Range Proved Reserves Increase 26% to 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,
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
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
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.
At year-end 2014, the Company added 74 Mmbbl of incremental ethane reserves as proved NGL reserves in the
During the year, the Company exchanged 217 Bcfe of proved reserves associated with the Permian Conger properties for 263 Bcfe of proved reserves in Nora plus
Year-end 2014 proved reserves by volume were 67% natural gas, 30% natural gas liquids and 3% crude oil and condensate. Importantly, proved developed producing reserves increased 876 Bcfe, or 22% year-over-year and now represents 47% of Range's total reserves at year-end 2014. Proved developed reserves increased 1,157 Bcfe, or 28% year-over-year and represents 52% of Range's total reserves at year-end 2014, a 1% increase compared to year-end 2013. Correspondingly, the percentage of reserves in the proved undeveloped category at year-end 2014 was 48%, a decrease of 1% from year-end 2013. With our large Marcellus acreage position, Range recorded, on average, a modest 0.64 offset Marcellus drilling locations as proved undeveloped reserves for each of its proved developed producing wells in the play at year-end 2014.
Disclosure Statements:
The information in this release is unaudited and subject to revision. Audited and final results will be provided in our Annual Report on Form 10-K for the year ended
Range has disclosed two primary metrics in this release to measure our ability to establish a long-term trend of adding reserves at a reasonable cost -- a reserve replacement ratio and finding and development cost per unit. The reserve replacement ratio is an indicator of our ability to replace annual production volumes and grow our reserves. It is important to economically find and develop new reserves that will offset produced volumes and provide for future production given the inherent decline of hydrocarbon reserves as they are produced. We believe the ability to develop a competitive advantage over other natural gas and oil companies is dependent on adding reserves in our core areas at lower costs than our competition. The reserve replacement ratio is calculated by dividing production for the year into the total of proved extensions, discoveries and additions and proved reserves added by performance as shown in the table.
Finding and development 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 and divided by proved reserve additions (extensions, discoveries and additions shown in the table) adjusted for the changes in proved reserves for acreage, acquisitions, performance revisions and/or price revisions 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 total of reserve additions and performance revisions. These calculations do not include the future development costs required for the development of proved undeveloped reserves.
The reserve replacement ratio and finding and development cost per unit are statistical indicators that have limitations, including their predictive and comparative value. As an annual measure, the reserve replacement ratio can be limited because it may vary widely based on the extent and timing of new discoveries and the varying effects of changes in prices and well performance. In addition, because the reserve replacement ratio and finding and development cost per unit do not consider the cost or timing of future production of new reserves, such measures may not be an adequate measure of value creation. These reserves metrics may not be comparable to similarly titled measurements used by other companies.
Year-end pre-tax discounted present value may be considered a non-GAAP financial measure as defined by the
All statements, except for statements of historical fact, made in this release, including those relating to finding and development costs in 2014 that are still subject to audit, expected future growth of production and reserves per share, de-risked acreage, future additions of proved undeveloped reserves, expected size and scale, embedded growth, expected rates of return and future expectation of low costs 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 our 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, environmental risks and regulatory changes. Range undertakes no obligation to publicly update or revise any forward-looking statements. Further information on risks and uncertainties is available in Range's filings with the
The
Range Investor Contacts:
Senior Vice President
817-869-4258
rwaller@rangeresources.com
Investor Relations Manager
817-869-4266
damend@rangeresources.com
Research Manager
817-869-4267
lsando@rangeresources.com
Senior Financial Analyst
817-869-4264
mfreeman@rangeresources.com
or
Range Media Contact:
Director of Corporate Communications
724-873-3224
mpitzarella@rangeresources.com
www.rangeresources.com
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