Range Resources Q3 2025: Contradictions Emerge on Inventory Growth, Capital Allocation, Infrastructure, and Export Strategies

Guidance:

• Q4 production ~2.3 Bcf/d; production growing toward ~2.6 Bcf/d by 2027 (~20% above current levels).
• Full-year 2025 capital guidance $650M–$680M; YTD invested $491M; Q3 all-in capital $190M.
• 2026 capital expected similar to 2025 but will shift toward completions to draw down DUC/WORK‑IN‑PROGRESS (400,000 lateral feet ≈ ~30 wells).
• Expect a ratable DUC drawdown across 2026–2027 with a mid‑2026 processing/gathering step-up (Harmon Creek) impacting production cadence.
• Maintain low reinvestment rate and continue shareholder returns (YTD repurchases $177M; dividends ~$65M).

Business Commentary:

* Operational Consistency and Efficiency: - Range Resources executed efficiently with production of 2.2 Bcf equivalent per day for Q3, generating $190 million in capital expenditure. - The company achieved consistent well results, free cash flow, and returns to shareholders, aligning with prior growth plans. - Efficiency was driven by techniques such as returning to pad sites, extending reach horizontal development, and operational improvements.

• Natural Gas and NGL Market Outlook:
• Range anticipates natural gas production to reach 2.3 Bcf equivalent per day in Q4 and 2.6 Bcf equivalent per day by 2027, supported by infrastructure and growth plans.
• The company remains optimistic about the natural gas market due to increasing demand, with LNG export capacity expected to exceed 30 Bcf per day by 2031.

• The NGL market also shows strong fundamentals, with expected growth in export capacity and demand supporting NGL pricing relative to WTI.

• Capital Allocation and Financial Strength:

• Range maintained a low reinvestment rate and significant capital returns, having repurchased $177 million in shares and paid nearly $65 million in dividends this year.
• The company capitalized on its strong balance sheet and strategic investments, reducing net debt by $175 million since year-end.

• Financial flexibility enables Range to focus on strategic capital allocation options, balancing market-driven growth and shareholder returns.

• Supply Agreement and Market Positioning:

• Range is actively engaged in discussions with end users for supply agreements, focusing on long-term supply contracts in Pennsylvania.
• The company's depth of high-quality inventory and infrastructure access provide a competitive advantage in securing reliable supply for end users.
• Range's strategic positioning in the Pennsylvania region aims to capitalize on regional demand growth, particularly in data centers and power generation.

Sentiment Analysis:

Overall Tone: Positive

• Management repeatedly described Range as "in the best place in company history," highlighted "free cash flow resilience," reported YTD repurchases of $177M and dividends of ~$65M, and guided to production growth (2.2 Bcf/d Q3 → ~2.3 Bcf/d Q4 → ~2.6 Bcf/d by 2027) while keeping reinvestment low and securing transport and export optionality.

Q&A:

• Question from Jacob Roberts (TPH & Company): Can you speak to the 400,000-foot work‑in‑progress inventory at year‑end and timing of that drawdown into 2026?
  Response: 400k lateral feet ≈ ~30 wells; 2026 capex similar to 2025 but will shift to completions—maintain ≥1 rig, ramp completion crew activity to draw down DUCs in a fairly linear fashion, supporting production rising toward 2.4 Bcf/d then 2.6 Bcf/d by 2027.

• Question from Unknown Executive (Unknown): As you draw down inventory in 2026, could OpEx move materially up or down?
  Response: Cash operating expense expected to remain very low (LOE roughly $0.10–$0.12/Mcfe); returning to pad sites and long laterals should sustain or modestly improve current low-cost base.

• Question from Kaleinoheaokealaula Akamine (Bank of America): Given strong execution, where is upside to the 2026/2027 plan on capital or volumes?
  Response: Upside primarily from continued field operational efficiencies (long, fast laterals and completion gains) and timely commissioning/utilization of midstream infrastructure (e.g., MPLX).

• Question from Kaleinoheaokealaula Akamine (Bank of America): What are you seeing on the NGL macro for 2026 (propane/ethane)?
  Response: Very constructive: LPG demand growth (~700kbpd by end‑2026, ~1.4mbpd by decade end) and rising ethane export/cracker demand (another ~400kbpd by end‑2026) should tighten fundamentals and improve NGL pricing and spreads.

• Question from Michael Scialla (Stephens): Are your supply‑agreement discussions limited to Pennsylvania or expanding beyond? And do you need additional takeaway to execute the 3‑year plan?
  Response: Primary focus is in our producing region (PA) but counterparties are open to expansions; disclosed midstream capacity additions (e.g., MPLX) are sufficient to deliver the three‑year plan—no additional takeaway required today.

• Question from Arun Jayaram (JPMorgan Securities LLC): Update on the Liberty/Imperial project in Washington County?
  Response: Discussions are constructive and narrowing to final potential end users; state support and Liberty funding are positive; timing of a formal announcement remains uncertain but management is optimistic.

• Question from Douglas George Blyth Leggate (Wolfe Research): How do you view future realizations/basis and why haven't you signed very large long‑term in‑basin deals — is investment grade a factor?
  Response: Marketing already has long‑term international and petrochemical deals; basis durability is expected as demand/infrastructure growth outstrip supply; investment‑grade status is not impeding deals — upgrades will come organically via scale and execution.

• Question from Paul Diamond (Citi): How should we think about production curtailments/modulation versus steady‑state?
  Response: Range has used limited curtailments historically but prefers program‑shaping (timing well turn‑ins); with ~80% of gas leaving the basin and NGL uplift, the curtailment calculus differs versus peers—focus is on marketing optimization, not broad curtailments.

• Question from Brent (Goldman Sachs): Now that you're within target net‑debt, how will free cash flow be allocated between buybacks, debt reduction and investments? And thoughts on M&A/acreage?
  Response: Balanced, opportunistic approach: priority was deleveraging, now mix of further deleveraging, share repurchases/dividends and reinvesting in high‑return inventory; M&A limited to accretive, nearby 'white‑space' acreage and incremental land spend (~up to $30M) when attractive.

• Question from David Deckelbaum (TD Cohen): Will the share of international exports grow and how will marketing mix evolve for LPG/ethane?
  Response: Expect international LPG exports to remain ~80% of LPG sales as capacity grows; ethane follow similar pattern with existing counterparties—business will retain flexibility to allocate between domestic and export markets to maximize returns.

Contradiction Point 1

Inventory Utilization and Production Growth

It directly impacts expectations regarding the company's production levels and growth strategy, which are crucial for investors.

How should we assess inventory drawdown over the next few years? - Paul Diamond(Citi)

2025Q3: The inventory utilization will be linear over 2026-2027, influenced by mid-2026 infrastructure expansions. The production step-up will occur with infrastructure completion. - Dennis Degner(CEO)

What is the outlook for the lateral foot requirement in 2026, and how will Range optimize service provider efficiency? - Roger David Read(Wells Fargo Securities, LLC, Research Division)

2025Q2: If we were to add on this year to really accelerate the growth, we would be putting ourselves in a position where we could lose some of the efficiency of the program that we have put together here for '26. - Dennis Degner(CEO)

Contradiction Point 2

Capital Allocation and Shareholder Returns

It involves changes in financial strategy, specifically regarding capital allocation and shareholder returns, which are critical for investors.

How are you allocating cash flow following recent debt reduction? - Unknown Analyst(Goldman Sachs)

2025Q3: We prioritize balance sheet management and opportunistic investments. Our trend is to lean more into capital returns as debt decreases, supporting balanced growth and shareholder returns. - Mark Scucchi(CFO)

Would you consider raising additional capital to invest in the business given potential supply-demand adjustments over the next 6-12 months, and how should we expect the capital return program's cadence to change this year compared to last year? - Neil Singhvi Mehta(Goldman Sachs Group, Inc., Research Division)

2025Q2: We believe we are well positioned to drive significant growth if there is a material opportunity to do so, while maintaining a balance sheet that allows us to return capital to shareholders. - Mark Scucchi(CFO)

Contradiction Point 3

Infrastructure and Takeaway Capacity

It involves changes in the company's strategy and expectations regarding infrastructure and takeaway capacity, which are crucial for production and revenue growth.

Does your 3-year plan require additional takeaway capacity? - Michael Scialla (Stephens)

2025Q3: The infrastructure added is what's needed for our 3-year plan. We're confident in meeting production targets without additional takeaway. - Dennis Degner(CEO)

How will improved drilling and frac efficiencies impact production potential? - Roger Read (Wells Fargo Securities)

2025Q1: In 2025, we do expect to complete the expansion of our midstream infrastructure which includes the Mariner East 2 pipeline, which puts us in a position to cost effectively move 1.5 million barrels per day of NGLs to market. - Dennis Degner(CEO)

Contradiction Point 4

Export Opportunities and Earnings Growth

It involves changes in strategic focus, particularly regarding export opportunities and earnings growth, which are important for investors.

Can you comment on the NGL macroeconomic outlook? What is your forecast for propane and ethane in 2026? - Kaleinoheaokealaula Akamine(Bank of America)

2025Q3: We're optimistic about NGL fundamentals, with increasing demand growth for LPG and ethane. Ethane exports are expected to improve the ethane spread relative to natural gas. LPG sees demand growth from new PDH units and LPG demand in Europe. We expect to benefit from access to the East Coast export capacity. - Dennis Degner(CEO), Alan Engberg(Executive)

What were the key factors behind lower well costs in Q2, and are there concerns about the NGLs market absorbing increased production? - Kevin Moreland MacCurdy(Pickering Energy Partners Insights)

2025Q2: We are not expecting any significant impact from the change in Russian export volumes to Europe. There is a significant capability to replace Russian volumes that we think is not going to happen. - Alan Engberg(Executive)