Range Accelerates Drilling Program in Horizontal Mississippian Play

FORT WORTH, Texas--()--RANGE RESOURCES CORPORATION (NYSE: RRC) announced today that its planned five-rig drilling program for 2013 in the Horizontal Mississippian play along the Nemaha Ridge in Oklahoma and Kansas is already underway.

  • Range announces two new wells with 24-hour initial production rates to sales each greater than 1,000 boe per day averaging 82% liquids.
  • Range has completed 18 horizontal wells in 2012 with four of these wells having initial 24-hour production rates to sales greater than 1,000 boe per day averaging 83% liquids.
  • Updated production results continue to reaffirm the Company’s estimated 600 Mboe EUR for the greater than 3,500 foot lateral well design.
  • 157,000 net acres have been accumulated in Range’s Nemaha Ridge core area where geological characteristics have historically produced superior results.

Commenting on the announcement, Jeff Ventura, Range’s President and CEO, said, “Range continues to be encouraged that our Horizontal Mississippian results are generating very attractive returns for our shareholders. Range believes its location along the Nemaha Ridge largely accounts for our positive results. Our technical team has done a great job targeting this core area of the play, which is essential for success. We believe our 2012 results with four wells having initial rates over 1,000 boe per day, spanning an eleven mile width of the Nemaha Ridge, confirm that we have identified a core area of the play. We are concentrated in those areas with the best historical oil results with over 4,500 vertical wells confirming our targeted area of development along the Nemaha Ridge. With more production history, our first eight horizontal wells from 2009 – 2011 are performing better than our original type curve for the 2,200 foot lateral wells. The production history on the first 18 wells in our 2012 program, with greater than 3,500 foot laterals, is resulting in a projected estimated ultimate recovery of 600 Mboe for this group of longer lateral wells.”

“Given our continued positive developments in the play, we have accelerated the start date of our five-rig program, originally slated to begin in the first quarter of 2013. We are becoming increasingly confident that the Horizontal Mississippian play will be a high return, low-cost liquids play that complements our Marcellus Shale play in Pennsylvania. Given our large, concentrated acreage position, the Horizontal Mississippian play has the potential to deliver outstanding returns and excellent per share growth for our shareholders for many years to come.”

Determining the core part of the play –

Range has accumulated approximately 157,000 net acres of leasehold in the eastern portion of the Horizontal Mississippian Play located primarily in Kay County, Oklahoma and Cowley County, Kansas. Essentially all of Range’s acreage is located on the Nemaha Ridge which runs primarily north/south and is approximately 15 to 20 miles wide. The Mississippian Lime formation was originally developed many years ago by drilling vertical wells. Over 4,500 older vertical wells have been drilled around and among Range’s leasehold position. Historically, the better vertical oil wells were drilled along the Nemaha Ridge. Along portions of the Nemaha Ridge, there is a Chat component in the formation which provides up to 30% to 40% porosity as compared to 3% to 5% in the Lime portion of the formation. In addition, since the Nemaha Ridge was thrusted up, Range believes that the area along the Ridge has more natural fracturing creating better permeability within the reservoir which enhances hydrocarbon flow. Historical vertical well results indicate that the eastern portion of the play, where Range’s acreage is located, is more “oily” and that the play becomes more “gassy” as it moves west. Over 90% of the historical vertical wells on the eastern side of the play have been classified as oil wells. The Mississippian play is a project that Range has been testing and evaluating methodically since 2006. We deliberately tested the play with over 100 new vertical wells of our own before we moved to horizontal development in 2009. In summary based on our evaluation to date, Range believes that portion along the Nemaha Ridge where we have focused our development will likely represent the “core” of the Horizontal Mississippian Play due to being higher structurally, a higher Chat component, a higher degree of natural fracturing and a higher proportion of oil and NGLs in the production stream.

Two new 1,000+ boe per day wells announced –

Range brought on production two additional wells with initial 24-hour production rates to sales in excess of 1,000 boe per day since the third quarter conference call – the Dakota #9-5S and the Troche #1-4N. The table below provides information on the four wells completed as part of the 2012 drilling program with peak 24-hour production rates to sales of more than 1,000 barrels of oil equivalent per day.

    Peak 24-hour rate to sales    

Well Name

Working

Interest

Liquids
%

 

Oil
(bblpd)

 

NGL
(bblpd)

 

Gas
(mcfpd)

 

Total
boepd

Lateral
length

Frac
stages

Balder #1-30N 86% 82% 782 339 1,448 1,363 3,911 19
Nancy Ann #1-1S 75% 87% 834 230 980 1,227 3,985 20
Dakota #9-5S 100% 79% 528 311 1,328 1,060 4,296 20
Troche #1-4N 75% 85% 680 224 961 1,064 3,946 20
 

The Balder and Dakota wells are approximately eleven miles apart, being on the eastern and western sides of the Nemaha Ridge with the Nancy Ann and Troche wells in between. Range believes these wells significantly de-risk this area along the Nemaha Ridge. With its greater liquids content, we estimate that with 80-acre spacing using 4,000 foot laterals, Range would expect to recover approximately 10% of the original oil in place. Currently, Range is generally drilling only one well per 640 acre section in order to hold leases and install infrastructure.

Updated Decline Curve Information –

Based on its production results to date, Range has updated its decline curves for the play. The updated production results reaffirm Range’s estimated 600 Mboe estimated ultimate recovery (“EUR”) per well for its 2012 program wells with greater than 3,500 foot laterals. Range has posted updated zero-time plots of actual production to date on its website which support the decline curves and reserve estimates. To provide more detailed information, Range has included decline curves for each product component – oil, NGLs and natural gas. Given the characteristics of a depletion drive reservoir, initial oil production rates are expected to approach 50% of production but are expected to decline faster over time than the associated natural gas and NGL production. Therefore, the decline curves are anticipated to be different for each product component which is consistent with historical results. For its acreage position, Range projects that the EUR per well will approximate one-third oil, one-third NGLs, and one-third natural gas.

Range has turned 18 wells to sales in its 2012 drilling program with an average 24-hour peak rate to sales of over 500 boe per day. Ten of those wells have been online for 30 days or more and the 30-day average rate for these ten wells is over 390 boe per day. These results are consistent with the Company’s forecasted 600 Mboe EUR type curve for these wells. The average lateral of the 18 wells turned to sales this year is approximately 3,800 feet with an average of 19 frac stages.

Based on the updated decline curves and estimated reserves of 600 Mboe, Range projects a well level rate of return of 96% based on a flat $80.00 WTI oil price and a flat $4.00 NYMEX natural gas price. This projected return is based on expected drilling and completion costs of $3.4 million per well (which includes $200,000 for water disposal infrastructure) and includes all estimated costs for gathering, pipeline and processing.

Range’s Future Plans –

Based on its current plans, Range expects to run a five-rig program in 2013, increasing to ten rigs in 2014 and 15 rigs in 2015. This multi-year rig program is projected to hold substantially all of the Range acreage currently within its lease terms. The five-rig 2013 program is expected to drill 68 wells, consisting of 51 producing wells and 17 water disposal wells. Range expects to continue testing other completion and drilling techniques to improve on the current results while varying lateral lengths and the number of frac stages during the program.

Range believes that all necessary infrastructure needed is in place to allow for the planned growth in 2013. Contracts are in place with two gathering and processing companies covering five facilities in the area with sufficient capacity for the expected growth in natural gas liquids and natural gas. Range is targeting one disposal well for each five to eight producing wells drilled. Currently, the Company believes its planned water disposal facilities will handle all of the produced water required for the 2013 program. In addition, Range is moving forward with plans to recycle produced water for fracture stimulations.

Range has posted a presentation to its website entitled “Horizontal Mississippian Update” with projected decline curves by product to show the average estimated ultimate recovery from its wells using its current well design along with zero-time production plots which support our EUR estimates from these wells. Please review the presentation on Range’s website www.rangeresources.com.

RANGE RESOURCES CORPORATION (NYSE: RRC) is a leading independent oil and natural gas producer with operations focused in Appalachia and the southwest region of the United States. The Company pursues an organic growth strategy targeting high return, low-cost projects within its large inventory of low risk, development drilling opportunities. The Company is headquartered in Fort Worth, Texas. More information about Range can be found at www.rangeresources.com and www.myrangeresources.com.

Except for historical information, statements made in this release such as expected rates of return, estimated ultimate recovery volumes, expected high returns, expected low-costs, expected per share growth, expected geological results, expected de-risking of the play, expected future spacing units, expected future decline rates, expected infrastructure availability, expected improvement in well performance, expected greater capital efficiency, expected addition of future value for shareholders, expected amount of future capital spending, expected timing, methods utilized and number of rigs related to drilling operations and expected timing of infrastructure improvements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on assumptions and estimates that management believes are reasonable based on currently available information; however, management’s assumptions and Range’s future performance are subject to a wide range of business risks and uncertainties and there is no assurance that these goals and projections can or will be met. Any number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to, the volatility of oil and gas prices, the results of hedging transactions, the costs and results of drilling and operations, the timing of production, mechanical and other inherent risks associated with oil and gas production, weather, the availability of drilling equipment, changes in interest rates, litigation, uncertainties about reserve estimates and environmental risks. Range undertakes no obligation to publicly update or revise any forward-looking statements.

Estimated ultimate recovery, or “EUR,” refers to our management’s internal estimates of per well hydrocarbon quantities that may be potentially recovered from a hypothetical future well completed as a producer in the area. These quantities do not necessarily constitute or represent reserves within the meaning of the Society of Petroleum Engineer’s Petroleum Resource Management System or the SEC’s oil and natural gas disclosure rules. Our management estimated these ultimate recoveries based on our previous operating experience in the given area and publicly available information relating to the operations of producers who are conducting operating in these areas. Actual quantities that may be ultimately recovered from Range's interests may differ substantially. Factors affecting ultimate recovery include the scope of Range's drilling program, which will be directly affected by the availability of capital, drilling and production costs, commodity prices, availability of drilling services and equipment, drilling results, lease expirations, transportation constraints, regulatory approvals, field spacing rules, recoveries of gas in place, length of horizontal laterals, actual drilling results, including geological and mechanical factors affecting recovery rates and other factors. Estimates of ultimate recoveries may change significantly as development of our resource plays provides additional data. In addition, our production forecasts and expectations for future periods are dependent upon many assumptions, including estimates of production decline rates from existing wells and the undertaking and outcome of future drilling activity, which may be affected by significant commodity price declines or drilling cost increases.

Further information on risks and uncertainties is available in Range’s filings with the Securities and Exchange Commission (“SEC”), which are incorporated by reference. Investors are urged to consider closely the disclosure in our most recent Annual Report on Form 10-K, available from our website at www.rangeresources.com or by written request to 100 Throckmorton Street, Suite 1200, Fort Worth, Texas 76102. You can also obtain this Form 10-K by calling the SEC at 1-800-SEC-0330.

Contacts

Range Resources Corporation
Investor Contacts:
Rodney Waller, 817-869-4258
Senior Vice President
or
David Amend, 817-869-4266
Investor Relations Manager
or
Laith Sando, 817-869-4267
Senior Financial Analyst
or
Michael Freeman, 817-869-4264
Financial Analyst
or
Media Contact:
Matt Pitzarella, 724-873-3224
Director of Corporate Communications

Release Summary

Range's Horizontal Mississippian 5 rig drilling program is underway. Updated production results reaffirm the 600 Mboe EUR.

Sharing

Contacts

Range Resources Corporation
Investor Contacts:
Rodney Waller, 817-869-4258
Senior Vice President
or
David Amend, 817-869-4266
Investor Relations Manager
or
Laith Sando, 817-869-4267
Senior Financial Analyst
or
Michael Freeman, 817-869-4264
Financial Analyst
or
Media Contact:
Matt Pitzarella, 724-873-3224
Director of Corporate Communications