Range Resources Corporation

Welcome to the Range Resources second quarter 2024 earnings 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 risks and uncertainties, which could cause 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. Laith Sandow, 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 2024 earnings call. The speakers on today's call are Dennis Degner, Chief Executive 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 may reference 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. We've also posted supplemental tables on our website that include realized pricing details by product, along with calculations of EBITDAX cash margins and other non-GAAP measures. With that, let me turn the call over to Dennis.

Thanks, Leith. And thanks to all of you for joining the call today. Brains' second quarter plan was executed successfully and consistent with our strategy for the year, which remains unchanged. operating safely while driving continued operational improvements, generating free cash flow with a peer-leading capital efficiency, and prudent allocation of that free cash flow, balancing returns of capital to shareholders with further debt reduction and the long-term development of our world-class asset base. I believe our second quarter results reflect the ongoing advancement of these objectives and demonstrate the resilience of Range's business through cycles. Our operational and financial updates highlight Range's high-quality, low-break-even inventory and liquids optionality, which drove another successful quarter while generating free cash flow. Our low capital intensity continues to be on display in quarters like Q2 and is the result of Range's class-leading drilling and completion costs, shallow base decline, large blocky core inventory, and talented team. These key attributes result in a required reinvestment rate that is among the best in the industry, providing range a solid foundation for consistently generating significant free cash flow and returns to shareholders, while positioning range to help meet future energy demand through our diverse transportation portfolio. Bolstering range's profitability and durability is our liquids contribution. As seen in the second quarter results, Liquids revenue provided an uplift to natural gas prices, with NGL price realizations providing a substantial premium relative to Henry Hub natural gas. When we roll all of that together, our liquids revenue uplift, our low capital intensity, along with a thoughtful right-sized hedging program, you get a unique story, generating the lowest break-even among natural gas producers and the most resilient organic free cash flow as evidenced by our second quarter results and 2024 projections. Importantly, with our vast inventory of de-risked, high-quality Marcellus Wells, we have the ability to compound our per-share growth in free cash flow for decades to come. As we look back on the second quarter, all-in capital came in at $175 million, with a total capital for the first half of the year totaling $345 million. Capital spend for the quarter reflected our base level of activity, along with a spot rig and frack crew we had in early 2024. For the remainder of the year, we will be running two dedicated horizontal rigs and single base frack crew, which will generate our planned $30 to $45 million of in-process well inventory, very similar to what Rage did last year. Also consistent with prior years, we will see capital spending decrease across the second half of the year, while production is set to modestly increase, aligning with expected improvements in natural gas prices heading into 2025. Production for the second quarter came in at 2.15 BCF equivalent per day, driven by continued strong well performance from long laterals and ongoing optimization of gathering systems that enhanced performance. Range's second quarter liquids were approximately 30% of production, slightly lower versus Q1 as a result of a propane cargo that was delayed into early July. Liquids production is back up to 32% today, near recent highs, reflecting our increased focus on liquids-rich activity in the first half of the year. We turned to sales 17 wells across our wet and super-rich acreage, with seven of these wells on paths with existing productions. As we've discussed for years, returning to existing pads is a durable, repeatable part of our program. Returning to pads allows us to minimize our operating surface footprint and reutilize existing infrastructure while also supporting efficient, nimble operations. Combined, this results in a normalized well cost per foot for rains that is differentiated versus piers. Year-to-date well performance and production has also been strong, aided by gathering system optimization efforts that have included compression expansions in Southwest PA. These type of expansions are a normal course of business, as the team continually works to optimize field-level performance and support production from our long lateral development. Production for the second half of the year is expected to be approximately 2.2 BCF equivalent per day. placing us near the high end of our previously communicated production guidance. Turning to operations, drilling activity during the quarter added 10 laterals with an average horizontal length of just over 14,300 feet per well, with several over 15,000 feet. And we have now drilled nearly 90 wells in the program's history with lateral lengths greater than 15,000 feet. For completions, The team continued to successfully operate with the new build electric frac fleet that was onboarded at the start of the year. We saw continued strong performance from the equipment and personnel across three different pads in the second quarter. Frac efficiencies finished at just over nine stages per day while completing approximately 800 stages for the quarter, showcasing the consistent repeatable nature of our program and placing us on track for the activity plans we've communicated for the year. Supporting our FRAC efficiencies is RANGE's water sharing program, which contributed approximately $1 million in cost savings above levels a year ago. Looking forward, we believe we will see similar savings from third-party water utilization given our blocky acreage position and existing water infrastructure. Cash lease operating expenses finished the quarter better than anticipated at $0.11 per MCFE, shaped by strong well performance from optimized gathering and efficient water logistics. As we look forward to the second half of the year, we project a similar level of expense performance and are therefore improving our previous guidance for lease operating expenses down to $0.11 to $0.13 per MCFE. Turning to marketing and starting with NGLs. Range's flexible transportation portfolio continued to access premium export markets during Q2. As one of the only U.S. producers with access to international LPG upside, we generated another fantastic quarter in terms of Range NGL price realizations. Looking at the NGL macro, international propane demand continues to grow. Chinese propane imports reached an all-time high in the second quarter as they continue to add PDH capacity to consume more propane. At the same time, limited growth in non-U.S. propane supply has led to tightened international fundamentals and an improved ARB for U.S. exporters. Range's flexible marketing and transportation portfolio allowed us to take advantage of this international opportunity, exporting the vast majority of propane produced during the second quarter. Simultaneously, range demonstrated its ability to optimize sales by pivoting butane volume into the domestic market to maximize margins. As a result, range AGLs received $24.35 per barrel in the second quarter, $1.26 per barrel premium to the Mont Bellevue equivalent. Looking ahead to the balance of 2024 and into early 2025, We expect domestic stock tightening to combine with export demand to support absolute and relative NGL pricing. And we expect Ranges NGL price realizations will remain a positive differentiator. On the natural gas side, Ranges pricing relative to NYMEX was right in line with our expectations as we sold the vast majority of our gas into the Midwest and Gulf Coast regions. On the macro front, we have seen U.S. natural gas production declining year over year, driven by maintenance or lower activity levels from industry, alongside durable demand for natural gas that can be observed in areas such as LNG exports and increased gas power burn. So we believe the fundamentals continue to be in place for improving natural gas pricing going forward. Before handing it over to Mark, I wanted to quickly touch on our most recent corporate sustainability report that was published last week. This report continues to showcase the company's resilience as a safe, low-cost natural gas producer with an enviable emissions profile. Range had a great year for safety, with zero employee incidents for the year. Range also continued its strong environmental performance, driving a 67 percent reduction in methane emissions intensity over the past five years, reaching just under 0.02% or more than 90% below the EPA's methane fee threshold. We look forward to discussing these and other results during future meetings. So where does that leave us as we're more than halfway through 2024? As stated, we remain constructive on the outlook for natural gas and NGLs, but importantly, Even in the presence of relatively high natural gas storage levels and the current commodity backdrop, the resilience of Range's business is on full display. Our ability to generate free cash flow through the cycles is underpinned by our large, contiguous, high-quality acreage position, operational efficiencies, NGO uplift, diverse marketing portfolio, and talented team. We believe the future of natural gas and NGOs remains strong, and we believe Range is positioned well to generate substantial value for shareholders in the years ahead. I'll now turn it over to Mark to discuss the financials. Thanks, Dennis.