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Range's Marcellus May Hold 24-30 Tcf, Says CEO

Range Resources Corp. CEO Jeff Ventura said last week the company's Marcellus Shale leasehold may have the long-term potential for 24-30 Tcf of reserves.

Ventura made his comments during a conference call to discuss 2Q2012 earnings. Net income was $55.7 million (34 cents/share), compared with $51.2 million (32 cents) in 2Q2011. Revenue was up 32% compared to the same period last year.

Longer term, production growth will depend on where Range focuses its efforts -- liquids versus dry gas, for example -- and prices will help decide that, Ventura said. "If gas prices moved up substantially and we moved in a bigger component of that, we would be growing at 35%, but if you just focused on dry gas exclusively, you theoretically double the numbers," he said.

"Right now we are doing exactly the right thing, I think. We are staying disciplined as oil prices are still high and gas prices are relatively low. Moving into our liquid-rich areas in southwest Pennsylvania and focusing on the rates of return there is the right thing to do.

"For a company our size, we have such a huge position that is predominantly derisked; we literally have the opportunity to grow ten-fold from where we are today. We are only a 5 Tcf company and we have the opportunity with our resource potential to grow to 45-60 Tcf. If you focus in just on the Marcellus Shale, our net resource potential is 24-30 Tcf. That's massive and it is largely derisked. This is a play now that is the largest gas field in the United States."

COO Ray Walker called the Utica Shale a "legacy asset" where the company holds more than 300,000 acres of shale rights. Noting that there are now 190,000 net acres for Range in the Utica, he said there has been a lot of "really good technical work, and we think it has a lot of potential.

"There are a lot of smart people in and around our position up there, so we're at the point now where we think it has great potential; it could even be phenomenal. We're essentially at the point where we have to get some horizontal wells drilled and tested so we see what we have there."

Walker said Range is performing "a lot of diagnostics" on a well it is now drilling in the Pennsylvania portion of the Utica. "We'll be completing that well in a month or so, and once we get all that data in, hopefully by the next conference call, we'll have some really great results to talk about," he said. The company also has another well lined up to drill in October.

Ventura emphasized that Range is focused on "multiple outlets and multiple contracts" for moving its natural gas liquids and it is also appraising its assets to determine when and if to sell any of them. No specific sales were mentioned, but the CEO said the company expects to further monetize assets as it has been over the past 10 years.

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