Friday, February 26, 2010
RANGE RESOURCES 2009 ANUUAL REPORT--GREAT #'S
RanRange resources released their 2009 Annual Report today and conducted a conference call for financial analysts this afternoon. This call can be listened to by calling 877-407-0778. Give account # 286 and conference ID # 345409.Range reported a loss for 2009 mainly because of low gas prices, but also for write- offs of expired and 'permanently impaired' leaseholds. This is despite increasing production 13% in 2009 and lowering unit operating costs. They announced the promising results from thier 1st 2 horizontal wells in NE PA, in Lycoming County: 13.4 Mmcfe average over the 1st 7 days for both wells, which are 10 miles apart. Wells were capped until pipeline is available later this year and next.Range now puts the EUR (estimated ultimate recovery) from the 40 Marcellus wells already completed mainly in Washington County at 4.4Bcfe.Range had 16 rigs in the Marcellus at the end of 2009 and plans to have 24 rigs by the end of 2010. Low gas prices will also be a challenge in 2010. They expect to ramp up production from PA from the current 115 Mmcfe to 200 by the end of 2010 and 400 by the end of 2011. They estimate production growth of 12% in 2010 and 25% in 2011.Range CEO Pinkerton was asked whether he would take a JV deal like Anadarko did with Mitsui for $14,000/acre. Pinketon said that Range would demand more than $14,000 for the 900,000 acres they hold in the "Marcellus Fairway". These 900,000 prime acres in the 'Fairway' are more than the combined acreage of XTO, Devon and Chesapeake. Pinkerton said that Range would prefer to keep all this acreage to itself and develop it systematically for the benefit of Range stockholders, if they can, rather than JV partners. But where their leases are expiring, they may throw this acreage in to the drilling units of other companies already operating in the area.Range gave the same figure of 900,000 acres in the Marcellus Fairway a year ago, even though they have spent more than $100 million in 2009 on land acquisition. So they have obviously lost some of that acreage to expiration. Range plans to spend $190 million in 2010 for land acquisition, mainly to fill out their blocks, or large units where they are already drilling.Range plans to drill longer laterals in 2010.Exploratory wells have recently been completed in SW PA on the Upper Devonian shales lying above the Marcellus, and the Utica shale lying below the Marcellus. Results so far are "encouraging" but no more detail was given.Range will be ramping up production on their NE PA acreage in 2010 but will continue to concentrate on SW PA where the infrastructure and pipelines are already in place. In answer to a question about Cabot's recent announcement about the Purcell Limestone, Range said thay have found something similar in SW PA, namely the Tully limestone between the Marcellus and the Upper Devonian shales.