UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
January 26, 2011 (January 24, 2011)
January 26, 2011 (January 24, 2011)
RANGE RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 001-12209 | 34-1312571 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 100 Throckmorton, Suite 1200 Ft. Worth, Texas |
76102 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (817) 870-2601
(Former name or former address, if changed since last report): Not applicable
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligations of the registrant under any of the following provisions (see General
Instruction A.2. below):
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| ITEM 7.01 | Regulation FD Disclosure |
On January 24, 2011 Range Resources Corporation issued a press release announcing its December
31, 2010 proved reserves. A copy of this press release is being furnished as an exhibit to this
report on Form 8-K.
In accordance with General Instruction B. 2 of Form 8-K, the information in this Current
Report on Form 8-K under this heading, including Exhibit 99.1, shall not be deemed “filed” for the
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to
the liabilities of that section, nor shall it be deemed incorporated by reference in any filing
under the Securities Act of 1933, as amended, except as shall be expressly set forth in such a
filing.
| ITEM 9.01 | Financial Statements and Exhibits |
| (d) | Exhibits: |
| 99.1 | Press Release dated January 24, 2011 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| RANGE RESOURCES CORPORATION |
||||
| By: | /s/ Roger S. Manny | |||
| Roger S. Manny | ||||
| Chief Financial Officer | ||||
Date: January 26, 2011
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EXHIBIT INDEX
| Exhibit Number | Description | |||
| 99.1 | Press Release dated January 24, 2011 |
|||
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EXHIBIT 99.1
NEWS RELEASE
RANGE’S PROVED RESERVES INCREASE 42%
RANGE’S PROVED RESERVES INCREASE 42%
FORT WORTH, TEXAS, JANUARY 24, 2011...RANGE RESOURCES CORPORATION (NYSE: RRC) announced today that
its proved reserves as of December 31, 2010 increased 42% to 4.4 Tcfe. From all sources, Range
replaced 931% of production in 2010 with 840% reserve replacement occurring through the drill bit
and positive performance revisions. Finding and development costs from all sources, including
acquisitions, acreage and all price and performance revisions, averaged $0.72 per mcfe. Excluding
positive price revisions, finding and development costs from 2010 operations averaged $0.74 per
mcfe. Drill bit development costs averaged $0.60 per mcfe.
For 2010, Range added 1,410 Bcfe of proved reserves through the drill bit and 125 Bcfe were added
through acquisitions. Positive performance revisions added 108 Bcfe, while price revisions
increased proved reserves by 40 Bcfe. During 2010, Range sold properties containing 189 Bcfe of
proved reserves, while the Company’s total production equated to 181 Bcfe. As a result, year-end
2010 proved reserves totaled 4.4 Tcfe; up 42% from the 3.1 Tcfe at year-end 2009, while proved
developed producing reserves increased 25% to approximately 2.0 Tcfe.
At year-end 2010, 80% of Range’s proved reserves by volume were natural gas as compared to 84% as
of year-end 2009. Year-end 2010 natural gas liquid reserves were 17% and crude oil reserves were
3% compared to 10% and 6%, respectively, in the prior year. The percentage of reserves in the
proved undeveloped category was 51% at year-end 2010, versus 45% at year-end 2009. The increase in
percentage of proved undeveloped reserves was due to the recording of additional proved undeveloped
reserves in the Marcellus Shale play where Range had outstanding results in 2010. At year-end 2010,
Range recorded, on average, a modest 1.9 offset Marcellus drilling locations to its proved
undeveloped reserves for each of its proved developed wells in the play. As of year-end 2010, only
6% of Range’s Marcellus acreage was classified as proved reserves. As additional Marcellus wells
are drilled in 2011 and beyond, it is expected that more of Range’s acreage will move into the
proved developed and proved undeveloped categories. Given its results to date, as well as those of
other operators, Range believes that a substantial portion of its Marcellus fairway acreage will be
classified as proved over time. With regard to other shale formations above and below the
Marcellus, Range has successfully drilled and tested one well in the Upper Devonian and one well in
the Utica formation. While these formations appear to have attractive economics, Range elected not
to record any proved undeveloped reserves associated with the Upper Devonian and Utica formation at
year-end 2010.
Given its increased focus on the Marcellus Shale play at year-end 2010, the Company removed 230
Bcfe of proved undeveloped reserves consisting primarily of its historical Pennsylvania tight gas
sand and Nora field coal bed methane locations. Although these reserves are still economic, the
Company no longer anticipates developing them within the next five years. At year-end 2010, the
Company has 40% less proved undeveloped drilling locations than at year-end 2009. However, the
average reserves per proved undeveloped drilling location increased as the mix of drilling
locations shifted toward the Marcellus Shale, which carries much higher per-well reserves. Not
only do the Marcellus Shale proved undeveloped drilling locations carry higher per-well reserves,
but their rates of return are substantially higher. As a result of these changes, at year-end
2010, 59% of the proved undeveloped reserved are located in the Marcellus Shale.
As noted above, from all sources, Range replaced 931% of production in 2010. Excluding the 40 Bcfe
of positive price revisions and 125 Bcfe of proved reserves purchased in acquisitions, reserve
replacement was 840% in 2010 drilling operations. The Company’s estimate of cash drilling and
development costs and property acquisitions incurred during 2010 including exploration expenses is
approximately $1.2 billion which is subject to year-end audit. The Company estimates that it spent
$165 million for acreage in 2010. Finding and development cost from all sources averaged $0.72 per
mcfe including price and performance revisions, or $0.74 per mcfe excluding price revisions. Drill
bit development cost (excluding price revisions and acreage cost) was $0.60 per mcfe.
In 2010, Range sold properties containing 189 Bcfe of proved reserves. The sold properties were
primarily associated with the Company’s legacy Ohio oil and gas properties. These properties
included 3,300 producing and non-producing wells.
The current Securities and Exchange Commission (“SEC”) rules implemented at year-end 2009 require
that the reserve calculations be based on the average prices throughout the calendar year. For the
year-end 2010 reserve evaluation, the benchmark prices were $4.38 per Mmbtu for natural gas and
$79.81 per barrel for crude oil, representing the simple average of the prices for the first day
for each month of 2010. Comparative pricing for year-end 2009 were $3.87 per Mmbtu for natural gas
and $60.85 per barrel for crude oil (Cushing). Based on these prices adjusted for energy content,
quality and basis differentials ($3.70 per Mmbtu, $39.14 per barrel of natural gas liquids and
$72.51 per barrel of crude oil, respectively), the pre-tax discounted (10%) present value of the
Company’s proved reserves was $4.6 billion for 2010 compared to $2.6 billion at year-end 2009.
Repricing the year-end 2010 reserves using the 10-year futures strip prices at December 31, 2010
(averaging $5.68 per Mmbtu and $93.69 per barrel with similar adjustments), would have resulted in
a pre-tax discounted present value of $7.0 billion.
Commenting, John H. Pinkerton, Range’s Chairman and CEO, said, “Our 42% increase in proved
reserves, 931% production replacement and $0.72 all-in finding cost is a direct reflection of Range
owning a very large acreage position in the Marcellus Shale — a giant field that has
industry-leading economics. The above results were achieved despite selling 189 Bcfe of reserves
and removing 230 Bcfe of undeveloped reserves that we no longer expect to drill within the next
five years. Additionally, we took a modest position by recording, on average, less than two offset
drilling locations in the Marcellus for each existing well and no undeveloped reserves were
included for the Upper Devonian and Utica formations.
With the 2010 results now in hand, we have achieved double-digit growth in production and reserves
per-share, on a debt-adjusted basis for five consecutive years. Given our Marcellus Shale
position, where much of our acreage has now been de-risked, coupled with our other projects in the
Nora field in Virginia, Midcontinent and Permian Basin, we have more than 1.4 million acres that
hold tremendous resource potential. As a result, we are extraordinarily well-positioned to
continue to achieve double-digit, per-share growth at low cost for years to come.”
| SUMMARY OF CHANGES IN PROVED RESERVES | ||||
| (in Mmcfe) | ||||
Balance at December 31, 2009 |
3,129 | |||
Extensions, discoveries and additions |
1,410 | |||
Purchases |
125 | |||
Performance revisions |
108 | |||
Price revisions |
40 | |||
Sales |
(189 | ) | ||
Production |
(181 | ) | ||
Balance at December 31, 2010 |
4,442 | |||
Based on the year-end proved reserves, Range does not expect to record any impairment of its proved
properties. However, the Company’s current analysis indicates that $23 to $26 million of non-cash
unproved leasehold impairments and $5.0 million for certain water disposal facility arrangements
will be recognized due to lease expirations and acreage that the Company believes will not be
developed due to high-grading of its drilling inventory and for waste water disposal facility
arrangements which have become unnecessary.
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 December 31, 2010 currently
planned to be filed with Securities and Exchange Commission by the end of February or early March
2011.
Disclosure Statements:
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,
proved reserves added by performance and the increase in reserves due to changes in prices as shown
in the table.
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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. This calculation does 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,
since 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 SEC. We believe that the presentation of pre-tax discounted present value is relevant and
useful to our investors because it presents the discounted future net cash flows attributable to
our proved reserves prior to taking into account corporate future income taxes and our current tax
structure. We further believe investors and creditors use pre-tax discounted present value as a
basis for comparison of the relative size and value of our reserves as compared with other
companies. Range’s pre-tax discounted present value as of December 31, 2010 may be reconciled to
its standardized measure of discounted future net cash flows as of December 31, 2010 by reducing
Range’s pre-tax discounted present value by the discounted future income taxes associated with such
reserves. This reconciliation will be included in the Company’s Form 10-K.
RANGE RESOURCES CORPORATION is an independent gas and oil company operating in the Southwestern and
Appalachian regions of the United States.
The Company has updated its most recent presentation on its website for the changes
announced in this press release. In addition, the Company has posted on its website,
www.rangeresources.com, a new video in its Video Operational Update Series covering a discussion of
its proved reserves for year-end 2010 by Alan Farquharson, Senior Vice President — Reservoir
Engineering. The video is expected to be available for at least the next 60 days. Click here
http://dl.dropbox.com/u/9774701/RR_1_17_11_Ver5.wmv
to access the video.
Except for historical information, statements made in this release such as per share exposure,
unproved resource potential and those relating to expected leasehold impairment, expected water
facility impairments, and finding and development costs in 2010 that are still subject to audit,
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 and environmental risks. 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 Securities and Exchange Commission (“SEC”),
which are incorporated by reference.
The “SEC” permits oil and gas companies, in filings made with the SEC, to disclose proved reserves,
which are estimates that geological and engineering data demonstrate with reasonable certainty to
be recoverable in future years from known reservoirs under existing economic and operating
conditions. Beginning with year-end reserves for 2009, the SEC permits the optional disclosure of
probable and possible reserves. Range has elected not to disclose the Company’s probable and
possible reserves in its filings with the SEC. Range uses certain broader terms such as “resource
potential,” or “unproved resource potential” or “upside” or other descriptions of volumes of
resources potentially recoverable through additional drilling or recovery techniques that may
include probable and possible reserves as defined by the SEC’s guidelines. Range has not attempted
to distinguish probable and possible reserves from these broader classifications. The SEC’s rules
prohibit us from including in filings with the SEC these broader classifications of reserves.
These estimates are by their nature more speculative than estimates of proved, probable and
possible reserves and accordingly are subject to substantially greater risk of being actually
realized. Unproved resource potential refers to Range’s internal estimates of hydrocarbon
quantities that may be potentially discovered through exploratory drilling or recovered with
additional drilling or recovery techniques and have not been reviewed by independent engineers.
Unproved resource potential does not constitute reserves within the meaning of the Society of
Petroleum Engineer’s Petroleum Resource Management System and does not include proved
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reserves. Area wide unproven, unrisked resource potential has not been fully risked by Range’s
management. Actual quantities that may be ultimately recovered from Range’s interests will 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 resource potential may
change significantly as development of our resource plays provides additional data. 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.
2011-2
Contact: |
Rodney Waller, Senior Vice President | |
| David Amend, Investor Relations Manager | ||
| Laith Sando, Senior Financial Analyst | ||
| Karen Giles, Corporate Communications Manager | ||
| (817) 870-2601 | ||
| www.rangeresources.com |
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