RANGE RESOURCES CORP - FORM 8-K - EX-99.1

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8-K - FORM 8-K - RANGE RESOURCES CORP	d82055e8vk.htm

Exhibit 99.1

Range Resources Corporation
Unaudited Consolidated Pro Forma Financial Statements

The following unaudited consolidated pro forma financial information is presented to illustrate the effect of Range Resources Corporation’s April 29, 2011 sale of substantially all of its Barnett Shale assets on its historical financial position and operating results. The accompanying unaudited pro forma consolidated balance sheet and unaudited pro forma consolidated statements of operations have been prepared to assist in analysis of the financial effects of the divestiture, including the reclassification of operations of such assets as discontinued operations. This information is based on the historical financial statements of Range and should be read in conjunction with the financial statements included in the Range Resources Corporation Annual Report on Form 10-K for the year ended December 31, 2010, filed with the United States Securities and Exchange Commission (“SEC”) on March 1, 2011 and Quarterly Report on Form 10-Q for the three months ended March 31, 2011, filed with the SEC on April 27, 2011.

The accompanying unaudited pro forma consolidated balance sheet as of March 31, 2011 has been prepared to give effect to the divestiture as if it had occurred on March 31, 2011. The unaudited pro forma consolidated statements of operations for the years ended December 31, 2010, 2009 and 2008 have been prepared to give effect to the divestiture as if it had occurred on January 1, 2008. An unaudited pro forma consolidated statement of operations for the three months ended March 31, 2011 is not provided since the results of the Barnett Shale operations were reported as discontinued operations in the Quarterly Report on Form 10-Q for the three months ended March 31, 2011 filed with the SEC on April 27, 2011.

The unaudited pro forma consolidated balance sheet and statement of operations included herein is not necessarily indicative of the results that might have occurred had the divestiture taken place on the respective dates assumed.

RANGE RESOURCES CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(In thousands, except per share data)
March 31, 2011


				Pro Forma
	As Reported			Adjustments			As Adjusted
Assets
Current assets:
Cash and cash equivalents	$	1,681		$	855,539	^(a)	$	857,220
Accounts receivable, less allowance for doubtful accounts of $4,285		75,530			—			75,530
Assets of discontinued operations		856,195			(827,919	) ^(b)		28,276
Deferred tax asset		1,639			—			1,639
Unrealized derivative gain		62,286			(36,111	) ^(b)		26,175
Inventory and other		18,605			—			18,605

Total current assets		1,015,936			(8,491	)		1,007,445

Equity method investments		142,353			—			142,353
Natural gas and oil properties, successful efforts method		5,669,791			—			5,669,791
Accumulated depletion and depreciation		(1,373,652	)		—			(1,373,652	)

		4,296,139			—			4,296,139

Transportation and field assets		121,274			—			121,274
Accumulated depreciation and amortization		(61,303	)		—			(61,303	)

		59,971			—			59,971

Other assets		100,848			—			100,848

Total assets	$	5,615,247		$	(8,491	)	$	5,606,756


Liabilities
Current liabilities:
Accounts payable	$	245,446		$	—		$	245,446
Asset retirement obligations		4,020			—			4,020
Accrued liabilities		44,629			—			44,629
Accrued interest		39,496			—			39,496
Unrealized derivative loss		593			—			593
Current liabilities of discontinued operations		16,288			—			16,288

Total current liabilities		350,472			—			350,472

Bank debt		480,000			—			480,000
Subordinated notes		1,686,816			—			1,686,816
Deferred tax liability		646,427			(2,263	) ^(b)		644,164
Unrealized derivative loss		30,242			—			30,242
Deferred compensation liability		169,278			—			169,278
Long-term liabilities of discontinued operations		2,226			(2,025	) ^(b)		201
Asset retirement obligations and other liabilities		66,168			—			66,168

Total liabilities		3,431,629			(4,288	)		3,427,341

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, 160,668,296 issued at March 31, 2011		1,607			—			1,607
Common stock held in treasury, 196,016 shares at March 31, 2011		(7,190	)		—			(7,190	)
Additional paid-in capital		1,835,261			—			1,835,261
Retained earnings		310,246			(4,203	) ^(b)		306,043
Accumulated other comprehensive income		43,694						43,694

Total stockholders’ equity		2,183,618			(4,203	)		2,179,415

Total liabilities and stockholders’ equity	$	5,615,247		$	(8,491	)	$	5,606,756

See accompanying notes.

RANGE RESOURCES CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2010
(In thousands, except per share data)


				Pro Forma
	As Reported			Adjustments^(c)			As Adjusted
Revenues and other income:
Natural gas, NGL and oil sales	$	909,607		$	(149,154	)	$	760,453
Transportation and gathering		1,068			(35	)		1,033
Derivative fair value income		51,634			—			51,634
Gain on the sale of assets		77,597			(955	)		76,642
Other		(931	)		(32	)		(963	)

Total revenues and other income		1,038,975			(150,176	)		888,799


Costs and expenses:
Direct operating		131,602			(35,328	)		96,274
Production and ad valorem taxes		33,652			(7,545	)		26,107
Exploration		61,087			(581	)		60,506
Abandonment and impairment of unproved properties		69,971			(20,233	)		49,738
General and administrative		140,571			—			140,571
Termination costs		8,452			—			8,452
Deferred compensation plan		(10,216	)		—			(10,216	)
Interest expense		131,192			(40,527	)		90,665
Loss on early extinguishment of debt		5,351			—			5,351
Depletion, depreciation and amortization		363,507			(88,269	)		275,238
Impairment of proved properties		469,749			(463,244	)		6,505

Total costs and expenses		1,404,918			(655,727	)		749,191


(Loss) income from continuing operations before income taxes		(365,943	)		505,551			139,608

Income tax (benefit) expense
Current		(836	)		—			(836	)
Deferred		(125,851	)		177,597			51,746

		(126,687	)		177,597			50,910


(Loss) income from continuing operations	$	(239,256	)	$	327,954		$	88,698


(Loss) income per common share from continuing operations:
Basic	$	(1.53	)				$	0.56


Diluted	$	(1.53	)				$	0.55


Weighted average common shares outstanding:
Basic		156,874						156,874
Diluted		156,874						158,428

See accompanying notes.

RANGE RESOURCES CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2009
(In thousands, except per share data)


				Pro Forma
	As Reported			Adjustments^(c)			As Adjusted
Revenues and other income:
Natural gas, NGL and oil sales	$	839,921		$	(125,357	)	$	714,564
Transportation and gathering		486			—			486
Derivative fair value income		66,446			—			66,446
Gain on the sale of assets		10,413			—			10,413
Other		(9,925	)		(3	)		(9,928	)

Total revenues and other income		907,341			(125,360	)		781,981

Costs and expenses:
Direct operating		133,211			(34,960	)		98,251
Production and ad valorem taxes		32,169			(6,633	)		25,536
Exploration		46,485			(2,209	)		44,276
Abandonment and impairment of unproved properties		113,538			(76,603	)		36,935
General and administrative		115,319			—			115,319
Termination costs		2,479			—			2,479
Deferred compensation plan		31,073			—			31,073
Interest expense		117,367			(42,106	)		75,261
Depletion, depreciation and amortization		373,502			(106,354	)		267,148
Impairment of proved properties		930			—			930

Total costs and expenses		966,073			(268,865	)		697,208

(Loss) income from continuing operations before income taxes		(58,732	)		143,505			84,773
Income tax (benefit) expense
Current		(636	)		—			(636	)
Deferred		(4,226	)		50,655			46,429

		(4,862	)		50,655			45,793

(Loss) income from continuing operations	$	(53,870	)	$	92,850		$	38,980

(Loss) income per common share from continuing operations:
Basic	$	(0.35	)				$	0.25

Diluted	$	(0.35	)				$	0.24

Weighted average common shares outstanding:
Basic		154,514						154,514
Diluted		154,514						158,778

See accompanying notes.

RANGE RESOURCES CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2008
(In thousands, except per share data)


				Pro Forma
	As Reported			Adjustments^(c)			As Adjusted
Revenues and other income:
Natural gas, NGL and oil sales	$	1,226,560		$	(237,253	)	$	989,307
Transportation and gathering		4,577			—			4,577
Derivative fair value income		71,861			—			71,861
Gain on the sale of assets		20,166			—			20,166
Other		1,509			—			1,509

Total revenues and other income		1,324,673			(237,253	)		1,087,420

Costs and expenses:
Direct operating		142,387			(29,404	)		112,983
Production and ad valorem taxes		55,172			(5,801	)		49,371
Exploration		67,690			(10,734	)		56,956
Abandonment and impairment of unproved properties		47,355			(32,063	)		15,292
General and administrative		92,308			—			92,308
Deferred compensation plan		(24,689	)		—			(24,689	)
Interest expense		99,748			(35,785	)		63,963
Depletion, depreciation and amortization		299,831			(88,868	)		210,963

Total costs and expenses		779,802			(202,655	)		577,147

Income from continuing operations before income taxes		544,871			(34,598	)		510,273
Income tax expense
Current		4,268			—			4,268
Deferred		189,563			(12,651	)		176,912

		193,831			(12,651	)		181,180

Income from continuing operations	$	351,040		$	(21,947	)	$	329,093

Income per common share from continuing operations:
Basic	$	2.32					$	2.18

Diluted	$	2.25					$	2.11

Weighted average common shares outstanding:
Basic		151,116						151,116
Diluted		155,943						155,943

See accompanying notes.

RANGE RESOURCES CORPORATION

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION

On April 29, 2011, Range Resources Corporation sold substantially all of its Barnett Shale assets and certain derivative contracts subject to the terms of a purchase and sale agreement dated February 28, 2011. The sale had an effective date of February 1, 2011 and consequently operating net revenues after that date is a downward adjustment to the selling price through the normal post closing provisions of the agreement.

The accompanying unaudited consolidated pro forma balance sheet and unaudited pro forma consolidated statements of operations have been prepared to give effect to the divestiture as if it had occurred on March 31, 2011 for the pro forma consolidated balance sheet and on January 1, 2008 for the pro forma consolidated statements of operations. In accordance with SEC pro forma presentation rules, an unaudited pro forma consolidated statement of operations for the three months ended March 31, 2011 is not provided since the results of the Barnett Shale operations were reported as discontinued operations for that time period. For the three months ended March 31, 2011, we recognized income from discontinued operations, net of tax, of $8.4 million.

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

(2) PRO FORMA ADJUSTMENTS

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

Balance Sheet

“As reported” — represents the historical consolidated balance sheet of Range Resources Corporation as of March 31, 2011.

To adjust for the proceeds, related estimated transaction costs and other estimated closing and post-closing adjustments associated with the divestiture and the sale of certain derivative contracts. The following is a table of the estimated proceeds (in thousands):


Gross proceeds	$	900,000
Less transaction costs		(2,700	)
Less estimated closing and post-closing adjustments		(41,761	)

Estimated net proceeds	$	855,539

To remove these assets sold as part of the purchase and sale agreement dated February 28, 2011. The following is a summarization of the application of proceeds and the estimated loss on the divestiture (in thousands):


Net proceeds	$	855,539
Unrealized derivative assets		(36,111	)
Net investment in properties		(827,919	)
Asset retirement obligation		2,025

Loss on disposition of assets		(6,466	)
Tax effect		2,263

Net loss on disposition of assets	$	(4,203	)

Statements of Operations

“As reported” — represents the historical consolidated statements of operations of Range Resources for the years ended December 31, 2010, 2009 and 2008.

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

RANGE RESOURCES CORP - FORM 8-K - EX-99.1 - May 4, 2011

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