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Range Resources Corp RRC
Q1 2013 Earnings Call Transcript

Transcript Call Date 04/26/2013

Operator: Welcome to the Range Resources' First Quarter 2013 Earnings Conference Call. This call is being recorded. All lines have been placed on mute to prevent any background noise.

Statements contained in 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 speakers' remarks, there will be a question-and-answer period.

At this time, I would like to turn the call over to Mr. Rodney Waller, Senior Vice President of Range Resources. Please go ahead, sir.

Rodney L. Waller - SVP and Assistant Secretary: Thank you, Melisa. Good morning and welcome. Range reported outstanding results for the first quarter of 2013 with record production and a continuing decrease in unit cost. Both earnings and cash flow per share results were greater than first call consensus.

The order of our speakers on the call today are Jeff Ventura, President and Chief Executive Officer; Ray Walker, Senior Vice President and Chief Operating Officer; and Roger Manny, Executive Vice President and Chief Financial Officer. And after the speakers, we will conduct a question and answer period.

Range did file our 10-K with the SEC yesterday. It should be available on the home page of our website or you can access it using the SEC's EDGAR system.

In addition, we posted on our website supplemental tables, which will guide you in the calculation of the non-GAAP measures of cash flow, EBITDAX, cash margins, and the reconciliation of our adjusted non-GAAP earnings to reported earnings that are discussed on the call today.

Now let me turn it over to Jeff for his opening remarks.

Jeffrey L. Ventura - President and CEO: Thank you, Rodney. We are off to a great start in 2013. We continue to making progress with our plan of driving up production in reserves on a per share basis while driving down cost. Production was up 34% versus the first quarter of last year. Total unit costs were down 10% versus a prior year with LOE leading the way, down 23% from last year.

DD&A dropped from $1.68 per MCFE to $1.46 per MCFE. Importantly, our operational successes are beginning to significantly flow through to our financial results. Despite prices being down 3%, our cash flow increased 34% year-over-year from $163 million to $219 million.

Looking further into 2013, growing production coupled with improving well results which Ray discuss shortly, and lower per unit operating expenses for the entire year should result in substantial increases in Range's cash flow for the year.

In addition to the operational success, we also had two other key accomplishments in the first quarter. We sold our New Mexico assets plus Powell Ranch for $275 million. We also issued $750 million of 5% Senior Subordinated 10-year notes. Both transactions allow us to continue to maintain a strong and flexible balance sheet. As we previously announced, we're expecting production to grow at a rate of 20% to 25% for 2013. More importantly, we believe that we have line-of-sight growth of 20% to 25% for many years. All this projected growth is in our existing plays. The reinvestment risk is low and the projected rates of return are very good.

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