Range eyes asset sales, continues Marcellus focus

Independent producer Range Resources may attempt to sell its Louisiana production assets this year as the company continues to shift its focus to stronger results and increased takeaway from Appalachia.

Range already has processes underway to sell some "underappreciated inventory" in its portfolio in order to lower the company's debt and move it towards an "investment-grade leverage profile," chief executive Jeffrey Ventura said on the company's first quarter earnings call today.

Ventura stopped short of naming which assets Range is considering selling, but in February he said Range's north Louisiana assets were "more geologically complex" than anticipated and portions of it were less productive than expected. The company then announced it would slow its activity there to one rig and one fracturing crew and allocate about 85pc of its 2018 capital budget to the Marcellus shale in Appalachia.

The producer's outlook on Marcellus production remains strong. Favorable basis pricing in the midcontinent and northeast amid cold weather provided a 13¢/mmBtu price differential to the Henry Hub during the first quarter. Range is currently selling about 1.4 Bcf/d (40mn m³/d) of natural gas in the southwest part of the Marcellus.

Range's takeaway capacity on the Energy Transfer Rover pipeline represents the final firm transportation commitment still on hold for the producer, and Range expects to fill that capacity by the fourth quarter of this year, Ventura said. When Rover's full capacity of 3.25 Bcf/d begins, Range will shift its current capacity on Dominion Transmission over to Rover in order to meet demand in the midcontinent.

Range's first quarter production reached 2.19 Bcf/d of natural gas equivalent (Bcfe/d), up by 13pc on the year and exceeding its guidance of 2.18 Bcfe/d. The producer's realized price including hedging averaged $3.58/1,000 cf, up by 12pc on the year. Range's capital spending budget remains at $941mn for the year, with 85pc directed towards the Marcellus.