Range Resources Corp., one of the Marcellus Shale’s biggest natural gas producers, doesn’t see commodity prices and demand moving high enough in the next year or so to see an increase in drilling.
Range’s new CEO, Dennis Degner, told financial analysts in a conference call Tuesday that the company sees gas prices rising from their lows and potentially strengthening later in 2024 once liquified natural gas plants and export terminals come on line.
But until then, Degner and CFO Mark S. Scucchi said, Range’s plan in recent years of drilling just enough to maintain its 2 billion cubic feet per day production will remain on track.
“As we think about 2024, a good starting point is to always think about maintenance (level of production),” Degner said.
For Range (NYSE: RRC), that’s drilling between 60 and 65 wells per year. Most of those wells are in southwestern Pennsylvania and specifically Washington County, where Range is a dominant driller. Drilling and putting into production that many wells allows Range to keep its production between 2.12 and 2.16 billion cubic feet per day.
But a sharp fall in prices has made it a lot less profitable to produce natural gas this year compared to last year. Range’s revenue fell from $1.36 billion in the second quarter of 2022 to $468.38 million this year. Profit was $30.23 million, 12 cents a share, in the second quarter, down from $452.85 million a year ago.
Range has moved to a single horizontal drilling rig for the rest of the year, having parted ways with the second rig it had been using in the first half of 2023. It’s got one hydraulic fracturing crew set for the rest of the year, with a second crew that has completed a set of wells already and plans for a second set before they will be released. Range expects to spend between $570 million and $615 million in capital expenditures, including drilling, for the year.
Degner said Range’s natural gas production will rise slightly in the second half as the new wells drilled and completed come on line.
“We see this production profile as a complementary setup as commodity prices improve after the shoulder months and into the winter,” Degner said.
Degner believes that there’s a positive forecast for natural gas prices, especially with the liquified natural gas that will be needed for export as well as optimism that Mountain Valley Pipeline, after years of delay, starts to help increase demand.
“All of that starts to have a positive outlook,” Degner said.