About Alan Farquharson
In 2013, Alan Farquharson, then Senior Vice President at Range Resources, discussed the company's projected annual production growth rate of 20 to 25% over several years, targeting nearly three billion cubic feet per day. He stated that the company conducted a "bottoms up analysis" involving land, geology, drilling, completions, regulatory, and marketing teams to support this growth. Farquharson noted that Range Resources planned to export ethane to Europe in 2015 through a deal with INEOS.
Farquharson said that cash flow was expected to grow faster than production, allowing the company to reduce its debt-to-EBITDA ratio from 2.8 in 2012 to under two by the end of 2013, with only modest capital outspending of around $350 million in the initial years. He added that 85% of capital was allocated to the Marcellus Shale, while other plays such as the horizontal Mississippian, Klein Shale, Wolfberry, Upper Devonian, and Utica were considered part of the company's emerging play inventory.
Source: AI-verified profile updated from Alan Farquharson's recent appearances.
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Transcript (11 segments)
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Interviewer0:06
Welcome and thank you for joining Oil and Gas 360. We're here at Intercom's London Oil and Gas Conference with Range Resources Senior Vice President Alan Farquharson. Thanks for joining us, Alan.
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Alan Farquharson0:16
Thank you very much for having me.
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Interviewer0:18
So Range Resources recently announced a projected annual growth rate of 20 to 25% over the next several years, which leads to almost 3 Bcf a day of production. That's right around the corner for you guys. Walk us through the operational execution over the next several years.
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Alan Farquharson0:31
Yeah, I think that's really significant growth that we're talking about doing. We did a bottoms-up analysis throughout the entire company, having everyone involved: land, geology, drilling, completions, regulatory, marketing as well. What it's going to tell us to do is make sure we can move the liquids and the gas. We're going to have to find marketing customers for it, and it's going to involve coming up with some additional innovative solutions, kind of like what we did with ethane by announcing that we'll be exporting ethane in 2015 with our deal with Ineos over here to Europe.
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Interviewer1:03
You mentioned ethane. What about the other production? Is the Marcellus infrastructure able to accommodate this type of growth over the next several years?
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Alan Farquharson1:09
You know, what we've done is focus on our growth, and we believe that our growth will be able to meet that. We're not worrying about what the rest of the market is going to be able to do, but we focus on the infrastructural effect up.
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Interviewer1:21
So Range has talked about initiatives to deleverage the balance sheet. Given the large-scale growth projects and expectations, how are you looking to fund this growth goal while simultaneously paying down debt?
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Alan Farquharson1:30
Well, I think really what you have to look at is this very simply: while it's 20 to 25% production growth for many years, cash flow is actually going to grow a little bit faster than that. As a result, with cash flow growing a little bit faster, our debt metrics will actually be coming down over time. We expect the debt-to-EBITDAX to move from the current 2.8 number pro forma 2012 to under 2 by the end of this. So we think it's going to be able to be funded with just a little bit of capital outspending in the first several years of maybe $2 to $350 million, and then after that, with the robust production growth we have projected, we should be just fine.
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Interviewer2:10
So as we talked about, most of your growth is going to come out of the Marcellus. What effect will projects like the Mississippian have on production and your capital allocation?
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Alan Farquharson2:19
Well, once again, with such a large position in the Marcellus, that's where the dominant amount of our capital is going to go. For example, this year 85% of our capital is going to the Marcellus. We view the horizontal Mississippian, as well as some of the other plays like the Cline Shale, the Wolfberry, the Upper Devonian, and the Utica, as part of our emerging play inventory. It's always good from a portfolio position to be able to invest in other opportunities, and we see that going forward. So they'll continue to be a part of the portfolio, but what's going to drive us at the end of the day will be the Marcellus. We look forward to watching the story over the next several years. Thanks a lot for joining us.
Thank you very much for having me.
