Fort Worth-based independent Range Resources Corp. may sell its Gulf Coast properties to concentrate its exploration efforts in Texas, Appalachia and the Midcontinent, the company said Monday. The Gulf Coast assets, 85% weighted to natural gas, account for about 4% of Range's proved reserves and 11% of its production.
The Gulf Coast properties are located onshore in Texas, Louisiana and Mississippi and in the shallow waters of the Gulf of Mexico. Offshore, Range holds interests in 36 platforms in water depths ranging from 11 to 240 feet. In 2005, the Gulf Coast assets' total net production was 29 MMcfe/d; in 2004, it was 39 MMcfe/d. In 2005, average gas output was 24.8 MMcf/d, down from 34.7 MMcf/d in 2004 and almost half the 40.7 MMcf/d in 2003.
Range has completed the $82 million sale of its Austin Chalk properties in Central Texas to an undisclosed private company. The assets were expected to be sold after Range acquired Fort Worth-based Stroud Energy Inc. for $456 million last year (see Daily GPI, May 12, 2006). Range expects to record a $25.4 million after-tax noncash loss on the discontinued operations, which will be recognized in 4Q2006.
With the Austin Chalk sale, Range reinvested a portion of the sales proceeds and expanded its Barnett Shale acreage position by almost 10,000 acres to 73,000 gross (64,000 net) acres. Range also paid $30.5 million to acquire the remaining interest in its northern Oklahoma shallow oil play, adding 15.7 Bcfe in proved reserves at a cost of $1.94/Mcfe.
"The asset sales, coupled with our rising cash flow, should be more than sufficient to fund our 2007 capital expenditure program," said President John H. Pinkerton.
In early February, Range set a $698 million capital budget for 2007, a 10% increase from 2006. The budget includes $600 million for drilling and recompletions, $58 million for land, $20 million for seismic and $20 million for the expansion and enhancement of gathering systems and facilities. This year, Range expects to drill 924 gross (691 net) wells and undertake 72 (52 net) recompletions. About 57% of the capital budget will be spent in its Southwestern region, which includes its Texas and New Mexico leaseholds. Another 37% will be spent in the Appalachian and Midcontinent operations, and 6% is set aside for the Gulf Coast.
"Our 2006 drilling program was a tremendous success, as it replaced 377% of production at a finding and development cost of $1.65/Mcfe," said Pinkerton. "Importantly, we are off to a solid start in 2007. In addition to targeting 15% production growth, we are focused on continuing the progress in our emerging plays." Pinkerton said Range now has 520,000 net acres of shale gas plays and 400,000 net acres of coalbed methane plays.
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