Range Resources(US:RRC)2024-02-22 17:44Financial Data and Key Metrics Changes - The company generated cash flow before working capital of approximately $1.1 billion in 2023, with cash flow in Q4 being $300 million, resulting in a realized price per unit of $3.25 per MCFE [118][121] - Fourth quarter cash margins per unit of production were $1.42, reflecting a healthy 44% margin despite lower commodity prices [121] - The company reduced net debt by an aggregate of $1.2 billion over the past two years and returned capital to shareholders totaling $535 million [88] Business Line Data and Key Metrics Changes - The company plans to maintain a production profile of approximately 2.12 BCF equivalent per day to 2.16 BCF equivalent per day, with a focus on liquids-rich production [66] - Approximately 640,000 lateral feet from 50 new wells are expected to go into production in 2024, with more than half being drilled on pads with existing production [77] - The average daily lateral footage drilled in 2023 was over 4,600 feet per day, a 38% increase from the previous year [68] Market Data and Key Metrics Changes - The company expects near-term natural gas prices to remain challenging, but anticipates long-term growth in global demand for U.S. natural gas [83][84] - The weighted average NGL price was $24.91 per barrel in Q4, a $2.42 per barrel premium to the Mont Belvieu Index, driven by strong seasonal butane values [113] - The company has approximately 55% of 2024 natural gas hedged with an average floor price of $3.70, providing stability in cash flow [124] Company Strategy and Development Direction - The company is focused on maximizing the value of its multi-decade project inventory while generating free cash flow and prudently returning capital [123] - Investments in water infrastructure are planned to support low D&C and LOE costs in the future, with a focus on maintaining operational efficiencies [65][152] - The company aims to maintain flexibility in its capital allocation strategy, balancing between share repurchases and debt reduction [102][161] Management's Comments on Operating Environment and Future Outlook - Management highlighted the resilience of the business in a low price environment, emphasizing the ability to generate free cash flow through cycles [125] - The company expects to see a ramp-up in production in the second half of 2024, with a consistent production profile similar to previous years [50][67] - Management noted that the current environment could provide opportunities for consolidation in the sector, but any M&A would need to align with the company's strategic objectives [99][134] Other Important Information - The company has a strong balance sheet with federal NOL carryforwards totaling $1.8 billion, which will reduce taxable income in the coming years [122] - The company achieved several new completion efficiency records, including nine stages per day and a record of 17 stages completed in a 24-hour period [80] - The company plans to maintain a flexible hedge program to cover fixed costs and capital commitments, which is beneficial in periods of price weakness [63][92] Q&A Session Summary Question: What is the company's strategy regarding gas production and market conditions? - Management indicated that they can adjust the timing of completions based on market conditions and basin fundamentals, allowing for flexibility in production [3][128] Question: How does the company view its capital allocation strategy moving forward? - The company emphasized a flexible approach to capital allocation, favoring share repurchases when prices are low while maintaining a focus on debt reduction [102][161] Question: What are the expectations for production levels in 2024? - The company expects production to ramp up in the second half of 2024, with a consistent profile similar to previous years, driven by new turning lines [50][67]