Range Resources (RRC) = GROWTH

[dan_s]

Range Resources forecasts production growth of 33%-35% for 2017

Range Resources (ticker: RRC) announced it 2017 capital plan Wednesday along with its fourth quarter and year-end financial results, forecasting production of 2.1 Bcfe/d in 2017, an increase of 33%-35% over 2016. The company plans to achieve that growth target with a capital program of $1.15 billion, two-thirds of which will be allocated to the Marcellus, and one-third to North Louisiana, the company said.

Increased production is especially exciting for the company as Range Resources continues to realize improved differentials for its production, the company told Oil & Gas 360. Range expects to see NYMEX minus $0.30 per Mcf of natural gas, 28%-30% of WTI for its natural gas liquids, and WTI minus $5-$6 for its oil and condensate production in 2017 compared to WTI minus $13.50, previously.

“This is a culmination of key marketing agreements coming to fruition,” Range Resources Vice President of Investor Relations Laith Sando told Oil & Gas 360® in an exclusive interview.

“For natural gas, the Gulf Markets expansion project came on line in early October of 2016 which moves 150 MMBtu/d to the Gulf Coast. Additionally, in 2017 we will have a full year of North Louisiana production that receives near NYMEX pricing. Overall, these developments should lead to better natural gas differentials of Henry Hub minus about $0.30 per Mcf in 2017. This is a substantial improvement over the approximately $0.50 differentials of the last couple years.

“On the NGL side, 2017 will be the first full-year of Range’s Mariner East 1 capacity. Mariner East 1, coupled with our NGL production from North Louisiana is driving an improvement in our NGL price for 2017, which is now expected to average 28-30% of WTI, based on October strip pricing, a substantial improvement over the last two years, which averaged less than 25% of WTI,” said Sando.

Range also hopes to improve its capital efficiency further by drilling on existing pads in the Marcellus and to spread out G&A costs over a larger production base to drive down costs over time. Combined with the improved differentials, this will translate into even strong capital efficiency. “In fact, based on strip pricing (calculated differentials and the assumption that cash unit costs stay flat), margins in 2017 are expected to improve to 40%, an 8-fold increase from a year ago,” said Sando.

Fourth quarter 2016 unhedged cash margins improved by over four times to $0.97 per Mcfe, compared to $0.22 per Mcfe in fourth quarter 2015, Range said in its year-end reporting.

“These expected improved margins, combined with a strong PUD F&D cost of $0.42 leads to a peer-leading unhedged recycle ratio that is approaching 3x. Additionally, the PUD F&D costs of $0.42 are based on 2016 costs and efficiencies; so, we believe there is the potential to further improve this top-tier F&D cost as we drive down well costs in North Louisiana, drill on existing pads in the Marcellus and extend our lateral lengths.

Read: http://www.oilandgas360.com/marcellus-l ... g-40-2017/

[mkarpoff]

Well, Joe B sure got his forecasts wrong. Even with the storage re-fill, it looks like natgas will underperform your expectations this year.

[dan_s]

Take about 15 minutes to go through the Drilling Info slides we sent out. It will help you understand why I remain bullish on natural gas.

BTW the ngas price is more than $1.00/mcf higher today than it was a year ago, despite the super warm February weather.

NGL market is much better than a year ago, which will help all of the Sweet 16.