|RANGE RESOURCES CORP filed this Form 8-K on 02/23/2017|
RANGE REPORTS 2016 EARNINGS, ANNOUNCES 2017 CAPITAL PLANS
FORT WORTH, TEXAS, FEBRUARY 22, 2017…RANGE RESOURCES CORPORATION (NYSE: RRC) today announced its 2016 financial results and 2017 capital spending plan.
Commenting, Jeff Ventura, the Company’s CEO said, “2016 was a significant year for Range, as we completed the acquisition of Memorial Resource Development in September, providing Range operational and geographic diversity with wells that rival our prolific Marcellus wells. In addition, we are beginning to see the advantages of a diversified marketing portfolio, as prices are expected to improve for all products in 2017, driving higher margins and a peer-leading recycle ratio. Higher expected margins and cash flow provide us the opportunity to increase our capital budget to $1.15 billion in 2017, after two consecutive years of declining capital spending. This increased activity in 2017 results in solid growth this year, but also positions us well for 2018 and beyond. With thousands of future locations in our core inventory and talented operational, technical and marketing teams, Range is well-positioned to drive shareholder value for years to come.”
Capital Spending Plans
Range has set its 2017 capital spending budget at $1.15 billion. Approximately two-thirds of the capital budget will be allocated to the Marcellus and one-third to North Louisiana. The budget includes projected service cost increases in 2017, which are expected to be minimal in the Company’s areas of operation. In the Marcellus, approximately 80% of activity will be directed towards liquids-rich drilling, which has a number of advantages. Range’s liquids-rich acreage has an extensive inventory of existing pads that reduce capital costs and gathering expense. The acreage is also in close proximity to capacity for both existing and expected NGL and natural gas takeaway projects, improving netback pricing. Lastly, recent improvements in NGL pricing has bolstered expected drilling returns. Despite shifting capital towards the liquids-rich area, the Company still expects production of approximately 2.07 Bcfe per day in 2017, which equates to absolute growth of 33% to 35% year-over-year. Capital spending in 2017 will also contribute towards production growth of approximately 20% in 2018, expected to be at or near cash flow, assuming a natural gas price of $3.25 per mcf and an oil price of $60.00 per barrel.
The 2017 capital budget includes approximately $1.07 billion for drilling and recompletions (93% of the total), $44 million for leasehold, $22 million for seismic, and $18 million for pipelines, facilities and other. The budget includes 118 wells expected to be brought on line during the year in the Marcellus and 56 wells in North Louisiana. In the Marcellus, approximately one third of the wells are planned to be drilled from existing pads in 2017.
Fourth quarter 2016 drilling expenditures of $195 million funded the drilling of 22 (18.9 net) wells. Drilling expenditures for the year totaled $535 million, and Range drilled 108 (101.9 net) wells during the year. A 100% success rate was achieved. In addition, during 2016, $33 million was spent on acreage purchases, $4 million on gas gathering systems and $30 million on exploration expense. The capital expenditure amounts include North Louisiana expenditures incurred since closing of the merger on September 16, 2016. Drill-bit only finding cost averaged $0.34 per mcfe, including pricing and performance revisions with a reserve replacement ratio of 292%.