The great Oz has spoken.

And, as expected at the 9th annual IPAA Oil and Gas Investor Symposium in San Francisco, it was a curt "no comment" on speculation Range Resources Corp. was for sale to an international major.

Rumors of that sale had pushed the company's stock price to a 52-week high on September 21--higher in fact, than the hot air balloon that served as the personal conveyance of the Great Wizard of Oz--before Range's share prices settled back to recent trading ranges in the low to mid-$60s.

After batting away the pesky sale question, management at Range Resources then outdid the Scarecrow himself (with his Doctorate in Thinkology) by detailing to a near-standing room only breakout session why the slow and steady Range approach in the liquids-rich Marcellus, and boutique stacked play acreage in the burgeoning Mississippi Lime, Granite Wash and Permian Basin horizontal Wolfcamp, remained the best way to bring the Wicked Witch's broomstick of value back to Emerald City shareholders.

Range senior vice president Rodney Waller outlined the meticulous planning behind the company's 790,000 net acre Marcellus development program.

"We believe we can actually build much more shareholder value with these assets over the next 12 or 18 months," Waller explained. "What people don't understand externally—as much as we try to say it—is we actually haven't drilled the very best wells in the southwest, or the northeast (Pennsylvania). What we have drilled are great wells right around the processing plant, or right off a pipeline. So in the next two years we will actually be drilling step out wells. The first big step out well we did in the 1st quarter this year was 35 miles away from where we are currently drilling—the biggest gas well we drilled in the southwest. New gas, new gathering system, new midstream company: you will see that repeated time and time again."

Pay No Attention to That Man Behind the Curtain

Like so many public independents on the shale treadmill, Range suffers from challenging financial optics. Shale potential on paper encompasses a treasure trove of resources and financial benefit. But the most exasperating characteristic of today's unconventional resource play model is that the time required for the ultimate resource build out is the cold water that melts capital faster than Dorothy's liquidated Wicked Witch of the West.

Hence Wall Street was quick to embrace the sale rumor, particularly in a post-BHP-Billiton/Petrohawk market with the Majors demonstrating a healthy appetite for multi-billion dollar investments in Appalachia.

In its IPAA presentation, Range management vowed the company's Marcellus program would be self-funding in 2013, attempting to allay investor concern over an expanding stream of $6.5 million wells—and a lot of non-core assets to sell—to finance operations in the interim. That reality, coupled with recent market volatility (lions and tigers and bears, oh my), had some investors more spooked than a village of diffident Munchkins.

Range management told IPAA attendees that they are, in fact, still following the yellow brick road. The company is targeting 400 MMcfed out of the Marcellus by year end, a reachable goal from the 300 MMcfed the company was producing at the midway point in 2011. The Fort Worth firm just inked a contract opening a Canadian outlet for ethane from its liquids-rich gas stream in 2013, which will provide an opportunity to monetize a potential 500 MMbbls of Marcellus ethane in a way that could enable Range to become a price setter rather than a price taker, depending on the global naphtha market.

Meanwhile Range is quietly watching developments in the nascent Utica shale, which would both de-risk portions of the company's 350,000 legacy acres in northwest Pennsylvania without spending additional exploration dollars, and provide impetus to midstream efforts to accelerate liquids processing infrastructure in preparation for potential polyethylene manufacturing capacity in the industrial northeast corridor at some point after 2013.

I'm Afraid It's True--There's No Other Wizard Except Me

Range's view on increasing shareholder value is the same even when the subject turns to taking on a joint venture partner, noted Ray Walker, senior vice president environment, safety and regulatory compliance.

"We build a ground up model that looks at every possible iteration of scenarios that you can think about, and we've looked at all of that. Time in and time out it comes back telling us the best way to provide long-term shareholder value is through organic growth, a slow and steady focusing on costs, protecting yourself from the volatility in the stock market and commodity prices, and everything else that is out there. We believe we're in a prime market for gas; we believe we're in some of the best rock in North America. We believe we have a great cost structure and we understand we have first-mover advantage."

Investors also queried Range on its current drilling approach, which employs shorter 3,000-foot laterals and fewer stages than those publicized by peers.

"We're not really focused on a per-well set of economics as much as we are focused rate of return for our project," Walker explained. "We've got a lot of things pulling on us. We've got to think about HBP (held-by-production) acreage, we've got to think about building infrastructure at a reasonable pace so we don't price ourselves out of the game, we've got to think about firm transportation, and ethane, and firm sales to the market. All of those things factor into our planning. Most of our wells, generically speaking, are going to be around 9 or 10 stage completions because when we go back and look at those wells on a per foot of lateral completed, they are as good as anybody else's in this area and we're making close to a 100% rate of return with what we are doing today. It makes a lot of sense for a steady, disciplined production growth profile. You can go out there and drill a bunch of wells on a pad—and drill them all 9,000 foot long—and you can have 10 wells that might make 200- or 300 MMcfd. But if you build production facilities to do that you may go broke, or it will be choked back forever."

The Range message that the best was yet to come may yet be as soothing to investors as those words the Good Witch Glinda imparted to Dorothy.

"Close your eyes and repeat after me: there's no place like home (Marcellus); there's no place like home (ethane). There's no place like home."

Contact the author, Richard Mason, at rmason@hartenergy.com.