Range Resources Corporation

conference call. All lines have been placed on mute to prevent any background noise. Statements made during this conference call that are not historical facts are forward-looking statements. Such statements are subject to risk and uncertainties, which can cause the actual results to differ materially from those in the forward-looking statements. After the speaker's remarks, there will be a question and answer period. At this time, I would like to turn the call over to Mr. Leith Sando, Vice President, Investor Relations at Range Resources. Please go ahead, sir.

Thank you, Operator. Good morning, everyone, and thank you for joining Range's second quarter earnings call. Speakers on today's call are Jeff Ventura, Chief Executive Officer, Dennis Degner, Chief Operating Officer, and Mark Skouki, Chief Financial Officer. Hopefully, you've had a chance to review the press release and updated investor presentation that we've posted on our website. We'll be referencing certain slides on the call this morning. You'll also find our 10Q on Range's website under the Investors tab. or you can access it using the SEC's EDGAR system. Please note, we'll be referencing certain non-GAAP measures on today's call. Our press release provides reconciliations of these to the most comparable GAAP figures. For additional information, we've posted supplemental tables on our website to assist in the calculation of EBITDAX, cash margins, and other non-GAAP measures. With that, let me turn the call over to Jeff.

Thank you, Leif, and thanks, everyone, for joining us on this morning's call. The second quarter of 2021 saw Range make continued steady progress towards our key objectives, improving margins through cost controls, generating free cash flow, operating safely and efficiently, and ultimately positioning the company to return capital to shareholders as the most efficient natural gas and NGL producer in Appalachia. I'll touch briefly on each of these before turning it over to Dennis and Mark to cover in more detail. starting with unit costs and margin improvements. Ranges unit costs for the quarter were in line with our expectations. As NGL prices strengthened during the quarter, processing costs increased as expected as a result of our percent of proceeds contracts. But this was more than offset by the improvement in natural gas liquids prices, resulting in vast improvements in ranges, margins, and cash flow. Looking at prices, Range's unhedged realized price for the quarter was approximately $3.25 per MCFE, which was 41 cents above the NYMEX Henry Hub equivalent price of $2.84. This premium to Henry Hub is outstanding, particularly when considering seasonality in certain natural gas and NGL markets, and it is a result of our liquids production and diversified marketing portfolio. This pricing uplift from liquids reduces RANGE's break-even natural gas price and improves margins when compared to producing only dry gas. In fact, RANGE's cash margin of approximately a dollar per MCFE for the first half of the year is roughly double where we were last year. Given the improved fundamental backdrop for NGLs with approximately 65 percent of our activity in the liquids-rich window this year, Range is very well positioned to continue to benefit. In the second quarter, Range produced $177 million in cash flow, and with capital spending coming in at just $120 million for the quarter, Range generated solid free cash flow despite seasonally weak pricing and the second quarter being the high point of capital spending for the year. The team did an outstanding job leveraging our large, contiguous acreage position to complete the operational plan safely and with peer-leading capital efficiency. RANGE's blocky acreage position affords us operational advantages on multiple fronts, including water recycling, infrastructure, rig mobilization, long lateral development, and E-Fleet optimization. When combined with a dedicated and focused technical team with years of experience in the basin, this equates to class-leading well cost and capital efficiency. and having delivered operational programs below budget for the last three years, Range remains on track to do the same for the fourth consecutive year in 2021. Taking this level of efficiency and combining it with strong recoveries, a shallow base decline of under 20 percent, a sizable inventory, and liquids optionality, Range has what we believe is an unmatched foundation for generating sustainable free cash flow for the long term. As shown on slide 15 of Range's investor presentation, we see significant free cash flow at strip pricing. This organic free cash flow, supported by thoughtful hedging through the end of this year and into 2022, puts us well on our way towards meeting our balance sheet targets in the near future. Mark will provide more detail, but at recent strip prices, leverage is forecast below two times early next year. The significant rate of improvement in our balance sheet is a testament to the progress we've made, reducing debt and improving our cost structure in recent years, and now reflects the free cash flow potential of the business. We are excited about where range is today and equally excited about what the future holds. Natural gas and natural gas liquids will continue to play a critical role as the world moves towards cleaner, more efficient fuels. We believe that producers who can most efficiently deliver these products to end markets from a cost and emissions perspective will be the most successful. And we believe range is well positioned within that framework. We remain ahead of schedule in achieving our absolute emissions reduction targets in our 2025 goal of net zero. And our emissions profile is near best in class amongst producers globally. Importantly, What further differentiates RANGE from PEERS is our ability to efficiently deliver clean-burning natural gas for an extended period of time, given our multi-decade core inventory. For context, RANGE's 2021 activity of approximately 60 wells is just a fraction of our 2,000 Marcellus locations with EURs that are greater than 2 BCFE per 1,000 foot of lateral. The average recovery of these thousands of wells is very similar to the wells range has turned to sales for the last several years, providing range and unmatched runway of high-quality wells that's measured in decades. And that's before counting other horizons, such as the Utica Point Pleasant or Upper Devonian. This type of runway is not found in most natural gas producers, and we believe range is positioned as well as any upstream company to generate competitive returns and free cash flow over the medium and long term. Before turning it over to Dennis and Mark, I'll just reiterate that Range remains committed to disciplined capital spending. Over time, we believe Range will stand out among peers as a result of our low-sustaining capital, competitive cost structure, liquids optionality, and importantly, our multi-decade core inventory life, which is an increasingly competitive advantage as other operators exhaust their core inventories. We will continue to focus on safe, efficient, and environmentally sound operations, prudent capital allocation, and generating sustainable returns to our shareholders. Over to you, Dennis.