Welcome to the Range Resources First Quarter 2020 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. Statements made during this conference call that are not historical facts are forward-looking statements. Such statements are subject to risk and uncertainties, which could cause actual results to differ materially from those in the forward-looking statements. After the speakers’ remarks there will be a question-and-answer period. At this time, I would like to turn the call over to Mr. Laith Sando, Vice President, Investor Relations at Range Resources. Please go ahead, sir.

Thank you, operator. Good morning everyone and thank you for joining Range’s first quarter earnings call. The speakers on today’s call are Jeff Ventura, Chief Executive Officer; Dennis Degner, Chief Operating Officer; and Mark Scucchi, Chief Financial Officer. Hopefully you’ve had a chance to review the press release and updated investor presentation that we’ve posted on our website. We also filed our 10-Q with the SEC yesterday, it’s available on our website under the Investors tab, or you can access it using the SEC’s EDGAR system. Please note we’ll be referencing certain non-GAAP measures on today’s call. Our press release provides reconciliations of these to the most comparable GAAP figures. For additional information, we’ve posted supplemental tables on our website to assist in the calculation of EBITDAX, cash margins, and other non-GAAP measures. With that, let me turn the call over to Jeff.

Thank you Laith and thanks everyone for joining us on this morning's call. Before we review the quarter, I will like to thank all of our employees and service providers for their hard work and dedication to keep our business plans on track while ensuring the health and safety of our employees and their families. In particular, our field employees have continued to deliver each day on our well sites while practicing social distancing, adhering to CDC guidelines, and helping us supply the much needed energy the world relies on during a crisis. Natural gas is a critical resource that powers our everyday lives, as well as helps to provide critical electricity to hospitals and clinics. One step further, the NGLs we produce are being used as a feedstock for life saving medical equipment, cleaning supplies, and medicine. Range’s culture has always been one to lend a hand, roll-up our sleeves, and help our community. Earlier this month, Range provided more than $100,000 to non-profit organizations supporting those that need it most in our local areas. On top of this program, Range has donated protective health supplies to area medical providers and technology to multiple school districts for students to be able to participate in remote learning. These are unique and challenging times in our industry and in the world. I believe that it’s during these moments that we really come closer together and grow stronger supporting each other and our local communities. I especially want to thank those that are working each day on the frontlines of this pandemic as is the case for numerous Range family members and likely the case for many listening to the call. We appreciate you taking time to join us today and wish the best for you and your families. Reflecting on the…

Thanks Jeff. Reviewing the first quarter, capital spending came in at approximately $131 million or 30% of the planned capital spend. While Q1 production closed out at 2.29 Bcf equivalents per day. This puts us firmly on track with our capital budget of $430 million, while delivering production guidance at maintenance levels, which we announced at the end of March. The details of our capital plan include $405 million dedicated for drilling and completions activity, 20 million for leasing and approximately 5 million for gathering and other support projects. This keeps us in line with our prior plan to direct 94% of the capital towards drilling and completions-related activity. Our Q1 execution resulted in turning to sales 20 wells from an average horizontal length of over 11,500 feet. Looked at a different way, we turned to sales over 230,000 feet of lateral footage in the first quarter. 40% of the wells turned to sales were in our dry gas acreage position with the remaining located in our wet area. Continued excellent field run time in our production operations and strong well performance from both new and existing wells across Southwest Pennsylvania has firmly positioned us to achieve our 2020 maintenance target of approximately 2.3 Bcf equivalents per day, while spending $430 million or less. On the operations front, during the first quarter we drill 20 wells across our dry and wet acreage with a total horizontal footage of approximately 240,000 feet or nearly 12,000 feet per well. This drilling performance represents a 20% increase over last year's per well horizontal length average. In Q1, over 50% of our activity was on existing pad sites, which is similar to prior quarters, and has allowed us to capture operational efficiencies in cost savings. Lastly, the drilling team achieved a new milestone by…

Thanks Dennis. Like Jeff and Dennis mentioned, in the midst of a pandemic, affecting nearly every aspect of daily life, I’m to state that as a corporation prioritizing employee and community health we remain fully capable and focused on shareholder value. In terms of preserving and enhancing shareholder value, over the past two years the steps Range has taken to reduce debt, enhance liquidity, extend maturities, reduce operating and capital costs have collectively positioned Range, as well as possible to pass through this business cycle. In fact, the steps Range took proactively to reduce debt by $1 billion expand its credit facility, refinance bonds and receive reaffirmed bank commitments to end borrowing base at existing levels serve as important stepping stones for Range to benefit from what appears to be an accelerated rebalancing of natural gas, and natural gas liquids supply and demand, and resulting better prices. Looking back on the first quarter, let’s start at the bottom line free cash flow. Range was cash flow positive before refinancing costs and returns of capital to shareholders. After all cash flows, including debt issuance costs, share repurchases, and working capital, debt increased to modest $19 million. This was driven by $23 million in share repurchases during the first quarter, which represents a very carefully considered deployment of capital. On accumulative basis, we repurchased approximately 10 million shares for $29.9 million through April equating to an average share price of less than $3. Protecting Range’s core asset through bolstering the balance sheet remains the priority, but during the first quarter, the disconnect between intrinsic value and the share price presented an opportunity to create long-term value to reiterate and evidence our priority. Of the $1.21 billion in recent asset sale proceeds, less than 10% of those proceeds were earmarked for the share…

Operator, we are happy to take questions.

Thank you, Mr. Ventura. [Operator Instructions] The first question is from Jane Trotsenko from Stifel. Your line is now open.

Good morning and thanks for taking my questions. The first question is on TG&P savings, maybe you could provide some color where those savings are coming from and how sustainable they are on a going forward basis, and finally the trajectory for the remainder of the year for TG&P?

Good morning Jane, it’s Mark. I’ll take that. So, as we’ve discussed over the last year or so and I think you’re really beginning to see in the reported numbers there are components of our gathering processing transport cost that are being optimized and have a long-term trend of gliding downwards. So, recall that of the total unit cost for gathering processing transport it has been running roughly a third, a third, a third. A third processing cost, a third long haul transport, and a third gathering. The processing component, remember will fluctuate with the price of natural gas, so you will see some savings as we run through periods like now, but you will also see continued savings as the marketing team does an outstanding job optimizing and fully utilizing our transportation as we are currently able to do out of Southwest Pennsylvania. You also have what are first mover advantages that are coming to fruition at this point. Those are contracts that will reach the maturity and renewal options that are our options to choose or to not elect to extend. So, you have the benefit this quarter and in quarters and years going ahead where we can allow contracts to expire, obligations and MVCs roll off as we saw with some processing capacity this quarter. Right way risk on the processing cost, so as NGLs fluctuate, that cost goes up and down, and then on the gathering side as we talked about on prior calls, a component of that gas cost structure has a capital recovery element to it and small portions of that have just begun to roll out. So over time, you will continue to see that trend down. And as far as our guidance for the year, I refer to the annual guidance we provided, as well as the glide slope that’s in the investor presentation, you know a long-term trend, this is a year-over-year downward trend we think we can continue to achieve.

That’s perfect. The second question is on NGL and condensate pricing, and maybe you guys can talk a little bit to what you are seeing this quarter and how it compares to the 1Q?

Yes Jane. This is Dennis. Good morning. As we start to, we tried to tackle some of this during the prepared remarks, but we’re pretty comfortable at this point that we’re seeing the ability to both move the barrels and also capture prices that are premiums relative to Mont Belvieu. So, as we think about our condensate production, really represents 2% of the total productions stacked in the profile, again with 70% being on the natural gas side, the other 20% really on the NGL barrel component. So, what we’ve seen is, is it represents a small portion of our business. We’ve been very successful keeping the barrels placed and staving off any concerns at this point around impacts to production. We have quality hedges in place also that help us with this discussion. So, as we think about us being 90% hedge with WTI crude prices over $58 a barrel, it really helps us as we think about the long haul. We know that there’s going to be recovery just around the corner. We’re starting to no doubt see and feel and hear about what that recovery could look like, but in the months ahead we feel that we’re well-positioned especially on the condensate side. You know, on the NGL component, we really see still good strong demand when it comes to our propane barrels and also the other NGL stream as well. On the heavier side, as you look at our C5 plus, we have multiple arrangements in place to be able to continue to have those barrels moved. And again, it represents a small component of the overall barrel itself. So, as we look for the rest of the year, we have a high degree of confidence that we’ll both be able to move the barrels, keep our production flowing and also be able to attain prices – really, our advantage of being able to get to premium markets.

And I think a key, just to tack on, again, just the NGL guide that we have out there. It’s a premium of $0.50 to $1.50.

Got it. And the final question if I may. Maybe you guys can provide some preliminary thoughts on 2021 and if flat production outlook is still appropriate?

Let me just start at a high level and say really we’ve been clear about our philosophy and strategy with the goal of really generating free cash flow per share and real corporate returns. So, we have a lot of flexibility. Because we have fulfilled all of our pipeline commitments and there is a slide in the back that shows at slide 23, we have a lot of flexibility. So, I think we’re in good shape, position, which should be going into a better natural gas and NGL market. Mark do you want to tackle on to that or?

Yes, I think you get the highlight there that we have the flexibility. So, economics and cash flow warranted and driving corporate returns and free cash flow yield will dictate the outcome of our reinvestment program from organic cash flow. So, we remain flexible and have a latitude to do that.

That’s better. Thank you so much.

Thank you.

Thank you. Our next question comes from the line of Brad Heffern from RBC Capital Markets. Your line is now open.

Hi, good morning everyone. Just a follow-up on the asset sale comments you guys have made. You called out the potential improvement in the gas macro longer term, but obviously, we're still in a very uncertain economic environment right now. So, I'm curious if you've seen an increase or a decrease in the interest level? And if your comments or your confidence around getting additional deals done, sort of pins some sort of economic recovery or if it's something that we could see in the near term?

Sure, Brad. I’ll keep the comments at a fairly high level. It’s certainly our preference to deliver the results rather than try to draw a box around the equation and then strive to hit that. So, we do have a number of asset sale under way. We have been encouraged by the level of interest and the dialogue. As you can see, we have a strong motivation to decrease absolute debt. Again, we can reference the proxy and the Board and our targets of what we’re trying to achieve this year and our philosophy to drive in corporate values. So, with that I would just highlight the fact that we have a lot of optionality, we have processes formally underway and active discussions underway that are making progress.

Okay. And then just as far as the use of any cash that might be coming in, I appreciate the comments earlier on the call about the repurchase program. Can you just talk about – obviously, you've repurchased thus far at a much lower level than where the shares are now. Will the repurchase program continue to be a priority? Or should we expect more of the reductions in outstanding principal like the bulk of capital has been going through already? Thanks.

Sure. I think you can look at our pattern of behavior thus far and kind of read into the future a bit that you’re striving to maximize value by prudently using liquidity and protecting the value of the organization. So, there’s value enhancement by buying back the shares when there is a dramatic disconnect, which we continue to see, but the tilting, the preference the priority you can see how we spent the dollars so far so you could expect similar behavior from us going forward. The program is still in place. It still represents options and choices. We can deploy that capital in that fashion, but you can see our bias is to protect the organization and its totality.

Okay. Thank you.

Thank you. [Operator Instructions] Our next question comes from the line of Greg Tuttle from Simmons Energy. Your line is now open.

Hi gentlemen. Thank you for taking the time this morning and taking the question. So, I wanted to first ask what the kind of long-term strategy for balancing growth leverage, operating leverage to firm transport and then any shareholder returns, if gas and NGL prices move meaningfully higher, which is currently being indicated by the strip?

Again, let me start at a high level and turn it to Mark. It’s the same answer I gave earlier, you know, but we have been very clear I think about our philosophy and strategy at Range and what we're trying to accomplish and the goal is really to generate free cash flow per share and real corporate return. So, with that philosophy, we really don't see the need or benefit to return to high growth. So, prices are significantly higher. We’re generating significant free cash flow. We'll first direct that to bolstering the balance sheet and then from there we will look to position to expand cash returns to shareholders. Mark?

Yes. I think with a good trend so far, debt reduction in 2018, 2019 we certainly intend to accomplish debt reduction this year as we go forward and think about the redeployment and the reinvestment of free cash flow. That's a philosophy that this is a self-funding organization that we are using organic cash flow to reinvest in the business and generate the highest corporate returns whether it’s through the drill bit. Once the balance sheet is where we wanted to be in the target place where we can always be on our front foot, and opportunistic throughout the cycles generating free cash flow with leverage and acceptable territory, whatever the future cycles may be, then we can elect what the right reinvestment rate is, whether that’s maintenance And certainly as we think about the macro, we think about core inventory going forward and what the call on the Appalachian basin maybe to meet natural gas demand, but domestically and internationally and what that necessary price may be ultimately. You know that puts us in a very good place in our perspective given the depth of our inventory and the choice of how quickly to reinvest or how slow to reinvest again to optimize total corporate returns.

Okay, that’s great. Thanks. Second question here, I am curious as to what is, if I look at Slide 14 shows some declines in GP&T and LOE continuing through 2024, so I'm curious, is that a ratable move lower each year through that timeframe or is there a specific step down moment that occurs and then if there is a specific step down, what’s driving that? Thank you.

So, it’s actually a combination of the two. So, on the gathering side there is a capital recovery component, which as you get to around year 12 or so, it just, it glides down. So, if you think back 12 years ago 2008 type timeframe, you were beginning to build-out the hub-and-spoke gathering system in Southwest Pennsylvania. So, you're just now at the first anniversary if you will, but again then with the earliest development so it’s a smallest piece of the system. So, each year as we step forward it’s ratable, but on an increasing size and component of that system. So, it is ratable, but it increases somewhat over the next dozen years. Over that period of time, you also have options that come up on long-haul transport that can drop away. So, if you look at Slide 23 in the deck, the blue shaded area is the Marcellus takeaway capacity, which first shows you we have production greater than 10% above our FT requirements that are fully utilized and then some, giving us optionality, but you can see as this glides down, there are some step functions there when we hit the optional renewal dates on long-haul takeaway capacity, but at that point in time we can evaluate the economics and determine whether or not to extend this. So, it’s a combination of the two.

Okay, perfect. Thank you so much. I appreciate it again.

Thank you.

Thank you. This concludes today's question-and-answer session. I'd now like to turn the call back over to Mr. Ventura for his concluding remarks.

Just want to thank everybody for participating on today's call.

Thank you for your participation in today's conference. You may disconnect at this time.