Range Resources' Drilling Success - Analyst Blog
March 15 2012 - 11:30AM
Zacks
With the completion of drilling at the Smith 2 and Albrecht 1
wells, Range Resources Corp. (RRC) witnessed
operational success at the North Chapman Ranch Field, onshore
Texas.
Range Resources, which holds approximate 20% to 25% interest in
the prospect, drilled the Smith 2 well about 1,350 feet southeast
of the Smith 1 discovery well. Soon after, moving more toward the
southeast of Smith 2 (almost 1,500 feet), the Albrecht 1 was
drilled that confirmed traces of the Howell Hight reservoir. The
exploration of these wells expanded Range’s Proved Reserves in the
region.
The Smith 2 well’s initial flow rates, coming from the uppermost
pay zone, touched more than 3 million cubic feet of gas and 125
barrels of oil. The company stated that this is one of four
principle pay zones in the well.
Range Resources plans to carry on work to eradicate all the
plugs below the upper pay zone and join the lower pay zones. This
will enable the well to accomplish maximum rate and recovery.
Following the drilling of four wells in the field, management
expects that more than 80% of the structural closure at the Howell
Hight reservoir will come under the proved and probable (2P)
category.
Although Range Resources is currently evaluating the reserve
potential of the North Chapman Ranch, it will provide the final
figure upon the start-up of the Albrecht 1 well. This well is
slated to be completed and fracture stimulated within the next four
to six weeks.
Net production and cash flow from the project is expected to
improve by more than 200% from the current levels, once the Smith 2
and Albrecht 1 wells come online.
We are maintaining a long-term Neutral recommendation on Range
Resources, reflecting its well-diversified asset portfolio,
impressive cost structure and high production growth target. These
positives are somewhat shadowed by the volatile natural gas prices,
inflationary industry situations and operational disturbances.
Range Resources, which competes with EQT
Corporation (EQT), SM Energy
Company (SM) and Ultra Petroleum
Corp. (UPL), holds a Zacks #3 Rank that translates
into a Hold rating for a period of one to three months.
EQT CORP (EQT): Free Stock Analysis Report
RANGE RESOURCES (RRC): Free Stock Analysis Report
SM ENERGY CO (SM): Free Stock Analysis Report
ULTRA PETRO CP (UPL): Free Stock Analysis Report
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