Ranger Oil Corporation

Ranger reported third-quarter sales volumes of 40,600 barrels of oil equivalent per day, above the high end of guidance. Pro forma adjusted free cash flow was $58 million, net income was $228 million, and adjusted EBITDAX was $209 million. Total drilling and completion capital was $151.9 million, and leverage finished at 0.75x. For the full year, the company said it expects year-over-year oil-equivalent sales growth of 48% and raised total sales guidance nearly 4% versus March guidance. Looking ahead, management said 2023 should deliver double-digit production growth, with 50,000+ BOE/d expected sometime in the first half of the year; growth could be in the low teens with two rigs or high teens with three rigs.

Darrin Henke framed the quarter as evidence that Ranger is executing across operations, finances, and strategy, emphasizing that the company has been transformed by a stronger balance sheet, larger inventory, organic growth, and shareholder returns. He repeatedly stressed that Ranger has “the highest margins in the business,” a long inventory runway, and strong per-share value creation. His tone was confident but flexible: while management sees strong returns from running a third rig, he said the company will keep options open and evaluate commodity prices, inflation, and M&A before deciding whether to keep it running into 2023.

Rusty Kelley highlighted the company’s non-GAAP reporting framework and pointed investors to the release and presentation for reconciliations. On the financial side, management said pro forma adjusted free cash flow was $58 million, net income was $228 million, and adjusted EBITDAX was $209 million. He also noted that Ranger returned about $80 million to shareholders since mid-May, had repurchased more than 2 million shares using about half of its $140 million authorization, and paid a third-quarter dividend of $0.075 per share payable November 28 to shareholders of record November 16. He closed with the balance sheet point that leverage was 0.75x at quarter end, more than half a turn lower than the beginning of the year, and said capital will continue to be allocated to the highest-return opportunities.

Analysts focused on M&A, the third rig, 2023 CapEx, inflation, and the quality/risk of the company’s 750 future locations. Management said the Ensign/Marathon deal looked attractive for those parties, but reiterated Ranger’s own screening criteria: strategic fit, operational and G&A synergies, accretion on cash flow per share and NAV, and keeping leverage below about 1.5x with a path back under 1.0x. On the third rig, Henke said the economics are compelling with well returns above 100% at strip prices, but the company wants to preserve flexibility because of macro uncertainty, possible recession, and commodity price volatility. Julia Gwaltney said operating inflation has been managed through efficiency gains and more water-on-pipe, while capital inflation has moderated from earlier in 2022 but is still expected to rise in Q1 2023 before potentially tapering.