Range Resources 10Q 2022 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)


☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-12209

RANGE RESOURCES CORPORATION

(Exact Name of Registrant as Specified in Its Charter)


Delaware		34-1312571
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)
100 Throckmorton Street, Suite 1200 Fort Worth, Texas		76102
(Address of Principal Executive Offices)		(Zip Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, (Par Value $0.01)

RRC

New York Stock Exchange

Registrant’s telephone number, including area code

(817) 870-2601

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer		Accelerated Filer	

Non-Accelerated Filer		Smaller Reporting Company	☐
		Emerging Growth Company	☐


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.		

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No 

241,635,155 Common Shares were outstanding on October 21, 2022

RANGE RESOURCES CORPORATION

FORM 10-Q

Quarter Ended September 30, 2022

Unless the context otherwise indicates, all references in this report to “Range Resources,” “Range,” “we,” “us,” or “our” are to Range Resources Corporation and its directly and indirectly owned subsidiaries. For certain industry specific terms used in this Form 10-Q, please see “Glossary of Certain Defined Terms” in our 2021 Annual Report on Form 10-K.

TABLE OF CONTENTS


		Page
PART I – FINANCIAL INFORMATION
ITEM 1.	Financial Statements:	3
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations (Unaudited)	4
	Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	5
	Consolidated Statements of Cash Flows (Unaudited)	6
	Consolidated Statements of Stockholders’ Equity (Unaudited)	7
	Notes to Consolidated Financial Statements (Unaudited)	9
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	40
ITEM 4.	Controls and Procedures	42
PART II – OTHER INFORMATION
ITEM 1.	Legal Proceedings	42
ITEM 1A.	Risk Factors	43
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
ITEM 6.	Exhibits	44
	SIGNATURES	45

PART I – FINANCIAL INFORMATION

ITEM 1. Financial Statements

RANGE RESOURCES CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)


	September 30,			December 31,
	2022			2021
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	157,144		$	214,422
Accounts receivable, less allowance for doubtful accounts of $564 and $568		634,333			471,775
Contingent consideration receivable		—			29,500
Derivative assets		37,350			5,738
Other current assets		33,539			15,230
Total current assets		862,366			736,665
Derivative assets		13,422			38,601
Natural gas properties, successful efforts method		10,548,054			10,175,570
Accumulated depletion and depreciation		(4,676,454	)		(4,420,914	)
		5,871,600			5,754,656
Other property and equipment		74,513			74,678
Accumulated depreciation and amortization		(71,781	)		(71,184	)
		2,732			3,494
Operating lease right-of-use assets		96,567			40,832
Other assets		73,089			86,259
Total assets	$	6,919,776		$	6,660,507

Liabilities
Current liabilities:
Accounts payable	$	220,818		$	178,413
Asset retirement obligations		5,310			5,310
Accrued liabilities		563,004			420,898
Accrued interest		31,231			75,940
Derivative liabilities		652,585			162,767
Divestiture contract obligation		88,570			91,120
Current maturities of long-term debt		528,149			218,017
Total current liabilities		2,089,667			1,152,465
Bank debt		—			—
Senior notes		1,831,675			2,707,770
Deferred tax liabilities		143,814			117,642
Derivative liabilities		155,995			8,216
Deferred compensation liabilities		85,750			137,102
Operating lease liabilities		37,458			24,861
Asset retirement obligations and other liabilities		99,268			101,509
Divestiture contract obligation		312,665			325,279
Total liabilities		4,756,292			4,574,844
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, 262,886,690 issued at September 30, 2022 and 259,795,554 issued at December 31, 2021		2,629			2,598
Common stock held in treasury, 20,603,035 shares at September 30, 2022 and 10,002,646 shares at December 31, 2021		(338,851	)		(30,007	)
Additional paid-in capital		5,757,194			5,720,277
Accumulated other comprehensive income (loss)		37			(150	)
Retained deficit		(3,257,525	)		(3,607,055	)
Total stockholders' equity		2,163,484			2,085,663
Total liabilities and stockholders’ equity	$	6,919,776		$	6,660,507

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

RANGE RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021

Revenues and other income:
Natural gas, NGLs and oil sales	$	1,435,152		$	849,305		$	3,824,395		$	2,074,507
Derivative fair value loss		(457,708	)		(652,220	)		(1,636,687	)		(959,782	)
Brokered natural gas, marketing and other		133,101			105,554			328,716			248,668
Total revenues and other income		1,110,545			302,639			2,516,424			1,363,393
Costs and expenses:
Direct operating		21,290			20,245			61,628			57,653
Transportation, gathering, processing and compression		323,019			296,510			948,713			853,684
Production and ad valorem taxes		8,428			7,140			22,486			20,179
Brokered natural gas and marketing		127,285			105,838			330,517			247,177
Exploration		7,498			5,881			19,703			16,447
Abandonment and impairment of unproved properties		3,186			2,000			12,319			7,206
General and administrative		41,197			49,061			127,716			127,307
Exit and termination costs		11,065			11,789			58,249			9,557
Deferred compensation plan		5,795			34,278			59,917			89,551
Interest		38,736			56,809			127,912			170,974
Loss on early extinguishment of debt		—			—			69,232			98
Depletion, depreciation and amortization		90,471			93,116			262,573			272,128
Gain on the sale of assets		(135	)		(78	)		(548	)		(724	)
Total costs and expenses		677,835			682,589			2,100,417			1,871,237

Income (loss) before income taxes		432,710			(379,950	)		416,007			(507,844	)
Income tax expense (benefit):
Current		6,981			4,484			20,732			7,221
Deferred		52,642			(34,167	)		26,141			(35,477	)
		59,623			(29,683	)		46,873			(28,256	)
Net income (loss)	$	373,087		$	(350,267	)	$	369,134		$	(479,588	)

Net income (loss) per common share:
Basic	$	1.52		$	(1.44	)	$	1.48		$	(1.98	)
Diluted	$	1.49		$	(1.44	)	$	1.45		$	(1.98	)

Dividends declared per share	$	0.08		$	—		$	0.08		$	—

Weighted average common shares outstanding:
Basic		239,768			243,311			242,850			242,692
Diluted		245,023			243,311			248,360			242,692

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

RANGE RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited, in thousands)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021

Net income (loss)	$	373,087		$	(350,267	)	$	369,134		$	(479,588	)
Other comprehensive income:
Postretirement benefits:
Amortization of prior service costs		73			92			219			277
Income tax expense		(17	)		(22	)		(32	)		(66	)
Total comprehensive income (loss)	$	373,143		$	(350,197	)	$	369,321		$	(479,377	)

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

RANGE RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)


	Nine Months Ended September 30,
	2022			2021

Operating activities:
Net income (loss)	$	369,134		$	(479,588	)
Adjustments to reconcile net loss to net cash provided from operating activities:
Deferred income tax expense (benefit)		26,141			(35,477	)
Depletion, depreciation and amortization and impairment of proved properties		262,573			272,128
Abandonment and impairment of unproved properties		12,319			7,206
Derivative fair value loss		1,636,687			959,782
Cash settlements on derivative financial instruments		(1,005,522	)		(239,165	)
Divestiture contract obligation, including accretion, net of gain		57,791			8,467
Amortization of deferred financing costs and other		6,521			6,253
Deferred and stock-based compensation		95,397			119,946
Gain on the sale of assets		(548	)		(724	)
Loss on early extinguishment of debt		69,232			98
Changes in working capital:
Accounts receivable		(132,644	)		(116,204	)
Other current assets		(19,478	)		(3,574	)
Accounts payable		52,292			34,313
Accrued liabilities and other		(177,806	)		(58,172	)
Net cash provided from operating activities		1,252,089			475,289
Investing activities:
Additions to natural gas properties		(351,813	)		(311,709	)
Additions to field service assets		(535	)		(720	)
Acreage purchases		(23,968	)		(20,302	)
Proceeds from disposal of assets		463			237
Purchases of marketable securities held by the deferred compensation plan		(39,362	)		(24,396	)
Proceeds from the sales of marketable securities held by the deferred compensation plan		40,531			27,974
Net cash used in investing activities		(374,684	)		(328,916	)
Financing activities:
Borrowings on credit facilities		813,000			1,250,000
Repayments on credit facilities		(813,000	)		(1,922,000	)
Issuance of senior notes		500,000			600,000
Repayment of senior or senior subordinated notes		(1,071,867	)		(63,324	)
Dividends paid		(19,526	)		—
Treasury stock purchases		(308,891	)		—
Debt issuance costs		(16,177	)		(8,799	)
Taxes paid for shares withheld		(25,492	)		(9,267	)
Change in cash overdrafts		(14,203	)		1,515
Proceeds from the sales of common stock held by the deferred compensation plan		21,473			5,522
Net cash used in financing activities		(934,683	)		(146,353	)
(Decrease) increase in cash and cash equivalents		(57,278	)		20
Cash and cash equivalents at beginning of period		214,422			458
Cash and cash equivalents at end of period	$	157,144		$	478

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

RANGE RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, in thousands)


Fiscal Year 2022							Common									Accumulated
							stock			Additional						other
	Common stock				Treasury		held in			paid-in			Retained			comprehensive
	Shares		Par value		shares		treasury			capital			deficit			(loss) income			Total
Balance as of December 31, 2021		259,796	$	2,598		10,003	$	(30,007	)	$	5,720,277		$	(3,607,055	)	$	(150	)	$	2,085,663
Issuance of common stock		2,980		29		—		—			(21,276	)		—			—			(21,247	)
Issuance of common stock upon vesting of PSUs		2		—		—		—			78			(78	)		—			—
Stock-based compensation expense		—		—		—		—			8,619			—			—			8,619
Treasury stock		—		—		599		(16,152	)		(46	)		—			—			(16,198	)
Other comprehensive income		—		—		—		—			—			—			75			75
Net loss		—		—		—		—			—			(456,808	)		—			(456,808	)
Balance as of March 31, 2022		262,778		2,627		10,602		(46,159	)		5,707,652			(4,063,941	)		(75	)		1,600,104
Issuance of common stock		108		1		—		—			33,132			—			—			33,133
Stock-based compensation expense		—		—		—		—			7,733			—			—			7,733
Treasury stock		—		—		4,000		(116,695	)		(1	)		—			—			(116,696	)
Other comprehensive income		—		—		—		—			—			—			56			56
Net income		—		—		—		—			—			452,855			—			452,855
Balance as of June 30, 2022		262,886		2,628		14,602		(162,854	)		5,748,516			(3,611,086	)		(19	)		1,977,185
Issuance of common stock		1		1		—		—			833			—			—			834
Cash dividends paid ($0.08 per share)		—		—		—		—			—			(19,526	)		—			(19,526	)
Stock-based compensation expense		—		—		—		—			7,845			—			—			7,845
Treasury stock		—		—		6,002		(175,997	)		—			—			—			(175,997	)
Other comprehensive income		—		—		—		—			—			—			56			56
Net income		—		—		—		—			—			373,087			—			373,087
Balance as of September 30, 2022		262,887	$	2,629		20,604	$	(338,851	)	$	5,757,194		$	(3,257,525	)	$	37		$	2,163,484

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

RANGE RESOURCES CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, in thousands, except per share data)


Fiscal Year 2021								Common									Accumulated
								stock			Additional						other
	Common stock				Treasury			held in			paid-in			Retained			comprehensive
	Shares		Par value		shares			treasury			capital			deficit			loss			Total
Balance as of December 31, 2020		256,354	$	2,563		10,006		$	(30,132	)	$	5,684,268		$	(4,018,685	)	$	(479	)	$	1,637,535
Issuance of common stock		3,205		33		—			—			(7,654	)		—			—			(7,621	)
Issuance of common stock upon vesting of PSUs		13		—		—			—			148			(148	)		—			—
Stock-based compensation expense		—		—		—			—			6,713			—			—			6,713
Treasury stock		—		—		—			47			(47	)		—			—			—
Other comprehensive income		—		—		—			—			—			—			70			70
Net income		—		—		—			—			—			27,151			—			27,151
Balance as of March 31, 2021		259,572		2,596		10,006			(30,085	)		5,683,428			(3,991,682	)		(409	)		1,663,848
Issuance of common stock		206		2		—			—			9,289			—			—			9,291
Issuance of common stock upon vesting of PSUs		—		—		—			—			—			—			—			—
Stock-based compensation expense		—		—		—			—			6,523			—			—			6,523
Treasury stock		—		—		—			—			—			—			—			—
Other comprehensive income		—		—		—			—			—			—			71			71
Net loss		—		—		—			—			—			(156,472	)		—			(156,472	)
Balance as of June 30, 2021		259,778		2,598		10,006			(30,085	)		5,699,240			(4,148,154	)		(338	)		1,523,261
Issuance of common stock		9		—		—			—			754			—			—			754
Stock-based compensation expense		—		—		—			—			7,466			—			—			7,466
Treasury stock		—		—		(3	)		78			(78	)		—			—			—
Other comprehensive income		—		—		—			—			—			—			70			70
Net loss		—		—		—			—			—			(350,267	)		—			(350,267	)
Balance as of September 30, 2021		259,787	$	2,598		10,003		$	(30,007	)	$	5,707,382		$	(4,498,421	)	$	(268	)	$	1,181,284

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

RANGE RESOURCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(1) SUMMARY OF ORGANIZATION AND NATURE OF BUSINESS

Range Resources Corporation is a Fort Worth, Texas-based independent natural gas, natural gas liquids (NGLs) and oil company engaged in the exploration, development and acquisition of natural gas properties in the Appalachian region of the United States. 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.”

(2) BASIS OF PRESENTATION

These consolidated financial statements are unaudited but, in the opinion of management, reflect all adjustments necessary for a fair statement of the results for the periods reported. All adjustments are of a normal recurring nature unless otherwise disclosed. These consolidated financial statements, including selected notes, have been prepared in accordance with the applicable rules of the Securities Exchange Commission (the SEC) and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America (U.S. GAAP) for complete financial statements.

These interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2021 Annual Report on Form 10-K filed with the SEC on February 22, 2022. The results of operations for third quarter and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the full year.

(3) NEW ACCOUNTING STANDARDS

Not Yet Adopted

No accounting standards were adopted in third quarter or nine months ended September 30, 2022 that had a material impact on our consolidated financial statements.

(4) REVENUES FROM CONTRACTS WITH CUSTOMERS

Disaggregation of Revenue

We have three material revenue streams in our business: natural gas sales, NGLs sales and condensate sales (referred to below as oil sales). 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. Accounts receivable attributable to our revenue contracts with customers was $624.5 million at September 30, 2022 and $460.2 million at December 31, 2021. Revenue attributable to each of our identified revenue streams is disaggregated below (in thousands):


	Three Months Ended September 30,					Nine Months Ended September 30,
	2022			2021		2022		2021
Natural gas sales	$	1,053,863		$	494,917	$	2,593,540	$	1,152,283
NGLs sales		325,989			309,232		1,039,057		795,173
Oil sales		55,300			45,156		191,798		127,051
Total natural gas, NGLs and oil sales		1,435,152			849,305		3,824,395		2,074,507
Sales of purchased natural gas		130,466			101,095		317,896		231,335
Sales of purchased NGLs		(6	)		2,764		2,274		3,912
Other marketing revenue (1)		2,641			1,695		8,546		13,421
Total	$	1,568,253		$	954,859	$	4,153,111	$	2,323,175

(1) The nine months ended September 30, 2021 includes $8.8 million received as part of a capacity release agreement.

(5) INCOME TAXES

We evaluate and update our annual effective income tax rate on a quarterly basis based on current and forecasted operating results and tax laws. Consequently, based upon the mix and timing of our actual earnings compared to annual projections, our effective tax rate may vary quarterly and may make comparisons not meaningful. The effective income tax rate is influenced by a variety of factors including geographic sources and relative magnitude of these sources of income. Income taxes for discrete items are computed and recorded in the period that a specific transaction occurs. For three months and nine months ended September 30, 2022 and 2021, 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 2022 which is based on our estimated earnings, taking into account state tax rates and laws regarding NOL limitations. We continue to evaluate the realizability of federal and state deferred tax assets and based upon significant increases in commodity prices and other positive evidence, we released a portion of our federal and state valuation allowances in first nine months 2022. On July 12, 2022, the Commonwealth of Pennsylvania enacted legislation to reduce the corporate income tax rate from 9.99% to 8.99% in 2023 and continue to reduce that rate by 0.5% per year beginning in 2024 and declining to 4.99% in 2031 and thereafter. We have evaluated the impact of this new corporate income tax rate and in third quarter 2022, we recorded a $20.7 million tax benefit.

(6) INCOME (LOSS) PER COMMON SHARE

Basic income or loss per share attributable to common shareholders is computed as (1) income or loss attributable to common shareholders (2) less income allocable to participating securities (3) divided by weighted average basic shares outstanding. Diluted income or loss per share attributable to common shareholders is computed as (1) basic income or loss attributable to common shareholders (2) plus diluted adjustments to income allocable to participating securities (3) divided by weighted average diluted shares outstanding. The following sets forth a reconciliation of income or loss attributable to common shareholders to basic income or loss attributable to common shareholders to diluted income or loss attributable to common shareholders (in thousands, except per share amounts):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Net income (loss), as reported	$	373,087		$	(350,267	)	$	369,134		$	(479,588	)
Participating earnings (a)		(8,667	)		—			(9,183	)		—
Basic net income (loss) attributed to common shareholders		364,420			(350,267	)		359,951			(479,588	)
Reallocation of participating earnings (a)		172			—			188			—
Diluted net income (loss) attributed to common shareholders	$	364,592		$	(350,267	)	$	360,139		$	(479,588	)
Net income (loss) per common share:
Basic	$	1.52		$	(1.44	)	$	1.48		$	(1.98	)
Diluted	$	1.49		$	(1.44	)	$	1.45		$	(1.98	)


(a)	Restricted Stock Awards represent participating securities because they participate in nonforfeitable dividends or distributions with common equity owners. Income allocable to participating securities represents the distributed and undistributed earnings attributable to the participating securities. Participating securities, however, do not participate in undistributed net losses.

The following details weighted average common shares outstanding and diluted weighted average common shares outstanding (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Weighted average common shares outstanding – basic		239,768		243,311		242,850		242,692
Effect of dilutive securities:
Director and employee restricted stock and performance based equity awards		5,255		—		5,510		—
Weighted average common shares outstanding – diluted		245,023		243,311		248,360		242,692

Weighted average common shares outstanding-basic for third quarter 2022 excludes 5.7 million shares of restricted stock held in our deferred compensation plan compared to 6.5 million shares in third quarter 2021 (although all awards are issued and outstanding upon grant). Weighted average common shares outstanding-basic for first nine months 2022 excludes 6.2 million shares of restricted stock compared to 6.6 million for first nine months 2021. For the three months ended September 30, 2022, equity grants of 2,000 shares and for the first nine months 2022, 3,000 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 third quarter 2021 and first nine months 2021, 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)


	September 30, 2022			December 31, 2021
	(in thousands)
Natural gas properties:
Properties subject to depletion	$	9,703,868		$	9,338,236
Unproved properties		844,186			837,334
Total		10,548,054			10,175,570
Accumulated depletion and depreciation		(4,676,454	)		(4,420,914	)
Net capitalized costs	$	5,871,600		$	5,754,656


(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 nine months ended September 30, 2022 or the year ended December 31, 2021 (in thousands).


	September 30, 2022			December 31, 2021
Bank debt	$	—		$	—
Senior notes:
4.75% senior notes due 2030		500,000			—
4.875% senior notes due 2025		750,000			750,000
5.00% senior notes due 2022		—			169,589
5.00% senior notes due 2023		528,585			532,335
5.875% senior notes due 2022		—			48,528
8.25% senior notes due 2029		600,000			600,000
9.25% senior notes due 2026		—			850,000
Total senior notes		2,378,585			2,950,452
Unamortized premium		38			188
Unamortized debt issuance costs		(18,799	)		(24,853	)
Total debt net of debt issuance costs		2,359,824			2,925,787
Less current maturities of long-term debt		(528,149	)		(218,017	)
Total long-term debt	$	1,831,675		$	2,707,770

Bank Debt

In April 2022, we entered into an amended and restated revolving bank facility, which we refer to as our bank debt or our bank credit facility, which is secured by substantially all of our assets and has a maturity date of April 14, 2027. The bank credit facility provides for a maximum facility amount of $4.0 billion and an initial borrowing base of $3.0 billion. The bank credit facility also provides for a borrowing base subject to periodic redeterminations and for event-driven unscheduled redeterminations. As of September 30, 2022, 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. The commitment amount may be increased to the borrowing base, subject to payment of a mutually acceptable commitment fee to those banks agreeing to participate in the facility increase. Borrowings under the 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%. The applicable spread is dependent upon borrowings relative to the borrowing base. 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 5.7% for third quarter 2022 compared to 2.0% for third quarter 2021. The weighted average interest rate was 3.7% for first nine months 2022 compared to 2.1% for first nine months 2021. A commitment fee is paid on the undrawn balance based on an annual rate of 0.30% to 0.375%. At September 30, 2022, the commitment fee was 0.30% 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 September 2022, our borrowing base was reaffirmed for $3.0 billion and our bank commitment was also reaffirmed at $1.5 billion. On September 30, 2022, we had no outstanding borrowings on our bank credit facility. Additionally, we had $330.5 million of undrawn letters of credit, leaving $1.2 billion of committed borrowing capacity available under the facility.

New Senior Notes

In January 2022, we issued $500.0 million aggregate principal amount of 4.75% senior notes due 2030 (the "4.75% Notes") for net proceeds of $492.5 million after underwriting expenses and commissions of $7.5 million. The 4.75% Notes, issued at par, were offered to qualified institutional buyers and to non-U.S. persons outside the United States in compliance with Rule 144A (for life) and Regulation S of the Securities Act of 1933, as amended (the "Securities Act"). Interest due on the 4.75% Notes is payable semi-annually in February and August and is unconditionally guaranteed on a senior unsecured basis by all of our subsidiary guarantors. On or after February 1, 2027, we may redeem the 4.75% Notes, in whole or in part and from time to time, at 100% of the principal amounts plus accrued and unpaid interest. We may redeem the notes prior to their maturity at redemption prices based on a premium, plus accrued and unpaid interest as described in the indenture governing the 4.75% Notes. Upon occurrence of certain changes in control, we must offer to repurchase the 4.75% Notes. The 4.75% Notes are unsecured and are subordinated to all of our existing and future secured debt, rank equally with all of our existing and future unsecured debt and rank senior to all of our existing and future subordinated debt. On the closing of the issuance of the 4.75% Notes, we used the proceeds, along with cash on hand and our bank credit facility, to redeem $850.0 million of our 9.25% senior notes due 2026.

Early Redemption

In first quarter 2022, we announced a call for the redemption of $850.0 million of our outstanding 9.25% senior notes due 2026. The redemption price equaled 106.938% of par plus accrued and unpaid interest. The redemption date was February 1, 2022. We recognized a loss on early extinguishment of debt in first quarter 2022 of $69.2 million which represents expensing of the remaining deferred financing costs and the call premium costs.

Senior Note Redemption

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. During second quarter 2022, we retired our 5.00% senior notes due 2022 and our 5.875% senior notes due 2022 on their maturity date. We currently intend to retire our outstanding long-term debt as it matures, is callable or when market conditions are favorable to repurchase in the open market. In September 2022, we purchased in the open market $3.8 million aggregate principal amount of our 5.00% senior notes due 2023 with no gain or loss recognized.

Guarantees

Range is a holding company that owns no operating assets and has no significant operations independent of its subsidiaries. The guarantees by our subsidiaries, which are directly or indirectly owned by Range, of our senior notes and our bank credit facility are full and unconditional and joint and several, subject to certain customary release provisions. The assets, liabilities and results of operations of Range and our guarantor subsidiaries are not materially different than our consolidated financial statements. A subsidiary guarantor may be released from its obligations under the guarantee:

•

in the event of a sale or other disposition of all or substantially all of the assets of the subsidiary guarantor or a sale or other disposition of all the capital stock of the subsidiary guarantor, to any corporation or other person (including an unrestricted subsidiary of Range) by way of merger, consolidation, or otherwise; or

•

if Range designates any restricted subsidiary that is a guarantor to be an unrestricted subsidiary in accordance with the terms of the indenture.

Debt Covenants

Our bank credit facility contains negative covenants that limit our ability, among other things, to pay cash dividends, incur additional indebtedness, sell assets, enter into certain hedging contracts, change the nature of our business or operations,

merge, consolidate or make certain investments. We are required to maintain a maximum consolidated debt to EBITDAX ratio (as defined in the bank credit facility agreement) of 3.75x and a minimum current ratio (as defined in the bank credit facility agreement) of 1.0x. We were in compliance with applicable covenants under the bank credit facility at September 30, 2022.

(9) ASSET RETIREMENT OBLIGATIONS

Our asset retirement obligations primarily represent the estimated present value of the amounts we will incur to plug, abandon and remediate our producing properties at the end of their productive lives. Significant inputs used in determining such obligations include estimates of plugging and abandonment costs, estimated future inflation rates and well lives. 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 nine months ended September 30, 2022 and the year ended December 31, 2021 is as follows (in thousands):


	Nine Months Ended September 30, 2022			Year Ended December 31, 2021
Beginning of period	$	95,836		$	79,822
Liabilities incurred		2,926			73
Liabilities settled		(8,887	)		(8,197	)
Accretion expense		5,190			5,511
Change in estimate		464			18,627
End of period		95,529			95,836
Less current portion		(5,310	)		(5,310	)
Long-term asset retirement obligations	$	90,219		$	90,526

Accretion expense is recognized as a component of depreciation, depletion and amortization expense in the accompanying consolidated statements of operations.

(10) DERIVATIVE ACTIVITIES

We use commodity-based derivative contracts to manage exposure to commodity price fluctuations. 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 loss of $816.0 million at September 30, 2022. These contracts expire monthly through December 2024. The following table sets forth our commodity-based derivative volumes by year as of September 30, 2022, excluding our basis swaps and divestiture contingent consideration which are discussed separately below:


Period	Contract Type	Volume Hedged	Weighted Average Hedge Price
			Swap			Sold Put	Floor		Ceiling
Natural Gas
2022	Swaps	490,000 Mmbtu/day	$	3.08
2022	Collars	174,783 Mmbtu/day					$	4.02	$	4.74
2022	Three-way Collars	293,261 Mmbtu/day			$	2.91	$	3.63	$	4.65
2023	Swaps	360,000 Mmbtu/day	$	3.35
2023	Collars	275,589 Mmbtu/day					$	3.59	$	4.77
2023	Three-way Collars	149,863 Mmbtu/day			$	2.28	$	3.30	$	4.28
2024	Collars	469,235 Mmbtu/day					$	3.55	$	5.51

Crude Oil
2022	Swaps	6,500 bbls/day	$	62.20
2023	Swaps	5,123 bbls/day	$	71.39
January-September 2024	Collars	832 bbls/day					$	80.00	$	90.12

NGLs (C2-Ethane)
October 2022	Swaps	4,000 bbls/day	$	0.64/gallon

NGLs (C5-Natural Gasoline)
2022	Swaps	1,500 bbls/day	$	1.98/gallon
2022	Collars	2,000 bbls/day					$	1.89/gallon	$	2.02/gallon

Every derivative instrument is required to be recorded on the balance sheet as either an asset or a liability measured at its fair value. We recognize all changes in fair value of these derivatives as earnings in derivative fair value income or loss in the periods in which they occur.

Basis Swap Contracts

In addition to the swaps and collars described above, at September 30, 2022, 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 2025 and include a total volume of 232,425,000 Mmbtu. The fair value of these contracts was a gain of $23.8 million at September 30, 2022.

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 was determined to be a derivative financial instrument that is not designated as a hedging instrument. The remaining contingent consideration of up to $45.5 million is based on future achievement of natural gas and oil prices based on published indexes and realized NGLs prices of the buyer for the years 2022 and 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 nine months 2022, this fair value has increased $7.8 million for a fair value of $34.4 million as of September 30, 2022.

Derivative Assets and Liabilities

The combined fair value of derivatives included in the accompanying consolidated balance sheets as of September 30, 2022 and December 31, 2021 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):


		September 30, 2022
		Gross Amounts of Recognized Assets		Gross Amounts Offset in the Balance Sheet			Net Amounts of Assets Presented in the Balance Sheet
Derivative assets:
Natural gas	–collars	$	11,527	$	(11,527	)	$	—
	–three-way collars		702		(702	)		—
	–basis swaps		44,708		(33,551	)		11,157
Crude oil	–swaps		1,060		(1,060	)		—
	–collars		3,123		(2,514	)		609
NGLs	–C2 ethane swaps		1,208		(1,208	)		—
	–C5 natural gasoline swaps		2,501		—			2,501
	–C5 natural gasoline collars		2,686		(591	)		2,095
Divestiture contingent consideration			34,410		—			34,410
		$	101,925	$	(51,153	)	$	50,772


		September 30, 2022
		Gross Amounts of Recognized (Liabilities)			Gross Amounts Offset in the Balance Sheet		Net Amounts of (Liabilities) Presented in the Balance Sheet
Derivative (liabilities):
Natural gas	–swaps	$	(432,143	)	$	—	$	(432,143	)
	–collars		(236,803	)		11,527		(225,276	)
	–three-way collars		(157,775	)		702		(157,073	)
	–basis swaps		(20,930	)		33,551		12,621
Crude oil	–swaps		(12,082	)		1,060		(11,022	)
	–collars		—			2,514		2,514
NGLs	–C2 ethane swaps		—			1,208		1,208
	–C5 natural gasoline collars		—			591		591
		$	(859,733	)	$	51,153	$	(808,580	)


		December 31, 2021
		Gross Amounts of Recognized Assets		Gross Amounts Offset in the Balance Sheet			Net Amounts of Assets Presented in the Balance Sheet
Derivative assets:
Natural gas	–swaps	$	22,491	$	(18,111	)	$	4,380
	–collars		12,378		(8,600	)		3,778
	–three-way collars		12,234		(8,449	)		3,785
	–basis swaps		18,092		(10,487	)		7,605
Crude oil	–swaps		368		(2,153	)		(1,785	)
NGLs	–C3 propane spread		4,153		(4,153	)		—
	–C5 natural gasoline swaps		266		(363	)		(97	)
	–C5 natural gasoline collars		221		(221	)		—
Freight	–swaps		114		(81	)		33
Divestiture contingent consideration			26,640		—			26,640
		$	96,957	$	(52,618	)	$	44,339


		December 31, 2021
		Gross Amounts of Recognized (Liabilities)			Gross Amounts Offset in the Balance Sheet		Net Amounts of (Liabilities) Presented in the Balance Sheet
Derivative (liabilities):
Natural gas	–swaps	$	(121,759	)	$	18,111	$	(103,648	)
	–swaptions		(11,149	)		—		(11,149	)
	–collars		(16,579	)		8,600		(7,979	)
	–three-way collars		(37,166	)		8,449		(28,717	)
	–calls		(61	)		—		(61	)
	–basis swaps		(2,064	)		10,487		8,423
Crude oil	–swaps		(27,252	)		2,153		(25,099	)
NGLs	–C3 propane spread		(4,030	)		4,153		123
	–C5 natural gasoline swaps		(2,048	)		363		(1,685	)
	–C5 natural gasoline collars		(1,493	)		221		(1,272	)
Freight	–swaps		—			81		81
		$	(223,601	)	$	52,618	$	(170,983	)

The effects of our derivatives on our consolidated statements of operations are summarized below (in thousands):


	Derivative Fair Value (Loss) Income
	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Commodity swaps	$	(241,437	)	$	(332,855	)	$	(890,741	)	$	(558,186	)
Swaptions		26,003			(33,718	)		11,149			(50,329	)
Three-way collars		(117,151	)		(173,344	)		(324,583	)		(226,176	)
Collars		(161,739	)		(106,340	)		(477,284	)		(158,562	)
Calls		—			(10,018	)		(1,363	)		(10,793	)
Basis swaps		36,966			(8,469	)		38,398			11,054
Freight swaps		—			(346	)		(33	)		(1,050	)
Divestiture contingent consideration		(350	)		12,870			7,770			34,260
Total	$	(457,708	)	$	(652,220	)	$	(1,636,687	)	$	(959,782	)

(11) FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. There are three approaches for measuring the fair value of assets and liabilities: the market approach, the income approach and the cost approach, each of which includes multiple valuation techniques. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to measure fair value by converting future amounts, such as cash flows or earnings, into a single present value amount using current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace the service capacity of an asset. This is often referred to as current replacement cost. The cost approach assumes that the fair value would not exceed what it would cost a market participant to acquire or construct a substitute asset of comparable utility, adjusted for obsolescence.

The fair value accounting standards do not prescribe which valuation technique should be used when measuring fair value and does not prioritize among the techniques. These standards establish a fair value hierarchy that prioritizes the inputs used in applying the various valuation techniques. Inputs broadly refer to the assumptions that market participants use to make pricing decisions, including assumptions about risk. Level 1 inputs are given the highest priority in the fair value hierarchy while Level 3 inputs are given the lowest priority. The three levels of the fair value hierarchy are as follows:

•

Level 1 – Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

•

Level 2 – Observable market-based inputs or unobservable inputs that are corroborated by market data. These are inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

•

Level 3 – Unobservable inputs for which there is little, if any, market activity for the asset or liability being measured. These inputs reflect management’s best estimates of the assumptions market participants would use in determining fair value. Our Level 3 measurements consist of instruments using standard pricing models and other valuation methods that utilize unobservable pricing inputs that are significant to the overall fair value.

Valuation techniques that maximize the use of observable inputs are favored. Assets and liabilities are classified in their entirety based on the lowest priority level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement of assets and liabilities within the levels of the fair value hierarchy.

Significant uses of fair value measurements include:

•

impairment assessments of long-lived assets; and

•

recorded value of derivative instruments and trading securities.

The need to test long-lived assets can be based on several indicators, including a significant reduction in prices of natural gas, oil and condensate, NGLs, unfavorable adjustments to reserves, significant changes in the expected timing of production, other changes to contracts or changes in the regulatory environment in which a property is located.

Fair Values – Recurring

We use a market approach for our recurring fair value measurements and endeavor to use the best information available. 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 September 30, 2022 using:
		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Total Carrying Value as of September 30, 2022
Trading securities held in the deferred compensation plans		$	52,355	$	—		$	—	$	52,355

Commodity price derivatives	–swaps		—		(439,456	)		—		(439,456	)
	–collars		—		(222,153	)		2,686		(219,467	)
	–three-way collars		—		(157,073	)		—		(157,073	)
	–basis swaps		—		23,778			—		23,778
Divestiture contingent consideration			—		34,410			—		34,410


		Fair Value Measurements at December 31, 2021 using:
		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total Carrying Value as of December 31, 2021
Trading securities held in the deferred compensation plans		$	69,606	$	—		$	—		$	69,606

Commodity price derivatives	–swaps		—		(127,934	)		—			(127,934	)
	–calls		—		(61	)		—			(61	)
	–collars		—		(4,201	)		(1,272	)		(5,473	)
	–three-way collars		—		(24,932	)		—			(24,932	)
	–basis swaps		—		16,151			—			16,151
	–swaptions		—		—			(11,149	)		(11,149	)
Derivatives	–freight swaps		—		114			—			114
Divesture contingent consideration			—		26,640			—			26,640

Our trading securities in Level 1 are exchange-traded and measured at fair value with a market approach using end of period market values. 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. As of September 30, 2022, a portion of our natural gas and oil derivative instruments are NGLs collars. 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 of our derivatives in Level 3 and is considered a significant unobservable input. We have utilized a range of implied volatilities from 55% to 61% for our NGLs collars with a weighted average implied volatility of 57%. 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):


	As of September 30, 2022
Balance at December 31, 2021	$	(12,420	)
Total losses:
Included in earnings		—
Additions		2,686
Settlements		1,272
Transfers out of Level 3		11,148
Balance at September 30, 2022	$	2,686

Divestiture Contingent Consideration. In August 2020, we completed the sale of our North Louisiana assets where we are entitled to receive contingent consideration based on future achievement of natural gas and oil prices based on published indexes along with NGLs prices based on the realized NGLs prices of the buyer. 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.

Trading securities. Our trading securities held in the deferred compensation plan are accounted for using the mark-to- market accounting method and are included in other assets in the accompanying consolidated balance sheets. We elected to adopt the fair value option to simplify our accounting for the investments in our deferred compensation plan. Interest, dividends, and mark-to-market gains or losses are included in deferred compensation plan expense in the accompanying consolidated statements of operations. For third quarter 2022, interest and dividends were $318,000 and the mark-to-market adjustment was a loss of $2.6 million compared to interest and dividends of $314,000 and a mark-to-market loss of $1.2 million in third quarter 2021. For first nine months 2022, interest and dividends were $609,000 and the mark-to-market adjustment was a loss of $16.6 million compared to interest and dividends of $541,000 and mark-to-market adjustment of a gain of $3.1 million in first nine months 2021.

Fair Values – Reported

The following presents the carrying amounts and the fair values of our financial instruments as of September 30, 2022 and December 31, 2021 (in thousands):


	September 30, 2022						December 31, 2021
	Carrying Value			Fair Value			Carrying Value			Fair Value
Assets:
Commodity swaps, collars and basis swaps	$	16,362		$	16,362		$	17,699		$	17,699
Divestiture contingent consideration		34,410			34,410			26,640			26,640
Marketable securities (a)		52,355			52,355			69,606			69,606
(Liabilities):
Commodity swaps, collars and basis swaps		(808,580	)		(808,580	)		(170,983	)		(170,983	)
Bank credit facility (b)		—			—			—			—
5.00% senior notes due 2022 (b)		—			—			(169,589	)		(171,488	)
5.875% senior notes due 2022 (b)		—			—			(48,528	)		(48,955	)
5.00% senior notes due 2023 (b)		(528,585	)		(526,814	)		(532,335	)		(543,471	)
4.875% senior notes due 2025 (b)		(750,000	)		(707,010	)		(750,000	)		(776,153	)
9.25% senior notes due 2026 (b)		—			—			(850,000	)		(916,929	)
8.25% senior notes due 2029 (b)		(600,000	)		(608,514	)		(600,000	)		(669,648	)
4.75% senior notes due 2030 (b)		(500,000	)		(433,600	)		—			—
Deferred compensation plan (c)		(178,813	)		(178,813	)		(165,395	)		(165,395	)


(a)	Marketable securities, which are held in our deferred compensation plans, are actively traded on major exchanges.
(b)	The book value of our bank debt approximates fair value because of its floating rate structure. The fair value of our senior notes is based on end of period market quotes which are Level 2 inputs.
(c)	The fair value of our deferred compensation plan is updated to the closing price on the balance sheet date which is a Level 1 input.

Our current assets and liabilities include financial instruments, the most significant of which are trade accounts receivable and payable. 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. 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 September 30, 2022, 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 $564,000 at September 30, 2022 and $568,000 at December 31, 2021. 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. To manage counterparty risk associated with our derivatives, we select and monitor our counterparties based on our assessment of their financial strength and/or credit ratings. We may also limit the level of exposure with any

single counterparty. At September 30, 2022, our derivative counterparties include fifteen financial institutions, of which all but five are secured lenders in our bank credit facility. At September 30, 2022, our net derivative liability includes a net receivable of $15.6 million from four of these counterparties that are not participants in our bank credit facility and an aggregate net payable of $697,000 to one of these counterparties.

Allowance for Expected Credit Losses. Each reporting period, we assess the recoverability of material receivables using historical data, current market conditions and reasonable and supported forecasts of future economic conditions to determine their expected collectability. The loss given default method is used when, based on management’s judgment, an allowance for expected credit losses should be accrued on a material receivable to reflect the net amount to be collected.

(12) STOCK-BASED COMPENSATION PLANS

Stock-Based Awards

We have two active equity-based stock plans: our Amended and Restated 2005 Equity-Based Incentive Compensation Plan and our Amended and Restated 2019 Equity-Based Compensation Plan. Under these plans, various awards may be issued to non-employee directors and employees pursuant to decisions of the Compensation Committee, which is composed of only non-employee, independent directors.

Total Stock-Based Compensation Expense

Stock-based compensation represents amortization of restricted stock and performance units. Unlike the other forms of stock-based compensation, the mark-to-market adjustment of the liability related to the vested restricted stock held in our deferred compensation plan is directly tied to the change in our stock price and not directly related to the functional expenses and therefore, is not allocated to the functional categories. The following details the allocation of stock-based compensation to functional expense categories (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Direct operating expense	$	372	$	319	$	1,083	$	986
Brokered natural gas and marketing expense		663		446		1,868		1,339
Exploration expense		393		368		1,163		1,116
General and administrative expense		10,402		9,845		32,245		28,632
Total stock-based compensation expense	$	11,830	$	10,978	$	36,359	$	32,073

Stock-Based Awards

Restricted Stock Awards. We grant restricted stock units under our equity-based stock compensation plans. These restricted stock units, which we refer to as restricted stock Equity Awards, generally vest over a three-year period, contingent on the recipient’s continued employment. The grant date fair value of the Equity Awards is based on the fair market value of our common stock on the date of grant.

The Compensation Committee also grants restricted stock to certain employees and non-employee directors of the board of directors as part of their compensation. In addition, we also grant restricted stock to certain employees for retention purposes. Compensation expense is recognized over the balance of the vesting period, which is typically three years for employee grants and one year vesting for non-employee directors. In early 2021, vesting for new grants of restricted stock Liability Awards changed to a three-year cliff vesting from a ratable 30%-30%-40% vesting schedule. All restricted stock awards are issued at prevailing market prices at the time of the grant and the vesting is based upon an employee’s continued employment with us. Prior to vesting, all restricted stock award recipients have the right to vote such stock and receive dividends thereon. Upon grant of these restricted shares, which we refer to as restricted stock Liability Awards, the majority of these shares are generally placed in our deferred compensation plan and, upon vesting, withdrawals are allowed in either cash or in stock. These Liability Awards are classified as a liability and are remeasured at fair value each reporting period. This mark-to-market amount is reported in deferred compensation plan expense in the accompanying consolidated statements of operations. Historically, we have used authorized but unissued shares of stock when restricted stock is granted. However, we can also utilize treasury shares.

Stock-Based Performance Units. We grant three types of performance share awards: two based on internal performance conditions which are measured against internal performance metrics and one based on market conditions measured based on Range’s performance relative to a predetermined peer group (TSR Awards or TSR-PSUs). In first quarter 2021, our internal performance metrics were changed to focus on debt reduction and to include an environmental component. For shares granted in 2021, the performance conditions will be measured against internal metrics of Debt/EBITDAX (earnings before interest, taxes, depreciation, amortization and exploration expense) and emission intensity performance. For shares granted in first quarter 2022, the performance conditions will be measured against internal metrics of total net debt (total debt less cash on hand) and emission intensity performance.

Each unit granted represents one share of our common stock. These units are settled in stock and the amount of the payout is based on the vesting percentage, which can range from zero to 200% and (1) the internal performance achieved, which is determined by the Compensation Committee and (2) for our TSR Awards, the value of our common stock on the vesting date compared to our peers. Dividend equivalents accrue during the performance period and are paid in stock at the end of the performance period. The performance period is for three years. Prior to 2021, the performance period for the internal performance metrics was based on annual performance targets earned over a three-year period.

Restricted Stock – Equity Awards

In first nine months 2022, we granted 1.4 million restricted stock Equity Awards to employees at an average grant date fair value of $18.59 which generally vest over a three-year period compared to 2.3 million at an average grant date fair value of $10.20 in first nine months 2021. We recorded compensation expense for these outstanding awards of $15.9 million in first nine months 2022 compared to $15.0 million in the same period of 2021. Restricted stock Equity Awards are not issued to employees until such time as they are vested. Employees do not have the option to receive cash.

Restricted Stock – Liability Awards

In first nine months 2022, we granted 603,000 shares of restricted stock Liability Awards as compensation to employees at an average grant date fair value of $20.43 which generally vest 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. In first nine months 2021, we granted 1.2 million shares of restricted stock Liability Awards as compensation to employees at an average grant date fair value of $9.30 with vesting generally at the end of a three-year period and 102,000 shares were granted to non-employee directors at an average price of $12.49 with vesting at the end of one year. We recorded compensation expense for these Liability Awards of $10.3 million in first nine months 2022 compared to $8.4 million in first nine months 2021. The majority of 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). The following is a summary of the status of our non-vested restricted stock outstanding at September 30, 2022:


	Restricted Stock Equity Awards					Restricted Stock Liability Awards
	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2021		2,674,777		$	7.39		796,629		$	6.49
Granted		1,392,660			18.59		649,739			20.94
Vested		(1,724,828	)		8.89		(812,203	)		12.13
Forfeited		(59,912	)		10.29		—			—
Outstanding at September 30, 2022		2,282,697		$	13.01		634,165		$	14.08

Stock-Based Performance Units

Internal Performance Metric Awards. These awards vest at the end of the three-year performance period. The performance metrics are set by the Compensation Committee. 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. See additional information above for shares granted in first nine months 2021 and 2022. The following is a summary of our non-vested internal performance awards outstanding at September 30, 2022:


	Number of Units			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2021		1,095,355		$	7.80
Units granted (a)		153,089			20.38
Vested and issued (b)		(243,482	)		9.64
Forfeited		—			—
Outstanding at September 30, 2022		1,004,962		$	9.27


(a)	Amounts granted reflect the number of performance units granted; however, the actual payout of shares will be between zero and 200% depending on achievement of specifically identified performance targets. Units granted in first quarter 2022 were to our CEO, CFO and COO only.
(b)	For the awards issued during 2019, the aggregate payout was approximately 116% of target with a positive performance adjustment of 158,793 shares.

We recorded compensation expense for these awards of $5.3 million in first nine months 2022 compared to expense of $3.8 million in first nine months 2021.

TSR Awards. TSR-PSUs 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. The fair value of the TSR-PSUs is estimated on the date of grant using a Monte Carlo simulation model which utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award grant and calculates the fair value of the award. The fair value is recognized as stock-based compensation expense over the three-year performance period. Expected volatilities utilized in the model were estimated using a combination of a historical period consistent with the remaining performance period of three years and option implied volatilities. 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 TSR-PSUs granted during first nine months 2022 and 2021:


	Nine Months Ended September 30,
	2022			2021
Risk-free interest rate		1.4	%		0.2	%
Expected annual volatility		68	%		75	%
Grant date fair value per unit	$	27.90		$	12.58

The following is a summary of our non-vested TSR-PSUs award activities:


	Number of Units			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2021		1,147,994		$	7.60
Units granted (a)		111,828			27.90
Vested and issued (b)		(314,152	)		11.34
Forfeited		—			—
Outstanding at September 30, 2022		945,670		$	8.76


(a)	These amounts reflect the number of performance units granted. The actual payout of shares may be between zero and 200% of the performance units granted depending on the total shareholder return ranking compared to our peer companies at the vesting date.
(b)	Includes TSR-PSUs awards granted in 2019 where the return on our common stock was 127% and therefore, the performance multiple and actual payout was 183%.

We recorded TSR-PSUs compensation expense of $2.3 million in first nine months 2022 compared to $1.9 million in the same period of 2021. Fair value is amortized over the performance period with no adjustment to the expense recorded for actual targets achieved.

Deferred Compensation Plan

Our deferred compensation plan gives non-employee directors and officers the ability to defer all or a portion of their salaries, bonuses or director fees and invest in Range common stock or make other investments at the individual’s discretion. Range provides a partial matching contribution to officers which vests over three years. In early 2021, vesting for the matching contribution was changed to a three-year cliff vesting schedule. The assets of the plan are held in a grantor trust, which we refer to as the Rabbi Trust, and are therefore available to satisfy the claims of our general creditors in the event of bankruptcy or insolvency. Our common stock held in the Rabbi Trust is treated as a liability award as employees are allowed to take withdrawals from the Rabbi Trust either in cash or in Range stock. The liability for the vested portion of the stock held in the Rabbi Trust is reflected as deferred compensation liability in the accompanying consolidated balance sheets and is adjusted to fair value each reporting period by a charge or credit to deferred compensation plan expense on our consolidated statements of operations. The assets of the Rabbi Trust, other than our common stock, are invested in marketable securities and reported at their market value as other assets in the accompanying consolidated balance sheets. The deferred compensation liability reflects the vested market value of the marketable securities and Range stock held in the Rabbi Trust. 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 $5.8 million in third quarter 2022 compared to a mark-to-market loss of $34.3 million in third quarter 2021. We recorded mark-to-market loss of $59.9 million in first nine months 2022 compared to mark-to-market loss of $89.6 million in first nine months 2021. The Rabbi Trust held 5.7 million shares (5.1 million of which were vested) of Range stock at September 30, 2022 compared to 6.2 million shares (5.4 million of which were vested) at December 31, 2021.

(13) EXIT AND TERMINATION COSTS

Exit Costs

In third quarter 2020, we sold our North Louisiana assets and retained certain gathering, transportation and processing obligations which extend into 2030. These are contracts where we will not realize any future benefit. The estimated obligations are included in current and long-term divestiture contract obligation in our consolidated balance sheets. In first nine months 2022, we recorded accretion expense of $33.0 million compared to $36.6 million in the same period of the prior year. In second quarter 2022, we recorded a net adjustment of $24.8 million to increase this obligation for a change in our forecasted drilling plans of the buyer along with adjusting the difference between estimated and actual payments. In second quarter 2021, we recorded a net favorable adjustment of $28.2 million to reduce this obligation due to a reduction of certain contractual payments compared to those originally estimated along with a change in our forecasted drilling plans of the buyer. The estimated discounted divestiture contract obligation was $401.2 million at September 30, 2022.

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 September 30, 2022 was $5.7 million.

Termination Costs

The following summarizes our exit and termination costs for the three and nine months ended September 30, 2022 and 2021 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Severance costs	$	—	$	—	$	—	$	509
Transportation contract capacity releases (including accretion of discount)		135		186		458		580
Divestiture contract obligation (including accretion of discount)		10,930		11,603		57,791		8,468
	$	11,065	$	11,789	$	58,249	$	9,557

The following details the accrued exit and termination cost liability activity for the nine months ended September 30, 2022 (in thousands):


	Exit Costs (1)			Termination Costs
Balance at December 31, 2021	$	423,742		$	10
Accretion of discount		33,472			—
Changes in estimate		24,776			—
Payments		(75,103	)		(10	)
Balance at September 30, 2022	$	406,887		$	—


(1)	Includes the divestiture contract obligation and the transportation contract capacity release obligation.

(14) CAPITAL STOCK

We have authorized capital stock of 485.0 million shares which includes 475.0 million shares of common stock and 10.0 million shares of preferred stock. We currently have no preferred stock issued or outstanding. The following is a schedule of changes in the number of common shares outstanding since the beginning of 2021:


	Nine months Ended September 30, 2022			Year Ended December 31, 2021
Beginning balance		249,792,908			246,348,092
Restricted stock grants		670,728			1,293,892
Restricted stock units vested		1,827,625			1,493,341
Performance stock units issued		590,940			640,468
Performance stock dividends		1,843			13,966
Treasury shares		(10,600,389	)		3,149
Ending balance		242,283,655			249,792,908

Subsequent to third quarter 2022, we purchased approximately $17.3 million shares of our common stock through October 21, 2022.

Stock Repurchase Program

In 2019, the board of directors approved a stock purchase program to acquire up to $100.0 million of our outstanding common stock. In early 2022, our board authorized an additional repurchase of up to $430.0 million of our outstanding common stock for an aggregate available amount at that time of $500.0 million. On October 21, 2022, our board of directors authorized an additional repurchase of up to $1.0 billion for common stock repurchases. 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 nine months 2022, we repurchased 10,810,000 shares at an aggregate cost of $313.9 million, including repurchases of $5.1 million (208,500 shares) that were purchased in September 2022 and settled in October 2022. The following is a schedule of the change in treasury shares for the three and nine months ended September 30, 2022:


	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022
Beginning balance		15,101,535		10,002,646
Rabbi trust shares distributed/sold		—		(1,111	)
Shares repurchased		5,710,000		10,810,000
Ending balance		20,811,535		20,811,535

(15) SUPPLEMENTAL CASH FLOW INFORMATION


	Nine Months Ended September 30,
	2022			2021
	(in thousands)
Net cash provided from operating activities included:
Income taxes paid to taxing authorities	$	(19,735	)	$	(2,661	)
Interest paid		(165,774	)		(175,195	)
Non-cash investing and financing activities included:
Increase in asset retirement costs capitalized		3,389			2,879
Increase (decrease) in accrued capital expenditures		4,538			(11,373	)

(16) COMMITMENTS AND CONTINGENCIES

Litigation

We are the subject of, or party to, a number of pending or threatened legal actions, administrative proceedings or investigations arising in the ordinary course of our business including, but not limited to, royalty claims, contract claims and environmental claims. While many of these matters involve inherent uncertainty, we believe that the amount of the liability, if any, ultimately incurred with respect to these actions, proceedings or claims will not have a material adverse effect on our consolidated financial position as a whole or on our liquidity, capital resources or future annual results of operations.

When deemed necessary, we establish reserves for certain legal proceedings. The establishment of a reserve is based on an estimation process that includes the advice of legal counsel and subjective judgment of management. While management believes these reserves to be adequate, it is reasonably possible we could incur additional losses with respect to those matters in which reserves have been established. We will continue to evaluate our litigation on a quarterly basis and will establish and adjust any litigation reserves as appropriate to reflect our assessment of the then current status of litigation.

We have incurred and will continue to incur capital, operating and remediation expenditures as a result of environmental laws and regulations. As of September 30, 2022, liabilities for remediation were not material. We are not aware of any environmental claims existing as of September 30, 2022 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.

Transportation, Gathering and Processing Contracts

During second quarter 2022, we entered into an extension of certain long-term gathering agreements that is contingent on the completion of certain construction by the gathering company which is expected to be completed in 2024. Our commitments would increase by a total of approximately $800.0 million upon completion of the construction.

Lease Commitments

During third quarter 2022, we extended a lease for a fleet used in our operations through the end of 2023. As of September 30, 2022, there is a remaining obligation of $60.0 million under this operating lease.

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


	Nine Months Ended September 30, 2022		Year Ended December 31, 2021
	(in thousands)
Acquisitions:
Acreage purchases	$	19,843	$	21,942
Development		360,748		381,753
Exploration:
Drilling		—		6,329
Expense		18,540		22,048
Stock-based compensation expense		1,163		1,507
Gas gathering facilities:
Development		847		3,402
Subtotal		401,141		436,981
Asset retirement obligations		3,389		18,634
Total costs incurred	$	404,530	$	455,615

(a)

Includes costs incurred whether capitalized or expensed.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview of Our Business

We are a Fort Worth, Texas-based independent natural gas, natural gas liquids (NGLs) and oil company primarily engaged in the exploration, development and acquisition of natural gas properties in the Appalachian region of the United States. We operate in one segment and have a single company-wide management team that administers all properties as a whole rather than by discrete operating segments. We measure financial performance as a single enterprise and not on a geographical or an area-by-area basis.

Our overarching business objective is to build stockholder value through returns-focused development of natural gas properties. Our strategy to achieve our business objective is to generate consistent cash flows from reserves and production through internally generated drilling projects occasionally coupled with complementary acquisitions and divestitures of non-core or, at times, core assets. Our revenues, profitability and future growth depend substantially on prevailing prices for natural gas, NGLs and oil and on our ability to economically find, develop, acquire, produce and market these reserves. Commodity prices have been and are expected to remain volatile. Our primary near-term focus includes the following:

•

operate safely and efficiently;

•

achieve competitive returns on investments;

•

reduce emissions and target net-zero Scope 1 and Scope 2 greenhouse gas emissions by year-end 2025;

•

manage liquidity and further improve financial strength;

•

focus on organic opportunities through disciplined capital investments;

•

improve operational efficiencies and economic returns;

•

attract and retain quality employees; and

•

align employee incentives with our stockholders’ interests and key business objectives.

We prepare our financial statements in conformity with U.S. GAAP which requires us to make estimates and assumptions that affect our reported results of operations and the amount of our reported assets, liabilities and proved reserves. We use the successful efforts method of accounting for our natural gas, NGLs and oil activities.

Prices for natural gas, NGLs and oil fluctuate widely and affect:

•

revenues, profitability and cash flow;

•

the quantity of natural gas, NGLs and oil we can economically produce;

•

the quantity of natural gas, NGLs and oil shown as proved reserves;

•

the amount of cash flows available for reinvestment; and

•

our ability to borrow and raise additional capital.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the preceding consolidated financial statements and notes in Item 1.

Market Conditions

Prices for natural gas, NGLs and oil that we produce significantly impact our revenues and cash flows. Natural gas, NGLs and oil benchmarks increased in third quarter 2022 when compared to the same period of 2021 and also increased in first nine months 2022 when compared to the same period of 2021. As a result, we experienced a significant increase in price realizations. As 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 gas and the uncertainty associated with recovering oil demand, future monetary policy and governmental policies aimed at transitioning towards lower carbon energy, we expect prices for some or all of the commodities we produce to remain volatile. NYMEX natural gas futures have shown strong improvements based on market expectations that associated gas-related activity in oil basins and dry gas basin activity will show modest rates of growth 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. LNG exports, domestic industrial gas demand and power generation. Other

factors such as the pace and extent of tightening global monetary policy and the effectiveness of responses to combat the COVID-19 virus may impact the recovery of world economic growth and the demand for oil, natural gas and NGLs. In addition, in response to continued supply chain disruptions attributable to the virus, the Russia-Ukraine conflict and global monetary policies over the last few years, cost inflation is occurring. Specifically, our 2022 capital program is primarily being impacted by inflation in steel, fuel and labor, among other items. We continue to assess and monitor the impact and consequences of these factors on our operations.

The following table lists related benchmarks for natural gas, oil and NGLs composite prices for the three and nine months ended September 30, 2022 and 2021:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Benchmarks:
Average NYMEX prices (a)
Natural gas (per mcf)	$	8.19	$	4.01	$	6.77	$	3.19
Oil (per bbl)		91.55		70.42		98.47		64.70
Mont Belvieu NGLs composite (per gallon) (b)		0.90		0.82		0.97		0.69


(a)	Based on weighted average of bid week prompt month prices on the New York Mercantile Exchange.
(b)	Based on our estimated NGLs product composition per barrel.

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

Consolidated Results of Operations

Overview of Third Quarter 2022 Results

During third quarter 2022, we recognized net income of $373.1 million, or $1.49 per diluted common share compared to a loss of $350.3 million, or $1.44 per diluted common share during third quarter 2021. The higher net income in third quarter 2022 compared to third quarter 2021 reflects the impact of significantly higher commodity prices on both our natural gas, NGLs and oil sales and on our reported derivative fair value loss. See page 32 for more information on our derivative fair value loss.

For third quarter 2022, we experienced a significant increase in revenue from the sale of natural gas, NGLs and oil due to a 65% increase 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 2021. Daily production averaged 2.1 Bcfe in both the third quarter 2022 and 2021.

Our third quarter 2022 financial and operating performance included the following results:

•

cash flow from operating activities increased $329.1 million from third quarter 2021;

•

paid $19.5 million of dividends, or $0.08 per share;

•

repurchased $176.0 million of our common stock;

•

enhanced liquidity with the accumulation of cash totaling $157.1 million;

•

revenue from the sale of natural gas, NGLs and oil increased 69% from the same period of 2021 with a 69% increase 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) increased 41% from the same period of 2021;

•

direct operating expense per mcfe was $0.11 in third quarter 2022 compared to $0.10 in the same period of 2021 due to higher contract labor, water handling/hauling and service costs partially offset by lower workover costs;

•

general and administrative expense per mcfe decreased 16% from same quarter 2021 primarily due to lower legal expenses, including legal settlements; and

•

reduced depletion, depreciation and amortization (“DD&A”) rate per mcfe by 2% from the same period of 2021.

Our cash flow from operating activities in third quarter 2022 was $521.0 million, an increase of $329.1 million from third quarter 2021 with significantly higher realized prices when compared to third quarter 2021 and a favorable impact from the change in negative working capital.

Overview of First Nine Months 2022 Results

During first nine months 2022, we recognized a net income of $369.1 million, or $1.45 per diluted common share compared to a net loss of $479.6 million, or $1.98 per diluted common share during first nine months 2021. The improvement in our net income for first nine months 2022 compared to 2021 reflects the impact of significantly higher commodity prices on both our natural gas, NGLs and oil sales and on our reported derivative fair value loss. Given the significant increase in commodity prices, our derivative fair value loss, which includes the non-cash fair value adjustment related to our derivatives, was $1.6 billion in the first nine months 2022 compared to $959.8 million in the first nine months of the prior year. For additional information on our derivative fair value loss, see page 32.

For first nine months 2022, we experienced an increase in revenue from the sale of natural gas, NGLs and oil due to a 91% increase in net realized prices (average prices including all derivative settlements and third-party transportation costs paid by us) somewhat offset by slightly lower production volumes, a loss on extinguishment of debt and higher exit costs when compared to the same period of 2021. Daily production averaged 2.1 Bcfe in both the first nine months 2022 and 2021.

Our first nine months 2022 financial and operating performance included the following results:

•

reduced total debt by $571.9 million with cash on hand and operating cash flows;

•

realized a significant improvement in our debt metrics from year-end 2021;

•

paid $19.5 million of dividends;

•

repurchased $308.9 million of our common stock;

•

reduced future interest expense through debt reduction combined with refinancing a portion of 9.25% senior notes due 2026 with 4.75% senior notes due 2030;

•

cash flow from operating activities increased $776.8 million from first nine months 2021;

•

revenue from the sale of natural gas, NGLs and oil increased 84% from the same period of 2021 with a 85% increase in average realized prices (before cash settlements on our derivatives) partially offset by slightly lower production volumes;

•

revenue from the sale of natural gas, NGLs and oil (including cash settlements on our derivatives) increased 54% from the same period of 2021;

•

direct operating expense per mcfe was $0.11 in first nine months 2022 compared to $0.10 in the same period of 2021 due to higher contract labor and higher service and water handling/hauling costs partially offset by lower workover costs;

•

general and administrative expense per mcfe for the first nine months 2022 was the same compared to the same period of 2021; and

•

reduced DD&A rate per mcfe by 2% from the same period of 2021.

Our cash flow from operating activities in first nine months 2022 was $1.3 billion, an increase of $776.8 million from same period of 2021 with significantly higher realized prices when compared to same period of 2021 partially offset by slightly lower production volumes and higher negative working capital due to higher commodity prices.

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

Our revenues vary primarily as a result of changes in realized commodity prices and production volumes. Our revenues are generally recognized when control of the product is transferred to the customer and collectability is reasonably assured. In third quarter 2022, natural gas, NGLs and oil sales increased 69% compared to third quarter 2021 with a 69% increase in average realized prices (before cash settlements on our derivatives). In first nine months 2022, natural gas, NGLs and oil sales increased 84% compared to first nine months 2021 with an 85% increase in average realized prices partially offset by a 1% reduction in production volumes. The following table illustrates the primary components of natural gas, NGLs and oil sales for the three and nine months ended September 30, 2022 and 2021 (in thousands):


	Three Months Ended September 30,									Nine Months Ended September 30,
	2022		2021		Change		%			2022		2021		Change		%
Natural gas, NGLs and oil sales
Natural gas	$	1,053,863	$	494,917	$	558,946		113	%	$	2,593,540	$	1,152,283	$	1,441,257		125	%
NGLs		325,989		309,232		16,757		5	%		1,039,057		795,173		243,884		31	%
Oil		55,300		45,156		10,144		22	%		191,798		127,051		64,747		51	%
Total natural gas, NGLs and oil sales	$	1,435,152	$	849,305	$	585,847		69	%	$	3,824,395	$	2,074,507	$	1,749,888		84	%

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 and nine months ended September 30, 2022 and 2021 is set forth in the following table:


	Three Months Ended September 30,										Nine Months Ended September 30,
	2022		2021		Change			%			2022		2021		Change			%
Production (a)
Natural gas (mcf)		136,862,857		137,713,717		(850,860	)		(1	)%		399,834,208		399,929,389		(95,181	)		—	%
NGLs (bbls)		9,235,626		9,080,902		154,724			2	%		26,473,922		26,977,257		(503,335	)		(2	)%
Crude oil (bbls)		653,000		710,914		(57,914	)		(8	)%		2,099,630		2,245,972		(146,342	)		(7	)%
Total (mcfe) (b)		196,194,613		196,464,613		(270,000	)		—	%		571,275,520		575,268,763		(3,993,243	)		(1	)%

Average daily production (a)
Natural gas (mcf)		1,487,640		1,496,888		(9,248	)		(1	)%		1,464,594		1,464,943		(349	)		—	%
NGLs (bbls)		100,387		98,705		1,682			2	%		96,974		98,818		(1,844	)		(2	)%
Crude oil (bbls)		7,098		7,727		(629	)		(8	)%		7,691		8,227		(536	)		(7	)%
Total (mcfe) (b)		2,132,550		2,135,485		(2,935	)		—	%		2,092,584		2,107,212		(14,628	)		(1	)%


(a)	Represents volumes sold regardless of when produced.
(b)	Oil and NGLs volumes are converted to mcfe at the rate of one barrel equals six mcf based upon the approximate relative energy content of oil 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 third quarter 2022 was $3.30 per mcfe compared to $2.00 per mcfe in third quarter 2021. Our average realized price received (including all derivative settlements and third party transportation costs) during first nine months 2022 was $3.27 per mcfe compared to $1.71 per mcfe in first nine months 2021. We believe computed final realized prices should include the total impact of transportation, gathering, processing and compression expense. Our average realized price (including all derivative settlements and third-party transportation costs) calculation also includes all cash settlements for derivatives. Average realized prices (excluding derivative settlements) do not include derivative settlements or third-party transportation costs which are reported in transportation, gathering, processing and compression expense in the accompanying consolidated statements of operations. Average realized prices (excluding derivative settlements) do include transportation costs where we receive net revenue proceeds from purchasers. Average realized price calculations for three and nine months ended September 30, 2022 and 2021 are shown below:


	Three Months Ended September 30,									Nine Months Ended September 30,
	2022		2021		Change		%			2022		2021		Change		%
Average Prices
Average realized prices (excluding derivative settlements):
Natural gas (per mcf)	$	7.70	$	3.59	$	4.11		114	%	$	6.49	$	2.88	$	3.61		125	%
NGLs (per bbl)		35.30		34.05		1.25		4	%		39.25		29.48		9.77		33	%
Crude oil and condensate (per bbl)		84.69		63.52		21.17		33	%		91.35		56.57		34.78		61	%
Total (per mcfe) (a)		7.31		4.32		2.99		69	%		6.69		3.61		3.08		85	%
Average realized prices (including all derivative settlements):
Natural gas (per mcf)	$	4.41	$	2.69	$	1.72		64	%	$	4.19	$	2.55	$	1.64		64	%
NGLs (per bbl)		35.75		31.17		4.58		15	%		38.54		26.59		11.95		45	%
Crude oil and condensate (per bbl)		55.42		50.32		5.10		10	%		57.85		43.89		13.96		32	%
Total (per mcfe) (a)		4.95		3.51		1.44		41	%		4.93		3.19		1.74		55	%
Average realized prices (including all derivative settlements and third-party transportation costs paid by Range):
Natural gas (per mcf)	$	3.13	$	1.49	$	1.64		110	%	$	2.91	$	1.33	$	1.58		119	%
NGLs (per bbl)		19.86		16.83		3.03		18	%		22.11		13.00		9.11		70	%
Crude oil and condensate (per bbl)		55.41		49.72		5.69		11	%		57.85		43.50		14.35		33	%
Total (per mcfe) (a)		3.30		2.00		1.30		65	%		3.27		1.71		1.56		91	%


(1)	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.

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


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Average natural gas differentials below NYMEX	$	(0.49	)	$	(0.42	)	$	(0.28	)	$	(0.31	)
Realized gains on basis hedging	$	0.11		$	0.06		$	0.08		$	0.02

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 September 30,									Nine Months Ended September 30,
	2021		Price Variance		Volume Variance			2022		2021		Price Variance		Volume Variance			2022
Natural gas
Price (per mcf)	$	3.59	$	4.11	$	—		$	7.70	$	2.88	$	3.61	$	—		$	6.49
Production (Mmcf)		137,714		—		(851	)		136,863		399,929		—		(95	)		399,834
Natural gas sales	$	494,917	$	562,004	$	(3,058	)	$	1,053,863	$	1,152,283	$	1,441,531	$	(274	)	$	2,593,540


	Three Months Ended September 30,								Nine Months Ended September 30,
	2021		Price Variance		Volume Variance		2022		2021		Price Variance		Volume Variance			2022
NGLs
Price (per bbl)	$	34.05	$	1.25	$	—	$	35.30	$	29.48	$	9.77	$	—		$	39.25
Production (Mbbls)		9,081		—		155		9,236		26,977		—		(503	)		26,474
NGLs sales	$	309,232	$	11,488	$	5,269	$	325,989	$	795,173	$	258,720	$	(14,836	)	$	1,039,057


	Three Months Ended September 30,									Nine Months Ended September 30,
	2021		Price Variance		Volume Variance			2022		2021		Price Variance		Volume Variance			2022
Crude oil
Price (per bbl)	$	63.52	$	21.17	$	—		$	84.69	$	56.57	$	34.78	$	—		$	91.35
Production (Mbbls)		711		—		(58	)		653		2,246		—		(146	)		2,100
Crude oil sales	$	45,156	$	13,822	$	(3,678	)	$	55,300	$	127,051	$	73,025	$	(8,278	)	$	191,798


	Three Months Ended September 30,									Nine Months Ended September 30,
	2021		Price Variance		Volume Variance			2022		2021		Price Variance		Volume Variance			2022
Consolidated
Price (per mcfe)	$	4.32	$	2.99	$	—		$	7.31	$	3.61	$	3.08	$	—		$	6.69
Production (Mmcfe)		196,465		—		(270	)		196,195		575,269		—		(3,994	)		571,275
Total natural gas, NGLs and oil sales	$	849,305	$	587,014	$	(1,167	)	$	1,435,152	$	2,074,507	$	1,764,288	$	(14,400	)	$	3,824,395

Transportation, gathering, processing and compression expense was $323.0 million in third quarter 2022 compared to $296.5 million in third quarter 2021. These third-party costs are higher in third quarter 2022 when compared to third quarter 2021 due to higher fuel prices, higher electricity costs and the impact of higher NGLs prices which result in higher processing costs.

Transportation, gathering, processing and compression expense was $948.7 million in first nine months 2022 compared to $853.7 million in the same period of the prior year. These third-party costs are higher in first nine months 2022 when compared to the same period of 2021 due to the impact of higher NGLs prices which results in higher processing costs along with higher electricity and fuel costs. In addition, second quarter 2022 included a one-time adjustment of $7.5 million that reflects a one-time settlement regarding transportation, gathering and processing charges. 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 and nine months ended September 30, 2022 and 2021 on a per mcf and per barrel basis (in thousands, except for costs per unit):


	Three Months Ended September 30,										Nine Months Ended September 30,
	2022		2021		Change			%			2022		2021		Change			%
Transportation, gathering, processing and compression
Natural gas	$	176,324	$	165,864	$	10,460			6	%	$	513,548	$	486,162	$	27,386			6	%
NGLs		146,695		130,221		16,474			13	%		435,154		366,648		68,506			19	%
Oil		—		425		(425	)		(100	)%		11		874		(863	)		(99	)%
Total	$	323,019	$	296,510	$	26,509			9	%	$	948,713	$	853,684	$	95,029			11	%

Natural gas (per mcf)	$	1.29	$	1.20	$	0.09			8	%	$	1.28	$	1.22	$	0.06			5	%
NGLs (per bbl)	$	15.88	$	14.34	$	1.54			11	%	$	16.44	$	13.59	$	2.85			21	%
Oil (per bbl)	$	—	$	0.60	$	(0.60	)		(100	)%	$	0.01	$	0.39	$	(0.38	)		(97	)%

Derivative fair value loss was $457.7 million in third quarter 2022 compared to a loss of $652.2 million in third quarter 2021. Derivative fair value loss was $1.6 billion in first nine months 2022 compared to a loss of $959.8 million in the same period of the prior year. All of our derivatives are accounted for using the mark-to-market accounting method. Mark-to-market accounting treatment can result in more volatility of our revenues as the change in the fair value of our commodity derivative positions is included in total revenue. As commodity prices increase or decrease, such changes will have an opposite effect on the mark-to-market value of our derivatives. Gains on our derivatives generally indicate 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 and nine months ended September 30, 2022 and 2021 (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Derivative fair value loss per consolidated statements of operations	$	(457,708	)	$	(652,220	)	$	(1,636,687	)	$	(959,782	)

Non-cash fair value gain (loss): (1)
Natural gas derivatives	$	(64,126	)	$	(503,633	)	$	(667,131	)	$	(715,578	)
Oil derivatives		62,936			(1,696	)		18,985			(31,259	)
NGLs derivatives		8,509			(241	)		9,325			(6,910	)
Freight derivatives		—			(63	)		(114	)		(1,130	)
Divestiture contingent consideration		(350	)		12,870			7,770			34,260
Total non-cash fair value gain (loss) (1)	$	6,969		$	(492,763	)	$	(631,165	)	$	(720,617	)

Net cash (payment) receipt on derivative settlements:
Natural gas derivatives	$	(449,713	)	$	(123,932	)	$	(916,518	)	$	(132,794	)
Oil derivatives		(19,114	)		(9,383	)		(70,331	)		(28,472	)
NGLs derivatives		4,150			(26,142	)		(18,673	)		(77,899	)
Total net cash payment	$	(464,677	)	$	(159,457	)	$	(1,005,522	)	$	(239,165	)

(1)

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

Brokered natural gas, marketing and other revenue in third quarter 2022 was $133.1 million compared to $105.6 million in third quarter 2021 which is the result of significantly higher broker sales prices somewhat offset by lower broker sales volumes (volumes not related to our production). Brokered natural gas, marketing and other revenue was $328.7 million in first nine months 2022 compared to $248.7 million in first nine months 2021 which is the result of significantly higher broker sales prices somewhat offset by lower broker sales volumes. First nine months 2021 also included $8.8 million received as part of a capacity release agreement. We continue to optimize our transportation portfolio using these volumes. See also Brokered natural gas and marketing expense below for more information on our net brokered margin.

Operating Costs per Mcfe

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 and nine months ended September 30, 2022 and 2021:


	Three Months Ended September 30,										Nine Months Ended September 30,
	2022		2021		Change			%			2022		2021		Change			%
Direct operating expense	$	0.11	$	0.10	$	0.01			10	%	$	0.11	$	0.10	$	0.01			10	%
Production and ad valorem tax expense		0.04		0.04		—			—	%		0.04		0.04		—			—	%
General and administrative expense		0.21		0.25		(0.04	)		(16	)%		0.22		0.22		—			—	%
Interest expense		0.20		0.29		(0.09	)		(31	)%		0.22		0.30		(0.08	)		(27	)%
Depletion, depreciation and amortization expense		0.46		0.47		(0.01	)		(2	)%		0.46		0.47		(0.01	)		(2	)%

Direct operating expense was $21.3 million in third quarter 2022 compared to $20.2 million in third quarter 2021. 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 third quarter 2022 primarily due to higher contract labor and services and higher water handling/hauling costs partially offset by lower workover costs. 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 only slightly lower in third quarter 2022 compared to the same period of the prior year. We incurred $223,000 of workover costs in third quarter 2022 compared to $896,000 in third quarter 2021. On a per mcfe basis, direct operating expense was $0.11 in third quarter 2022 compared to $0.10 in the same quarter of the prior year due to higher water handling/hauling costs.

Direct operating expense was $61.6 million in first nine months 2022 compared to $57.7 million in the same period of the prior year due to higher contract labor and higher services and water handling/hauling costs somewhat offset by lower workover costs. Our production volumes decreased 1% in first nine months 2022 compared to the same period of the prior year. We incurred $1.3 million of workover costs in first nine months 2022 compared to $3.3 million in first nine months 2021. On a per mcfe basis, direct operating costs increased 10%, from $0.10 to $0.11 with the increase due to higher water handling/handling costs and higher contract labor and services somewhat offset by lower workover costs. The following table summarizes direct operating expense per mcfe for the three and nine months ended September 30, 2022 and 2021:


	Three Months Ended September 30,									Nine Months Ended September 30,
	2022		2021		Change		%			2022		2021		Change			%
Direct operating
Lease operating expense	$	0.11	$	0.10	$	0.01		10	%	$	0.11	$	0.09	$	0.02			22	%
Workovers		—		—		—		—	%		—		0.01		(0.01	)		(100	)%
Stock-based compensation		—		—		—		—	%		—		—		—			—	%
Total direct operating expense	$	0.11	$	0.10	$	0.01		10	%	$	0.11	$	0.10	$	0.01			10	%

Production and ad valorem taxes are paid based on market prices rather than hedged prices. This expense category is predominately comprised of the Pennsylvania impact fee. 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 $8.4 million in third quarter 2022 compared to $7.1 million in third quarter 2021 due to higher natural gas prices. The impact fee is based on drilling activities and is adjusted based on prevailing natural gas prices. Production and ad valorem taxes includes an impact fee of $22.5 million in first nine months 2022 compared to $20.1 million in first nine months 2021 due to higher natural gas prices. The following table summarizes production and ad valorem taxes per mcfe for the three and nine months ended September 30, 2022 and 2021:


	Three Months Ended September 30,									Nine Months Ended September 30,
	2022		2021		Change		%			2022		2021		Change		%
Production and ad valorem taxes
Impact fee	$	0.04	$	0.04	$	—		—	%	$	0.04	$	0.04	$	—		—	%
Production and ad valorem taxes		—		—		—		—	%		—		—		—		—	%
Total production and ad valorem taxes	$	0.04	$	0.04	$	—		—	%	$	0.04	$	0.04	$	—		—	%

General and administrative (G&A) expense was $41.2 million in third quarter 2022 compared to $49.1 million in third quarter 2021. The third quarter 2022 decrease of $7.9 million when compared to the same period of 2021 is primarily due to lower legal expenses (including legal settlements) of $9.0 million partially offset by higher stock-based compensation and higher general office expenses. On a per mcfe basis, third quarter 2022 G&A expense was 16% lower than third quarter 2021 primarily due to lower legal expenses.

G&A expense for first nine months 2022 increased $409,000 when compared to the same period 2021 with higher stock-based compensation of $3.6 million, higher salaries and benefits of $2.1 million and higher general office expenses including technology costs offset by lower legal expenses, including legal settlements. On a per mcfe basis, first nine months 2022 G&A expense is equal to the first nine months 2021. The following table summarizes G&A expenses on a per mcfe basis for the three and nine months ended September 30, 2022 and 2021:


	Three Months Ended September 30,										Nine Months Ended September 30,
	2022		2021		Change			%			2022		2021		Change			%
General and administrative
General and administrative	$	0.16	$	0.20	$	(0.04	)		(20	)%	$	0.16	$	0.17	$	(0.01	)		(6	)%
Stock-based compensation		0.05		0.05		—			—	%		0.06		0.05		0.01			20	%
Total general and administrative expense	$	0.21	$	0.25	$	(0.04	)		(16	)%	$	0.22	$	0.22	$	—			—	%

Interest expense was $38.7 million in third quarter 2022 compared to $56.8 million in third quarter 2021. Interest expense was $127.9 million for first nine months 2022 compared to $171.0 million for first nine months 2021. The following table presents information about interest expense per mcfe for the three and nine months ended September 30, 2022 and 2021:


	Three Months Ended September 30,												Nine Months Ended September 30,
	2022			2021			Change			%			2022			2021			Change			%
Bank credit facility	$	0.02		$	0.02		$	—			—	%	$	0.02		$	0.02		$	—			—	%
Senior notes		0.17			0.26			(0.09	)		(35	)%		0.19			0.27			(0.08	)		(30	)%
Amortization of deferred financing costs and other		0.01			0.01			—			—	%		0.01			0.01			—			—	%
Total interest expense	$	0.20		$	0.29		$	(0.09	)		(31	)%	$	0.22		$	0.30		$	(0.08	)		(27	)%
Average debt outstanding ($000's)	$	2,404,038		$	3,089,472		$	(685,434	)		(22	)%	$	2,580,876		$	3,141,729		$	(560,853	)		(18	)%
Average interest rate (a)		6.2	%		7.1	%		(0.9	)%		(13	)%		6.3	%		7.0	%		(0.7	)%		(10	)%


(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 third quarter 2022 from the same period of 2021 was primarily due to lower overall average outstanding debt balances and lower overall average interest rates. Average debt outstanding on the bank credit facility for third quarter 2022 was $21.9 million compared to $139.0 million in third quarter 2021 and the weighted average interest rate on the bank credit facility was 5.7% in third quarter 2022 compared to 2.0% in third quarter 2021.

On an absolute basis, the decrease in interest expense for first nine months 2022 from the same period 2021 was primarily due to lower overall outstanding debt balances and lower overall average interest rates. Average debt outstanding on the bank credit facility was $59.0 million for first nine months 2022 compared to $185.0 million for first nine months 2021 and the weighted average interest rates on the bank credit facility was 3.7% in first nine months 2022 compared to 2.1% in first nine months 2021.

Depletion, depreciation and amortization expense was $90.5 million in third quarter 2022 compared to $93.1 million in third quarter 2021. This decrease is due to a 2% decrease in depletion rates. Depletion expense, the largest component of DD&A expense, was $0.45 per mcfe in third quarter 2022 compared to $0.46 per mcfe in third quarter 2021. 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.

DD&A expense was $262.6 million in first nine months 2022 compared to $272.1 million in the same period 2021. This is due to a 2% decrease in depletion rates and a 1% decrease in production volumes. Depletion expense per mcfe was $0.45 in first nine months 2022 compared to $0.46 in the same period of 2021. The following table summarizes DD&A expense per mcfe for the three and nine months ended September 30, 2022 and 2021:


	Three Months Ended September 30,										Nine Months Ended September 30,
	2022		2021		Change			%			2022		2021		Change			%
DD&A
Depletion and amortization	$	0.45	$	0.46	$	(0.01	)		(2	)%	$	0.45	$	0.46	$	(0.01	)		(2	)%
Depreciation		—		—		—			—	%		—		—		—			—	%
Accretion and other		0.01		0.01		—			—	%		0.01		0.01		—			—	%
Total DD&A expense	$	0.46	$	0.47	$	(0.01	)		(2	)%	$	0.46	$	0.47	$	(0.01	)		(2	)%

Other Operating Expenses

Our total operating expenses also include other expenses that generally do not trend with production. These expenses include stock-based compensation, brokered natural gas and marketing expense, exploration expense, abandonment and impairment of unproved properties, exit and termination costs, deferred compensation plan expenses, loss or gain on early extinguishment of debt and gain or loss on sale of assets. 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 and nine months ended September 30, 2022 and 2021 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Direct operating expense	$	372	$	319	$	1,083	$	986
Brokered natural gas and marketing expense		663		446		1,868		1,339
Exploration expense		393		368		1,163		1,116
General and administrative expense		10,402		9,845		32,245		28,632
Total stock-based compensation	$	11,830	$	10,978	$	36,359	$	32,073

Brokered natural gas and marketing expense was $127.3 million in third quarter 2022 compared to $105.8 million in third quarter 2021 due to significantly higher commodity prices somewhat offset by lower broker purchase volumes (volumes not related to our production). Brokered natural gas marketing expense was $330.5 million in first nine months 2022 compared to $247.2 million in first nine months 2021 due to significantly higher commodity prices somewhat offset by lower broker purchased volumes. The following table details our brokered natural gas, marketing and other net margin for the three and nine months ended September 30, 2022 and 2021 (in thousands):


	Three Months Ended September 30,												Nine Months Ended September 30,
	2022			2021			Change			%			2022			2021			Change			%
Brokered natural gas and marketing
Brokered natural gas sales	$	130,466		$	101,095		$	29,371			29	%	$	317,896		$	231,335		$	86,561			37	%
Brokered NGLs sales		(6	)		2,764			(2,770	)		(100	)%		2,274			3,912			(1,638	)		(42	)%
Other marketing revenue (1)		2,641			1,695			946			56	%		8,546			13,421			(4,875	)		(36	)%
Brokered natural gas purchases (2)		(124,756	)		(100,868	)		(23,888	)		(24	)%		(320,180	)		(236,498	)		(83,682	)		(35	)%
Brokered NGLs purchases		3			(2,867	)		2,870			100	%		(2,326	)		(3,924	)		1,598			41	%
Other marketing expense		(2,532	)		(2,103	)		(429	)		(20	)%		(8,011	)		(6,755	)		(1,256	)		(19	)%
Net brokered natural gas and marketing margin	$	5,816		$	(284	)	$	6,100			2,148	%	$	(1,801	)	$	1,491		$	(3,292	)		(221	)%

(1)

(2)

The nine months ended September 30, 2021 includes $8.8 million received as part of a capacity release agreement.

Includes transportation costs.

Exploration expense was $7.5 million in third quarter 2022 compared to $5.9 million in third quarter 2021 due to higher delay rentals and other expense. Exploration expense was $19.7 million in first nine months 2022 compared to $16.4 million in first nine months 2021 due to higher delay rentals and other expense. The following table details our exploration expense for the three and nine months ended September 30, 2022 and 2021 (in thousands):


	Three Months Ended September 30,										Nine Months Ended September 30,
	2022		2021		Change			%			2022		2021			Change		%
Exploration
Delay rentals and other	$	5,925	$	4,370	$	1,555			36	%	$	14,767	$	11,872		$	2,895		24	%
Personnel expense		1,060		1,131		(71	)		(6	)%		3,574		3,530			44		1	%
Stock-based compensation expense		393		368		25			7	%		1,163		1,116			47		4	%
Seismic		120		12		108			900	%		199		(71	)		270		380	%
Total exploration expense	$	7,498	$	5,881	$	1,617			27	%	$	19,703	$	16,447		$	3,256		20	%

Abandonment and impairment of unproved properties was $3.2 million in third quarter 2022 compared to $2.0 million in third quarter 2021. Abandonment and impairment of unproved properties was $12.3 million in first nine months 2022 compared to $7.2 million in the same period of 2021. Abandonment and impairment of unproved properties for third quarter and first nine months 2022 increased when compared to the same periods of 2021 due to higher estimated lease expirations in Pennsylvania.

Exit and termination costs was $11.1 million in third quarter 2022 compared to $11.8 million in third quarter 2021. In third quarter 2022, we recorded $11.1 million accretion expense primarily related to retained liabilities for certain gathering, transportation and processing obligations extending until 2030 compared to accretion expense of $11.8 million in the same quarter of the prior year.

Exit and termination costs was $58.2 million in first nine months 2022 compared to $9.6 million in first nine months 2021. We recorded accretion expense of $33.5 million in first nine months 2022 compared to accretion expense of $37.2 million in the same period of 2021. The first nine months 2022 includes an unfavorable adjustment of $24.8 million to increase this obligation for a change in our forecasted drilling plans of the buyer and other adjustments compared to a favorable adjustment of $28.2 million in the same period of 2021 due to a reduction of certain contractual payments compared to those originally estimated along with a change in our forecasted drilling plans of the buyer.

Deferred compensation plan was a loss of $5.8 million in third quarter 2022 compared to a loss of $34.3 million in third quarter 2021. 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 $24.75 at June 30, 2022 to $25.26 at September 30, 2022. In the same period of the prior year, our stock price increased from $16.76 at June 30, 2021 to $22.63 at September 30, 2021. During first nine months 2022, deferred compensation was a loss of $59.9 million compared to a loss of $89.6 million in the same period of 2021. Our stock price increased from $17.83 at December 31, 2021 to $25.26 at September 30, 2022. In the same period of the prior year, our stock price increased from $6.70 at December 31, 2020 to $22.63 at September 30, 2021.

Loss on early extinguishment of debt was a loss of $69.2 million in first nine months 2022 compared to $98,000 in the same period of the prior year. In first quarter 2022, we announced a call for the redemption of $850.0 million of our outstanding 9.25% senior notes due 2026. The redemption price equaled 106.938% of par plus accrued and unpaid interest. 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 $59.6 million in third quarter 2022 compared to benefit of $29.7 million in third quarter 2021. Income tax expense was $46.9 million in first nine months 2022 compared to benefit of $28.3 million in the same period of 2021. The 2022 and 2021 effective tax rates were different than the statutory tax rate due to state income taxes, equity compensation, valuation allowances and other discrete tax items. In third quarter 2022, we recorded a $20.7 million tax benefit related to the reduction in the Commonwealth of Pennsylvania corporate income tax rates enacted on July 12, 2022.

Management’s Discussion and Analysis of Financial Condition, Capital Resources and Liquidity

Cash Flow

Cash flows from operations are primarily affected by production volumes and commodity prices, net of the effects of settlements of our derivatives. Our cash flows from operations are also impacted by changes in working capital. Short-term liquidity needs are satisfied by borrowings under our bank credit facility and/or cash on hand. Because of this, and because our principal source of operating cash flows (proved reserves to be produced in future years) cannot be reported as working capital, we often have low or negative working capital. From time to time, we enter into various derivative contracts to provide an economic hedge of our exposure to commodity price risk associated with anticipated future natural gas, NGLs and oil production. 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. Production receipts, however, often lag payments to the counterparties. As of September 30, 2022, we have entered into derivative agreements covering 94.4 Bcfe for the remainder of 2022, 297.9 Bcfe for 2023 and 173.1 Bcfe for 2024, not including our basis swaps.

The following table presents sources and uses of cash and cash equivalents for the nine months ended September 30, 2022 and 2021 (in thousands):


	Nine Months Ended September 30,
	2022			2021
Sources of cash and cash equivalents
Operating activities	$	1,252,089		$	475,289
Disposal of assets		463			237
Issuance of senior notes		500,000			600,000
Borrowing on credit facility		813,000			1,250,000
Other		62,005			35,011
Total sources of cash and cash equivalents	$	2,627,557		$	2,360,537

Uses of cash and cash equivalents
Additions to natural gas properties	$	(351,813	)	$	(311,709	)
Repayment on credit facility		(813,000	)		(1,922,000	)
Acreage purchases		(23,968	)		(20,302	)
Additions to field service assets		(535	)		(720	)
Repayment of senior and senior subordinated notes		(1,071,867	)		(63,324	)
Treasury stock purchases		(308,891	)		—
Dividends paid		(19,526	)		—
Debt issuance costs		(16,177	)		(8,799	)
Other		(79,058	)		(33,663	)
Total uses of cash and cash equivalents	$	(2,684,835	)	$	(2,360,517	)

Sources of Cash and Cash Equivalents

Cash flows provided from operating activities in first nine months 2022 was $1.3 billion compared to $475.3 million in first nine months 2021. 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 nine months 2021 to first nine months 2022 reflects significantly higher realized prices partially offset by lower production volumes. As of September 30, 2022, we have hedged more than 50% of our projected total production for the remainder of 2022, with more than 55% of our projected natural gas production hedged. Net cash provided from operating activities was affected by a 1% decrease in production and working capital changes or the timing of cash receipts and disbursements. Changes in working capital (as reflected in our consolidated statements of cash flows) for first nine months 2022 were negative $277.6 million compared to a negative $143.6 million for first nine months 2021.

Issuance of senior notes in first nine months 2022 includes the issuance of $500.0 million new 4.75% senior notes due 2030.

Uses of Cash and Cash Equivalents

Additions to natural gas properties for first nine months 2022 were consistent with expectations relative to our announced 2022 capital budget. We continue to monitor inflationary pressures given the labor market, commodity prices and supply chain challenges. We currently believe our 2022 capital program will approach the high-end of our announced range of $460.0 million to $480.0 million with any increase in our 2022 capital program due to the impact of cost inflation.

Repayment of senior notes for first nine months 2022 includes the redemption of our $850.0 million aggregate principal amount 9.25% senior notes due 2026 along with the retirement of our 5.00% senior notes due 2022 and our 5.875% notes due 2022. From time to time, we may continue to repurchase our senior notes based upon prevailing market or other conditions at the time.

Treasury stock purchases for first nine months 2022 include the repurchase of 10.6 million shares as part of our previously announced stock repurchase program.

Liquidity and Capital Resources

Based on the current commodity price environment, we believe we have sufficient liquidity and capital resources to execute our business plan for the foreseeable future. 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 September 30, 2022, we had cash on hand in the amount of $157.1 million and availability under our credit facility of $1.2 billion.

Sources of Cash

We expect our 2022 capital program to be funded by cash flows from operations. During the nine months ended September 30, 2022, we generated $1.3 billion of cash flows from operating activities. As of September 30, 2022, we had approximately $1.4 billion of liquidity, consisting of $1.2 billion available under our bank credit facility and $157.1 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. We may draw on our bank credit facility to meet short-term cash requirements. In early January 2022, we issued $500.0 million aggregate principal amount of new 4.75% senior notes due 2030 and used the proceeds, cash on hand and our credit facility to fully redeem our 9.25% senior notes due 2026 in February 2022.

Although we expect cash flows and capacity under the existing credit facility to be sufficient to fund our expected 2022 capital program, we may also have the option to raise funds through new debt or equity offerings or from other sources of financing. All of our sources of liquidity can be affected by the general conditions of the broader economy, the global pandemic, force majeure events and fluctuations in commodity prices, operating costs and volumes produced, all of which affect us and our industry. We have no control over market prices for natural gas, NGLs or oil, although we may be able to influence the amount of realized revenues through the use of derivative contracts as part of our commodity price risk management.

Bank Credit Facility

Our bank credit facility is secured by substantially all of our assets. As of September 30, 2022, 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 $330.5 million as of September 30, 2022. We were in compliance with the applicable covenants under the bank credit facility as of September 30, 2022.

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 September 2022 with our borrowing base and commitments reaffirmed. On April 14, 2022 we entered into an amended and restated revolving bank credit facility. The new facility has a maximum facility amount of $4.0 billion, a borrowing base of $3.0 billion and aggregate lender commitments of $1.5 billion. The maturity of the new bank credit facility is April 14, 2027. See Note 8 for additional information.

Our daily weighted-average bank credit facility debt balance was $59.0 million for first nine months ended September 30, 2022 compared to $185.0 million for the same period of the prior year. As of April 14, 2022, 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%. The applicable spread is dependent upon borrowings relative to the borrowing base. 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.

Uses of Cash

We use cash for the development, exploration and acquisition of natural gas properties and for the payment of gathering, transportation and processing costs, operating, general and administrative costs, taxes and debt obligations, including interest, dividends and share repurchases. Expenditures for the development, exploration and acquisition of natural gas and oil properties are the primary use of our capital resources. During first nine months 2022, we funded $376.3 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. In addition, the impact of commodity prices on investment opportunities, the availability of capital and the timing and results of our development activities may lead to changes in funding requirements for future development. We periodically review our budget to assess changes in current and projected cash flows, debt requirements and other factors.

We may from time to time repurchase or redeem all or portions of our outstanding debt securities for cash, through exchanges for other securities or a combination of both. Such repurchases or redemptions may be made in open market transactions and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. Our next significant long-term debt maturity is in the amount of $528.6 million due 2023 which is callable in December 2022. As part of our strategy for 2022, we will continue to focus on improving our debt metrics.

Our quarterly cash dividend was reinstated in third quarter of 2022 at a quarterly dividend rate of $0.08 per share or a $0.32 per share annual distribution. See also Cash Dividend Payments below. Details regarding the record and payment dates will be announced at such time the dividend is declared by our board of directors. In early 2022, the board of directors approved an increase to our share repurchase program, where we were authorized to repurchase an additional $430.0 million of our outstanding shares of common stock for an aggregate available at the time of $500.0 million. During the first nine months 2022, we repurchased 10.8 million shares of our common stock at an aggregate cost of $313.9 million (including 208,500 shares purchased in September and settled in October). The total remaining share repurchase authorization was approximately $186.1 million at September 30, 2022. On October 21, 2022, our board of directors approved an additional repurchase of up to $1.0 billion of our outstanding common stock for this program.

Shelf Registration

We have a universal shelf registration statement filed with the SEC under which we, as a "well-known seasoned issuer" for purposes of SEC rules, have the ability to sell an indeterminate amount of various types of debt and equity securities.

Cash Dividend Payments

On August 30, 2022, our board of directors approved a dividend of $0.08 per share payable on September 30, 2022 to stockholders of record at the close of business on September 15, 2022. The determination of the amount of future dividends, if any, to be declared and paid is at the sole discretion of the board of directors and primarily depends on cash flow, capital expenditures, debt covenants and various other factors.

Cash Contractual Obligations

Our contractual obligations include long-term debt, operating leases, derivative obligations, asset retirement obligations and transportation, processing and gathering commitments including the divestiture contractual commitment. As of September 30, 2022, we do not have any significant off-balance sheet debt or other such unrecorded obligations and we have not guaranteed any debt of any unrelated party. As of September 30, 2022, we had a total of $330.5 million of undrawn letters of credit under our bank credit facility.

Since December 31, 2021, there have been no material changes to our contractual obligations other than the changes to our indebtedness as discussed further in Note 8 and changes to our commitments as discussed in Note 16.

Interest Rates

At September 30, 2022, we had approximately $2.4 billion of debt outstanding which bore interest at fixed rates averaging 5.7%. We had no variable rate debt outstanding at September 30, 2022.

Off-Balance Sheet Arrangements

We do not currently utilize any significant off-balance sheet arrangements with unconsolidated entities to enhance our liquidity or capital resource position, or for any other purpose. However, as is customary in the oil and gas industry, we have various contractual work commitments, some of which are described above under Cash Contractual Obligations.

Inflation and Changes in Prices

Our revenues, the value of our assets and our ability to obtain bank loans or additional capital on attractive terms have been and will continue to be affected by changes in natural gas, NGLs and oil prices and the costs to produce our reserves. Natural gas, NGLs and oil prices are subject to significant fluctuations that are beyond our ability to control or predict. Certain of our costs and expenses are affected by general inflation and we expect costs for the remainder of 2022 to continue to be a function of supply and demand.

Forward-Looking Statements

Certain sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations include forward-looking statements concerning trends or events potentially affecting our business. These statements typically contain words such as “anticipates,” “believes,” “expects,” “targets,” “plans,” “estimates,” “predicts,” “may,” “should,” “would” or similar words indicating that future outcomes are uncertain. In accordance with “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, these statements are accompanied by cautionary language identifying important factors, though not necessarily all such factors, which could cause future outcomes to differ materially from those set forth in the forward-looking statements. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our current forecasts for our existing operations and do not include the potential impact of any future events. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise. For additional risk factors affecting our business, see Item 1A. Risk Factors as set forth in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on February 22, 2022.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our potential exposure to market risks. The term “market risk” refers to the risk of loss arising from adverse changes in natural gas, NGLs and oil prices and interest rates. The disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonably possible losses. This forward-looking information provides indicators of how we view and manage our ongoing market-risk exposure. All of our market-risk sensitive instruments were entered into for purposes other than trading. All accounts are U.S. dollar denominated.

Market Risk

We are exposed to market risks related to the volatility of natural gas, NGLs and oil prices. We employ various strategies, including the use of commodity derivative instruments, to manage the risks related to these price fluctuations. These derivative instruments apply to a varying portion of our production and provide only partial price protection. These arrangements can limit the benefit to us of increases in prices but offer protection in the event of price declines. Further, if our counterparties defaulted, this protection might be limited as we might not receive the benefits of the derivatives. Realized prices are primarily driven by worldwide prices for oil and regional index prices for North American natural gas production. However, natural gas and NGLs prices are becoming global commodities similar to oil. Natural gas and oil prices have been volatile and unpredictable for many years. Changes in natural gas prices affect us more than changes in oil prices because approximately 64% of our December 31, 2021 proved reserves are natural gas and 2% of proved reserves are oil and condensate. In addition, a portion of our NGLs, which are 34% of proved reserves, are also impacted by changes in oil prices. We are also exposed to market risks related to changes in interest rates. These risks did not change materially from December 31, 2021 to September 30, 2022.

Commodity Price Risk

We use commodity-based derivative contracts to manage exposures to commodity price fluctuations. We do not enter into these arrangements for speculative or trading purposes. At times, certain of our derivatives are swaps where we receive a fixed price for our production and pay market prices to the counterparty. Our derivatives program can also include collars, which establish a minimum floor price and a predetermined ceiling price. We have also entered into natural gas derivative instruments containing a fixed price swap and a sold option (which we refer to as a swaption). Our program may also include a three-way collar which is a combination of three options. At September 30, 2022, our derivative program includes swaps, collars and three-way collars. The fair value of these contracts, represented by the estimated amount that would be realized upon immediate liquidation based on a comparison of the contract price and a reference price, generally NYMEX for natural gas and crude oil or Mont Belvieu for NGLs, as of September 30, 2022, approximated a net unrealized pretax loss of $816.0 million. These contracts expire monthly through December 2024. At September 30, 2022, the following commodity derivative contracts were outstanding, excluding our basis swaps which are discussed below:


Period	Contract Type	Volume Hedged		Weighted Average Hedge Price										Fair Market Value
				Swap		Sold Put			Floor			Ceiling
Natural Gas														(in thousands)
2022	Swaps	490,000 Mmbtu/day	$		3.08									$	(170,941	)
2022	Collars	174,783 Mmbtu/day						$		4.02	$		4.74	$	(40,083	)
2022	Three-way Collars	293,261Mmbtu/day				$	2.91	$		3.63	$		4.65	$	(71,787	)
2023	Swaps	360,000 Mmbtu/day	$		3.35									$	(261,202	)
2023	Collars	275,589 Mmbtu/day						$		3.59	$		4.77	$	(121,457	)
2023	Three-way Collars	149,863 Mmbtu/day				$	2.28	$		3.30	$		4.28	$	(85,286	)
2024	Collars	469,235Mmbtu/day						$		3.55	$		5.51	$	(63,736	)

Crude Oil
2022	Swaps	6,500 bbls/day	$		62.20									$	(9,533	)
2023	Swaps	5,123 bbls/day	$		71.39									$	(1,489	)
January-September 2024	Collars	832 bbls/day						$		80.00	$		90.12	$	3,123

NLGs (C2-Ethane)
October 2022	Swaps	4,000 bbls/day	$	0.64/gallon										$	1,208

NGLs (C5-Natural Gasoline)
2022	Swaps	1,500 bbls/day	$	1.98/gallon										$	2,501
2022	Collars	2,000 bbls/day						$	1.89/gallon		$	2.02/gallon		$	2,686

We believe NGLs prices are somewhat seasonal, particularly for propane. Therefore, the relationship of NGLs prices to NYMEX WTI (or West Texas Intermediate) will vary due to product components, seasonality and geographic supply and demand. We sell NGLs in several regional and international markets. If we are not able to sell or store NGLs, we may be required to curtail production or shift our drilling activities to dry gas areas.

Currently, the Appalachian region has limited local demand and infrastructure to accommodate ethane. We have agreements where we have contracted to either sell or transport ethane from our Marcellus Shale area. We cannot ensure that these facilities will remain available. If we are not able to sell ethane under at least one of these agreements, we may be required to curtail production or, as we have done in the past, purchase or divert natural gas to blend with our rich residue gas.

Other Commodity Risk

We are impacted by basis risk, caused by factors that affect the relationship between commodity futures prices reflected in derivative commodity instruments and the cash market price of the underlying commodity. Natural gas transaction prices are frequently based on industry reference prices that may vary from prices experienced in local markets. If commodity price changes in one region are not reflected in other regions, derivative commodity instruments may no longer provide the expected hedge, resulting in increased basis risk. Therefore, in addition to the swaps, collars and three-way collars discussed above, we have entered into natural gas basis swap agreements. The price we receive for our gas production can be more or less than the NYMEX Henry Hub price because of basis adjustments, relative quality and other factors. Basis swap agreements effectively fix the basis adjustments. The fair value of the natural gas basis swaps was a gain of $23.8 million September 30, 2022 and they settle monthly through December 2025.

At September 30, 2022, we are entitled to receive contingent consideration associated with the sale of our North Louisiana assets, annually through 2023, of up to $45.5 million based on future achievement of certain natural gas and oil prices based on published indexes along with the realized NGLs prices of the buyer. The fair value at September 30, 2022 was a gain of $34.4 million.

The following table shows the fair value of our derivatives and the hypothetical changes in fair value that would result from a 10% and a 25% change in commodity prices at September 30, 2022. We remain at risk for possible changes in the market value of commodity derivative instruments; however, such risks should be mitigated by price changes in the underlying physical commodity (in thousands):


				Hypothetical Change in Fair Value						Hypothetical Change in Fair Value
				Increase in Commodity Price of						Decrease in Commodity Price of
	Fair Value			10%			25%			10%			25%
Swaps	$	(439,456	)	$	(117,526	)	$	(293,815	)	$	117,526		$	293,815
Collars		(219,467	)		(111,752	)		(284,606	)		109,437			271,242
Three-way collars		(157,073	)		(40,914	)		(103,903	)		39,707			97,253
Basis swaps		23,778			11,211			28,027			(11,211	)		(28,027	)
Divestiture contingent consideration		34,410			1,040			2,250			(1,250	)		(3,470	)

Our commodity-based derivative contracts expose us to the credit risk of non-performance by the counterparty to the contracts. Our exposure is diversified primarily among major investment grade financial institutions and we have master netting agreements with our counterparties that provide for offsetting payables against receivables from separate derivative contracts. Our derivative contracts are with multiple counterparties to minimize our exposure to any individual counterparty. At September 30, 2022, our derivative counterparties include fifteen financial institutions, of which all but five are secured lenders in our bank credit facility. Counterparty credit risk is considered when determining the fair value of our derivative contracts. While our counterparties are primarily major investment grade financial institutions, the fair value of our derivative contracts has been adjusted to account for the risk of non-performance by certain of our counterparties, which was immaterial.

Interest Rate Risk

We are exposed to interest rate risk on our bank debt. We attempt to balance variable rate debt, fixed rate debt and debt maturities to manage interest costs, interest rate volatility and financing risk. This is accomplished through a mix of fixed rate senior and, at times, variable rate bank debt. At September 30, 2022, we had $2.4 billion of debt outstanding which bears interest at fixed rates averaging 5.7%. We had no variable rate bank debt outstanding as of September 30, 2022.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon the evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of September 30, 2022 at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There was no change in our system of internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the three months ended September 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Note 16 to our unaudited consolidated financial statements entitled “Commitments and Contingencies” included in Part I Item 1 above for a summary of our legal proceedings, such information being incorporated herein by reference.

Environmental Proceedings

From time to time, we receive notices of violation from governmental and regulatory authorities in areas in which we operate relating to alleged violations of environmental statutes or the rules and regulations promulgated thereunder. While we

cannot predict with certainty of whether these notices of violation will result in fines and/or penalties, if fines and/or penalties are imposed, they may result in monetary sanctions, individually or in the aggregate, in excess of $250,000.

ITEM 1A. RISK FACTORS

We are subject to various risks and uncertainties in the course of our business. In addition to the factors discussed elsewhere in this report, you should carefully consider the risks and uncertainties described under Item 1A. Risk Factors filed in our Annual Report on Form 10-K for the year ended December 31, 2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of our common stock during the quarter is as follows:


	Three Months Ended September 30, 2022
Period	Total Number of Shares Purchased		Average Price Paid Per Share (a)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b) (c)		Approximate Dollar Amount of Shares that May Yet Be Purchased Under Plans or Programs
July 2022		1,150,000	$	26.61		1,150,000	$	323,479,911
August 2022		1,627,000	$	31.82		1,627,000	$	271,715,995
September 2022 (c)		2,933,000	$	29.18		2,933,000	$	186,131,091
		5,710,000				5,710,000


(a)	Includes any fees, commissions or other expenses associated with the share repurchases.
(b)	In October 2019, our board of directors authorized a $100 million common stock repurchase program. In February 2022, our board of directors subsequently increased the authorization for repurchases under the program for a cumulative approval of $530.0 million which includes fees, commissions and expenses. The share repurchase authority does not obligate us to acquire any specific number of shares. The program may be changed based upon our financial condition and is subject to termination by the board of directors prior to completion. Shares repurchased as of September 30, 2022 were held as treasury stock. On October 21, 2022, the board of directors authorized an additional repurchase of up to $1.0 billion of our outstanding common stock under this program.
(c)	Includes 208,500 shares that were purchased in September 2022 and settled in October 2022.

ITEM 6. EXHIBITS

Exhibit index


Exhibit Number		Exhibit Description
	3.1	Restated Certificate of Incorporation of Range Resources Corporation (incorporated by reference to Exhibit 3.1.1 to our Form 10-Q (File No. 001-12209) as filed with the SEC on May 5, 2004, as amended by the Certificate of First Amendment to Restated Certificate of Incorporation of Range Resources Corporation (incorporated by reference to Exhibit 3.1 to our Form 10-Q (File No. 001-12209) as filed with the SEC on July 28, 2005) and the Certificate of Second Amendment to Restated Certificate of Incorporation of Range Resources Corporation (incorporated by reference to Exhibit 3.1 to our Form 10-Q (File No. 001-12209) as filed with the SEC on July 24, 2008)

	3.2	Amended and Restated By-laws of Range Resources Corporation (incorporated by reference to Exhibit 3.1 to our Form 8-K (File No. 001-12209) as filed with the SEC on May 19, 2016)

	31.1*	Certification by the President and Chief Executive Officer of Range Resources Corporation Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	31.2*	Certification by the Chief Financial Officer of Range Resources Corporation Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	32.1**	Certification by the President and Chief Executive Officer of Range Resources Corporation Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	32.2**	Certification by the Chief Financial Officer of Range Resources Corporation Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	101. INS*	Inline XBRL Instance Document – the XBRL Instance Document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document

	101. SCH*	Inline XBRL Taxonomy Extension Schema

	101. CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document

	101. DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document

	101. LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document

	101. PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document

	104 *	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* filed herewith

** furnished herewith

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 thereunto duly authorized.

Date: October 24, 2022


RANGE RESOURCES CORPORATION

By:		/s/ MARK S. SCUCCHI
		Mark S. Scucchi
		Senior Vice President and Chief Financial Officer

Date: October 24, 2022


RANGE RESOURCES CORPORATION

By:		/s/ DORI A. GINN
		Dori A. Ginn
		Senior Vice President – Controller and Principal Accounting Officer

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Range Resources (RRC) 10-Q2022 Q3 Quarterly report

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