Range Resources Q1 Earnings Call Highlights

Key Points

• Range generated approximately $400 million of first-quarter free cash flow (about $545 million cash from operations before working capital), kept a capital reinvestment rate under 30%, ended the quarter with $834 million of net debt, and returned capital via $24 million of dividends and $27 million of buybacks, which management called the strongest balance sheet in company history.
• Production averaged 2.2 Bcfe per day in Q1 with a mid‑year ramp as gathering, compression and processing capacity comes online; Range expects production to hit 2.5 Bcfe per day by year‑end and target ~2.6 Bcf/day in 2027.
• Marketing execution drove outsized realizations: the company reported its best gas differential in over a decade at a $0.18 premium to Henry Hub and a record NGL premium of $4.41 per barrel over Mont Belvieu, and raised full‑year NGL differential guidance to a $1.25–$2.50 per barrel premium.

Range Resources NYSE: RRC executives highlighted a strong start to 2026 as winter-driven natural gas pricing and a spike in international NGL markets helped drive approximately $400 million of first-quarter free cash flow, supporting increased shareholder returns and what management called the strongest balance sheet in company history.

First-quarter performance driven by pricing and marketing execution

Chief Executive Officer Dennis Degner said first-quarter production averaged 2.2 Bcfe per day and characterized operational execution as “steady” against the company’s multi-year plan. He pointed to “strong realized pricing” as winter weather lifted U.S. natural gas prices and international NGL prices spiked in March after supply disruptions in the Middle East.

Chief Financial Officer Mark Scucchi said the company generated $545 million in cash flow from operations before working capital. He attributed the result to a realized natural gas price of $5.18 per Mcf before hedging and NGL realizations of $26.62 per barrel. With a capital reinvestment rate of less than 30% during the quarter, Range generated “approximately $400 million” of free cash flow.

Scucchi said the company paid $24 million in dividends in the quarter and repurchased $27 million of shares. Net debt ended the quarter at $834 million, which he described as “half the turn of leverage” and comparable to an “investment-grade style balance sheet.”

Operations: efficiency gains and a mid-year production ramp

Degner said first-quarter capital spending totaled $139 million with one rig and one completions crew in the field. He said completion spending will increase in the second quarter as Range adds a spot completion crew to work through drilled-but-uncompleted inventory built over the past 24 months, with the second and third quarters expected to be the high points for capital spending while still remaining within prior guidance.

Degner cited drilling and completions efficiency improvements. Range’s single horizontal rig drilled about 143,000 lateral feet during the quarter, and the company’s electric fracturing fleet completed 874 stages, which he called a program record. He also said winter operations during Winter Storm Fern supported strong field runtime and helped deliver “record-free cash flow for the month of February.”

Looking ahead, Degner said production should “increase slightly” in the second quarter before rising “meaningfully higher at the midpoint of the year” as gas processing and related infrastructure enters service. He said this is expected to push production to 2.5 Bcfe per day by year-end, consistent with prior guidance.

In the Q&A, Degner provided more detail on the timing and shape of the ramp. He said gathering and compression is expected to go into service toward the end of the second quarter, with processing “right there at the mid-year point.” He said the back half of the year should see a “fairly ratable” increase across the third and fourth quarters as additional DUCs are turned in line, ending the year at 2.5 Bcfe per day and working toward a “2.6 Bcf a day type number in 2027.”

Degner also discussed flexibility beyond 2027, saying the company could either add another “wedge of growth” if demand materializes or reduce capital and hold production flat if it does not. He said in a flat-production scenario, capital could be “somewhere in the $570 million-$600 million type range.”

Marketing: decade-best gas differential and record NGL premium

Management repeatedly pointed to marketing execution as a key differentiator in the quarter. Degner said the marketing team sold “nearly all” of Range’s natural gas during bid week in late January when Henry Hub NYMEX settled above $7 per MMBtu. He said this helped deliver the company’s “best quarterly natural gas differential in over a decade” at a $0.18 premium to Henry Hub.

On liquids, Degner said Range’s access to international markets and strong Northeast NGL pricing early in the quarter drove an NGL premium of $4.41 per barrel above the Mont Belvieu index, “the largest NGL premium in company history.” He said Range improved its full-year 2026 NGL differential guidance to a premium of $1.25 to $2.50 per barrel over Mont Belvieu.

In the Q&A, Alan, who said he manages the marketing group, outlined three drivers behind the first-quarter NGL outperformance:

• Ethane flexibility tied to gas pricing: During Winter Storm Fern, Range reduced ethane recovery to benefit from high gas prices; Alan said roughly one-third of Range’s ethane contracts are priced off natural gas, helping ethane realizations.
• Strong domestic Northeast LPG demand: Cold weather boosted demand in January and February, supporting domestic LPG pricing.
• International export pricing spike: Alan said international pricing surged after a Saudi terminal disruption and later Middle East events, lifting netbacks at the dock.

Alan said Range’s positioning and flexibility allowed it to shift volumes between domestic and international markets to capture the best netbacks, while also noting seasonality and that international propane pricing had moderated from mid-March levels.

Macro outlook: exports, infrastructure, and market integration

Executives described export growth as a key structural support for both natural gas and NGL fundamentals. Degner said LNG exports are approaching 20 Bcf per day, up 20% year-over-year, supported by the startup of Golden Pass LNG. He also cited first-quarter ethane waterborne exports estimated at 665,000 barrels per day, up more than 47% year-over-year, and said propane and butane exports were up 5% year-over-year with expectations for further growth as additional export capacity comes online.

On propane, Scucchi said roughly 80% of Range’s propane is exported out of the East Coast and that “the majority, well over half,” is linked to medium-term contracts tied to ARA and FEI indices. He declined to disclose contract terms, citing competitive considerations.

Degner also discussed U.S. LPG inventories, calling stock levels elevated and estimating they are roughly 70% above historical averages. He pointed to added export capacity in 2025 and additional “flex capacity” out of the Gulf that he said adds 360,000 barrels per day of LPG export capacity, along with expectations for more capacity later in 2026 and demand growth from PDH-related infrastructure over the next 24 months. Degner additionally cited the Repauno terminal expected to enter service in January 2027 as expanding Range’s access to waterborne exports.

On natural gas pricing concerns tied to Permian associated gas, Degner said Permian rig count had not changed appreciably since the beginning of the year, though he noted an increase in completion crews and said DUC inventory across the Lower 48 is down about 20%. He said the company expects some Permian gas growth, but also emphasized LNG export growth and a view that end-of-injection-season storage could be around 3.8 to 3.9 Tcf, which he said would imply about 37 days of supply, roughly five days below the five-year average—conditions he suggested could contribute to volatility.

Costs, capital returns, and taxes

Degner said Range expects no changes to capital plans despite some cost pressures, noting that electric fracturing fleet costs should remain unchanged under a long-term contract and that day rates are locked for 2026 horizontal activity. He said Range is “mostly insulated” from steel price increases due to pre-purchased casing, while fuel pricing is expected to be elevated due to higher diesel prices.

Scucchi addressed gathering, processing, and transportation (GP&T) costs, saying per-unit GP&T increased in the quarter due to strong pricing and the structure of Range’s contracts, which he described as “right way risk.” He said margin per unit of production improved to $2.77 per Mcfe, up 38% year-over-year.

On cash taxes, Scucchi said he still expects 2028 to be the first “full cash tax paying type year” as Range uses accumulated NOLs, and he anticipates “low single digit” cash taxes for 2026 and 2027.

Regarding capital returns, Scucchi said Range’s $1.5 billion repurchase authorization provides significant flexibility, and he reiterated management’s intention to be opportunistic rather than formulaic. He said the company’s goal is for share count to decline year over year, while noting that quarterly repurchase pacing can be affected by blackout periods and market conditions.

About Range Resources NYSE: RRC

Range Resources Corporation, headquartered in Fort Worth, Texas, is an independent energy company engaged in the exploration, development and production of natural gas, oil and natural gas liquids. The company focuses its core operations on the Appalachian Basin, with a significant presence in Pennsylvania's Marcellus Shale. Through its drilling and completion activities, Range Resources seeks to optimize production efficiency while maintaining a disciplined approach to capital allocation and cost management.

The company's technical expertise centers on advanced horizontal drilling and hydraulic fracturing techniques, which it applies to unlock unconventional resources.

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