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Range Boasts Record Production Without Barnett

Following a trend among the major players in the Marcellus Shale, Range Resources Corp. is reporting record production rates after averaging 625 MMcfe/d across its portfolio in the fourth quarter.

The Fort Worth, TX-based company averaged 554 MMcfe/d for the year, up 12% from 2010, making 2011 its eighth consecutive year of double-digit production growth. Adjusting for the sale of its Barnett Shale assets in early 2011, the year-over-year increase would have been 36% (see Shale Daily, March 2, 2011).

"With a significant portion of our 2012 and 2013 natural gas hedged, we are well positioned to continue to generate attractive returns during this period of low natural gas prices," said Range CEO Jeff Ventura. "Our large inventory of high-return, liquid-rich projects, low cost structure and strong financial position provides us substantial flexibility as we continue to focus on creating value per share for our shareholders."

As companies tally their year-end totals, 2011 is proving to be a record year for the major players in the Appalachian Basin. Cabot Oil & Gas Corp. closed out the year producing 600 MMcf/d from the Marcellus, up 154% from 2010 (see Shale Daily, Jan. 5). Talisman Energy Inc. produced a record 485 MMcf/d from the Marcellus in the fourth quarter of 2011, although the company expects that production to remain level this year as the company diverts capital toward liquids plays in its portfolio (see Shale Daily, Jan. 11).

While Cabot and Talisman are among the biggest producers in the prolific dry gas corridor of northeastern Pennsylvania, Range is primarily active in the wet gas corridor of southwestern Pennsylvania, where it holds around 550,000 net acres in the Marcellus, Upper Devonian and Utica shales. Range also holds around 240,000 net acres in northeastern Pennsylvania, where it had 15 online as of the third quarter.

Although Range is "well positioned" going into 2012, with 75% of its gas production is hedged at $4.45/Mcf, the company will likely tout its "super wet" acreage in the coming weeks, according to analysts at Tudor, Pickering, Holt & Co. Analysts at Canaccord Genuity Energy Research called Range's news "neutral," saying, "lower liquids production offsets higher price realizations and a solid hedge book."

While Range plans to operate this year on a combination of revenue from production, a carryover from the Barnett sale and debt, the company is aiming for the Marcellus holdings to be self-funding by 2013.

But analysts from Moody's said, "Depressed natural gas prices in combination with the aggressive spending program are expected to lead to higher debt levels for the next few years."

Range also operates in the Midcontinent, West Texas and the Huron Shale of Kentucky.

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