TEXAS RNS..
Range Resources LTD
Texas Reserves Upgrade
8 June 2012
The Manager
Company Announcements
Australian Securities Exchange Limited
Level 6, 20 Bridge Street
Sydney NSW 2000
By e-lodgement
TEXAS RESERVES UPGRADE
Highlights
- Range's net attributable interest * in Proved Reserves increase
by 54-57%
- Range's net attributable interest * in Probable Reserves
increased by 16-20%
* net of government and overriding royalties
Range Resources Limited ("Range" or "the Company") is pleased to announce a
significant increase in Proved (P1) and Probable (P2), reserves for the North
Chapman Ranch Project, in which Range holds a 20-25% interest.
The Company engaged leading Independent Petroleum Consultants
Forrest A. Garb and Associates ("Forrest Garb") to complete a review of the
North Chapman Ranch reserves following the successful completion of the Smith
#2 and Albrecht wells that has seen a significant reclassification of the
previous Possible (P3) reserves into the Proved (P1) and Probable (P2)
categories.
Set out below is a comparison of the gross reserves (100% basis)
for the Company's North Chapman Ranch asset between the previous reserve
update in December 2011 and the current gross reserves update for June 2012.
Category Oil Natural Gas Natural Gas Liquids
(MMbbls) (Bcf) (MMBbls)
Dec Jun %age Dec Jun %age Dec Jun %age
`11 `12 Mvmt `11 `12 Mvmt `11 `12 Mvmt
Proved (P1) 5.1 8.4 +64% 64.3 106.0 +65% 5.0 8.0 +60%
Probable (P2) 3.7 4.4 +19% 48.6 56.7 +17% 3.8 4.4 +16%
Possible (P3) 9.9 5.0 -50% 129.6 64.8 -50% 10.1 5.1 -50%
Total Reserves 18.7 17.8 242.5 227.5 18.9 17.5
Set out below is the comparison between June 2012 and December 2011
of Range's attributable interest in the net reserves on the Company's North
Chapman Ranch asset which is net of government and overriding royalties and
represents Range's economic interests in its development and production assets
as classified in the report from Forest Garb.
Category Oil Natural Gas Natural Gas Liquids
(MMbbls) (Bcf) (MMBbls)
Dec Jun %age Dec Jun %age Dec Jun %age
`11 `12 Mvmt `11 `12 Mvmt `11 `12 Mvmt
Proved (P1) 0.7 1.1 +57% 7.6 11.7 +54% 0.7 1.1 +57%
Probable (P2) 0.5 0.6 +20% 5.5 6.4 +16% 0.5 0.6 +16%
Possible (P3) 1.3 0.7 -46% 14.6 7.3 -50% 1.3 0.7 -46%
Total Reserves 2.5 2.4 27.7 25.4 2.5 2.4
Based on the reserve numbers cited above, Forrest Garb's estimated
net undiscounted cash flow value to Range for Proved (P1), Probable (P2) and
Possible (P3), along with discounted cash flow (at a 10% discount rate)
valuation based on the Nymex forward strip prices reported on 7 March 2012
following reductions for royalties, opex, capex, production taxes etc is as
follows:
Nymex Forward Strip Nymex Forward Strip
Price at Price at
1 October 2011 7 March 2012
Category Undiscounted PV10 Undiscounted PV10
US$'m US$'m US$'m US$'m
Proved (P1) 116 67 165 93
Probable (P2) 86 43 89 39
Possible (P3) 246 95 102 37
Total 448 205 356 169
The Company notes that the valuation of the Company's interest in the Proved
and Probable Reserves has not increased to the same extent of the actual
percentage increase in physical volumes, which is primarily related to the
significant reduction in the futures gas price since the previous report.
With the drilling of the Smith #2 and Albrecht #1 wells, gross current average
production from the field increased to approximately 4.5 MMcfd and 394 Bopd.
With the field having now been largely appraised and value demonstrated, the
Company has commenced with the sale of its North Chapman Ranch interests
targeting completion in Q3 2012 so that it can focus its capital on higher
value adding opportunities in its portfolio. Any such divestiture decision
will be based on market conditions and the ability to achieve a sales price
that appropriately reflects the value of the project interest.
East Texas Cotton Valley
Work also continues in the Company's East Texas Cotton Valley project area,
where additional sections of the Ross 3H horizontal well were recently
fracture stimulated and are currently unloading frac fluids. With
approximately 5000 barrels of load left to recover, the well has already
yielded early indications of oil saturation, consistent with strong oil shows
recorded during drilling.
If successful, the Ross 3H well is expected to form the basis of a new
horizontal development of the shallow oil reservoir within the Cotton Valley
formation. The project is considered to be analogous to the neighbouring
Clarksville Field, which is expected to ultimately produce more than 7 million
barrels of oil.
Added Peter Landau, Range's Executive Director, "We are extremely pleased with
the recent results from our Texas drilling programs, which has confirmed what
the Company had strived to do in increasing shareholder value through the
increase in the Company's share of Proved and Probable reserves from the North
Chapman Ranch Project. This now paves the way for the Company to commence
divestment of the Company's interest in the project during Q3 2012. The sales
prices of similar production assets in the region have been encouraging, and
any such divestment will provide significant funding that could be applied to
Range's current activities and other possible corporate initiatives such as an
on market share buy back."
The Company looks forward to providing operational updates for Trinidad and
Colombia next week.
Yours faithfully
Peter Landau
Executive Director
