22,495				—				22,495
Depletion, depreciation and amortization			453,178				(47,962	)			405,216
Impairment of proved properties and other assets			502,233				—				502,233
Total costs and expenses			1,755,642				(139,706	)			1,615,936
(Loss) income before income taxes			(566,248	)			39,187				(527,061	)
Income tax (benefit) expense:
Current			—				—				—
Deferred			(174,390	)			15,283				(159,107	)
			(174,390	)			15,283				(159,107	)
Net (loss) income		$	(391,858	)		$	23,904			$	(367,954	)
Loss per common share:
Basic		$	(2.36	)						$	(2.21	)
Diluted		$	(2.36	)						$	(2.21	)
Dividends paid per common share		$	0.12							$	0.12
Weighted average common shares outstanding:
Shares– basic			166,327								166,327
Shares– diluted			166,327								166,327

See accompanying notes.

 

3

---

RANGE RESOURCES CORPORATION

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2014

(Unaudited, in thousands, except per share data)

 

		As Reported				Pro Forma Adjustments (c)				As Adjusted
Revenues and other income:
Natural gas, NGL and oil sales		$	1,911,989			$	(147,889	)		$	1,764,100
Derivative fair value income			383,520				—				383,520
Gain on the sale of assets			285,638				—				285,638
Brokered natural gas, marketing and other			130,548				(5,046	)			125,502
Total revenues and other income			2,711,695				(152,935	)			2,558,760
Costs and expenses:
Direct operating			150,483				(18,198	)			132,285
Transportation, gathering and compression			325,289				(5,298	)			319,991
Production and ad valorem taxes			44,555				(7,223	)			37,332
Brokered natural gas and marketing			129,980				(14,240	)			115,740
Exploration			63,548				(999	)			62,549
Abandonment and impairment of unproved properties			47,079				(100	)			46,979
General and administrative			213,426				(8,647	)			204,779
Termination costs			8,371				—				8,371
Deferred compensation plan			(74,550	)			—				(74,550	)
Interest expense			168,977				(33,900	)			135,077
Loss on early extinguishment of debt			24,596				—				24,596
Depletion, depreciation and amortization			551,032				(53,192	)			497,840
Impairment of proved properties and other assets			28,024				—				28,024
Total costs and expenses			1,680,810				(141,797	)			1,539,013
Income (loss) before income taxes			1,030,885				(11,138	)			1,019,747
Income tax (benefit) expense
Current			1				—				1
Deferred			396,502				(4,344	)			392,158
			396,503				(4,344	)			392,159
Net income (loss)		$	634,382			$	(6,794	)		$	627,588
Net income per common share:
Basic		$	3.81							$	3.77
Diluted		$	3.79							$	3.75
Dividends paid per common share		$	0.16							$	0.16
Weighted average common shares outstanding:
Shares– basic			163,625								163,625
Shares– diluted			164,403								164,403

See accompanying notes.

 

4

---

RANGE RESOURCES CORPORATION

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION

On December 30, 2015, we completed the sale of our certain assets in Virginia and West Virginia for a purchase price of $876.0 million subject to the terms of the purchase and sale agreement dated November 3, 2015. The sale has an effective date of November 1, 2015 and consequently operating net revenues after that date is a downward adjustment to the selling price through the normal post-closing provisions of the agreement.

The accompanying unaudited pro forma consolidated balance sheet and unaudited pro forma consolidated statements of operations have been prepared to give effect to the divestiture as if it had occurred on September 30, 2015 for the unaudited pro forma consolidated balance sheet and on January 1, 2014 for the unaudited pro forma consolidated statements of operations.

The following are descriptions of the individual columns included in the accompanying unaudited pro forma consolidated balance sheet and the accompanying unaudited pro forma consolidated statements of operations.

(2) PRO FORMA ADJUSTMENTS

The unaudited pro forma consolidated financial statements reflect the following adjustments:

Balance Sheet

“As reported” – represents the historical consolidated balance sheet of Range Resources Corporation as of September 30, 2015.

 

a)

To adjust for the proceeds and other estimated closing and post-closing adjustments associated with the divestiture. The following is a table of the estimated cash proceeds (in thousands):

 

Gross cash proceeds		$	876,000
Less estimated closing and post-closing adjustments			(10,669	)
Estimated net cash proceeds		$	865,331

 

b)

To remove the Virginia and West Virginia assets sold as a part of the purchase and sale agreement dated November 3, 2015. The following is a summarization of the application of net proceeds and estimated loss on the divestiture (in thousands):

 

Net proceeds		$	865,331
Net investment in inventory and other assets			(176	)
Net investment in natural gas and oil properties			(1,319,652	)
Net investment in other property and equipment			(8,998	)
Other liabilities – firm transportation contract			9,743
Asset retirement obligation			40,330
Loss on disposition of assets			(413,422	)
Tax benefit			161,235	)
Net loss on disposition of assets		$	(252,187	)

Statements of Operations

“As reported” – represents the historical consolidated statements of operations of Range Resources for the year ended December 31, 2014 and the nine months ended September 30, 2015.

 

c)

All adjustments are to eliminate revenues and costs and expenses (including the income tax effect) of our Virginia and West Virginia assets from our consolidated operations. Interest expense is allocated based on the ratio of net assets of Virginia and West Virginia to our consolidated net assets plus long term debt.

 

5