RANGE RESOURCES CORPORATION (NYSE:RRC) today
announced a 2018 capital budget of $941 million, which is below
anticipated 2018 cash flow at current strip prices and generates
annual production growth of approximately 11%. Additionally, Range
announced a five-year outlook from 2018 through 2022 that generates
cumulative free cash flow of approximately $1 billion and reduces
leverage to below 2x net debt to EBITDAX by year-end 2022, assuming
no asset sales.
Highlights –
- 2018 capital budget of $941 million generates expected annual
production growth of ~11% within cash flow
- ~$1 billion of cumulative free cash flow through 2022
- Debt to EBITDAX ratio reduced to 2.7x in 2020 and below 2x by
2022, even without asset sales
- Free cash flow yield at end of five-year outlook of ~33%
- Annual production CAGR of approximately 13% per debt-adjusted
share in five-year outlook
Capital Spending
The Company plans to reduce capital spending to
approximately $941 million for 2018, which is expected to generate
production growth of approximately 11% year-over-year, while
spending within cash flow at current strip pricing.
Additional cash flow generated from asset sales or an increase in
commodity prices would be expected to be used to pay down debt in
2018. Approximately 80% of 2018 capital is projected to be
spent in the Marcellus, generating greater than 25% growth from
Range’s southwest Marcellus assets and full utilization of
transportation capacity out of Appalachia by the end of the
year. To support the 2018 capital program, the Company has
also increased its hedge position, with approximately 70% of
expected 2018 natural gas production currently hedged at an average
price of $3.09. Detailed hedging information can be found in
the updated Company presentation.
Capital spending for 2017 was approximately
$1.27 billion, approximately 10% above the planned $1.15 billion
budget. In North Louisiana, the increase was primarily driven
by higher capital spending in the expansion area, higher than
expected costs on wells completed in the second half of 2017 and on
wells drilled but not completed in 2017. The increase was
also driven by higher spending in the Marcellus, where well results
have been very strong and new transportation capacity agreements
are on line or expected to be on line in early 2018.
Please refer to the latest Company presentation to see updated well
economics for planned 2018 activity in the Marcellus and Lower
Cotton Valley.
Five-Year Outlook
Range’s current five-year outlook would deliver
an annual production CAGR of approximately 13% on a debt-adjusted
per share basis while generating approximately $1 billion of
cumulative free cash flow, at strip pricing. Leverage is
expected to improve significantly under this outlook with a net
debt to EBITDAX ratio below 2x by 2022, even without asset
sales. Any proceeds from assets sales are expected to be used
for debt reduction. Margin improvement is expected due to
improved access to better markets and a continued improvement in
the Company’s cost structure through utilization of existing
infrastructure and lower interest expense. The five-year
outlook assumes all production growth is from Range’s Marcellus
inventory, while North Louisiana production is held roughly flat
from year-end 2018 through the remainder of the plan. At the
end of the five-year outlook, Range would still have over 3,200
locations in the core of the Marcellus alone. Additional
details, underlying assumptions and defined terms can be found in
the latest Company presentation posted on Range’s website, entitled
“Company Presentation January 2018”.
Commenting, Jeff Ventura, the Company’s CEO
said, “We have entered a new era of shale
development where companies that captured the most prolific
resources have the ability to generate better returns for
shareholders. For Range, the flagship asset and growth driver
of the Company will continue to be our large, high-quality,
de-risked inventory in southwest Pennsylvania. As
demonstrated in our five-year outlook, the quality of our assets
allows Range to improve corporate returns and our leverage profile
in the near-term, while generating competitive growth of production
and reserves on a debt-adjusted per share basis. Looking
beyond the five-year outlook, as the industry exhausts its core
inventory, we believe Range will be well-positioned with a long
runway of high-quality drilling locations from which we can drive
long-term value.”
RANGE RESOURCES CORPORATION (NYSE:
RRC) is a leading U.S. independent natural gas, NGL and
oil producer with operations focused in stacked-pay projects in the
Appalachian Basin and North Louisiana. 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.
This release contains certain “forward-looking
statements” within the meaning of federal securities laws,
including within the meaning of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 that are not
limited to historical facts, but reflect Range’s current beliefs,
expectations or intentions regarding future events. Words
such as “may,” “will,” “could,” “should,” “expect,” ““plan,”
“project,” “intend,” “anticipate,” “believe,” “outlook”,
“estimate,” “predict,” “potential,” “pursue,” “target,” “continue,”
and similar expressions are intended to identify such
forward-looking statements. The statements in this presentation
that are not historical statements, and any other statements
regarding Range’s future expectations, beliefs, plans, objectives,
financial conditions, assumptions or future events or performance
that are not historical facts, are forward-looking statements
within the meaning of the federal securities laws.
All statements, except for statements of
historical fact, made in this presentation regarding activities,
events or developments the Company expects, believes or anticipates
will or may occur in the future, such as those regarding future
well costs, expected asset sales, well productivity, future
liquidity and financial resilience, anticipated exports and related
financial impact, NGL market supply and demand, improving commodity
fundamentals and pricing, future capital efficiencies, future
shareholder value, emerging plays, capital spending, anticipated
drilling and completion activity, acreage prospectivity, expected
pipeline utilization and future guidance information 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"), which
are incorporated by reference. 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
David Amend, Investor Relations Manager
817-869-4266damend@rangeresources.com
Michael Freeman, Senior Financial
Analyst817-869-4264mfreeman@rangeresources.com
Josh Stevens, Financial
Analyst817-869-1564jrstevens@rangeresources.com
or
Range Media Contact:
Michael Mackin, Director of External Affairs
724-743-6776mmackin@rangeresources.com
www.rangeresources.com
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