Saturday, August 7, 2010

Range Resources RRC - Marcellus Shale Update

Range Resources (RRC) has issued an update on the Marcellus Shale in Lycoming County, PA:

Range's Marcellus Shale Division continues to exceed expectations. Current net production is approximately 160 Mmcfe per day, ahead of its mid-year target. Drilling rigs are becoming more efficient as are completions and production operations. These increased efficiencies and cost improvements are resulting in improved economics and rates of return. These efficiencies, coupled with being ahead of schedule on production volumes, are allowing us to add an additional $210 million of capital to the Marcellus project in 2010. The additional capital, in turn, will help us to accelerate the Company's net asset value of the Marcellus Shale play.

Pipeline, compression and plant processing infrastructure capacity in the Marcellus Shale is on schedule. In the southwest portion of the play, an additional 30 Mmcfe per day of capacity is scheduled to be complete in the fourth quarter of this year and an additional 150 Mmcfe per day is scheduled for first quarter 2011. This processing capacity coupled with additional dry gas taps will position Range well in 2011 and beyond for increased production in the southwest portion of the play. With regard to the northeast portion of the play, solid progress is being made on the first phase of the Lycoming County pipeline project which is scheduled to begin flowing gas on or before year end 2010. Firm take away capacity has been contracted for both the southwest and northeast areas to allow our Marcellus Shale production to flow on time and within our forecasts.

As we ramp up development in the Marcellus Shale, our technical team continues to make significant progress. Our production curves as updated and presented with zero time plots on our website illustrate continued improvements in well performance and demonstrate the progress that our technical team is making. Range previously announced an encouraging test of its first Upper Devonian Shale horizontal well. Given the Upper Devonian's prevalence across our acreage position, we are very encouraged regarding the increased unproved resource potential this well implies on our existing acreage in southwestern Pennsylvania. The Marcellus Shale team plans two additional Upper Devonian test wells in 2010. Range plans to spud another Utica Shale well early in the first quarter of 2011.

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