Range announced that under the Beach Marcelle Incremental Production Service Contract ("IPSC"), its wholly owned subsidiary Los Bajos Oil Limited has with Petrotrin established P1 reserves of 12.8 million barrels of oil based on extensive independent engineering studies of its mature oil fields in Trinidad. It should be noted that under the IPSC, in ground reserves belong to Petrotrin. The reserves are then able to be economically developed and exploited by the Contract partner pursuant to an agreed work program.
This increase in reserves follows the recently completed engineering studies of secondary recovery potential in the Company's Beach Marcelle Block. Range, through its wholly owned subsidiary Los Bajos Oil Limited will seek all necessary approvals to commence development in early 2012 and commit to a $12MM development program over the next 12-18 months.
The engineering review, performed by the Company's Dallas-based reserve auditor Forrest A. Garb & Associates ("Forrest Garb"), confirmed that significant volumes of crude remain in the Beach Marcelle field that are expected to be recoverable using standard secondary recovery techniques such as water flooding. The water flood program has been engineered to produce approximately 1m to 1.5m barrels per year for the first 8 years following initial production and has an attributable valuation of approximately US $290MM (PV10) as determined by Forest Garb taking into account all relevant project economics (capital and operating expenditure, production taxes and royalties, and a US $85 per barrel WTI crude oil price).
Range Resources Managing Director Peter Landau commented, "we are extremely delighted with the addition of around 13 million barrels of recoverable oil to the Trinidad Project. Adding 1 - 1.5MM barrels per year of production for the first 8 years, whilst not impacting on our other production and exploration initiatives already in place is a significant boost to the Range portfolio.
The development program to bring these reserves into production will be a key near term focus for Range. This Project will result in the creation of significant local work opportunities and skills development."
"It should also be noted that these new proven (P1) reserves are in addition to the previously reported P1-P3 reserves and Prospective Resources inventory that Range currently holds on its Trinidad assets, hence the enormous significance and value that these reserves on the Beach Marcelle Block represent".
Texas - North Chapman Ranch
Range and its partners are drilling ahead at approximately 12,700 ft. in the Smith #2 well in North Chapman Ranch, after successfully setting intermediate casing at 11,300 ft. Prior to reaching casing point, two zones of interest were identified that may be tested at a later date. TD for the well is 14,000 ft. If successful the Smith #2 well would increase Proved Reserves, production, and cash flow from the field.
In addition to the Smith #2 well, site preparation is underway at the Albrecht #1 well location. The Albrecht well is intended to more fully appraise the North Chapman Ranch field, while testing additional, shallower objectives. The well is expected to spud immediately after operations have been completed on the Smith #2 well.
Texas - East Texas Cotton Valley
In the Company's East Texas Cotton Valley prospect, testing continues on the Ross 3H horizontal well, as individual zones are perforated and swabbed in to check fluid content prior to any hydraulic fracturing. The Ross 3H well was drilled to a total measured depth of 8,500 ft. and showed good evidence of reservoir quality rock and oil saturation while drilling.
Joint venture operator Horn Petroleum continues with significant set up operations for the initial well in the proposed two well program in Puntland and remains on track for spudding later this year.
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