The top executive of Range Resources Corp., one of the largest natural gas producers in the United States, said again on Tuesday that not enough is being done by the country to ease the global energy crisis. 

appalachia price graph

“Energy policy will need to be rooted in market realities,” said CEO Jeff Ventura. “If infrastructure projects, mainly pipelines and LNG terminals, are not prioritized and given reasonable regulatory reviews, then I believe it’s simply impossible to meet the growing global demand for reliable, safe and affordable fuels.”

Ventura said unwarranted permitting delays, adverse policy decisions and the global push for more renewable energy have resulted in underinvestment in the oil and gas sector, helping to stifle domestic gas supplies and inflate energy costs worldwide. 

[What’s keeping energy execs up at night? Join a team of NGI editors as they break-down the main themes from CERAWeek, giving you insight into what leading energy professionals are focusing on in this episode of NGI’s Hub & Flow podcast. Listen now.]

“The current situation will not change unless there is support for the necessary infrastructure that would allow for increased supply – plain and simple,” Ventura said during a call to discuss the company’s second quarter financial results. 

He said nearly the same after the company’s 1Q2022 results were released in April, calling on federal and state policymakers to better support natural gas infrastructure as other executives across the space have. Their pleas come at a time when Europe is preparing to cut gas consumption through next spring. Russia has significantly reduced deliveries to the continent in retaliation to sanctions for its war in Ukraine. 

The squeeze on Europe has created fierce competition among the world’s gas buyers and sent prices soaring at a time of rampant inflation and the lingering economic impacts of a global pandemic. 

Range holds more than 500,000 net acres in the Appalachian Basin, home to some of the world’s largest gas fields. The U.S. has pledged to send more than 1 Tcf of liquefied natural gas annually to Europe through 2030, a target that Ventura said would require unlocking higher volumes from the basin. But he stressed that pipeline constraints would limit the region’s ability to produce affordable natural gas for consumers at home and abroad. 

“Additional infrastructure requires permitting at the federal level and that process has been incredibly slow or impossible in recent years,” Ventura said. “…Unfortunately, domestic supplies are being stymied by short-sighted energy policy with permitting delays and cancellations of prior approvals.”

FERC has faced criticism that it’s been too slow to approve export projects in recent years, but it’s been working to address those claims and has approved about a dozen terminals since 2018. Environmental opposition, along with legal and regulatory setbacks, have also slowed or stopped pipeline projects altogether.

Despite the setbacks, the United States has rapidly ascended to the ranks of the world’s largest LNG exporters and is expected to have the globe’s largest export capacity by the end of the year. The country has been delivering record amounts of the super-chilled fuel this year, which has also helped push up domestic prices. 

Record Results

Range benefited from soaring commodity prices, reporting a significant jump in revenues and generating the highest free cash flow in company history. 

Average realized prices during the second quarter jumped to $5.03/Mcfe, up from $3.04 in the year-ago period. 

The company is one of the nation’s largest natural gas liquids (NGL) producers. Before hedges, Range reported NGL realizations of $42.65/bbl, or an 11-cent premium over the Mont Belvieu equivalent and the company’s highest in over a decade. After hedges, the company realized $41.46/bbl for its NGLs. 

COO Dennis Degner said NGL demand in the second half of this year and into next is likely to remain strong. He noted that Shell plc’s new ethane cracker in Western Pennsylvania is expected to ramp up, while industrial activity in Asia should strengthen following Covid-19 lockdowns and boost U.S. NGL exports further. 

Along with above-average demand in Europe, domestic NGL stocks heading into the winter buying season are also expected to be low and push prices higher heading into next year, Degner said. 

Degner did note that the current macro environment is not without challenges as the company has “seen inflationary changes” in its cost structure for things like labor, steel and fuel. Range has been working to offset the additional costs by pre-purchasing tubular goods, working closely with service providers and looking to lock in better prices for rigs and equipment, he added. 

Range reported second quarter revenue of $1.23 billion on soaring commodity prices, up from $435 million in the year-ago period. 

Additional proceeds, Ventura said, have gone toward paying down debt and shareholder returns. The company’s total debt stood at $2.4 billion at the end of 2Q2022, down from $3.1 billion in the year-ago period. 

The company produced 2.1 Bcfe/d during the second quarter, flat with the year-ago period as it executed plans for a maintenance program it announced earlier in the year. 

Second quarter net income was $452.8 million ($1.81/share), swinging from a net loss of $156.5 million (minus 65 cents) in the year-ago period.