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Range Tips Its Hat to Marcellus for Reserves Growth

Last year Range Resources Corp. grew proved reserves 42% to 4.4 Tcfe and replaced 931% of its production for the year, the company said Tuesday.

"Our 42% increase in proved reserves, 931% production replacement and 72 cents/Mcfe all-in finding cost is a direct reflection of Range owning a very large acreage position in the Marcellus Shale -- a giant field that has industry-leading economics," said Range CEO John H. Pinkerton.

"With the 2010 results now in hand, we have achieved double-digit growth in production and reserves per-share on a debt-adjusted basis for five consecutive years. Given our Marcellus Shale position, where much of our acreage has now been derisked, coupled with our other projects in the Nora field in Virginia, Midcontinent and Permian Basin, we have more than 1.4 million acres that hold tremendous resource potential."

Recently the company said it had doubled its production from the Marcellus Shale last year (see Shale Daily, Dec. 16, 2010).

Overall activity in the play has picked up from year to year. In January 2010, less than 120 rigs were actively searching for oil and gas in the Marcellus Shale, according to NGI's Shale Daily Unconventional Rig Count. After spiking to more than 160 rigs last fall, there are currently more than 140 rigs active during January 2011.

At year-end 2010, 80% of Range's proved reserves by volume were natural gas, compared with 84% as of year-end 2009. Year-end 2010 natural gas liquid reserves were 17% and crude oil reserves were 3% compared with 10% and 6%, respectively, in the prior year. The percentage of reserves in the proved undeveloped category was 51% at year-end 2010, versus 45% at year-end 2009.

"The increase in percentage of proved undeveloped reserves was due to the recording of additional proved undeveloped reserves in the Marcellus Shale play where Range had outstanding results in 2010," the company said.

The company's estimate of cash drilling and development costs and property acquisitions incurred during 2010 including exploration expenses is approximately $1.2 billion. Range estimates that it spent $165 million for acreage in 2010. Finding and development cost from all sources averaged 72 cents/Mcfe including price and performance revisions, or 74 cents/Mcfe excluding price revisions. Drillbit development cost (excluding price revisions and acreage cost) was 60 cents/Mcfe.

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