Skip to main content Takeaway Capacity In Appalachia – Range Resources Corp Investor Presentation | Shale Experts
Loading...
Pm

Takeaway Capacity In Appalachia – Range Resources Corp

Range Resources Corp · Oct 17, 2014 · 40 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Takeaway Capacity In Appalachia – Range Resources Corp – slide 1
    Takeaway Capacity in Appalachia Chad Stephens Senior Vice President Corporate Development Rodney Waller Senior Vice President Updated October 17, 2014 1
  2. Takeaway Capacity In Appalachia – Range Resources Corp – slide 2
    NE Pipelines: Pre-Marcellus Demand Pull Long-haul pipelines built from the Gulf Market Area Producing Annual avg. Areas to North demand 10-12 Bcf/d East Markets North East Markets historically traded at a 16 Bcf/d premium…
  3. Takeaway Capacity In Appalachia – Range Resources Corp – slide 3
    NE Pipeline Marcellus Supply Push Range discovers the Marcellus in 2004 Producing Area The North East region became the Producing Area The Gulf Coast, Southeast and Midwest are becoming the premium Market Areas Market…
  4. Takeaway Capacity In Appalachia – Range Resources Corp – slide 4
    Major Marcellus / Utica Pipeline Overview Geographical location of pipelines dictates reversals and expansions 50% of existing production is Southwest PA has the coming from this most existing pipeline area with the least…
  5. Takeaway Capacity In Appalachia – Range Resources Corp – slide 5
    Appalachian Natural Gas Production 18.0 16.0 14.0 12.0 10.0 Bcf/d NE supply flattening due to limited takeaway 8.0 6.0 4.0 2.0 0.0 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 NEPA SWPA+WV Utica…
  6. Takeaway Capacity In Appalachia – Range Resources Corp – slide 6
    Natural gas flow into the North East now minimal - Net flows into North East reduced dramatically - Strong flows into South East and North Central regions continue Source Ventyx LCI, Bloomberg Source: LCI, 08/12/14 7 7
  7. Takeaway Capacity In Appalachia – Range Resources Corp – slide 7
    NE Supply and Transportation Fundamentals NE region demand: Winter peak 20 to 25 Bcf/d Summer 8 to 10 Bcf/d Current supply exceeds summer and shoulder months demand Increased regional supply has created negative basis differentials…
  8. Takeaway Capacity In Appalachia – Range Resources Corp – slide 8
    Historic rates to move gas between various regions 1.15/dth 0.89/dth Source = Goldman Sachs, Independence Day for Natural Gas v6 Building a new Appalachian trail: Where Marcellus/Utica gas will go, May 15, 2014 9
  9. Takeaway Capacity In Appalachia – Range Resources Corp – slide 9
    Major Sales Points in NE Region Gas sold at certain NE indexes provides liquidity and winter premiums Year round premium markets Winter premium markets Niagara Dawn Iroquois Algonquin Leidy Hub TN 219 NY City Gate…
  10. Takeaway Capacity In Appalachia – Range Resources Corp – slide 10
    Planned and proposed pipeline projects through 2018 Moving gas out of the basin should balance supply & demand North & Northeast Williams Constitution Pipeline Estimated incremental capacity: +25.2 Bcfd Spectra Algonquin Expansion…
  11. Takeaway Capacity In Appalachia – Range Resources Corp – slide 11
    North East Takeaway Projects Announced (Mmbtu/d) Source Internal * Routes are approximations and may not represent exact final path. Timing and capacities may vary. 12
  12. Takeaway Capacity In Appalachia – Range Resources Corp – slide 12
    Ranges Portfolio of Transportation Arrangements Moving gas to diverse markets with improved pricing 2016 Firm transportation volumes shown above exclude 380,000 Mmbtu/d of firm sales/released capacity 13
  13. Takeaway Capacity In Appalachia – Range Resources Corp – slide 13
    Announced Appalachian Basin Takeaway Projects 1 of 2 NORTH EAST PA Operator Main Line Market Start-up Capacity - Bcf/d 2014 Northeast Connector Williams Transco NE Q4'14 0.1 Iroquois Access Dominion Iroquois NE Q4'14 0.3 Rose Lake…
  14. Takeaway Capacity In Appalachia – Range Resources Corp – slide 14
    Announced Appalachian Basin Takeaway Projects 2 of 2 SOUTH WEST Operator Main Line Market Start-up Capacity - Bcf/d 2016 Gulf Expansion Ph1 Spectra TETCO Gulf Coast Q4'16 0.3 Clarington West Expansion Tall Grass REX Midwest Q4'16 2.4…
  15. Takeaway Capacity In Appalachia – Range Resources Corp – slide 15
    Appalachia Supply & Demand LNG exports starting in late 2015 Appears to have sufficient takeaway capacity by 2016 Source: FBR Research (Aug14 - SupplySource: Analyst & Demand estimates forecasts), Internal (announced takeaway…
  16. Takeaway Capacity In Appalachia – Range Resources Corp – slide 16
    Potential Industry Weighted Average Transport Tariffs by End Market Weighted-Average GS/INGA Newbuild Pipeline Cost Estimates* Demand Charge *assumes 36 pipeline Pipeline Flow 2018 (/mcf) Bigger pipelines can deliver more gas…
  17. Takeaway Capacity In Appalachia – Range Resources Corp – slide 17
    How are gas flows expected to change Historical and potential net inter-region pipeline flows 2012, 2020E Bcf/d Canada 2012 2020 Production 13.9 14.4 Ample demand in Midwest, SE and Pacific Local Disposition 8.5 9.2 Gulf to absorb…
  18. Takeaway Capacity In Appalachia – Range Resources Corp – slide 18
    What is the expected price in the NE when supply and demand balances As supply and demand balance, NE prices should revert back to Henry Hub +/- variable transportation cost Seasonal winter demand in excess of basin supply should…
  19. Takeaway Capacity In Appalachia – Range Resources Corp – slide 19
    What does the futures price indicate for regional basis Dawn 2015 +0.24 2018 +0.18 Algonquin 2015 +3.70 MichCon 2018 +1.93 Chicago CG 2015 +0.14 2015 +0.13 2018 -0.13 2018 -0.16 Transco Z6 (NY) Dom South 2015 +0.72 2015 -1.32 2018…
  20. Takeaway Capacity In Appalachia – Range Resources Corp – slide 20
    How will Gulf Coast demand affect the market DOE/FERC approved LNG export projects of approximately 8 Bcf/d LNG exports forecasted to begin in late 2015 and ramp up through 2020 Increased demand from Texas and Louisiana petrochemical…
  21. Takeaway Capacity In Appalachia – Range Resources Corp – slide 21
    What is Ranges philosophy for committing to firm pipeline transportation Range has a detailed 10+ year drilling plan Ranges transportation portfolio follows our projected production volumes Planned volume ramp matches in-service date…
  22. Takeaway Capacity In Appalachia – Range Resources Corp – slide 22
    Ranges Appalachia Gas Transportation Arrangements Projected 2014 Projected 2016 Projected 2018 Transport Transport Transport Mmbtu/day Mmbtu/day Mmbtu/day Regional Direction Cost per Cost per Cost per (Gross) (Gross) (Gross) Mmbtu…
  23. Takeaway Capacity In Appalachia – Range Resources Corp – slide 23
    2014 Diversified Portfolio by Major Indices Estimated Appalachia Gas Sales Portfolio By Major Indices - 2014 2Q 2014 Corporate Southeast 8% Differential to NYMEX: (0.58) Northeast Transco Z5 Non-WGL 18% 8% Transco NNY 10% CGT…
  24. Takeaway Capacity In Appalachia – Range Resources Corp – slide 24
    Projected 2018 Diversified Portfolio by Major Indices Estimated Appalachia Gas Sales Portfolio By Major Indices - 2018 70% of Ranges gas Southeast 5% volumes are expected Northeast to be priced off of 11% Transco Z5 Non- indices…
  25. Takeaway Capacity In Appalachia – Range Resources Corp – slide 25
    Conclusions Marcellus and Utica volumes are expected to reach an estimated 25 Bcf/d by 2018 Cumulative takeaway capacity is expected to be sufficient to move gas away from the Appalachian basin Range has contracted sufficient firm…
  26. Takeaway Capacity In Appalachia – Range Resources Corp – slide 26
    How can you assess a producers takeaway capacity First need to understand two concepts: 1. What is total cost of takeaway capacity Demand/Reservation charges Fuel charges Commodity charges 2. How do E&P companies account for…
  27. Takeaway Capacity In Appalachia – Range Resources Corp – slide 27
    Peer Group Transport Capacity Comparison Average Capacity (1) Gross Production (2) Calculated Utilization 2015 2016 2017 2015 2016 2017 2015 2016 2017 Calculated Utilization Labels RRC (3) 1,200 1,520 1,820 1,145 1,386 1,651 95% 91%…
  28. Takeaway Capacity In Appalachia – Range Resources Corp – slide 28
    Effective Cost of Transport Assuming No Released Capacity Calculated Trans. Cost w/ Capacity (1) Calculated Utilization Transport Cost (2) Utilization % (3) 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 RRC 1,200 1,520…
  29. Takeaway Capacity In Appalachia – Range Resources Corp – slide 29
    Effective Cost of Transport - Assuming Release Capacity Market Calculated Trans. Cost - w/ Capacity (1) Calculated Utilization Transport Cost (3) Released Mkt (2) 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 RRC 1,200…
  30. Takeaway Capacity In Appalachia – Range Resources Corp – slide 30
    What can you conclude from this comparison 1. Transportation costs will be a differentiating component of total cash costs in the future. 2. Not W fully utilizing transportation costs in the short-term will raise the effective costs…
  31. Takeaway Capacity In Appalachia – Range Resources Corp – slide 31
    Ranges Perspective Range believes it has demonstrated a comprehensive understanding of todays market. Range was years ahead in identifying the growth of the Marcellus/Utica and the need for transportation out of the basin for…
  32. Takeaway Capacity In Appalachia – Range Resources Corp – slide 32
    Appendix 33 33
  33. Takeaway Capacity In Appalachia – Range Resources Corp – slide 33
    What is the total cost of takeaway capacity All costs are based on dekatherms (dth) or Mmbtu basis. Gas production is reported in mcf. If gas production averages 1,060 Btu per cubic foot, demand costs will be 106% of the dth cost for…
  34. Takeaway Capacity In Appalachia – Range Resources Corp – slide 34
    How do E&P companies account for takeaway capacity There are two methods to account for production revenue recognition. Natural gas, NGL and oil sales are recognized when the products are sold and delivered to customers: Sales method…
  35. Takeaway Capacity In Appalachia – Range Resources Corp – slide 35
    How can you assess a producers takeaway capacity Producers having takeaway capacity on the same pipeline can have dramatically different costs. (0.15 to 0.30 in cases) Anchor shippers most often have the lowest cost. Anchor shippers…
  36. Takeaway Capacity In Appalachia – Range Resources Corp – slide 36
    How can you assess a producers takeaway capacity What volume of production can the producer move on its capacity Are there pipeline connections that limit how much production can actually flow Telescoping connections are limited by the…
  37. Takeaway Capacity In Appalachia – Range Resources Corp – slide 37
    Understanding Takeaway Capacity in Appalachia Transportation takeaway requires size and scale and therefore smaller producers are at an inherent competitive disadvantage until play matures. Markets are more important than takeaway…
  38. Takeaway Capacity In Appalachia – Range Resources Corp – slide 38
    Understanding Takeaway Capacity in Appalachia Size and scale is essential at the beginning of any project. Transportation will be available to balance supply and demand only if the producers with size and scale sponsor the construction…
  39. Takeaway Capacity In Appalachia – Range Resources Corp – slide 39
    Understanding Takeaway Capacity in Appalachia Takeaway capacity should be a function of getting to better markets. A large number of the takeaway projects over the last few years were motivated by pipelines creating more take or pay…
  40. Takeaway Capacity In Appalachia – Range Resources Corp – slide 40
    Contact Information Range Resources Corporation 100 Throckmorton, Suite 1200 Fort Worth, Texas 76102 Main: 817.870.2601 Fax: 817.870.2316 Chad Stephens, Senior Vice President Elie Atme, Vice President Gas Marketing…

From the store

Browse maps, data & reports in the Shale Experts store