Range Resources Corporation

Thank you for standing by. Welcome to the Range Resources Fourth Quarter 2025 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. Lathando, SVP Investor Relations at Range Resources. Please go ahead, sir.

Thank you, operator. Good morning, everyone. Thank you for joining Range's year-end 2025 earnings call. With me on the call today are Dennis Degner, Chief Executive Officer, and Mark Skuki, 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 10-K 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, I'll turn the call over to Dennis.

Thanks, Leith, and thanks to all of you for joining the call today. In the fourth quarter, range continued its steady progress on key themes that we have discussed over the past year. We executed on our plans safely and efficiently, delivering consistent well results, free cash flow, returns to shareholders, and steady activity levels that support RANGE's multi-year development plans we previously communicated. All-in capital came in at $183 million, while generating production of 2.3 BCF equivalent per day for the quarter. For full year 2025, we invested $674 million in capital, placing us squarely within the previously improved guidance while generating production for the year at approximately 2.24 BCF equivalent per day. This production level was a result of strong well performance and continued optimization of gathering and compression infrastructure that was mentioned on our previous calls. Diving into the quarter, Range operated two horizontal rigs drilling approximately 225,000 horizontal feet across 15 laterals, averaging 15,000 feet per well. For the year, the team drilled 69 laterals with an average horizontal length of 14,800 feet, with our total activity exceeding 1 million lateral feet drilled. Our large contiguous acreage position affords us the ability to drill these type of long laterals, increasing efficiencies and allowing us to access more reserves from a single location, all while reducing our overall development footprint and consolidating infrastructure requirements. For completions, the team ended the fourth quarter completing approximately 1,200 frac stages. Completion efficiencies for the fourth quarter approached 10 frac stages per day per crew, pushing our 2025 totals to nearly 3,800 total stages and setting a new yearly frac efficiency benchmark of 9.7 stages per day. While we are proud of these achievements, We are equally proud that the team accomplished this while delivering on one of our best safety performance levels for the company. During the quarter, our supply chain team also completed the annual RFP for services process. The result was pricing for 2026 drilling and completions materials and services that are flat to slightly lower than 2025 levels. In addition, multiple long-term agreements are in place to provide service pricing stability throughout the year. including the continued use of a base electric hydraulic fracturing fleet, which began a new two-year term agreement on January 1, 2026. Our RFP results, coupled with our operational efficiencies, should continue to provide a strong foundation for peer-leading well costs and capital efficiency while creating options for future growth. Shifting over to marketing, consistent with themes we highlighted on the last call, U.S. energy exports continue to set new records in the fourth quarter of 2025. We are seeing this across both natural gas and NGLs as global demand for reliable, affordable supply continues to support growing exports from the U.S. for multiple products. For context, LNG exports averaged over 17 BCF per day in the fourth quarter, which was up 10% from the previous quarter. Waterborne ethane exports were estimated at 622,000 barrels per day for the quarter, up over 40% year on year and 24% sequentially. And lastly, LPG exports were up modestly year over year and are expected to benefit significantly in 2026 from new U.S. export terminal capacity. We believe this will be helpful in improving propane storage levels over the course of 2026 particularly on a days-of-supply basis. In January, Winter Storm Fern proved to be a meaningful demonstration of the energy security provided by America's position as the world's leading energy exporter. As demand for natural gas to feed power plants and heat homes increased rapidly for several days in late January, approximately 5 BCF per day of LNG feed gas was redirected to serve the needs of U.S. citizens. Then, when temperatures warmed closer to normal levels, LNG feed gas exports ramped back up to pre-storm levels just as quickly. This weather also provided for strong bid week pricing for the month of February, which settled at over $7 per MMBTU. The gas marketing and operational teams did a superb job coordinating a production and sales plan locking in strong free cash flow by selling nearly all of Range's natural gas during bid week. At the same time, the liquids marketing team picked up additional revenue by optimizing ethane extraction and selling more BTUs locally as natural gas. During the quarter, Range also executed a long-term sales agreement that will link gas from our planned processing expansion to a new power plant in the Midwest. The plan is expected to start up in late 2027 with the transaction set at an attractive premium relative to a Midwest index. In addition, we continue to support the development of a number of prospective projects in the power generation and data center space. While many of those projects are concentrated in our backyard, we are also seeing interest in other regions where we have transportation capacity as evidenced by the deal just mentioned. We believe there will be several near- and medium-term opportunities for Appalachian Energy to meet the growing demand for energy in North America and around the world. We look forward to reporting on more range-specific opportunities as they progress. Now turning to our go-forward plans. RANGE's Strategic Multi-Year Operational Plan has built up more than 500,000 lateral feet of growth-focused inventory to support future development. This is approximately 100,000 more lateral feet in inventory than previously discussed as a result of the continued strong drilling performance mentioned earlier. This additional duct inventory provides range added flexibility to align our future reinvestment plans with market fundamentals. Simplistically, we can reduce our previously communicated 2027 capital and still produce 2.6 BCFE per day next year. Or we could maintain a similar operational cadence with 650 to 700 million in capital for 2027 and set up continued growth into 2028. So we are in great position to see how demand shapes up over the next 24 months and respond accordingly. Looking more closely at 2026, We expect to continue an operationally efficient program that utilizes a single full-time super spec drilling rig paired with a second rig utilized throughout the second half of the year. On the completion side, we anticipate running a single full-time electric frack crew while picking up a spot crew for the second and third quarter to harvest some of our duct inventory. This drives an all-in capital budget of $650 to $700 million, which consists of the following. Approximately $500 million of maintenance DNC capital. An incremental $120 to $140 million of DNC growth capital that is primarily allocated to a second completions crew. $15 to $35 million in land for targeted acreage. This acreage capital is less than prior years, as we have held more acreage with production, allowing maintenance land spend to decrease. Also included in the acreage budget is capital that supports increased lateral links, which can offset some or all of the lateral footage being turned to sales during the year. And lastly, We also plan to invest 15 to 25 million for software and production facility upgrades to further reduce emissions. And by year end, we will have completed the pneumatic retrofit project that was started in 2024. This total capital investment plan of 650 to 700 million is consistent with prior discussions and will result in production of 2.35 to 2.4 BCFE per day. while carrying significant momentum into 2027. Looking at the year ahead, the shape of our production profile is expected to look similar to prior years, as we project first quarter production to be down versus Q4 of last year. As we commission sizable gathering and processing expansions at mid-year, you will see production step up meaningfully in the second half of 2026 and continue into 2027. We are excited about how the company is positioned today with financial and operational flexibility that allows us to efficiently align production growth with sales to known end markets while generating free cash flow and returning capital to shareholders. We believe our robust inventory and relatively low capital intensity provides range a differentiated foundation for generating through cycle returns for our investors. I'll now turn it over to Mark to discuss the financials. Thanks, Dennis. 2025 again demonstrated the strength of Range's business. Throughout commodity cycles, we intend to generate free cash flow, prudently invest in the business, and return capital to shareholders. Range accomplished just that, generating cash flow from operations before working capital of $1.3 billion and over $650 million in free cash flow while priming the business for future growth, enabling an operational and reinvestment strategy that maximizes our competitive advantages to enable value capture from increasing long-term demand across the U.S. and internationally. Consistent with prior years, Range's free cash flow was enhanced in 2025 by realizing a price greater than NIMAC's Henry Hub. NYMEX natural gas prices averaged $3.43 for the year, while range achieved an average hedged realized price of $3.60 per unit of production, a 17-cent premium created by commodity mix, hedging strategy, and our advantaged portfolio of transportation and sales contracts. They provide access to geographically diversified sales points, linking range to customers in key U.S. and global markets, delivering roughly 90% of revenue from outside Appalachia. Alongside higher realized prices year over year, range expanded its margins, growing per unit of production cash margin by roughly 20% to $1.64 per MCFE, or approximately three times our maintenance drilling and completion capital per MCFE. Premium pricing, strong operational execution, and competitive full cycle costs generated enhanced free cash flow, and enabled growing shareholder returns. Range paid $86 million in dividends, invested $231 million in share repurchases, and reduced net debt by $186 million while investing in operations that support our growth plans through 2027. Over the last several years, Range has reduced debt by a total of roughly $3 billion. With a strong balance sheet, we have increasing flexibility to make opportunistic investments. As of year end, Range has purchased over 33 million shares since the program's initiation in 2019, investing $744 million during that timeframe. To position the share repurchase program for the future, our board has increased the currently available capacity to $1.5 billion. In addition, The fixed per share dividend is something that we expect over time to grow slowly and reliably. We expect to increase the quarterly dividend by a penny per share or 11% at the next announcement. We critically evaluate investment opportunities and shareholder returns with an unwavering focus on sustaining and further enhancing Range's core objective, durable and growing per share free cash flow. To achieve that objective, we seek to enhance our low full cycle cost structure, low reinvestment rate, and durable margins. Like Dennis mentioned, Range could hold 2.6 BCFE per day of production with less than $600 million of annual drilling and completion capital, or less than $0.60 per MCFE. Here's a key message we repeat today. We can thoughtfully grow Range's business in conjunction with increasing market demand, allowing us to grow the value of the business and deliver additional returns to shareholders. This is a consistent long-term strategy underpinned by quality, long-duration assets, and a strong balance sheet. As the U.S. and global natural gas markets continue to integrate with commissioning of LNG facilities, while domestic demand grows substantially, primarily from the need for additional gas-fired electric generation, We believe Range's long-life inventory creates enormous option value by serving an integral role as a long-term energy supplier. Our durable free cash flow, evidenced through cycles, positions Range to consistently deliver value to its shareholders. Dennis, back to you. Thanks, Mark. Range's results continue to reflect a consistent theme. Strong operational performance against our stated multi-year plan. consistent free cash flow generation, and prudent allocation of that cash flow, balancing returns of capital, balance sheet strength, and the optimal development of our world-class asset base. As we sit here today, our multi-year plan, communicated just one year ago, is on track in generating the results you've come to expect from Range. Years of discipline planning have placed us in the strongest position in our company history, having de-risked a high-quality inventory measured in decades and translated that into a business capable of generating significant free cash flow through cycles. And we have more opportunity in front of us more than ever. With that, let's open the line for questions.