Range Resources Corp. has hired Bank of America Corp. to market some of its properties in the oil-rich regions of southeast New Mexico and West Texas as the company moves its focus to natural gas and liquids production in the Marcellus and Oklahoma, the company said Wednesday.
Range would follow Chesapeake Energy Corp. out of the Permian Basin region of West Texas after the sale. Fort Worth, Texas-based Range will instead focus on regions where its land holdings are of a greater scale and promise better returns, said Dahlman Rose & Co. analyst Nike Pope.
"They had nice stuff in the Permian, but it wasn't core," Mr. Pope said. "It didn't have returns to compete with their stuff in the Mississippian and Marcellus."
The sale could generate as much as $400 million
Range said the Marcellus liquids-rich area and its Horizontal Mississippian play have the highest estimated rates of return in its portfolio. Range has a combined acreage position in these two areas of about 500,000 acres providing a multi-year growth platform.
It said it will reduce dry gas drilling activity, primarily in northeastern Pennsylvania, where it will reduce its activity from four to five rigs in 2012 to one rig in 2013.
In October, Range said its third-quarter production jumped 47% from a year earlier, due to the success of the company's drilling program in the Marcellus and horizontal Mississippian oil plays.
That same month, the independent producer reported that it had swung to a third-quarter loss as hedging losses weighed on bottom-line results, though production volumes increased.
Meanwhile, Range announced Wednesday a 2013 capital expenditure budget of $1.3 billion, down nearly 19% from its 2012 budget of $1.6 billion. The reduction comes from a $200 million decrease in dry gas drilling and $100 million fall in expected leaseholding expenditures.
The new capital spending budget includes about $1.1 billion for drilling and recompletions, $100 million for leasehold and renewals, $75 million for pipelines and facilities and $25 million for seismic, Range said. The company noted that about 85% of the budget will be targeted toward liquids-rich and oil projects predominately in the Marcellus Shale centered in Pennsylvania and Horizontal Mississippian plays in Oklahoma.
Copyright (c) 2012 Dow Jones & Company, Inc.
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