RANGE RESOURCES CORPORATION (NYSE: RRC)
today announced a 2020 capital budget of $520 million, which is
expected to maintain daily production at approximately 2.3
Bcfe. Additionally, Range announced that year-end 2019
reserves increased to 18.2 Tcfe.
Highlights –
- All-in 2020 capital budget of $520 million maintains production
at ~2.3 Bcfe per day
- Similar inventory of drilled uncompleted lateral footage
expected at year-end 2020 as year-end 2019, supporting the option
of a similar capital program in 2021 and beyond
- Well costs expected to average less than $625 per lateral foot
in 2020
- 2019 capital spending is currently estimated to be $728
million, approximately $28 million less than the original
budget
- Fourth quarter 2019 production expected to be near the high end
of prior 2.33 to 2.35 Bcfe per day guidance
- Year-end proved reserves increase to 18.2 Tcfe, greater than
95% from Marcellus Shale
- Year-end SEC PV10 valuation of $7.6 billion equates to over $17
per share, net of debt
Capital Spending
Range plans to reduce capital spending to
approximately $520 million for 2020, which is expected to maintain
production at approximately 2.3 Bcfe per day while spending within
cash flow based on recent strip pricing. The 2020 capital
spending will be directed towards Range’s Marcellus
assets.
The Company has increased its hedge position to
support the 2020 budget with over 1 Bcf per day hedged, or more
than 60% of expected 2020 natural gas production, at an average
price of $2.64. Detailed hedging information can be found in
the updated Company presentation. In addition, access to
international natural gas liquids (NGL) markets has become
increasingly beneficial, as pricing premiums compared to Mont
Belvieu continue to remain at multi-year highs. Range expects
to direct additional propane and butane volumes through the Mariner
East system to international markets in 2020.
Capital spending for 2019 is currently estimated
to be $728 million, approximately $28 million less than the
original budget. The capital underspend was driven primarily
by continued improvement in Range’s drilling and completion
efficiencies, water recycling program, and service cost reductions.
Fourth quarter 2019 production is expected to be near the high end
of the Company’s prior 2.33 to 2.35 Bcfe per day guidance.
Commenting, Jeff Ventura, the Company’s CEO
said, “Range finished 2019 with continued solid
execution on our Marcellus program, delivering on our operational
plans for less than our original budget. This is the second
consecutive year the team has delivered our operational plans for
less than originally budgeted, reflecting the organization’s
continued focus on capital discipline and efficient
operations. Similarly, our expectation to maintain production
for $520 million will make Range one of the most capital efficient
natural gas producers in North America. This efficiency is
driven by peer-leading well costs of less than $625 per foot, low
base decline of approximately 20%, and the high productivity of our
core Marcellus assets in southwest Pennsylvania. As the
industry exhausts its core inventory, we believe Range is
well-positioned with a lengthy runway of high-quality drilling
locations from which we can drive long-term value.”
Repurchase Programs
The Company initiated a share repurchase program
in October 2019. During fourth quarter 2019, Range
repurchased 1.8 million shares for approximately $7 million,
reducing shares outstanding by approximately 1%. The Company
has $93 million remaining on the $100 million repurchase program.
The Company has also decided to suspend its
dividend, which was approximately $20 million annually, to
prioritize debt reduction. Range repurchased and retired
approximately $108 million in principal amount of its senior notes
during the fourth quarter. Total senior note repurchases
during 2019 were approximately $202 million in principal amount at
an average weighted discount to par of 3%.
Commenting, Mark Scucchi, CFO said, “Over the
last 18 months, Range has executed approximately $1.1 billion in
asset sales. Maintaining and further enhancing financial
strength is core to Range’s strategy and debt reduction remains a
priority, guiding the Company’s capital investment and continuing
divestiture initiatives. At the same time, we believe the
repurchase program initiated last quarter to buy shares at a
substantial discount to intrinsic value with a small portion of
asset sale proceeds reflects our responsible commitment to create
long-term value.”
2019 Year-end Proved
Reserves
SUMMARY OF CHANGES IN PROVED RESERVES |
(in Bcfe) |
|
|
Balance at December 31, 2018 |
18,072 |
|
|
|
Extensions, discoveries and additions |
1,161 |
|
Performance revisions |
924 |
|
|
|
Reclassification of PUD to unproved under SEC 5-year
rule |
(601 |
) |
Price revisions |
(18 |
) |
Sales of proved reserves |
(512 |
) |
Estimated production |
(834 |
) |
|
|
Balance at December 31, 2019 |
18,192 |
|
|
|
Year-end 2019 proved reserves by volume were 67% natural gas,
31% natural gas liquids and 2% crude oil and condensate.
Proved developed reserves represent 54% of the Company’s
reserves.
During 2019, Range added 1.2 Tcfe of proved
reserves through the drill-bit, driven by the Company’s Marcellus
development. Field level performance increased reserves by
924 Bcfe due to continued improvement in the well performance of
existing Marcellus producing wells and 577 Bcfe of reserves
associated with proved undeveloped locations which have re-entered
the Company’s five-year drilling program. As future
development plans are continually optimized, some previously
planned wells have been rescheduled beyond five years.
Accordingly, Range removed 601 Bcfe of proved undeveloped reserves
that now fall outside the SEC mandated five-year development
window. The Company expects the majority of these proved
undeveloped reserves to be added back in future years. The
lower SEC price for 2019 as compared to 2018 resulted in a nominal
pricing revision in proved reserve volumes of 18 Bcfe, or 0.1% of
total proved reserves. The Company sold approximately 512
Bcfe of reserves during the year, predominantly associated with the
ORRI sales announced in 2019 as well as the sales of non-core
properties. Range’s corporate proved undeveloped development
cost is expected to improve to approximately $0.35 per mcfe.
Commenting on 2019 proved reserves, Jeff
Ventura, CEO, said, “This year’s reserve report reflects both the
quality and scale of Range’s reserve base with another consecutive
year of positive performance revisions, which were a result of
extending laterals and continued optimization of targeting and
completions. Range’s stable reserve report was accomplished with
only 442 Marcellus proven undeveloped locations currently recorded,
which compares to over 1,400 horizontal producing wells. We believe
this ratio reflects the quality of reserves that can be expected
from Range for years to come as capital is allocated to future
offset locations. Our resilience is further demonstrated in the
year-end PV10 reserve value of approximately $7.6 billion, which
equates to over $17 per share, net of debt. As mentioned
before, we believe Range is well positioned on the low-end of the
industry’s cost curve with inventory depth to drive long-term value
for shareholders.”
SEC Pricing:
|
|
|
2019 SECPricing (a) |
|
|
2018 SECPricing (b) |
|
|
WTI Oil Price ($/Bbl) |
$55.73 |
|
|
$65.55 |
|
|
Natural
Gas Price ($/Mmbtu) |
$2.58 |
|
|
$3.10 |
|
|
|
|
|
|
|
|
|
|
|
Proved
Reserves PV-10($ billions) |
$7.6 |
|
|
$13.2 |
|
|
|
|
|
|
|
|
|
|
(a) SEC
benchmark prices adjusted for energy content, quality and basis
differentials were $2.38 per Mmbtu, $17.32 per barrel of natural
gas liquids and $49.24 per barrel of crude oil, respectively.
|
|
(b) SEC benchmark
prices adjusted for energy content, quality and basis differentials
were $2.98 per Mmbtu, $25.22 per barrel of natural gas liquids and
$59.96 per barrel of crude oil, respectively. |
Disclosure Statements:
Certain selected financial information in this
release is unaudited. Audited financial results will be
provided in Range’s Annual Report on Form 10-K for the year ended
December 31, 2019, which the Company plans to file with the
Securities and Exchange Commission (SEC) in conjunction with
year-end earnings.
Year-end pre-tax discounted present value is
considered a non-GAAP financial measure as defined by the SEC. We
believe that the presentation of pre-tax discounted present value
is relevant and useful to our investors because it presents the
discounted future net cash flows attributable to our proved
reserves prior to taking into account future corporate income taxes
and our current tax structure. We further believe investors
and creditors use pre-tax discounted present value as a basis for
comparison of the relative size and value of our reserves as
compared with other companies. Range's pre-tax discounted
present value as of December 31, 2019 may be reconciled to the GAAP
financial measure of its standardized measure of discounted future
net cash flows as of December 31, 2019 by reducing Range's pre-tax
discounted present value by the discounted future income taxes
associated with such reserves. This reconciliation will be included
in the Company’s 2019 Form 10-K.
RANGE RESOURCES CORPORATION (NYSE:
RRC) is a leading U.S. independent natural gas, NGL and
oil producer with operations focused on stacked-pay projects in the
Appalachian Basin. The Company pursues an organic growth
strategy targeting high return, low-cost projects within its large
inventory of low risk development drilling opportunities. The
Company is headquartered in Fort Worth, Texas. More
information about Range can be found at
www.rangeresources.com.
All statements, except for statements of
historical fact, made in this release regarding activities, events
or developments the Company expects, believes or anticipates will
or may occur in the future are forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements are based on assumptions and estimates
that management believes are reasonable based on currently
available information; however, management's assumptions and
Range's future performance are subject to a wide range of business
risks and uncertainties and there is no assurance that these goals
and projections can or will be met. Any number of factors could
cause actual results to differ materially from those in the
forward-looking statements. Further information on risks and
uncertainties is available in Range's filings with the Securities
and Exchange Commission ("SEC"). Range undertakes no
obligation to publicly update or revise any forward-looking
statements.
The SEC permits oil and gas companies, in
filings made with the SEC, to disclose proved reserves, which are
estimates that geological and engineering data demonstrate with
reasonable certainty to be recoverable in future years from known
reservoirs under existing economic and operating conditions as well
as the option to disclose probable and possible reserves.
Range has elected not to disclose the Company’s probable and
possible reserves in its filings with the SEC. Range uses
certain broader terms such as "resource potential,” “unrisked
resource potential,” "unproved resource potential" or "upside" or
other descriptions of volumes of resources potentially recoverable
through additional drilling or recovery techniques that may include
probable and possible reserves as defined by the SEC's
guidelines. Range has not attempted to distinguish probable
and possible reserves from these broader classifications. The SEC’s
rules prohibit us from including in filings with the SEC these
broader classifications of reserves. These estimates are by
their nature more speculative than estimates of proved, probable
and possible reserves and accordingly are subject to substantially
greater risk of actually being realized. Unproved resource
potential refers to Range's internal estimates of hydrocarbon
quantities that may be potentially discovered through exploratory
drilling or recovered with additional drilling or recovery
techniques and have not been reviewed by independent
engineers. Unproved resource potential does not constitute
reserves within the meaning of the Society of Petroleum Engineer's
Petroleum Resource Management System and does not include proved
reserves. Area wide unproven resource potential has not been
fully risked by Range's management. “EUR,” or estimated
ultimate recovery, refers to our management’s estimates of
hydrocarbon quantities that may be recovered from a well completed
as a producer in the area. These quantities may not necessarily
constitute or represent reserves within the meaning of the Society
of Petroleum Engineer’s Petroleum Resource Management System or the
SEC’s oil and natural gas disclosure rules. Actual quantities that
may be recovered from Range's interests could differ
substantially. Factors affecting ultimate recovery include
the scope of Range's drilling program, which will be directly
affected by the availability of capital, drilling and production
costs, commodity prices, availability of drilling services and
equipment, drilling results, lease expirations, transportation
constraints, regulatory approvals, field spacing rules, recoveries
of gas in place, length of horizontal laterals, actual drilling
results, including geological and mechanical factors affecting
recovery rates and other factors. Estimates of resource
potential may change significantly as development of our resource
plays provides additional data.
In addition, our production forecasts and
expectations for future periods are dependent upon many
assumptions, including estimates of production decline rates from
existing wells and the undertaking and outcome of future drilling
activity, which may be affected by significant commodity price
declines or drilling cost increases. Investors are urged to
consider closely the disclosure in our most recent Annual Report on
Form 10-K, available from our website at www.rangeresources.com or
by written request to 100 Throckmorton Street, Suite 1200, Fort
Worth, Texas 76102. You can also obtain this Form 10-K on the
SEC’s website at www.sec.gov or by calling the SEC at
1-800-SEC-0330.
Range Investor Contacts:
Laith Sando, Vice President – Investor
Relations817-869-4267lsando@rangeresources.com
Range Media Contacts:
Mark Windle, Manager of Corporate Communications 724-873-3223
mwindle@rangeresources.com
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