Mon, 15 Dec 2008|
Automatically Generated Transcript (may not be 100% accurate)
Thank you appreciate it like coming -- this afternoon. -- depressing -- been compressing data so it's time to tell you great story. Right gas fields. Right where you need them and Appalachian. Huge growth low cost structure. Range resources. While we actually. Flourish in these period of time. That you got the ability to grow. -- -- what my -- commodity prices go down it actually makes everybody else feel a bit more rational which allows us to really excuse their business plan. The way we'd like to. A -- of your unique company. We have. Three plays in which. We can actually double and triple. Our proof these are things. -- Barnett shale. Norah with Houston state of Virginia. Both those plays can actually. Double. That of course Marcellus dramatic growth in that area. This our production growth over the last. For -- for five years 23 consecutive sequential quarters of production growth. That'll obviously be. -- 24. We. Announced today that we are at the thirty million -- that. Marcellus production coming through our processing plant which we opened in October. So therefore. Fourth quarter ought to be a pretty easy target to make. Anybody in this business can grow production. If you -- enough money at it anybody can hit these rates. What you can't do. To do with that cost structure. Three year five year finding cost. With the drill bit. Dollar. 56. Dollar 53. 424%. Rick drove it replacement. For 2000 and seven. So it shows you the resiliency of the portfolio of being able to -- What we have long term development projects. So that we can now be able to grow. No matter what -- -- -- We're low cost producer. This is an entry -- study from Bank of America. Which actually takes into account. Not only what your cash costs are -- -- finding costs which I think they use that they. Three year average but it also takes into account your differentials and in this kind of economy in this kind of a -- that we're in today. Where do you get a thirty cent premium and apple make sure where you get me four dollar deduct in the Rocky Mountains -- a huge impact. What your margins are. So therefore what this study does this -- pay -- take into account what you're differentials are and give us they break even. Nymex price. At which you breakeven -- zero. Cash cost. We were the winner in three years and we were second last year you don't have to be the absolute lowest what you gotta be -- in the top. Three or four to get your cost structure. Competitive to where you are geographically -- portfolio -- in or deliver the rates of return consistently from quarter to quarter. Hedging hedging is a part of our program. This like used to be in the back of the presentation at thirteen dollar -- back in front of the presentation today. Again we -- not trying to gas. Commodity prices. We have long term development projects which will take five to eight to ten years with the level of activity that we have today. Our biggest problem is we have to hear and accelerate that drilling in order think that present value and bring it to today. So when I got assure myself. That we have to cash flow to execute our program consistently. No matter what the commodity prices or. Don't have a low cost structure and I high margin. What I assure you need reassurance or is what is the cash flow that I have to -- in order just keep rolling out the program. So everything else will take care of itself in the process because of the cost for. This actually slide that we use for board and we incorporated into our -- our presentations. This is that we have 2.2. -- of reserves at you're in 2007. We're -- three point one million. Inventory to drilling inventory of 111000 projects. And that we have upside in the emerging place but it shows you. Is exactly. How we've grown the reserves proved the drilling inventory. And what was that eventually done on the proven place. In the emerging plays we only talk about high gas and she'll place we don't talk about. Conventional plays we don't have to show you fall was on shoes and kind of -- you have figure out what it is. Pretty well on tight gas and -- place people know there's some degree of uniformity that there's a lower risk so we don't talk about. All are upside that we have our confessional plain. Because I don't have enough slides in this presentation -- ready to go through. Here's literally pyramid you'll see that is really dominated by three plays again the Barnett. And -- Nora. The Marcellus is not in this line. You go back. We have Barnett and -- in proved reserves ignore it nor and Barnett and growing inventory. And -- Barnett and Marcellus and the emerging play. At the end of 2008. All three will be in this category this category -- this category. And all the major plays that we have so therefore you what you see -- -- whole process. -- -- To see here that the emerging plays are basically dwarfed -- Marcellus play. And that's -- most -- -- here today you. -- Great little engine we're just right across the state line from night games in gas bill and do great -- -- equitable over now -- Where the little engine. Huge growth in here it -- -- -- area called it mapping between 500 feet. In Kiev today that -- -- years flat production great little engine listen eighties and finding cost. Tight gas at 4005000. Feet. That we got the Iran -- Which is about 6000. We have started drilling horizontally down here in the wrong -- we're not going back -- real tight gas and the real. That -- area. Great little engine. Can double itself and -- -- reserves. With what we own today. We actually own the minerals on -- this that we actually. 50% working interest in the 56 and a quarter percent net interest. You can't screw up too badly. If -- revenue increases -- working interest. The Iran -- huge potential. Big sandy. If you analogy over here. Your analogue. The only difference between big thing in the in the -- 300000. Net acres we have been here. This produced 2.5 TCF from the thirties. Yet no production. Down here really you're on the other version pressure much higher pressure actually going from here so that's the little engine deeper -- Here's the -- -- everybody understands the Barnett. You know what's -- what's noncore what's your three I would a lot of terminology of -- what you really have to understand what's productive what's not productive. Okay. Just to set up -- my comments that we -- further. The very largest thickest portion. Of the -- that. Is up against the monster art in Denton county. That's where the play started that 700 to a thousand -- -- the most productive area. In the Barnett. Its parent. Johnson -- Okay not even in the Barnett is everything thing. There is a hero of counting there was a pal and -- bad areas and it was good here. What you have to do is to figure out how you can make each one of those serious work if you think your completion techniques in Denton county you gonna take on Johnson -- And -- in just repeat them. You've been very average results. Little Rock passed -- rule what you're doing we have over 700 locations in the core area. That we still have to drill. We're running six rigs -- up to over a hundred million a day here will grow this 25. Percent or more. In 2009. This is Carter industrial. This is some. Vessel -- -- in the Barnett. From the highest -- -- -- drill to drill right here. Lucky thing for you if you want to take a tour it's right behind Miller brewery. -- -- -- Johnson County again this is where you really have. The very big -- -- monster well the range -- monster wells. Carter industrial district seeks all of this area. We're -- the huge monster well. I throw this slide in because it's a very unique slide over and boot camp here in and our gas processing window area. But these wells three years ago cautious about. Three point 63 point eight million dollars and it is about thirty to 45 days -- complete the last three wells were drilled here we drove them each in ten days. And we complete them and -- for one point six million dollars. So huge efficiencies in the Barnett huge efficiencies throughout. The show places people become much more familiar. And repetitive you know what's the optimum track. What's -- the way to -- it. You don't need to have a lot of high powered read that Federer. Once you actually know what to -- -- -- so efficiencies here so you have huge rates of return here. And again. Mitchell ranch and Crockett county. In through here again a huge area for -- the reason -- point this out is that this doubt. And kind of the same ingredients. Is the same. Area that in the southwest of PA and the thing where we're going Marcellus Shale. There were estimated cost be somewhere between 33 to four million dollars for three -- four of these yet. Here. Is cost -- one point two. He changed the location cost change a little bit more for non competitive services accelerant. You clearly see that there's huge upside reducing the cost -- ourselves even further what she really get too repetitive. Places. -- to the Marcellus Shale. Again. I draw your attention to this photograph. Rather than -- photographs of Kentucky and West Virginia. These are Rolling Hills. It scares me when you see some of these pictures I don't see how you could agree on some complications after. These are gently Rolling Hills now there'll be parts of the Marcellus that look this is that is what bill would feel when you. -- West Virginia Kentucky. But again. These are gently Rolling Hills great area first mover here. Greg played for -- The comparable that we had a couple weeks ago. With Chesapeake selling between 5% interest to settle well our I think maybe more than -- percent. The comparable for -- one point four million acres and 52 dollars here. And unfortunately until about surgery so you get a lot of free bonuses when you -- -- stock. You can just -- what -- bonus points would like to be but basically the Marcellus is totally free in what you're working on here. Again these are great IP wells we -- a press release this morning unfortunately. To remind everybody that they on the stock -- were down. Along with the sector. Our first thirty million a day project -- point refrigeration plant is on. Is now fully capacity I was seven well so that's averaging. Over five million. Production per day -- -- well. So huge play huge. Ability to be able to grow. We've done this in 2004 so. Unfortunately in the state of Pennsylvania. All geological data -- confidential production it is held confidential for five years. So. None of -- this year so therefore you create a huge competitive thing about what you know what you for. We -- a conference last week. And the real struggle for some of the investors -- I don't understand why people can't figure out exactly. Where two by a creature -- -- that are. I think I just handed them the itinerary for the -- -- companies that here's -- great companies -- -- speaking at this conference. -- for you to pick and invest two billion dollars but -- -- no fundamental research on any of these companies just read the names and figure out what to do. That's essentially what you're doing in the Marcellus and for the Pennsylvania today. Again you got twenty Euro deal -- that will tell you where some of the ticker areas are. But -- -- told you -- doesn't necessarily equate high productivity. So what you've got to do you know roll up your sleeves and understand. Geological model and get the data in which to figure out where to drill and how to develop that play. Range is three years of have everything in 2009. It looks like one of the silver linings of today's credit problem. That range will largely. Be the only player in the Marcellus again probably -- a few wells from equitable few -- from apple. Because really always you can actually invest dollars wisely and get a return on the cash that we're spending most everyone else we'll have to spend their money elsewhere. And -- become the Marcellus 20102000. -- So it really gives us the ability to further consolidate -- very dominant position. In this play. The play. Again the size and depth is just he. One thing you can't do in this place place play close -- You can picking -- won't. But it is very hard to get up close to somebody that's got data that's real data. Are you really buying a creek where you really doing well in the optimal place to have the right technology do have the right geology. So that's why it's just very critically important. Just what you do. We've divided the play actually two segments simply because of topography. And the timing which we believe the -- will actually be developed. If you see the southwest area. This is gonna be where hi. BTU and broadcast. This is where largely a lot of our positive results of -- We also have a huge position. Here in the northeast. This has more -- serious -- terrain harder more lack of infrastructure. That I mean roads people. Six. If you every chip -- -- real world would be great place. To be but right now you know finding -- road and how to get -- guys from Texas Oklahoma and -- come up here don't pipelines. Get totally disoriented because the elevation to -- three -- 4000 feet different. Trying to connect the dots -- this is not flat land up here but the very thickest part. The play from -- standpoint is up in the northeast us why you -- most of the public companies. Go that direction. Again gently -- when. This is what mark west and range -- coordinated and doing. The this plant. Right here came on October -- second. It's now up to full capacity. And got full capacity -- seven wells. This will come on in the first quarter of of -- another thirty million day cryogenic plant is of refrigeration unit is less. Effective. Efficiency wise it's -- get down about zero degrees if -- -- to a negative 150 degrees. We'll build a second plan 120 million today here. Third quarter. There will be a security of a cryogenic plant built that here makers bill we will have half of that thirty million -- day. From that -- so again huge infrastructure. Coming into the area. To be able to take all the pent up well we basically -- not been able to lose. This is what the fight looked like before they start turning dirt on them. The day that we got our permit from the local. Governments. This is what looked like -- August. This what looked like when I started my production. Right before -- -- go back here. This is where the refrigeration unit is when you'll have. The thirty million -- cryogenic plant here this'll be 220 million. Cryogenic plant here this will be fractions nation through here. This is where all -- four characters and -- -- coming years from this period this will be where all the piping and -- -- come through here. In this will be the where the truck driver and take all the liquids that are from that in this apparently 519 Washington can. So basically cascade down. -- -- what we're doing this. This is compressor site this was taken when they're -- to pick two compressors are there actually for the it was. A lot of infrastructure in appellation. Largely lot of this has not been put under compression so you have a lot of takeaway capacity the field there. We have a 150 million -- day takeaway capacity find out today. We've had publicly it will exit 2008. -- thirty million today. Twelve X 2000 -- -- eighty to a hundred million -- -- and probably in 2010. The section 200 me again. So again huge growth in an area. Don't get too confused -- all the processing capacity through here because again. You've got wet gas -- through here but you've got right definitely monthly throughout the other areas so. What you have while we're working -- capacity. Is being able to drill in -- the drive in quick answers. There's additional upside. When you look at the play. On the western part of PA there's at least. Four other. Shales above the Marcellus that -- last organic. Material in places -- gas in place. But again it's something we'll be testing. Late 09 in 2010. So these are what these -- the types -- things you'll see coming on the emerging place. Next year. Talk a little bit about permits. There's a whole process that you happen or not to disclose. Data from other company's -- that are these are all the permits that are publicly available -- where they are. You can see that range have a lot of permits and through here that permit through here in this area. Good wells have been drilled in through here this is with his range. Back -- and -- -- through here. -- twelve -- over here. Well and through here that will run through here that -- -- through here good wealth over here in Susquehanna. From these series and through here again so it's -- So just like in the barn it just can't swing your hand across -- -- its -- -- You know just I wish it was that easy. Here's the southwest this is where you've had -- and success. These are our permits and through this area we have 550000. Here I acres in through here. This is that was vertical program through here primarily. Phoenix equitable drill down through here -- you can't be well adapters here. What you really have been here. There's about 200 -- that have largely find it very large gas field southwest part. And today. The important thing is when you look at the right to return and look to recoveries and look at the -- This is better than Terry Johnson camp. So this is better than -- Johnson can. You know focus on what's really important as we move to the northeast. Which will actually take a couple years later to do. Again you got good wells and through here that are verticals. So so wells here. Bad well that will that well. You know he's up here. They're talking about to be here for well you're probably right after fairway there in the under pressure -- they're not in the over pressured -- So again we we've moved to. You met him. Some of this over in the eastern part we'll probably good this is probably two. Had a twelve -- Susquehanna to where you are in the fairway where you've -- -- acreage will be critically important. Why get concerned about all this it's always -- return driven. This was Shannon Nome. Looking at a study abolish -- -- conclusion. Of course this was back in the heyday of nine dollar gas. That marshals of the 86% later returned. This is dry gas if you please don't let -- context of -- -- -- -- Okay seven dollar nymex gas and -- gas through the project plan that -- back at the well it is about eight dollars and twenty. If you have the right -- -- economics and like people and technology to tell you how to do it extremely profitable. The real key here if you got a 31. Thirty cent premium. And have a -- -- here that is not been bid up to marginal economics was still twelve -- -- to 15% this is not 25% standard rules to. Going and again. -- oil comp here they pay 5000 dollars an Acre on one point eight million acres. Which would be fifty dollars issue arranged. -- that we. What does it take to be successful in the Marcellus. It's really no different than any other place. But you just gotta be cautious that one -- -- just got to be in the right place. Secondly you gotta have a tactical team that actually knows what they're doing how to -- and adapt to the wrong. If there's -- questions you -- know in the Marcellus as to how to make it successful. 45 of those questions you can largely answer from prior experience Michelle playing with experience to be able to adapt. The next four to five questions -- real killers. That's what cost you money even if the learning curve that's where you need to go and how you need to adapt to that. But again our team on their sixth. Horizontal well that was drilled inception -- date in the plight came on three million. Today -- right. So Iraq here is great if you know if you got the right rock if you got the wrong rock. You're ready to return is still zero. So rigs. Services yes it's gotta come got to have the capabilities. -- are permitting problem we get our last -- two weeks ago. Is there water sourcing problem. Either water disposal issues yes that could be an issue based upon volumes -- you have. The Susquehanna river basin authority itself in their own lives at the peak. 3000 wells. Being drilled per per year about the industry shows brother own data. That -- gas. Operators will be using one half. A what the golf courses in Pennsylvania used on the water usage based. We get very excited. It wouldn't do a lot of press releases. About things when you -- in the context of water the water usage is if it's not that really important. Are we gonna be responsible and be environmentally friendly. I don't see a lot of damage in the Barnett I don't see a lot of damage and would hurt. From environmental unsound practices I don't know why we do that in the Marcellus. In world big public companies. And we're probably much more environmentally friendly. Than anybody would expect. Gathering and processing. Is going to be an issue. We've had to wait to get that done we solve that problem marquis is a fabulous group. They're staying ahead. And then I can have the best field in America. For the don't have firm transportation. Market I guess -- city that. So if you understand all the pieces of the food chain. And you have those appropriately dealt with -- going to be tremendously successful. -- -- Marcel. So why invest in -- great company. Really proven record of being able to be very consistent. Growth can we grow at twice what the current rates are absolutely. What can you do that for five years can -- built a foundation year after year quarter after quarter. That'll allow -- to continue to -- to -- continue to grow at low cost irrespective of what my question today. That's the difference in range resources. In many of our competitors we're geared to be they're successful in a down market. Because what we can do so we do every day drill fabulous wells with huge growth. Higher commodity prices just simply accelerates -- force. And with that we'll go to break out.