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Range Proved Reserves Increase 26% to 10.3 Tcfe

By On January 26, 2015 3:15 pm


RangeResources.com

FORT WORTH, TX — (Marketwired) — 01/15/15 — RANGE RESOURCES CORPORATION (NYSE: RRC) announced today that its proved reserves as of December 31, 2014 increased 26% to a record high of 10.3 Tcfe.

Proved Reserves Highlights –

  • Range replaced 581% of production in 2014 from drilling
  • Finding and development costs from all sources are expected to average $0.64 per mcfe
  • Drill bit development costs are expected to average $0.55 per mcfe
  • Proved developed producing reserves increased 876 Bcfe, or 22% year-over-year
  • Proved developed reserves increased 1,157 Bcfe, or 28% year-over-year
  • Proved undeveloped reserves were 48% at year-end 2014, compared to 49% year-end 2013
  • Year-end 2014 proved reserves by volume were 67% natural gas, 30% natural gas liquids and 3% crude oil and condensate.
  • Range has moved 8.8 Tcfe of reserves from resource potential to proved reserves in the last five years
  • Pre-tax 10% present value of the Company’s proved reserves increased 28% to $10.1 billion at year-end 2014

Commenting on Range’s 2014 proved reserves, Jeff Ventura, Range’s Chairman and CEO, said, “Our 26% increase in proved reserves, 581% drill bit replacement and preliminary $0.64 per mcfe all-in finding cost are outstanding results. In 2014 we achieved per share, debt-adjusted growth in both production and reserves of 20% or more. This is our eighth consecutive year to have double-digit growth in these two key metrics. These results reflect our large inventory of low cost, strong return projects. We plan on continuing to focus capital on our strong rate of return projects in our Marcellus Shale position during 2015. Range has moved 8.8 Tcfe of resource potential into our proved reserves over the last five years which demonstrates the size and scale of the growth embedded within our portfolio. Over the last three years, Range has grown its reserves at a 27% annual compounded growth rate while production has grown at a 28% annual compounded growth rate. With our existing acreage portfolio, Range is very well positioned to continue to achieve double-digit reserve and production growth per share, debt adjusted, at low cost in the future.”

SUMMARY OF CHANGES IN PROVED RESERVES
(in Bcfe)
Balance at December 31, 2013 8,202
Extensions, discoveries and additions 2,399
Purchases
Performance revisions:
PUD improved recovery 450
PUD removal (611)
PDP field performance 227
Total Performance revisions 66
Price revisions 25
Exchange and Sales:
Reserves disposed in the exchange (217)
Reserves received in the exchange 263
Sales of proved reserves (3)
43
Production (425)
Balance at December 31, 2014 10,310

Range replaced 581% of production in 2014 from drilling (including proved performance revisions). Finding and development costs from all sources (including acreage and price and performance revisions) are expected to average $0.64 per mcfe ($0.66 per mcfe excluding positive price revision), based on preliminary unaudited costs incurred for 2014. Drill bit development costs are expected to average $0.55 per mcfe. The Company’s estimate of drilling and development costs incurred during 2014 including acreage, exploration and seismic expenses is approximately $1.58 billion which is subject to final year-end accruals. Included in the$1.58 billion capital spending for 2014 is approximately $228 million for acreage.

For 2014, Range added 2,399 Bcfe of proved reserves through the drill bit, driven by the Company’s Marcellus development. This extensions, discoveries, and additions amount excludes 450 Bcfe of reserves associated with improved recovery on previously booked undrilled locations as a result of drilling longer laterals, better lateral targeting and increasing the number of frac stages in the Marcellus which remain in the development plan. The improved recovery estimate is included in the “revision” category and represents the incremental increase in recovery including any previous proved undeveloped (“PUD”) locations which may have been integrated into longer laterals. On average, the lateral lengths for these proved undeveloped locations are approximately 5,135 feet in the 2014 report compared to the 4,174 foot laterals used in the 2013 report. The number of frac stages planned for proved undeveloped locations in the 2014 report is 26 while the total number of frac stages used in the 2013 report was 21 frac stages. If the improved recovery resulting from the drilling of longer laterals and the increased number of frac stages in the Marcellus were included in the “addition” category because additional capital will be required to capture those incremental reserves than what was previously estimated, the reserve extensions, discoveries and additions would be 2,849 Bcfe and the resultant drill bit development costs would be $0.48 per mcfe.

Overall performance revisions for 2014 were 66 Bcfe. To provide more clarity on the 2014 performance revisions, this estimate is comprised of three components. First, as mentioned above, the improved recovery component has a positive revision of 450 Bcfe. Second, as a result of our continued success in the Marcellus drilling longer laterals, better lateral targeting results and increasing the number of frac stages, the development plan has been re-optimized which resulted in some previously planned wells not being drilled within five years from their booking date. As such, the Company removed 611 Bcfe of proved reserves in its year-end reserve evaluation. However, the reduced number of new optimized wells have greater EURs and higher costs but with improved economics than the previous wells. The Company expects the reserves associated with this proved undeveloped removal to be added back in future years as development continues. Third, field level performance increased by 227 Bcfe due primarily to the continued improvement in the well performance of existing Marcellus producing wells. The net adjusted price increase after differentials in 2014 as compared to 2013 resulted in an upward revision in proved reserves of 25 Bcfe.

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