Range Resources Corp.’s new assets in North Louisiana, along with additional takeaway projects coming online in the Appalachian Basin, are expected to drive natural gas production growth and improve differentials going forward.

A little more than a month after Range acquired Memorial Resource Development Corp. (MRD), the company has wasted little time in learning about the new assets in the Cotton Valley Sands Terryville Complex and strategizing about how they’ll fit into future development plans (see Shale Daily, May 16). Picking up where MRD left off, Range brought online 16 wells in the Terryville field during the third quarter. It expects to run five rigs in the southern Marcellus Shale and four in North Louisiana during the fourth quarter.

“Based on extensive logs, cores and shows, all three vertical pilots look very encouraging,” CEO Jeff Ventura said of extension wells the company is working on to test different zones south of the Terryville in Lincoln Parish, LA. “We expect to have all three wells completed and tested by the end of this year. The results of the wells will help provide additional data regarding extension areas that will be rolled into our planning for 2017 and 2018.”

MRD was mostly focused on the Upper and Lower Red zones of the Terryville, leaving the Upper and Lower Deep Pink zones unexploited. Range has moved south of Lincoln Parish, where the Cotton Valley gets thicker and is higher pressured, to continue testing wells that MRD sited. Management said both Range and former MRD personnel have worked together to come up with drilling and completion techniques for those tests.

“Looking at the data collected thus far, the Upper Red sands in these wells have an average gas-in-place (GIP) concentration that is on par with the very best wells in the Terryville, and they’re twice as thick, yielding twice the GIP as the Upper Red sands in Terryville,” COO Ray Walker said of the extension areas. “The Lower Red sands have an average GIP concentration of nearly three times that of the best Lower Red in the Terryville.”

Range produced 1.51 Bcfe/d in the third quarter, up from the 1.45 Bcfe/d it produced in the year-ago period and the 1.42 Bcfe/d it produced in 2Q2016. The southern Marcellus Shale accounted for 1.23 Bcfe/d during 3Q2016, and production included 15 days of volumes from the Terryville.

Realized natural gas prices, including hedges, were $2.50/Mcf, compared with $2.77/Mcf in the year-ago period and $2.52/Mcf in 2Q2016. The Louisiana assets, along with liquids pipelines and Spectra Energy Corp.’s new Gulf Markets Expansion in Appalachia, helped the company’s gas differentials, which improved to 68 cents/Mcf from 78 cents/Mcf in the year-ago period.

“We sold ethane to Europe, Canada and the Gulf Coast and exported propane from Marcus Hook into international markets,” Ventura said. “The net effect is that our [natural gas liquids] price increased from 13% of [West Texas Intermediate] to 25% on a year-over-year basis.”

Gas differentials are slightly better in Louisiana compared to those in the Appalachian Basin, Ventura said. But he wasn’t ready to say if the company would begin favoring those assets with more capital anytime soon.

“One of the advantages we have that some of our peers don’t have because they’re single-basin focused is that we can allocate capital back and forth,” Ventura said in response to a question about how the company would allocate capital to both plays in the future. “As best we can, on a real time basis, we’ll be looking at making the best investment decisions we can.”

Range is on target with its $495 million capital budget for 2016, but that doesn’t include the $74 million it plans to spend in Louisiana during the fourth quarter. Those assets now have it anticipating up to 35% year/year production growth in 2017, compared to the 11-13% year/year growth it would have without them.

Third quarter revenues were $413 million, down 14% from the year-ago period. The company reported a net loss of $42 million (minus 23 cents/share), compared to a steeper loss of $301 million (minus $1.81) in 3Q2015.