Range Resources Increases its Marcellus Output Estimates by 25 Percent

Range Resources, the very first horizontal driller in the Marcellus Shale, is even more bullish about the Marcellus Shale now than in the past. In a press statement released today, Range says due to the longer lateral wells they now use, the average potential gas that can be harvested from each well has gone from 3 to 4 billion cubic feet to 4 to 5 billion cubic feet, a 25 percent increase. Range estimates the total gas it can realize across all of it’s current lease holdings in the Marcellus Shale is 20 to 27 trillion cubic feet. According to Range CEO John Pinkerton, Marcellus Shale play economics are “extremely attractive even in a low gas price environment.”

From the Range press statement:

FORT WORTH, TEXAS, APRIL 12, 2010...Range Resource Corporation today provided an update of its Marcellus Shale operations. Range currently owns approximately 1.3 million net acres in the Marcellus Shale play, with approximately 900,000 net acres in the “fairway” of the play. Of the fairway acreage, approximately 600,000 net acres are located in the southwest portion of the play and 300,000 net acres are located in the northeast portion. Range had previously estimated that its horizontal wells in the southwest averaged 4.4 Bcfe per well at a development cost of $3.5 million. On average, these wells have lateral lengths of about 2,500 feet and eight stage completions.

In mid-2009, Range began drilling wells in the southwest using longer laterals and more completion stages. In 2009, Range drilled 17 horizontal wells with average lateral lengths of 3,056 feet with an average completion of ten stages. Based on the results to date, Range estimates the longer lateral wells have reserves of 5.0 Bcfe with an average development cost of $4.0 million per well. The impact of the longer lateral wells is very favorable as Range believes it will be able to recover more of the gas in place with fewer wells, while generating higher rates of return. Range is continuing to evaluate longer laterals and more completion stages to determine the optimal design. Like other shale plays, Range believes the optimal lateral length and optimal number of completion stages will vary depending on different areas of the play.

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