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Q2 2010 Earnings Call – Range Resources Corp

Range Resources Corp · Jul 27, 2010 · 71 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. Q2 2010 Earnings Call – Range Resources Corp – slide 1
    Company Presentation August 2010 Range Resources Corporation Company Presentation l June 2010 l 1
  2. Q2 2010 Earnings Call – Range Resources Corp – slide 2
    Range Resources Overview Marcellus Shale 20 to 27 Tcfe resource potential Market Cap 6.5 billion Reserve Base (1) 3.1 Tcfe 84% natural gas 19 year reserve life Appalachia Operations 3 core operating areas Southwest 23 rigs…
  3. Q2 2010 Earnings Call – Range Resources Corp – slide 3
    2010 Business Plan Focus on continued development in Marcellus where rates of return are still attractive 81% of capital focused in Marcellus Continue infrastructure build out with midstream partners for 2011- 2012 growth Target…
  4. Q2 2010 Earnings Call – Range Resources Corp – slide 4
    Consistent Growth 7 Consecutive Years of Production Growth 640 610 Not less than 25% Growth 580 Target for 2011 550 520 490 14% Growth Target 460 f 2010 (1) for 430 400 370 340 310 280 250 220 190 160 130 2003 2004 2005 2006 2007…
  5. Q2 2010 Earnings Call – Range Resources Corp – slide 5
    Range is Getting Bigger, But Also Getting Better Range is growing production and reserves at low cost by focusing its capital on its lower cost, higher return plays At the same time,, Range g is selling g its more mature non-core…
  6. Q2 2010 Earnings Call – Range Resources Corp – slide 6
    High-Grading the 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 11,000 ay uction Mmcfe/da 459…
  7. Q2 2010 Earnings Call – Range Resources Corp – slide 7
    Lease Operating Costs are Reflecting Our Higher Quality Asset Base 1.10 1 00 1.00 0.90 mcfe 0.80 /m 0.70 0.60 0.50 0.40 2007 2008 2009 2010E 2011E Unit lease operating costs are decreasing due to: Selling…
  8. Q2 2010 Earnings Call – Range Resources Corp – slide 8
    Growth at Low Cost D illbit R Drillbit Reserve R Replacement l t IIncreasing, i Whil While F&D Significantly Si ifi tl Decreased D d 600% 1.80 Drillbit Replacement 550% Drillbitt Reserve Replacement, % 1.60 500%…
  9. Q2 2010 Earnings Call – Range Resources Corp – slide 9
    High Quality Asset Base + Low Cost Structure Generates Significant Free Cash Flow G Growth th Capex C (Percentage (P t off remaining i i cash h flow fl available il bl to d ti )(1) t grow production) (1) Maintenance Capex…
  10. Q2 2010 Earnings Call – Range Resources Corp – slide 10
    Ranges Reserve Base and Upside are Growing (Tcfe) YE 2005 YE 2006 YE 2007 YE 2008 YE 2009 Proved Reserves 1.4 1.8 2.2 2.7 3.1 Resource Potential (1) 3.4 - 4.6 6.7 - 9.2 16.2 - 21.9 20.5 - 28.2 24.0 31.7 Proved reserves have…
  11. Q2 2010 Earnings Call – Range Resources Corp – slide 11
    Not Just Growing Production and Reserves Range is focused on PER SHARE GROWTH 1.2 25 1.0 20 0.8 15 0.6 10 0.4 5 2005 2006 2007 2008 2009 2005 2006 2007 2008 2009 Production/share debt adjusted Reserves/share debt…
  12. Q2 2010 Earnings Call – Range Resources Corp – slide 12
    Marcellus Shale 20 to 27 Tcfe Potential Range discovered the Marcellus Shale Completed C l t d the th first fi t commercial i l Marcellus Shale well in 2004 1.3 million acres prospective for Marcellus 900,000 net acres in the…
  13. Q2 2010 Earnings Call – Range Resources Corp – slide 13
    Ranges Marcellus Shale Net Production 440 Anticipate 400-420 400 Mmcfe/d Anticipate p by YE 2011 360 200-210 Mmcfe/d 320 exit rate by YE2010 280 Mmcfe/d d 240 200 160 120 80 Actual Projected 40 0 Dec-06 Jun-07…
  14. Q2 2010 Earnings Call – Range Resources Corp – slide 14
    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…
  15. Q2 2010 Earnings Call – Range Resources Corp – slide 15
    Wet Gas Provides Excellent Economics 5.00 NYMEX Henry Hub 75.00 NYMEX WTI Wellhead Production Based on 9/09 Gas Quality* 1 mcf of Natural Gas Assumes Cryogenic Only Natural Gas NGLs Condensate Production by product .900 mcf 2.450…
  16. Q2 2010 Earnings Call – Range Resources Corp – slide 16
    Marcellus NGL Pricing Wt. Avg Composite Barrel (1) Realized Marcellus NGL Prices (2) Correlation to WTI WTI Oil Marcellus % Price NGL Price 19% 1Q 2009 43.20 24.20 56% 2Q 2009 59.77 27.25 46% 56% 18% 3Q 2009 68.18 31.91 47%…
  17. Q2 2010 Earnings Call – Range Resources Corp – slide 17
    Range Marcellus Shale Fracs Bigger Jobs and Lower Costs Better Well Results 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…
  18. Q2 2010 Earnings Call – Range Resources Corp – slide 18
    Marcellus Zero Time Plot by Well Type as of June 30, 2010 4000 3500 3000 2009/2010 Long Laterals MCFD 2500 Gross Well Head Gas M 2009 Short Laterals 2000 2008 Avg 1500 2007 Avg A 2006 Avg 1000 500…
  19. Q2 2010 Earnings Call – Range Resources Corp – slide 19
    Excellent Economics at Low Cost 10 000 10,000 Gross EUR Well Costs Royalty F&D Cost ROR (Bcfe) (millions) (per mcfe) (6 NYMEX) 5.0 4.0 15% 0.94 100% FED Gross MCF 1,000 100 10 12 14 16 18 20 22 24…
  20. Q2 2010 Earnings Call – Range Resources Corp – slide 20
    Marcellus Shale Well Economics Wet Gas Case Southwestern Pennsylvania (wet 130% gas case) 120% EUR 4.5 45B Bcfe f and d55.0 0BBcfe f 110% 100% Capital 4.0MM 90% RR (1) F&D 1.05/mcfe (4.5 Bcfe) 80% 70% IR…
  21. Q2 2010 Earnings Call – Range Resources Corp – slide 21
    Current Infrastructure Facilities S.W. Pennsylvania Wet Gas Facilities Range entered into an agreement with MarkWest in 2008 Currently 155 Mmcf/d cryo capacity, additional 30 Mmcf/d to be added 3Q 2010 Additional 165 Mmcf/day…
  22. Q2 2010 Earnings Call – Range Resources Corp – slide 22
    Wheres the Best Place to Drill for Natural Gas in North America Today Marcellus Economics Appear to be the Best in North America Ross Smith study dated September 4, 4 2009 The The core of the Marcellus should offer a better…
  23. Q2 2010 Earnings Call – Range Resources Corp – slide 23
    Ranges N.E. Pennsylvania Position Range has 300,000 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…
  24. Q2 2010 Earnings Call – Range Resources Corp – slide 24
    Marcellus Shale Acreage Per Share 90% in PA 33% in PA and basic shares 10.00 25% in PA 1,600 9.00 1,400 8.00 1,200 cres 7.00 6.00 1,000 Net Ac es per thousa 5.00 800 4.00 600 3.00 400 2.00 1.00 200 Net…
  25. Q2 2010 Earnings Call – Range Resources Corp – slide 25
    Hydraulic Fracturing Hydraulic Fracturing is a proven technology and a key to unlocking l ki our nations i growing i 100-year supply of clean-burning natural gas. Fracturing g fluids consist of 99.5- percent water and sand,…
  26. Q2 2010 Earnings Call – Range Resources Corp – slide 26
    Hydraulic Fracturing Fluid by Volume Range Resources Corporation Company Presentation l July 2010 l 26
  27. Q2 2010 Earnings Call – Range Resources Corp – slide 27
    Hydraulic Fracturing Mixture Range Resources Marcellus Shale Hydraulic Fracturing Completions Listing Individual wells may vary slightly based on geologic and other conditions Overall Component Compounds Purpose Use and Dilution…
  28. Q2 2010 Earnings Call – Range Resources Corp – slide 28
    Nora Area in Virginia 350,000 acres Over 2,600 producing CBM & tight gas wells 7,000+ additional wells to drill in stacked pay areas F&D 0.88/mcfe LOE 0.60/mcfe Significant unbooked resource potential Nora Area VA…
  29. Q2 2010 Earnings Call – Range Resources Corp – slide 29
    Nora Area Multiple Horizon Potential Range Resources Corporation Company Presentation l July 2010 l 29
  30. Q2 2010 Earnings Call – Range Resources Corp – slide 30
    Nora Vertical Well Economics CBM Tight Gas 80% EUR - 350 Mmcf 450 Mmcf 70% Capital - 340,000 500,000 60% F&D - 0.88 0.99 50% IRR 40% 30% NYMEX Price/Rate of Return 20% CBM Tight Gas 10% 4.00 - 24% 26% 0% 4.00 5.00 6.00…
  31. Q2 2010 Earnings Call – Range Resources Corp – slide 31
    Nora Field Successful Drilling Confirms Huron Shale Potential Resource potential up to 1.5 1 5 Tcfe net to Range Reserves of 1.0 Bcf for Dev. D&C of 1.2 million = F&D of 1.15/mcf 23 Drilled/Drilling Shale Wells 4 Drilled Berea…
  32. Q2 2010 Earnings Call – Range Resources Corp – slide 32
    Nora Area Production Growth 70,000 65,000 60,000 55,000 50,000 EQT Acquisition Mcfe/day 45,000 40,000 35 000 35,000 M 30,000 25,000 20,000 15,000 10 000 10,000 5,000 - 1//1/2003 7//1/2003 1//1/2004…
  33. Q2 2010 Earnings Call – Range Resources Corp – slide 33
    Nora Nora Extension Extension Acquisition Acquisition Area Area Acreage g acquired q in center of giant gas accumulation Acreage developed on wide spacing Strong economics KY WVA NORA EXTENSION BUCHANAN COUNTY VA…
  34. Q2 2010 Earnings Call – Range Resources Corp – slide 34
    Nora Extension Acquisition Summary 135 MM purchase price 10 Mmcfe/d net production 115,000 acres 125 Bcf proved reserves 800 Bcf upside potential Contiguous to and partially overlaps Nora acreage with similar stacked…
  35. Q2 2010 Earnings Call – Range Resources Corp – slide 35
    Nora Extension Acquisition Upside Potential 800 BCF Unproved Reserves 1,300 Drilling locations Multiple drilling targets CBM, Devonian Shale, Big Lime, Berea & Weir S Significant g ca t be behind d pipe p pe potential…
  36. Q2 2010 Earnings Call – Range Resources Corp – slide 36
    Barnett 1.3 Tcf Unbooked Potential Drilling focused in core area 1-2 1 2 rigs running for balance of year; expect to maintain production Over 900 locations to drill in the core, with minimal drilling obligations Range…
  37. Q2 2010 Earnings Call – Range Resources Corp – slide 37
    Barnett Shale Well Economics Core area Tarrant, Denton, 80% Johnson and NW Ellis Counties 70% EUR 3.0 Bcf 60% 50% Capital 2.6MM RR IR 40% F&D 1.14/mcfe 30% NYMEX Price/Rate of return 20% 10% 4.00 - 23% 0% 5.00 - 32%…
  38. Q2 2010 Earnings Call – Range Resources Corp – slide 38
    Shale Plays in General Core vs. Non-Core L Location ti off Acreage A is i Key K to t Shale Sh l Economics E i Barnett Shale Gas Play Wid Wide distribution di t ib ti off well ll results from core vs. non- core…
  39. Q2 2010 Earnings Call – Range Resources Corp – slide 39
    Why Invest in Range Proven Track Record of Growth 30 consecutive quarters of production growth at low cost 18% CAGR reserves and 10% CAGR production per share growth High Return Projects Even in Low Price Environment Nora and…
  40. Q2 2010 Earnings Call – Range Resources Corp – slide 40
    Appendix Range Resources Corporation Company Presentation l July 2010 l 41
  41. Q2 2010 Earnings Call – Range Resources Corp – slide 41
    Range is a Founding Member of ANGA ANGA Mi ANGAs Mission i America s Natural Gas Alliance (ANGA) exists to pursue a single mission: to increase Americas appreciation for the environmental, economic and national security benefits of…
  42. Q2 2010 Earnings Call – Range Resources Corp – slide 42
    Appalachian Basin Overview LAKE O LAKE ONTARIO MICHIGAN HURON Largest onshore basin in the U.S. ONTARIO NEW YORK by aerial extent E R IE LA KE Much of the basin remains unexploited PENNSYLVANIA Large L untapped t d…
  43. Q2 2010 Earnings Call – Range Resources Corp – slide 43
    Devonian Shale in Appalachia In selecting the most prospective shales, you need to consider: Thickness; total carbon content; porosity; gas in place; natural fracturing; geological complexity; depth; bottom hole pressure; thermal…
  44. Q2 2010 Earnings Call – Range Resources Corp – slide 44
    Marcellus Drilling Permits Legend Wet Gas New Permitted Wells Wet Gas Area RANGE ANADARKO ATLAS CABOT CHESAPEAKE CHIEF/AB CNX EAST EOG OG EQT FORTUNA TURM ULTRA XTO/EXXON OTHERS Range Resources Corporation…
  45. Q2 2010 Earnings Call – Range Resources Corp – slide 45
    Marcellus SW PA Core Area Drilling Permits Rangeg Resources Rex Energy Atlas 10 horizontals Drilled 46 horizontal wells 4 vertical, 1 horizontal 3-10 Mmcfe/d and 75 vertical wells 2.4 Mmcfe/d (90 day) 150+ verticals Best Range Well…
  46. Q2 2010 Earnings Call – Range Resources Corp – slide 46
    Marcellus NE PA Core Area Drilling Permits National Fuel Gas Fortuna EOG Resources Cabot Oil & Gas Ultra / East 3 wells averaging 10 wells producing Drilled 2 horizontals Drilled 20 verticals Resources 6.7 Mmcfe/d 30+ Mmcf/d…
  47. Q2 2010 Earnings Call – Range Resources Corp – slide 47
    Additional Upside From Other Formations P FORMATION NAME A Y & DESCRIPTION RHINESTREET SHALE Mixed organic & non-organic shale Formation Area Status Rhinestreet / First well drilled MIDDLESEX SHALE Mixed organic &…
  48. Q2 2010 Earnings Call – Range Resources Corp – slide 48
    Proposed Gross Capacity Additions Installed by MarkWest Liberty Processing MarkWest Liberty Processing Plants Proposed Gross Capacity Additions Capacity Committed to Range Houston, PA Majorsville, WV Third Parties Total (Mmcf/day)…
  49. Q2 2010 Earnings Call – Range Resources Corp – slide 49
    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…
  50. Q2 2010 Earnings Call – Range Resources Corp – slide 50
    Strong Market for Marcellus NGLs Winter Propane Market vs MarkWest Production Summer Summer Propane Market Propane Market vs.vs MarkWest MarkWest Production Production Bbls/d Winter Propane Market vs. MarkWest Production Bbls/d…
  51. Q2 2010 Earnings Call – Range Resources Corp – slide 51
    Marcellus Area Pipelines Great Take-Away Capacity; Premium Pricing Firm Transport TCO 200 Mmcf/day TETCO 120 Mmcf/day by April 2011 TETCO 150 Mmcf/day by November 2012 Columbia Gas Transmission/Columbia Gulf Marcellus Fairway…
  52. Q2 2010 Earnings Call – Range Resources Corp – slide 52
    Marcellus Well Costs Based upon 3,000 foot lateral, 10 stage frac and 6 well pad Site Preparation(1) 270,000 Drilling 1,300,000 T b lars Tubulars 330 000 330,000 Facilities 250,000 Completion Operations (2) 1,850,000…
  53. Q2 2010 Earnings Call – Range Resources Corp – slide 53
    Cost Cutting and Well Optimization 2007 Average initial test rate 2.4 Mmcfe/d Average Completion Costs 3.1 MM 2008 Average initial test rate 3.6 Mmcfe/d Average Completion Costs 2 2.6 6 MM 2009 Average initial test rate 5.1…
  54. Q2 2010 Earnings Call – Range Resources Corp – slide 54
    Operations Update Lower Cost Marcellus is no longer a frontier area Competition is increasing and driving down cost 2 to 3 times the number of vendors over 2008 Operations Efficiencies 24 hour completions operations enable…
  55. Q2 2010 Earnings Call – Range Resources Corp – slide 55
    Custom Built Rigs (APEX Series Rigs) Designed specifically for Marcellus drilling in Appalachia Well suited for pad-site drilling S State-of-the-art f h technology h l Faster mobilization / demobilization Lower cost with less…
  56. Q2 2010 Earnings Call – Range Resources Corp – slide 56
    How Water Usage Stacks Up 5,930 6,000 s per Day At a drilling rate of double the 5,000 expected peak of 6,000 wells per year, industry water usage 4,000 still represents less than 1% of Pennsylvania daily water usage of…
  57. Q2 2010 Earnings Call – Range Resources Corp – slide 57
    Low F&D / High ROR 4 Bcf for 2.4 million cost 3,100 acres 30 wells drilled 19 wells to be drilled on 500 p foot spacingg 48 wells to be drilled on 250 foot spacing Recent well completed approximately 3 miles south IP averaged…
  58. Q2 2010 Earnings Call – Range Resources Corp – slide 58
    Strong Financial Position Strong, Simple Balance Sheet Bank debt, subordinated notes and common stock No debt matures until 2012 for bank debt and beginning 2013 for subordinated notes Well Structured Bank Credit Facility 26…
  59. Q2 2010 Earnings Call – Range Resources Corp – slide 59
    Growth at Low Cost Top quartile growth at top quartile cost 3 Year 5 Year 2005 2006 2007 2008 2009 (4) Average Average Reserve growth 20% 25% 27% 19% 18% 21% 22% Drillbit replacement (1) 235% 367% 400% 386% 540% 449% 404% All…
  60. Q2 2010 Earnings Call – Range Resources Corp – slide 60
    2009 Breakeven Cost (mcfe) Bank of America 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,…
  61. Q2 2010 Earnings Call – Range Resources Corp – slide 61
    Unit Costs Are a Key Focus 5 00 5.00 /mcfe 4.00 3.00 2.00 1.00 0.00 2006 2007 2008 2009 2010E Reserve Rep (1) 1.45 1.59 1.64 1.25 1.00 LOE 0.90 0.93 1.01 0.84 0.66 Prod. taxes 0.37 0.36 0.39 0.20 0.20 G&A (2) 0.35…
  62. Q2 2010 Earnings Call – Range Resources Corp – slide 62
    Margins are Tightening 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 2006 2007 2008 2009 2010E Realized Prices 6.79 8.03 8.58 6.86 5.30 Cash Costs 2.19 2.39 2.59 2.29 2.14 Cash Margin 4.60 5.64 5.99 4.57 3.16 Reserve Rep. (1)…
  63. Q2 2010 Earnings Call – Range Resources Corp – slide 63
    Full Cycle Return on Investment Range ROI should R h ld improve i substantially b t ti ll as Marcellus M ll results become a larger percentage of historical company results 180% 160% 140% 5 Year Average ROI 120% 100%…
  64. Q2 2010 Earnings Call – Range Resources Corp – slide 64
    Strong, Simple Balance Sheet Year-End Year-End Year-End Year-End March 31, June 30, 2006 2007 2008 2009 2010 2010 ( in millions) Bank borrowings 452 304 693 324 354 475 Sr. Sub. Notes 597 847 1,098 1,384 1,384 1,385 Less: Cash (2)…
  65. Q2 2010 Earnings Call – Range Resources Corp – slide 65
    Ranges Outstanding Bonds Corporate Rating: BB / Ba2 Outlook: Stable Senior Subordinated Notes Amount Rating Current YTW 7.375% due 2013 200 BB / Ba3 6.104% 6.375% due 2015 150 BB / Ba3 6.183% 7.5% due 2016 250 BB / Ba3 6.717%…
  66. Q2 2010 Earnings Call – Range Resources Corp – slide 66
    Debt Maturities Range maintains an even even, manageable debt maturity profile Revolver 400 350 Net Revolver 300 300 ( Millions ) 250 250 250 250 200 200 150 150 100 50 - - - - Senior Secured Revolving…
  67. Q2 2010 Earnings Call – Range Resources Corp – slide 67
    Range Financing History Sources and Uses 8 0 8.0 2010 Forecast 7.5 7.0 6.5 Cum Cash Flow + Growth (Equity, Debt) 6 0 6.0 Cum. Cash Flow (Includes Divestiture Proceeds) 5.5 Marcellus Growth: Equity acreage 5.0 Billions)…
  68. Q2 2010 Earnings Call – Range Resources Corp – slide 68
    Hedging Status Hedges Insulate Cashflow G Gas Oil Average Average Average Average Volumes Floor Ceiling Volumes Floor Ceiling Hedged Price Price Hedged Price Price (Mmbtu/day) (Bbls/day) 3Q2010 Collars 315,000 5.55 7.19 1,000…
  69. Q2 2010 Earnings Call – Range Resources Corp – slide 69
    2010 Capital Budget (1) Budget = 1.2 Billion Budget by Area Drilling & Recompletion Pipelines, Facilities & Other Marcellus Midcontinent Acreage & Seismic Southwest Appalachia/Nora 73% 77% 81% 11% 8% 5% 5% 5% 7% 22%…
  70. Q2 2010 Earnings Call – Range Resources Corp – slide 70
    Proved Reserve Profile Total Proved Reserves 3.1 Tcfe Proved Developed p Appalachia pp Midcontinent Proved Undeveloped Southwest 58% 45% 34% 55% 8% As of 12/31/09 Range Resources Corporation Company…
  71. Q2 2010 Earnings Call – Range Resources Corp – slide 71
    Consistent Reserve Growth (Bcfe) 3,500 3,000 2,500 2 000 2,000 1,500 1,000 500 0 2005 2006 2007 2008 2009 Proved Developed Proved Undeveloped Range Resources Corporation Company Presentation l July 2010 l 72

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