Range Resources(US:RRC)2021-02-24 18:59Financial Data and Key Metrics Changes - Range Resources reduced cash unit costs by approximately 10% in 2020 compared to average 2019 costs, resulting in significant enhancements to margins and cash flow [7][33] - The fourth quarter unit cost was $1.84 per unit, which improved by $0.20 or 10% compared to the full year 2019 [33] - The company reduced debt by over $1 billion and improved liquidity to approximately $2 billion following a bond offering [9][34] Business Line Data and Key Metrics Changes - The operational program for 2020 resulted in 67 wells turned to sales, with approximately half focused on dry gas acreage [15] - The average well cost for 2021 is projected to be below $600 per lateral foot, maintaining the best performance among peers [10] - The company plans to complete 59 wells in 2021, with 60% of turned in lines expected in wet and super-rich acreage [18] Market Data and Key Metrics Changes - The pricing for 2021 NGLs is expected to be comfortably above $20 per NGL barrel, with an anticipated realized price approaching $4 per MCF equivalent [7] - Propane prices have increased by 70% compared to the third quarter of 2020, with expected pre-hedge NGL prices above $25 per barrel for Q1 2021 [26][70] - The differential from NYMEX is expected to improve from $0.57 in Q4 to $0.20 to $0.25 in Q1 2021 due to returning infrastructure and strong LNG exports [25] Company Strategy and Development Direction - The company aims to return capital to shareholders while maintaining a focus on safe, efficient, and environmentally sound operations [12] - Range Resources is positioned to capture the best value for its LPG production through flexible export capabilities and expects to export over 80% of its propane and butane in 2021 [27] - The company is focused on reducing costs and enhancing liquidity while maintaining best-in-basin capital efficiency [28][34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about generating significant free cash flow in 2021 and 2022 due to improving commodity prices and operational efficiencies [12][36] - The company anticipates a healthy and prudent approach in the industry, prioritizing shareholder returns while managing environmental, social, and governance matters [37] - Management highlighted the importance of maintaining a strong balance sheet and reducing leverage to enhance shareholder value [36][68] Other Important Information - The company corrected a deferred tax error in its 10-K, which was a noncash adjustment and did not affect the net operating loss balance [29][30] - Range Resources has a core inventory of wells measured in decades, providing a long runway for consistent results and efficient capital deployment [11][39] Q&A Session Summary Question: Regarding the asset sales program and the current A&D market - Management indicated that the company is in a strong position to make economic choices on divestitures, focusing on maximizing cash flow rather than needing to refinance [45] Question: On the sustainability of cost reductions - Management confirmed that the cost structure is durable and repeatable, driven by operational efficiencies and innovative technologies [54][56] Question: Outlook for natural gas demand stimulation in the region - Management noted that natural gas is replacing coal in power generation, and there are opportunities for growth in LNG exports and local demand infrastructure development [63][66] Question: Thresholds for returning cash to shareholders - Management stated that the long-term objective is to operate below 2 times leverage, at which point they will clarify the framework for returning capital to shareholders [67][68] Question: NGL realizations and future premiums - Management expects NGL realizations to continue improving, with current market values indicating a significant increase compared to previous quarters [70]