Our strategy is to achieve growth in production and reserves, while maintaining an industry-leading cost structure.
Our track record speaks for itself. We have delivered consistent growth for the past nine years, and have done so with some of the lowest finding and development costs in our peer group. While our strategy is simple, it is difficult to achieve. Most companies can achieve a high growth rate, if they are willing to increase costs or dilute shareholders by entering into joint ventures or issuing debt and equity. Likewise, most companies can achieve low finding costs if they are willing to sacrifice their growth rate. Achieving both high growth and a low cost structure is the key for shareholders – and it is the key to Range’s success.
At Range, we focus on low-risk, highly repeatable projects that provide high rate of return growth opportunities, such as the Marcellus Shale and Horizontal Mississippian plays. According to a Bank of America study, Range has been ranked either first, second or third in its peer group in terms of achieving the lowest cost production for the past seven years.
We pursue acquisition opportunities within our core operating areas in order to capitalize on regional expertise, drive down unit operating costs and generate economies of scale. In addition, we periodically sell our lower rate-of-return properties and reinvest the capital into higher rate-of-return projects. In the past several years, Range has sold its Barnett Shale properties, West Texas oil field properties, offshore Gulf of Mexico interests, East Texas Austin Chalk properties, and tight gas sand properties in New York and Ohio for combined sales proceeds of approximately $2 billion.
The Company utilizes hedging as a risk-management tool, entering into hedging agreements to help ensure a predictable level of cash flow and earnings. Our usual hedging strategy is based on implementing a combination of swaps and costless collars. Collars ensure a minimum floor price, but allow the Company to benefit from price increases up to a predetermined ceiling price.
At Range, we have created a high-performance culture where innovation and excellence are encouraged. Recognition and reward for superior performance is largely achieved through our annual bonus program, as well as equity awards granted to all employees. Ultimately, these practices tie individual goals with the corporate goals of growth at low costs. Team members are encouraged to share ideas, tap into their creativity, strive for continuous improvement and engage in prudent risk taking. As a result, Range has been able to attract and retain what we believe is one of the best teams in the industry.