Range Completes 56 New PA Marcellus Wells in Q311

Range Resources, one of the largest drillers in the Marcellus Shale, reports in its third quarter operations update that the company is on track to produce 400 million cubic feet of shale gas per day from its Marcellus Shale gas wells. During the third quarter, Range drilled 56 new wells in the Marcellus region of PA with a total of 229 producing wells across the state, most of them in the southwest part of the state.

From the Range quarterly operations update:

Significant progress was made on multiple fronts in the Marcellus Shale and the division is solidly on track to reach the 2011 year-end production target of 400 Mmcfe per day net to Range. Currently, total production from the Marcellus Shale is running approximately 350 Mmcfe per day net to Range. In southwest Pennsylvania, Range drilled 42 wells during the third quarter. During the quarter, a total of 28 wells were turned to sales bringing the total horizontal Marcellus wells producing in the southwest to 214 wells. At the end of the third quarter, there were 12 wells waiting on pipeline and 74 wells waiting on completion in the southwest. In northeast Pennsylvania, Range drilled 14 wells during the third quarter. A total of 10 wells were turned to sales during the third quarter. At quarter-end, there were 15 wells on production in the northeast with 11 wells waiting on pipeline and 22 wells waiting on completion.

In addition to the operational progress in the Marcellus, Range made substantial progress during the quarter regarding infrastructure build-out and marketing arrangements. Below are the key accomplishments achieved during the third quarter.

• During the third quarter an additional 40 Mmcf per day of fully dedicated cryogenic gas processing capacity was brought on line increasing Range’s total dedicated processing capacity to 390 Mmcf per day. In addition to the committed capacity, Range currently has access to approximately 100 Mmcf per day of interruptible processing capacity.
• Phase I of the Lycoming trunkline system in northeast Pennsylvania was completed and Phase II is expected to be completed by the end of 2011. Additional phases are planned to be constructed for Range operated properties to complete Range’s expected development in Lycoming County. The trunkline will give 350 Mmcf per day of capacity flowing into the Transco system moving gas into and out of the Leidy storage complex.
• Range accomplished a key element in the development of its liquid-rich Marcellus play by signing its first ethane sales contract. The contract with NOVA Chemicals Corporation was signed at the conclusion of the binding open season of the Mariner West Project. The project was the culmination of years of planning and will insure that Range can continue accelerating its Marcellus Shale development plans. The first sales under the contract are targeted to occur in late 2013. Anticipating Range’s ethane production growth, numerous petrochemical companies, both domestic and international, have approached the Company as potential customers.
• Late in the third quarter, Range began receiving an incremental NGL pricing uplift when the C3+ fractionation facility was completed at the gas processing facility located in Houston, Pennsylvania. This complex allows for the production of 60,000 barrels per day of purity propane, butane, and natural gasoline for sale into the premium Northeast markets. As a result, Range’s realizations should improve since the liquids will no longer be required to be trucked or railed offsite to be fractionated. Commencing in early November, Range expects that the railroad siding at the Houston, Pennsylvania plant will be fully operational allowing for the direct rail shipment of purity NGL products to customers. With the start-up of the rail facilities, Range will be able to fully realize the expected uplift in incremental NGL pricing of $12 to $15 million annually by the elimination of all intermediate transportation charges before freight cost to the customers.
• Basis during the third quarter in the southwest area of the Marcellus continued to be in the flat to positive $0.08 per mcf range above the NYMEX Henry Hub index price depending on bid week quotes and daily swing gas spot markets. In the northeast along the Transco-Leidy transmission system, basis during the third quarter continued in the positive $0.10 to $0.15 per mcf above the NYMEX Henry Hub index price depending on bid week quotes and daily swing gas spot markets. Currently Range has commitments in the southwest portion of the Marcellus for over 420 Mmcf per day to transport natural gas to markets either with Range-owned firm transportation or firm sales arrangements with customers which hold firm transportation. Transportation commitments in the southwest are planned to increase to 550 Mmcf per day during 2012 to accommodate the expected increased production from that region. In the northeast Marcellus along the Transco-Leidy transmission line, Range currently has commitments of 80 Mmcf per day increasing to 100 Mmcf per day during 2012 in the form of firm sales arrangements with customers owning existing firm transportation on Transco and storage at Leidy. Range believes that our existing firm sales arrangements both in the southwest and the northeast can be further increased as it demonstrates that additional production volumes are available.*

*Range Resources (Oct 18, 2011) – Range Provides Operations Update