Welcome to the Range Resources First Quarter 20 23 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 risks and uncertainties, which could cause actual results to differ materially from those in the forward-looking statements. After the speaker's 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, 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 may reference certain slides on the call this morning. You'll also find our 10-Q on Range's 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. 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 Jeff. Thanks, Laith, and thanks everyone for joining us on this morning's call. Range continued to deliver on our key strategic objectives in the first quarter, operating safely and efficiently to deliver a production plan that consistently generates free cash flow. Dennis and Mark will walk through the quarter in a moment, further demonstrating the resilience of Range's program and assets, even in today's commodity price environment. As was announced last month, after 20 years with Range, I am retiring, and this will be my last earnings call. I have to say I couldn't be more proud of the work the Range team has done to position the company where it is today. Range is in the best operational and financial shape in company history and is poised to generate substantial free cash flow and competitive returns long term, given our multi-decade inventory, efficient operations, and access to diversified markets. For the Marcellus, the future is bright as we sit at the very low end of the global cost curve with one of the lowest emissions intensities of any play. Given the size and potential of the Marcellus, it has the ability to help supply the U.S. and our allies for decades. I strongly believe the products we produce are going to remain in high demand as natural gas and natural gas liquids provide products needed for our everyday lives. Natural gas has many important uses, from generating electricity to making plastics. It's a key ingredient in the manufacture of fertilizer for agriculture. It's a key source of industrial heat for making steel and cement, and it's used for heating and cooking, just to name a few. Given the importance of the Marcellus and Range's sizable core position, I believe Range is in a desirable position to continue delivering competitive returns and creating sustainable long-term value for shareholders. Before turning it over, I'd just like to say that I'll be forever grateful to the Range team for their dedication, creativity, and hard work. We pioneered what I believe is the best and largest producing natural gas field in the world and have developed it in a way that we can all be proud of as good citizens of the communities with industry-leading environmental practices. The discovery of the Marcellus in 2004 was a game-changer for energy markets. This resulted in Range becoming one of the largest natural gas and natural gas liquids producers in our country, and the U.S. becoming by far the largest natural gas-producing country in the world. The positive impacts have been many. Natural gas prices in the U.S. are more affordable than Europe and Asia, which helps direct industry back to the U.S., creates hundreds of thousands of jobs, helps with national security, and improves the trade balance. The free market substitution of coal with natural gas has been the major driver behind the U.S. leading the world in CO2 and emissions reductions. I thank God for blessing me with an opportunity to be part of the team that not only unlocked it, but was also innovative in how to successfully produce and market the vast resources over the last two decades. I've said this on past calls, the team and board we have in place today is the strongest it's ever been. I look forward to seeing Dennis, Mark, and the entire Range team continue to move the company forward, generating significant long-term value for shareholders and making Range even stronger and more resilient. Thank you to my colleagues and friends. I'm so proud of what we were able to accomplish as a team. I'll now turn it over to Dennis for his remarks. Thanks, Jeff. It's an exciting time to be a part of the Range team. I'm humbled by the opportunity to lead the company in the years ahead as we remain focused on translating our world-class resource base into long-term shareholder value. Like Jeff said, the company is in a great position today. We aim to continue working to make Range even stronger in the future. In the first quarter, Range continued to successfully deliver on our stated objectives by completing our operational plans safely and with peer-leading efficiencies. Generating free cash flow, further strengthening our financial position, and returning capital to shareholders in the form of share buybacks and a base dividend. Looking at operations, I'm pleased to report that our program is off to a solid start and is on track to deliver this year's plan with a continued focus on capital-efficient operations, safety, and environmental performance. Our front-end loaded drilling activity for the year resulted in utilizing two top hole rigs and three horizontal rigs during most of the first quarter. We will maintain this level of drilling activity through the end of Q2 before tapering off in the second half of the year. Completions activity will remain relatively steady, with one frac crew operating through 2023, with a second crew activated later this year. This drill and complete cadence is consistent with previous years' maintenance level programs, which generates turn-in-lines and a production profile weighted towards the back half of the year. Capital spend for the first quarter was $152 million, which represents roughly 26% of our 2023 program budget. This is in line with the level of operational activity conducted during the quarter and puts us firmly on track with our capital guidance of $570 million-$615 million for the year. Production for the quarter came in at 2.14 Bcf per day and was underpinned by consistent field runtime and strong well performance. We expect daily production in the second quarter to be approximately 100 million equivalent lower than Q1 as we've moved up planned annual midstream maintenance and turn-in-lines are weighted towards the end of the quarter. Kills pick up in the second half of the year, making the fourth quarter our highest production, putting us on track to deliver a full-year production of 2.12- 2.16 Bcf equivalent per day. This back half-weighted production profile fits well with the current shape of the natural gas curve. Shifting to operational highlights. Our drilling team exceeded Range prior's record for fastest day drilling in the lateral section and then broke their own record two more times during the quarter. During the quarter, 13 wells were drilled that averaged daily horizontal footages greater than a mile per day. By comparison, only four wells achieved this level of efficiency in all of last year. These records, along with other strong days drilling in the lateral, drove a 42% increase in the average daily horizontal footage drill per rig. The drilling team also successfully added three wells to the top 10 longest laterals drilled for Range, with all three laterals exceeding 18,800 feet. After drilling over 1,500 wells in the Marcellus, this is the type of incremental improvement that has become a cornerstone of our program, supporting our peer-leading capital efficiency. Completions placed just over 600 frac stages on three pads located across our dry, wet, and super rich areas while utilizing our contracted electric frac fleet. Efficiencies remained in line with prior quarters, with the team averaging eight stages per day while varying completion designs based on well mix. Completion efficiencies continued to improve in late Q1 and into Q2 by averaging in excess of nine stages per day. As a byproduct, a pad currently being completed is setting a new standard for our overall operational efficiencies and is projected to be one of our most efficient pads in Range's history. We look forward to providing more details on a future call. On the last call, we provided some context on inflation and how Range's low base decline and peer-leading well costs serve as a hedge against service cost inflation. Year to date in 2023, we have seen the price of rigs and pumping crews start to show signs of receding slightly. Next generation pumping crews continue to be in high demand. The availability of traditional spot crews and drilling rigs has increased. Additionally, commodities and raw materials like tubular goods and sand are also starting to show signs of increased availability. It is possible this could translate into slight one-off savings later this year, with broader savings more likely to occur in 2024. Range remains in a leadership position on capital intensity given our low base decline, strong well productivity, and our blocky acres position, which lends itself to efficient operations and peer-leading well costs. Shifting over to marketing and looking at the NGL macro, U.S. LPG exports set an all-time monthly record of 2.1 million barrels per day in March, driving a quarterly record of over 1.9 million barrels per day. This level of export activity represents an increase of approximately 19% above the same time period last year, keeping domestic propane stocks within the five-year range despite the unusually warm winter. Looking ahead to the balance of 2023, Range expects continued growth in the demand for U.S. LPG exports in order to satisfy ongoing strong demand in European and Mediterranean markets, as well as PEH demand in China that continues to recover with the addition of new capacity and due to the loosening of zero-COVID policies. Range's diverse NGL marketing agreements drove a $1.63 per barrel premium to Mont Belvieu for the quarter, with an absolute NGL price of $27.60 per barrel. Our NGL pricing equated to $4.60 per Mcf equivalent, which was a $1.14 premium to the average Henry Hub natural gas price. Liquids optionality is a key differentiator in our resilient free cash flow versus other natural gas producers. This becomes more evident when natural gas prices are challenged like they have been to start 2023. The ongoing strength in the NGL outlook and price realization support our 2023 NGL guidance range of $1 per barrel discount to $1 per barrel premium relative to the Mont Belvieu index. For our natural gas, in Q1, Range reported a natural gas differential of $0.14 below NYMEX, including basis hedging, with our realized natural gas price closing out at $3.58 per Mcf. Freeport LNG returning to full service and early signals of rig activity reductions should help storage levels normalize as we work through injection season and look towards next winter. Lastly, our team's strong safety and environmental culture was on display as we look back on both last year and Q1's performance. Starting from an already low level, we continue to see further improvements in our safety performance in the field while capturing emissions reduction as a result of initiatives discussed on prior calls. We look forward to sharing more details on these accomplishments in our upcoming corporate sustainability report, slated for release this summer. In summary, this year's program is off to a solid start, and this is an exciting time to be a part of Range and our industry. Our low capital intensity, liquids optionality, and our leading hedge program all come together to provide Range one of the lowest breakevens amongst natural gas producers. I believe the resilience of Range's business is being demonstrated in today's challenging price environment as we're still delivering on stated objectives and generating free cash flow. I look forward to our future calls together as we continue to demonstrate our dedication to safe, efficient operations and consistently generating competitive returns to shareholders. I'll now turn it over to Mark to discuss the financials. Thanks, Dennis. The first quarter was successful operationally and financially, with solid execution across the business. Cash flow from operations totaled $475 million, funding net debt reduction of approximately $250 million, capital expenditures of roughly $152 million, the first quarter dividend, as well as 400,000 shares repurchased. Two objectives helping drive value are a durable balance sheet and competitive shareholder returns. These are not mutually exclusive. They are integral parts of our overall capital allocation strategy. We've consistently described a waterfall of our cash flow reinvestment. First, maintenance CapEx in order to utilize infrastructure and maximize margins. Second, debt reduction towards target debt levels. Third, return of capital to shareholders. Fourth, growth CapEx when appropriate. It's important to note that this waterfall entails flexibility to allocate based on highest overall returns to the company and its shareholders. With Range's leading full-cycle costs, margins are resilient, generating free cash flow even at reduced commodity prices that support risk-adjusted, returns-driven capital allocation. As of quarter end, we have reduced debt net of cash by nearly $2.5 billion since it peaked in 2018. Debt reduction achieved to date places us close to entering our target range of $1 billion-$1.5 billion net debt. With current leverage of 0.8x debt to EBITDAX and close proximity to our debt targets, we believe the company is in great shape to continue value creation on a stable financial base throughout business cycles. Taking a closer look at first quarter results, cash flow from operations of $475 million was driven by plant production levels, achieving strong pre-hedge realized prices of $3.82 per Mcfe. This realized unit price is $0.36 above NYMEX Henry Hub, driven by Range's diverse sales outlets for natural gas, combined with the pricing uplift from natural gas liquids and condensate. During the first quarter, Range's NGL price realized was approximately $28 per barrel or $4.60 on an Mcfe basis. Range's diversified portfolio of transportation capacity and customer contracts support a differential such that the total per unit price received by Range remains a premium to Henry Hub natural gas. Hedged cash margins per unit of production remain strong at $2.06. Range's margins benefit from thoughtful hedging and continued focus on costs and efficiency. Total cash unit costs improved by $0.16 versus the prior year. The change compared to the prior year primarily relates to savings in processing costs, which are linked to NGL prices, with variations in other line items related to labor cost inflation or the timing of planned workover projects. Cash interest expense declined by $14 million for the quarter compared to Q1 last year on reduced debt balances equating to $0.08 per Mcfe savings. These improvements more than offset slightly higher LOE, as mild weather allowed the team to pull some workover activity into the first quarter that would typically have been completed in Q2 and Q3. Range's right-sized hedging program supported realized prices for the first quarter with $32 million in realized NYMEX hedging gains. Looking forward, Range's natural gas is approximately 55% hedged at $3.50 for the balance of 2023, providing further support to Range's free cash flow profile. Cash balances of $228 million at quarter end, combined with future free cash flow and an undrawn revolving credit facility, provide ample liquidity to efficiently operate our business and execute efficient debt retirement. Successful first quarter results, combined with a positive industry backdrop for Range going forward, support our confidence in the return of capital program discussed on previous calls. We believe a stable, reliable, fixed cash dividend is appropriate at this time and in this market, while remaining opportunistic in our share repurchases with capacity available totaling $1.1 billion, alongside our primary objective of reaching target debt levels. We will remain flexible and adapt to market conditions, project returns, and prudent reinvestment. Range's story for a long time has been about innovation translated into reality through dedicated teamwork. Hard work, focus, and swift but precise adjustments to our business plan without veering from our core objectives are demonstrating the value of Range's portfolio and business. This focus and dedication will continue as Range's business is in the best shape in company history and primed for impending demand growth domestically and internationally for natural gas and natural gas liquids. With a strong financial foundation and the largest portfolio of quality inventory in Appalachia, we seek to continue this trend of disciplined value creation for our shareholders. Jeff, back to you. Operator, we'll be happy to take questions. Thank you, Mr. Ventura. The question-and-answer session will now begin. If you would like to ask a question, please indicate by pressing the star key, then one. If you are on a speakerphone, please pick up your handset before asking your question. If you would like to withdraw your question, you may do so by pressing the pound key. Once again, please press star one one to ask a question. One moment for our first question. Our first question will come from Michael Scialla of Stephens. Your line is open. Yeah, good morning, everybody. Jeff, wanted to offer my congratulations on a great career. Not too many folks can make claims about taking a big hand in a huge discovery like Marcellus. Congrats. Dennis, congrats to you on your promotion. Well deserved. Wanted to ask first. Well, thanks for the comments. kind of you to say that, and much appreciated. Absolutely. wanted to ask on the decision to put the cash on the balance sheet. Mark, you talked about the, you know, the priorities for the use of cash. You said there's some flexibility around those. maybe just your thoughts there on obviously you had gas prices collapse this winter. You did buy back a lot of shares, $400 million worth last year. just any commentary on the decision to put the cash on the balance sheet for now? Sure. Good morning, Michael. I think there's a couple of factors in play there. As you know, we're always evaluating the risk and returns and that waterfall capital allocation, you know, simplistic description we use. Since inception, we've bought back more than 14 million shares. Last year, 400 million. This year, obviously just in the first quarter, you've got the typical blackout period around your earnings preparation season. You had the announcement of Jeff's retirement and succession planning, and you're also in a choppy commodity price environment. As we worked through the first few months of the year and just evaluated the priorities as well as the tremendous opportunities we had, we were comfortable holding that cash and the optionality that creates. As we sit here looking forward, we're at close proximity to our debt targets. We have a couple of hundred million in cash on the balance sheet. We have net debt approaching our target levels. We like having that flexibility as we see this year unfolding. Very good. Dennis, you mentioned, you know, you see storage moving back to normal this summer. Wanna see if you could offer a little bit more detail on that. I know you guys are asked every quarter about your macro views. You've been pretty good on the gas macro. How do you see that playing out? What drives the that move back to normal on storage levels? How does that, I guess, tie into your thoughts on, again, on priorities for cash? Yeah. Good morning, Michael. I think as we take a step back and we think about the gas macro, both- You know, kind of near term and in the years that follow, I think what, you know, some of our thoughts are, you know, clearly you're starting to see more and more, it's kind of shifted from posturing to actually seeing it translate into the numbers for on the supply side, you're starting to see some rig activity start to reduce. I mean, started seeing that over the balance of the last few months. If you look at Appalachia as an example, many of us have been under a, especially Range, we're now on the third year of a maintenance level-esque program where we're keeping the gathering system at a high level of utilization and really keeping our cost structure and operations as efficient and as well placed as possible. You start to couple us being at maintenance along with other Appalachia producers, rig activity reductions, and then toss in more and more of what you're seeing around well performance degradation year-over-year, that's starting to translate into, you know, really production profiles as we look back. We see this all kind of translating into, you know, maybe less of an oversupplied market, potentially. You could make the argument through the data. Part of that comes down to, you know, looking at days of supply. If you look at getting it to the end of this injection season, you know, depending upon your outlook, whether it's 3.9 or maybe four Tcf, if you start to couple that with many of the points I just laid out, coupled with demand that's been coming online over the past several years, both on the industrial side, LNG now with Freeport being back up to full capacity, not to mention the additional infrastructure that's going to be coming online in 2024, you start to get to a place of 42 days of supply at the end of injection season. Just for comparison, the 5-year average is 43 days, and we were at 41 days in October of 2022 before we entered the winter. Much different commodity price environment today, clearly than it was in October. You could make the argument, maybe it's not quite as oversupplied as what the market would kind of indicate just from a storage level number alone. Clearly, on the demand side, LNG is its own unique story. You know, as you look into 2024, there's reason to believe that Golden Pass Train 1 is, could come online mid-year and start to play a significant role as we then roll into injection season for 2024, which we also think sets everything up in a pretty positive light. For us, we'll stay the course from our maintenance level program, and we think that plays well when you look at our transportation portfolio, what we can get out of the basin and make us resilient through the cycles here. Great. Appreciate the thoughts, guys. Thank you very much. Thank you. One moment for our next question. Our next question will come from Doug Leggate of Bank of America. Your line is open. Well, thank you. Good morning, everyone. Jeff, let me add my congratulations. You've been around for a very long time, making some of us feel pretty old. Hope you enjoy the next stage of your endeavors. Thanks, Doug. Guys, I got a couple of questions. I guess my first one is for Mark. You know, Mark, the obviously, the stock and therefore the market capitalization moves around quite a bit. We at least see equity value as what's left from enterprise value minus net debt. When you see the market failing to recognize a forward curve, which is 50% above a year ago, there's two things you can do. You can buy back shares, or you can reduce net debt to force market recognition of value. My question is, why is $1 billion-$1.5 billion the right number in a volatile commodity environment? Why not go tighter than that? You've seen some of your oil peers go to net debt zero. Why not? That's a fair question, Doug. As we've laid out our debt targets over the last couple of years, we began with what is the most conversational debt metric and easiest for everyone to understand, and that's the debt-to-EBITDAX ratio. Fundamentally, we believe the absolute debt number is what's really important given commodity price fluctuations and EBITDA fluctuations that naturally occur in the space, either cyclically or seasonally. Starting with a leverage ratio that investors, and we believe are prudent levels, you know, we set out some targets and thinking through a commodity price cycle, we said at the depth of a cycle, we want to be at or better than 2x. In mid-cycle, you might think around 1.5x. At a strong market, you want to be better than 1x leverage. Those were not hard and fast. Those were indicative levels we laid out. Actually it's an proxy from a year before last. When you pressure test those levels against a variety of commodity prices, both for natural gas, oil, and NGLs, you can get to a $1 billion-$1.5 billion level at our current production levels. That's the genesis of the framework and those levels. They are indications indicative of what we think creates a solid financial foundation. That's not to say that we can't be opportunistic, strong environments and pay that down. Also by design to have a strong balance sheet to use that balance sheet appropriately, when opportunities arise, whether that's buying back shares, whether that's putting cash on the balance sheet and paying off debt opportunistically. Again, those are guidelines just intended to make sure that Range, from a financial standpoint, has the wherewithal to capitalize and monetize this huge inventory we have over the long haul. Fair. I guess I'll continue to press on it. 5% money might, you know, wonder if that influences the decision a little bit. We will take it offline. My follow-up, if I may, is I also want to offer obviously my congratulations to Dennis. I want to use that as a lead into a two-part question, if I may, and forgive me for this one. Dennis, the press release for your announcing your promotion to CEO had an interesting comment. It talked about what is currently the company's sole operational area. I guess my question is a strategic one. Do you see with this, the change of, you know, I don't want to say the change of leadership, but the retirement of Jeff and your move into that role, should we expect any change of Range strategy? I guess my part B is, you know, it's interesting that when something like the run up to the announcement of Jeff's retirement happens, there's speculation that Range could have been a target for M&A. I guess my follow-up is, has there at any time in the last, you know, several months, I guess, been any consideration that there were other strategic alternatives, that should be or could have been explored for Range, that might have led to that speculation? I'll leave it there. Thank you. Thanks for the, for the comments and the questions this morning, Doug. I'll take a step back and really kind of start with the change of strategy piece, and then I'll end off with your second question. You know, I think you heard it from all three of us this morning, and you've probably heard it from us on prior calls, but the company is in the best position it's ever been in the history of the organization. When you, when you look across the multiple facets that we report on, whether it's financial, operational, safety, environmental, Range continues to really chip away at continuous progress. From our position, the company is in a great position to date. We're drilling some of our longest laterals, our fastest wells. Even after 1,500 horizontal wells being drilled in the basin, we're still continuing to make that incremental progress, which we kind of see that generating our highest return wells and being really resilient and durable through the cycles. We've got the best team in the business. I think when you look at, you know, some of the early on wells that we drilled with the Renz discovery well in the mid-2000s, there's many of those team members are still with us today, and that is difficult to put a dollar value on it because their commitment level is tremendous. In a lot of ways, Doug, you're not gonna see a lot of change from Range. It's going to be staying the course, continuing to block and tackle in the aspects that we're really strong and talented at, and that is really continuing to develop our assets, drill our best wells, and really generate competitive returns for our shareholders and generating free cash flow through the cycles. We see the world needs our clean burning energy that we supply, and we stand ready to participate in that year in and year out with our program. As far as your follow-up question, you know, about any other considerations, you know, I think, you know, ultimately, we're prepared to go it alone. Again, when you look at the asset base we have and the quality of the inventory now in our 15th year of a positive reserves revision, we stand poised to continue to chip away at what we do best, incrementally improving our well performance, efficiencies, and other aspects of our business. No other considerations from our end. All right, guys. Well, congrats again to both of you guys. Thanks. Thank you, Doug. One moment for our next question. Our next question comes from Bertrand Donnes of Truist. Your line is open. Morning, team, and, thanks for everything over the years, Jeff, and congratulations, Dennis. Thanks. Just kind of piggybacking on Doug's question. I know that debt reduction and buybacks are the current focus. In the future, does the shareholder return program change? It seems like you'll have the ability to accelerate production when the market asks for it. Is that what we should expect almost all cash flows to go to? Or if you ramped your spending levels into a strong gas pricing environment, would that be accompanied by, you know, a balance of buybacks and dividends? Yeah, that's a fair question. I think two things. Let me point to our activity levels last year. These elements of our capital allocation are executed in tandem. They can be done in different percentages or different weightings, just depending on where we are in progress towards our target debt level, what our expectations of cash flow are going forward, as well as frankly, the stock price and what the overall market may be there, what value there is. As we think about what the program can be, you've seen us allocate 75% of cash flow in a quarter to debt reduction. You've seen us allocate the majority to share repurchases in a quarter. You can see that move backwards and forwards, again, balancing where the balance sheet is, where the stock price is, where cash flow expectations are. Under the assumption that you're within your debt level, your target debt levels, and you feel solid about that, then it comes down to the fundamental demand for natural gas. Number four on our list is the growth when appropriate. You know, is there a call on gas? Is there a call for Range's gas? Do we have the deliverability to our end customers? All of which we think is simply a question of when, not if. We have capacity. Half our gas goes down to the Gulf Coast, a third to the Midwest, balance is further into the Northeast. NGLs are delivered domestically and internationally. Over 90% of our revenue because of that is effectively outside the basin. We've got great exposure. Because of the depth of our inventory, we will have the ability to grow either through existing capacity that goes underutilized through growth in in-basin demand or expansion of existing or new facilities that come online. There's a great many ways to win, and our capital allocation will simply adapt to that call on Range's supply and the economics of either buyback shares or that incremental growth. That's great color. Then, on the capital allocation side, you know, I think the strength in your NGL pricing kind of outperformed street estimates, maybe even internal estimates. Are there any plans to switch where your activity levels are to maybe focus on the liquids rich areas versus the dry gas areas? Then maybe would that be temporary until there's kind of a, you know, a call on gas where you guys are accelerate and then maybe switch back to dry gas? Just any thoughts there? Thanks. Yeah. Thanks for the question. I think when you look at our program kind of year in and year out, I think what you'll find is, on a percentage basis, it's pretty common for us to focus somewhere in the neighborhood of, say, 30%-40% of our activity in the dry gas portion of our assets with the remaining, we'll say 60%-70% being on the liquid side, both in the wet and the super rich. This year's program is very consistent with that. We always leave some optionality in the program for us to, we'll just say, optimize the schedule throughout the year, whether it's an operational efficiency type driver, it could be something else that's going on in the market. Our ability to do that really ties back to our ability to move back into pads with existing production, which represents usually year in and year out about 50% plus or minus of our annual activity. It allows us to be pretty nimble, react fairly quickly, and again, put the best program forward in each given year. However, what I would tell you is we don't tend to overcorrect the steering on the car all that much. If you look at where pricing has gone just over the past, you know, 10-12 months from a commodity standpoint, you can quickly see where you could just as apt to be more right or more wrong by making those radical adjustments. Under a maintenance type scenario, again, we look to keep the gathering system full and utilized as much as possible at a very high level, which provides another unique variable in this multi-math problem, variable math problem, if you will. We do allow some flexibility. If you look at this year, we're already heavily weighted on the NGL side, which we think that plays really, really well, when you look at the NGL pricing that we reported in the first quarter. Of course, lastly, with our program being front-end loaded from an activity standpoint and the production profile being more on the uptick in the second half of the year, we think that also plays well with the commodity curve for the back half of the year and into the winter of 2024. I appreciate it. That's all for me. Thanks. Thank you. One moment for our next question. Our next question will come from Jacob Roberts at TPH & Co. Your line is open. Morning, guys. Morning. Good morning. Just, to start out with, you know, sorry to keep harping on this topic, but has there been any discussion internally about the ideal pace of chewing through the remaining $1.1 billion on the, on the repurchases? Is there a ticking clock on that number at all? I guess the short answer to the question is no. There is no pace on it. We'll be opportunistic and balance the priorities. We intentionally have not given out a hard and fast formulaic approach. We have to balance market conditions and our priorities and returns and cash flows. That's the optionality and the intentional flexibility built into the program. Fair enough. I was hoping you could speak to the ethane dynamic that Range saw during this quarter and how you see that shaping up over the year. Dennis, you laid out the NGL macro side of things. I'm just wondering longer term how we should be thinking about any potential impacts on the premium to Mont Belvieu, maybe in 2024 and beyond. Tell you what, thanks for the question, Jacob. I'm gonna start off, and then I'm gonna pitch over to Alan to let him provide some thoughts as well on this question that you've raised. I think when you look at the production profile for this year, you know, quarter in and quarter out, you can expect to see some fluctuations in, you know, let's just say the gas that we report on in that production profile or on the NGLs, just depending upon the turn-in lines and again, that activity cadence. By and large, we would expect our NGL production to basically be relatively consistent and flat throughout the balance of the year. A lot of that goes back to some comments I made earlier. We're still under a maintenance level program where, again, we're keeping the system at a high level of utilization and maintaining a flat level of production. From an ethane perspective, I'll punt over to Alan at this point and let him provide some additional color on the diff and other long-term outlook. Hey, Jacob, this is Alan Engberg. I manage our liquids business. I'll actually start talking maybe a little bit just about the overall premium, NGL premium that we got here in the first quarter. As I think the guys have said already, it's been a good start to the year for Range. At a high level, the liquids business really it's a hedge against weak nat gas prices. NGLs in general really track crude more than natural gas. Now ethane, in particular, does track gas, but it's also influenced by the rest of the NGL barrels, which tracks much more closely with crude. In particular, the international markets track a lot more with crude. When natural gas is weak, NGLs, the spread between gas and crude widens and NGLs tend to outperform. For Range in particular, we have a lot of flexibility in our system, and we did see, you know, weak winter weather demand. We actually flexed to the export markets, and the export markets really performed strongly for us If you look at just market reported index values at the export dock relative to the Mont Belvieu index, those averaged for the first quarter around $0.08-$0.085 per gallon, which was up about 35% year-on-year. Overall, our premium benefited from the market dynamics, the spread between gas and crude, as well as our ability to flex to the highest value markets. It is somewhat seasonal what we get, and typically the winter does provide us more opportunities than the summer months. We're still maintaining our guidance at ±$1 for that premium. Going to ethane fundamentals in particular. You know, it's interesting. The ethane price has come off quite a bit from the fourth quarter. It's actually kind of weak. That is really the result of the lower natural gas price, which does pull on ethane. Also there's been, let's say, value chain destocking on the chemical side, which has reduced demand somewhat. All that said, though, the ethane inventories, especially as represented in days of supply, so total stocks divided by total demand, are still at five-year lows. The market is relatively snug. In fact, the EIA's short-term energy outlook that was just released a couple weeks ago is showing ethane stocks, in terms of days of disposition, remaining at the bottom of the five-year range for the rest of this year and next year. In fact, you don't get any lower than where we are right now, unless you look back to 2011 on days of disposition. We see operating rates improving already in the chemical industry during the first quarter. There's domestically about another 250,000 barrels per day of ethane demand that can still come back and get us back to last July's ethane demand levels. Plus, there's new demand internationally as well as domestically that could add another 200,000 barrels per day. Given, you know, strong underlying fundamentals, a lot of demand coming online that we see, we think ethane prices relative to gas are going to improve through the rest of this year and could actually double in value relative to gas. Again, Range because of our position, being a first mover in the industry, having production at the Marcus Hook facility, that is the main hub for moving ethane to whether it's Mont Belvieu or moving it to Canada or moving it to international markets, we feel real confident about our ability to continue to extract strong values for ethane and the rest of the NGL barrel through the rest of the year. Thank you. Excuse me. I appreciate that detail. I guess I'll just finish by saying congratulations to Jeff and Dennis. Best of luck. Thank you very much. Thanks, Jacob. One moment for our next question. Our next question will come from Subash Chandra of The Benchmark Company. Your line is open. No, thank you. Ditto, Jeff, on all the words said here, for a long and storied career. Couple line item questions. You know, first, I guess, on lifting costs, I think, in the 10-Q, kind of cited water hauling costs. Just wondering if that is a temporary issue or a structural issue of any kind. The abandonment cost, which is, you know, not a huge number, but if that was specific to any particular part of your acreage. Yeah. Good morning, Subash. I'll go ahead and tackle these. From a water hauling perspective, we have seen some fluctuations that are kind of short term in nature from a cost perspective. As you can imagine, as demand goes up for, you know, let's just say, to start a program at the beginning of the year, coupled with winter operations and fuel costs, we can see some of those being needle movers, if you will, at times with our quarterly water hauling costs. We would expect, though, all of that to still normalize throughout the year, and we're on track for our lease operating expense guidance that we provided this past call for $0.11-$0.13. All of that's still intact. From a workovers perspective, you know, any given quarter, I think, is really tough to assess whether it's a workover that's unique or an abandonment operation because each one has its own unique cost exposure. We did pull several projects forward into Q1. As you can imagine, in the Northeast, we try and push some of those projects into the middle part of the year when the weather is a little bit nicer. With the mild winter conditions that we had in the first quarter, the team became very proactive to pull some of those projects forward, so we could see some benefit throughout the year with further production stabilization. We would expect to see, just like when we talk about turn-in-lines or other operational cadence, we expect to see some quarter-over-quarter variance. Everything is still on track for the guidance that we provided this past quarter. All right. Thank you for that. A question on MVP. You know, it seems like it's warmer than ever to get that pipeline operational, and we've chatted before on it. Just curious, you know, I think you've cited indirect benefits. Do you have an opinion whether you would expect to see, you know, 2 Bcf a day of fresh gas in the basin, or do you think, you know, some large portion of it would be just rerouted gas? Well, Really good question. I think if you look historically, with other projects of that magnitude that were greenfield, that were brought into service and commissioned, clearly there was more of a ramp to fill type approach. In this particular environment, you can make the argument there's probably going to be more of a production redistribution effort where you can see some capacity start to open up on other pipes. You could see then, the demand pull for the customers that are gonna be on the end of that particular piece of infrastructure. You could see that production then get shifted off of other infrastructure and directed toward the utilization of MVP. I think we would see it could potentially be a balance of those two. Okay, great. Thank you, guys. Thank you. One moment for our next question. Our next question will come from Paul Diamond of Citi. Your line's open. Thank you. I would echo everyone else's commentary here. Congratulations, Jeff. you know, well deserved, and good luck on the next efforts. Well, thank you very much. Appreciate it. Just circling back a little bit. You guys talked a touch about, you know, you're starting to see some cracks in the inflationary narrative we've seen over the past years and looking more towards H2 and more, probably likely 2024. I was wondering if you could give a bit of color on that as far as if there's anything particular you think might go first or just a bit more, a bit more detail there? Good morning, Paul, this is Dennis. I think as you start to. It's hard to predict today where, you know, some of that will surface. We are starting to see signs of, we'll call it one-off rig availability, or you're starting to see some different openings in the schedule for maybe those spot frac crews that you may need to address, like that one-off pad or two execution throughout the balance of your year. I can't say that pricing has really moved all that much at this point. You are still seeing, I think a very high utilization of what we call the specialty equipment, your high spec drilling rigs, and also the electric frac fleets, where those are, you know, clearly at a very high level of utilization. You are starting to see signs of tubular goods showing signs of relief, along with one-off consumable products like frac sand as an example. That could translate again into some one-off unique savings toward the end of the year. Again, we think this is going to be, if there is whatever savings materializes will then really more show itself for the balance of 2024. Whatever comes out of the inflation, you know, uptick or relief that we see through the balance of this year and into the years that follow, you know, I'll kind of direct you back to our dollars per Mcf incremental component. You know, last year, we were $0.64 an M when you look at our low base decline and just our overall capital efficiency and our cost structure. This year, I mean, clearly, even with that, with the increases that we've seen from 2022- 2023, we're still in the mid $0.70 range. Still in a fraction of what we would see compared to our peers in other basins, if you will. However this plays out, we do see that we're still going to be in a peer leading position at the end of the day. Understood. Thanks for the clarity. Just, one quick follow-up. I know we've talked a lot about, you know, the takeaway constraints and the concern for, you know, in-basin growth, at least in, you know, the near term. How do you guys think about the opportunity for more organic growth in basin, whether it's through industrial demand or commercial or residential or anything along those lines? How do you guys think about that, you know, going forward? Yeah, I think you know, I think we see a couple options. One, when you start to look at some of the M&A activity that's occurred over the last few years, you no doubt have seen also a change in capital allocation, potentially for some of those producers to start to direct their activity toward the assets that have been a part of that transaction. In some regards, away from Appalachia. You've also seen some degradation in well performance year-over-year, which certainly challenges probably of those other peers around capital allocation choices that they're making. Those are things we haven't seen on our end. The position that that puts us in is really to be on the first cut of the fairway to utilize infrastructure that goes underutilized in the future. We think that poisons us well with our long runway of inventory. There are some projects that have been identified in the event that growth, It's not a question of if, it's when, that call on Appalachian gas takes place. We feel like those have been identified in a way that Range could participate down the road in the future. Again, for now, maintenance is the case. We know we've got the runway and ability to add inventory to the growth conversation when the, not only the macro, but also the basin fundamentals point in that direction. You're seeing more conversations around in-basin demand sources in the future. Shell Cracker is one of those prime examples where you're taking, you know, somewhere in the neighborhood of, you know, 100,000 barrels of ethane in the conversation, plus fuel gas, that gets you almost to between an excess of a quarter of a Bcf a day just alone in that facility. You've got combined cycle facilities that have continued to express interest in being in that area, given the long runway of inventory and supply that a company like Range could participate in. Certainly opportunities down the road for sure for growth. Understood. I appreciate the clarity. Thanks for your time, gentlemen. Thanks, Paul. One moment for our next question. Our next question will come from Scott Hanold of RBC Capital Markets. Your line is open. Yeah, thanks. Jeff, Dennis, you know, again, my congrats to both of you. You know, maybe my first question to get to kind of, you know, layer on to, you know, that, you know, conversation there, but, like, when you think about the market right now, it is a little bit loose the gas market. I know there are a lot of folks calling for the need for, you know, some gas producers to further reduce activity. Can you just give us a high level sense that is there any point where it makes sense, you know, for Range to back off its maintenance plan? Or is there an overriding just kind of efficiency, you know, benefit to maintain maintenance? Yeah, Scott, this is Dennis again. We're very comfortable with the maintenance program that we have laid out. I mean, again, by the time we get to the mid-year point, we'll be down to one drilling rig and one frack crew. This is what I would say a very comfortable low-end position for our program. It's very capital and operationally efficient for us, and it allows us to continue to check all the right boxes from a lower cost structure perspective, high-end utilization of the gathering system. You know, even through the balance of the last couple of years when we started to see fluctuation in commodity prices, we didn't grow. Instead, we stayed the course, and we did what we said we were going to do and remain focused on our balance sheet objectives. From our perspective, we never grew, and we stayed the course. Again, we'll stay at this level until the fundamentals suggest we should do otherwise. Would there be any consideration in to curtail production, you know, rather than change your drilling program to curtail during, you know, periods of more extreme weakness? Yeah, good question. It's something we evaluate on an as-needed basis here within the organization. You know, I think at the end of the day, if you look back on the last time we had commodity prices in this similar zip code, we did demonstrate that we were willing to shut in some of our gas that basically had commensurate cost reductions associated with it. Really for us, it's a much more of a complex math problem, if you will, than just, you know, do we shut in the gas or not? Because of the liquids component that you've heard Alan, Mark, and Jeff and myself touch on today. When you look at the incremental benefit that we see to our realized price because of our overall liquids production, quarter in and quarter out, it generates a NYMEX plus type exposure for us versus our natural gas wholly exposed peers who can be more at a NYMEX minus in type environment. I know we touched on in the prepared remarks, but just this past quarter, we were in excess of $1 over Henry Hub in a comparison basis as an example, $1.14. For us, again, maintenance really makes a lot of sense for us utilizing that existing infrastructure, that NGL exposure that Alan's touched on plays a significant part in the overall cash flow that we generate. Our NGLs generally produce about 30% of our overall production profile. From a cash flow perspective, it can mean as much as 40%-45%. All in all, something that we are cognizant of, we study on a regular basis on an as needed based upon where commodity prices are. NGLs carry a lot of weight for us, and it's meaningful returns. Understood. Thanks. Thank you. One moment. We are nearing the end of today's conference. We will go to Umang Choudhary of Goldman Sachs for our final question. One moment. Your line is open. thank you. Jeff, thank you so much for your leadership and contribution, and good luck on your retirement. Dennis, congratulations on the promotion. Thank you. Thank you. My first question was around deflation. You talked about seeing some signs of deflation. Can you give any more details around it? What do you think is the impact to capital spending this year and potentially next year? Yeah, I would really point to it having a very minimal impact to this year's program. I think for a couple of reasons. One, you're still trying to see the rig reductions materialize and what that means for where the market is truly heading. Secondly, our program is front-end loaded for the year. The deeper you get into the year, it does take us down to the one rig, one frack crew type environment. By nature of that, your speedometer has been reduced by the time you get to the remaining quarters in the second half of the year at that point. More materially, we see this being an opportunity for 2024. We know that we have a long-running history and relationship with many of our service providers. Those service partners, want to align with companies that are efficient and will execute a program that they've communicated and everyone's made commitments around. We think that'll be more, more results will be seen through the 2024 process than later this year. Got it. That's helpful. Thank you. Going back on that, response on options for growth, I guess anything which you would like to see on local demand or on gas basis, to get a signal to grow more in basin? Or put another way, like if you think about where you would like to grow and how your gas marketing portfolio will evolve, is there any place where you would like to add more end market exposure? Well, good question. I think we, you know, I'll take a half a step back on this one, Umang. I think we would take the same approach that we've had on the NGLs as an example or our current gas portfolio. Mark touched on it a few moments ago, but 80% of our gas gets out of basin. Of that overall portfolio, 50% of it gets to the Gulf. We already participate in the LNG market. I think we would continue to look for whether it's NGL sides or the gas side, what gives the most competitive returns regardless of that end market. We do see the future having more in-basin opportunities. That's gonna take, as you would imagine, time to further develop and put that infrastructure in place. It also has to compete with our ability to get that gas, as an example, transported to the Gulf versus being right there in basin. We'll evaluate all of our options. We've got a really talented marketing team. I think if you look over the history of the organization, we've demonstrated through creative structures and being the first producer to put ethane on a waterborne export, tying to foreign indices as an example, for some of those structures. All of that has translated into some of the returns that we talk about today. The team will remain diligent. We'll continue to evaluate all of our options, but they have to compete amongst what we have as our options and what we have in the current portfolio. Very helpful. Thank you. Thank you. Thank you. This concludes today's question and answer session. I'd like to turn the call back over to Mr. Ventura for his concluding remarks. I just wanna thank everybody for participating on our call today. Thanks for all the kind comments for Dennis and I on our path forward. If you have any questions, please follow up with the team. Thank you. Thank you for your participation in today's conference. You may now disconnect.