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Credit Suisse 2011 Group Energy Summit – Range Resources Corp

Range Resources Corp · Feb 10, 2011 · 63 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. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 1
    Credit Suisse Energy Summit February 10, 2011 / Vail, Colorado John Pinkerton Chairman & CEO
  2. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 2
    Shale Gas is Transforming the Energy Market The biggest energy innovation of the decade is natural gas more specifically what is called unconventional natural gas. Some call it a revolution. Daniel Yergin Chairman Cambridge…
  3. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 3
    Natural Gas A Global Energy Business A new global energy business natural gas is emerging. As natural gas becomes a traded global commodity, it will be critical to meeting a host of urgent needs. Daniel Yergin Chairman…
  4. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 4
    Industry Beliefs Have Changed THEN NOW Shales are merely a Shale basins contain some of the most source rock, and cannot economic and repeatable reserves. be produced commercially. The Fort Worth and The Barnett Shale is currently…
  5. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 5
    Range Has Transformed Itself 2004 Now Daily Production 196 Mmcfe 541 Mmcfe Unconventional Prod. (% of Total) 0% 60% Proved Reserves 1.2 Tcfe 4.4Tcfe Proved Reserves (per share) 11.72 28.46 Finding & Dev. Cost (per mcfe) 1.20…
  6. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 6
    Disciplined Approach Our Strategy Has Not Changed Consistent growth in production and reserves per share, debt-adjusted Maintain top quartile or better cost structure 7
  7. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 7
    Seven Years of Double-Digit Production Growth Includes Impact of Asset Sales 600 500 400 Mmcfe/d 300 200 100 0 2003 2004 2005 2006 2007 2008 2009 2010 Oil and Liquids Gas 8
  8. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 8
    Range is Focused on Per Share Growth, on a Debt-Adjusted Basis Production/share debt adjusted Reserves/share debt adjusted 1.2 30 25 1.0 20 0.8 15 0.6 10 0.4 5 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009…
  9. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 9
    Industry Leading Cost Structure 1st, 2nd, or 3rd lowest breakeven price for six years running, according to Bank of America High Yield study of 33 companies. Marcellus driving top-quartile cost structure even lower. All-in finding…
  10. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 10
    Marcellus Shale - A Game Changer For Range 2004 Range drilled the Marcellus discovery well, the Renz 1, and pumped the first large slick water frac east of the Mississippi. 11
  11. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 11
    Marcellus Shale - A Game Changer For Range / 2005 - 2008 2005 - Drilled two more successful vertical confirmation wells 2006 - Drilled first horizontal Marcellus well Drilled 18 verticals and 2 horizontals 2007 - Opened…
  12. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 12
    Marcellus Shale - A Game Changer For Range / 2009 - 2010 2009 - Tripled production to 100 Mmcfed, net Expanded gas processing and pipeline infrastructure Developed industry leading water recycling program 2010 - Doubled…
  13. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 13
    Marcellus Shale - A Game Changer For Range / 2011 Marcellus Shale Goals for 2011 Double production to 400 Mmcfed, net Initiate production in NE PA Continue to drive down costs in the SW and NE Drill additional Upper Devonian…
  14. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 14
    Marcellus Shale Has Best Economics 81% of Capital Budget Directed to Marcellus Internal Rate of Return (IRR) 60% 50% 40% Marcellus Challenges Even Oil Plays for ROR 30% 20% 10% 0% Source: Credit Suisse Research report *…
  15. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 15
    Higher Quality / Lower Cost Wells Driving Capital Efficiency Drillbit Reserve Replacement Increasing, While F&D Significantly Decreased Drillbit Replacement 900% 1.80 Drillbit Reserve Replacement, % 800% 1.60 700% 1.40…
  16. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 16
    Higher Quality Asset Base Producing More with Less Wells Since 2007, production has increased 52%, while well count has decreased more than 50% 14,000 13,000 Production 559 12,000 509 Production Mmcfe/day 11,000 Number…
  17. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 17
    2010 Reserve Walk Forward 42% Increase in Total Proved Reserves Bcfe Balance at December 31, 2009 3,129 Discoveries and extensions 1,410 Purchases 125 Revisions - performance 108 Revisions - pricing 40 Sales (189) Production…
  18. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 18
    Future Development Costs Per Mcfe Decreasing PUD Development Costs 1.90 1.80 1.77 1.73 1.71 PUD Development Costs /mcfe 1.70 1.60 1.50 1.40 1.29 1.30 1.22 1.20 1.10 1.00 2006 2007 2008 2009…
  19. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 19
    PUD Reserves Per Location Are Increasing Average Net Reserves Per PUD 3,500 3,000 2,874 2,500 Net Mmcfe per PUD 2,000 1,500 1,000 945 657 500 423 313 2006 2007 2008 2009 2010 20
  20. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 20
    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 2.0 21.9 9.2 4.6 1.0 (Tcfe) YE 2005 YE 2006 YE 2007 YE 2008 YE 2009…
  21. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 21
    Resource Potential Today Net Unproven Resource Area Resource Potential (Tcfe) Marcellus Shale 20 - 31 Upper Devonian Shale 10 - 14 Nora, Permian and Mid- 5-7 Continent TOTAL 35 - 52 22
  22. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 22
    Asset Sales Have Helped to Transformed the Asset Base Since 2004, Range has sold 870 million in non-core properties. Since 2007 property sales provided the second largest source of funding, behind cash flow. Sales of lower growth,…
  23. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 23
    Why Invest in Range Proven Track Record of Growth at Low Cost 32 consecutive quarters of production growth at low cost. 35% reserve and 13% production per share growth in 2010. 2010 Reserve and finding cost results demonstrate the…
  24. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 24
    Appendix 25
  25. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 25
    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,…
  26. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 26
    Hydraulic Fracturing Hydraulic Fracturing is a proven technology and a key to unlocking our nations growing 100-year supply of clean-burning natural gas. Fracturing fluids consist of 99.5- percent water and sand, the rest…
  27. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 27
    Hydraulic Fracturing Fluid by Volume 28
  28. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 28
    Devonian Shale in Appalachia In selecting the most prospective shales, several factors to consider are: Thickness; total carbon content; porosity; gas in place; natural fracturing; geological complexity; depth; bottom hole…
  29. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 29
    Marcellus Drilling Permits LEGEND NEW PERMITTED WELLS 30
  30. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 30
    Marcellus SW PA Core Area Drilling Permits Range Resources 139 producing horizontal wells Butler Armstrong As of 12/31/10 Best Range Well 10.8 Mmcfe/d Beaver (30 day) Indiana Cambria Allegheny Jefferson Westmoreland…
  31. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 31
    Marcellus NE PA Core Area Drilling Permits Range/Talisman - Tioga Area of Mutual Allegany Chemung Broom Allegany Steuben Allegany Interest Susquehanna Bradford Potter LEGEND Tioga NEW PERMITTED WELLS Sullivan Wyoming…
  32. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 32
    Marcellus Economics Fully Loaded Southwestern PA (wet gas case) EUR 5.0 Bcfe (Based on 95 wells in SW 150% PA) Drill and Complete Capital 4.0MM 130% F&D 0.94/mcfe (5.0 Bcfe) 110% 0.96/mcfe (5.0 Bcfe incl. land) 90% IRR (1)…
  33. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 33
    Wet Gas Provides Excellent Economics 5.00 NYMEX Henry Hub Wellhead Production 75.00 NYMEX WTI 1 mcf of Natural Gas Based on 9/09 Gas Quality(1) Assumes Cryogenic Only Natural Gas & NGLs Condensate Ethanes Production by…
  34. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 34
    Range Marcellus Shale Fracs Finding Optimum Length and Frac Stages Proppant, Water, Lateral Stages lbs. gallons Length, ft. 2006 923,000 2,225,000 3 1,794 2007 2,765,000 2,646,000 7 2,198 2008 3,418,000 3,127,000 8 2,495 2009…
  35. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 35
    Marcellus NGL Pricing Currently all ethanes are sold with the natural gas as additional Btus Realized Marcellus NGL Prices (2) Wt. Avg. Composite Barrel (1) Correlation to WTI WTI Oil Marcellus Price NGL Price % 19% 1Q 2009…
  36. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 36
    Well Performance Continues to Improve Marcellus Zero Time Plot by Well Type 4000 3500 3000 2010 Avg Gross Well Head Gas MCFD 2500 2009 Avg 2000 2008 Avg 1500 2007 Avg 2006 Avg 1000 500 0 1 51 101 151…
  37. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 37
    Premium Gas Price Plus 28% Liquids 10,000 1,000 5.0 BCFE type curve consists of 3.6 BCF gas* and 239 MBBLs of oil and natural gas liquids Gross BBLS/D Gross MCFD 1,000 100 Type Curve for a well with an average lateral…
  38. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 38
    Marcellus SW Resource Potential is 14 to 19 Tcfe Southwest resource potential of 14 to 19 Tcfe is comprised of 270 to 380 million barrels of liquids and 12.4 to 16.7 Tcf of gas. Range has 600,000 net acres in SW PA Reserves per…
  39. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 39
    Ranges Marcellus Shale Net Production 480 14 Anticipate 400-420 mmcfe/d by YE2011 440 12 400 360 10 Net MMCFD/ Net MMCFED 320 Net MBBLS/Day 280 212 mmcfe/d exit 8 rate at YE2010 240 200 6 160 4 120 80…
  40. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 40
    Additional Upside From Other Formations P FORMATION NAME A Y & DESCRIPTION Formation Area Status RHINESTREET SHALE Mixed organic & non-organic shale Rhinestreet / First well drilled Middlesex and completed. PA MIDDLESEX SHALE…
  41. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 41
    Current Infrastructure Facilities S.W. Pennsylvania Wet Gas Facilities Range entered into an agreement with MarkWest in 2008. Currently 185 Mmcf/d cryo capacity. Additional 165 Mmcf/day cryo capacity has been ordered, expected 1H…
  42. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 42
    Proposed Gross Capacity Additions MarkWest Liberty Processing Plants Proposed Gross Capacity Additions Capacity Committed to Range Houston, PA Majorsville, WV Third Parties Total (Mmcf/day) Volume Type Volume Type Volume Type…
  43. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 43
    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 Gathering Facilities Houston…
  44. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 44
    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…
  45. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 45
    The Mariner Project Mark West Liberty will modify the Houston and Majorsville plants to recover ethane MarkWest Liberty will construct a Sunoco 8 Sunoco 45-mile liquid ethane pipeline Pipeline Philadelphia Storage and Sunoco…
  46. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 46
    Ranges N.E. Pennsylvania Position Range has 250,000 net acres in the Northeastern Pennsylvania portion of the play Highest rate vertical well IP 6.3 Mmcfpd (24 hour rate) First 2 horizontal wells IP of 13.6 and 13.3 Mmcfpd (7 day…
  47. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 47
    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 TETCO 150 Mmcf/day by November 2012 Firm Sales 80 Mmcf/day during…
  48. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 48
    Marcellus Net Backs After Transportation El Paso NE Upgrade NY City Gate Less 1.70 Millennium NYMEX Plus 0.20 Tennessee 300 NYMEX Less 0.50 TCO Columbia Transco NYMEX Less 0.05 NYMEX Plus 0.05 TRANSMISSION…
  49. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 49
    Range Virginia Assets RANGE RESOURCES VIRGINIA ACREAGE POSITION Range Acreage Natural Gas Producing Area 350,000 gross acres Interest in over 3,000 producing wells 6,000+ additional wells to drill Nora Area F&D < 1.00 VA…
  50. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 50
    Nora Multiple Stacked Pays Old becomes New with advances in technology 1950 Lower Huron 1970 Berea (Tight Gas Sands) 1990 CBM 2010 Lower Huron (Horizontal) 51
  51. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 51
    Horizontal Oil Potential in West Texas & New Mexico 155 (118 net) locations Will spud first well early in 2011 (Wolfcamp Shale) on Powell Ranch Avalon/Bone Spring East Loving Upside in Penn Shale NM TX Powell Ranch 105,000…
  52. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 52
    Midcontinent Activity - Oklahoma Ardmore Basin Woodford OKLAHOMA 7,800 net acres Miss Chat 75% HBP 221 well locations EUR 1.3 mmboe/well Cost 4 million/well 98% IRR Marshall County Horizontal Miss/Chat Cana Woodford 15,000…
  53. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 53
    Midcontinent Activity Texas Panhandle Panhandle Granite Wash 91 Potential horizontal OKLAHOMA locations St. Louis 4 Granite wash tests in Granite Wash 2011 (2 vertical & 2 horizontal) Unrisked resource potential of 546 Bcfe…
  54. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 54
    2009 Breakeven Cost (mcfe) 2009 NYMEX Breakeven Analysis 18.00 16.00 14.00 Range 12.00 Resources 10.00 Median 8.10 8.00 6.00 4.00 2.00 0.00 Companies include (in alphabetical order): Atlas, Berry, Brigham,…
  55. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 55
    Strong Financial Position Strong, Simple Balance Sheet Bank debt, subordinated notes and common stock No bond maturity until 2015 Well Structured Bank Credit Facility 26 banks with no bank holding more than 5% of total Current…
  56. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 56
    Strong, Simple Balance Sheet Year-End Year-End Year-End Year-End March 31, June 30, Sept 30, 2006 2007 2008 2009 2010 2010 2010 ( in millions) Bank borrowings 452 304 693 324 354 475 165 Sr. Sub. Notes 597 847 1,098 1,384 1,384…
  57. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 57
    Debt Maturities Range maintains an even, manageable debt maturity profile 600 Pro forma for call of 200 million 500 500 2013 bonds and issuance of 500 million in bonds due 2020 in August. 400 ( Millions ) 300 300 250…
  58. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 58
    Ranges Outstanding Bonds Corporate Rating: BB / Ba2 Outlook: Stable Senior Subordinated Notes Amount Rating Current YTW 6.375% due 2015 150 BB / Ba3 5.61 % 7.5% due 2016 250 BB / Ba3 6.12 % 7.5% due 2017 250 BB / Ba3 6.11 %…
  59. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 59
    Range Financing History Cumulative Sources and Uses 10.0 9.5 9.0 8.5 Uses Sources 8.0 Acquisitions Debt 7.5 Capital Equity 7.0 6.5 Divestitures 6.0 ( Billions) Cash Flows 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5…
  60. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 60
    Hedging Status Hedges Insulate Cash Flow Gas Oil Average Average Average Average Volumes Floor Cap Volumes Floor Cap/Call Hedged Price Price Hedged Price Price (Mmbtu/day) (Bbls/day) 2011 Collars 408,200 5.56 6.48 - - -…
  61. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 61
    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…
  62. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 62
    Proved Reserve Profile Total Proved Reserves 4.4 Tcfe Proved Developed Appalachia Midcontinent Proved Undeveloped Southwest 51% 64% 29% 49% 7% As of 12/31/10 63
  63. Credit Suisse 2011 Group Energy Summit – Range Resources Corp – slide 63
    Consistent Reserve Growth (Bcfe) 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 2005 2006 2007 2008 2009 2010 Proved Developed Proved Undeveloped 64

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