Yahoo Finance Range Resources Corp (RRC) (Q1 2024) Earnings Call Transcript Highlights: Strategic Moves and ...
Free Cash Flow: Generated meaningful free cash flow in Q1 2024.
Capital Expenditure: All-in capital for Q1 was $170 million.
Production: Achieved 2.14 Bcf equivalent per day in Q1.
Liquids Production: Liquids accounted for 32% of total production.
NGL Revenue: Provided a price uplift, with NGL price realizations at a $2 premium over Henry Hub.
Realized NGL Price: $26.24 per barrel, $1.91 over Mont Belvieu equivalent.
Overall Corporate Realizations: $3.54 per Mcfe.
Cash Margins: $1.59 per unit of production, representing a 45% margin.
Cash Flow: Generated $308 million before working capital changes.
Debt Reduction: Reduced debt net of cash by $150 million.
Dividends: Paid approximately $19 million.
Share Repurchases: $24 million paid for common shares withheld for taxes on equity compensation.
Hedging: Approximately 55% of 2024 natural gas production hedged at an average floor price of $3.70.
Release Date: April 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Dennis, you mentioned the strong domestic butane and international propane markets. So like the dynamics there are more than seasonal and caused you to raise your '24 realization guidance? Do you have any visibility on those markets longer term? A: Dennis L. Degner, CEO, President & Director of Range Resources, explained that seasonal effects are typical for propane and butane, which is why they maintain flexibility in their sales and transportation options. Alan Engberg added that there is significant international demand expected for LPG, with 18 new PDH units coming online, potentially increasing U.S. propane exports. This positions Range well due to their significant export capacity.
Q: Your cash balance increased 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? A: Mark S. Scucchi, CFO, indicated that the cash balance might fluctuate based on quarterly allocations. The priority remains managing the 2025 notes economically, with the possibility of buying back at a discount. The cash balance provides flexibility and efficiency in managing working capital needs.
Q: Just wanted to brush on the topic of shifting some of your dry gas wells to later in the year. Is this a moving target if gas prices remain depressed, would these move into 2025? A: Dennis L. Degner noted that while current prices still make these wells profitable, the flexibility in their scheduling allows optimization based on market conditions. The timing of these wells will depend on various market factors, including U.S. production declines and LNG facility commissioning.
Q: Given current market conditions and expectations, how are you guys thinking about '25 hedging? A: Mark S. Scucchi explained that Range's hedging strategy aims to cover fixed costs to maintain operational stability and protect the balance sheet. For 2025, approximately 25% of natural gas is hedged, providing a stable financial base while allowing significant exposure to potential market improvements.
Q: AI and the demand growth for gas from AI adoption is a big topic. In your outlook, you only bake in about a Bcf a day of incremental demand growth. Are you seeing something on the ground that's making you more conservative than some of the expectations that are out there? A: Dennis L. Degner addressed this by stating that while their estimate of a Bcf a day is conservative, the actual demand could be significantly higher, especially with potential increases in data center activity and other industrial expansions in the Northeast, close to Range's operations.
Q: On the topic of your AI, what do you think the back half of the decade growth or demand outlook looks like in basin or out of basin? A: Mark S. Scucchi highlighted the early but compelling sources of incremental demand for natural gas due to data centers and other industrial activities. Proximity to these growing demands is seen as a strategic advantage for Range, emphasizing the importance of their existing transport and infrastructure capabilities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
