Q1 2024 Range Resources Corp Earnings Call
Operator: Hello, and welcome to the Range Resources First Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.
Hello, and welcome to the range resources first quarter 'twenty 'twenty four earnings conference call.
All lines have been placed on mute to prevent any background noise.
Operator: Statements made during this conference call that are not historical facts are forward-looking statements, statements such as: Such statements are subject to risk and uncertainties, which could cause actual results to differ materially from those in the forward-looking statement. After the speaker's remarks, there will be a question and answer period. At this time, I would like to turn the call over to Mr. Laith Sando, Vice President, Investor Relations, at Range Resources. Please go ahead, sir.
That's made during this conference call that are not historical facts are forward looking statements.
And as such.
Such statements are subject to risks and uncertainties, which could cause actual results to differ materially from those in the forward looking statements.
After the Speakers' remarks, there'll be a question and answer period.
At this time I would like to turn the call over to Mr. Lai Sando, Vice President Investor Relations at range Resources. Please go ahead Sir.
Laith Sando: Thank you, operator. Good morning, everyone, and thank you for joining Range's first quarter 2024 earnings call. Speakers on today's call are Dennis Degner, Chief Executive Officer, and Mark Scucchi, Chief Financial Officer. Hopefully, you've had a chance to review the press release and updated investor presentation that we've posted on our website. We may reference certain slides on the call this morning. You'll also find our 10-Q on Range's website under the Investors tab, or you can access it using the SEC's Edgar Center.
Laith Sando: Thank you operator, good morning, everyone and thank you for joining arrangements first quarter 2024 earnings call.
Laith Sando: The speakers on today's call are Dennis Degner, Chief Executive Officer, and Mark <unk>, Chief Financial Officer.
Laith Sando: Hopefully you've had a chance to review the press release and updated Investor presentation that we posted on our website we.
Laith Sando: We may reference certain slides on the call. This morning.
Laith Sando: You'll also find our 10-Q on ranges website under the investors tab.
Laith Sando: Or you can access it using the Sec's Edgar system.
Laith Sando: Please note, we'll be referencing certain non-GAAP measures on today's call. Our press release provides reconciliations of these to the most comparable GAAP figures. We've also posted supplemental tables on our website that include realized pricing details by product, along with calculations of EBITDAX, cash margins, and other non-GAAP measures. With that, I'll turn the call over to Dennis.
Laith Sando: Please note, we'll be referencing certain non-GAAP measures on today's call.
Our press release provides reconciliations of these to the most comparable GAAP figures.
Laith Sando: We've also posted supplemental tables on our website.
Laith Sando: That include realized pricing details by product along with calculations of EBITDAX cash margins and other non-GAAP measures.
Laith Sando: With that let me turn the call over to Dennis.
Dennis L. Degner: Thanks, Laith, and thanks to all of you for joining the call today. Range's first quarter was executed successfully and consistent with our strategy communicated earlier this year, by operating safely while driving continued operational improvement, generating free cash flow with a peer-leading capital efficiency, and Pruden Allocation of that free cash flow, balancing returns of capital to shareholders with further debt reduction and the long-term development of our world-class asset base. I believe our first quarter results reflect the ongoing progress in line with these key objectives and showcase the resilience of Range's business while navigating the current commodity environment.
Dennis L. Degner: Thanks, Laith and thanks to all of you for joining the call today.
Dennis L. Degner: Ranges first quarter was executed successfully and consistent with our strategy communicated earlier this year.
Dennis L. Degner: By operating safely while driving continued operational improvements.
Dennis L. Degner: Generating free cash flow with a peer leading capital efficiency.
And prudent allocation of that free cash flow balancing returns of capital to shareholders with further debt reduction and the long term development of our world class asset base.
Dennis L. Degner: I believe our first quarter results reflect the ongoing advancement in line with these key objectives.
Dennis L. Degner: And showcase the resilience of ranges business, while navigating the current commodity environment.
Dennis L. Degner: Today's operational and financial updates should feel consistent, highlighting Range's high quality, low break-even inventory, and liquids optionality, which drove another successful quarter with meaningful free cash flow. Beyond a quarterly view, the long-term value proposition is underpinned by RANGE's low-sustaining capital requirements. This low capital intensity is the result of Range's class-leading drilling and completion costs, shallow base decline, large Blocky Core Inventory, and Talented Teams. These key attributes result in a required reinvestment rate that is among the best in the industry, providing Range a solid foundation for consistently generating significant free cash flow and returns to shareholders, while positioning Range to help meet future energy demands, whether that is through exports to international markets or serving our needs closer to home for further electrification of our economy related to power generation needed for AI and data centers or increased domestic manufacturing.
Dennis L. Degner: Today's operational and financial updates should feel consistent highlighting range as high quality low breakeven inventory and liquids optionality, which drove another successful quarter with meaningful free cash flow.
Dennis L. Degner: Beyond a quarterly view the long term value proposition is underpinned by ranges low sustaining capital requirements.
Dennis L. Degner: This low capital intensity as the result of ranges class, leading drilling and completion costs.
Dennis L. Degner: Shallow base decline.
Dennis L. Degner: Large blocky core inventory and talented team.
Dennis L. Degner: These key attributes resulted in required reinvestment rate that is among the best in the industry.
Dennis L. Degner: Providing range a solid foundation for consistently generating significant free cash flow and returns to shareholders, while positioning range to help meet future energy demand.
Dennis L. Degner: Whether that is through exports to international markets or serving our needs closer to home for further electrification of our economy related to power generation needed for AI and data centers or.
Dennis L. Degner: Increased domestic manufacturing.
Dennis L. Degner: Bolstering Range profitability and durability is our liquids contribution, which is over 30% of our total production volume. As seen in the first quarter results, liquids revenue provided an uplift to natural gas prices, with NGO price realizations equating to a premium of over $2 relative to Henry Hub prices. When we roll all of that together, our Liquids Revenue Uplift. Our Low-Capital Intentions..., and Thoughtful Hedging Program
Dennis L. Degner: Bolstering ranges profitability and durability as our liquids contribution which is over 30% of our total production volume.
Dennis L. Degner: As seen in the first quarter results.
Dennis L. Degner: <unk> revenue provided an uplift in natural gas prices.
Dennis L. Degner: With NGL price realizations equating to a premium of over $2 relative to Henry hub pricing.
Dennis L. Degner: When we roll all of that together.
Dennis L. Degner: Our liquids revenue uplift.
Dennis L. Degner: Our low capital intensity and thoughtful hedging program.
Dennis L. Degner: You get the lowest breakeven among natural gas producers and the most resilient organic free cash flow, as evidenced by our first quarter results and 2024 projections. Importantly, with our vast inventory of de-risked, high-quality Marcellus wells, we have the ability to compound our per-share growth and free cash flow for decades to come. Looking back on the quarter, all-in capital came in at $170 million, with production of 2.14 BCF equivalent per day.
Dennis L. Degner: You get the lowest breakeven among natural gas producers and the most resilient organic free cash flow as evidenced by our first quarter results and 2020 for projections.
Dennis L. Degner: Importantly, with our vast inventory of de risked high quality Marcellus wells, we have the ability to compound our per share growth and free cash flow for decades to come.
Dennis L. Degner: Looking back on the quarter all in capital came in at $170 million with production of 214 Bcf equivalent per day.
Dennis L. Degner: This capital spend aligns with our operational cadence detailed on our previous call and places us squarely within our stated capital guidance for the year. During the quarter, nine wells returned to sales, with an average lateral length exceeding 10,000 feet per well. These wells were located in the liquids-rich portion of our operating footprint, reporting the highest liquids production profile that Range has had in many years at 32% and providing the Revenue Uplift touched on just moments ago. Additionally, all of these wells are located on paths with existing production, minimizing our operating surface footprint. Supporting Nimble Operations and driving Rage's cost-efficient development approach.
Dennis L. Degner: This capital spend aligns with our operational cadence detailed on our previous call and places us squarely within our stated capital guidance for the year.
Dennis L. Degner: During the quarter nine wells returned to sales with an average lateral length exceeding 10000 feet per well.
Dennis L. Degner: These wells were located in the liquids rich portion of our operating footprint supporting the highest liquids production profile that <unk> had in many years at 32%.
Dennis L. Degner: And providing the revenue uplift touched on just moments ago.
Dennis L. Degner: Additionally, all of these wells are located on pads with existing production.
Dennis L. Degner: Minimizing our operating surface footprint.
Dennis L. Degner: Supporting nimble operations.
Dennis L. Degner: Driving ranges cost efficient development approach.
Dennis L. Degner: Production during the quarter was aided by strong well performance and continued optimization of our dry and wet gas gathering. These consistent, quarter-over-quarter results demonstrate the repeatable nature of our large contiguous acreage position and the benefit of returning to pad sites for our ongoing development. Turning to operations, two super spec horizontal rigs operated during the quarter, adding 13 laterals with an average lateral length of just under 16,000 feet per well.
Dennis L. Degner: Production during the quarter was aided by strong well performance and continued optimization of our dry and wet gas gathering systems.
Dennis L. Degner: These consistent quarter over quarter results demonstrate the repeatable nature of our large contiguous acreage position and the benefit of returning to pad sites for our ongoing development.
Speaker Change: Turning to operations.
Speaker Change: Two super spec horizontal rigs operated during the quarter, adding 13 laterals with an average lateral length of just under 16000 feet per well.
Dennis L. Degner: This was a new quarterly record for Range and is the type of performance that underpins the improved well cost Range expects for 2024. For completions, the team successfully onboarded our new-build electric frack fleet that will be utilized throughout 2024. The new fleet provides a smaller operating footprint, which complements operations when moving back to pads with existing production.
Speaker Change: This was a new quarterly record for range and is the type of performance that underpins the improved well cost range expects for 2024.
Speaker Change: For a complete.
Speaker Change: <unk> the team successfully on boarded our new build electric Frac fleet that will be utilized throughout 2024.
Speaker Change: The new fleet provides a smaller operating footprint, which complements operations when moving back to pads with existing production.
Dennis L. Degner: The fleet also includes state-of-the-art process control and power distribution technology and is coupled with a larger natural gas-fired turbine, which aids our continued efforts to electrify operations and reduce emissions. Performance of the new fleet thus far has been, as evidenced by the new program records set during the first quarter, with a 15% increase in the number of stages per day completed versus the same time period just a year ago. Supporting the completion's performance was efficient water operations and logistics, as the team recycled 100% of Ranges produced water while taking incremental third-party water to further support our operations.
Speaker Change: The fleet also includes state of the art process control and power distribution technologies.
Speaker Change: And is coupled with a larger natural gas fired turbine, which AIDS. Our continued efforts to electrify operations and reduce emissions.
Performance of the new fleet, thus far has been excellent as evidenced by the new program record set during the first quarter with a 15% increase in the number of stages per day completed versus the same time period, just a year ago.
Speaker Change: Supporting the completions performance was efficient water operations and logistics as the team recycled 100% of regions produced water, while taking incremental third party water to further support our operations.
Dennis L. Degner: Looking at activity levels for the remainder of 2024, we will continue to run one electric fleet on completions and two horizontal rigs. We have further refined the timing of our turn-in-line activity and have pushed all of our wells for the dry window deeper into the back half of the year.
Speaker Change: Looking at activity levels for the remainder of 2024, we will continue to run one electric fleet on completions and two horizontal rigs, but we have further refined the timing of our turn in line activity and have pushed all of our tools for the dry window deeper into the back half of the year.
Dennis L. Degner: Despite pushing these productive dry gas wells later in the year, our annual production guidance remains unchanged, with a slightly higher liquids cut expected in the first nine months of the year, when NGLs are particularly advantaged relative to natural gas, based on current forward prices. Before moving on to marketing, I'll briefly touch on service costs. So far in 2024, we've seen full utilization of high-spec equipment in the region, such as high-torque top-drive drilling rigs and electric frack fleets, with service costs remaining relatively in line with our prior calls.
Speaker Change: Despite pushing these productive dry gas wells later in the year, our annual production guidance remains unchanged with a slightly higher liquids cut expected in the first nine months of the year when Ngls are particularly advantage relative to natural gas based on current forward prices.
Speaker Change: Before moving on to marketing I'll briefly touch on service costs.
Speaker Change: So far in 2024, we've seen full utilization of high spec equipment in the region, such as high torque top drive drilling rigs and electric Frac fleets, but service costs remaining relatively in line with our prior call.
Dennis L. Degner: There is potential for service costs to ease during the year as operators complete or curtail their programs in response to the current commodity environment, especially for higher-cost dry gas bases. In the event service costs soften during the year, Range will be positioned to capture savings and further complement our lean program and capital efficiency for the year, while shifting over to marketing.
Speaker Change: There is potential for service cost to ease during the year as operators complete or curtailed their programs in response to the current commodity environment.
Speaker Change: Especially for higher cost dry gas basins.
Speaker Change: In the event service cost soften during the year range will be positioned to capture savings and further complement our lean program and capital efficiency for the year.
Speaker Change: Shifting over to marketing.
Dennis L. Degner: Similar to our messaging in February, Range utilized the flexibility built into our NGO transportation portfolio to capture some of the highest market premiums in company history during the quarter. This winter's market dynamics suggested that domestic butane prices offered the best returns, while international propane netbacks were set to exceed local values. As a result, Range directed more butane to U.S. Northeast markets while exporting the vast majority of its propane production. This resulted in some of the highest premiums to the Mont Belvieu Index that we've seen.
Speaker Change: Similar to our messaging and February range utilize the flexibility built into our NGL transportation portfolio to capture some of the highest market premiums in company history during the quarter.
Speaker Change: This winter's market dynamics suggested that domestic butane prices offered the best returns while international propane FX, we're set to exceed local values.
Speaker Change: As a result range directed more butane to U S northeast markets, while exporting the vast majority of its propane production.
Speaker Change: This resulted in some of the highest premiums to the Mont Belvieu index that we've seen.
Dennis L. Degner: In total, the realized AGL price for the quarter was $26.24 per barrel, $1.91 over the Mont Belvieu equivalent, which contributed to our overall corporate realizations of $3.54 per MCF fee, a significant premium to natural gas. Going forward, we expect continued growth in U.S. propane exports as 18 new PDH units come online this year and next, adding the capacity to consume another 500,000 barrels per day of propane at full utilization, although to the extent that Gulf Coast NGO export capacity continues to tighten.
Speaker Change: In total the realized NGL price for the quarter was $26 24 per barrel.
Speaker Change: $1 91 over the Mont Belvieu equivalent.
Speaker Change: Which contributed to our overall corporate realizations of $3 54 per Mcf.
Speaker Change: A significant premium to natural gas.
Speaker Change: Going forward, we expect continued growth in U S. Propane exports as 18, new PTH units come online this year and next adding the capacity consume another 500000 barrels per day of propane at full utilization rates.
Speaker Change: To the extent Gulf Coast NGL export capacity continues to tighten.
Dennis L. Degner: Range's firm transport on Mariner East to the Marcus Hook export facility should continue to provide advantaged NGL price realization. As a result of this dynamic and the strong start we've had to the year, Range is improving its full-year guidance for NGLs to a differential to the Mont Belvue Index of $0.25 per barrel discount to $1.25 per barrel premium, despite current natural gas storage levels and the current commodity backdrop.
Ranges firm transport on Mariner East to the Marcus Hook export facility should continue to provide advantaged NGL price realizations.
Speaker Change: As a result of this dynamic and the strong start we've had to the year ranges improving its full year guidance for Ngls to a differential to the Mont Belvieu index of 25 per barrel discount to a $1 25 per barrel premium.
Speaker Change: Despite current natural gas storage levels and the current commodity backdrop.
Dennis L. Degner: The resilience of Range's business is on full display in quarters like Q1. This is underpinned by our large, contiguous, high-quality acreage position and operational efficiency.
Speaker Change: The resilience of <unk> business is on full display in quarters like Q1.
Speaker Change: This is underpinned by our large contiguous high quality acreage position.
Speaker Change: Operational efficiencies.
Mark S. Scucchi: NGL Uplift, diverse marketing portfolio, and talented team. We believe the future of natural gas and NGLs is strong, and the range team remains focused on generating free cash flow while advancing our overall efficiencies and delivering repeatable well performance across our large contiguous inventory. I'll now turn it over to Mark to discuss the finances. Thanks, Janet.
Speaker Change: NGL uplift.
Speaker Change: Diverse marketing portfolio and talented team.
Speaker Change: We believe the future of natural gas and Ngls is strong and the range team remains focused on generating free cash flow, while advancing our overall efficiencies and delivering repeatable well performance across our large contiguous inventory.
Speaker Change: I'll now turn it over to Mark to discuss the financials.
Mark: Thanks Dennis.
Mark S. Scucchi: In the first three months of 2024, Range has kicked off what we expect will be a disciplined and promising. Range's most fundamental objective is to safely and consistently generate cash flow for its stakeholders. Despite commodity prices seen in early 2024, Range continues to generate healthy free cash flow, pay dividends, and reduce debt while maintaining the ability to thoughtfully reinvest in our operations. As mentioned during our last call, Range has an efficient plan to maintain steady production, adapt to near-term commodity prices and resulting economics, while also positioning our long-term business for eventual growth as demand increases from domestic and international.
Mark: And the first three months of 2024 range has kicked off what we expect will be a disciplined and promising year.
Mark: <unk> most fundamental objective is to safely and consistently generate cash flow for its stakeholders.
Mark: Despite commodity prices seen in early 2024 range continues to generate healthy free cash flow pay dividends.
Mark: <unk> debt, while maintaining the ability to thoughtfully reinvest in our operations.
Mark: As mentioned during our last call range has an efficient plan to maintain steady production this year.
Mark: Near term commodity prices and resulting economics, while also positioning our long term business for eventual growth as demand increases from domestic and international customers.
Mark S. Scucchi: As incremental demand materializes, in-basin, near-basin, and farther downstream, Range has the cost structure, inventory, and infrastructure to remain a reliable long-term energy supplier. Results of the first quarter highlight the strengths of Range's production mix and transportation portfolio. Realized price per unit of production before NYMEX hedging was $0.70 above NYMEX Henry Hubb prices, a byproduct of our diversified mix in production and sales. First quarter cash margins per unit of production were $1.59, a healthy 45% margin, resulting in cash flow before working capital of approximately $308 million.
Mark: As incremental demand materializes and basin near basin and farther downstream range.
Mark: Range has the cost structure inventory and infrastructure to remain a reliable long term energy supplier.
Results of the first quarter highlight the strength of ranges production mix and transportation portfolio.
Mark: Realized price per unit of production before Nymex hedging was 70 above Nymex Henry hub prices, a byproduct of our diversified mix and production and sales outlets.
Mark: Including hedges range realized $3 54 per Mcf.
Mark: First quarter cash margins per unit of production for $1 59.
Mark: A healthy 45% margin, resulting in cash flow before working capital of approximately $308 million.
Mark S. Scucchi: Cash Flow funded capital investment for the quarter of $170 million, and a reduction in debt, net of cash, of $150 million, along with roughly $19 million in dividends and $24 million paid for common shares withheld for taxes on equity compensation.
Mark: Cash flow funded capital investment for the quarter of $170 million a.
Mark: A reduction in debt net of cash of $150 million, along with roughly $19 million in dividends and $24 million paid for common shares withheld for taxes on equity compensation.
Mark S. Scucchi: Financial results rely on safe, efficient operations, and the Range team executed another successful quarter, delivering planned production on budget. As a reminder, the plan we announced for 2024 differs slightly from others in the industry, and our capital efficiency, Low full-cycle cost, paired with advantaged marketing of our production generates meaningful margin at current commodity prices. I mean, Range has options, options on how we redeploy capital into the drill bit, infrastructure like water facilities to provide durable cost reduction or Low-Cost Lateral Extending Land, among other attractive alternatives.
Mark: Financial results rely on safe efficient operations in the range team executed another successful quarter delivering planned production on budget.
Mark: As a reminder, the plan, we announced for 2024 differ slightly from others in the industry and that our capital efficiency lower full cycle cost.
Mark: Paired with advantaged marketing of our production generates meaningful margin at current commodity prices.
Mark: Range has options.
Mark: Options on how we redeploy capital into the drill bit.
Mark: Infrastructure like water facilities.
Mark: Provide durable cost reductions.
Mark: <unk> low cost lateral extending land among other attractive alternatives.
Mark S. Scucchi: With a thoughtfully constructed hedging program, we seek to participate in improved long-term market dynamics while increasing confidence in near-term forecasted cash flow that supports consistent, efficient operations while protecting the balance sheet and creating additional optionality around capital allocation. Range's hedging philosophy has produced successful results that have served the company well, and we expect it will continue to do so in the future. Presently, Range has approximately 55% of its 2024 natural gas hedged with an average floor price of $3.70.
Mark: With a thoughtfully constructed hedging program, we seek to participate and improved long term market dynamics, while increasing confidence in near term forecasted cash flow that support consistent efficient operations, while protecting the balance sheet and creating additional optionality around capital allocation.
Mark: Ranges hedging philosophy has produce successful results that have served the company well and we expect we'll continue to do so in the future.
Mark: Presently range has approximately 55% of 2024 natural gas hedged with an average floor price of $3 70.
Mark S. Scucchi: And in 2025, approximately 25% with an average floor price of $4.11, providing Range with a stable base to consistently generate free cash flow through market cycles. Our comments this morning may sound familiar, and that is a good thing.
Mark: And in 2025, approximately 25% hedged with an average floor price of $4 11.
Providing range a stable base to consistently generate free cash flow through market cycles.
Mark: Our comments this morning may sound familiar.
Speaker Change: That is a good thing.
Mark S. Scucchi: We intend to share our corporate goals and to deliver on those. Range has transitioned over the years from a startup, in a manner of speaking, when it drilled the discovery well at the Marcellus, to a rapid growth commissioning phase for a decade, to a successful business generating value from a massive well-understood resource. The options ahead for Range are attractive, particularly given a balance sheet within our targeted debt level. LNG is a well-known evolution for the industry, linking the U.S. with international customers. What is perhaps less appreciated and still developing are domestic opportunities in the form of reindustrialization, be it semiconductor manufacturing, EV Battery Plants, Data Centers, and Electric Generation, with modest investment in inventory.
Speaker Change: We intend to share our corporate goals and to deliver on those plants.
Speaker Change: Range has transitioned over the years from a startup in a manner of speaking when it drilled a discovery well in the Marcellus to a rapid growth commissioning phase for a decade.
Speaker Change: For a successful business generating value from our massive well understood asset.
Speaker Change: The options ahead for range are attractive, particularly given our balance sheet within our targeted debt levels.
Speaker Change: LNG is a well known evolution for the industry linking the U S with international customers.
Speaker Change: What is perhaps less appreciated and still developing our domestic opportunities in the form of re industrialization.
Speaker Change: Semiconductor manufacturing.
<unk> battery plants, Datacenters and electric generation.
Speaker Change: With modest investments in inventory. This year, we believe range is creating valuable future optionality to participate in that growing demand as it comes online.
Dennis L. Degner: We believe Range is creating valuable future optionality to participate in that growing demand as it comes online. Range's business plan continues to be executed on what we believe is the largest per share exposure to core Appalachian inventory, paired with a transport and sales portfolio, delivering production across the U.S. and international markets. All underpinned by a strong financial foundation. We have the team, assets, and balance. And we believe the Range business can and will continue to deliver significant value to investors. Dennis?
Speaker Change: Ranges business plan continues to be executed on what we believe is the largest per share exposure to core Appalachia inventory.
Speaker Change: Third with the transport and sales portfolio delivering production across the U S and internationally.
Speaker Change: All underpinned by a strong financial foundation.
Speaker Change: We have the team assets and balance sheet to succeed through price cycles, and we believe the range business can and will continue to deliver significant value to investors.
Dennis L. Degner: Thanks, Mark. Our 2024 program is off to a solid start, and I believe the first quarter results communicated today showcase that Range's business is in the best place in company history, having de-risked a high-quality inventory measured in decades and translated that into a business capable of generating free cash flow through these types of cycles. With that, I'll open the line for questions. Thank you, Mr. Degner.
Dennis back to you.
Dennis L. Degner: Thanks, Mark our 2024 program is off to a solid start.
Dennis L. Degner: And I believe the first quarter results communicated to date showcase that ranges business is in the best place in company history.
Dennis L. Degner: <unk> de risked a high quality inventory measured in decades, and translated that into a business capable of generating free cash flow through these types of cycles.
Speaker Change: With that let's open the line for questions.
Thank you Mr <unk>.
Operator: The question and answer session will now begin. If you would like to ask a question, please indicate by pressing the star key, then 1-1. Again, that's Star 1-1 to ask a question. If you are on a speakerphone, please pick up your handset before asking your question. If you would like to withdraw your question, you may do so by pressing star 1 1 again. Please stand by while we compile the Q&A list. Our first question comes from the line of Michael Scialla with Stevens. Your line is open.
Speaker Change: A question and answer session will now begin.
Speaker Change: We'd like to ask a question please indicate that pressing the starkey Dan one line.
Speaker Change: Again, Thats star one to ask a question.
Speaker Change: If you on the speakerphone, please pick up your handset before asking your question.
Speaker Change: If you would like to withdraw your question you may do so by pressing star one again.
Speaker Change: Please standby, while we compile the Q&A roster.
Speaker Change: Our first question comes from the line of Michael <unk> with Stephens. Your line is open.
Michael Stephen Scialla: Good morning, guys. Dennis, you mentioned the strong domestic butane and international propane markets. Sounds like the dynamics there are more than seasonal and have caused you to raise your 24 Realization Guidance. Do you have any visibility on those markets longer term? I know everybody's bullish on gas longer term, but I haven't really heard views on those NGL markets for the... 25 and beyond, period.
Michael: Good morning, guys. Dennis you mentioned, the strong domestic butane and international propane markets.
Michael: The dynamics there are more than seasonal and caused you to raise your 24 realization guidance do you have any visibility on that.
Michael: Markets longer term I know everybody is bullish on gas longer term, but.
Michael: I haven't really heard views on those NGL markets.
Michael: 25 and beyond period.
Dennis L. Degner: Yeah, good morning Michael. I'll kind of take a step back and kind of start in at a high level and then we have Alan Engberg here with us this morning and so I'll look to hand off to him to maybe take a bit of a deeper dive on this topic but I think if you look back on the past several years we tend to see some seasonal effects associated with both propane and butane and just the different components of the NGL stack itself and that's one of the reasons why we've always had the flexibility that we've left into the way we look at our sales and also our transportation options where we can put barrels on a waterborne export or leave them here on a domestic basis when we see those fluctuations.
Dennis L. Degner: Yes, good morning, Michael.
Speaker Change: I'll kind of take a step back and kind of starting at a high level and then we have Alan engberg here, whether this morning, So I'll I'll look to hand off to him to maybe take a bit of a deeper dive on this topic, but I think if you look back on the past several years, we tend to see some seasonal effects associated with both propane and butane and just the different components of that.
Alan Engberg: NGL stack itself.
Alan Engberg: That's one of the reasons why we've always had the flexibility that lift into the way we look at our sales and also our transportation options, where we can put barrels on waterborne export or leave them here on a domestic basis, when we see those fluctuations.
Dennis L. Degner: Gasoline blending season no doubt played a role in how we looked at the different pricing for both of them, but as we take a step back and look at propane, a big driver was no doubt getting stock levels back to a place more normalized in the back half of last year and then getting into what we felt like was more something normalized for this past Q1 and, The presents a winner that we did have. I'm going to hand it over to Alan, though, and he can add some additional color. Yeah, good morning, Michael. This is Alan here.
Alan Engberg: The gasoline blending season, no doubt played a role in how we looked at the different pricing for both of them, but as we take a step back and look at propane a big driver was no doubt getting stock levels back to a place more re normalized in the back half of last year, and then getting into what we felt like was more something normalized for this past <unk>.
Alan Engberg: Q1.
The presence of winter that we did have I'm going to hand, it over to Alan though and he can add some additional color.
Yes. Good morning, Michael This is Allan here I guess part of your question also is around what we see coming forward.
Alan Engberg: I guess part of your question also was around what we see coming forward. I guess I could say right now where we're at on propane, we've got days of supply as of the end of winter or the end of March at around 19 days. So that's about 10% under the five-year average. Pricing, we saw that improve during the first quarter. Just the market price went to 86 cents per gallon on average and 46% accrued, and that compares to the fourth quarter, which was at 67 cents per gallon and 36% accrued.
Alan Engberg: And.
Allan: I guess, we could say right now we're at on propane we've got data supply.
Alan Engberg: At the end of winter at the end of March at around 19 days. So that's about 10% under the five year average pricing we saw that improve during the first quarter just market price went to 86 cents per gallon on average.
Alan Engberg: And 46% of crude and that compares to the fourth quarter, which was at 67 cents per gallon.
Alan Engberg: 36% accrued.
Alan Engberg: Um, going forward though, over the next two years, so this year through 2025, we still see tremendous new demand coming on stream internet. That's LPG Crackers, that's ResCom Growth, and it's 18 new PDH units that are going to come on. In that 620 days of new demand, that's taking PDH utilization down to 65% this year and 70% next year. So we think it's a pretty conservative estimate.
Alan Engberg: Going forward, though over the next two years. So this year through 2025, we still see tremendous new demand coming on stream internationally.
Alan Engberg: LPG crackers, that's <unk> com growth.
Alan Engberg: And it's 18, new PTH units that are going to come on in.
Alan Engberg: 620, a day of new demand, that's taking PTH utilizations down.
Alan Engberg: <unk>, 265% this year, 70% next year. So we think it's a pretty conservative estimate.
Alan Engberg: Overall, US supply so far this year, if we look at the weekly EIA stats, it's up about 6%. And that matches the supply growth that we saw in 2023. So it's a relatively, you know, decent number to work with. Internationally, though, they're, you know, kind of like we saw last year; there really isn't a whole lot of international supply growth.
Alan Engberg: Overall U S supply so far this year, if we look at the weekly EIA, it's up about 6%.
Alan Engberg: That matches the supply growth that we saw in 2023, so it's a relatively decent number to work with.
Alan Engberg: Internationally, though they're kind of like we saw last year that really isn't a whole lot of international supply growth.
Alan Engberg: Um, during the first quarter, OPEC Plus, if you look at them as a whole, their LPG export relative to the first quarter of 23, we're down 2%. So what that means is that there's going to be, you know, going forward, a continued strong call on U.S. supply to the international market. During 23, the U.S. captured 90% of the international growth in LPG demand.
Alan Engberg: In fact <unk>.
Alan Engberg: The first quarter OPEC, plus if you look at them as a whole their LPG exports.
Alan Engberg: Relative to the first quarter 'twenty three were down 2%.
Alan Engberg: So what that means is that there is going to be going forward to continued strong call on U S supply to the international markets.
Alan Engberg: During 'twenty three the U S captured 90% of the international growth LPG demand.
Alan Engberg: And I'm going to just conservatively cut that to 80%, and it still means a call on the US supply of 500,000 barrels per day this year and next. And that's going to... It's more than what our supply is, so that means that we're probably going to be pulling from inventory. That means U.S. fundamentals are going to improve, and that means dock premiums are going to get higher. Um, Range has dock capacity, our export market capacity, that's equivalent to roughly 80% of our LPG production, that exceeds any of our wet piers, and it's a good position to be in.
Alan Engberg: I'm going to just conservatively cut that to 80% and it still means a call on U S supply of 500000 barrels per day this year and next year.
Alan Engberg: That's going to add.
Alan Engberg: That's more than what our suppliers. So that means that we're probably going to be pulling from inventory that means U S. Fundamentals are going to improve that means dock premiums are going to get higher.
Alan Engberg: Range has.
Alan Engberg: Dock capacity or export market capacity, that's equivalent to roughly 80% of our LPG production that exceeds any of our peers.
Speaker Change: And it's a good position to be and so we're quite pleased with that Dr.
Alan Engberg: So we're quite pleased with that. Dock capacity is getting tighter, particularly on the U.S. Gulf Coast. There's more capacity available on the East Coast, and I think we're in a very good position to continue to use our flexibility to place products in the markets that give us the best return.
Speaker Change: <unk> capacity is getting tighter, particularly in the U S Gulf Coast.
Speaker Change: More capacity available on the East Coast and I think we're in a very good position to continue to use our flexibility to place products to the markets that give us the best returns.
Michael Stephen Scialla: Well, that sounds very promising. I appreciate all that detail.
Speaker Change: Well it sounds very promising I appreciate all that detail.
Paul Michael Diamond: I wanted to ask Mark, Mark, your cash balance increase for the quarter, above $300 million. Should we assume you want to maintain a higher cash balance now than you have in the past to take advantage of opportunities to purchase notes like you did in the quarter in the open market? Or do you expect that cash balance to come down over the year?
Speaker Change: I wanted to ask Mark <unk>.
Mark: Mark your cash balance increase for the quarter.
Mark: Above $300 million should we assume you want to maintain a higher cash balance now.
Mark: Then you have in the past to take advantage of opportunities to purchase.
No just like you did in the quarter in the open market or do you expect that cash balance to come down over the year.
Mark S. Scucchi: I think you'll just see it fluctuate based on how we choose to allocate within a given quarter. The 2025 notes are clearly a very high priority that we make sure we comfortably handle and very economically handle.
Mark: I think you'll just see it fluctuate based on how we choose to allocate within a given quarter.
Mark: The 2025 notes is clearly very high priority that we make sure we comfortably handle and very economically handle so chipping away at those in the open market being able to buy those in.
Paul Michael Diamond: So chipping away at those in the open market, being able to buy those in at a discount is certainly a compelling option. But our Returns of Capital Program, as well as just funding our working capital needs intra-month, it's most efficient to use that, especially since interest rates are where they are. There's a decent return in holding that versus quickly redeploying, and some other areas are moving too quickly on buying back some bonds or paying a premium at the moment.
At a discount and certainly a compelling option, but our returns of capital program as well.
Mark: Funding.
Our working capital needs intra month, its most efficient to use that especially since interest rates are where there are there is a decent return on holding that versus quickly redeploying in some other areas are moving too quickly on buying back the bonds are paying a premium at the moment that said, we'll take a conservative risk.
Paul Michael Diamond: That said, we'll take a conservative and risk-appropriate strategy to continue deleveraging and paying off that debt. But I guess the long and short of it is having some cash on the balance sheet, which I think is prudent at this time and an effective, you know, cost-effective way to manage our working capital.
Mark: Appropriate strategy to continue deleveraging and paying off that debt, but I guess, the long and short of it is having some cash on the balance sheet. I think is prudent at this time in an effective.
Mark: Cost effective way to manage our working capital.
Paul Michael Diamond: Understood. Thank you. Thank you.
Speaker Change: Understood. Thank you.
Operator: Please stand by for our next question. Our next question comes from the line of Bertrand Donnes with Trois. Your line is open.
Speaker Change: Thank you Michael.
Speaker Change: Please standby for our next question.
Bertrand William Donnes: Our next question comes from the line of Bertrand Donna's with Truest. Your line is open.
Bertrand William Donnes: Hey, good morning, guys. I just wanted to briefly touch on the topic of shifting some of your dry gas wells to later in the year. Is this a moving target? You know, if gas prices remain depressed, would this move into 2025? Or, you know, would they be replaced with liquids locations? Or is there some motivation, maybe lease lines or something like that, where you need to get these wells turned in, you know, next 12 months?
Bertrand Donna: Hey, Good morning, guys just wanted to brush on the topic of shifting some of your dry gas well to later in the year.
Bertrand Donna: Is this a moving target if gas prices remain depressed.
Bertrand Donna: Moved into 2025 or would they be replaced with liquids locations or is there some motivation maybe lease lines or something like that where you need to get these wells turned in next 12 months.
Dennis L. Degner: Yeah, good morning. I'll tackle that from a kind of different set of angles. But I think when you look at where prices are today, these are still profitable wells. We think we have the flexibility by pushing these turn-in lines deeper into the year. And there is the potential that they could even go a little bit farther, depending upon what signals we see in the market. But we ultimately feel that pushing them to a time that's more optimized makes a lot of sense for us.
Speaker Change: Yes, good morning.
Speaker Change: Will that from a kind of a various set of angles, but I think when you look at where prices are today, but these are still profitable wells. We think we have the flexibility by pushing these turned in lines deeper into the year and there is the potential they could even go a little bit farther depending upon what signals that we see in the market.
Speaker Change: We ultimately feel like pushing them to a time this more optimized makes a lot of sense for us and as you heard us touch on his prepared remarks. This is all coming on the back of <unk>.
Dennis L. Degner: And as you heard us touch on in the prepared remarks, this is all coming on the back of not changing our production guide for the year. Pricing will just be one, really only, component that we'll look at. I think we'll want to keep a close eye on when those wells turn in line. Considerations will involve what kind of decline will we see in U.S. production. We're starting to see a dip below 100 BCF a day now.
Speaker Change: Not changing our production guidance for the year.
Speaker Change: Pricing will just be one really one component that will look at.
I think we want to keep a close eye on when those wells turned in line with considerations will involve what kind of decline do we see in U S production.
Speaker Change: Starting to see a dip below 100, 100, 100 Bcf a day now we find that encouraging rig count seems to be stable and down in some basins.
Dennis L. Degner: We find that encouraging recount seems to be stable and down in some basins. What kind of decline rate do we see further materialized in the Haynesville as an example? So I think those are just some of the aspects we'll keep a close eye on, along with the commissioning of the next two facilities on the LNG side between Golden Pass and Plaquemines, and certainly encouraging results or encouraging information of late on the timing for those facilities.
Speaker Change: What kind of decline rate do we see further materializes. The haynesville as an example, so I think those are just some of the aspects we will keep a close eye on along with the commissioning for the next two facilities on the LNG side between Golden pass and Plaquemines certainly encouraging result are encouraging information of late on the timing for that.
Speaker Change: These facilities, but all of that will kind of come into play as we think about the timing at which we would bring those wells back into the mix.
Dennis L. Degner: They'll be drilled, completed, and ready to go. And so our timing to be nimble, our ability to be nimble in timing to turn that production in line should be relatively short, and we will have the ability to put those wells to sale when we see pricing improvement and stable pricing improvement, not just in a spot market type of way.
Speaker Change: There'll be drilled completed and ready to go and so our timing to be nimble our ability to be nimble and timing to turn that production line should be relatively short.
Speaker Change: And have the ability to put those wells to sales when we see pricing improvement and stable pricing improvement not just in a spot market type basis.
Dennis L. Degner: That's great, Tyler. And then I think I heard you mention, you know, some potential cost reductions on the service side. Are you seeing these reductions tracked more closely with lower gas prices? Or is this a function of the activity cuts, you know, by the gas group? Or is this maybe a push by, you know, a market share grab by some of the service companies? Just anything, you know, any patterns you're seeing out there?
Speaker Change: That's great color and then I think I heard you mentioned.
Speaker Change: Potential cost reductions on the service side.
Speaker Change: Or are you seeing these reductions track more so with lower gas prices or is this a function of the activity cut by the gas group or is this maybe a push by our market share grab by some of the service companies just anything any patterns, you're seeing out there.
Dennis L. Degner: Yeah, good question. I think you've probably heard me touch on this in the past, but you know service cost adjustments feel a little different today, and they have even somewhat through the last 12 months than maybe prior peer cycles of commodity prices up, service cost up, commodity prices down, service costs down. And what I mean by that is you're seeing, let's just say, electric frac fleets at still a relatively high level of utilization. Superspec rigs are at a high level of utilization.
Speaker Change: Yeah. Good question I.
Speaker Change: I think you've probably heard me touch on this in the past, but service cost adjustments feel a little different today than they have even somewhat through the last 12 months than maybe prior peer cycles of commodity prices up service cost commodity prices down service costs down and what I mean by that is you see.
Speaker Change: Let's just say electric frac fleets at a still a relatively high level of utilization of Super spec rigs are at a high level of utilization.
Dennis L. Degner: In our case we have you know some of that under contract and so there's optionality that we've baked in as a part of that, but ultimately as you'd imagine some of that is is secured for the year. We do see that there are starting to have we're starting to have some conversations around what will end of year activity levels look like, what will service costs then do in response to that. So you know we very well like we saw in the last year to see some relief associated with you know maybe some consumables and other respective items that start to see some relief, but it's early and that's you know we would expect if there are some service cost relief type variables that most likely they'll start to materialize in the back half of the year as you see programs start to reach their close or you see further activity get shuttered because of let's just say poor returns for those other high-cost space and so.
In our case, we have.
Some of that under contract and so there is optionality that we've baked in as a part of that but ultimately as you would imagine some of that is is secured for the year. We do see that there are starting to we're starting to have some conversations around what will end of your activity levels look like what will service cost than do in response to that so.
Speaker Change: We very well like we saw in the last year to see some relief associated with maybe some consumables and other respective items they start to see some relief.
Speaker Change: But it's early and we would expect if there are some service cost relief.
Speaker Change: Type variables that most likely they will start to materialize in the back half of the year as you see programs start to reach their clothes or do you see further activity get shuttered because of let's just say poor returns for those other high cost basis. So.
Dennis L. Degner: Again, it's early, but wherever the service cost equation lands for the industry this year, and particularly in Appalachia, we like our opportunity to be on the leading edge of capturing those costs if they come.
Speaker Change: Again, it's early but we wherever the service cost equation layers for the industry this year and particularly in Appalachia, we like our opportunity to be on the leading edge of capturing those costs if they further come down.
Bertrand William Donnes: I appreciate the answers. Thanks guys. Thank you.
I appreciate the answers thanks guys.
Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Paul Diamond with Citi. Your line is open.
Speaker Change: Thank you.
Speaker Change: Thank you ladies standby for our next question.
Speaker Change: Our next question comes from the line of Paul Donovan with Citi. Your line is open.
Paul Michael Diamond: Good morning. Thanks for taking the time. I just want to touch base real quick on, you know, given current market conditions and expectations, how are you thinking about 25 hedging? You have 55 for this year, 25% hedge or locks per next. It's how you're thinking about where that right level should be, or is that more of a function of the next step?
Good morning, Thanks for taking for taking the time.
Paul Michael Diamond: Just wanted to touch base real quick on given current market conditions and expectations. How are you guys thinking about 25 hedging 55 for this year, 25% hedged for Walter.
Speaker Change: For next okay.
Paul Michael Diamond: Just how you're thinking about where the right level should be or is that more of a function of next.
Mark S. Scucchi: Hi Paul, I think I'll start with our philosophical approach and how we think about hedging, particularly where the balance sheet is today within our targeted net debt levels. The basic principle that we use to backcalculate and figure out where we're most comfortable as a starting point is just to cover the fixed cost. You know, while we're in the commodity business, this is not just a pure, simple commodity bet. There are fixed costs built into the business, be it the technical, the people, the safety, and so forth, to just prudently, safely, efficiently continue to run the company through a cycle.
Paul Michael Diamond: The next six months or so.
Speaker Change: Hi, Paul I think I'll start with our philosophical approach and how we think about hedging, particularly where the balance sheet is today within our targeted net debt levels.
Paul Michael Diamond: The basic principle that we use to back calculate and figure out where we're most comfortable as a starting point is just to cover the fixed costs.
Paul Michael Diamond: While we are in the commodity business. This is not just pure simple commodity bet their fixed cost built into the business be it the technical that people.
Paul Michael Diamond: Safety and so forth to just prudently safely efficiently.
Paul Michael Diamond: Can you run the company through a cycle and to do that while preserving the balance sheet and being better able to maintain a steady cadence to use and fully utilized effectively utilize equipment that we'd like to contract for that we know as productive in the most efficient.
Mark S. Scucchi: And to do that while preserving the balance sheet and being better able to maintain a steady cadence to use and fully utilize, effectively utilize equipment that we'd like to contract for, that we know is productive and the most efficient. The safety and the repeatability of that over time, you know, having some stability in your capital spend or other, the ability to weather dips, shoulder season, or, you know, a surprise poor winter weather, that sort of thing. Having some financial foundation there, support from a hedge book makes sense to us to cover those fixed costs. So all of that is just a backdrop.
Paul Michael Diamond: Safety and the repeatability of that over time, having some stability in your capital spend or other the ability to weather.
Paul Michael Diamond: Older season, or a surprise poor winter weather that sort of thing having some financial foundation there support from our hedge book makes sense to us cover those fixed cost so all of that as a backdrop that 25% at $4 11.
Mark S. Scucchi: That 25% at $4.11 in 2025, we think gets us there, but we have stressed it down to an extreme low $2 type pricing. Of course, with our NGL uplift, that provides us with a high degree of comfort and confidence in where the company can land financially for 2025 and going forward. The flip side of that is we like the 25% hedged and the 75% or a significant portion unhedged in 2025, just because of the fundamentals and significant demand coming online.
Paul Michael Diamond: In 2025, we think gets us there.
Paul Michael Diamond: Stress it down to the extreme low to dollar type pricing.
Paul Michael Diamond: With our NGL uplift that provides us with a high degree of comfort and confidence.
Paul Michael Diamond: Where the company can.
Paul Michael Diamond: Land financially for 2025 and going forward.
Paul Michael Diamond: The flip side of that is we like the 25% hedged and the 75% or a significant portion unhedged in 2025, just because of the fundamentals significant demand coming online.
Mark S. Scucchi: As we look at production trends that Dennis just touched on across the U.S., declining production levels, rig count deployed across various basins, basin-wide decline rates outside the Marcellus and even within the Marcellus for certain producers, we are set up for what we believe is a really compelling shift in the supply-demand equation, both for natural gas and natural gas liquids, in 2025. So, as we look at the fundamentals and compare that risk-reward scenario, we like having the downside production while having exposure to, what we think is, you know, a positive setup for 2025, 2026, and beyond.
Paul Michael Diamond: We look at production trends that Dennis just touched on across the U S declining production levels rig count deployed across various basins basin wide decline rates outside of the Marcellus and even within the Marcellus where certain producers. We are set up for what we believe is a really compelling ship.
Paul Michael Diamond: A shift in the supply demand equation, both for natural gas and natural gas liquids in 2025, so as we look at the fundamentals and compare that risk reward scenario, we like having the downside protection, while having exposure. What we think is a positive set up for 'twenty five 'twenty six and beyond so.
Mark S. Scucchi: So, as you play that out in 2026 and beyond, I think the basic philosophy continues. How do we continue to maintain that nice base of protection? So, of course, the percentage hedge depends on what price we can hedge, but, you know, that 2025 is a good example of what you may see going forward.
Paul Michael Diamond: As you play that out in 2006 and beyond I think the basic philosophy continues how do we continue to maintain that nice base of production protection. So of course, the percentage hedge depends on what price we can hedge but.
Paul Michael Diamond: That 25 is a good example of what you may see going forward.
Paul Michael Diamond: Understood. Thanks for the clarification.
Speaker Change: Understood. Thanks for the clarity and just a quick follow up that kind of portends into some of the stuff. You said so on slide 17, you talk about potential <unk> b coal over the next few years of incremental Collyn gassy.
Paul Michael Diamond: And just a quick follow-up that kind of portends into some of the stuff you said. So on slide 17, you talk about a potential 16B poll over the next few years of incremental call on GASI, on Gassie Basins. From that number, does that shift your thought process on slide nine? So the kind of locational... Destination of where you want to see or where you want to end up seeing the product. Is there any shift there, or is that still going to remain relatively consistent?
On gassy basins.
Speaker Change: Number does that shift your thought process on slide nine.
Speaker Change: Kind of a location.
Speaker Change: Destination, where you last year, we wound up seeing the product is there any shift there or is that still going to remain relatively.
Dennis L. Degner: Yeah, Paul, I think you're To think that it's going to be consistent, I think, is a good starting point. The transportation portfolio and options that we have have a lot of long-term optionality for us. And so there's the ability for us to continue, let's just say, extend the exposure to those different markets that we've had the luxury of being a part of and participating in for the past decade now. And so there is an opportunity, in our opinion, in the future, for capacity to go underutilized by other producers.
Speaker Change: Okay.
Speaker Change: Yeah, Paul I think you are.
Paul Michael Diamond: To think that it's going to be consistent I think is a good starting point.
Paul Michael Diamond: Transportation portfolio and options that we have had a lot of long term optionality for us and so there is the ability for us to.
Paul Michael Diamond: Continued SSA extend the exposure to those different markets that we've had the luxury of being a part of and participating in for the past decade now so.
Paul Michael Diamond: There is an opportunity in our opinion in the future for capacity to go underutilized.
Paul Michael Diamond: By other producers as you start to see conversations like inventory exhausts should become more material as you start to see capital allocation, maybe look differently for different producers as they think about different basin exposure.
Dennis L. Degner: As you start to see conversations like inventory exhaustion become more material, as you start to see capital allocation maybe look differently for different producers as they think about different bases and exposure, and I think all of that starts to point to a really good complement to our ability to put additional production on when the call on that is appropriate. And get more exposure to those same and similar respective markets. Clearly, on the NGL side, we've already got a lot of exposure to both the Gulf and also to waterboard export capacity in markets like Philadelphia. And we would expect that to be consistent.
Paul Michael Diamond: Think all of that starts to point to a really good complement to our ability to put additional production when the call on that as appropriate and get more exposure to those same and similar respective markets clearly on the NGL side.
Paul Michael Diamond: We've already got a lot of exposure to both the Gulf and also to Waterboard export capacity out of Marcus Hook in Philadelphia, and we would expect that to be consistent as well.
Paul Michael Diamond: Okay.
Paul Michael Diamond: Understood. Thanks for the clarification. I'll leave it there. Thank you all.
Speaker Change: Understood. Thanks for the clarity I'll leave it there.
Speaker Change: Thank you Paul.
Operator: Please stand by for our next question. Our next question comes from Alana Nitin Kumar with Mizzou Hope. Your line is open.
Speaker Change: Please standby for our next question.
Speaker Change: Okay.
Nitin Kumar: Our next question comes from the line of <unk> Kumar with Mizuho. Your line is open.
Nitin Kumar: Hi, good morning, everyone. And thanks for taking my questions. Dennis, I want to start on slide 17.
Kumar: Hi, good morning, everyone and thanks for taking my questions.
Kumar: Dennis I want to start on <unk>.
Nitin Kumar: 17, obviously AI.
Nitin Kumar: The demand growth for gas from AI adoption is a big topic.
Dennis L. Degner: Obviously, AI, and the demand growth for gas from AI adoption is a big topic out there. In your outlook, you only bake in about a BCF a day of incremental demand growth. Obviously, you mentioned that others have higher expectations. Just want to see, like, is there a difference in assumptions, or are you seeing something on the ground that's making you more conservative than some of the expectations that are out there?
Speaker Change: Out there.
Dennis L. Degner: In your outlook you only taken about a bcf a day of incremental demand growth.
Dennis L. Degner: Obviously, you mentioned there are others that have higher expectations.
Dennis L. Degner: Just wanted to see is there a difference in assumptions or are you seeing something on the ground thats, making you maybe need to be more conservative than some of the expectations that are out there.
Dennis L. Degner: Yeah, good morning. The power demand piece has no doubt been more and more topical every time we get around the table with investors these days, and also internally, as we have these conversations about the future of our industry. I think we wanted to take a conservative view on the outlet from the standpoint of, we know that it's going to require some conversations around further, probably permit support, and infrastructure development. But if you had to, I guess, pin us down on a respective range or number, we think of BCF today is a very conservative outlook, and we think there's a lot of opportunity when you look at it.
Speaker Change: Yes, good morning.
Speaker Change: Our demand piece has no doubt been more and more topical every time, we get around the table with investors. These days and also internally as we have these conversations about the future of our industry.
Speaker Change: We wanted to take a conservative view on the outlook from the standpoint of we know that it's going to require some conversations around further probably permit support infrastructure development.
Speaker Change: But if you had I guess pin us down on a on a respective range or a number we think a bcf a day is a very conservative outlook and we think theres a lot of opportunity when you look at.
Dennis L. Degner: Gosh, if you just look at PJM alone, they came out with a forecast here recently that suggested that, in a nutshell, 20 additional gigawatts is going to be required in that power market alone by 2030, and that's going to represent somewhere between 2 and 3 BCF a day at opportunity. So, that's kind of narrowing it down.
Speaker Change: Oh Gosh, if you just look at PJM alone. They came out with a forecast here recently that suggested that in a nutshell 20 additional gigawatts is going to be required in that power market alone by 2030, and thats going to represent somewhere between two and three three Bcf a day and opportunity. So that's that's kind of narrowing it down we'll say a little bit closer to home for us.
Dennis L. Degner: We'll say a little bit closer to home for us. And again, we even think that's conservative. When you start to think about the exposure to further coal retirements, there's another 2 BCF a day, approximately, that's going to get retired in that similar timeframe in the Northeast, and clearly, you've got some other facilities that may be facing retirement conversations, either regulatory driven or economics driven. So, all that to be said, we really think there's a key opportunity here.
Speaker Change: And again, we even think Thats conservative when you start to think about the exposure to further coal retirements as another two Bcf a day approximately that's going to get retired in that similar timeframe in the northeast.
Speaker Change: And clearly you've got some other facilities that may be facing retirement conversations either regulatory driven or economics, driven so all that to be said, we really think there is a key opportunity here our diverse portfolio gets us to several of the markets that could have exposure to this AI and power demand equation.
Dennis L. Degner: Our diverse portfolio gets us to several of the markets that could have exposure to this AI and power demand equation, and you can start to even, I'll just say, take a step back and say, even though the data center concentration is clearly in a place like Virginia, I think one of the questions that we're starting to raise is, does this now change, because of the reliable and cost-effective clean part of our system, the supply equation, start to challenge and All of that could find, let's just say, new concentration centers closer to that reliable supply, which aligns with us.
Speaker Change: And you could start to even I'll, just say take a step back to say, even though the data center concentration is clearly at a place like Virginia I think one of the questions that were starting to raise is does this now change because of the reliable and cost effective clean part of our.
Speaker Change: Supply equation does that start to.
Speaker Change: Challenge and relocate some of the data center development as Mark touched on re shoring of of industrialization and manufacturing expansion all of that can find which is a new concentration centers closer to that reliable supply, which aligns with us it lines with range has a long dated inventory that we have in that runway and the quality of it so.
Dennis L. Degner: It aligns with the range and the long-dated inventory that we have and that runway and the quality of it. Yes, I think a BCF today is a conservative estimate, but as you've probably seen from several of the research pieces today, that range can be wide and a little bit all over the place. But I think it's clearly pointing to there being a really good opportunity here and one that we could play a part of.
Speaker Change: Yes, I think a bcf a day is a conservative estimate, but as you've probably seen from several of the research pieces today that that range can be wide in a little bit all over the place, but I think it's clearly pointing to there is a really good opportunity here and one that we can play a part of.
Nitin Kumar: Great, thanks for the detail, Dennis. And my second question is perhaps related, but you've started talking about the 200,000 acres you have in Northwest Pennsylvania, perhaps closer to the Midwest area. And so some of your peers have been testing it.
Speaker Change: Great. Thanks for the detail.
Speaker Change: My second question is perhaps related but you started talking about 200.
Speaker Change: Because you haven't been northwest, Pennsylvania.
Speaker Change: Perhaps closing the Midwest area.
So some of your peers have been testing it.
Dennis L. Degner: Can you talk a little bit about this acreage? Does this asset play any part in your capital plan for the next two to three years? Or is this just an option value for you at this stage?
You talked a little bit about this acreage and is this.
Speaker Change: Does this asset play any part in your capital plan for the next two three years or is this just option value for you at this stage.
Dennis L. Degner: Yeah, it's probably more the latter than the former. The Northwest Pennsylvania footprint represents a part of our legacy activity from years and years ago, and it is a part of our asset base that is held by deep rights held by production. And so there's not a risk component associated with the land. And so we feel like our focus for the next several years is going to be the bread and butter of what we've reported on in this quarter and in the previous.
Speaker Change: Yes, it's probably more the latter than the prior.
Speaker Change: The northwest, Pennsylvania footprint represents a part of our legacy activity from years and years ago and it is a part of our asset base that is held by the deep rights are held by production and so there is not a at risk component associated with the land and so we feel like our focus for the next several.
Speaker Change: All years is going to be the bread and butter of what we've reported on in this quarter in the prior and Thats, the Marcellus and continuing to harvest the value of that portion of our asset base.
Dennis L. Degner: And that's the Marcellus and continuing to harvest the value of that portion of our asset base. But the reason why we still retain Northwest PA is that it's a stacked hydrocarbon-charged column in that part of the basin, much like other parts of Appalachia. And so we're watching what's taking place in places like Ohio with others that our acreage is on trend for a portion of that. And we'll, we'll kind of sit back and watch. We have the luxury of doing so instead of needing to prospect in that part of our asset base while we continue to harvest the cash flow and returns associated with them ourselves.
Speaker Change: The reason why we still retain northwest PAA is stacked.
Speaker Change: Hydrocarbon charged column in that part of the basin much like other parts of Appalachia and so we've we're watching what's taking place in places like Ohio with others that our acreage is on trend for a portion of that in multiple kind of sit back and watch we had the luxury of doing so instead of meeting to prospect in that part of our asset.
Speaker Change: While we continue to harvest the cash flow and returns associated with them ourselves.
Nitin Kumar: Thanks for the detail, guys. Thank you.
Speaker Change: Hey, thanks for the detail guys.
Speaker Change: Thank you.
Speaker Change: Thank you.
Operator: Please stand by for our next question. Our next question comes from the line of Jake Roberts with TPH and Company. Your line is open. Good morning.
Speaker Change: Please standby for our next question.
Speaker Change: Our next question comes from the line of Jake Roberts with Tpa <unk> Company. Your line is open.
Speaker Change: <unk>.
Jacob Phillip Roberts: Good morning.
Jacob Phillip Roberts: Just wanted to circle back and, you know, the topic is your AI here. But I think your view of Virginia is one that we tend to agree with. And we're just curious if you could frame ultimately what you think that back half of the decade growth or demand outlook looks like in the Basin or out of the Basin. And do you think there's a general perception that pipelines will be getting built out of the Northeast on a lot of these forecasts?
Jacob Phillip Roberts: Just wanted to circle back on topic to your AI here.
Jacob Phillip Roberts: I think your view of Virginia, we tend to agree with and we're just curious if you could frame ultimately what you think about back half of a decade growth our demand outlook looks like in basin.
Jacob Phillip Roberts: Out of Basin do you think there's a general.
Jacob Phillip Roberts: The pipeline will be getting built out in the northeast <unk> forecast.
Mark S. Scucchi: So I'll jump in here. I think, to start with, this is still very early in how both the power markets and the data centers and all of this are developed, the pace, the energy sources, and so forth. But again, looking at some recent third-party research. And just if you think about the U.S. gas market share being north of 40% or right at 40% and roll that forward, make that a simple assumption through 2030.
Speaker Change: So I'll jump in here I think to start with this is still very early and how both of the power market and the data centers and all of this is developed the cadence the <unk>.
Speaker Change: The sources and so forth, but again looking at some recent third party research.
Speaker Change: And just if you think about in the U S gas is market share being north of 40% or 40% and roll that forward to make that a simple assumption through 2030.
Mark S. Scucchi: And then even think closer to home for range, where in the Northeast, think Virginia, Ohio, New York, just general Northeast type markets, that data center market share is about 35% of the U.S. market. So if you back solve for that, you get anywhere from 2.5 to 5.5 B's equivalent of natural gas demand for power. So we just see this as an early but very compelling source of incremental demand over and above the demand that's already been baked in. PJM, as Dennis mentioned earlier, is revised upward at their expectations.
Speaker Change: And then even seen closer to home for range, where in the northeast think Virginia, Ohio, and New York, just general in northeast type markets.
Speaker Change: That data center market share is about 35% of the U S market. So if you back solve for that you get anywhere from two 5% to five five.
Speaker Change: These equivalent.
Speaker Change: Natural gas demand for power.
Speaker Change: We just see this as an.
Speaker Change: Early but very compelling source of incremental demand over and above the demand thats already been baked in PJM that Dennis mentioned earlier is revised upwards their expectations.
Mark S. Scucchi: Other grid operators have done so as well. We can just zoom back out to the general concept of reindustrialization and reshoring in the U.S., be it the Intel plant in Ohio. While EV sales and production are slowing down a little bit, there is incremental demand in the form of multiple EV battery plants, be it in Indiana from the Stellantis Samsung plant or in Ohio from the GM LG plant. And these are just a couple examples of a whole host of other industrial projects, which ultimately pull you back to powering the grid and how that gets built out via distribution networks and generation and pulling back the gas. So we think proximity to that is important. You need Appalachia.
Speaker Change: Other grid operators have as well.
Speaker Change: We can do zoom back out to the general concept of Reindustrialization in reassuring in the U S. B at the Intel plant in Ohio.
Speaker Change: While EV sales and production are slowing down a little bit there is incremental demand in the form of multiple EV battery plants be it in the Indiana from still onto Samsung plant or in Ohio from the GM LG plant and these are just a couple of examples of a whole host of other industrial projects, which ultimately pull.
Speaker Change: Back to power.
Speaker Change: To the grid and how that gets built out distribution networks and generation and pulling back to gas. So we think proximity to that is important.
Speaker Change: Need Appalachia, you need the Marcellus at low decline clean base foundation of supply and its cost competitive. So while we can't give you a high degree of confidence of what those other industries, the speed and permitting and construction cadence will be.
Dennis L. Degner: You need the Marcellus, that low decline, clean base foundation of supply. And it's cost competitive. So while we can't give you a high degree of confidence about what those other industries' speed, and permitting, and construction cadence will be, we do have a high degree of confidence that we can play a fundamental role in making that economically viable and reliable and continuing that build out now through the end of the decade. And I'll just tack on one quick thing, Jake, to maybe close this topic out.
Speaker Change: We do have a hydro we are confident that we can play a fundamental role in making our economic and reliable.
Speaker Change: Continuing the build out now through the end of the decade.
Speaker Change: And I'll just tack on one quick thing Jay to maybe close this topic out.
Dennis L. Degner: I think when you start to look at the supply and demand piece. Really, in-ground storage, as you probably well know, has really not changed in a material way over the past decade. So as you start to think about in-ground storage not really changing, as you think about now... Even if, let's just say this wide range of variability is, you know, two to three BCF or five, as Mark points out, who knows where it fully lands, but it's hard to imagine us going forward in the lower 48 without further electrifying what we do.
Speaker Change: When you start to look at the the supply demand piece.
Speaker Change: Really in ground storage as you probably will know has really not changed in a material way over the past decade, and so as you start to think about in ground storage not really changing as you think about now.
Speaker Change: Even if let's just say this wide range of variability is two to three bcf or five as mark points out.
Speaker Change: Where it fully lands, but it's it's hard to imagine us going forward and this is in the lower 48 without further electrifying, what we do and thats going to require infrastructure pipes and wires to be able to get low cost reliable clean effective energy to basically power, what we do and so the equation starts to break down at that.
Dennis L. Degner: And that's going to require infrastructure, pipes, and wires to be able to get low cost, reliable, clean, effective energy to basically power what we do. And so the equation starts to break down at that point if you're going to meet the supply without additional pipeline infrastructure and wires to support that power getting to those underserved markets or critical markets.
<unk>, if youre going to meet the supply without additional pipeline infrastructure and wires to support that power getting to those underserved markets where critical market. So.
Infrastructure is going to play a real part of it is in our opinion.
Jacob Phillip Roberts: I appreciate the color. And as I know you want to close the topic out, maybe just one more. As infrastructure does appear, timelines are longer, and permitting becomes more difficult. Is there a more compelling case to be a multi-basin operator in the back half of this decade to perhaps take advantage of where this on-shoring or data center facilities ultimately come online?
Speaker Change: I appreciate the color.
Speaker Change: I know you want to close the topic out maybe just one more.
Speaker Change: Yes.
Speaker Change: Infrastructure does appear.
Speaker Change: Timelines are longer permitting becomes more difficult is there a more compelling case to be a multi basin operator in the back half of this decade to perhaps take advantage of where this onshoring or data center.
Speaker Change: Facilities are ultimately come on line.
Dennis L. Degner: Yeah, really good question. I kind of think I would take a step back on this and say, look, when you look at where a lot of the power demand and some of the manufacturing that Mark touched on, it's going to be regional for our asset base. And so, you know, I think, whereas maybe a year ago, the question may have revolved around multi-basin exposure advantages tied specifically to LNG, in our case, we don't really feel like that has to be a driver.
Speaker Change: Yes, really good question I kind of think I would take a step back on this and say look when you look at where a lot of the power demand in some of the manufacturing that mark touched on it's going to be regional for our asset base and so I think whereas maybe a year ago. The question may have revolved around multi basin exposure.
<unk> advantage is tied specifically to LNG in our case, we don't really feel like that has to be a driver. We've got the inventory to basically deliver repeatable results on the transport we have two LNG type outlets and now is this data center demand.
Dennis L. Degner: We've got the inventory to basically deliver repeatable results on the transport we have to LNG type outlets. And now, as this data center demand opportunity further materializes, grows, and develops, we feel like it's going to be more regional to an Appalachian producer like Range. So we feel like this takes its further support, developing our Marcellus, and then, in the decades to come, our Utica, and then later after that, the Upper Devon
Speaker Change: Opportunity further materializes grows and develops we feel like it's going to be more regional to an Appalachian producer like range. So we feel like this this takes it.
Speaker Change: Further supports developing our Marcellus and then the decades to come our Utica and then later after that.
Devonian so.
Mark S. Scucchi: I think it puts us in a great position to not need to have other... Yeah, I'll join in on that. I would say that Range is effectively, economically, a multi-basin company. Ninety percent of our revenue is outside the basin. The transportation portfolio moves more than 80 percent of the gas out of the basin and virtually all of the liquids. So we have the best marriage of the most efficient asset with the business overlay and the infrastructure to transport that production and connectivity to end markets.
Speaker Change: And it puts us in a great position to not need to have other basic exposure.
Speaker Change: I will join in on that.
Speaker Change: I would say that range effectively as economically as a multi basin company, 90% of our revenue is outside the base of the transportation portfolio moves north of 80% of the gas out of the basin and virtually all of the liquids. So.
Speaker Change: We have the best marriage of the most efficient asset with the business overlay and the infrastructure to transport that production and connectivity to end markets. The proximity is actually an advantage I would say being concentrated in the northeast for all the reasons, we just touched on it in the form of incremental power and the <unk>.
Mark S. Scucchi: The proximity is actually an advantage, I would say, being concentrated in the northeast for all the reasons we just touched on in the form of incremental power and the sheer population density and data center and other sources of future demand that's going to manifest itself in the next few years. So from an operational standpoint, no, we don't feel that driving need or compelling need to have another operational footprint. And from an economic perspective, we think the overlay of the transport accomplishes the goals of risk mitigation and the capture of opportunities in other basins, both domestically and internationally.
Speaker Change: Population density.
Speaker Change: And the data center and other sources of future demand that's going to manifest itself in the next few years. So.
Speaker Change: From an operational standpoint, no, we don't feel that driving need or compelling need to have another operational footprint from an economic perspective, we think the overlay of the transport accomplishes the goals of risk mitigation and the capture of opportunities in other basins, both domestically and internationally.
Jacob Phillip Roberts: Great. Thank you. I appreciate your time. Thank you. Thanks, Jay.
Speaker Change: Great. Thank you appreciate the time.
Speaker Change: Thank you thanks Jay.
Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Leo Mariani with WAF MKM. Your line is open.
Speaker Change: Thank you.
Speaker Change: Please standby for all next question.
Speaker Change: Our next question comes from the line of Leo Mariani with Roth MK Ann Your line is open.
Leo Paul Mariani: I just wanted to follow up a little bit on what you're thinking on the production trajectory for the rest of the year. Obviously, a good start in the first quarter. You mentioned kind of moving some tills back. I mean, normally Range sees kind of higher production in the second half, but maybe this is not happening. You know, maybe 3Q dips a little bit and then 4Q is stronger. Just trying to get a high-level sense of how you see production trending over the next handful of quarters.
Speaker Change: Okay.
Leo Paul Mariani: Hi, guys wanted to just follow up a little bit on what youre thinking on production trajectory for the rest of the year. Obviously, a good start in the first quarter, you mentioned kind of maybe some tills back I mean normally range six kind of higher production in the second half, but maybe this is not happening.
Leo Paul Mariani: Maybe <unk> dips a little bit and then <unk> stronger just trying to get high level sense of how you see production trending over the next handful of quarters.
Dennis L. Degner: You bet. Good morning, Leo.
Speaker Change: You bet. Good morning, Leo Good question I think when you look at this year it really should looking feel very similar to prior years under this maintenance type profile.
Dennis L. Degner: Good question. I think when you look at this year, it really should look and feel very similar to prior years under this maintenance type profile. The one, you know, couple of differences maybe this year that you'll feel when you start to see the numbers quarter over quarter, and we've somewhat touched on this in prior, you know, probably one-on-one conversations, but as long lateral development has continued to materialize for us, and, you know, clearly we talked about that a lot last year. Our original plan was 10,000 feet for an average horizontal, but by the end of the year, it was approaching 13,000 feet.
Speaker Change: The one a couple of differences may be this year that youll feel when you start to see the numbers quarter over quarter.
Speaker Change: We've somewhat touched on this in prior probably one on one conversations but as long lateral development has long lateral development has continued to materialize for us clearly we talked about that a lot last year of our original plan was 10000 feet for an average horizontal by the end of the year. It was approaching 13000 feet.
Dennis L. Degner: Took some of our till count down while we still had a similar, if not slightly higher, turn in line footage versus the original plan. All that starts to influence the production shape and profile throughout that following program year. So, in Q4, we saw some of our long laterals turn into sails. They're demonstrating not only really strong well performance, but they're also continuing to basically keep parts of the gathering system at a high level of utilization.
Speaker Change: Took some of our til count down while we still had a similar if not slightly up turn in line footage versus the original plan all that starts to influence the production shape throughout the profile throughout that following program year.
Q4, we saw some of our long laterals turned to sales.
Speaker Change: Demonstrating not only really strong well performance, but they are also continuing to basically keep parts of the gathering system at a high level of utilization. So all of that to say maybe in prior years under maintenance, where you've seen us have a Q1 to Q2 dip in production and then see a stronger ratable increase in the back half.
Dennis L. Degner: So all of that to say, maybe in prior years under maintenance, where you've seen us have a Q1 to Q2 dip in production and then see a stronger routable increase in the back half of the year, you can see that shallowing potentially this year, where maybe that Q1 to Q2 time frame is a little bit less, and you're actually going to see something a little flatter. And that kind of makes sense when you look at the two flat drilling rig program for the year, very lean with the one completion crew supporting that. And on top of that, we are just seeing some of this strong well performance from our long lateral.
Speaker Change: The year, you could see that that shallow in potentially this year, where maybe that Q1 to Q2 timeframe is a little bit less and youre actually going to see something a little flatter than that kind of makes sense. When you look at <unk>.
Speaker Change: Two flat drilling rig program for the year very lean with the one completion crew supporting that.
Speaker Change: Top of it just seeing some of this long.
Speaker Change: <unk> well performance from our long laterals.
Leo Paul Mariani: Okay, no, that's helpful for sure. And then, just wanted to touch base on the share buyback. Obviously, you folks haven't done quite as much over the last few quarters, despite pretty robust free cash flow here and a nice cash balance. I understand you've got the debt maturity coming up in roughly 12 months, but it seems like you could easily refinance that. You're kind of at your net debt target under 1.5
Speaker Change: Okay. No. That's helpful for sure and then just wanted to touch base.
Speaker Change: On the share buyback.
Speaker Change: Obviously, you folks havent done quite as much over the last few quarters, despite pretty robust free cash flow here and a nice cash balance I guess, you've got the debt maturity.
Speaker Change: Coming up.
Speaker Change: Roughly 12 months, but it seems like you could easily refinance that youre kind of at your net debt target under $1 5 billion. So maybe just talk about how youre kind of thinking about the buyback going forward.
Leo Paul Mariani: So maybe just talk about how you're kind of thinking about the buyback going forward in terms of kind of allocating between debt pay down and as well. Yeah, if we work our way and have worked our way into the net.
Speaker Change: In terms of kind of allocating between debt Paydown and.
As well.
Speaker Change: Yes, we work our way and have worked their way into the net debt target range, we certainly have a lot more latitude and flexibility.
Mark S. Scucchi: Yeah, as we work our way, and have worked our way into the net debt target range, we certainly have a lot more latitude and flexibility. It has been an opportunistic program by design from the very beginning. And 1 year, 2 years ago, we repurchased $400 million. The year after that, it was something like $19 million.
Speaker Change: It has been an opportunistic program by design from the very beginning in one year or two years ago.
Speaker Change: Purchase $400 million.
Speaker Change: The year after was something like $19 million.
Mark S. Scucchi: As I mentioned, some shares are repurchased in cash, effectively related to equity compensation. So there are some decent purchases that way. So again, to your point, since we're in the debt target range, we certainly have the latitude. The debt refinancing Again, there are a lot of choices. That's been kind of a repetitive theme today is us creating options and choices. We never want to be in a situation where we have to
Speaker Change: As I mentioned some shares are repurchased in cash effectively related to equity compensation, but there are some.
Speaker Change: Decent purchases that way so again to your point since we're in that target range, we certainly had a latitude the debt refinancing.
Speaker Change: There's a lot of choices thats been kind of repetitive theme today is us creating options and choices that we never want to be in a situation, where we have to do something with the ability to simply use the undrawn revolver.
Leo Paul Mariani: So, with the ability to simply use an undrawn revolver, in addition to the cash we have on the balance sheet to deal with refinancing, again, that frees us up as we evaluate movements in the market. Certainly, the way I would put it is, if we see a pullback in the stock price, we would certainly be more apt to lean in and repurchase more aggressively. In the meantime, that certainly remains part of our plans going forward.
Speaker Change: In addition to the cash we have on the balance sheet to deal with refinancing again that frees us up as we evaluate movements in the market.
Speaker Change: Certainly the way I would put it is if we see a pullback in the stock price, we would certainly be more apt to lean in.
Speaker Change: And repurchase more aggressively in the meantime that certainly remains part of our plans going forward, we have ample capacity under the existing.
Leo Paul Mariani: We have ample capacity under the existing board authorization, greater than a billion dollars right now. So, it will be a part of the plan. But again, we're not locked in on a specific formula. The idea is to not simply execute a pro-cyclical program but to make this an efficient value-generating exercise to maximize returns for the shareholder.
Speaker Change: Board authorization authorization greater than $1 billion right now so it will be a part of the plan, but again, we're not locked in on a specific formula the idea is to not simply execute a pro cyclical.
Program, but to make this an efficient value generating exercise to maximize returns for shareholders.
Operator: Ladies and gentlemen, we are nearing the end of today's conference. We'll now go to Noel Parks with TUI Brothers Investment Research for our final questions. Noel, your line is open.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, we are nearing the end of today's conference. We will now go to Noel Parks with Tuohy Brothers investment research for our final questions Noelle Youre line is open.
Noel Augustus Parks: Hi, just a couple of things. I wondered, um, just in your broad thoughts about what you're seeing in the industry, um, with the lower prices, people probably being a little bit more conservative, uh, in spending overall, um, as far as what you're seeing from maybe your non-operated partners and other peers, um, What do you think, as far as continuing to work on emissions control, just wondering if that's continuing as it has been, or if you've seen any shifts in people's attention to that?
Noel Augustus Parks: Hi, just a couple of things I wonder if.
Noel Augustus Parks: And your broad thoughts about where you are seeing in the industry.
Noel Augustus Parks: With the.
Noel Augustus Parks: Lower prices people, probably getting a little more conservative.
Noel Augustus Parks: Spending overall.
Noel Augustus Parks: As far as what Youre seeing from maybe your non operated partners in other peers.
Noel Augustus Parks: What are you seeing as far as the <unk>.
Noel Augustus Parks: Continuing to work on emissions control.
Noel Augustus Parks: Just wondering if that's continuing as it has been or if you've seen any any shifts.
Speaker Change: Attention to that.
Dennis L. Degner: Yeah, good morning, Noel. I appreciate you joining the call. Emissions management has not, I'll just say philosophically, has not changed for Range, and we've continued to maintain the same course that we charted a few years ago. At this time last year, we transitioned over to, as an example, a new facility installation we're getting. We're moving away from traditional pneumatic conveyors for our controllers and using basically modern technology, so something that's more air-conveyed and also uses nitrogen.
Speaker Change: Yes. Good morning, I. Appreciate you joining the call emissions management has not I will just say philosophically has not changed for range and we've continued to maintain the same course that we charted a few years ago. At this time last year, we transitioned over to as an example, a new facility.
Speaker Change: <unk>, we're getting.
Speaker Change: We're moving away from traditional pneumatic conveyors and FERC.
Speaker Change: FERC controllers and using basically modern technology, so something thats more air conveyed and also using nitrogen.
Dennis L. Degner: We've now also gone transition to a retrofit program, again, as an example, where we're going back to other sites and making those upgrades as well, coupling it with looking at field runtime, making sure that we've got the best design in the field that's supporting our overall, both economic and operational approach. So, just using those two examples, but nothing has changed on that front. We got MIQ certification last year. The LDAR program still remains at eight times a year, and our leak detection program is as robust as ever, and we've even looked at, we'll just say, a beta test of a top-down survey, and we're in the process of analyzing that data as well, and how it complements our ground-level inspection process. So, certainly from a range perspective, we're still remaining focused on reducing emissions tangibly further in an economical and responsible way.
Speaker Change: We have now also gone transition to a retrofit program again as an example, where we're going back to other sites and making those upgrades as well coupling it with looking at field run time, making sure that we've got the best designed as a field that is supporting our overall, both economic and operational approach.
Speaker Change: So just using those two examples but nothing has changed on that front, we got <unk> certification last year.
Speaker Change: Eldar program still remains at eight times, a year, where were our leak detection program is as robust as ever.
Speaker Change: And we've even looked at I will just say a beta test of a top down survey and we're in the process of analyzing that data as well and how it complements our ground level of inspection process. So certainly from a range perspective, we're still.
Speaker Change: The remaining focused on reducing missions tangibly further in an economic and responsible way.
Noel Augustus Parks: Great, I'll be interested to hear about the results of that survey and just try to move on for a second. The outlook looking ahead for materials, thinking about steel in particular, for the longer term, is that still looking pretty constructive, or are you seeing any issues on the horizon there?
Speaker Change: Great I'll be interested to hear about the results of that survey and just trying to cost for a second.
Speaker Change: The outlook outlook looking ahead for materials thinking about steel in particular.
Speaker Change: For the longer term is that still looking pretty constructive or are you seeing any.
Dennis L. Degner: Noel, are you speaking specifically about service costs?
Speaker Change: Any issues on the horizon there.
Noel Augustus Parks: I think it's specifically about steel materials overall. Sorry about that; I didn't quite hear that.
Speaker Change: No were you speaking specifically to service costs.
Speaker Change: I think it will be about steel.
Dennis L. Degner: Sorry about that; I didn't quite hear that. So, from a tubular goods perspective, we have seen some softening in that cost through the back half of last year, and a similar strategy you've probably heard us talk about before, but we procured a significant portion of our tubular goods needs for this year's program last year when we saw a positive window for us to do so. But we have seen some fluctuations this year, but I would expect as you start to see inventories get to a place where they've renormalized based upon rig activity, you could see some further relief in tubular goods prices.
Speaker Change: Materials overall.
Speaker Change: Sorry about that I didn't quite understand here that.
Speaker Change: So from a tubular goods perspective, we have seen some softening in that cost through the back half of last year and a similar strategy you've heard us talk about probably before that we procured a significant portion of our tubular good needs for this year's program last year. When we saw a positive window for us to do so.
Speaker Change: But we have seen some fluctuations this year, but I would expect as you start to see.
Speaker Change: Inventories get to a place where they've re normalized based upon rig activity you could see some further relief in tubular good prices.
Dennis L. Degner: Ladies and gentlemen, this concludes today's question and answer session. I would now like to turn the call back over to Mr. Degner for closing remarks.
Speaker Change: Great. Thanks, a lot.
Thank you.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen. This concludes today's question and answer session I would now like to turn the call back over to Mr. Taking a quick close closing remarks.
Dennis L. Degner: We'd just like to thank everyone for joining us this morning on our Q1 call. If you have any follow-up questions, don't hesitate to reach out to our investor relations team. We look forward to seeing you on the next call. Thank you.
Speaker Change: Just like to thank everyone for joining us. This morning on our Q1 call. If you have any follow up questions don't hesitate to reach out to our Investor Relations team. We look forward to seeing you on the next call. Thank you.
Operator: Thank you for your participation in today's conference. You may now disconnect.
Speaker Change: Thank you for your participation in today's conference you may now disconnect.
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