Range Announces 26% Increase in Proved Reserves
Highlights –
- SEC PV10 reserve value increased by 119% to
$8.1 billion - Proved reserves increased by 3.2 Tcfe, or 26%
- Reserve extensions, discoveries and additions were a record 3.5 Tcfe
- Proved developed reserves increased 1.6 Tcfe, or 23%
- Drill-bit finding cost of
$0.31 per mcfe - Future development costs for proved undeveloped reserves are estimated to be
$0.38 per mcfe - Unhedged recycle ratio over 3x based on future development costs of
$0.38 per mcfe - Core undrilled inventory of over 3,800 Marcellus locations, assuming 10,000 foot laterals
Commenting on Range’s 2017 proved reserves,
“Looking forward, we see capital efficiency gains continuing as we drive down normalized well costs with longer laterals and drilling on existing pads, while enhancing recoveries with improved targeting and completions. Similar to previous years, this strong reserve growth reflects high quality acreage, as less than one third of our offset proven undeveloped locations are currently recorded for each horizontal producing well. We believe this will provide consistent
SUMMARY OF CHANGES IN PROVED RESERVES | |||
(in Bcfe) | |||
Balance at December 31, 2016 | 12,072 | ||
Extensions, discoveries and additions | 3,488 | ||
Purchases | 10 | ||
Performance revisions: | |||
PUD improved recovery | 597 | ||
Field performance | 531 | ||
Total performance revisions | 1,128 | ||
Reclassification of PUD to unproved under SEC 5-year rule | (668 | ) | |
Price revisions | 46 | ||
Sales of proved reserves | (81 | ) | |
Estimated production | (733 | ) | |
Balance at December 31, 2017 | 15,262 |
During 2017, Range added 3.5 Tcfe of proved reserves through the drill-bit, driven by 3.2 Tcfe from the Company’s Marcellus development. The “extensions, discoveries, and additions” amount excludes 597 Bcfe of Marcellus reserves associated with undrilled locations that now have increased recovery estimates as a result of longer laterals, better lateral targeting and increased frac stages. This improved recovery estimate is included in the “revision” category. The average lateral length for existing proved undeveloped locations increased to approximately 9,000 feet in the 2017 report from 7,162 feet in the 2016 report, while newly added proved undeveloped locations in the Marcellus incorporate an average lateral length of approximately 9,500 feet.
Field level performance increased reserves by 531 Bcfe due primarily to the continued improvement in the well performance of existing Marcellus producing wells. As a result of Range’s continued success in drilling longer laterals, the future development plan has been re-optimized resulting in some previously planned wells not being drilled within five years from their original booking date. Accordingly, Range removed 668 Bcfe of proved undeveloped reserves that now fall outside the
Year-end 2017 proved reserves by volume were 67% natural gas, 30% natural gas liquids and 3% crude oil and condensate. Proved developed reserves represent 55% of the Company’s reserves. The Company’s Appalachia reserves were audited by
2017
2017 Year-End | 2016 Year-End | |||||||||||||||||||||||||||||
SEC Pricing (a) |
Strip Pricing |
SEC Pricing (b) |
Strip Pricing |
|||||||||||||||||||||||||||
WTI Oil Price ($/Bbl) |
$ | 51.19 | $ | 53.44 | $ | 42.68 | $ | 56.49 | ||||||||||||||||||||||
Natural Gas Price ($/Mmbtu) | $ | 2.98 | $ | 2.94 | $ | 2.48 | $ | 3.14 | ||||||||||||||||||||||
Proved Reserves PV-10 ($ billions) |
$ | 8.1 | $ | 9.5 | $ | 3.7 | $ | 9.0 | ||||||||||||||||||||||
(a) SEC benchmark prices adjusted for energy content, quality and basis differentials were $2.60 per Mmbtu, $17.84 per barrel of natural gas liquids and $45.73 per barrel of crude oil, respectively. | ||||||||||||||||||||||||||||||
(b) SEC benchmark prices adjusted for energy content, quality and basis differentials were $2.07 per Mmbtu, $13.44 per barrel of natural gas liquids and $37.41 per barrel of crude oil, respectively. | ||||||||||||||||||||||||||||||
Summary of Changes in Proved Reserves by Category for 2017 |
||||||||||||||||||||||||||||||
Proved Developed Reserves |
Proved Undeveloped Reserves |
Total Proved Reserves |
||||||||||||||||||||||||||||
(Bcfe) | (Bcfe) | (Bcfe) | ||||||||||||||||||||||||||||
Proved Reserves 12/31/16 | 6,770 | 5,302 | 12,072 | |||||||||||||||||||||||||||
Extensions, discoveries and additions | 314 | 3,174 | 3,488 | |||||||||||||||||||||||||||
Purchases | 5 | 5 | 10 | |||||||||||||||||||||||||||
PUDs drilled | 1,862 | (1,862 | ) | - | ||||||||||||||||||||||||||
Performance revisions | 156 | 972 | 1,128 | |||||||||||||||||||||||||||
5-year rule PUDs reclassified | - | (668 | ) | (668 | ) | |||||||||||||||||||||||||
Pricing revisions | 46 | - | 46 | |||||||||||||||||||||||||||
Sales of reserves | (72 | ) | (9 | ) | (81 | ) | ||||||||||||||||||||||||
Estimated production | (733 | ) | - | (733 | ) | |||||||||||||||||||||||||
Proved Reserves 12/31/17 | 8,348 | 6,914 | 15,262 | |||||||||||||||||||||||||||
Percent by Category |
55 | % | 45 | % | 100 | % | ||||||||||||||||||||||||
Increase in Reserves by Category | 23 | % | 30 | % | ` | 26 | % | |||||||||||||||||||||||
Core Drilling Inventory
Range has an extensive stacked-pay acreage position in both Appalachia and North Louisiana. Range also has a network of over 200 existing well pads. These pads are designed to accommodate an average of 20 wells from any combination of the Marcellus, Utica or Upper Devonian horizons. However, most pads currently contain only 4-6 producing wells, providing Range the opportunity to drill thousands of future wells utilizing existing roads, pads and infrastructure.
The table below reflects Range’s estimate of the remaining core drilling inventory for the Marcellus and
Estimated Future Core Drilling Locations -
(Excludes Deep Utica and Upper Devonian Locations)
Area |
Net Acres |
Average Lateral Length |
Undrilled Locations |
Marcellus- SW- Liquids areas | 335,000 | 10,000 ft. | 2,700 |
Marcellus- SW-Dry area | 170,000 | 10,000 ft. | 800 |
Marcellus- NE | 90,000 | 10,000 ft. | 300 |
Lower Cotton Valley | 205,000 | 7,500 ft. | 600 |
Total | 800,000 | 4,400 |
Fourth Quarter Production
Company production in fourth quarter 2017 is expected to be 2.17 Bcfe per day, level with previous guidance. Marcellus production is expected to be 1.80 Bcfe per day, approximately 27% higher than a year ago, driven by continued outstanding results in the Marcellus, particularly in the Company’s super-rich area.
Disclosure Statements:
Certain selected financial information in this release is unaudited. Audited financial results will be provided in our Annual Report on Form 10-K for the year ended
Finding and development (F&D) cost per unit is a non-GAAP metric used in the exploration and production industry by companies, investors and analysts. The calculations presented by the Company are based on estimated and unaudited costs incurred excluding asset retirement obligations, gas gathering facilities and non-cash stock-based compensation and divided by proved reserve additions (extensions, discoveries and additions shown in the table) adjusted for the changes in proved reserves for performance, price and deferral revisions or excluding certain costs such as acreage and acquisitions as stated in each instance in the release. Drill-bit development cost per mcfe is based on estimated and unaudited drilling, development and exploration costs incurred divided by the reserve extensions, discoveries and additions with the inclusion of any revisions as specified in the stated measurement. These calculations do not include the future development costs required for the development of proved undeveloped reserves. The
F&D cost per unit as a statistical indicator can have limitations, including its predictive and comparative value. As an annual measure, F&D cost per unit does not consider the cost or timing of future production of new reserves, and therefore may not be an accurate predictor of future value creation. In addition, it may not be comparable to similarly titled measurements used by other companies.
Year-end pre-tax discounted present value is considered a non-GAAP financial measure as defined by the
This release contains certain “forward-looking statements” within the meaning of federal securities laws, including within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that are not limited to historical facts, but reflect Range’s current beliefs, expectations or intentions regarding future events. Words such as “may,” “will,” “could,” “should,” “expect,” ““plan,” “project,” “intend,” “anticipate,” “believe,” “outlook”, “estimate,” “predict,” “potential,” “pursue,” “target,” “continue,” and similar expressions are intended to identify such forward-looking statements. The statements in this presentation that are not historical statements, and any other statements regarding Range’s future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not historical facts, are forward-looking statements within the meaning of the federal securities laws.
All statements, except for statements of historical fact, made in this presentation regarding activities, events or developments the Company expects, believes or anticipates will or may occur in the future, such as those regarding future well costs, expected asset sales, well productivity, future liquidity and financial resilience, anticipated exports and related financial impact, NGL market supply and demand, improving commodity fundamentals and pricing, future capital efficiencies, future shareholder value, emerging plays, capital spending, anticipated drilling and completion activity, acreage prospectivity, expected pipeline utilization and future guidance information are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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. Further information on risks and uncertainties is available in Range's filings with the
The
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. 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
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