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Q1 2011 Earnings Call – Range Resources Corp

Range Resources Corp · Apr 27, 2011 · 68 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. Q1 2011 Earnings Call – Range Resources Corp – slide 1
    Company Presentation April 2011
  2. Q1 2011 Earnings Call – Range Resources Corp – slide 2
    Range Resources Strategy Proven track record of performance following these principles Marcellus Shale 20 to 31 Tcfe resource potential Upper Devonian Shale 10 to 14 Tcfe resource potential Grow production and Utica Shale…
  3. Q1 2011 Earnings Call – Range Resources Corp – slide 3
    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…
  4. Q1 2011 Earnings Call – Range Resources Corp – slide 4
    Higher Quality / Lower Cost Wells Driving Capital Efficiency Drillbit Reserve Replacement Increasing, While F&D Significantly Decreased 900% 1.80 Drillbit Replacement Drillbit Reserve Replacement, % 800% 1.60 Drillbit…
  5. Q1 2011 Earnings Call – Range Resources Corp – slide 5
    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 20 0.8 15 0.6 10 0.4 5 2005 2006 2006 2008 2009 2010 2005 2006 2007 2008 2009 2010 2010…
  6. Q1 2011 Earnings Call – Range Resources Corp – slide 6
    2010 Reserve Walk Forward 25% increase in proved developed producing (PDP) reserves Bcfe Balance at December 31, 2009 3,129 Discoveries and extensions 1,410 Purchases 125 Revisions - performance 108 Revisions - pricing 40 Sales…
  7. Q1 2011 Earnings Call – Range Resources Corp – slide 7
    Seven Years of Double-Digit Production Growth Eight Consecutive Years of Production Growth Includes Impact of Asset Sales 700 25% - 30% Growth in 2012 600 10% Growth in 2011 500 (Includes effect of Barnett Sale) Mmcfe/d…
  8. Q1 2011 Earnings Call – Range Resources Corp – slide 8
    Higher Quality Asset Base Producing More with Less Wells Since 2007, production has increased 54%, while well count has decreased 43% 13,000 600 Production 550 12,000 500 11,000 450 Number of Wells 10,000 400…
  9. Q1 2011 Earnings Call – Range Resources Corp – slide 9
    Range Looking Forward Managing Cash Flow and Asset Sales to Reach Self-Funding Barnett Sale (900 million) and targeting additional 200 - 250 100-200 million of asset sales 500 400 Expected production growth of carryover 10%…
  10. Q1 2011 Earnings Call – Range Resources Corp – slide 10
    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…
  11. Q1 2011 Earnings Call – Range Resources Corp – slide 11
    Resource Potential Today Net Unproven Resource Resource Area Potential (Tcfe) Marcellus Shale 20 - 31 Upper Devonian Shale 10 - 14 Nora, Mid-Continent and Permian 5-7 TOTAL 35 - 52 Increased from 24 32 Tcfe at Year-end…
  12. Q1 2011 Earnings Call – Range Resources Corp – slide 12
    Marcellus Shale Has Best Economics 86% of 2011 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…
  13. Q1 2011 Earnings Call – Range Resources Corp – slide 13
    Marcellus Economics Fully Loaded Southwestern PA (wet gas case / 85 WTI) EUR 5.0 Bcfe (Based on 139 wells in SW PA) 170% Drill and Complete Capital 4.0MM 150% F&D 0.94/mcfe (5.0 Bcfe) 130% 0.96/mcfe (5.0 Bcfe incl. land)…
  14. Q1 2011 Earnings Call – Range Resources Corp – slide 14
    Wet Gas Provides Excellent Economics 4.00 NYMEX equates to 6.34 per one 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…
  15. Q1 2011 Earnings Call – Range Resources Corp – slide 15
    Well Performance Continues to Improve 4000 3500 Type Curve Gas Liquids (BCFE) (BCF) (MBBLS) 5.0 3.6 239 3000 4.5 3.2 214 Gross Well Head Gas MCFD 3.5 2.5 167 2500 2000 1500 1000 500 0 1 51 101 151 201…
  16. Q1 2011 Earnings Call – Range Resources Corp – slide 16
    Marcellus SW Resource Potential is 15 to 23 Tcfe Southwest resource potential of 15 to 23 Tcfe is comprised of 307 to 463 million barrels of liquids and 13.5 to 20.5 Tcf of gas. Range has 550,000 net acres in the SW part of the…
  17. Q1 2011 Earnings Call – Range Resources Corp – slide 17
    Ranges Marcellus Shale Net Production 650 600 Anticipate 600 Mmcfe/d by YE 2012 15 550 500 12 Anticipate 400 Mmcfe/d by YE 2011 450 Net MMCFD/ Net MMCFED Net MBBLS/Day 400 9 350 200+ Mmcfe/d exit rate at YE 2010…
  18. Q1 2011 Earnings Call – Range Resources Corp – slide 18
    Upper Devonian and Utica Shale Formation Current Status Upper Devonian Shales First 2 wells drilled and Rhinestreet / Middlesex completed. Average IP of 3.8 Genessee / Burkett Shales Mmcfe/d. Range drilled and completed the…
  19. Q1 2011 Earnings Call – Range Resources Corp – slide 19
    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…
  20. Q1 2011 Earnings Call – Range Resources Corp – slide 20
    Why Invest in Range Proven Track Record of Growth at Low Cost 33 consecutive quarters of production growth at low cost. 32% reserve and 12% production per share debt-adjusted growth in 2010. 2010 reserve and finding cost results…
  21. Q1 2011 Earnings Call – Range Resources Corp – slide 21
    Appendix 22
  22. Q1 2011 Earnings Call – Range Resources Corp – slide 22
    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,…
  23. Q1 2011 Earnings Call – Range Resources Corp – slide 23
    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 99.9% water and sand, the rest consists of…
  24. Q1 2011 Earnings Call – Range Resources Corp – slide 24
    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…
  25. Q1 2011 Earnings Call – Range Resources Corp – slide 25
    Hydraulic Fracturing Fluid by Volume Composition of Hydraulic Fracture Fluid (by volume) HCL Acid .01% Scale Inhibitor .01% Sand 5.85% Chemical Water Additives 0.10% 94.05% Friction Reducer .05% Antimicrobial .03%…
  26. Q1 2011 Earnings Call – Range Resources Corp – slide 26
    How Water Usage Stacks Up At a drilling rate of double the expected peak of 6,000 wells per year, industry water usage still represents less than 1% of Pennsylvania daily water usage ( At current drilling level ) Source:…
  27. Q1 2011 Earnings Call – Range Resources Corp – slide 27
    Marcellus Drilling Permits LegendLEGEND NEW PERMITTED WELLS New Permitted Wells RANGE Wet Gas ANADARKO ATLAS CABOT CHESAPEAKE CHIEF/AB CNX EAST/SHELL EOG EQT FORTUNA/TAILSMAN TURM ULTRA XTO/EXXON OTHERS 28
  28. Q1 2011 Earnings Call – Range Resources Corp – slide 28
    Marcellus SW PA Core Area Drilling Permits Butler Armstrong Range Resources As of 12/31/10 139 producing horizontal wells Beaver Indiana Cambria Allegheny Jefferson Westmoreland LegendLEGEND NEW NewPERMITTED WELLS Permitted…
  29. Q1 2011 Earnings Call – Range Resources Corp – slide 29
    Marcellus NE PA Core Area Drilling Permits Range/Talisman - Tioga Chemung Broom Area of Mutual Allegany Steuben Interest Bradford Susquehanna Potter Tioga LegendLEGEND NEW New PERMITTED WELLS Permitted Wells Sullivan…
  30. Q1 2011 Earnings Call – Range Resources Corp – slide 30
    Premium Gas Price Plus 28% Liquids 10000 1000 5.0 BCFE type curve consists of 3.6 BCF gas* and 239 MBBLs of oil and natural gas liquids Gross BBLS/D Gross MCF/D 1000 100 Type Curve for a well with an average lateral…
  31. Q1 2011 Earnings Call – Range Resources Corp – slide 31
    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…
  32. Q1 2011 Earnings Call – Range Resources Corp – slide 32
    Marcellus NGL Pricing Currently all ethane sold with the natural gas as additional Btus Realized Marcellus NGL Prices (2) Wt. Avg. Composite Barrel (1) Marcellus NGL as % WTI Oil Price NGL Price of WTI 1Q 2009 43.20 24.20 56% 2Q…
  33. Q1 2011 Earnings Call – Range Resources Corp – slide 33
    Marcellus Shale Has Best Economics Estimated Gas Price Required for 10% IRR 7.00 6.00 5.00 NYMEX 4.00 3.00 2.00 Source: Morgan Stanley Research Report January 2011 34
  34. Q1 2011 Earnings Call – Range Resources Corp – slide 34
    Marcellus Well Costs Based upon 3,000 foot lateral, 10 stage frac and 6 well pad in development stage in SW PA Site Preparation(1) 270,000 Drilling 1,300,000 Tubulars 330,000 Facilities 250,000 Completion Operations (2)…
  35. Q1 2011 Earnings Call – Range Resources Corp – slide 35
    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…
  36. Q1 2011 Earnings Call – Range Resources Corp – slide 36
    Utica Shale Three Areas of Focus 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 / Retrograde Condensate Dry Gas…
  37. Q1 2011 Earnings Call – Range Resources Corp – slide 37
    Current Infrastructure Facilities SW 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…
  38. Q1 2011 Earnings Call – Range Resources Corp – slide 38
    Proposed Gross Capacity Additions MarkWest Liberty Processing Plants Proposed Gross Capacity Additions Installed by MarkWest Liberty Processing Capacity Committed to Range Houston, PA Majorsville, WV Third Parties Total (Mmcf/day)…
  39. Q1 2011 Earnings Call – Range Resources Corp – slide 39
    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…
  40. Q1 2011 Earnings Call – Range Resources Corp – slide 40
    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…
  41. Q1 2011 Earnings Call – Range Resources Corp – slide 41
    The Mariner Project West & East Mariner West Sarnia, Ontario New Connection to Mariner West to Sarnia Targeted service by 4Q2012 25 mile 8 pipe to existing Sunoco Logistics Sunoco pipeline Existing Pipeline Sunoco Philadelphia…
  42. Q1 2011 Earnings Call – Range Resources Corp – slide 42
    Ranges NE Pennsylvania Position Range has 240,000 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…
  43. Q1 2011 Earnings Call – Range Resources Corp – slide 43
    Lycoming County Developments First 5 wells on production in mid- February at a seven day average rate of 45 Mmcf/d 9 wells waiting on completion 4 wells waiting on pipeline 3 rigs running, adding one additional rig in April…
  44. Q1 2011 Earnings Call – Range Resources Corp – slide 44
    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…
  45. Q1 2011 Earnings Call – Range Resources Corp – slide 45
    Marcellus Net Backs After Transportation Millennium El Paso NE Upgrade NYMEX Plus 0.20 NY City Gate Less 1.70 Tennessee 300 NYMEX Less 0.50 TCO Columbia NYMEX Less 0.10 Transco NYMEX Plus 0.05 TRANSMISSION PIPELINES…
  46. Q1 2011 Earnings Call – Range Resources Corp – slide 46
    Range Virginia Assets RANGE RESOURCES VIRGINIA ACREAGE POSITION Range Acreage Natural Gas Producing Area Nora Area 350,000 gross acres Interest in over 3,000 producing wells KY VA WVA 6,000+ additional wells to drill…
  47. Q1 2011 Earnings Call – Range Resources Corp – slide 47
    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) 48
  48. Q1 2011 Earnings Call – Range Resources Corp – slide 48
    Horizontal Oil Potential in West Texas 155 (118 net) locations in Wolfcamp Upside in Penn Shale First well drilling in Penn Shale 105,000 acres in Powell Ranch, Conger and East Loving Powell Ranch Conger All acreage is…
  49. Q1 2011 Earnings Call – Range Resources Corp – slide 49
    Midcontinent Resource Potential OKLAHOMA Miss Chat St. Louis TEXAS Major Hansford Ochiltree Lipscomb Hutchison Roberts Blaine Hemphill Canadian Wheeler Carson Gray Caddo Cana Woodford Granite Wash Ardmore Basin…
  50. Q1 2011 Earnings Call – Range Resources Corp – slide 50
    Midcontinent Activity - Oklahoma Ardmore Basin Woodford OKLAHOMA 8,400 net acres Miss Chat 75% HBP 220 well locations EUR 1.3 mmboe/well Cost 4 million/well Major 98% IRR Resource potential 400-600 Blaine Bcfe net Horizontal…
  51. Q1 2011 Earnings Call – Range Resources Corp – slide 51
    Midcontinent Activity Texas Panhandle Panhandle Granite Wash 140 potential horizontal OKLAHOMA locations St. Louis 3 Granite Wash tests in 2011 (3 vertical) Hansford Ochiltree Lipscomb Unrisked resource potential of 300-400 Bcfe…
  52. Q1 2011 Earnings Call – Range Resources Corp – slide 52
    Strong Financial Position Strong, Simple Balance Sheet Bank debt, subordinated notes and common stock No debt maturity until 2015 Well Structured Bank Credit Facility 27 banks with no bank holding more than 7% of total Current…
  53. Q1 2011 Earnings Call – Range Resources Corp – slide 53
    2010 Breakeven Cost (mcfe) 2010 NYMEX Breakeven Analysis 25.00 20.00 Range 15.00 Resources 10.00 Median 8.40 5.00 0.00 Antero Resources, ATP Oil & Gas, Berry Petroleum, Bill Barrett Corp., BreitBurn Energy,…
  54. Q1 2011 Earnings Call – Range Resources Corp – slide 54
    Unit Costs Are a Key Focus 5.00 /mcfe 4.00 3.00 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 0.17…
  55. Q1 2011 Earnings Call – Range Resources Corp – slide 55
    Margins are Tightening 7.00 6.00 5.00 4.00 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 5.24 Cash Costs 2.19 2.39 2.58 2.27 2.19 2.09 Cash Margin 4.60 5.64 6.00 4.59 3.14 3.15…
  56. Q1 2011 Earnings Call – Range Resources Corp – slide 56
    Strong, Simple Balance Sheet Year- Year-End Year-End Year-End Year-End 1st Qtr End 2007 2008 2009 2010 2011 2006 ( in millions) Bank borrowings 452 304 693 324 274 480 Sr. Sub. Notes 597 847 1,098 1,384 1,686 1,687 Less: Cash…
  57. Q1 2011 Earnings Call – Range Resources Corp – slide 57
    Debt Maturities Range maintains an even, manageable debt maturity profile 600 Revolver (As of 3/31/2011) 500 500 400 ( Millions ) 300 300 250 250 250 200 150 100 - - - - - 0 Senior Secured Revolving Credit…
  58. Q1 2011 Earnings Call – 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 5.52 % 7.5% due 2016 250 BB / Ba3 6.09 % 7.5% due 2017 250 BB / Ba3 5.80 %…
  59. Q1 2011 Earnings Call – Range Resources Corp – slide 59
    Range Financing History Cumulative Sources and Uses 10.0 9.0 Uses Sources 8.0 Acquisitions Debt Capital Equity 7.0 Divestitures 6.0 ( Billions) Cash Flows 5.0 4.0 3.0 2.0 1.0 0.0 2004 2005 2006 2007 2008…
  60. Q1 2011 Earnings Call – Range Resources Corp – slide 60
    Gas Hedging Status Hedges Insulate Cash Flow Average Average Volumes Floor Cap Premium Hedged Price Price Paid (Mmbtu / day) ( / Mmbtu) 2Q2011 Collars (a) 408,200 5.56 6.48 (0.33) 3Q2011 Collars (a) 408,200 5.56 6.48 (0.33)…
  61. Q1 2011 Earnings Call – Range Resources Corp – slide 61
    Oil and Natural Gas Liquids Hedging Status Hedges Insulate Cash Flow Oil NGLs Average Average Average Average Volumes Floor Cap Premiums Volumes Floor Cap Hedged Price Price Received Hedged Price Price (Bbls/day) ( / Bbl)…
  62. Q1 2011 Earnings Call – Range Resources Corp – slide 62
    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…
  63. Q1 2011 Earnings Call – Range Resources Corp – slide 63
    2011 Capital Budget (1) 2011 budget funded by cash flow and asset sales Budget = 1.38 Billion Budget by Area Drilling Pipelines, Facilities & Other Marcellus Midcontinent Acreage & Seismic Southwest Appalachia/Nora 79% 86%…
  64. Q1 2011 Earnings Call – Range Resources Corp – slide 64
    Proved Reserve Profile Total Proved Reserves 4.4 Tcfe Proved Developed Appalachia Proved Undeveloped Southwest 64% 51% 49% 36% As of 12/31/10 65
  65. Q1 2011 Earnings Call – Range Resources Corp – slide 65
    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 66
  66. Q1 2011 Earnings Call – Range Resources Corp – slide 66
    Future Development Costs Per Mcfe Decreasing PUD Development Costs 1.90 Number of PUDs decreased by 1.80 1.77 40% in 2010 PUD development cost per PUD Development Costs /mcfe 1.73 1.71 1.70 mcfe has declined rapidly…
  67. Q1 2011 Earnings Call – Range Resources Corp – slide 67
    PUD Annual Reserves Added Per Location Are Increasing Average Net Reserves Per PUD 3,500 Added fewer PUDs in 2010 than previous 4 years 3,000 2,874 Reserves per PUD up significantly in 2010 due to increased Marcellus focus…
  68. Q1 2011 Earnings Call – Range Resources Corp – slide 68
    Contact Information Range Resources Corporation 100 Throckmorton, Suite 1200 Fort Worth, Texas 76102 Main: 817.870.2601 Fax: 817.870.2316 Rodney Waller, SVP rwallerrangeresources.com David Amend, Investor Relations Manager…

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