• Aggregate Unhedged Price Realization: $2.61 per Mcfe for the quarter, a $0.45 premium over Henry Hub natural gas.
• Third Quarter Production: 2.2 Bcf equivalent per day.
• Capital Investment: $156 million in the third quarter.
• Net Debt: Reduced by $136 million, ending the third quarter at $1.44 billion.
• Dividends Paid: $58 million year-to-date.
• Share Repurchases: $44 million year-to-date.
• Reinvestment Rate: 63% through the first three quarters of 2024.
• NGL Premium: Over $4 per barrel above the Mont Belvieu index, highest in company history.
• Net Debt Reduction: Nearly $2.7 billion over the last several years.

• Warning! GuruFocus has detected 4 Warning Sign with RRC.

Release Date: October 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Range Resources Corp (NYSE:RRC) achieved the highest NGL premium in company history, over $4 per barrel above the Mont Belvieu index, showcasing strong performance in international markets.
• The company generated positive free cash flow despite challenging natural gas prices, demonstrating resilience and efficient operations.
• RRC's low capital intensity and efficient operations allow it to maintain production levels with minimal resources, such as holding 2.2 Bcfe per day of net production with just one completion crew.
• The company has a strong balance sheet, having reduced net debt by $136 million and maintaining net debt within the target range of $1 billion to $1.5 billion.
• RRC's diversified production stream, with roughly 30% liquids, has accounted for more than 50% of pre-hedge revenue in five of the last six quarters, providing a stable revenue base.

Negative Points

• Despite positive cash flow, the company is operating in a low commodity price environment, with NYMEX natural gas averaging $2.09 for the first three quarters of 2024.
• RRC's capital expenditure guidance was adjusted upwards, indicating higher-than-expected spending, particularly in land acquisition.
• The company faces potential challenges with takeaway capacity and in-basin demand, which could impact future production growth.
• There is uncertainty around future capital and production plans for 2025, with the company still finalizing its strategy.
• RRC's ability to maintain its current production levels and efficiencies is partly dependent on external factors such as weather patterns and LNG infrastructure commissioning, which are beyond its control.

Q & A Highlights

Q: You all had some pretty strong production performance. Could you give us a sense of what midstream optimization has added in terms of volumes and its impact on your base decline rate? A: We've seen improvements due to long lateral performance and infrastructure expansion. While it's early to quantify trends, we've observed small upticks in constrained areas and better utilization of longer laterals. Our base decline is around 19%, and we expect it to continue to shallow over time.

Q: Regarding 2025, you mentioned running one frac crew for modest growth. Can you discuss the DUC optionality and what you need to see to utilize it? A: We are monitoring winter weather, LNG infrastructure commissioning, and price responses. We have inventory to pick up a spot crew when fundamentals call for it. Our transportation setup supports incremental production, and we can respond efficiently to market demands.

Q: On slide 38, the NGL differential was strong. Can you explain how your marketing teams achieved this and if it's sustainable? A: Our setup allows us to market NGLs out of Marcus Hook, capturing premiums due to Gulf congestion. With high export levels and growing demand, we expect these dynamics to continue into 2025, although the premium may adjust post-2025.

Q: Can you elaborate on the incremental land spend and its impact on your opportunity set? A: The land spend allows us to capture open parcels and extend laterals, adding capital-efficient wells. This year, it could represent 500,000 feet of lateral inventory, enhancing our near-term opportunity set.

Q: How should we think about your approach to the remainder of the 2025 notes? A: We have options due to our strong financial position. We can use cash on hand, our undrawn credit facility, or refinance if rates are favorable. Our focus is on optimizing and reducing interest expenses over time.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.