Telling the Story

Range Resources Corp. president and chief executive John Pinkerton has a lot to say about the company’s investor relations practices, and with good reason. Range was the recipient of Oil and Gas Investor’s 2007 Excellence Award for “Best IR Program,” as the company has successfully communicated its story of consistent growth and low cost structure.

The IR team includes senior vice president Rodney Waller, IR manager David Amend, corporate communications manager Karen Giles and IR representatives Ronda Palmer and Jessica Jordan. Pinkerton praises the team for its dedication.

The company presents at 35 or more investor conferences annually, conducts more than 10 non-deal road shows each year in major financial centers, and frequently hosts field tours and office visits with investment firms and analysts wanting to meet management.

The company has a deep bench of senior managers, so the group divvies up the various conferences and meetings. Pinkerton says he attends about 20% of the meetings and is usually assisted by other company officers.

In addition, the IR team has put the company in front of investors via The Wall Street Journal, CNBC and Bloomberg television, among other business news sources.

At the end of the day, Pinkerton adds, the success of the company in posting consistent growth and driving the stock price up more than 1,400% during the past five years has been an effort of all of Range’s 750 employees.

“We are extremely proud of each and every team member at Range who has contributed to our success,” he says.

With Range for more than 20 years, Pinkerton guided its expansion throughout the Appalachian Basin into the Barnett shale and other unconventional plays. Range has been a first-mover in the emerging Marcellus shale play in Appalachia, drilling a series of high-rate horizontal wells. This play alone may grow the company’s existing reserve base as much as seven times, he says.

An avid outdoorsman, Pinkerton respects the environment and feels Range’s clean-burning natural gas will prove to be a valuable commodity in upcoming decades. He spoke with Oil and Gas Investor on Range’s award-winning IR, and its plans for its key plays.

Investor Congratulations on your stock price increasing 87% last year. To what do you attribute this phenomenal growth?

Pinkerton It gets back to what Range is all about—driving up production and reserves at low finding and development costs and doing it year after year. We’ve had 20 consecutive quarters of sequential production growth, and we’re one of only a handful of companies that has been able to do that.

Investor That puts you in some very exclusive company.

Pinkerton Clearly the market is starting to better understand some of the upside of the company. We take a transparent view and try not to get ahead of ourselves in terms of forecasting estimates based on opinion rather than fact. So, it comes down to the fact that we have really good financial results and continue our consistent production growth. We are gaining more clarity in terms of the progress we’ve made in some of these emerging plays. These plays are becoming more and more tangible.

As we’ve done more drilling, and we’ve done more technical work and as those facts come out, people are becoming more aware of the upside of this company that they weren’t valuing before.

Investor How much do you attribute to your IR effort?

Pinkerton I know our IR team works very hard at getting the message out. They are constantly setting meetings, preparing press releases, going on the road—whatever it takes to communicate with all interested parties.

The market’s pretty smart. It doesn’t get it right with every company at every moment, but over a long period of time, the market is very intelligent and makes very rational decisions. We don’t try to compare ourselves with other companies. We are who we are. We have our strengths; we have our weaknesses. Our functionality really ought to be a mirror of that.

There are things we’re not good at. And we’re open and honest about those. For example, the Gulf of Mexico didn’t fit our strategy, so we sold those assets.

Also, we let our results speak for themselves. Credibility is built on historical performance.

Investor What are your IR goals this year for getting the message out?

Pinkerton More of the same. Last year, we tried to simplify our message and narrow our presentation to our three major areas of activity: the Fort Worth Basin/Barnett shale, the Nora coalbed-methane field in Virginia and the Appalachia/Marcellus shale play. We tried to simplify the message because these plays each have significant potential to move the needle on our per-share value.

We don’t try to go out of our way to forecast the ups and downs of oil and gas prices. Others have as good a view on that as we do. The reason why someone should buy our stock is not because they think gas prices are going to go up or down, but because they think that, during the next two to three years, Range is going to more than double its production and reserves.

Whether gas prices are $6, $8 or $10 doesn’t matter much in the short-term. Our value is going to be driven by how good we are at driving up reserves and production per share. How we do that in terms of the relative costs versus the rest of the industry is the measuring stick.

Investor What were some of the stand-out efforts of the IR team in 2007?

Pinkerton They’ve done an excellent job on hosting investor meetings in our various offices. Instead of just seeing me and a couple of the officers, investors are seeing presentations from our technical people. The more investors get to know a company and its people, the more they really start to understand the company’s fabric and texture.

Also, as we’ve gotten bigger in terms of our public relations, whether it’s The Wall Street Journal or TV interviews, they coordinate that. They’ve done a good job of making sure it’s the right kind of exposure. Not too much, and the kind of exposure that adds value.

Investor What’s on investors’ minds these days?

Pinkerton It’s a lot harder for investors today. We’ve had a wind at our back in terms of the overall economic condition in the U.S. That has changed and the wind is somewhat in our face now. They are concerned about the volatility of commodity prices and the overall market.

Investor Is there anything about Range you think investors misunderstand or miss?

Pinkerton There are some investors who generally spend the time, the ones who come to our office to get a hard look at where the upside in the company is. When people come to our office, they’re just getting a better picture of the upside, which gives them more confidence.

As we continue to release information about our emerging plays, particularly the Marcellus, whether it’s the amount of acreage that we have, initial production data off the newly completed wells or the production history or the well costs, we try to give facts as opposed to estimates for what’s going to happen in the future. People are becoming more comfortable with the upside and want to become investors.

Investor How do Range employees fit in?

Pinkerton All Range employees are equity owners, so all of us care vigilantly about our stock price and our performance. Our 20 consecutive quarters of sequential production growth is a direct outgrowth of all of our employees pulling in the same direction.

Investor How is the Marcellus shale looking?

Pinkerton Range is beginning to gain traction in the Marcellus now. We started working on it back in 2004. We did a lot of data gathering for two years, analyzed a lot of logs and did a lot of technical work before we drilled a well. We were fortunate, because the company was founded in Appalachia. We own more than 2 million gross acres in the basin. So we started out with a pretty decent portion of the sandbox already leased.

We’re going to go from 10 horizontal wells in 2007 to about 40 in 2008. That’s a fourfold increase, which is going to be a challenge. We’ve put a high-quality team together that works on nothing but this play. We’ve announced some good results on our last eight horizontal wells. The basin is very large and there is tremendous potential. We have 1.1 million net acres in the Marcellus trend, of which 650,000 acres has been high-graded.

The good news is that there are other companies coming up into the basin. While that’s competition, it will be helpful in terms of bringing in additional services and infrastructure.

Investor What are Range’s goals this year?

Pinkerton After currently planned asset sales, we’re expecting to increase production 15% and hope to continue our string of sequential quarters of production growth.

We must continue to focus on keeping a low cost structure. You do it by stressing the nickels and dimes. You’re not looking for $1,000 bills on the ground. It’s all the little things that keep your cost structure low.

(For more on Range, see “About Range,” Oil and Gas Investor, October 2006.)