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BAML 2011 Global Energy Conference – Range Resources Corp

Range Resources Corp · Nov 15, 2011 · 64 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. BAML 2011 Global Energy Conference – Range Resources Corp – slide 1
    2011 Global Energy Conference Miami, FL Jeff Ventura President & Chief Operating Officer November 15, 2011
  2. BAML 2011 Global Energy Conference – Range Resources Corp – slide 2
    Range Resources Strategy Proven track record of performance following these principles Marcellus Shale 22 to 32 Tcfe resource potential Upper Devonian Shale 10 to 14 Tcfe resource potential Focus on PER SHARE Utica Shale GROWTH…
  3. BAML 2011 Global Energy Conference – Range Resources Corp – slide 3
    Track Record of Low Cost 1st, 2nd, or 3rd lowest breakeven price for seven years running, according to Bank of America High Yield study. 2010 NYMEX Breakeven Analysis 16.00 14.00 Range Resources 12.00 10.00 Median 8.40…
  4. BAML 2011 Global Energy Conference – Range Resources Corp – slide 4
    Range is Focused on Per Share Growth, on a Debt-Adjusted Basis Production/share debt adjusted Reserves/share debt adjusted 1.4 30 1.2 25 1.0 20 Mcfe Mcfe 0.8 15 0.6 10 0.4 5 2005 2006 2006 2008 2009 2010 2005 2006 2007…
  5. BAML 2011 Global Energy Conference – Range Resources Corp – slide 5
    Seven Years of Double-Digit Production Growth 700 25% - 30% Growth in 2012 600 11% Growth in 2011 (Includes effect of Barnett Sale) 500 Mmcfe/d 400 300 200 100 0 2003 2004 2005 2006 2007 2008 2009 2010 2011E 2012E…
  6. BAML 2011 Global Energy Conference – Range Resources Corp – slide 6
    Strong Financial Position Strong, Simple Balance Sheet Bank debt, subordinated notes and common stock No debt maturity until 2016 As of September 30, 2011 52 million in cash and zero balance on bank credit facility Well Structured…
  7. BAML 2011 Global Energy Conference – Range Resources Corp – slide 7
    Range Looking Forward Managing Cash Flow and Asset Sales to Reach Self-Funding Barnett Sale (900 million) and targeting additional 200 - 250 million of asset sales in either 2011 100-200 or 2012 500 400 Expected production…
  8. BAML 2011 Global Energy Conference – Range Resources Corp – slide 8
    Ranges Reserve Base and Upside are Growing 6.0 Size = Resource Potential Proved Reserves (Tcfe) 5.0 Placement = Proved Reserves 52.0 4.0 3.0 31.7 28.2 21.9 2.0 9.2 4.6 1.0 (Tcfe) YE 2005 YE 2006 YE 2007 YE 2008 YE 2009…
  9. BAML 2011 Global Energy Conference – Range Resources Corp – slide 9
    Resource Potential Today Net Unproven Gas Liquids Resource Area Resource (Tcf) (Mmbbls) Potential (Tcfe) Marcellus Shale 20 28 409 545 22 - 32 Upper Devonian Shale 8 12 253 368 10 - 14 Midcontinent, Nora and Permian 56 489…
  10. BAML 2011 Global Energy Conference – Range Resources Corp – slide 10
    Marcellus Shale Has Excellent Economics Credit Suisse 50% Marcellus Challenges Even Oil Plays for ROR Internal Rate of Return 40% 30% 20% 10% 0% Year: 1 2 3 4 5 6 7 8+ WTI Oil: 93.18 87.55 88.76 89.20 89.81…
  11. BAML 2011 Global Energy Conference – Range Resources Corp – slide 11
    Marcellus Shale Has Lowest Breakeven Cost Goldman Sachs 7.00 6.50 NYMEX price required for 12% IRR 6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.00 1.50 Source: Goldman Sachs - May 31, 2011 11
  12. BAML 2011 Global Energy Conference – Range Resources Corp – slide 12
    SW PA Wet Marcellus Economics Southwestern PA (wet gas case) EUR 5.7 Bcfe 190% Drill and Complete Capital 4.0MM 170% F&D 0.82/mcfe 150% 2,800 lateral length & 9 stages 130% IRR (1) 110% 90% NYMEX 70% Gas Price 5.7…
  13. BAML 2011 Global Energy Conference – Range Resources Corp – slide 13
    Wet Gas Provides Excellent Economics 4.00 NYMEX equates to 6.34 per mcf 4.00 NYMEX Henry Hub Wellhead Production 85.00 NYMEX WTI 1 mcf of Natural Gas Based on 12/10 Gas Quality (1) Assumes 1130 Btu Natural Gas & NGLs Condensate…
  14. BAML 2011 Global Energy Conference – Range Resources Corp – slide 14
    SW PA Wet Area Marcellus Type Curve 4,000 3,500 2009 & 2010 wells average 5.7 Bcfe Reserves Lateral Length Stages 3,000 4.0 Bcf & 281 Mbbl 2,802 ft. 9 Gross Well Head Gas Mcfd 2,500 2,000 1,500 1,000 500 0…
  15. BAML 2011 Global Energy Conference – Range Resources Corp – slide 15
    Marcellus SW is Liquids Rich Southwest resource potential of 17 to 24 Tcfe is comprised of 409 to 545(1) million barrels of liquids and 14.9 to 21.0 Tcf of gas. Range has 550,000 net acres in the SW part of the play. Over 1,000…
  16. BAML 2011 Global Energy Conference – Range Resources Corp – slide 16
    NE Marcellus Range has 240,000 net acres in NE Pennsylvania fairway Tap capacity of 350 Mmcf/d being built Reserves average 6.5 Bcf for avg. 2,573 lateral with nine frac stages At end of 3Q, 15 wells on production, with an…
  17. BAML 2011 Global Energy Conference – Range Resources Corp – slide 17
    Ranges Marcellus Shale Net Production 650 600 15 Anticipate 600 Mmcfe/d by YE 2012 550 500 12 Net Mmcf/d or Net Mmcfe/d 450 Anticipate 400 Mmcfe/d by YE 2011 Net MBBLS/Day 400 9 350 200+ Mmcfe/d exit rate at YE…
  18. BAML 2011 Global Energy Conference – Range Resources Corp – slide 18
    Ethane Now an Opportunity Rather Than a Challenge Ranges ethane potential in SW PA is over 500 million barrels. These volumes are not included in our resource potential estimates. When ethane extraction begins in late 2013, Ranges…
  19. BAML 2011 Global Energy Conference – Range Resources Corp – slide 19
    Upper Devonian and Utica Shale Formation Current Status First 2 wells average IP of 3.8 Mmcfe/d. Best well 4.7 Bcfe Upper Devonian Shales Wet where Marcellus is wet Rhinestreet / Middlesex Drill a thick, wet test in mid…
  20. BAML 2011 Global Energy Conference – Range Resources Corp – slide 20
    Midcontinent Resource Potential OKLAHOMA Horizontal Mississippian St. Louis TEXAS Major Hansford Ochiltree Lipscomb Hutchison Roberts Blaine Hemphill Canadian Wheeler Carson Gray Caddo Cana Woodford Granite Wash…
  21. BAML 2011 Global Energy Conference – Range Resources Corp – slide 21
    % of Mississippian Wells Classified as Oil Greater Oil Potential 88% 54% 57% 86% Kansas Oklahoma 37% 74% 83% 92% 95% Range Focus Area 94% 91% Oklahoma 96% Texas Acreage Increased to 105,000 Acres Source: Industry…
  22. BAML 2011 Global Energy Conference – Range Resources Corp – slide 22
    Mississippian Economics Rival Marcellus Wet Area 80% 70% 60% 50% IRR (%) 40% 30% 20% 10% 0% 8/23/11 Strip 2012 2013 2014 2015 WTI Oil: 88.61 91.04 91.80 92.29 NYMEX Oil: 4.45 4.94 5.26 5.53 Source: ISI Group…
  23. BAML 2011 Global Energy Conference – Range Resources Corp – slide 23
    Horizontal Mississippian Economics EUR 400 Mboe and 500 Mboe Drill and Complete Capital 3.1MM 110% Includes 200M for SWD F&D 9.78/boe (400 Mboe) 7.89/boe (500 Mboe) 90% IRR (1) NYMEX 70% Oil Price 400 Mboe 500 Mboe 80.00…
  24. BAML 2011 Global Energy Conference – Range Resources Corp – slide 24
    Horizontal Mississippian - Performance 500 - 8 wells average EUR is 485 MBOE 450 - 2197' Laterals and 12 stages - 70% of EUR comprised of liquids 400 - EUR equates to 4-9% recovery of the 350 original oil in place 300 Gross…
  25. BAML 2011 Global Energy Conference – Range Resources Corp – slide 25
    Range in the Marcellus Pioneering Best Practices in Protecting the Environment Range pioneered Marcellus water recycling and reuse. Pioneered disclosure of fracturing chemicals on a well-by-well basis in July 2010. Range has…
  26. BAML 2011 Global Energy Conference – Range Resources Corp – slide 26
    Why Invest in Range Proven Track Record of Growth at Low Cost 8 consecutive years of production growth at low cost. 32% reserve and 12% production per share debt-adjusted growth in 2010. 2010 reserve and finding cost results…
  27. BAML 2011 Global Energy Conference – Range Resources Corp – slide 27
    Appendix 28
  28. BAML 2011 Global Energy Conference – Range Resources Corp – slide 28
    Shale Wells Drilled and Permitted Wet Gas LegendLegend RANGE ANADARKO CHEVRON/CHIEF SW CABOT CHESAPEAKE CHIEF CONSOL ECA EOG EQT EXCO REX SHELL TALISMAN ULTRA XTO/EXXON/PHILLIPS OTHERS LARGER DOTS DRILLED SMALLER…
  29. BAML 2011 Global Energy Conference – Range Resources Corp – slide 29
    Shale Wells Drilled and Permitted SW PA Beaver Indiana Allegheny Westmoreland Jefferson Washington LegendLegend RANGE ANADARKO CHEVRON/CHIEF SW CABOT CHESAPEAKE CHIEF CONSOL ECA EOG Fayette EQT EXCO Marshall Green…
  30. BAML 2011 Global Energy Conference – Range Resources Corp – slide 30
    Shale Wells Drilled and Permitted NE PA Steuben Tioga Broom Chemung Range/Talisman - Area of Mutual Interest Tioga Bradford Susquehanna LegendLegend RANGE ANADARKO CHEVRON/CHIEF SW Potter CABOT CHESAPEAKE Lycoming…
  31. BAML 2011 Global Energy Conference – Range Resources Corp – slide 31
    SW PA Wet Area Type Curve 10,000 1,000 5.7 Bcfe type curve consists of 4 Bcf gas and 281 Mbbls of oil and natural gas liquids Gross Bbls/d Gross Mcf/d 1,000 100 Cumulative Production 1 yr 0.8 Bcfe 2 yrs 1.3 Bcfe 3…
  32. BAML 2011 Global Energy Conference – Range Resources Corp – slide 32
    Wet Gas Provides Excellent Economics 4.00 NYMEX Henry Hub Wellhead Production 85.00 NYMEX WTI 1 mcf of Natural Gas Based on 12/10 Gas Quality(1) Assumes 1130 Btu, Post Processing Natural Gas & Ethane NGLs Condensate Production…
  33. BAML 2011 Global Energy Conference – Range Resources Corp – slide 33
    Marcellus NGL Pricing Currently all ethane sold with the natural gas as additional Btus Realized Marcellus NGL Prices (2) Marcellus NGL as % WTI Oil Price NGL Price of WTI Wt. Avg. Composite Barrel (1) 1Q 2009 43.20 24.20 56% 2Q…
  34. BAML 2011 Global Energy Conference – Range Resources Corp – slide 34
    Utica Shale The Utica Shale generally becomes shallower and less mature moving from east to west Currently expect the Utica to have three windows of maturity Oil Wet Gas Dry Gas Although Range plans on drilling 2 - 4 wells…
  35. BAML 2011 Global Energy Conference – Range Resources Corp – slide 35
    Proposed Gross Capacity Additions Cryogenic Processing Installed by MarkWest Liberty Capacity Committed to Range Houston, PA Majorsville, WV Third Party Total (Mmcf/day) Volume Volume Volumes Volume April 2009 35 35 Houston I…
  36. BAML 2011 Global Energy Conference – Range Resources Corp – slide 36
    Liberty Marcellus Project Schedule MarkWest Liberty is developing integrated and scalable gathering, processing, fractionation, and marketing infrastructure to support production in excess of 1 Bcf/d Houston Processing Complex…
  37. BAML 2011 Global Energy Conference – Range Resources Corp – slide 37
    Strong Market for Marcellus NGLs Winter Propane Market vs MarkWest Production Summer Propane Summer Market Propane vs MarkWest Market Production vs. MarkWest Production* Bbls/d Winter Propane Market vs. MarkWest Production* Bbls/d…
  38. BAML 2011 Global Energy Conference – Range Resources Corp – slide 38
    Liquid Rich Area Infrastructure The key ingredient for success in the liquid rich area is not building processing plants but how to market the liquids. 60,000 Bbl/day C3+ fractionator currently operating at Houston, PA. Allows…
  39. BAML 2011 Global Energy Conference – Range Resources Corp – slide 39
    Project Mariner Overview Export Capabilities Sarnia Will Open Up Foreign Markets Mariner West Mariner East Pittsburgh Existing Sunoco Pipeline Philadelphia New MarkWest Liberty Pipeline Houston Fractionator…
  40. BAML 2011 Global Energy Conference – Range Resources Corp – slide 40
    The Mariner Project West & East Mariner West Sarnia, Ontario New Connection to Mariner West to Sarnia Targeted service by 4Q2012 40 mile 8 pipe to existing Sunoco Logistics Sunoco pipeline Existing Pipeline Sunoco Philadelphia…
  41. BAML 2011 Global Energy Conference – Range Resources Corp – slide 41
    Mariner East Update Mariner East includes two ships to allow for weather contingencies, optimization of offloading schedules and volume increases The ships can be easily modified to transport ethane, consume ethane as fuel and are…
  42. BAML 2011 Global Energy Conference – Range Resources Corp – slide 42
    Lycoming County Developments First 15 wells on production Additional 23 wells expected to be brought online by end of November 5 rigs running Capacity coming available Phase I 50 Mmcf/day - 1Q2011 Phase II 150 Mmcf/day - 4Q2011…
  43. BAML 2011 Global Energy Conference – Range Resources Corp – slide 43
    Marcellus Area Pipelines Great Take-Away Capacity; Premium Pricing Firm Transport & Sales with Firm Transport SW TCO 200 Mmcf/day TETCO 120 Mmcf/day by April 2011 150 Mmcf/day by November 2012 Firm Sales 100 Mmcf/day during 2011…
  44. BAML 2011 Global Energy Conference – Range Resources Corp – slide 44
    Marcellus Net Backs After Transportation Millennium NYMEX Plus 0.20 Tennessee 300 NYMEX Less 0.05 to 1.00 TCO Columbia NYMEX Less 0.10 Transco NYMEX Plus 0.20 TRANSMISSION PIPELINES COLUMBIA DOMINION MILLENIUM…
  45. BAML 2011 Global Energy Conference – Range Resources Corp – slide 45
    Marcellus PA Production Growth Marcellus production now over 3 Bcf per day of dry gas 3,000 TN 300 showing the most regional 2,500 growth while the other pipelines show displacement of gas from other regions. 2,000 Mmcf/d…
  46. BAML 2011 Global Energy Conference – Range Resources Corp – slide 46
    Other Midcontinent Activity Panhandle Granite Wash 140 potential horizontal locations Unrisked resource potential of 300-400 Bcfe net OKLAHOMA Panhandle St. Louis St. Louis Horizontal Mississippian 70 potential locations…
  47. BAML 2011 Global Energy Conference – Range Resources Corp – slide 47
    Range Virginia Assets RANGE RESOURCES VIRGINIA ACREAGE POSITION Range Acreage Natural Gas Producing Area Nora Area 353,000 gross, 231,000 net acres Interest in over 3,000 producing wells KY VA WVA 6,000+ additional wells…
  48. BAML 2011 Global Energy Conference – Range Resources Corp – slide 48
    Nora Multiple Stacked Pay Old becomes New with advances in technology 1950 Lower Huron 1970 Berea (Tight Gas Sands) 1990 CBM 2010 Lower Huron (Horizontal) 49
  49. BAML 2011 Global Energy Conference – Range Resources Corp – slide 49
    Southern Appalachia Division Production Growth 100,000 East Tennessee curtailment 80,000 CHK Acquisition 60,000 mcf/d EQT Acquisition Weather issues Range Acquires Pine Mountain 40,000 20,000 - 1/1/2003…
  50. BAML 2011 Global Energy Conference – Range Resources Corp – slide 50
    Horizontal Oil Potential in West Texas Penn Shale 90,000 net acres 170+ Mmboe resource potential Wolfcamp Shale 9,000 net acres 20 Mmboe resource potential Penn Shale/Wolfcamp All acreage is HBP 51
  51. BAML 2011 Global Energy Conference – Range Resources Corp – slide 51
    Unit Costs Are a Key Focus 5.00 4.00 3.00 /mcfe 2.00 1.00 0.00 2006 2007 2008 2009 2010 2011E Reserve Rep(1) 1.45 1.59 1.64 1.25 0.83 0.65 LOE (2) 0.90 0.92 0.99 0.82 0.72 0.65 Prod. taxes 0.37 0.36 0.39 0.20 0.19 0.16…
  52. BAML 2011 Global Energy Conference – Range Resources Corp – slide 52
    Margins are A Key Focus 7.00 6.00 5.00 4.00 /mcfe 3.00 2.00 1.00 0.00 2006 2007 2008 2009 2010 2011E Realized Prices 6.79 8.03 8.58 6.86 5.33 5.40 Cash Costs 2.19 2.39 2.58 2.27 2.19 2.08 Cash Margin 4.60 5.64 6.00 4.59…
  53. BAML 2011 Global Energy Conference – Range Resources Corp – slide 53
    Strong, Simple Balance Sheet Year- Year-End Year-End Year-End 1st Qtr 2nd Qtr 3rd Qtr End 2007 2009 2010 2011 2011 2011 2008 ( in millions) Bank borrowings 304 693 324 274 480 - - Sr. Sub. Notes 847 1,098 1,384 1,686 1,687 1,787…
  54. BAML 2011 Global Energy Conference – Range Resources Corp – slide 54
    Debt Maturities Range maintains an even, manageable debt maturity profile 600 500 500 500 400 ( Millions ) Revolver Undrawn (As of 9/30/2011) 300 300 250 250 200 100 - - - - - - 0 Senior Secured Revolving…
  55. BAML 2011 Global Energy Conference – Range Resources Corp – slide 55
    Ranges Outstanding Bonds Corporate Rating: BB / Ba2 Outlook: Stable Senior Subordinated Notes Amount Rating Current YTW 7.5% due 2017 250 BB / Ba3 4.95 % 7.25% due 2018 250 BB / Ba3 5.13 % 8.0% due 2019 300 BB / Ba3 5.49 % 6.75%…
  56. BAML 2011 Global Energy Conference – Range Resources Corp – slide 56
    Range Financing History Cumulative Sources and Uses 10.0 9.5 USES SOURCES 9.0 Acquisitions Debt 8.5 8.0 Capital Equity 7.5 Divestitures 7.0 Cash flows 6.5 6.0 ( Billions) 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5…
  57. BAML 2011 Global Energy Conference – Range Resources Corp – slide 57
    Gas Hedging Status Hedges Insulate Cash Flow Average Average Volumes Floor Cap Premium Hedged Price Price Paid (Mmbtu/day) ( / Mmbtu) 4Q2011 Collars 348,200 5.33 6.18 (0.37) 2012 Collars 189,641 5.32 5.91 (0.28) 2012…
  58. BAML 2011 Global Energy Conference – Range Resources Corp – slide 58
    Oil and Natural Gas Liquids Hedging Status Hedges Insulate Cash Flow Oil NGLs (1) Average Average Average Average Volumes Floor Cap Premiums Volumes Floor Cap Hedged Price Price Received Hedged Price Price (Bbls/day) ( / Bbl)…
  59. BAML 2011 Global Energy Conference – Range Resources Corp – slide 59
    Growth at Low Cost Top quartile growth at top quartile cost 3 Year 5 Year 2006 2007 2008 2009(4) 2010 Average Average Reserve growth 25% 27% 19% 18% 42% 26% 26% Drillbit replacement (1) 367% 400% 386% 540% 840% 608% 653% All…
  60. BAML 2011 Global Energy Conference – Range Resources Corp – slide 60
    2011 Capital Budget (1) 2011 budget funded by cash flow and asset sales Budget = 1.47 Billion Budget by Area Drilling Pipelines, Facilities & Other Marcellus Midcontinent Acreage & Seismic Southwest Appalachia/Nora 75% 86%…
  61. BAML 2011 Global Energy Conference – Range Resources Corp – slide 61
    Range is a Founding Member of ANGA ANGAs Mission Americas Natural Gas Alliance (ANGA) exists to pursue a single mission: to increase appreciation for the environmental, economic and national security benefits of clean, abundant,…
  62. BAML 2011 Global Energy Conference – Range Resources Corp – slide 62
    Range is a Founding Member of the MSC Founded in 2008, the Marcellus Shale Coalition (MSC) is committed to the responsible development of the Marcellus Shale and the enhancement of the regions economy that can be realized by this…
  63. BAML 2011 Global Energy Conference – Range Resources Corp – slide 63
    Green Completion Objectives Continue treatment design advancement with service provider partnerships with focus on salt water use (recycling) Develop fluid systems in line with 12 principles of Green Chemistry We continue to share…
  64. BAML 2011 Global Energy Conference – Range Resources Corp – slide 64
    Contact Information Range Resources Corporation 100 Throckmorton, Suite 1200 Fort Worth, Texas 76102 Main: 817.870.2601 Fax: 817.870.2316 Rodney Waller, Senior Vice President rwallerrangeresources.com David Amend, Investor…

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