Q2 2025 Range Resources Corp Earnings Call
Welcome to the range resources, second quarter 2025 earnings conference. Call all lines have been placed on mute to prevent any background noise.
Statements major in this conference call or if not the historical facts are forward-looking statements, such statements are subject to risk and uncertainties which could cause actual results to different materially from those in the forward looking statements.
Speaker Change: After the speaker's remarks, there'll be a question and answer period at this time. I would like to turn the call over to Mr. Leith Sandow, senior vice president, best relations at range resources. Please go ahead, sir.
Leith Sandow: Thank you, operator. Good morning, everyone. And thank you for joining rang's. Second quarter 2025 earnings call.
Dennis dagner: With me on the call today are Dennis dagner, chief executive officer and Mark skooki, 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.
Dennis dagner: We may reference certain slides on the call this morning.
Dennis dagner: You'll also find our 10 Q on ranges website under the investors table.
Dennis dagner: Or you can access it using the sec's Edgar system.
Dennis dagner: 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.
Dennis dagner: With that, I'll turn the call over to Dennis.
Dennis dagner: Thanks slate and thanks to all of you for joining the call today.
Dennis dagner: Before Mark, and I provide an update on ranges business.
Dennis dagner: I'd like to start today's call by expressing our deepest, sympathy to all of those impacted during the recent flooding in Texas.
Dennis dagner: as we continue to gather information from this tragedy, we see just how close to home this has become for many of us, it range,
Dennis dagner: and for many of you on this call,
Dennis dagner: Our hearts go out to the families and communities impacted during this time and know that we will keep you in our thoughts.
As we shift over to ranges business, This Year, is off to a great start with another quarter of consistent, well, performance and efficiency gains driving strong free, cash flow.
Dennis dagner: Shareholder returns and building operational momentum to support ranges through your outlook.
Ranges previously, announced growth plans of approximately 20% through 2027, have near-term line of sight to Growing demand for natural, gas and NGL.
Dennis dagner: At the same time, our plans are positioning range to benefit from additional Invasion. Demand opportunities that are continuing to materialize.
Just last week in Pennsylvania.
Dennis dagner: We joined the president.
Dennis dagner: Senator McCormack.
Dennis dagner: A bipartisan group of government officials and leaders from the largest Tech Construction financial and energy companies.
In total over 90 billion dollars in new, AI power and infrastructure Investments were announced.
Dennis dagner: All in Pennsylvania.
Dennis dagner: These projects represent the future.
Dennis dagner: 1 that will require a substantial increase in Regional electric demand.
Dennis dagner: Positioning, Pennsylvania, natural, gas to be a Cornerstone, that will power, the AI Revolution.
Dennis dagner: We Believe range is incredibly well positioned to support these initiatives.
Dennis dagner: being 1 of the few producers in Appalachia with sufficient, high-quality inventory to support the required long-term durable supply of natural gas,
Dennis dagner: More near-term. Our consistent, well results and counter cyclical investments. In drilled inventory, over the last 18 months are allowing range to vary a wage of growth into this increasing demand.
Dennis dagner: And importantly, we intend to deliver that growth while maintaining a disciplined reinvestment rate that allows for significant returns to shareholders at the same time.
Dennis dagner: A key component of ranges business. That allows growth and shareholder returns. Through Cycles is ranges low Capital intensity, which is anchored, by our class-leading Drilling and completion costs.
Shallow based decline.
Dennis dagner: Large blocky core inventory and talented team.
Dennis dagner: And we believe this was on display once again during the quarter.
Dennis dagner: Diving into Q2.
Dennis dagner: Range executed on our plans safely and efficiently.
Dennis dagner: Delivering consistent. Well, results and free cash flow with steady activity, levels, that support the longer term Outlook. We've communicated
all in capital came in at 154 million, while generating production of 2.2 BCF equivalent per day as we turn to sales, approximately 156,000 lateral feet across 12 Wells.
Year to date, capital is tracking better than planned.
Dennis dagner: Our year-to-date savings from efficiencies, reflect the benefit of returning to pad sites for ongoing development.
Dennis dagner: And the team's dedication to continue to Improvement.
Dennis dagner: I'll touch on a few of the operational highlights driving this in just a moment.
Dennis dagner: We have invested approximately 300 million in development and land capital in the first half of the Year, versus our full year budget of 650 to 690 million.
Dennis dagner: As a result, we are lowering the high end of our Capital guidance to 6880 million without altering, our planned, operational activity.
Dennis dagner: For production, we expect continued strong performance in the field will drive annual production of our prior guidance.
Dennis dagner: Without performance weighted towards the fourth quarter as we bring in a spot completion crew. Later this year to complete 2 pad sites,
Dennis dagner: we are expecting production to be roughly flat in the third quarter at 2.2 BCF equivalent per day. And then stepping up to a approximately 2.3 BCF equivalent per day in the fourth quarter.
Us for 2026 and Beyond and aligning. With an expected steady Improvement in natural gas, fundamentals.
Consistent with prior quarters range, operated 2, horizontal rigs. During the second quarter drilling approximately 20084000 lateral feet across 20 lateral, averaging over 14,200 ft per weld.
Dennis dagner: This adds to ranges planned. Drilled uncompleted inventory and places us on track to exit 2025 with more than 400,000 lateral feed of growth focused. Inventory supporting our 3-year Outlook,
Building on the momentum from earlier. This year, our operations team set, new Range quarterly Drilling and completions records.
Dennis dagner: To start our drilling team set another program record by averaging approximately 6,200 and 5050 lateral fee per day.
Dennis dagner: This achievement occurred while maintaining Precision within an exceptionally narrow, Geo steered Landing Target window, underscoring ranges capability to drill our longest.
Fastest and most accurately placed Wells today.
Dennis dagner: On the completion side, the team executed 812 fra stages, sending a new company record for the most stages pump by a single crew and a quarter.
Dennis dagner: A 7% increase over the previous record.
To achieve this level of completion, efficiencies clearly takes planning across multiple departments for water, operations, and Logistics and the team continues to impress.
Dennis dagner: All while keeping lease operating expense in just 11 cents per mcfe for the quarter.
Dennis dagner: This type of drilling and completions, efficiency puts us in great shape for 2025.
While also setting up the 3-year Outlook, we've communicated.
I'd like to congratulate our team on the new Milestones set during the quarter.
Dennis dagner: Before moving on to marketing, I'll briefly touch on supply chain.
Dennis dagner: The strength of ranges long-term service Partnerships and the contractual agreements that are in place. For the remainder of the Year, support the improved Capital numbers. I've highlighted
Dennis dagner: Ing. Rigs hydraulic fracturing services.
Dennis dagner: Profit.
Dennis dagner: Tubular goods and diesel fuel.
Dennis dagner: Looking towards 2026 ranges preparing to launch our annual RFP for services in the months ahead. Seeking to secure, go forward. Service pricing.
Dennis dagner: And while it is early to talk specifics on 2026, we expect range will continue to be in a leading position on well cost and capital efficiency.
Dennis dagner: With the low required reinvestment rate that you've come to expect from us.
Dennis dagner: now, turning to marketing and the macro,
Dennis dagner: Natural gas inventory. Finished the quarter at approximately 3 TCF.
Dennis dagner: Down 6% from the prior year and supported by record high LNG feed gas, which reached over 17 BCF per day in the second quarter.
Dennis dagner: From a combination of added us LNG exports and pipeline expansions to Mexico. The US natural gas market is expected to add 8.5 BCF per day of new demand over the next 18 months, which we believe to be supportive of near-term natural, gas fundamentals.
For liquids during the second quarter we directed LPG barrels to the international export Market in order to capitalize on continued, favorable pricing Dynamics.
Dennis dagner: For context, ranges LPG, export volumes are currently under contracts with International pricing upside or a fixed premium to The Mont Belvieu index.
Dennis dagner: This structure enhances our ability to capture consistent premium pricing throughout the year and reinforces ranges competitive positioning.
In addition, our advantage East Coast export capability, continues to differentiate range as a preferred NGO supplier to European markets relative to us Gulf Coast space peers.
Dennis dagner: Ranges combined flexibility, reliability and responsiveness to market dynamics delivered. Solid results with a premium to the index of 61 cents per barrel.
Dennis dagner: And accordingly, we have again, improved the full year guidance for our expected ago, premium.
Stepping back and looking at the broader landscape for liquids.
Dennis dagner: Us NGL exports. Continue to outperform with us. Waterborne ethane exports. Increasing by 5% to 475,000, barrels per day while propane exports also increase by 5% to 1.8 million barrels per day versus the second quarter last year.
Dennis dagner: Looking ahead us NGL exports are expected to ramp significantly as terminal capacity is expanding.
Dennis dagner: Some of which is starting up as we speak.
Dennis dagner: Us, ethane and LPG. Export capacity are expected to grow by approximately 425,000 barrels per day over the next 18 months helping to support near-term. Fundamentals,
Speaker Change: Before handing over to Mark, I wanted to share highlights from our recent corporate sustainability report.
Speaker Change: We believe the natural gas produced in Pennsylvania offers both economic and environmental advantages.
Speaker Change: This year we're proud to have achieved Net Zero for ranges, combined scope 1 and 2, greenhouse gas emissions.
Speaker Change: Accomplished through a combination of direct emissions reductions and the use of verified carbon offsets.
Speaker Change: And this commitment can be seen in our 83% reduction. In methane emissions. Intensity.
Speaker Change: Over the last 5 years.
Speaker Change: in addition, we expanded our miq certification to cover all of our Pennsylvania assets and once again earned an a grade
Speaker Change: The highest distinction available.
Speaker Change: We are proud of these accomplishments and our team remains focused and motivated to continue our efforts as an industry leader.
Now, as much as ever, we believe the future of natural gas and ngls is strong with significant demand. Coming in the near and medium-term both globally and within Appalachia.
Speaker Change: Range is poised to help meet this future demand while creating outsized value for shareholders with the strongest financial position in company history.
Speaker Change: A large. Contiguous inventory. Measured in decades.
Speaker Change: And a proven track record of delivering through cycle returns of capital while investing in the long-term success and optionality of the business.
Speaker Change: I'll now turn it over to Mark, to discuss the financials.
Mark: Thanks, Dennis.
Mark: With the first half of 2025 behind us. The year is unfolding as a success. Both operationally and financially.
Mark: Of our asset while capturing additional future value from growing demand.
Mark: This plan was designed to deliver both value from future growth and to deliver returns to shareholders today.
Mark: So, let's Dive Right In To What range has already delivered to stakeholders in 2025.
Mark: In the second quarter, we repurchased 53 million in shares, bringing the first half of the year, total to 120 million.
Mark: We paid 21 million in dividends in the quarter.
Mark: Bringing year-to-date total to 43 million.
Mark: We also repaid, maturing senior notes, totaling 606 million using cash on hand and a modest draw on the revolver.
In aggregate. This brings year to date Enterprise Value returned to equity holders to 646 million roughly 7% of ranges market cap in just the first 2 quarters.
Mark: These numbers are in the financials. So why am I calling them out now?
Mark: It's because they warrant attention.
Mark: These are tangible results delivered to shareholders and they are result. In indicative of where range can take the business. This natural gas prices, respond to Rising, domestic and international demand.
With a strong balance sheet, less than 1 times Leverage.
Range is ability to return capital and pursue an investment in the business.
Is not deferred by balance sheet needs.
Mark: But are being carefully evaluated and opportunistically executed.
Mark: In other words, range is delivering on the industry's promise of future returns today while still investing for tomorrow.
Mark: Financial results rely on safe, efficient operations in the range team, executed another successful quarter delivering planned production on budget.
Mark: In fact, Drilling and completions activity and well, performance are trending better than plans.
Mark: Such that we have improved our capital budget and production guidance for the year.
Mark: This improves guidance continues to support our multi-year plan of capturing growing demand.
Mark: Recall that this year's budget includes incremental Investments. Enabling carefully. Staged growth through 2027 with capital, like, less than 700 million per year and achieving production of 2.6 bcfe per day.
Mark: Further we estimated that range can maintain 2.6 bcfe per day of production for less than 600 million dollars of annual Drilling and completion capital or approximately 60 cents per mcfe.
Mark: Simply put the goal of efficient production growth which we expect to be augmented by a declining. Share. Count is growth in cash flow per share.
Mark: Let's put this cash flow in perspective.
Mark: Forward natural gas prices. For the next couple years are above 4 dollars.
Mark: Closer to the marginal cost of supply.
Mark: So let's use a likely conservative $3.75 natural, gas price over the 3 year period through 2027.
Mark: Free cash flow should total in excess of 2 billion.
Mark: Equal to nearly a quarter of ranges current market cap.
Mark: Alternatively, cash flow. In this scenario could repay all debt and still acquire a significant percentage of ranges shares outstanding.
Mark: the objective is simple Drive per share value through the compounding effects of prudently growing the business while reducing share count
Mark: This goal is underpinned by a strong balance sheet that allows optionality in capital returns, and reinvestment.
Mark: Combine this with the long duration of our inventory and we believe the range story represents a unique value.
Given the level of ranges expected cash, flow generation and changes to tax rules within recently passed legislation. It's worth a quick update on how the effective tax rate unfolds over the next few years.
Mark: We anticipate range of becoming a full cash, taxpayer 1 year later than before.
Mark: Due to updated depreciation and R&D expense rules.
Mark: As a result, we expect the effective cash tax rate for 2025 will be in the low single digit.
Mark: 2026 will likely be mid single digits.
Mark: 2027 should be high single digits.
Mark: and in 2028, full cash taxpayer with rate in the mid to high teams,
These estimates are a significant improvement from, prior estimates of after tax cash flow through 2027.
Mark: Potential for incremental value creation, through pricing and marketing.
Mark: These deals should serve to improve pricing Dynamics for all producers over time.
Mark: However, the companies that will benefit the most are those with the ability to offer counterparties, the scale to sign large Supply agreements.
Mark: The inventory quality and duration to deliver gas through cycles and over the long term.
Mark: The infrastructure to reach numerous Outlets.
Mark: The creativity to structure, win-win deals and the execution track record to attract high quality partners.
Mark: Long-term security of Supply is once again front of Mind in the global gas market.
Mark: With domestic infrastructure Investments needing to be paired with Dependable Supply.
Mark: Range is among a small group of companies. Well, positioned to provide the markets required, shity of Supply long term.
Mark: That position should allow us to capitalize on our strategic advantages and ultimately produce positively differentiated margins.
Mark: Greater free cash flow and Superior shareholder returns.
Mark: In summary range is in a strong position to continue capitalizing on strategic advantages across several key areas.
Mark: Maintaining Superior full cycle margins through operational, efficiency.
Delivering, strong Capital returns to shareholders.
Mark: And exploring new business opportunities. The position us for long-term growth in the evolving energy Market.
Mark: as the natural gas market, continues to evolve range will remain Nimble responsive to Market signals
Mark: And focused on creating sustainable value for our shareholders.
Mark: We're excited about the opportunities ahead and remain confident that our strategy will continue to deliver Superior Financial and operational performance.
Dennis Becky: Dennis Becky.
Dennis dagner: Thanks Mark.
Speaker Change: The first half of the Year results for range, reflect a consistent theme communicated earlier this year and throughout prior quarters.
Speaker Change: Strong operational performance against our stated multi-year plan.
Speaker Change: Consistent free cash flow generation.
Speaker Change: Improved and allocation of that cash flow balancing returns of capital.
Speaker Change: Balance sheet strength and the optimal development of our world-class asset base.
You've heard of State this before, but we continue to believe the results. Communicated today. Showcased that ranges businesses in the best place in company history.
Speaker Change: Having driss, the high quality inventory, measured in decades.
Speaker Change: And translated that into a business capable of generating significant free cash flow through Cycles.
Speaker Change: With that, let's open the line for questions.
Speaker Change: Thank you, Mr. Dagner 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.
Speaker Change: If you're using a speaker-phone, please pick up your handset before asking your question. If you would like to respond your question you may do so by pressing star 1 1 again.
Speaker Change: And our first question comes from Doug leet, with wolf research, your line is open.
Doug Leet: Uh, good morning guys. Uh, thanks for having me on. Um, so Dennis obviously a lot of, uh, news in your backyard regarding Supply agreements and you've been very vocal about the potential Market opportunity. Um, so far, I think you were actually the first to talk about it. But so far range hasn't, um, participated. So, I wonder if you could offer any line of sight on where you stand on Supply deals and I guess address, perhaps what, uh, what we are going back. At least is the the biggest worry of the regional market which is, you know, the market gets oversupplied because everyone adds, you know, adds production and ends up killing the regional basis. How do you think about managing the Cadence of Supply agreements versus having production? I've got a quick follow-up, please.
Speaker Change: Yeah, good morning Doug, thanks for joining us on the call. Um, you're right, we were 1 of the first to make an announcement uh during this past spring with our relationship and commitment to supply fuel gas into power generation between Imperial Land Development, and also Imperial, uh, understanding from conversations that we've had ongoing with them is that there's been a significant amount of interest for, uh, subscribing to that end use, that will come out of that facility development. So certainly a very Dynamic space right now, when you as you point out, look at all the announcements made just within the past, you know, week or 2. So we would expect that to continue to, to mature and for an end user to step into that, commitment that we communicated. Uh, again, this past spring
Speaker Change: You know, as I take a step back and think about, you know, 2 things 1, the broader picture of of last week in the 90 billion dollars in in commitments that have been announced and the 1.5 BCF a day that, uh, others will supply at least here from from those announcements. It still represents a really large opportunity set. And I think by the time you get to the end of the decade, it's starting to narrow in, on on something that's closer to a 4, to 5 BCF per day opportunity, for a lot of the producers in the region. And so, when I think about who can supply that gas, it really points, pretty heavily toward a producer like range and I think it starts with with really a couple of components 1. We hear from the end users how important it is to address the 5 9 of reliability and that comes with not only the inventory quality but the ability to execute on what you say you're going to do. And I hope that both from your your lens and from others that are on this call each quarter range is just demonstrate.
Speaker Change: In a good quality, consistent ability to execute meet expectations. In many cases be from an efficiency standpoint and deliver the supply inventory quality is clearly always been a Cornerstone of our story as well. And I think that goes without saying, when you look at our ability to meet production, expectations and guidance again year-over-year, and then, lastly, when you look at the diversification of our marketing portfolio and how we can move gas, regionally, let's just say not necessarily always out of basin but our ability.
To tap into Outlets regionally, we think that that also supports that 59 of our liability. So in our mind it makes a lot of sense. Uh, you know, to connect with an organization, like range to help Supply that future demand and then I think, lastly, we think inventory exhaustion is going to play a part and we we we've talked about resource exhaustion in Prior discussions, uh, with many of you. But ultimately, we think that's going to play a part as you start to get to the end of this decade and get closer to it. When you see these powerful forecasts continuing to ramp up and get stronger and stronger. So, when you asked the question about oversupply in The Basin, I think, ultimately it's going to come down to the inventory, quality, the ability for others to produce into that capacity, and it starts to get challenged with other names other than probably range in a couple of others.
Speaker Change: I uh I appreciate the answers a lot of moving parts and obviously it's it's still early days but yeah we we're the 30-year inventory, you talk about is um is is going to differentiate for sure? And it really gets to my following my following question, which is
Speaker Change: when, if a call does range
Speaker Change: Uh, start thinking about adding capital. And if, if I could frame the question a little bit, Mark, Mark pointed out, um, 2 billion dollars of free cash flow for the next 3 years. Well, if I average that, and I knew it simply put you get your market cap.
Speaker Change: So, as opposed to thinking about it, 2, 2 billion is X percent of your market cap, a new attaching that run rate is your market cap on a DCF basis. So, growth needs to be part of the story and I guess my question is, when do you think or do you need to add activity to support? Longer-term growth beyond the 2 rigs currently, I'll leave it there please.
Speaker Change: Morning Doug. Maybe I'll kick that off just from the financial conceptual um aspect of valuation. And how we're thinking about that cash flow and then how to translate that into per share value. And I think that's the key. I kind of touched on that. During the opening comments, you're, you're right the, the number of the next couple years and this
Speaker Change: Illustrative example, we gave 375 type prices, well, over 2 billion dollars. Something really closer to 2 and a half billion dollars cumulative. Free cash flow over 3 year period. Um, but I think the key point there is that's talking just in the absolute for the corporation.
Speaker Change: The use of that cash flow and the growth in that cash flow is to the point. You're making how we drive and, and, and monetize that 30 years of inventory. But I think the other piece of it is what really matters is the first share price and per share value. So as we're shrinking, the share count buying back in shares and driving growth. You're getting a twisting effect of compounding effect of the values. So, you know, to to your point, absolutely run, an annuity valuation model. Just at that 2 2 and a half billion dollars. You can get something equal to today.
Accepted both of those variables are moving and improving for shareholders. So as we think about what that translates into beyond the 3 year plan, we've we've given and really it ties into the first question. You asked to Dennis as well about oversupply?
Speaker Change: To both in base, in base and demand growth, be it power, be it data centers. Be it industrial as well, as through our Long Haul transport that we have to today, potentially more we can do it through transport that we can take on that. Others are having to give up. We can sell to customers through their transport just as we do today. So the story about growth and I want to be careful on how I frame that in that the industry. I believe, I can't speak for all of it but we can read between lines and read commentary of our peers. I think everyone is being appropriate.
Speaker Change: and economically sensitive in terms of how and when to bring on Supply in response to demand, so
To come back full circle. I think the the risk of invasion over Supply is mitigated by the fact that we're all focused on these discussions with specific projects and trying to match the Cadence of our build outs with that. Call on Supply.
Speaker Change: And in terms of valuation for range, as we think about how to maximize that, and accelerate that value into our shares, its seizing that growth as these opportunities become available, to us attractive growth opportunities with line of sight deliverability of the gas combined with Howard deploying that significant free cash flow back into shrinking the share count. This is twisting effect where the valuation per share in the market cap far exceeds what the annuity valuation would indicate today.
Speaker Change: Appreciate the the answer Mark, and I would, I would add that 375 is hopefully a conservative number. Uh, thanks for taking my questions, guys.
Doug Leet: Thank you, Doug.
Speaker Change: Our next question comes from Scott, hanold with RBC, your line is open.
Thanks and good morning. Uh, if I could ask maybe, you know, similar kind of question in a different way when when you think about the potential of you know 4 to 5 BTF a day of of invasion demand you know over the next several years that could come online um and thinking that range has got a plan to grow to 2.6 BCF a day by 2027. What I guess what is your logistical capacity? Reasonable logistical capacity not theoretical but like how much of that 4 to 5 BCF a day? You know, do you think you can contribute, you know, could range be say, 1 BCF a day of that or could you be as much as 2 BCF a day and and and this is more so thinking over a a longer range time frame, you know, say it just starting around 5 to 10 years
Speaker Change: Yeah, good morning Scott. I'll I'll try and address that question. I, I think I'll start with what we've communicated, uh, on this 3-year Outlook, and I think it's, it's kind of a starter kit of what the business is capable of to grow 20%. So roughly, we're adding 400 million a day over the next, uh, really as if you think about it, the balance of the next 2, to 2 to 3 years. And so I think that's a a good snapshot of what we can generate using almost.
Almost a maintenance level, type staff and rig activity in a single Frac crew with some spot activity that sprinkled in throughout the next 24 months. So, when you ask what, how much could we participate in? I think really, you know, the the it's a little bit endless for us because of the inventory and our ability to absorb additional incremental uh activity within the current uh program as it sets. We can be nimble uh because of our ability to move back to pad sites with existing. Um,
Infrastructure for utilization for those ongoing development phases. And so, for us, it's really a function of having that line of sight to where that demand is going to take shape and how we can then participate in it. So I I hate to be, uh, give you I hate to give you a vague answer, but I think we can participate in this space at a very, very large volume, because of the team, inventory, in our ability to be efficient with utilization of our equipment.
Speaker Change: So so is it unreasonable thing to over the next stage decade? Plus you guys have the ability or capability or maybe even position to to say double your current production base.
I think that is very much an art of the possible. Uh, and again, I think it goes back to what you've seen from the current team and also the infrastructure that we have in inventory. So absolutely, that could be, that could be a scenario that could exist.
As well.
Speaker Change: Yeah, maybe I'll start this 1 off and I it's a good question and it's frankly Just a Touch early to give too many details before. All of these contracts are are nailed down the details of pricing terms and so forth. But you you've touched on all the key elements? Security supply is. Number 1, Dennis mentioned it a minute ago, these data centers.
And whether its data centers or a power plant, or an industrial plant with on-site generation, I mean, it's 99.999%, reliability is what they want. So you got to have the inventory and for range, these types of contracts are nothing new. We have 15 plus year term deals with various customers. Um, what is unique to range is our experience in in structuring deals that may be, you know, Invasion Plus
Speaker Change: But we've also structured deals that can work and capture value for both sides, you know, putting callers around pricing, identifying, the risk factors. So, you know, think creatively as as we mentioned, if you think about what range of ones, if we're going to commit to a 15-year deal, we're in essence. Saying that look, we're going to hold that portion of our production flat. So we're in essence, committing to Capital, to maintain that production over 15 years. So, what are we being paid to give up that option value for redeployment. I think that that Capital elsewhere. So you would certainly expect some downside protection. So maybe it's a a hub type protection. Natural gas, price, protection
Speaker Change: Now conversely, we're sensitive to what our customers will need these. These need to be win-win deals for them to be truly successful. Is, is we've experienced in our prior deals. So what is their risk factor? Well, their risk factor is price, is below out and go too high. So they might want a ceiling, but what is their ceiling. It's their alternate feed stock. It's not, you know, in the pet cam industry, is it NASA? Is it something else? Well, in this case it's electricity prices so do you get creative and put something like a hub floor and a spark spread ceiling there. There's a variety of things under discussion and this is not just the 1 or 2 names that have been in the public Arena. So far, there are a host of potential customers, being discussed, and different structures and different terms. So uh what I'd say is these are 20 plus year type Investments for those developers and for those data centers and range is in a variety of these conversations, to make sure we get the best deal that works over time for us and for them.
Speaker Change: Thanks. That's a good answer. I appreciate it.
Scott Hanold: Thanks Scott.
Speaker Change: Thank you. Our next question comes from. Jacob Roberts with cbh and Company. Your line is open.
Jacob Roberts: Good morning.
Morning. Jake.
is, is there any possibility or would there be any benefit to going ahead and completing some of the lateral footage you guys are accumulating and and delaying turning to sales, just trying to think about you know, the possibility that the another spot crew could come in and maybe
Jacob Roberts: Prepare the setup for 2026 in a in a way that you could respond to pricing a little bit faster.
Jacob Roberts: Yeah, good question. Jake and and I would tell you 1 of those uh spot Crews is actually operating as we speak. So uh maybe in some regards we're thinking very similarly at this phase of of our program so we're executing 1 of them as we speak. The other 1's, going to be a little bit later this year. Some of this activity lines up with our Midstream uh, expansions that we have set to Commission in the end of Q3 beginning of Q4. And as you heard us say in the in the prepared remarks today, we think that timing really lines up well with good, efficient operations, and that Supply coming into the market when we start to see the fundamentals further improve going into this winter season, so, we think we've got the right timing there. Uh, and hopefully, everything will come together as expected.
Great. Thank you.
Speaker Change: As a follow up the, the demand and the assumed growth in your backyard is exciting and certainly, you know, capturing the day today. But wondering how you think about that opportunity, set locally versus the potential that you and some of the other Appalachia players may be needed to back, stop Gulf, Coast demand, given some inventory exhaustion. We may see in other basins, is there any interest in looking South at at new pipeline opportunities? Uh, or similar?
Speaker Change: Yeah, I think there's, you know, when you start to take a step back, I think really, it comes down to where do we see the strongest margins present themselves. And so, when you look at what supporting, uh, piece of our 3 year outlook that we communicated earlier this year, it is with utilization of some additional Long Haul transport that we picked up that gets to the Midwest and also to the Gulf Coast. So we feel like even though there's a lot of
Speaker Change: This plays. Well, as you start to think about ranges ability to, not only participate in the current transport that we've been able to acquire. But also other transport that will become available because it's going under utilized as you think about new projects. You know, clearly I think I saw a list the other day from from some internal work where you know, there's 14 roughly projects that we're aware of that are either Brownfield, expansions or Greenfield projects that are under evaluation that could get gas to places like the Northeast and and add additional supply to the southeast. And also to the gulf, we're going to be patient when it comes to those projects and make sure that we understand what that netback looks like for range versus again. The demand growth that's going to take place in the Basin. But if you've heard us say on today's call and others, the inventory back stopped for us is just really allowing us that flexibility to think about how we could participate in the growing demand term and as you've heard Mark touch on even what kind of pricing structures would exist? Not only for the AI
Type discussions, but also for future Gulf Coast Opportunities as well. So I think it, you can expect to see a diverse portfolio from us like you've seen in the past where we're trying to get to premium markets and also support our best, net backs.
Speaker Change: Thank you. I appreciate the time.
Jake: Thanks, Jake.
Speaker Change: Thank you. Our next question, comes from Kevin mcci with Pickering Energy Partners. Your line is open.
Kevin mcci: Hey, good morning. Um TQ capex came in well below expectations and it looks like net lateral. Footage was up. You know, pretty materially quarter over quarter, any comments on what the main driver of executing uh on those lower wall costs are, you know, is there anything particular on the drilling or the completion side or maybe any comments on deflation, you're seeing in the market?
Kevin mcci: Yeah, good morning, Kevin. I, I think our conversation around capitol for Q2 really starts with some of the efficiencies you heard us touch on in the prepared remarks drilling team just continues to, uh, really hit a home run here, uh, by drilling, you know, 6,250 feet on average in the lateral during the quarter. Those are just some of our most Capital efficient Wells that we're seeing come through uh through the numbers, if you will, um, that gets us on to the next pad, sites more efficiently and quicker. Um, and so ultimately, I would tell you that some of our Capital Savings really comes, comes at the back of that. Uh, we were really patient with water Logistics. Also, during Q2 supplying, those 800 Franc stages, that the team pumped and so uh, that means lower LOE but also lower cost. As we then feed that water into the operating site itself. So very much a, you know if you look over the past couple of years, you've just seen kind of a quarter
Kevin mcci: Recorder a year-over-year, incremental Improvement, some of its on the back of process. Some of its on the back of also infrastructure and changes in and the equipment that we use on location, but our Capital coming in the way it has, so far has really been on the back of just good quality, efficient operations. And part of the reason why you saw us pulled out the upper end of our guidance for the year,
Speaker Change: I appreciate the further detail on that. And, and as a follow-up, you know, with all this talk about potential gas growth in the future. Do you have a view on the local nl's markets, uh, ability to absorb additional production? Or would you consider growing with lower BTU? Uh, inventory.
Speaker Change: Yeah, I'll I'll start here. Um, I think we see good line of sight on on what the NGL Market looks like and really it it's it's going to start with a balance of both local and international exposure. Part of the reason why you saw us take on some incremental capacity on the East Coast through the repauno terminal, uh, everything is on track there. As expected to support our 2026 and 2027, uh, ago, growth profile, but as you've seen in the past, we also remain pretty focused on the ability to toggle those barrels and sometimes even split the various components apart where we see the greatest demand. Take place. So, you've seen in some quarters. As an example, we may have sold greater than 80% of our of our propane into a waterborne export market. And we may keep some of the butane here.
Speaker Change: In the lower 48 and or in Regional markets we can do that based upon Rail and other pipe exposure optionality that we have. So we feel like we've got good good visibility and what that future demand looks like. And as you start to look globally, there's a lot of infrastructure that's being built out, both on the LPG and on the propane. And also on the ethane side, uh, both from a dock capacity, export standpoint, some of which is commissioning now, but also just future. Pdh ethylene steam crackers, infrastructure over the next 18 to 24 months. So we feel like we've got good line of sight into what that growing demand looks like. And we feel like there's a constructive view for ngo's going forward as we grow the business,
Speaker Change: Appreciate that. Thank you.
Kevin mcci: Thank you. Kevin.
Speaker Change: Thank you. Our next question comes from Neil, Mehta with Goldman Sachs, your line is open.
Speaker Change: Yeah, thanks team. Great. Uh, great call. I, I just wanted to follow up on, on the US production numbers. I, I think there's no doubt, there's going to be tremendous amount of demand over the long term, but there's been an investor debate around some of the scrapes that we've seen here, over the last couple weeks with production kind of queueing up over 107 on some of the on some of the third parties. So I think just curious, have you been surprised relative to your own, um, modeling about us production? And do you think that there will be price elasticity if if uh near-term uh, gas prices? Price to the downside?
Speaker Change: Yeah, good morning, Neil, thanks for for joining us. I would say there's been very few surprises for us. As we think about the supply for the year, you know, we anticipated uh a fairly uh we'll just say flat and stable production response from the Deferred heels from last year. I think we expected uh that to be flat based upon, you know, some of the infrastructure being at a high level of utilization. And then eventually you'd see a a decline off of that. You know, we've been going through, uh, Midstream maintenance season the industry. And so when you look at whether its LNG infrastructure or other other pipes compression and other Downstream, you know, short-term impacts we're starting to come out of that now at this point in time
Speaker Change: All at the same time that we're at the doorstep of seeing Phase 2 of of platinum's, get commissioned, and also start to see ramped up further of of Corpus Christi stage 3. And then later this year, um, pending further updates golden pass starts to see some feed gas start to go through that facility. So we think there's a, a lot of reason to believe that we could end the year that's somewhere similar, or a little bit north of where we're at, from a US production standpoint. Let's just say, 107 BCF a day, that wouldn't surprise us at all internally on how we view where activity has been. Uh, but again, when you start to look at the the Dynamics that's about 4 BC at the day, roughly year over year, increase in production, at that point. We're also going to see about 4 to 5. DCF a day in incremental, demand take shape between LNG and other aspects, and so exports to Mexico and that doesn't include Shell Canada. So, we feel like there's, there's a balance here that's playing out. That's different than just focusing, maybe on a store.
Speaker Change: Storage, never uh, number and level alone. But if we end up at 3.8 to 3.9 TCF, let's just say this this fall that roughly turns out to be about 39 to 40 days from a days of Supply standpoint. And that's a good couple of days below where we were last year at that same time and it's below the 5-year average. So we feel like this all still sets up really well, as we kind of start to as an industry shift, our way our eyes away from state of a Storage level alone and think more about the demand.
Speaker Change: And days of Supply coverage.
Speaker Change: That, that's great color. And that's the follow-up, which is just your perspective on hedging the 26. I stayed pretty well bid even as the front has come off. And so, you know, just your thoughts on continuing to layer in Hedges, to protect, uh, to protect downside. Well, it's still leaving enough open to capture the upside.
Speaker Change: Morning Nate. I'll I'll kick that 1 off. Um, I think what you have seen the modest changes in our hedge book, this past quarter is consistent with the philosophy and the business objective. We described over the last number of years, is really primarily to cover fixed costs and hang on to, as much upside as we can. Because the fundamentals in our mind are not fully baked into the forward curve. It's just not liquid enough. There's not enough trading activity and and fundamental counterparties active for it to be truly linked up. Um, so what you saw was some modest additions just finishing off the 25 book, you just added some collars which raised the floor price on our book and raise the ceiling to capture more upside. So a lot of us editions fine-tuning their so you looked into 26 and 27, same thing execution around the same guidelines. Same philosophy. We described over the last, um, several years and again, increasing the ceiling, for example, in 26, the the ceiling on that percentage, the production of the 10.
Speaker Change: went up by 30 some cents so we we are trying to
Speaker Change: So it said differently, the the Hedge books for 26 and 27 are basically where we want them, and we don't need to do anything else.
Speaker Change: That's perfect. Thanks team.
Speaker Change: Thanks Dale. Thank you.
Speaker Change: Thank you. Our next question comes from, Roger Reid with Wells. Fargo Securities. Your line is open.
Roger Reid: Yeah, thank you. Good morning.
Speaker Change: Roger.
Roger Reid: Morning. Uh, seems like a lot of it's been covered. Maybe get a little bit, uh, granular here. Uh, just you know, y'all talk about lateral feed as an indicator of, you know, expectations where we'll be at the end of the year. Just curious as you look into the
Roger Reid: Call it the first half of the 26th. Second half of 26, how we should think about that lateral foot need, you know, the call it the backlog you need in order to hit some of the growth targets you've laid out and then
Roger Reid: The industry has been in such a, you know, caught almost a stasis mode, right? Just maintaining production. You're going to shift here to growth. How do you think about managing
Roger Reid: That, you know, with your service providers and maintaining your efficiency or even continuing uh to improve it as we've seen, you know, maybe what are the challenges in in delivering on that?
Roger Reid: Kind of 2 questions in 1 and I'll I won't ask any follow-up, I promise.
Roger Reid: That's okay again thanks for joining us. Roger you know I think when we start to think about lateral feet requirements for 2026, we've really been quietly building that over the past 24 months and through the balance of this year. Part of that was
getting to a place of having some visibility to what the setup could look. Like we've been running an efficient 2 rig program with 1, fracc Crew and really those 2 drilling rigs have generated a little more inventory than that. 1 Frac crew could consume. And so now here we are looking at 2026 with the ability to start utilizing more of that inventory, which should be in excess of 400,000 lateral fee as we think about 26 and 27.
Roger Reid: So next year, you should see a similar Capital requirement that we've communicated up to this point and you should see the dollars, get allocated more heavily on a percentage basis toward the completion side to start working through that inventory. All while a single, uh, maybe 1 to 1 and a half, drilling rigs, just continue to kick out some inventory, uh, for than 2027 as well. So we feel like there's the right kind of setup. We keep it very efficient. And then by the time you get to the end of that profile, we feel like we can hold production flat as you heard Mark touch on today. Roughly 2.6 BCF a day with a similar type Activity Set. But depending upon what materializes we can also
Roger Reid: Alo consider, uh, some incremental growth beyond that if if that's what's required and what the market is calling for from a Service Company standpoint, you know, ultimately we feel like we've got the right Service Partners in place really Quality Service Partners. Many of them that have been with us for a number of years dating back to when we drilled some of the early on Discovery and delineation. Well, so we feel like there's good stability there and we have the ability to ramp into this space. Instead of using, we'll say a partial crew on the frag side. It's something more like 6 months or maybe instead of having a partial year with a given top hole rig. Maybe it's a full year, so we have that ability to work with them communicate. We do what we say we're going to do. We think that pays off really well, because there's business. Business certainty, uh, on their end to then plan around how we're thinking about executing for the next several years. So all in all we've seen really good Partnerships across the across the board. And I think that's why you see the efficiencies that you do that come out of our program quarter over quarter.
Speaker Change: All right. Thank you.
Roger Reid: Thanks, Roger.
Speaker Change: Thank you.
Speaker Change: Our next question comes from David deckle bomb with TD. Cowen, your line is open.
Speaker Change: Uh, thanks everyone for taking my questions. Um,
Dennis, and Mark, I I wanted to follow up on just the conversation, just for context. That now that you're you're effectively, um, you know, below your long-term debt targets and you
Speaker Change: kind of a
Speaker Change: You laid out there, the 375 sort of case, over the next several years, you know, how how do you think about like the split of returning Capital to shareholders while also thinking about investing in the business? And there are other portions of the business that we, we should expect you to look, you know, more more deeply at particularly as you think about, uh, trying to satisfy invasive demand, whether it's, uh, more organically sold opportunities and extending lateral feet, uh, or if you're looking at at perhaps, you know, other source of infrastructure Investments, or, or maybe things that we might not be thinking about,
Speaker Change: I think you've touched on a lot of the things we've mentioned, um,
Speaker Change: over the last number of quarters. And as you've seen us evolve, and, and EB, and flow in how we're returning Capital, how we're allocating the cash flow of this business is generating. So, you're right, we are very comfortably within the target debt Zone first. I guess, let me touch on that debt Target guidance, that net debt of 1 to 1 and a half billion. Let's think about that when it was established a number of years ago. Um, we described it as through a cycle and I would think about an appropriate balance sheet and the changes in the balance sheet over um, a cycle. So at you're going to continue to de-lever in the strongest points of the cycle to build your dry powder, such that you can be opportunistic at those points in time, when you can create the most value. So we continue to, um, have a strong balance sheet, but you've seen us in the first 2 quarters of this year. More than double what we did and share repurchases from last year and um, slowly grow the dividend of this year. So, as as we've said,
Speaker Change: Prior calls.
The stronger, the balance sheet, was the greater the flexibility. We had in returns of capital and another piece of that returns of capital, uh, program that we laid out at the beginning was we were shying away from a purely formulated approach. We think that creates a very Pro cyclical type program where you're buying when maybe prices have run on you and there's better allocations of that Capital back into the program.
We're paying down debt for other uses. So you know just as an example the way the program is executed this past quarter are average share price on repurchase shares was roughly $66 $36.37. So well below the average price during the quarter. If you look programmed to date, we've bought back some 31 million shares in an average price of $1 per share. So, as we look ahead, we want to retain that optionality of buying in the shares. But fundamentally range is a natural, gas Natural, Gas Liquids production company. So maintaining efficient production focusing on operational efficiency, focusing on these value added contracts, and capturing that disproportionate market share of this demand as it comes in enabled, by our transportation portfolio. And depth of inventory is how we think about that going forward now. What other things might we invest in along the way?
Speaker Change: don't expect us to stray too far from what our core Mission and core objective is
Speaker Change: So that's investing focusing operations in the Appalachian Basin, where our operational is in geological expertise lives and the marketing team's expertise lies in moving gas and liquids out of the Basin and internationally. Um, so might it be, um, carrying some of the costs or investing in some of our compression to improve production? Might it be building some lateral lines modest investments in in Midstream, you you could see those I think as as 1 officers participation going forward but again, I'd be focused on developing
Developing a maximizing, the value of our inventory and our production going forward. I think, as you think further down the line might be buying some royalties, I think on our properties. I think that's an option as well. But fundamentally the way, we view these types of options is we come back to, what are we buying for you the shareholder? In terms of cash flow per share resource and production per share future? Um, future resource potential per share. So whether that's buying and ranked shares, and you're requiring them that way or through some other means,
Speaker Change: That's what we're focused on, is the per share value.
Speaker Change: Appreciate it, Mark. And then maybe this is as a follow-up, then, as you talked about, you know, looking to announce perhaps an opportunity in your term on a data center project.
Speaker Change: you know, I guess as as you think about those terms,
Speaker Change: Versus perhaps just the remaining exposed to invasive pricing. Um, and and and potentially capturing some of that upside volatility. Um, you know, I guess you, do you feel like the incentive is enough at this point for you to look to to sign some of those Supply agreements. And, and why do you necessarily feel that you have to be involved on the data? Amen. Data center supply side.
Speaker Change: Talk through earlier where we're providing some.
Speaker Change: Strength in how we think about our net backs. Also it could be that we're providing some some thoughts around it upside exposure for them as well but can also trickle down into how we think differently about hedging in the future as well with some assurity around some of these pricing structures. So we think we can do both quite honestly.
Speaker Change: Appreciate it. Best of luck, guys.
Awesome. Thanks. David.
Speaker Change: Thank you. We are nearing the end of today's conference. We will go to Philip Jung of BMO for our final question.
Philip Jung: Thanks, good morning.
Coming out of the Pennsylvania energy Innovation Summit last week. Um, can you speak to the, the discussion or level of optimism around Federal permit reform? Just as it relates to the third party pipeline or Invasion projects, uh, invasive demand projects, um, and how meaningful some of the changes in the big beautiful. Bill could be here. Um, you're ALS, welcome to touch on any local and state Dynamics and that also
Speaker Change: Yeah, I think clearly permit reform and and you've probably heard me say this in in Prior conversations that we've had. But I think permit reform just really has to play an important role in how we think about the future. And really, it's it's a bigger discussion than really just natural gas and NGO production. It really goes all the way to how you think about getting support for not only building.
Speaker Change: And expanding the grid as it stands today but bolstering it as well. How do you basically get right away? How do you stretch, wires? How do you further Electrify? What we do, which again a lot of this AI conversation is that's what the underpin, uh, what's underpinning? This conversation? And then the feed gas that we as a company. Could then provide into generating that power source for a lot of what the future uh opportunities look like. So in our mind, there's a fair amount of optimism around permit reform, taking shape even a year ago, you actually saw some bipartisan support between, uh, Senator manchin out of West, Virginia and barrasso out of Wyoming to have. Uh, we'll just say some language that was being constructed even then and if you think about a year ago we were all going through a phase of of campaign fatigue and trying to uh understand what the administrative Administration could look like or if there would be a change. So all that to be said I think there was support a year ago there's now a growing support now I think it all plays well for appellation.
Speaker Change: And there was a a quite a volume of of optimism last week at the conference and I think locally to to maybe top off your question, you know, even the governor was present and, you know, we were really pleased to see Governor Shapiro's support, uh, for the energy. The role of energy is going to play in adding jobs, Economic Development, and also playing a role in this AI buildout going forward. And ultimately, we would expect both from his messaging and what we've seen in conversations with the governor's office ongoing support
Speaker Change: Report for this permit reform to help truncate the time frame to get these projects from we'll just say from the dream factor, to actually being commissioned. So we're uh, we're optimistic.
Speaker Change: Great, thanks for that. And then, uh, I did also want to get your updated thoughts on the propane markets. Uh, we have seen inventory build here over the past 2 months. Uh, wondering if you could talk through the moving pieces here and and and how do you see the market and exports shaping up in into your end?
Speaker Change: Yeah, I'll I'll touch on this briefly as we kind of wrap up here today, but we still are really optimistic about the propane Market. I think, if you look at exports over the over the last quarter, I mean we've averaged 8 as an industry 1.8 million barrels per day, that's up 5% versus versus the same time a year ago and you've continued to see barrels flow even at that level despite some of the noise around tariffs and trade Wars. As an example. Uh, infrastructure, uh, is being commissioned as we speak to expand dot capacity, out of the gulf. We've all been looking, I guess as a sector at congestion, in the Gulf Coast Market less impactful to range because of our exposure to East Coast terminals out of Marcus Hook Philadelphia. But clearly congestion has played a role. And I think you're seeing that probably translate into some of the numbers now that we're seeing from a stock level standpoint, you know, but from the stalks perspective, we're really about where we were last year, so it's very comparable and I think ultimately we would expect with
Speaker Change: Further build out of that dock capacity but also in 2026.
Speaker Change: uh, you're seeing infrastructure on the demand side, get added that total 700,000 barrels a day if you assume a similar 80% utilization rate that the US has
Speaker Change: Of Midstream infrastructure.
Uh, build outs, but also maintenance season. I think you start to see improvements in some of these stock levels and especially as you get into 2026 with this further build out of demand infrastructure.
Speaker Change: Thank you guys.
Phil: Thank you. Phil.
Speaker Change: Thank you. This concludes today's question and answer session. I'd like to turn the call back over to Mr. Dagner for his concluding remarks
Speaker Change: I'd like to thank everybody as always for joining us on the call today and have a another great conversation with us. If you have any questions, please don't hesitate to follow up with our investor relations team. We look forward to seeing you at upcoming meetings and on the road during the fall and talking again in October at our next call. Thanks everyone.
Speaker Change: Thank you for your patience.
Speaker Change: Today's conference, you may now disconnect