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Marcellus Pushed Range Production 27% Higher in 2Q2013

Driven primarily by the continued success of its drilling program in the Marcellus Shale, Range Resources Corp. saw its production volumes surge to a record high of 910 MMcfe/d in 2Q2013, a 27% increase over 2Q2012, the Forth Worth, TX-based company said Thursday.

Production during the quarter was 79% natural gas, 15% natural gas liquids (NGL) and 6% crude oil and condensate. Oil and condensate production increased 39% compared with 2Q2012, NGL production rose 35% and natural gas production increased 24%, Range said.

Range, which has been focusing ever more sharply on liquids-rich and oil projects, began 2Q2013 with the sale of some of its gas-weighted Permian Basin properties in New Mexico and West Texas (see Shale Daily, Feb. 28). Adjusting for the sale of the New Mexico properties, which comprised production of about 18 MMcfe/d, 2Q2013 production would have increased 30% over the prior-year quarter, with oil and condensate production increasing 57%, NGL production increasing 35% and natural gas production increasing 27%.

Total 2Q2013 production exceeded the high end of Range's guidance of 880-890 MMcfe/d due to the timing of turning wells to production and continued positive performance of wells in the Marcellus Shale.

"The success of our drilling program over the first half of the year puts us on track to achieve the high-end of our production growth target of 20% to 25% for 2013," said CEO Jeff Ventura. "More importantly, our sizable position in the Marcellus Shale gives us confidence that we can deliver similar line-of-sight growth of 20% to 25% for many years."

Range's production number came in "well ahead of both Street and our estimate of 904 MMcfe/d," said Wells Fargo Securities analysts, who added that they are looking for an update from the company on Marcellus infrastructure and pricing.

"More than any, the outlook for Marcellus infrastructure is the topic du jour right now, with investors trying to get a handle on the issue. We believe this could be an ongoing issue in the Marcellus over the next few years," the analysts said in a note Thursday. Investors are "still trying to sort out who gets impacted the hardest,"

Driven in large part by production out of its extensive Marcellus acreage, Range reported record annual production of 753 MMcfe/d in 2012, an increase of 36% over 2011. And the company broke its total production record, in the Marcellus and other areas, in 1Q2013 with an output of 876 MMcfe/d, more than one-third higher year/year (see Shale Daily, April 30). Range believes it has the potential to produce up to 8 Bcf/d from the Marcellus (see Shale Daily, May 23).

Range also announced that its preliminary 2Q2013 natural gas, NGL and oil price realizations averaged $5.02/Mcfe, a 6% composite increase from the prior year quarter.

Range sold most of its Barnett Shale leasehold in late 2010 to concentrate its exploration efforts in the Marcellus Shale (see Shale Daily, Oct. 29, 2010). The company has said it expects to spend about 85% of its $1.3 billion 2013 capital expenditures budget on liquids-rich and oil projects, predominately in wet areas of the Marcellus and through horizontal drilling in the Mississippian Lime (see Shale Daily, Dec. 13, 2012).

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