Range Resources is bumping up its capital spending by 18% from 2007 to $1.065 billion, and it plans to use most of the funds to develop its Texas, Midcontinent and Appalachian properties.
The 2008 budget includes $783 million for drilling and recompletions, $109 million for land, $51 million for seismic and $122 million for the expansion and enhancement of gathering systems and facilities. Of the drilling and recompletion capital, 95% will be spent on “lower-risk development and exploitation activities,” and 5% will be directed toward exploration projects.
“The strategy for our 2008 capital expenditures is consistent with prior years, in that our goal is to consistently grow production and reserves at top quartile finding costs,” said President John H. Pinkerton. “Based on the drilling projects planned for 2008, we anticipate generating excellent returns on invested capital and another year of double-digit production growth.
“Including the impact of planned asset sales, we have established a production growth target of 15% for 2008. Given rising production combined with our low cost structure and attractive hedge position, we foresee posting another year of record financial results in 2008.”
Acquisitions, particularly those in proximity to Range’s existing properties, “will continue to be pursued but are considered too unpredictable to be specifically budgeted,” the company noted. Based on the current futures prices and existing hedges, Range’s 2008 capital spending is expected to be funded by operating cash flow and asset sales.
This year the Fort Worth, TX-based independent expects to drill 968 gross (715 net) wells and undertake 82 (66 net) recompletions. About 56% of the budget is attributable to Range’s Southwestern region, which consists of properties in West and East Texas and the Midcontinent.
Another 40% of the budget will go to Appalachian asset development, and 4% will be directed to Gulf Coast activities.
Included in the budget are 187 net coalbed methane, tight gas and shale wells at the Nora/Haysi field in Virginia, 92 net Barnett Shale wells in the Fort Worth Basin and 60 net Marcellus Shale wells in Appalachia. The remaining 376 net wells are primarily tight gas and oil wells in the company’s other core areas.
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