RANGE RESOURCES CORP Fair Value Disclosure
(9) FAIR VALUE MEASUREMENTS
We use a market approach for our recurring fair value measurements and endeavor to use the best information available. Accordingly, valuation techniques that maximize the use of observable inputs are favored. As of December 31, 2025, a portion of our natural gas instruments contain swaptions (Level 3 inputs) where the counterparty has the right, but not the obligation, to enter into a fixed price swap on a pre-determined date. If exercised, the swaption contract becomes a swap treated consistently with our fixed-price swaps. At December 31, 2025, we used a weighted average implied volatility of 15% for our swaptions. 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):
|
Year Ended |
|
|
Balance at December 31, 2024 |
$ |
(13,240 |
) |
Total losses included in earnings |
|
— |
|
Additions |
|
(603 |
) |
Settlements |
|
10,794 |
|
Transfers |
|
2,446 |
|
Balance at December 31, 2025 |
$ |
(603 |
) |
The following table presents the carrying amounts and the fair values of our financial instruments as of December 31, 2025 and 2024 (in thousands):
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||||||||||
|
Carrying |
|
|
Fair |
|
|
Carrying |
|
|
Fair |
|
||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity derivatives (a) |
$ |
69,397 |
|
|
$ |
69,397 |
|
|
$ |
87,098 |
|
|
$ |
87,098 |
|
Marketable securities (b) |
|
65,436 |
|
|
|
65,436 |
|
|
|
60,989 |
|
|
|
60,989 |
|
(Liabilities): |
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity derivatives (a) |
|
(3,559 |
) |
|
|
(3,559 |
) |
|
|
(20,122 |
) |
|
|
(20,122 |
) |
Bank credit facility (c) |
|
(118,000 |
) |
|
|
(118,000 |
) |
|
|
— |
|
|
|
— |
|
4.875% senior notes due 2025 (c) |
|
— |
|
|
|
— |
|
|
|
(608,702 |
) |
|
|
(607,363 |
) |
8.25% senior notes due 2029 (c) |
|
(600,000 |
) |
|
|
(609,186 |
) |
|
|
(600,000 |
) |
|
|
(618,114 |
) |
4.75% senior notes due 2030 (c) |
|
(500,000 |
) |
|
|
(493,895 |
) |
|
|
(500,000 |
) |
|
|
(469,285 |
) |
Deferred compensation plan (d) |
|
(74,410 |
) |
|
|
(74,410 |
) |
|
|
(86,882 |
) |
|
|
(86,882 |
) |
(a) Fair values for commodity derivatives utilize Level 2 inputs with the exception of swaptions, which utilize Level 3 inputs.
(b) Marketable securities, which are held in our deferred compensation plans, are actively traded on major exchanges, which is a Level 1 input.
(c) 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. Debt is presented on the balance sheet at carrying value.
(d) 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 contain financial instruments, the most significant of which are trade accounts receivables and payables. 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 incurrence of and expected future insignificance 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. See Note 8 for information regarding the fair value of derivative instruments and Note 10 for information regarding the fair value of stock-based compensation awards.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.