January 8, 2020 / 5:39 PM / 14 days ago

Range Resources expects to book asset impairment charge in fourth quarter

(Reuters) - Range Resources Corp (RRC.N) said on Wednesday it expects a significant charge in the fourth quarter related to its oil and gas properties in north Louisiana, as U.S. natural gas prices trade near two-decade lows.

The company’s shares were down 4.7% at $4.50 at midday.

The announcement comes nearly a month after the No. 2 U.S. oil producer Chevron Corp (CVX.N) said it expects a writedown of $10 billion to $11 billion in the fourth quarter related to a deepwater Gulf of Mexico project and shale gas in Appalachia.

Range Resources, like other producers, is pressured by a glut of shale gas coming from fields in Texas, Oklahoma and Pennsylvania.

A long, steady increase in U.S. shale gas production – much of it a byproduct of the shale oil boom – has hit prices for the fuel. Oil producers are selling shale gas at low prices to get more lucrative oil to market.

U.S. natural gas futures are trading at about $2.13 per million British Thermal Units (mmBTU), and energy consultancy IHS Markit forecasts the price could average below $2/mmBTU this year.

Range Resources has significant holdings in the Marcellus shale gas field in the eastern United States, where pipeline constraints have worsened local pricing.

Shale producers have also been pushed by investors to cut back spending and focus on higher returns and debt reduction instead as oil and gas prices continue to be volatile amid global uncertainties.

On Monday, Range Resources said it would cut its capital expenditure by around 29% to about $520 million this year, and suspended its dividend.

However, the company said on Wednesday it does not expect to record any impairments related to properties in the Appalachian basin.

Reporting by Arunima Kumar and Shariq Khan in Bengaluru; Editing by Maju Samuel

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