Gas Producer Range Resources Upbeat Despite Weak Market

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Though pointing to static volumes for the year, Range Resources Corporation (NYSE:RRC) (Fort Worth, Texas), one of the larger U.S. shale producers, said it would be able to weather a storm brought on by lower natural gas prices.

"As global energy demand continues to increase, we believe Range is well-positioned on the low-end of the natural gas cost curve with a competitive emissions intensity and a high-return, long-life inventory of de-risked wells, measured in decades," Dennis Degner, the company's chief executive officer, said Wednesday.

Trading at around $2 per million British thermal units (mmBtu), Henry Hub, the U.S. benchmark for the price of natural gas, is down about 18% since the start of the year. The price reached as high as $9/mmBtu shortly after Russian forces invaded Ukraine in early 2022 as markets adjusted to the loss of Russian supplies in Europe.

A survey from the Federal Reserve Bank of Kansas City, whose district includes parts of the Anadarko, Niobrara and Permian shale basins, found that natural gas prices need to be about twice as high as current levels to make a profit. To incentivize drilling further, Henry Hub needs to be around $4.38 per mmBtu, the survey found.

The federal government expects Henry Hub to average $2.20 per mmBtu this year, before settling at around $2.90 in 2025.

Laying out its guidance for the year, Range said it was targeting "maintenance" levels for the year. Output will be relatively unchanged from prior years, averaging between 2.12 billion and 2.16 billion cubic feet of liquid equivalent per day (Bcfe/d).

The company averaged 2.1 Bcfe/d during the first quarter. Of that, about 70% is in the form of natural gas. As of year-end 2023, the company had proved reserves of around 18.1 trillion cubic feet equivalent, of which 64.1% was in natural gas.

Range operates primarily in the Appalachia Basin, which includes both the Marcellus and Utica shale reserves. The Energy Information Administration (EIA), the statistical arm of the Energy Department, expects Appalachia to yield around 36 Bcf/d on average in April, which represents around 35% of total U.S. shale natural gas production.

"Range also has a network of more than 250 existing well pads that provide the opportunity to develop future wells while utilizing existing roads, pads and infrastructure," the company added.

Earnings per share for the first quarter were 69 cents, compared with the analyst estimate of around 57 cents on shares valued at $37 each. Total revenue was $718 million, nearly 9% higher than expected.

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