RANGE RESOURCES CORPORATION (NYSE: RRC) announced
today that proved reserves at December 31, 2018 increased by 18%
from the prior-year to 18.1 Tcfe.
Highlights –
- Year-end 2018 PV10 value of reserves using future strip prices
was $9.9 billion
- Year-end 2018 SEC PV10 value of proved reserves was $13.2
billion, up $5.1 billion from prior year
- Proved reserves increased by 2.8 Tcfe, or 18%
- Reserve extensions, discoveries and additions were 3.1
Tcfe
- Proved developed reserves increased 1.4 Tcfe, or 17%
- Drill-bit finding cost of $0.22 per mcfe, including performance
revisions
- Future development costs for proved undeveloped reserves
estimated to be $0.40 per mcfe
- Unhedged recycle ratio over 2.5x based on future development
costs of $0.40 per mcfe
Commenting on Range’s 2018 proved reserves, Jeff
Ventura, Range’s CEO, said, “Range had another solid year of
reserve additions, with drill-bit finding costs of only $0.22 per
mcfe. The quality of reserves was highlighted by another
consecutive year of positive performance revisions, which were a
result of extending laterals and improvements from optimized
targeting and completions. Future development costs for proven
undeveloped locations are expected to be approximately $0.40 per
mcfe, which is outstanding and underpins a strong unhedged recycle
ratio of over 2.5x at current strip pricing. Range added a
record 3.1 Tcfe to proved reserves from extensions, discoveries and
additions, driven by our large inventory of low-risk, high-return
projects in the Marcellus Shale.”
“Similar to previous years, Range’s strong
reserve growth was accomplished while having less than one-third of
our offset proven undeveloped locations currently recorded for each
horizontal producing well. We believe this demonstrates our
ability to grow SEC reserves in the future as capital is allocated
to offset locations. Our economic resilience is further
demonstrated in the year-end PV10 reserve value of $9.9 billion
using futures strip pricing from year-end, which equates to
approximately $24 per share, net of approximately $3.8 billion of
debt at year end. Going forward, Range is committed to translating
well-level returns from our high-quality asset base into
corporate-level returns, including a free cash flow yield that is
competitive not only within energy, but across the broader
market.”
SUMMARY OF CHANGES IN PROVED
RESERVES |
|
(in Bcfe) |
|
|
|
Balance at
December 31, 2017 |
|
15,262 |
|
|
|
Extensions, discoveries and additions |
|
3,144 |
|
Performance revisions: |
|
PUD improved recovery |
|
154 |
|
Field performance |
|
945 |
|
Total performance revisions |
|
1099 |
|
|
|
Reclassification of PUD to unproved under SEC 5-year
rule |
|
(379 |
) |
Price revisions |
|
11 |
|
Sales of proved reserves |
|
(262 |
) |
Production |
|
(803 |
) |
|
|
Balance at December 31, 2018 |
|
18,072 |
|
|
|
During 2018, Range added 3.1 Tcfe of proved
reserves through the drill-bit, driven by 3.0 Tcfe from the
Company’s Marcellus development. The “extensions,
discoveries, and additions” amount excludes 154 Bcfe of Marcellus
reserves associated with undrilled locations that now have
increased recovery estimates as a result of longer laterals and
improved lateral targeting and completion design. This
improved recovery estimate is included in the “revision”
category. The average lateral length for proved undeveloped
locations was approximately 9,300 feet in the 2018 report with
newly added Marcellus locations incorporating an average lateral
length of approximately 10,200 feet.
Field level performance increased reserves by
945 Bcfe due to continued improvement in the well performance of
existing Marcellus producing wells and 611 Bcfe of reserves
associated with proved undeveloped locations which have re-entered
the Company’s five-year drilling program. As future
development plans are continually optimized, some previously
planned wells are not being drilled within five years from their
original booking date. Accordingly, Range removed 379 Bcfe of
proved undeveloped reserves that now fall outside the SEC mandated
five-year development window. The Company expects these
proved undeveloped reserves to be added back in future years as
field development continues, similar to the 611 Bcfe added back in
this year’s reserves. The higher SEC price for 2018 as
compared to 2017 resulted in a nominal upward pricing revision in
proved reserve volumes of 11 Bcfe. The Company sold
approximately 262 Bcfe of reserves during the year, primarily
associated with the Washington County ORRI announced in October
2018 as well as the sale of its remaining properties in the
northern Midcontinent area. The resulting corporate proved
undeveloped development cost is estimated to be $0.40 per mcfe,
based on 2018 well costs, estimated recoveries and lateral lengths,
assuming no future efficiencies.
Year-end 2018 proved reserves by volume were 67%
natural gas, 30% natural gas liquids and 3% crude oil and
condensate. Proved developed reserves represent 54% of the
Company’s reserves. The Company’s Appalachia reserves were
audited by Wright & Company, Inc. and North Louisiana reserves
were audited by Netherland, Sewell & Associates, Inc. The
audited reserve value estimates for each area were within 4% of
aggregate estimates prepared by Range’s petroleum engineering
staff.
2018 SEC and Strip Pricing:
|
|
|
2018 Year-End |
|
2017 Year-End |
|
|
|
|
|
|
|
|
|
|
|
|
|
SEC Pricing (a) |
|
Strip Pricing |
|
SEC Pricing
(b) |
|
Strip Pricing |
|
|
|
|
|
|
|
|
|
|
|
|
WTI Oil Price ($/Bbl) |
$ |
65.55 |
|
$ |
51.54 |
|
$ |
51.19 |
|
$ |
53.44 |
|
Natural Gas Price ($/Mmbtu) |
$ |
3.10 |
|
$ |
2.83 |
|
$ |
2.98 |
|
$ |
2.94 |
|
|
|
|
|
|
|
|
|
|
|
|
Proved Reserves PV-10($
billions) |
$ |
13.2 |
|
$ |
9.9 |
|
$ |
8.1 |
|
$ |
9.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) SEC
benchmark prices adjusted for energy content, quality and basis
differentials were $2.98 per Mmbtu, $25.22 per barrel of natural
gas liquids and $59.96 per barrel of crude oil, respectively.
|
|
|
(b) SEC
benchmark prices adjusted for energy content, quality and basis
differentials were $2.60 per Mmbtu, $17.84 per barrel of natural
gas liquids and $45.73 per barrel of crude oil, respectively. |
|
Summary of Changes in Proved
Reserves by Category for 2018 |
|
|
Proved Developed Reserves |
|
Proved Undeveloped Reserves |
|
Total Proved
Reserves |
|
|
(Bcfe) |
|
(Bcfe) |
|
(Bcfe) |
|
|
|
|
|
|
|
|
Proved Reserves 12/31/17 |
8,348 |
|
|
6,914 |
|
|
15,262 |
|
|
|
|
|
|
|
|
|
Extensions,
discoveries and additions |
419 |
|
|
2,725 |
|
|
3,144 |
|
|
PUDs
drilled |
1,805 |
|
|
(1,805 |
) |
|
- |
|
|
Performance
revisions |
111 |
|
|
988 |
|
|
1,099 |
|
|
5-year rule
PUDs reclassified |
- |
|
|
(379 |
) |
|
(379 |
) |
|
Pricing
revisions |
11 |
|
|
- |
|
|
11 |
|
|
Sales of
reserves |
(134 |
) |
|
(128 |
) |
|
(262 |
) |
|
Estimated production |
(803 |
) |
|
- |
|
|
(803 |
) |
|
Proved Reserves 12/31/18 |
9,757 |
|
|
8,315 |
|
|
18,072 |
|
|
|
|
|
|
|
|
|
Percent by Category
|
54 |
% |
|
46 |
% |
|
100 |
% |
|
|
|
|
|
|
|
|
Increase in Reserves by Category |
17 |
% |
|
20 |
% |
` |
18 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Disclosure Statements:
Certain selected financial information in this
release is unaudited. Audited financial results will be
provided in our Annual Report on Form 10-K for the year ended
December 31, 2018, which we plan to file with the Securities and
Exchange Commission (SEC) on February 26, 2019.
Finding and development (F&D) 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, gas gathering
facilities and non-cash stock-based compensation and divided by
proved reserve additions (extensions, discoveries and additions
shown in the table) adjusted for the changes in proved reserves for
performance, price and deferral revisions or excluding certain
costs such as acreage and acquisitions 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 reserve extensions, discoveries and
additions with the inclusion of any revisions as specified in the
stated measurement. These calculations do not include the
future development costs required for the development of proved
undeveloped reserves. The SEC method of computing finding costs
contains additional cost components and results in a higher
number. A reconciliation of the two methods will be shown on
the Company’s website at www.rangeresources.com after filing its
2018 Form 10-K.
F&D cost per unit as a statistical indicator
can have limitations, including its predictive and comparative
value. As an annual measure, F&D cost per unit does not
consider the cost or timing of future production of new reserves,
and therefore may not be an accurate predictor of future value
creation. In addition, it may not be comparable to similarly titled
measurements used by other companies.
Year-end pre-tax discounted present value is
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 future corporate 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, 2018 may be reconciled to the GAAP
financial measure of its standardized measure of discounted future
net cash flows as of December 31, 2018 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 2018 Form 10-K.
RANGE RESOURCES CORPORATION (NYSE:
RRC) is a leading U.S. independent natural gas, NGL and
oil producer with operations focused in stacked-pay projects in the
Appalachian Basin and North Louisiana. The Company pursues an
organic growth strategy targeting high return, low-cost projects
within its large inventory of low risk development drilling
opportunities. The Company is headquartered in Fort Worth, Texas.
More information about Range can be found at
www.rangeresources.com.
All statements, except for statements of
historical fact, made in this release regarding activities, events
or developments the Company expects, believes or anticipates will
or may occur in the future are forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. 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. Further information on risks and
uncertainties is available in Range's filings with the Securities
and Exchange Commission ("SEC"). Range undertakes no
obligation to publicly update or revise any forward-looking
statements.
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 as well
as the option to disclose 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,” “unrisked
resource potential,” "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 actually being 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
reserves. Area wide unproven resource potential has not been
fully risked by Range's management. “EUR,” or estimated
ultimate recovery, refers to our management’s estimates of
hydrocarbon quantities that may be recovered from a well completed
as a producer in the area. These quantities may not necessarily
constitute or represent reserves within the meaning of the Society
of Petroleum Engineer’s Petroleum Resource Management System or the
SEC’s oil and natural gas disclosure rules. Actual quantities that
may be recovered from Range's interests could 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.
In addition, our production forecasts and
expectations for future periods are dependent upon many
assumptions, including estimates of production decline rates from
existing wells and the undertaking and outcome of future drilling
activity, which may be affected by significant commodity price
declines or drilling cost increases. 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 on the
SEC’s website at www.sec.gov or by calling the SEC at
1-800-SEC-0330.
Range Investor Contacts:
Laith Sando, Vice President – Investor
Relations817-869-4267lsando@rangeresources.com
Michael Freeman, Director – Investor Relations &
Hedging817-869-4267mfreeman@rangeresources.com
John Durham, Senior Financial
Analyst817-869-1538jdurham@rangeresources.com
Range Media Contacts:
Mike Mackin, Director of External
Affairs724-743-6776mmackin@rangeresources.com
Range Resources (NYSE:RRC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Range Resources (NYSE:RRC)
Historical Stock Chart
From Apr 2023 to Apr 2024