Range Resources Corporation · NYSE:RRC
Range Resources — Goldman Sachs Global Energy Conference 2020
38 slides from Range Resources's conference presentation, Jan 8, 2020
Slide 1: Goldman Sachs Global Energy Conference 2020
Goldman Sachs Global Energy Conference 2020
Slide 2: Forward Looking Statements
Forward Looking Statements All statements, except for statements of historical fact, made in this presentation regarding activities, events or developments the Company expects, believes or anticipates will or may occur in the future are forward-looking statements within the meaning of Section 27A of
Slide 3: Range – At a Glance
Range – At a Glance Unmatched Southwest Appalachia Inventory â–ª Approximately one half million net acres provide decades of low-risk drilling inventory â–ª Contiguous position allows for efficient operations and long-lateral development â–ª Peer-leading well costs and productivity underpin top-tier
Slide 4: Unmatched Inventory in Southwest Appalachia
Unmatched Inventory in Southwest Appalachia ~3,700 undrilled core Marcellus wells(a) provide decades of low-risk drilling opportunities Marcellus resource potential(b) ~ 40 Tcf of natural gas ~ 3 billion barrels of NGLs ~ 149 million barrels of condensate Significant inventory of highly prolific Uti
Slide 5: Value of Year-End 2019 Proved Reserves – Over $17 per share
Value of Year-End 2019 Proved Reserves – Over $17 per share Included in SEC Reserves â–ª Only 5 years of development activity â–ª Proved Developed reserves of 9.9 Tcfe â–ª Proved Undeveloped reserves of 8.3 Tcfe â–ª Approximately 440 Marcellus locations Reserve Value Ignores Resource Potential â–ª R
Slide 6: Capital Efficiency Driven by Peer-Leading Well Costs & Decline Rate
Capital Efficiency Driven by Peer-Leading Well Costs & Decline Rate Well Costs per Lateral Foot 2020 Decline Rate $1,400 40% $1,200 35% $1,000 30% 25% $800 20% $600 15% $400 $200 10% 5% $0 RRC RRC Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 0% 2020 2019 RRC Peer 2 Peer 1 Peer 4 Peer 3 Peer 5 Peer 6 D&
Slide 7: Cash Recycle Ratio Shows Quality and Durability of Asset Base
Cash Recycle Ratio Shows Quality and Durability of Asset Base 250% 200% 150% 100% 50% 0% Appalachia Gas Peer Oil Peer Source: MKM Partners. “Energy/Exploration & Production Outlook”. June 2019. Cash Recycle Ratio = Cash Operating Margin divided by Capital Intensity. Companies shown include APC, AR,
Slide 8: Maintenance Capital Drives Free Cash Flow Through the Cycles
Maintenance Capital Drives Free Cash Flow Through the Cycles Sustainable Shallow Free Cash Base Decline Low Maintenance Capital Shallow Base Decline Driven by: â–ª Core Marcellus position â–ª 10+ years of drilling history in Marcellus provides solid base of low-decline wells –ª Infrastructure built
Slide 9: Improving Cost Structure Enhances Cash Flow & Margin Growth
Improving Cost Structure Enhances Cash Flow & Margin Growth $2.20 Over Half of Targeted $2.10 Savings Have Already e ) Been Achieved f mc $2.00 r p e $1.90 $ ( s $1.80 t Cos $1.70 g tin $1.60 a Oper $1.50 sh $1.40 Ca $1.30 $1.20 4Q18 1Q19 2Q19 3Q19 4Q19 4Q23 (Original Target) TGP&C LOE Production Ta
Slide 10: Leading in Sustainability and Environmental Practices
Leading in Sustainability and Environmental Practices Environmental Responsibility Highlights Range is actively Ranked second among Range’s water sharing working to achieve zero top producers on water program is recycling net emissions across management 153% of its own and its operations and corpora
Slide 11: Natural Gas Demand Increases
Natural Gas Demand – Increases 21 Bcf/d in Next 5 Years 2019-2024 Demand Outlook â–ª Total demand growth of +21 Bcf/d through 2024 from LNG and Mexican exports, industrial and electric power demand growth â–ª LNG export capacity to increase by mid-2020 to 10 Bcf/d from projects under-construction â–
Slide 12: Natural Gas Supply—Base Decline & Capital Discipline
Natural Gas Supply—Base Decline & Capital Discipline Base Declines Offset Current Activity â–ª Average U.S. decline rate of 26% equates to ~27 Bcf/d of new gas required each year to simply hold production flat â–ª After drawing down DUCs, industry growth should slow meaningfully into 2H2020 and 2021
Slide 13: NGL Macro Improving
NGL Macro Improving New Export Infrastructure 2019-2020 â–ª 2019 export capacity to increase by ~400 MBPD and by ~650 MBPD in 2020 versus EIA gas plant LPG supply of 2,559 MBPD in September 2019. â–ª U.S. waterborne export capacity increases equivalent to over 40% of U.S. LPG supply, which should ti
Slide 14: Range is Positioned Well for Low Commodity Prices
Range is Positioned Well for Low Commodity Prices Self-Funded Business Model â–ª Flexible capital program as all of Range’s firm transportation commitments have been met â–ª Shallow base decline supports low maintenance capital requirement â–ª Low maintenance capital and high capital efficiency prom
Slide 15: Appendix
Appendix
Slide 16: Peer-Leading Capital Efficiency
Peer-Leading Capital Efficiency Range’s Estimated 2020 Capital Efficiency Remains Consistent With Prior Year, Versus Some Peers Who May Rely on One-Time DUC Drawdowns. $500 Implied D&C Maintenance Capital per Mcfepd $450 $400 $384 $387 $388 $350 $325 $302 DUCs? DUCs? $300 $260 $250 $200 $150 RRC Pee
Slide 17: D&C Capex per Mcfepd Reflects Relative Capital Efficiency
D&C Capex per Mcfepd Reflects Relative Capital Efficiency 2018 Quarterly Summary 1Q18 2Q18 3Q18 4Q18 $192 $177 $180 $171 $165 $156 $157 $152 $151 $152 $139 $137 $128 $124 $118 $117 $113 $108 $104 $97 $101 $84 $93 $84 $82 $74 $61 $41 2019 Quarterly Summary 1Q19 $202 2Q19 3Q19 4Q19E $169 $159 $139 $12
Slide 18: Appalachia Assets – Stacked Pay
Appalachia Assets – Stacked Pay â–ª ~1.5 million net effective acres(a) in PA leads to decades of drilling inventory â–ª Gas In Place analysis shows the greatest potential is in Southwest Pennsylvania â–ª Approximately 1,000 producing Marcellus wells demonstrate high quality, consistent results acro
Slide 19: Targeting / Downspacing Production Results
Targeting / Downspacing Production Results 3,000 2,500 â–ª Optimized targeting shows ~50% ft . increase in cumulative production after 1,000 2,000 1,300 days per â–ª No detrimental production impact seen Mmcfe/Day 1,500 on the original wells Normalized 1,000 500 - 0 200 400 600 800 1000 1200 1400 AV
Slide 20: Return to Existing Pads – Marcellus
Return to Existing Pads – Marcellus 100,000 10,000 Additional 3 wells (MCFD)1,000 Gas Wellhead 100 10 1 Mar-14 Oct-14 May-15 Dec-15 Jul-16 Mar-17 Oct-17 May-18 Dec-18 Wellhead Gas Ability to target our best areas with significant cost savings
Slide 21: Significant Utica Resource
Significant Utica Resource â–ª Range has drilled three Utica wells â–ª Range’s third well appears to be one of the best dry gas Utica wells in the basin (next slide) â–ª Continued improvement in well performance due to higher sand concentration and improved targeting â–ª 400,000 net acres in SW PA p
Slide 22: Utica Wells – Wellhead Pressure vs. Cumulative Production
Utica Wells – Wellhead Pressure vs. Cumulative Production Range’s DMC Properties well one of the best in the Utica
Slide 23: Innovative NGL Marketing Agreements Enhance Pricing
Innovative NGL Marketing Agreements Enhance Pricing â–ª First-mover on Appalachian NGL exports to Europe via ethane sales to INEOS using Mariner East capacity â–ª Range’s propane has been sold internationally since 2016 through Marcus Hook, with option to sell into premium NE winter markets â–ª Mari
Slide 24: High Quality Reserve Base
High Quality Reserve Base â–ª Proved reserves of 18.2 Tcfe as of year end 2019 â–ª Future development costs for proved undeveloped reserves are estimated to be $0.35 per Mcfe at YE2019 20 2019 SEC PV10 18 of $7.6 billion 16 (Tcfe) 14 serves 12 R e 10 ved 8 P ro Total 6 4 2 0 2010 2011 2012 2013 2014
Slide 25: Natural Gas & NGL Macro Outlook
Natural Gas & NGL Macro Outlook
Slide 26: Natural Gas—35% of the U.S. Generation Mix in 2018
Natural Gas—35% of the U.S. Generation Mix in 2018 Growing Market Share in Power Gen. â–ª Gas power demand grew by 11 Bcf/d from 2009-2018, while coal declined 11 Bcf/d(a) and renewables grew 5.3 Bcf/d(a) Market Share Growth Should Continue â–ª 25 Bcf/d of coal generation remains to be displaced, or
Slide 27: Shale Efficiency Gains Are Slowing
Shale Efficiency Gains Are Slowing Oil Basins â–ª Limited Tier-1 runway left in Williston, Mid-Con, DJ Basin and Eagle Ford as cores are believed to have been heavily drilled â–ª Up-spacing across several plays reduces core inventory life â–ª Efficiency gains from lateral length and proppant intensi
Slide 28: Dry Gas Basin Break-Evens Suggest Higher Prices
Dry Gas Basin Break-Evens Suggest Higher Prices Supply Growth Needed from Dry Gas Basins â–ª EIA forecasts 6.7 Bcf/d of 2019-2024 supply growth from outside of Northeast (mostly associated gas) â–ª Demand growth forecast of +21 Bcf/d from 2019-2024 will require growth from dry gas basins to balance
Slide 29: L48 Dry Gas Production Growth Slowing
L48 Dry Gas Production Growth Slowing U.S. L48 Pipeline Flows (Bcf/d) 94 92 90 88 86 84 82 80 78 76 74 72 70 68 1-Jan 1-Feb 1-Mar 1-Apr 1-May 1-Jun 1-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec 2017 2018 2019 Source: Platts
Slide 30: LNG Growth Expected to Continue
LNG Growth Expected to Continue U.S. LNG Export Terminal Capacity (Bcf/d) Second Wave 22 FIDs & Potential 20 Port Arthur FERC Approved and/or >70% long-term offtake Magnolia LNG 18 signed. Potential Next Freeport T4 16 Wave Projects. Cameron T4-T5 14 Under Construction Golden Pass T1-T3 or In-Servic
Slide 31: U.S. Natural Gas Exports to Mexico Making New Highs
U.S. Natural Gas Exports to Mexico Making New Highs U.S Natural Gas Exports to Mexico (Bcf/d) 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 014 014 014 015 015 015 016 016 016 017 17 0 018 019 /2 1/5 /2 4/5 /2 7/5 /2014 /2 1/5 4/5 /2 /2 7/5 /2015 1/5 /2 /2 4/5 /2 7/5 /2016 /2 1/5 4/5/2017
Slide 32: NGL Macro Outlook
NGL Macro Outlook NGL Demand â–ª IEA forecasts LPG (propane and butane) and ethane to be the fastest growing global oil products over medium and long term â–ª Demand growth driven primarily by petrochemical feedstock demand and residential demand in developing countries â–ª U.S. waterborne export ca
Slide 33: Global LPG Demand Forecast Absorbs Growing U.S. Exports
Global LPG Demand Forecast Absorbs Growing U.S. Exports Global LPG S&D Waterfall (MBL/D) 11,200 11,000 10,800 10,600 10,400 10,200 ~1.2 MMBPD 10,000 9,800 9,600 9,400 9,200 2018 Demand ResCom + Industry PDH Ethylene 2023 Demand Non-U.S. Supply Call on U.S. Supply +Autogas + Other â–ª U.S. LPG Export
Slide 34: Financial Detail
Financial Detail
Slide 35: Well-Structured, Resilient Balance Sheet
Well-Structured, Resilient Balance Sheet â–ª $4+ billion max conforming borrowing base ($3B elected borrowing base, $2.4B committed) â–ª Simple capital structure â–ª Near-term cash flow protected with hedges â–ª Ample cushion on financial covenants(a) â–ª Interest coverage ratio(b) of ~5.0x versus c
Slide 36: Natural Gas & NGL Hedging Status
Natural Gas & NGL Hedging Status Volumes Hedged Average Hedge Prices Time Period (Mmbtu/day) ($/Mmbtu) 4Q19 Swaps 1,421,739 $2.82 1Q20 Swaps 1,007,253 $2.68 Natural Gas1 2Q20 Swaps 1,010,000 $2.62 (Henry Hub) 3Q20 Swaps 1,010,000 $2.62 4Q20 Swaps 976,848 $2.63 FY21 Swaps 50,000 $2.62 Volumes Hedged
Slide 37: Oil Hedging Status
Oil Hedging Status Volumes Hedged Average Hedge Prices Time Period (bbl/day) ($/bbl) 4Q19 Collars 1,000 $63 x 73 4Q19 Swaps 9,168 $56.11 1Q20 Swaps 9,000 $58.62 Oil (WTI)1 2Q20 Swaps 9,000 $58.18 3Q20 Swaps 8,500 $58.15 4Q20 Swaps 5,500 $58.00 FY21 Swaps 1,000 $55.00 *As of 12/31/19 1) Range also so
Slide 38: Contact Information
Contact Information Range Resources Corporation 100 Throckmorton St., Suite 1200 Fort Worth, Texas 76102 Laith Sando, Vice President – Investor Relations (817) 869-4267 lsando@rangeresources.com Michael Freeman, Director – Investor Relations & Hedging (817) 869-4264 mfreeman@rangeresources.com John
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