Range Resources Corporation Price & Performance (RRC)

We've also posted supplemental tables on our website that include realized pricing details by product, along with calculations of EBITDAX, cash margins and other non GAAP measures. With that, let me turn the call over to Dennis. Thanks, Laid. And thanks to all of you for joining the call today. In the fourth quarter, Range continued its steady progress on key themes that we have discussed over the past year. We completed the operational program safely efficiently and within budget while generating free cash flow and investing in the long term development of our world class asset base. RAGE's ability to generate free cash flow at trough level natural gas prices in 2024 allowed us to repurchase shares. Distribute dividends, and meet our balance sheet targets. All while making countercyclical capital investments that support the multiyear plans we'll discuss here today. I believe that Range's 2024 results are a testament to the resilience of our business and the financial flexibility we've created over the last several years. Range's low capital intensity Range's low capital intensity is a key component of our through cycle profitability. And is the result of Range's class leading drilling and completion costs. Shallow base decline, Large Lucky core inventory and talented team.

Another key component of Range's resilience is the diversity of our production stream. And the value of Range's Range business was on display once again in 2024. Our ability to market ethane, propane and butane into the international market drove the highest NGL premiums in company history. And we expect premiums versus the Mont Belvieu Index once again in 2025. Looking at the entire production makeup, Range saw an aggregate unhedged price realization of $2.76 per Mcfe for the year. Which is a $0.49 premium over Henry Hub natural gas, and a clear differentiator versus purely dry gas producers. When you combine our efficient operations, low capital intensity and liquids revenue uplift The output was another quarter and another year of positive free cash flow despite challenging natural gas prices.

Before diving into Range's 2025 plans and the three year outlook we announced, I want to briefly touch on some of our results for 2024. For 2024, Range ran two rigs and one completion crew.

Driving capital investments of $654,000,000 while generating production for the year at approximately 2.18 Bcf of This production level was above guidance and is the result of strong well performance and continued optimization of gathering and compression infrastructure that was mentioned on recent earnings calls. This past year showcased a continued theme of operation [indiscernible] Drilling saw several new efficiency records set for the program while drilling a total combined lateral footage of over 800,000 feet. For context, maintenance production requires approximately 600,000 lateral feet. So the 800,000 plus feet from drilling points for future periods. For the year, the team drilled 59 laterals with an average horizontal leap over 14,000 feet. Our large contiguous acreage position affords us the ability to drill these types of long laterals. Increasing efficiencies, and allowing us to access more reserves from a single location. All while reducing our overall footprint and consolidating infrastructure requirements. Completions also saw continued we picked up at the start of 2024. With the team completing 3,300 stages for the year. And underpinned by a 6% increase in frac stages per day, versus the previous record set in 2023. Now turning to our plans for 2025. Consistent with our 2024 operational plan, we project to run an efficient two drilling rig and one frac crew program for the year ahead.

This drives an all in capital budget of $6.50 to six ninety million dollars Approximately $530,000,000 of all in maintenance [indiscernible] including maintenance land, and facilities. An incremental $70,000,000 to $100,000,000 of drilling completions capital that will support future growth. Up to $30,000,000 for targeted acreage that supports increased lateral lengths and offsets our lateral footage being turned to sales during the year. All while keeping our 28,000,000 feet of Marcellus inventory relatively unchanged. And lastly, approximately $20,000,000 to $30,000,000 for pneumatic devices and production facility upgrades to further reduce emissions. This is part of an estimated $50,000,000 to $60,000,000 project with $10,000,000 already completed in 2024. This capital plan will 2.2 Bcfe per day, while building additional in process inventory for increased growth capacity in 2026 and 2027, We expect first half of the year production to be slightly down before increasing into the second half of the year and carrying into 2026. Looking beyond 2025, we are planning to add approximately hundred million cubic foot equivalent of daily production over the three years. This will put 2027 annual production at approximately 2.6 Bcfe per day with the capital required to reach this level of production at $650,000,000 to $700,000,000 per year.

This should sound familiar to our investors as it approximates the two rig and one completions crew program we ran in 2024 and plan to run again in 2025. Importantly, our production plan over the next three years will utilize incremental processing capacity at the MPLX Harmon Creek facility, and feed directly into natural gas transportation capacity we have secured to the Midwest and Gulf Coast regions. Braze will also be sending incremental AGL production to a new East Coast terminal that is expected to generate the same export premiums that have benefited rate shareholders many years. Over the three year period, Range's reinvestment rate is expected to remain well below 50%. At a $3.75 natural gas price level. Allowing for increasing returns of capital while thoughtfully growing the business into known end markets. And at current strip pricing, the reinvestment rate would clearly be even lower. The resulting 19% increase in production over the three years will modestly improve margins as certain fixed costs improve on a per Mcfe basis further strengthening ranges breakeven to approximately $2 for NYMEX Range gas. At the end of the three year period, we also expect to have maintained our thirty plus years of high quality Marcellus inventory with modest land spending in line with recent years.

Having decades of inventory will support additional growth as it is called for. Alternatively, at the end of this production profile, Range could maintain 2.6 Bcfe per day a production with approximately $570,000,000 of annual drilling and [indiscernible] the equivalent of only $0.6 per Mcfe. This required maintenance capital is an improvement versus prior disclosures and is the result of continued strong well performance. Operational efficiencies and continued optimization of gathering and compression infrastructure. We believe this robust inventory and relatively low capital intensity provide Range's differentiated foundation for generating through cycle returns for our investors. I'll now turn it over to Mark to discuss the financials. Thanks, Dennis. 2024, as in years past, highlighted the strength of Range's business. Throughout business cycles, we intend to generate free cash flow prudently invest in the business and return capital to shareholders. Despite low commodity prices in 2024, Range accomplished just that. Free cash flow prudent investments, and returns of capital to shareholders. Additionally, our prudent investments were not constrained by cash flow. Such that we were only able to simply maintain the business but instead we have positioned the company to strategically take advantage of demand growth. To recap, Range paid $77,000,000 in dividends, invested $65,000,000 in share repurchases at prices well below our view of long term value and reduced net debt by $172,000,000 while investing in operations.

Range generated $453,000,000 in free cash flow that made those capital allocation decisions possible, executing an operational plan that stands in stark contrast to many industry peers. For upstream producers, quality assets with low full cycle costs the ability to reach a diverse set of customers with a variety of price points, and a rock solid balance sheet to provide flexibility are all necessary to consistently create value. As we sit here in early twenty twenty five, with an efficient plan to modestly grow production, We are also carefully positioning the business and international demand for natural gas and natural gas liquids. In the past, we had stated that we wanted line of sight deliverability to growing demand. Before we would grow production. As incremental demand is materializing today, Range is positioned with its infrastructure and inventory to do just that. As a reliable, long term energy supplier that generates strong returns from a resilient business. Over the past three years, Range has reduced while also returning $678,000,000 to shareholders in the form of share repurchases, [indiscernible] In total, that is more than $2,000,000,000 in capital. Returned to stakeholders. With the balance sheet in our target range, we have increasing flexibility to exercise opportunistic use of the $1,000,000,000 available under our existing share repurchase plan.

In addition, the fixed dividend is something that we expect over time to grow slowly but steadily. It's our expectation to increase the quarterly dividend by $0.01 per share over 12.5% at the next announcement. Here's a key message we intend to deliver today. We can thoughtfully grow Range's business in order to increase returns of capital to shareholders, a goal that is underpinned by quality, long duration assets, and a strong balance sheet. With perhaps the lowest decline rate of comparable companies, Range's capital efficiency stands out in terms of costs per NCFE, full cycle breakeven costs and the required reinvestment rate of cash flow to maintain production. As a percentage of cash flow, Range should regularly be near the lowest call on cash for sustaining CapEx. Critical in our assessment of growth potential is our ability to sustain a low full cycle cost structure low reinvestment rate, and durable high margins. Like Dennis mentioned, Range could hold 2.6 Bcfe per day of production with approximately $570,000,000 of annual drilling and completion capital or approximately $0.6 Prem CFE. Simply put, is growth in cash flow per share which we expect to be compounded by a declining share count. In a profitable business, cash taxes are a reality.

Year end 2024, Range had federal NOL carry forwards totaling $1,400,000,000 These NOLs will serve to reduce taxable income in coming years. These NOLs can be used to reduce up to 80% of a given year's federal taxable income. In addition, Range Head Pennsylvania state NOLs of roughly $770,000,000 All combined, the value of Range in OLLs and tax planning should enhance after tax cash flows over the next two years by more than $300,000,000 For several years, we have spoken about the undervalued option of growth the range business. We stated that growth would be appropriate when we had clear line of sight and deliverability to incremental demand. Further, we explained this could be accomplished with either new transportation capacity picking up uncontracted capacity or through increased in basin demand. We believe today's announcements illustrate the physical link of Range's inventory Through gathering, processing and long haul transport directly to growing demand centers enabling efficient thoughtful growth to harvest additional value from Range's immense inventory. The consistent capital allocation strategy carefully executed we believe it's positioned to range uniquely within the industry to capture significant value for our shareholders both today and long into the future. Dennis Bechtia, Thanks, Mark.

Before moving to Q and A, I'd like to congratulate our team for their accomplishments discussed today and their ongoing dedication to our continued safety performance, operational improvements and progress toward our stated financial objectives. These results harvested in 2024 and across prior years have laid the foundation for our plans in the years ahead and beyond. Simply put, Range's business has never been stronger. Having derisked a high quality inventory measured in decades, and translated that into a business capable of generating free cash flow, through cycles. With that, let's open the line for questions. Thank you, Mr. Degner.

The question and answer session will begin now. And our first question from today will be coming from the line of Scott Hannon of RBC. Your line is open.

Yes, thanks. Good morning. Taking a look at your three year outlook and your plans to grow into 2027, Can you you give us a little bit of sense on the thought process First, could have you grown sooner than later? You obviously had some ducks that In theory, you could have pushed growth a little bit more in 25% and why decision to kind of hold back for '27 versus do it now? And as you look into that 2027 outlook, can you give us a sense of is there a mix shift between the gas and the liquids Yes. Good morning, Scott. I think when you start to look at 2025, a lot of things you've heard us say in the past and Mark touched on this morning in the prepared remarks have really started to come together and inform our approach for not only this year, but then what that looks like for 'twenty six and 'twenty seven. And I think we really wanted to see some clear line of sight some of those demand growth opportunities and also have a home for the production We know that that is an critical part of the overall equation because it feeds to the top line and that is our cash flow and our cash flow goals that we're going to have over the next several years.

As you think about 2025, could there have been some utilization of the end of generation over the past one to two years. Maybe so. But again, we wanted to see that clearer line of sight around those demand growth opportunities Range then start to translate that into a trajectory over the following couple of years. I kind of get back to something you've heard us say as well, really running a lean program and it's operationally efficient. With the one completion crew and the two drilling rigs we feel like that presents a a strikes that correct balance of appropriate modest healthy growth gets it to those that production to end markets that can utilize that that there are known end markets that we've transacted in and around for the past several decades. And so again, our knowledge level is high in that space. But it also allows us to continue to grow around our efficient operational program. So we think this strikes the right balance, but the inventory will get utilized and how we see is really kind of the best trajectory over the next three years. Got it. And as you look at that growth in the 2027.

Just can you give me your thoughts on do you hedge some of that to mitigate some potential weakness in price? Like what if prices are weak as you build into '27? Are you willing to kind of hedge into 2027 at the right prices to kind of secure some of that? And or would you evaluate doing, I guess, a end user kind of transactions, you can kind of lock in a price I think the answer to your question is kind of yes to all of the above. One of the hallmarks of our program is flexibility. That we built into it through diversity of the outlets Fundamentally, I think it's important to keep in mind the structural hedge that hedges that are built into our business by the nature of our production. With 70% gas, 30% liquid, the uplift and the resilience combine that with where the balance sheet is, the need to hedge is simply greatly reduced. What we do hedge that philosophical approach to providing some level of insurance for a steadiness to protect the balance sheet to preserve the optionality of being a bit countercyclical in order to create really outsized value, that's the fundamental guiding principle there.

So I think the simplest answer is yes, we do tend to continue to hedge a very modest portion of our production. But we do have flexibility And I think as we look at the macro, backdrop on both gas and liquids, the end markets to where we're going to be delivering this production and what that incremental demand, really demand pull is feel very good about that. At the end of the day, as Dennis stated, free cash flow generation and growing free cash flow is the goal here. So can adapt the program based on macro trends that we see. But we're very confident given the low breakeven low capital per unit of production, a low cost for incremental production, and the margin will generate off of where these molecules are being delivered to about what that path looks like. Thank you. Thank you.

Thank you. One moment for the next question please. And our next question will be coming from the line of Jake Roberts of TPH and Company. Your line is open. Good morning.

Maybe starting out with the new gas takeaway agreement. So I was wondering if you could frame those relative to your current agreements and what you might see on the cost side over time as you start utilizing those? And also if you could disclose the ultimate split between Gulf Coast and Midwest and if there is the ability to kind of move those volumes around if necessary?

Yes, good morning. I think when you look at the transport that we've been able to acquire, it's going to look and feel a lot like what you've seen from our current portfolio. So in a lot of ways, Jake, the percentages really don't move significantly or really materially versus what you've heard us talk about in the past where essentially 80% of our gas gets out of basin and on total 50% gets down to the Gulf. So it's a little bit more weighted in the direction of the Midwest, but there's significant exposure in this transportation that gets us to the Gulf, which we really like. From a cost perspective, it's going to be right in line with what you've seen us in prior prior cycles on GPT reporting. So really no change from a cost structure there. But inherently from a total perspective, we would expect to see some relief as we talked about in the prepared remarks over the course of time as we see efficient use of that infrastructure [indiscernible] [indiscernible] portions of our contracts in the past that have some cost roll up over the course of time. So there's still an opportunity for us in the near term to see GP and T look really consistent and in the future continue to see it actually roll off as well.

I think when you look at where this transport gets to, one thing that gets us excited is storylines around the emerging demand that could exist in the Midwest and where this transport essentially terminates at. So there's a real opportunity for us as you think about the Thanks. I appreciate the detail there. And then my second question is on the multiyear outlook and specifically the capital that you guys have laid out Can you frame how we should be thinking about the cadence of that six seventy five over 2026 and 2027? And then what exactly is falling off the program to get to the five seventy in the longer term environment? And what rig count does that come Yes. I think the way I would frame this this morning would capital should look really pretty consistent. And I know we framed it with some guardrails for $650,000,000 to $700,000,000 I think ultimately therein lies the variation of what we think the next three years will look like as we deliver on this profile. When you start to get to 2026 and 2027 though, what you start to see is some of those capital dollars on a on a, I'll just say, allocation basis start to get a little bit more weighted toward completing.

And completions activity for that DUC inventory that's slowly been building over 2023, 2024 that will get built over the balance of 2025. So you really get to use that as a tailwind then for those following two years of this three year outlook that we've communicated Again, the capital we'd expect to really be consistent in that $650,000,000 to $700,000,000 type level.

Thank you. Appreciate the time. Awesome. Thanks, Jake.

Thank you. One moment for the next question. And our next question will be coming from the line of Bertrand Donas Hey, good morning guys. Just wanted to start off and one of your peers made a meaningful distinction this quarter on the difference between maybe an attractive gas strip price versus what they were actually seeing on the supply demand side. Just wondering, first, was this decision made using one or the other? And then maybe when we get to early next year and you're staring down that ramp into 2027, are you looking at the the strip price at that point? Or are you looking at maybe there some hyper scaling deals or maybe in basin demand? Just which one you're looking at more?

Yes. I'll start this morning on that question. Bertrand. Thanks for joining the call. I think there's I'll just say commodity price alone really wasn't the driver in this conversation as we started to formulate a three year plan. I think we touched on a couple of aspects in the prepared remarks, but really it was around our food free cash flow goals and objectives over the balance of the next three year. Coupled with the demand that we see we have line of sight on and the transport that it gets us to again those known end markets.

So So when you start to look at the balance of the go forward, you've seen some significant strength no doubt. And it's more it's tied to a lot more than just conversation around whether and net gas storage levels, which starts to get us pretty excited, includes LNG commissioning and the run rates and includes the NGL story for for our overall realizations and what that means from a cash flow force multiplier for Range. So I think as we look forward, again, commodity price wasn't the wasn't the biggest driver. It was really our cash flow outlook and our goals and objectives around that. And as we talked about earlier, the ability to have that production get to demand centers and node end markets. We fully expect that there's going to be we'll just say power demand conversations and AI and data center type growth opportunities in basin. But that really doesn't have to be a part of the conversation today for us on this three year path because of our ability to market this production into that known that those known markets and again on existing transport. So if other opportunities start to materialize, we can have an opportunity to help feed some of that growing demand either through future growth outside of what we're talking about today or it could be through existing production that's sold in basin that could get reallocated that future growth profile.

So very optimistic about the no doubt the future of natural gas prices as we start to think about quite honestly where things have shaped up over the last several years.

Got you. And then the second one just is there room for external growth through maybe acquisitions in this three year outlook?

Maybe you outlined this growth scenario to highlight that you don't you don't need to add any more inventory or could you maybe grow and still find a way to make it accretive with acquisition? I'm just not sure if it's an either or situation. Yes. Sure. This is Mark. I'll jump in. It's I wouldn't say necessarily as an either or how ever this organic growth is so compelling, the quality and depth of our inventory as we've talked about in the past with the quality in thirty plus years, for an acquisition to make sense, it really has to make Range even better than it is today. And create incremental value. So think the phrase we've used before is that the high bar We study the basin. We study the assets to understand geology and pipeline flows and what the potential opportunities may be. But Range Range a standalone entity operating and harvesting the value of the existing inventory with the overlay of our business, our contracts, the marketing prowess of the team is a great path. So we'll be open minded. But it's a Challenging.

Perfect. Just to clarify, so if you made an acquisition, you wouldn't need to slow down growth or anything to adjust for that?

That would be a hypothetical. So we if that were to happen, we'd evaluate it at that time. Got you. Thank you.

Thank you.

Thank you. One moment for the next question. And the next question will be coming from the line of Kevin McCurdy of Pickering. Your line is open.

Hey, good morning. Appreciate the details on the multiyear production and CapEx plan. I wonder if you could help help us bridge the gap between the production 2.2 Bcf a day in 2025 and 2.6 in 2027. With the production ramp up at a measured pace in 2026 or will it be kind of a steeper growth in the back half of the year? And any specifics on when those contracts come online?

Yes. I think if you start to look at the production profile in 2025, I'll start there. It'll look pretty similar characterized to what you've seen in the past. Where the front half of the year can be activity driven you're going to see some turn in lines start to then materialize through through the back half of the year into, I'll just say adding that incremental production. So will be higher in the back half of the year, a little flatter in the front half of the year. But some of the infrastructure that is in process of being constructed and will get commissioned Some of that gets commissioned in late spring some of it's going to be in the fall time period. So as you can imagine, that compression and gathering support for this growth profile will then start to materially move our production profile in that back half of the year and then provide momentum as we start to look into 2026 and 2027. The transport and the processing at the MPLX facility that all comes together in 2026. So again, further supporting that momentum that we talked about for the production growth in 2026 and into 2027.

So it will be, I'll just say, a slow and steady incremental increase across that back in twenty four months. But as we talked about also a little bit earlier, you'll see some of the capital then start to get or weighted more toward the completion side to utilize that DUC inventory readily built over the balance of the last few years and this year. So it'll just be it'll look smooth and steady. I think from capital standpoint and activity basis, where it'll look like two rigs and one frac crew. Will see a little more completion activity start to materialize and get into the program as you see this infrastructure reach commissioning phase.

Got it. Appreciate those details. And then you touched a little bit about the margin expansion on the prepared remarks. But I was curious if you had any more particular details on the contracts Will you get better margins on the extra gas and the NGL you're producing into 2027? Or maybe where do you see those breakevens?

Think I'll end as we pointed to in the materials, a $2 type of breakeven When you factor in deliverability of of our production, the uplift from NGLs and so forth, that $2 is a decent frame of reference for breakeven per range.

As far as driving down fixed costs, be it direct operating costs, be it some elements of the GP and T G and A continuing to drive down interest expense as we pay off debt [indiscernible] is pennies here and pennies there across There are a variety of discussions on the marketing side and what those contracts look like. So as we have a long history of doing long term contracts, with partners domestically and internationally, Those margins can be impacted simply by long term relationships and the creative ability that we brought pricing structures in the past.

So it's going to be a variety and all of the above. Terms of continuing to control costs prudently. [indiscernible] hang on to a durable margin and expand that margin over the next several years as we see this demand come online.

Thank you.

Thank you, Kevin.

Thank you. One moment for the next question. And our next question will be coming from the line of John Anis of Texas Capital. Your line is open.

Hey, good morning all and congrats on a strong year end.

For my first question, you noted that you've secured additional processing and export capacity to support your planned production profile. Is the right way to think about growth beyond that 2.6 Bcf E a day level post 2027 requiring additional transport capacity or incremental in basin demand to support it? And then perhaps if you could also provide some color on the uncontracted takeaway? Thanks. Yes, good question this morning, John. Thanks for joining us. I think when you start to think about what's beyond 2027, I think in a lot of ways, we can be patient. And that's really what's happened over the balance of the last couple of years that goes underutilized by others in the future as well. It's hard to have line of sight on what the volume of that could look like today. But I think when you start to really look at what inventory exhaustion and the role that could play for basin producers, and the competition for capital allocation within their given portfolios versus range. And certainly heard Mark touch on it a couple of minutes ago. I mean, thirty plus years of inventory alone really affords us a lot of opportunity to grow the company as demand continues to materialize and we can be patient and look to add transportation as it comes available in the future or we've touched on in prior calls and today to some degree what future opportunities that are regional or in basin materialize over the next few years.

If you look at the AI and data center forecasting numbers, there's a lot of numbers floating around, but ultimately, if you look at the forecast from PJM here recently, that's been increased yet again. Ultimately, you're talking about if natural gas plays its lion's share of of supplying and consistent with historical supply percentages that power generation growth you're talking about the opportunity for another four Bcf. A day That's something that Range could play a part in as an example. So again, I'll underline this with a conversation around we have the opportunity to be patient and see what materializes. It could be a combination of holding production flat beyond that. It could be more growth with filling demand that continues to materialize either in our backyard where our assets [indiscernible] In other markets on transport that goes underutilized by others. Terrific color. As my follow-up, you highlighted how maintenance D and C continues to trend lower, decreasing around $50,000,000 this year versus last.

Could you help us understand the drivers of those savings and tacking onto that? What additional levers do you have to continue to drive that down over time?

Yes, I think the first place I would start is the team has continued to just exceed expectations around long lateral development and the efficiencies that get captured there. I could spend a whole call probably talking about some of those results alone. Ultimately, if you look over the past couple of years, we've seen double digit percentage increases in our drilling efficiencies set several records in the program And so I think when I start thinking about what future is going to look like, I would expect us to continue to chip away at further improvements in our long lateral development and the efficiencies there. And that translates into a lower D and C cost per foot or potential for that. Now the flip side of that is, as you also have been the challenge of a pad site that was at the beginning of your following program year gets pulled in to your current program year. And so that will result in us thinking about how that translates into production growth, over the balance of the three to five years as we start to look out. Or does that allow us to be more efficient and pull down capital on a given program year.

So but our drilling and completion efficiencies have just really been great. I think the other areas is we've seen efficiency improvements when we return to pad sites with existing facilities. That's allowed us to reutilize roads and infrastructure All of that translates into lower cost We look back at our operational performance and root out non productive time. That's a big significant portion of this. And so when you have a large continuous acreage position that we have and I know it's something we talk about often. But the reality is it does translate into the numbers we harvest and the results that we communicate on a quarterly basis. And we would further expect that to see improvement as we go quarter after quarter and year after year in the future.

Thanks guys. Thank you, John.

Thank you. One moment for the next question, please. And the next question will be coming from the line of Michael Sascalia of Stephens. Your line is open.

Good morning, everybody. Obviously, you're pretty bullish on both net gas and NGL demand growth. One or the other weren't to materialize like you think is can you talk to your ability to shift the production mix to respond? Or is that fairly limited Yes.

I think if you good morning, Michael. I think if you look at how we balance the activity over the last several years from a a well mix standpoint. It could look really similar to on the go forward. So we've typically been somewhere in the 70% to 80% on the processable gas side. And then ultimately 20% to 30% on the dry gas side. But we've always left some flexibility within the program to allocate capital from one side of our asset base to the other. We think that affords us some good optionality. But the other part of this is we also can be flexible in how we utilize in basin gas to basically utilize the transport that we've committed to coupled with the [indiscernible] again still harvesting that NGL uplift. I think when you've heard Alan talk about it in the past, but with all of the PDH facilities that have been commissioned over the past twenty four months, and those that are remaining plus the steam crackers in the year or two ahead the vessels that are getting constructed. There is a real momentum around this NGL side that we feel strongly there's the support there for the future of this profile.

And so it's hard for us to see the the proverbial what breaks down if one of these doesn't materialize. Especially when you couple it with all of the net gas demand conversation. So we do have flexibility in the program. We can change the growth profile if it were required. While still utilizing this infrastructure on the wet gas side. We just don't think that's going to be required when you start to look at all the other details. Got it.

Obviously, your net gas outlook heavily dependent upon LNG demand growth. There's been some split views there. I wanted to get your view on some saying that the LNG market could be oversupplied with all the supply that's coming online.

Next few years. So Wanted to see if you could speak to the demand side for LNG over the next few years?

Yes. I'll kick this one off and then hand it off with more detailed macro thoughts to Alan. I think what we have tried to be careful as we articulate the range story is diversification.

LNG is a part of the story. And so is power. So is reindustrialization in the Midwest. Or NGLs in those end markets. So certainly NGL the LNG story rather is the biggest piece affecting U. S. Production.

But with the diversification in our ultimate end of sales points, it's a linkage to a number of different economic drivers. So that risk of an oversupply in global market [indiscernible] There's obviously the potential in a commodity business, a cyclical commodity business for that to occur, [indiscernible] does not represent too significant a risk to our business profile Again, it's the production mix of NGLs with our gas, our domestic sales and Midwest sales, sales into Canada sales of the Gulf Coast petrochemical and industrial baseload, as well as just power demand. So it's an all of the above for lack of a better term. But if you want to add anything on the LNG side as well, Alan?

No, I would just add that for 24, I think we averaged around 13 Bcf a day. Of LNG demand out of The U. S. And right now, it's line of sight coming on just over the next couple of years. It's going to have us up to like 26 Bcf a day by 2028.

And that's all backed by existing contracts. The current administration is supporting fast tracking or approvals of projects that we're not even talking about here yet. And again, these are backed by international demand. And contract interest. So we feel pretty strongly around that. Additionally, we've got LNG out of Canada that's starting up soon that'll add another two BCF a day of demand.

Wasn't in that '26 I was referencing. As well as just expansions of the pipe flowing to Mexico adding another 1.5 Bcf a day. So again, just in the near term, We have contracts supporting strong demand that I don't think gives us any pause.

Thank you.

Thank you. One moment please. And the our next question will come from the line of Neil Mehta of Goldman Sachs. Your line is open. Hey, thanks so much, Dennis, Mark and Timmy.

Guess the first question is just around the NGL side. We spend a lot of time talking about dry gas. But one of the hallmarks of your 2024 realization was just how good your differential was in NGLs, I think it's $2.33 So how do you think about that as we work our way through 2025 And you talked about a pretty big range here zero to $1.25 But why would it be sequentially lower and is there a potential for outperformance?

Yes. Thanks, Neil. This is Alan. Good question. We like talking about NGLs or at least I do. Premium last year really was fantastic and I think it goes back to [indiscernible] Our activity in the international markets at started way back in 2016 when we were part of the first ever export of ethane out of Bayonne. The U. S. The contracts internationally, some of them are priced on international indices. Some of them are just priced on premiums to domestic indices. And they really do make a difference in our returns. And as you saw last year, overall dock capacity in The U. S. On ethane as well as LPG was relatively [indiscernible] So when supply demand of anything gets tight value, if it goes up, and the value at the dock went up as a result of that. Where we are today, we have a bit of new capacity coming online for export docks for both ethane and LPG. In fact, almost a doubling of the export capacity on ethane we're adding about 400,000 barrels per day of export dock capacity over the next two years and roughly call it 500 a day of propane or LPG export capacity coming on.

Over the next couple of years. And what that will do is it will really tighten up The U. S. Fundamentals. Because that's going to be a huge pull U. S. Supply of NGLs. So I think when that happens, we'll get the benefit of the higher overall domestic prices it could actually result in a tighter arm and maybe a little bit less of a premium on the international So we win actually typically both ways. When things are tight internationally, we get the benefit from the higher premiums. Things are tight domestically, we get the benefit from just the higher base load prices in the domestic market. That's really helpful. So thank you. And then flipping back to the gas side, I guess Range's announcement today does represent, I think, one of the first large producers to talk about [indiscernible] from maintenance to a growth mode and [indiscernible] certainly by very strong demand fundamentals. But as you think about this, do you see the risk that the industry over responds to what is a strong demand environment [indiscernible] to grow at this level because of your low cost good inventory and takeaway. I guess genesis of the question is how many times over the last twenty years have we seen strong demand fundamentals that get swamped by an oversupply response.

Good morning, Neil. That is the age old problem of many a commodity industry. I would say that range is in a somewhat special and unique position. Given the lifespan of our inventory, we are able to underwrite the transport to reach these known growing demand end markets. So while aggregate takeaway capacity out of Appalachia has not changed material and is expected to change material in the next several years. We have taken additional capacity on Range's book to move those molecules into into known demand growth. So range is growing, our concerns around the broader market growing and outstripping demand is really pretty moderated. The trends you've seen be it rational economic decision making based on the relative consolidation of the industry while it's still not totally consolidated. There has been quite a bit of discipline instilled across the industry to be rational, allocate capital to drive free cash flow, Another element that is different that allows Range to be optimistic here the fact that we're at or below 50% reinvestment rate. At three seventy five. We are the only company at or below 50% at 3.75 other basins that are going to be the primary sources of growth require $4 just to hit 70% reinvestment rates.

To supply the growth to LNG.

So our concern is minimal. About the industry being irrational and growing production for production sake.

As we highlighted as we began this discussion today and Dennis kicked it off, our priority is free cash flow And I think that that basic principle permeates the industry today and we collectively will be just rational business people trying to drive returns for our shareholders. Thanks, Tim. Thanks, Neil.

Thank you. One moment for the next question. And our next question will be coming from the line of Betty Range? Of Barclays. Your line is open. Good morning. I want to ask about the the implied improvement in the capital efficiency that's shown in the three year outlook.

If I look at what you guys are saying on 2027 maintenance capital, it's $570,000,000 to maintain 2.6 Bcf per day. And then in 2025, you're doing that at $500,000,000 for $2,200,000 So capital is going up less than production. So wondering if there is any implied like improvement in well cost or drivers behind this better capital efficiency long term versus today?

Yes. Good morning, Betty. I would tell you what's really embedded in that outlook of capital spend as you start to get to that $570,000,000 in 2027 time period is it really is on the back of our continued efficiencies of our operation. But all in extending lateral lengths again, we've touched on that a lot, but it's on the back of our ability with our contiguous acreage position to extend laterals some of the incremental land spend that we've talked about on a very low level to pick up those open parcels that will again allow us to extend the lateral lengths think you saw that this past year where our average drilled lateral length was 14,000 feet as an example. So it's going to be supported by that. But also the other part of this is just the ability to continue to reutilize infrastructure again, drilling those long laterals and our low base decline. When you start to look at how the field continues to perform over the course of time, our assets really do have a unique base decline profile versus some other basins and some others in our basin and it allows us to continue to capitalize on that with a strong foundation.

Got it. That's helpful. And my follow-up is on the DUC inventory. Could you help us Perhaps quantify what is the level of DUC inventory do you [indiscernible] By the end of this year and what that would mean to your incremental activity for the next for 2026 and 2027?

Sure thing. When you start to look at the end of twenty twenty five and the capital and activity program that we have in place, what we would expect is to have a DUC inventory of approximately 400,000 lateral feet. Above our maintenance program. So you're talking about around 30 wells if you just approximate that to a 12,000 foot type lateral as an example or something comparable to what we've been drilling and completing over the last couple of years. [indiscernible] you start to move forward into 2026, and you see again some of the compression in gathering commissioned on the back half of this year that would then support the utilization of that DUC inventory as we start to look into 2026 and That makes sense. Thank you for that color. You, Ben.

Thank you. One moment for the next question, please.

And our next question will be coming from the line of Doug Leggate of Wolfe Research. Your line is open. Good morning. This is John Abbott on for Doug Leggett.

Mark, our first question is for you.

Is for you on capital returns, I mean, you'll probably you could probably continue to allocate capital between debt reduction and buybacks But really want to think talk more about long term dividend growth. So how do you think about the ultimate size of the dividend burden of the firm and then to grow that over time via buybacks.

You have a thirty year inventory is is probably greater than what the market is willing to recognize. You're basically an annuity So how do you look to gain greater market value by growing the dividend over time.

Sure. I think you're highlighting a distinction. We've tried to make and hopefully we can continue to beat that drum that the value of Range is in the longevity of story, that long duration of the inventory. Repeatability and at the appropriate times. Growth is appropriate, investing in the business to drive incremental cash flow. So to your point, returns of capital are a key part of that. Reality is we are an upstream natural gas and natural gas liquids company. It's a commodity business with cycles. We are not a regulated utility and we are unlikely to be valued based on a dividend yield. So the dividend yield, we think, is an important commitment [indiscernible] it is an important element to demonstrate the durability of the story through cycles to pay out a [indiscernible] slowly growing modest dividend So expect or rather our intent would be to regularly but very ratably, modestly grow that dividend. Where the share repurchase will be opportunistic, but the lion's share of the return of capital.

That means is that we would certainly hope and expect to have a declining share count where even a growing per share dividend in the aggregate may not grow that much in the total cash call on dividend payouts. So To say it more briefly, the dividend we expect to be a more modest piece, but a steady slowing slowly growing element of the return of capital program. In your remarks, it sounds like you're going to get a $300,000,000 benefit from your NOLs over the next two years. How do cash taxes look in 2027 and beyond?

We would expect over the next two years at current prices to pretty much fully utilize those NOLs. So you'll move from a low very low single digit type effective cash tax Range. 2% in 2027 percent and beyond, you're likely high teens You still have IDC deductions and other tax planning options. So think high teens cash effective tax rate 27% and beyond.

You very much for taking our questions.

Thank you.

We'll close out the Q and A this morning. We appreciate everyone joining us for the call this morning, listening to our exciting plans and news that we've got for the next three years ahead. If you have any questions, please follow-up with our Investor Relations team as always. We look forward to talking about our plans on the road in the months ahead. We'll see you on the next call. Thanks everyone.

Thank you. This does conclude today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.