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Range keeps 2018 capital spending under budget, misses Q4 production expectation

Range Resources Corp. said its 2018 capital spending came in about $20 million lower than its budget of $941 million due to savings from drilling efficiencies and water recycling, among other cost savers.

The independent natural gas, NGL and oil producer estimated its production in the fourth quarter of 2018 to be about 2.15 Bcfe/d after losing approximately 10 Bcfe of production due to an operational downtime of its facilities in Pennsylvania, according to a Jan. 7 news release.

Range said the Houston gas processing and NGL fractionation facility and the Harmon Creek processing facility, both operated by MarkWest Energy Partners LP, were returned to service after an extended curtailment stemming from an operational issue at the Houston facility.

"As planned, the company generated free cash flow in the fourth quarter of 2018 with efficiencies realized in the 2018 capital spending program expected to offset a majority of the cash flow impact from processing downtime," Range said in the release.

In a Jan. 7 note to clients, SunTrust Robinson Humphrey analysts said the fourth-quarter 2018 production figure is lower than the consensus 2.27 Bcfe/d and their 2.26-Bcfe/d estimate. The analysts lowered the price target on Range to $12 per share from $20 per share and adjusted estimates on the company's production and EBITDA for 2019 to 2.41 Bcfe/d and $1.33 billion, respectively, from 2.44 Bcfe/d and $1.35 billion.

Range's shares closed at $10.69 on Jan. 4 and were up 5.7% at $11.30 in early afternoon trading Jan. 7.

The Fort Worth, Texas-based Range focuses on stacked-pay projects in the Appalachian Basin and northern Louisiana.