Range Resources Corp Q3 FY2025 Earnings Call

Good day. Welcome to the Range Resources Third Quarter 2025 Earnings Conference Call. 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, SVP, Investor Relations at Range Resources. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and thank you for joining Range's Third Quarter 2025 Earnings Call. With me on the call today are Dennis Degner, Chief Executive Officer; and Mark Scucchi, Chief Financial Officer. Hope you've had a chance to review the press release and updated investor presentation that we 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, I'll turn the call over to Dennis.

Thanks, Laith, and thanks to all of you for joining the call today. As we report on the progress made during the third quarter and focus on the execution of the remainder of our 2025 program, the results remain consistent with what we've shared in prior cycles. During the quarter, Range executed on our plan safely and efficiently, delivering consistent well results, free cash flow, returns to shareholders, and steady activity levels that support the growth plans we've previously communicated. All-in capital came in at $190 million, while generating production of 2.2 Bcf equivalent per day for the quarter. Year-to-date, we have invested $491 million in capital, putting us right on track with the previously improved guidance of $650 million to $680 million for the full year. Our year-to-date operational savings come from several differentiated aspects of our business, which include returning to pad sites for incremental development, utilization of existing infrastructure, extended reach horizontal development, and the team's dedication to continued operational improvements. I'll touch on a few of our operational highlights driving this in just a moment. As we look ahead, our previously announced growth plans will begin to gain visibility in Q4 as strong field-level performance is expected to deliver production of approximately 2.3 Bcf equivalent per day in the quarter and growing towards 2.6 Bcf equivalent per day in 2027, an increase of approximately 20% from current levels. Importantly, Range's incremental production will be transported to known end markets as our depth and quality of inventory allowed Range to secure transportation capacity that was going underutilized by others. We believe our plans align well with increasing demand in the Midwest, Gulf Coast, and global LNG markets in the years ahead, while having the flexibility to meet future in-basin demand as well. Lastly, we will add our planned 400 million cubic feet equivalent per day of growth very efficiently with relatively flat annual capital over the next two years, supported by investments in additional work-in-progress inventory since late 2023. This will keep Range's reinvestment rate at the low end of the peer group, allowing significant capital returns to shareholders while growing. Diving into the quarter. Consistent with prior quarters, Range operated two horizontal rigs, drilling approximately 262,000 lateral feet across 16 laterals, averaging 16,400 feet per well. This adds to Range's planned drilled uncompleted inventory and places us on track to exit 2025 with more than 400,000 lateral feet of growth-focused inventory supporting our development plans through 2027. For completions, the team ended the third quarter completing just over 1,000 frac stages, utilizing a combination of our full-time electric fracturing fleet and a spot frac crew for a single pad in Northeast Pennsylvania that we discussed during the prior call. Completion efficiencies for the third quarter were at nearly 10 frac stages per day across all operations. Supported by a strong KPI-driven focus, efficient logistics, and a look back from prior pad executions, our Northeast Pennsylvania operations continue to deliver incredibly efficient results and strong returns, utilizing existing infrastructure on our occasional return trips to the area. Cash operating expenses for the third quarter finished at $0.11 per Mcfe, firmly within our previously improved guidance for the year. The team continues to see efficiencies within the field, especially when focusing on multi-operational project scheduling to improve production downtime, reduce spending, and maximize field run time from the wellhead to the burner tip. Shifting over to marketing. The third quarter of 2025 was an exciting time for U.S. energy marketing as we saw the commissioning of new NGL export capacity, the ramp-up of recently commissioned LNG export capacity, and strong interest in new natural gas supply for power generation within the Appalachia Basin. Highlighting some specifics, starting with natural gas. The U.S. exported record volumes of LNG in the third quarter as new capacity continued to be commercialized and international demand for clean, reliable American energy remains strong. Three additional LNG projects reached FID in the third quarter with additional projects recently sanctioned, bringing the year-to-date total to approximately 9 Bcf per day of incremental feed gas demand, making this a record-breaking year for FIDs in the U.S. Based on projects under construction, LNG feed gas demand is expected to exceed 30 Bcf per day by 2031, more than doubling the export capacity versus current levels. We are confident of the world's strong appetite for U.S. natural gas as long-term global gas demand is underpinned by rising incomes and population growth. Looking at in-basin opportunities, we continue to be encouraged by early phase activity in Pennsylvania toward gas-fired power generation data center projects. Numerous projects are progressing, and the past few months have provided us with even more conviction that consensus estimates for approximately 2.5 Bcf per day of Northeastern demand potential from data centers by the end of the decade are becoming more real. We are continuing to make progress on the Fort Cherry joint venture project with Liberty and Imperial announced earlier this year. In addition, Range is in conversations with multiple other potential projects that could benefit from Range's asset location in Southwest Pennsylvania, our pipe access across the U.S., our marketing acumen, and importantly, our depth of high-quality inventory and financial strength that can support long-term supply agreements that end users are looking for. As we look forward, we believe there will be a clear call for Appalachia to play a key role in supplying U.S. markets with affordable, reliable natural gas supply. Moreover, we believe that expanding infrastructure from Appalachia and sourcing more power demand within Appalachia is the most effective way for America to fuel its long-term energy needs. We remain very constructive on the setup for natural gas with storage levels at or below average compared to last year in terms of days of supply. As we move into 2026, a further 4 Bcf of LNG export capacity is expected to come online, leading to tightening gas market fundamentals. Turning to NGLs, similar to our outlook for natural gas, we're encouraged by the fundamental setup for ethane and LPG. Ethane and propane are both expected to see substantial increases in export capacity out of the Gulf Coast into continuing stronger international demand, and we expect this to improve NGL pricing relative to WTI in the coming quarters. Specific to Range, our geographically advantaged access via exports to the European market continues to support a premium versus the Mont Belvieu index. We see continued strong demand for Northeastern U.S. LPG as Europe continues to secure long-term supply from reliable producers. During the quarter, Range once again leveraged its flexible transportation and marketing portfolio to respond to market dynamics and enhance margins. These optimization efforts for Range led to a strong seasonal natural gas price differential of minus $0.49 per Mcf versus the NYMEX index, coupled with a continued premium on our NGLs. We have improved our full-year guidance accordingly. The future of natural gas and NGLs is strong, with significant demand continuing to materialize in the near and medium term, both globally and within Appalachia. Range is poised to help meet this future demand while creating outsized value for shareholders with the strongest financial position in company history, a large contiguous inventory measured in decades, and a proven track record of delivering through-cycle returns of capital while investing in the long-term success and optionality of the business. I'll now turn it over to Mark to discuss the financials.

Thanks, Dennis. The first 9 months of 2025 have underscored the stability and profitability of Range's business. During this period, NYMEX natural gas prices averaged $3.39, while Range achieved an average realized price of $3.59 per unit of production, a $0.20 premium created by our diversified commodity mix and sales strategy. Strong pricing realizations, combined with low full cycle costs have provided Range the ability to continue progress along our 3-year growth plan while returning capital to shareholders. Year-to-date, we have repurchased $177 million in shares, paid dividends of nearly $65 million while reducing net debt by $175 million since year-end. Each of these actions reinforces our commitment to delivering on our stated capital allocation priorities. While front month gas prices fluctuate, our business model, sitting on a high-quality resource base, has consistently generated free cash flow, enabling capital allocation options of executing a market-driven, growth-oriented operational plan alongside current capital returns to investors. Range is proving the free cash flow resilience of its business and enhancing that resilience through targeted capital investment. The specific attributes of Range's business that provide a stable base and enable through-cycle investments and returns include a high-quality, long-duration inventory that enables a low reinvestment rate, a strong balance sheet to allow value-capturing opportunistic investments, and a diverse portfolio of natural gas and natural gas liquids transportation that links Range to customers in key U.S. and global markets, delivering roughly 90% of revenue from outside Appalachia. While building cost-effective DUC inventory to meet future demand, our opportunistic investments and returns in 2025 have grown from prior years in the form of share buybacks and dividends, given the strength of Range's balance sheet. We are generating healthy free cash flow and diligently redeploying that capital to harvest value from Range's resource base. As the U.S. and global natural gas markets continue to integrate with the commissioning of new LNG facilities alongside substantial domestic demand growth, primarily from electricity, we believe Range's long-life, low-cost inventory creates enormous option value to play an integral role as a key supplier. Our durable free cash flow, evidenced through cycles in recent years, positions Range to consistently deliver value to its shareholders. Dennis, back to you.

Thanks, Mark. Range's year-to-date results reflect a consistent theme: strong operational performance against our stated multiyear plan, consistent free cash flow generation, and prudent allocation of that cash flow, balancing returns of capital, balance sheet strength, and the optimal development of our world-class asset base. You've heard us state this before, but we continue to believe the results communicated today showcase that Range's business is in the best place in company history, having derisked a high-quality inventory measured in decades and translated that into a business capable of generating significant free cash flow through cycles. With that, let's open the line for questions.

And our first question will be coming from Jake Roberts at TPH & Co.

I wanted to spend some time on the work in progress inventory. Can you speak to what you think that 400,000-foot number looks like at the end of 2026? And if you could, I know it's early for 2026 discussions, but is there any consideration on the timing of that drawdown we should be thinking about?

Yes. I'll try and help provide some color on what '26 looks like. As you start to kind of think about from a capital, I'll start there at a high level. Capital is going to look really similar in 2026 to what you've seen us executing here in the program for 2025. The difference between the two years is an allocation of the capital that will then start to lean more heavily on the completion of the DUC inventory that's been building over the last couple of years and through 2025 and our ability to start to work through that, coupled with some timing of some infrastructure that will come online that I'll touch on here in maybe just a moment. So maybe more simply put, where you've seen us have two drilling rigs over the last couple of years, we've talked about that as being kind of a maintenance plus kind of a program. So over 3 years, we will have added 400,000 lateral feet, and roughly that translates into around 30 wells. So I'll put some context around the last 3 years between '23, '24, and '25 in that perspective. Then when you start to shift into 2026, and that's also with one completion crew. That maintenance plus inventory that gets built is clearly more than one frac crew can consume. For '26, we'll take that drilling activity down throughout the balance of the year. We'll still maintain at least one rig for the balance of the year, and there will be portions of the year where there may be a little bit more activity, but the completion activity will go on an uptick. So you'll see a single frac crew for portions of the year. Then instead of what you've seen in '24 and '25, where there's been a spot crew to complete maybe one or two pad sites, you'll see some continuous activity with a second crew that then starts to work through that inventory. So what does it look like at the end of 2026? We're still working through the refinement of those numbers, and we'll have some better guidance for you on what that lateral inventory looks like. They expect it to be a very linear utilization trend over the balance of '26 and '27. That also translates into the production that we've talked about where roughly we'll be at 2.4 Bcf a day, then going to 2.6 by 2027. It will be a fairly ratable increase over the balance of that time. There will be a portion of '26 where you'll see production at a high level of utilization into the existing infrastructure before we get to the midyear point, and then you see another increase with Harmon Creek III processing and some also gathering support there. So a lot to unpack with what I've shared with you this morning. But ultimately, the 2026 program is going to have a fairly linear trend of that utilization of inventory over 2026 and into 2027.

Great. That's really helpful. And staying on the same topic, as we think about that shift or the balance perhaps of B versus C capital here in 2026. You guys have spoken a lot about returning to pad sites and things like that as drivers of efficiencies over the past quarters and years. I'm wondering if you've already spoken that you see capital as similar, but I'm wondering if there's anything we could be thinking about maybe on the OpEx side of things that as we progress through the drawdown of this inventory that might move the needle in either direction on some of those line items?

When I think about the breakout of, let's just say, capital and operating expenses, you're come to see us really remain at a very low level from a cash operating expense basis. So from an LOE perspective, we've typically run somewhere between $0.10 to $0.12 depending upon seasonality and winter influence. I wouldn't expect that to move a whole lot because we're already starting from a really, really low base. There's always an opportunity for a little more improvement there. As you point to returning to pad sites with existing infrastructure, that is something that we factor in year in and year out from a perspective of it represents roughly about half of our activity on a year in and year out basis. You can expect to see that fluctuate a little bit. But again, I would say, overall, what you're seeing in our historical efficiency gains on completion and the drilling side, drilling, as you've heard us say, our fastest and longest laterals, all while staying within greater than 90% within a tight target window. We would expect that momentum to continue into '26 and '27. We're refining those goals right now as we speak on what that could look like for '26. So we'll have more to share at the February call, but I would expect us to continue to be on that leading edge of what cost per foot looks like with our ability to move back to these pad sites, drill really long laterals, and continue to be very efficient with our operating capital.

Our next question will be coming from Kalei Akamine of Bank of America.

I wanted to follow up on 2026 as well. So this year, you're pretty much on track with your plans, and that's great because it's effectively year 1 of 3 as you think about that ramp through 2027. But as you continue here, given your strong execution this year, where do you see upside to your plan? Is there an opportunity to outperform on the capital or volume side in the next couple of years?

Yes. Good question. Thanks for joining us, Kalei. When I think about '26 and '27, we really think we have opportunities to perform. It's really what you've seen us talk about in many cycles, and that is the efficiencies from an operations perspective in the field. What we've seen and the ability to drill long laterals, I'll just say we drilled against some of our fastest wells, and again staying in a tight target. Our completion efficiencies continue to show improvement there. I think that's a way that you could see some potential upside in the numbers. The other part, when I think about '26 and '27 is infrastructure utilization that comes online with our midstream partners like MPLX. They've really done a good job working closely with us, and they've demonstrated the ability to remain on schedule and also move pretty quickly to commissioning of that infrastructure. I would say field run time performance, especially as it pertains to new infrastructure and our ongoing operational efficiencies.

For my second question, I want to see if you guys could opine on the NGL macro. You had a couple of interesting slides in your deck last night, showing maybe some green shoots on both the propane and the ethane side. So maybe I can simply see the floor and maybe you can tell us what you're seeing in that market for 2026?

Yes. I'll start here, and if we need to take a deeper dive and others may jump in. But ultimately, when we start to take a look at the macro for NGLs, we're as optimistic on that front as we are really from a natural gas perspective. I know you've heard us dive into the nat gas side a number of times. It starts with the 2 components: one, the demand growth side. There continues to be increasing run rates on previously commissioned infrastructure. On the LPG side, you've got another 700,000 barrels per day of demand growth by year-end 2026. So the demand side, we feel is still continuing to show really good strength. By the end of the decade, it looks like, at least from what we can see in tally, it's a total of 1.4 million barrels per day of incremental demand. This really points to a strong call on LPG demand growth and a supply pool that's going to be important out of the U.S. We see continued strong demand for Northeastern U.S. LPG as Europe continues to secure long-term supply from reliable producers. During the quarter, Range once again leveraged its flexible transportation and marketing portfolio to respond to market dynamics and enhance margins. These optimization efforts for Range led to a strong seasonal natural gas price differential of minus $0.49 per Mcf versus the NYMEX index, coupled with a continued premium on our NGLs. We have improved our full-year guidance accordingly. The future of natural gas and NGLs is strong, with significant demand continuing to materialize in the near and medium term, both globally and within Appalachia. Range is poised to help meet this future demand while creating outsized value for shareholders with the strongest financial position in company history, a large contiguous inventory measured in decades, and a proven track record of delivering through-cycle returns of capital while investing in the long-term success and optionality of the business.

On the demand side, do you see that demand on the export side pulling volumes out of the Rockies and driving ethane to natural gas parity in 2026?

I don't believe that will be necessary at a high level. I'll let Alan take over since he manages our marketing efforts.

We expect that demand moving forward will lead to maximizing ethane recovery from the Permian, Mid-Continent, and Appalachia regions. We anticipate an improvement in the ethane spread to natural gas. September was notable as we achieved a record for ethane exports, exceeding 600,000 barrels per day, aided by new infrastructure. This has resulted in a better spread between ethane and natural gas due to increased demand. Additionally, new crackers are commencing operations in Europe, Asia, and China, with approximately 130,000 barrels per day of new domestic demand projected to begin in late 2026 or early 2027. All these factors suggest that ethane fundamentals will strengthen, leading to decreased inventories, reduced days of supply, and an uptick in prices compared to natural gas.

And our next question will be coming from Michael Scialla of Stephens.

I would like to know if there are any updates on your discussions regarding supply agreements. Are these discussions limited to Pennsylvania, or are you also exploring opportunities outside the state with end users, similar to the conversations you've had with Imperial?

Michael, I'll jump in here. I think in a lot of ways, our update is going to feel similar to what we shared at the July call, and it's still a very dynamic space. I'll kind of start there where Alan and the team have seen a number of inbound phone calls and engagements with household names. I think that a lot of us on the call would know as end users for potential facilities. I think right now, it's that phase of trying to look at site selection, where is the best location to put one of these facilities to have, I'll just say, access to long-term supply. That's part of the reason why we think we've been on the front end of many of these conversations. Again, inventory is playing a huge role in this conversation, along with the diversification of gathering and regional transport that would allow our ability to help supply one of these facilities, again, with long-term reliable supply. I think it's still narrowing down on like Liberty and Imperial as an example. We're seeing a lot of positive movement there in narrowing down to a final couple of potential end users. So it's hard to see at this point in time what that announcement time frame could look like, but know that this is being actively worked really hard. Once you see at that point, an end user truly get defined, then we'll be able to move forward with more party conversations around what a pricing structure could look like, both from a term and framework standpoint of whether it's tied to something that's a normal index? Or is it something that's got a floor and ceiling type structure that allows us to have some long-term support and also provide some upside protection for those other end users striking that right balance. More to come on this. We look forward to sharing more details as we get closer to announcement type time frames, but know that it is a very dynamic and busy space, and Alan and the team at Range has been very active in a lot of that space.

And Dennis, all those are pretty much inside of Pennsylvania at this point? Or are you looking outside of Pennsylvania at all?

Yes. I would say the focus has been primarily within our producing region directly. But we also have seen, as you would imagine, with many of these potential offtake users, the willingness to talk about expansions. Expansions could both be there in the existing footprint that they would be planning on, and it could be outside the area. Given the transport that we have and the areas of the U.S. that it gets to and reaches, we've got some durability there once we start to put a framework in place. We could see this starting to shift into other areas of their business again, given our transport diversification.

Got you. I want to ask about the capacity out of the basin. You mentioned you acquired some available FTE. With your three-year plan, does that require you to take on any additional takeaway, or are you set in that regard? You mentioned MPLX is keeping pace with you. Is there any other infrastructure that needs to be established for you to execute your three-year plan?

As of now, I will begin with the MPLX question. The infrastructure and capacity additions we have shared over the past year are what we need to execute our 3-year plan. We are well-prepared. Now it is just a matter of proceeding with construction and commissioning this infrastructure. We are confident about the timelines and the production profile we have indicated. MPLX has a proven track record of successfully managing and directing these facilities. The transportation aspect complements our growth profile. At this stage, nothing else is necessary to meet our goals. We are comfortable being patient as we look beyond 2027, whether it's to supply and create more growth that thoughtfully meets in-basin demand or to consider other available transportation options that may be underutilized. We appreciate the flexibility and patience we can maintain due to the inventory we possess.

And our next question will be coming from Arun Jayaram of JPMorgan Securities LLC.

Dennis, I was wondering if you could provide maybe a little bit more details on what's going on with Liberty and the Imperial Land kind of project in Washington County?

You bet. Arun, thanks for joining us. I tried to touch on this a little bit here just a few minutes ago. But at the end of the day, we're seeing that the conversations are very fruitful. We're seeing that the counterparties are getting down to our partners in this JV are getting down to what I would say is a lightning bonus round of the final few end users that could utilize the facility there and that footprint, along with thoughts around how they would expand in the future. It's difficult to precisely nail down a time frame on when we think an announcement could materialize. We're hearing Liberty announced that they were one of the early on and initial recipients of some of those funds to help support this project. We think that's a great sign, not just from a conceptual planning phase but also the state's willingness to support this as well. Our gas supply being right under the footprint of this site is really ideal. We think this is going to translate into expansion into other projects as well because of all the complementary components we've talked about, but it's a very busy space. Alan and the team continue to have a number of conversations and helping support this along, so we're very optimistic.

Yes. We cover Liberty and they were pretty optimistic, Dennis, about inking some power deals relatively soon. So it would make sense. Maybe one question for you guys on what you're seeing in the global LPG market. Right now, we're seeing an environment where Far East propane and butane prices are below what we're seeing in Europe and the U.S. So I was wondering if you could maybe give us some thoughts on how you see the international LPG market trending next year? Obviously, and perhaps implications of a trade deal, which could happen in the next few days, and thoughts could that be something that opens back up U.S. exports to China?

Overall, as Dennis mentioned earlier, we're pretty optimistic on the setup for going into next year. There's obviously been a lot of volatility and a lot of back and forth in terms of international dynamics on the political front, and we can't predict what's going to happen there. Recent news has been positive. I think we're going to get to a good place. From an ethane side, exports are up year-on-year despite turbulence. From an LPG standpoint, September year-to-date, exports are actually up, not substantially, but it's a few percentage points. When we look forward, we see 700,000 barrels a day of LPG demand growth. Grant, those are primarily in China. It's good strong demand, and we've been bumping up against the limit. There are major export capacity expansions underway, adding 42% to the U.S. export capacity for LPG. We’re confident that this export capacity will be well utilized, leading to strong demand pull on U.S. NGLs. Over time, we see the fundamental strengths for both ethane and LPG fuel demand.

And our next question will be coming from Doug Leggate of Wolfe Research.

Gosh, there's a lot of moving parts in these supply agreements. I wonder if I could take 2 pieces of them. The first is the prognosis for your realizations, whether you want to benchmark it, I look at it as a percentage of benchmark or in-basin discounts, whatever. What's kind of in my mind is you guys have got a lot of takeaway, obviously, out of the basin. But there's also a growing concern that the 2 lowest cost areas of the country are going to be the primary sources of supply for a lot of the onshore stuff specifically the Permian and the Marcellus. I guess my question for you is, as you look to your growth story, how do you see your basis changing?

Doug, it's Mark. I'll start with both parts of those questions, and no doubt Dennis will chime in as well. As we think about the supply agreements, I'd like to pull back and kind of highlight a couple of comments that Dennis and Alan have both made so far. As we look at even this morning's call and the amount of time spent appropriately on the hot topics of the day, which are data center and in-basin demand and so forth. I think it's important to put that in context of Range's overall current portfolio and our marketing strategy. For everyone newer to the Range story, it's essential to remember that 90% of our revenue essentially comes from outside the basin, half of our gas goes to the Gulf Coast, and 30% goes to the Midwest. We've already entered into and completed 2 long-term 5-year plus deals with Japanese utilities and LNG exports. We've already done multiple 15-year plus term deals with petrochemical partners, both Canadian and European. These use pricing structures that could be NYMEX-linked, could be Northwest European naphtha-linked, could be ARA, or FEI-linked depending on the liquids components. As we look at these deals and negotiate with customers for in-basin demand, be it industrial, be it data centers, be it power with traditional customers like utilities, it's the same mindset. What is going to bring Range the best margin over the long haul? What is the best visible demand, durable demand that underpins growth and profitability for Range? So pricing realizations, that’s clearly our priority. While we may not have announced the first deals out there, the quality of discussions and the number of discussions that are ongoing on our marketing team are very encouraging, both with the Liberty, Imperial joint marketing effort and our other discussions and project initiatives that we have underway. These deals will be clearly positive additions.

If you look at where basis has really landed since MVP came into service, you now see the conversation about growing demand. We see some durability in where basis is as it stands today. Our view is that there's roughly 5 to 8 Bcf a day of incremental demand that's going to materialize by the end of the decade. You’ve heard Mark and I touch on this a few different times. We think about the go-forward: the demand is outstripping the supply.

I appreciate the detailed answer. I wonder if I could just take it back, Mark, very quickly to the second part of my question. What do you think is going to take for the credit agencies to move you to investment grade, even if it's not an issue clearly from what you've said, but still, your balance sheet is better than most of your peers and you're still sub-investment grade. Is that a scale issue? Or what do you think is behind that?

I think if you look at the publications from the rating agencies over the last several years, they have worked to keep up the evolution of the industry, and their targets have moved somewhat. Scale, just sheer production side, has been a focus for them over the years. If you look at their most recent commentary, basically, we're checking all the boxes. I think with the growth plan we've already laid out there just organically, we should be checking all the boxes in the not-too-distant future. I'm not going to try to predict exactly when it may or may not happen, but I would say it will be a good byproduct of the quality of our assets, our breakevens, our full cycle or recycle ratios, and so forth. When we clear that hurdle to investment grade, I believe we can clear that bar quite high, and it will come naturally from our operations and growth and production that we've laid out.

Great stuff, guys. I'm sure we'll get into this, and then I'll have more detail in a few weeks. Appreciate it.

And our next question will be coming from Paul Diamond of Citi.

Just wanted to quickly touch on your kind of thoughts on a couple of issues across the market. So curtailments and production modulation have seen this additional chatter as of late with some of your peers choosing that avenue to kind of address pricing volatilities. I guess how should we think about Range's overall strategy towards that type of modulation or whether it's plus or minus, or curtailments, or is it more a steady state?

If you look back over the balance of the past 3 to 5 years, what you would see are a couple of different strategies that Range has deployed. We have executed shut-in economics and curtailed some production when we felt like pricing warranted, there was also a supportive reduction in cost associated with that production restriction. The other strategy you've seen us utilize is more of reshaping the program where you saw more of our liquids-rich activity and turn in lines in the first 6 to 9 months of the year, and you saw us push our dry gas TILs deeper into the year as you started to see fundamentals improve for the winter season. We have looked at some shut-ins over the years, but this year, for us, was business as usual, continuing to execute, turn those wells in line, and then get ready for the upcoming improving pricing markers.

Just to emphasize a couple of things that Dennis said, a couple of key points and differentiating factors of Range's business make that calculus for curtailments different than our peers. First, 80% of our gas leaves the basin. Thus, the curtailments of dry gas in-basin sales at in-basin pricing. The second, our NGL uplift. Our realized price year-to-date is $0.20 greater than Henry Hub. So the dynamic of marketing sales outlets combined with the mix of production changes that calculus for us.

Understood. Makes perfect sense. Just one quick modeling follow-up. Keeping with the narrative of the 400,000 and excess inventory by year-end works out to 30 or so wells in linear fashion over the next subsequent 2 years. Is the right way to think about that, like true linearity? You have 4 wells, a little under 4 wells per quarter and kind of tranching out and then just building that into the TIL count? Or should there be more, I guess, seasonality or any other lumpy issues?

Good question. I'm only chuckling at the lumpy comment because I think ultimately, when you start to go from the model to reality, there will be some dynamics. When you think about capital, it will be a really consistent program of execution, and then when you start to see the next step in production, it will be more toward the midpoint when you see that Harmon Creek processing bolt-on come into service. You're going to see the utilization of that inventory look pretty linear overall.

And we are nearing the end of today's conference. We will go to David Deckelbaum of TD Cowen for our final question.

Let me wrap things up here. I wanted to get your views on your positive outlook regarding NGL markets and the natural gas markets. Given the rising international demand, particularly for ethane, should we expect an increase in the portion of your portfolio directed internationally? Are we likely to see some commercial agreements for 2026 and 2027 as new volumes are put into service for 2028? How do you view your marketing strategy and outlook for premium pricing compared to Belvieu over the next couple of years?

Yes, I appreciate your comments, and I'm glad you see it similar as we do. There is a tremendous amount of new demand coming on, and we're going to be growing our business at the same time. The proportion of our business on the LPG side internationally has been roughly around 80% of our production, which puts us at one of the highest levels relative to our peers. What's good about the additions to that capacity I referenced earlier is that, that percentage is going to stay about the same. It will continue to have a fair amount of flexibility built into it, so we can optimize between domestic and export markets, depending on the highest overall return. On the ethane side, there's been similar growth with export capacity growth and also more demand growth, and we really think that could potentially lead to commercial agreements into '26 and '27.

If you look at our program, roughly our activity level should look very similar in the next few years to what you've seen on that allocation of a portion of the field as you've seen over the last couple of years. However, it's reasonable to think that our production mix will get slightly wetter. Our inventory is more weighted on the liquid side, which we believe will be complementary to each other, giving us a similar production mix.

This concludes our question-and-answer session. I would like to turn the call back to Mr. Degner for concluding remarks.

Yes. I'd just like to thank everybody for joining our call today. It's always exciting to share the results from our prior quarter. We appreciate everyone joining the call. As always, if you have any follow-up questions, please don't hesitate to follow up with our Investor Relations team, and we look forward to sharing our 2025 full year results and plans for 2026 at the next call. We appreciate you joining. Thanks, everyone.

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