Paul Diamond

Paul Diamond (Citi) inquired about Range Resources' strategy regarding production curtailments and modulation in response to pricing volatility, and sought clarification on the linearity of utilizing the 400,000 feet of excess inventory (approximately 30 wells) over the next two years.

Answer

CEO Dennis Degner explained that Range Resources has historically used shut-ins on a limited basis and primarily shapes its program, focusing on liquids-rich activity in the first half and dry gas in the second, to align with pricing signals. CFO Mark Scucchi emphasized that Range's diverse marketing outlets and NGL uplift differentiate its curtailment calculus. Dennis Degner clarified that while inventory utilization will be linear, production increases will be influenced by infrastructure expansions, particularly a step-up around mid-2026 with Harmon Creek processing.

Paul Diamond asked about Range Resources' strategy regarding production modulation or curtailments to address pricing volatilities, and the expected linearity or seasonality of DUC inventory utilization over the next two years.

Answer

CEO Dennis Degner explained that Range has historically curtailed production when warranted by pricing and cost reductions, and has also shaped its program to align production timing with improving pricing signals, such as focusing on liquids-rich activity in the first half of the year. CFO Mark Scucchi highlighted that Range's diverse sales outlets (80% out-of-basin) and NGL uplift differentiate its curtailment calculus. Degner noted that DUC inventory utilization will be linear, but production will see a step-up around mid-2026 with new Harmon Creek processing infrastructure.

Paul Diamond asked if Range is discussing other concrete in-basin demand opportunities similar to the Liberty Alliance and inquired where potential inflationary pressures might first reappear in 2026 after current contracts roll off.

Answer

CEO Dennis Degner confirmed 'yes,' they are in discussions for other projects, driven by the quality and duration of Range's assets. On costs, he explained that Range proactively secures materials like tubular goods opportunistically and has already covered about 80% of its 2025 needs. The company's annual fall RFP process will provide visibility into 2026 service and material costs.

Paul Diamond asked whether the current level of incremental spending on land and infrastructure should be considered a flat run-rate going forward, or if there are low-hanging fruit opportunities that could cause that spending to increase.

Answer

CEO Dennis Degner responded that the incremental land spend is expected to decrease in the coming years. He explained that since over 90% of the company's acreage is held by production, the type of small, open-parcel acquisitions seen this year represent a diminishing opportunity. While some larger land opportunities may exist in the future, the current run-rate for this specific type of spend should decline. He reiterated that the current overall capital and activity level is a good model for the business going forward.

Paul Diamond inquired about the future of the native title holder agreement beyond its initial three-year term, specifically how the next round of negotiations would proceed, and sought an update on the progress and plans for implementing a local sand solution for Phase II of development.

Answer

Chairman and Interim CEO Dick Stoneburner stated that specific, prescriptive processes are required for moving to a production license with native title holders. CFO Eric Dyer clarified that the current three-year agreement is for beneficial use of gas, and discussions are commencing for a longer-term Indigenous Land Use Agreement (ILUA) which can take up to three years. Mr. Stoneburner confirmed that local sand is a key focus, with extensive auger testing underway for quality assessment, and they are working with partners to navigate technical and governmental procedures for establishing a local mine.

Paul Diamond from Citigroup asked for clarification on the native title holder agreement, which is currently for three years, inquiring about the process for the next round of negotiations—whether it's an extension or a new agreement for a longer duration. He also followed up on the company's plans for a local sand solution for Phase Two, asking about its progress and continued inclusion in future plans.

Answer

Dick Stoneburner, Chair & Interim CEO, provided a broad statement about undertaking specific, deliberate processes with native title holders for a production license. Eric Dyer, CFO, elaborated that the current three-year agreement is temporary to avoid flaring during appraisal, and Tamboran is commencing discussions for an Indigenous Land Use Agreement (ILUA), which is a normal consultation process that can take up to three years and leads to a permanent production license. Stoneburner confirmed that a local sand solution remains a key focus for Phase Two, with extensive testing underway for sand quality and ongoing work to follow technical and governmental procedures for mine development.

Paul Diamond from Citi asked for clarification on the three-year native title holder agreement for gas sales, specifically how the next round of negotiations would proceed—whether it would be an extension or a new agreement for a longer duration. He also inquired about the progress and plans for implementing a local sand solution for Phase Two of Tamboran Resources' operations.

Answer

Dick Stoneburner, Chairman and Interim CEO, broadly stated that specific, deliberate processes would be undertaken with native title holders for a production license. Eric Dyer, CFO, elaborated that the current three-year agreement is temporary, under beneficial use of gas legislation to avoid flaring during appraisal. He explained that discussions are commencing for an Indigenous Land Use Agreement (ILUA), a normal consultation process that can take up to three years, involving meetings with government authorities to discuss local jobs, royalties, and other factors, ultimately leading to a production license. Stoneburner added that local sand is a key focus, with extensive testing underway to assess quality (compressive strength, grain size) and working with partners like Liberty to navigate technical analysis and governmental procedures for establishing a mine in the long run.

Paul Diamond of Citigroup asked for details on the third-party midstream constraints in the Utica shale, including the cause and resolution. He also inquired about the potential for drilling and completion (D&C) costs to diverge between the Ohio and Pennsylvania assets.

Answer

President and CEO Zach Arnold explained the midstream issue was a temporary pipeline routing problem that has been resolved, with upcoming projects already having infrastructure in place. Regarding D&C costs, he stated they are nearly identical on a cost-per-foot basis between plays, with variances driven by lateral length and working interest, not geology.

Paul Diamond of Citigroup asked for details regarding the third-party midstream constraints experienced in the Utica during the quarter, including the cause, remediation, and likelihood of recurrence. He also questioned if drilling and completion (D&C) costs between the Ohio oil and Pennsylvania gas assets might diverge over time.

Answer

President and CEO Zach Arnold explained the midstream issue was a temporary land access problem with a farmer that required a pipe reroute. He confirmed the situation is fully resolved, the wells are flowing unconstrained, and upcoming projects already have infrastructure in place, mitigating future risk. Regarding D&C costs, Arnold stated they are not expected to diverge, as the cost per foot is nearly identical for both oil and gas wells. He noted that total well cost variations are driven by lateral length and working interest, not the play or commodity.

Paul Diamond questioned how midstream CapEx correlates with activity shifts to Pennsylvania and how the current commodity environment is shaping the M&A landscape for smaller bolt-on deals versus larger transactions.

Answer

CFO David Sproule advised tying near-term midstream CapEx to the addition of new pad locations rather than well counts, as initial infrastructure builds support future development on those same pads. CEO Zack Arnold reiterated that the company's skill set allows it to pursue deals of all types—small or large, oil or gas, PDP or greenfield—and it continues to evaluate a wide range of asset packages that would augment its positions.

Paul Diamond asked about the correlation between midstream CapEx and the activity shift to Pennsylvania, and also inquired whether the current M&A environment favors smaller bolt-on deals versus larger transactions.

Answer

CFO David Sproule clarified that near-term midstream CapEx should be linked to adding new pad locations rather than well counts, as existing pads can be re-entered. CEO Zack Arnold reiterated that the company's expertise allows it to actively evaluate and execute on all deal types—small or large, oil or gas—regardless of commodity market volatility.

Paul Diamond of Citigroup questioned how Diversified Energy sees its role in the developing AI and data center opportunity in Appalachia and asked for the drivers behind the increased synergy guidance from the Maverick acquisition.

Answer

CEO Rusty Hutson stated that the primary benefit from the data center boom will be improved basin pricing due to higher natural gas demand, although the company is also exploring smaller, direct supply opportunities. Regarding synergies, Hutson explained the initial $50 million estimate was increased to a highly confident $60 million after on-the-ground teams identified additional operational and administrative efficiencies post-acquisition.

Paul Diamond of Citigroup questioned how Diversified Energy sees its role in the developing AI and data center opportunity in Appalachia and asked for details on what drove the increase in Maverick acquisition synergies from $50 million to $60 million.

Answer

CEO Rusty Hutson stated that the primary benefit from the data center build-out will be improved basin pricing from increased natural gas demand, though the company is also exploring smaller-scale direct supply opportunities. On synergies, Hutson explained the initial $50 million estimate was from due diligence, and the $10 million increase resulted from post-acquisition, on-the-ground efforts by field teams who identified additional efficiencies.

Paul Diamond sought clarity on the 40-60% CapEx savings for four-mile wells and whether further improvements are expected. He also asked if the original three-year plan could see upward pressure on production given recent operational gains.

Answer

President, CEO & Director Daniel Brown clarified that current CapEx savings are based on geometry, and he expects further incremental cost reductions as the team gains experience through repetition. Regarding the three-year plan, he reiterated the primary goal is generating strong free cash flow per share, not necessarily maximizing production volume, but confirmed that recent efficiency gains were not contemplated in the original plan.

Paul Diamond of Citigroup inquired about the 40-60% lower CapEx for four-mile wells, asking if further incremental improvements are expected. He also asked if the company's three-year plan outlook might see upward pressure due to these operational gains.

Answer

CEO Daniel Brown clarified that current CapEx reduction for four-mile wells is primarily due to geometric advantages. He expects further incremental savings as the company gains experience. Regarding the three-year plan, Brown acknowledged that efficiency gains and the move to four-mile laterals were not in the original static plan, suggesting benefits to the outlook, which will be detailed in November. The focus remains on free cash flow per share.

Paul Diamond from Citi asked about the total addressable market for 4-mile laterals within Chord's inventory and how recent market volatility might influence the company's hedging strategy.

Answer

CEO Daniel Brown clarified that the goal is for over 80% of inventory to be long-lateral (3-mile plus), with 4-mile wells being a subset of that, likely under 50% of the total program. He also affirmed that the company's hedging philosophy is unchanged, as it is built to accommodate market cyclicality, relying on a strong balance sheet and low reinvestment rate as a natural hedge.

Paul Diamond asked about the potential to convert existing 3-mile inventory to 4-mile laterals, questioning how much of the current inventory is convertible. He also inquired about the timing of dropping a rig mid-year and what factors could alter that schedule.

Answer

CEO Daniel Brown stated the company's objective is to have over 80% of its inventory be 3-mile or longer laterals and that they will re-evaluate converting 3-mile locations to 4-mile once more performance data is available. COO Darrin Henke explained that the timing for dropping the fifth rig depends on factors like well productivity and operational run-time improvements; better-than-forecasted performance could lead to releasing the rig earlier.

Paul Diamond inquired if the potential for 4-mile wells is included in the 3-year plan's long-lateral development targets or if it represents incremental upside. He also asked about the strategy behind the recent increase in the company's hedge book.

Answer

COO Darrin Henke and CEO Daniel Brown clarified that 4-mile laterals are not included in the 2025-2027 plan and represent pure upside, with the potential to convert less efficient 2-mile locations into more economic wells. Regarding hedging, Henke explained that the recent activity reflects a consistent, programmatic approach to layer in protection each quarter, rather than a shift in strategy or a specific market call, while still retaining significant commodity price upside.

Paul Diamond from Citigroup inquired about the company's target cash balance and asked whether the recent pace of its 'ground game' acreage acquisitions is sustainable.

Answer

CFO Guy Oliphint stated the target cash balance is in the $500 million to $1 billion range to maintain firepower for opportunistic investments. Co-CEO James Walter noted that the ground game is lumpy and Q2 was lighter due to price volatility, but he expects activity to increase in the second half of the year, aided by opportunities around the new Apache assets.

Paul Diamond asked about the expected future progression of the company's cost per lateral foot. He also inquired about the long-term strategy for the non-operated position acquired as part of the recent deal.

Answer

An executive stated that while costs per foot were expected to flatten, recent market shifts and activity drops will likely lead to modest service cost reductions. Hays Mabry added that the non-operated acreage is a small part of the portfolio and will primarily be used as a tool for the land team to execute trades and convert non-op positions into operated ones, where the company can apply its differentiated cost structure.

Paul Diamond of Citigroup sought clarity on the typical size of M&A opportunities the company is targeting. He also asked how the 'ground game' for grassroots leasing has evolved in terms of deal dynamics since the Colgate-Centennial merger.

Answer

Executive Hays Mabry clarified that the M&A opportunity set ranges from very small deals up to billion-dollar cash transactions, with a successful track record in the 'high hundred million' dollar range. He explained that the ground game's core dynamics have been steady since 2015, with the main evolution being a doubling of the opportunity set and success rate due to the increased scale of operations post-merger.

Paul Diamond asked how commodity price volatility has affected the 'ground game' for bolt-on acquisitions and questioned the company's midterm goal for shifting gas sales away from WAHA pricing.

Answer

Co-CEO James Walter acknowledged that Q3 volatility widened bid-ask spreads and slowed the pace of small acquisitions but affirmed the ground game remains a core, long-term strategy. An unnamed executive described the shift to Gulf Coast gas pricing as a multi-year effort that will be achieved gradually over the next couple of years, rather than in a single quarter.

Paul Diamond from Citigroup inquired if reaching the $1.5 billion net debt target would alter the company's hedging strategy. He also asked for clarity on the expected split between variable dividends and buybacks for the remainder of the year.

Answer

Kaes Van’t Hof, CEO & Director, clarified that the hedging strategy would remain conceptually the same, focused on downside protection, but would require fewer barrels to be hedged as net debt declines. He reiterated a strong preference for leaning into share buybacks over variable dividends in the near term, given the current dislocation in the stock price.

Paul Diamond from Citigroup asked if Viper's hedging strategy would change after reaching its $1.5 billion net debt target. He also sought clarity on the allocation of distributable cash between variable dividends and buybacks for the remainder of the year, noting the current stock price.

Answer

CEO Kaes Van’t Hof clarified that the hedging strategy of using puts for downside protection will remain, but lower debt levels will require hedging fewer barrels. He strongly indicated that given the current equity valuation, the company would lean heavily towards share buybacks over variable dividends for its discretionary capital returns in the near term.

Paul Diamond of Citi inquired about the geographic focus for future third-party M&A opportunities, specifically between the Midland and Delaware Basins, and asked if recent market volatility might alter Viper's hedging strategy.

Answer

President Austen Gilfillian explained that Viper is geographically agnostic, focusing on price and opportunity rather than a specific basin. He also affirmed that the company's hedging strategy remains unchanged, relying on a strong balance sheet and deferred premium puts to protect against downside risk without sacrificing upside potential.

Paul Diamond asked about the ideal long-term operational profile split between Diamondback-operated and third-party assets, and how the company's view on its balance sheet has evolved with its increased scale.

Answer

CEO Kaes Van’t Hof explained that the Diamondback relationship is a key differentiator that will remain the majority, but future large-scale growth will naturally involve more third-party assets. He also noted that while the business could handle more debt, they will maintain a 'fairly lowly levered' balance sheet to preserve rating agency support.

Paul Diamond asked about the potential for further reductions in well costs and requested details on the structure of the deals within the company's large, $8 billion M&A pipeline.

Answer

CEO Nicholas O’Grady and President Adam Dirlam indicated that while there is downward pressure on costs, significant further reductions would require a material contraction in frac spreads, which is more likely a 2026 event. They described the M&A pipeline as diverse, including standard non-op packages, co-buying opportunities, and minority interest buy-downs across various basins.

Paul Diamond inquired about the potential to replicate the Appalachian drilling partnership structure in other basins and asked whether current inorganic growth opportunities are more focused on leaseholds or larger co-purchase deals.

Answer

CEO Nicholas O'Grady confirmed strong interest from other parties in similar partnership structures. President Adam Dirlam added that the M&A opportunity set is a diverse "buffet," including leaseholds, non-op packages, co-buy exercises, and other drilling partnerships across multiple basins.

Paul Diamond requested more detail on the 'bespoke' M&A opportunities NOG is seeing and asked if the recent acceleration in activity cadence is a long-term trend.

Answer

CEO Nicholas O'Grady explained that bespoke opportunities are typically off-market deals structured with operators to solve specific needs, such as JVs or co-purchases. He also noted that while the industry's development speed has increased, further acceleration is unlikely in the current price environment, and the company has adjusted its planning accordingly.

Paul Diamond from Citi inquired about the Horseshoe well program, asking what might cause a deviation from the plan to drill ten wells this year and ten next. He also asked for more detail on the scale, structure, and timing of the recently announced agreement with NextEra Energy.

Answer

COO Daniel Harrison expressed strong confidence in the Horseshoe well program, stating they perform like conventional long laterals with minimal extra drilling time and no issues to date, giving no reason to change the current plan. Regarding the NextEra agreement, CEO M. Jay Allison described it as a strategic collaboration to explore developing gas-fired power generation for potential data centers near their Western Haynesville assets, but did not provide specific structural or timing details, citing the early stage and customer confidentiality.

Paul Diamond from Citi inquired about the Horseshoe well program, asking what factors might alter the current drilling plan. He also asked for more details on the scale, structure, and timing of the new agreement with NextEra Energy.

Answer

COO Daniel Harrison conveyed strong confidence in the Horseshoe well program, noting the wells perform like standard long laterals with minimal issues and only add about two days to drilling time, giving no reason to deviate from the plan. Regarding the partnership, CEO M. Jay Allison explained that the agreement with NextEra is to explore developing gas-fired power generation to serve potential data centers near their Western Haynesville assets. He praised NextEra as an ideal partner but declined to provide specific details of the agreement.

Paul Diamond of Citi asked about the company's strategy for layering in the remaining hedges to reach its 50% target for 2025. He also questioned why only 57% of Haynesville locations were converted to horseshoe wells and what limitations prevent converting the rest.

Answer

President and CFO Roland Burns affirmed they will work diligently to reach the 50% hedge target, potentially focusing on the second half of 2025 where the forward curve is stronger. COO Daniel Harrison explained that horseshoe conversions require two suitably spaced well 'sticks' on an acreage block. The remaining 43% of locations are not convertible because they are single sticks or are spaced too far apart, though he noted this could change as they test wider designs.

Paul Diamond asked about the company's long-term view on balancing its portfolio between LNG, data center contracts, and other markets, and also requested a timeline for fixing the Haynesville data reporting issue.

Answer

CEO Domenic Dell’Osso described the strategy as 'all of the above,' stating the company is uniquely positioned to serve all growing demand sources and does not see it as an either/or choice. Executive VP & COO Josh Viets indicated they hope the state data reporting issue will be resolved over the next several months and are working constructively with the agencies involved.

Paul Diamond asked about the company's long-term view on the right portfolio balance between LNG contracts, data center deals, and general market sales. He also asked for a timeline on fixing the Haynesville productivity data reporting issue.

Answer

President, Director & CEO Domenic Dell’Osso emphasized that the company's strategy is 'all of the above,' not an 'either/or' choice, as its diverse portfolio is uniquely positioned to serve all growing demand centers. Executive VP & COO Josh Viets stated they are working with Louisiana state agencies and hope to have the data issue resolved over the next several months, aiming for a permanent fix.

Paul Diamond of Citigroup asked how the company thinks about the ideal long-term portfolio balance between LNG, data center, and other sales contracts. He also followed up on the timing for resolving the inaccurate Haynesville production data with Louisiana state agencies.

Answer

President, Director & CEO Domenic Dell’Osso emphasized an 'all of the above' strategy, stating the company is uniquely positioned to serve all growing demand centers. Executive VP & COO Josh Viets expressed hope that the data reporting issue would be resolved over the next several months and that the fix would be permanent.

Paul Diamond inquired about the long-term strategy for the remaining convertible preferred units and sought more detail on the natural gas M&A market, specifically asking if competition differs between the Haynesville and Appalachian basins.

Answer

Davis Ravnaas, President and CFO, detailed the plan to allocate 25% of cash flow to debt paydown and then redeem the preferred units in 20% increments every few quarters, while maintaining leverage around 1.5x EBITDA. On M&A, he confirmed that the Haynesville has been more competitive than Appalachia. He also highlighted the Mid-Continent as a less competitive but attractive area for gas-focused acquisitions due to its strong volumes and lack of infrastructure constraints.

Paul Diamond asked about Kimbell's M&A appetite, specifically whether the company will pursue smaller deals or larger, more transformative ones given its increased scale. He also asked if the DUC-to-permit ratio in the Haynesville is a reliable indicator of future production trends.

Answer

Davis Ravnaas, President and CFO, stated that the company's focus is on larger deals of $100 million or more, as they are better suited for equity financing without increasing leverage. He noted the deal market is naturally trending larger. Regarding the Haynesville metric, he cautioned against over-interpreting short-term fluctuations in the DUC-to-permit ratio, stating the company remains bullish on the basin's long-term prospects.

Paul Diamond inquired how much production from the Katmai West #2 and Sunspear wells is factored into the Q2 guidance. He also asked about the company's pre-ordered OCTG inventory and its exposure to potential tariff-related inflation.

Answer

President and CEO Paul Goodfellow confirmed that production from both wells is built into the Q2 guidance at the midpoint of their expected rates, and current data suggests this is robust. EVP and CFO Sergio Maiworm stated that due to standardized well designs, the majority of OCTG needed for 2025 and well into 2026 is already purchased and under control, minimizing exposure to tariffs.

Paul Diamond asked about the company's target level for financial leverage and whether there were any plans to further expand the capacity of the Tarantula facility.

Answer

Interim Co-President and CFO Sergio Maiworm stated he is very comfortable with the current leverage of 0.8x and does not feel a need to delever further. Regarding Tarantula, he said the current capacity is sufficient, but if future drilling in the field is successful, they would carefully evaluate a significant investment to expand flow lines and topside capacity.

Paul Diamond of Citi questioned the constraints and potential for further expansion at the Tarantula facility and asked how an uncertain 2025 price environment might impact the company's hedging strategy.

Answer

Interim President & CEO Joseph Mills detailed that the Tarantula facility's main constraint is the flow line from the manifold, and a new 'loop line' is being evaluated for future growth. He emphasized a philosophy of not overbuilding for short-term peak rates. EVP & CFO Sergio Maiworm stated that hedging practices will remain consistent, noting that nearly half of 2025 production is already hedged in the $70s.

Paul Diamond questioned what specific pricing conditions for in-basin demand, such as a significant basis collapse or a specific premium, would be necessary for Antero to commit supply, given its firm transportation is already full. He also asked if they would consider a long-term discount to Henry Hub.

Answer

CFO Michael Kennedy explained that Antero evaluates all opportunities through a NYMEX Henry Hub lens because it is a reliable, long-term, hedgeable benchmark necessary for committing capital. He stated that while a contract could be structured as Henry Hub minus a differential, it would need to float on the NYMEX price, as the volatility of local basis pricing makes it difficult to support with significant capital investment.

Paul Diamond asked if Antero has a target hedging level for its lean gas production. He also inquired about the perceived risk and potential volatility in the price curve for the TGP 500L hub.

Answer

CFO Michael Kennedy stated there is no target hedge level; the strategy is to opportunistically use wide collars to place a floor on returns for specific lean gas pads, rather than broad-based hedging. He expressed confidence in the TGP 500L basis, seeing more upside risk than downside due to the significant new LNG demand coming online in the Gulf Coast, which will have to compete for Antero's gas.