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Range Reserves Move Higher on Better Performance from Marcellus

Appalachian heavyweight Range Resources Corp. increased its proved reserves last year by 26%, driven largely by improved well performance across its 955,000 net acres in the Marcellus Shale, where it has focused on completing wells with longer laterals and more hydraulic fracture (frack) stages.

Proved reserves at year-end 2013 stood at 8.2 Tcfe, up from 6.5 Tcfe a year before, the company said late Tuesday. Range replaced 612% of its production in 2013 and reported that proved reserves by volume were 69% natural gas, 27% natural gas liquids (NGL) and 4% crude oil and condensate.

"Importantly, in 2013, we achieved per share, debt-adjusted growth in production and reserves of 23% and 25%, respectively," said Range CEO Jeff Ventura. "This is our seventh consecutive year to have double-digit growth in these two key metrics."

Ventura said Range's reserve additions last year reflected its large inventory of "low-cost, high-return projects" and said the focus for the company heading into this year would remain on its de-risked acreage position in the Marcellus (see Shale Daily, Dec. 3, 2013). Range has been heavily focused on a wet-gas window in southwest Pennsylvania, where it continues to drill aggressively and purchase more land (see Shale Daily, Dec. 12, 2013).

Additions to its reserves came from existing acreage;  the company did not add any land acquisitions to its year-end totals. Range has also yet to assign any proved undeveloped (PUD) reserves associated with its prospective Utica/Point Pleasant and Upper Devonian acreage.

In all, Range added 1.7 Bcfe of proved reserves in 2013, excluding 630 Bcfe of extensions, discoveries and additions added on previously booked locations. Improving recoveries in PUD revisions stemmed from lateral lengths that averaged 4,410 feet in 2013, compared with 3,508 feet in 2012. The number of frack stages planned for PUDs in 2013 also increased to 22 from just 12 in 2012.

In the last four years, Range has moved 6.4 Tcfe from resource potential to proved reserves. Crude oil, condensate and NGL reserve volumes jumped 48%, while natural gas reserve volumes were up 18% at the end of 2013. Proved developed producing reserves increased by 1.08 Bcfe, or 38% year/year. The proved producing reserves now represent 48% of total reserves.

Financial analysts at Tudor, Pickering, Holt & Co. said in a research note on Wednesday that Range's year-end production of 343 Bcfe implied a 1-2% increase in 4Q2013 volumes, and noted that the company plans to focus on ethane takeaway capacity going forward. They were also positive on mproving well results as the company continues to move the gauge higher on production. In December Range said Marcellus production reached 1 Bcfe/d (see Shale Daily, Dec. 17, 2013).

Range added 61.5 million bbl of ethane reserves in 2013 and said Tuesday any other incremental Marcellus ethane volumes would continue to be included in gas reserves until more ethane contracts commence. 

The company estimated its drilling and development costs at $1.3 billion last year and the pre-tax value of reserves increased from $4 billion in 2012 to $7.9 billion.

Range, with 955,000 net Marcellus acres, is currently the second largest leaseholder in the play behind Chesapeake Energy Corp., which holds 1.78 million net acres (see chart). Detailed acreage tables and stats for more than 20 North American Shale Plays are now available inNGI's North American Shale & Resource Plays Factbook. For more information, visit http://www.naturalgasintel.com/factbook.

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