First quarter 2007 production volumes rose to 306 Mmcfe per day, a 19% increase over the prior-year period. This represents the highest quarterly production in Range's history. The increase is attributable to the success of the Company's multi-year drilling program. Range has now recorded 17 consecutive quarters of sequential production growth.
During the first quarter of 2007, Range sold its Austin Chalk properties and all of its Gulf of Mexico properties for a total consideration of $237 million. These sales will reduce Range's production in the future. Offsetting these divestitures, Range has acquired or is in the process of acquiring additional interests in three fields where it is active. In February, Range acquired the minority owner's interest in its northern Oklahoma shallow oil play for $30 million. Earlier this month, Range acquired the minority owner's interest in a southern Tarrant County Barnett shale field for $29 million. It was in this field that Range recently drilled a well that was placed on production at an initial rate in excess of 12 Mmcfe per day. With these two acquisitions, Range now owns 100% working interest in both fields.
Earlier Monday, Range announced that it is acquiring from Equitable Resources, Inc. additional interests in the Nora field, located in southwestern Virginia for $315 million. In this transaction, Range and Equitable are equalizing their interests in the Nora field, whereby each company will own a 50% interest in approximately 1,600 producing wells, 300,000 gross acres of leasehold and the gas gathering system. Range will retain its separate mineral and royalty interest in the Nora field that covers roughly 80% of the acreage. The Nora field transaction is anticipated to close in May after the expiration of the Hart-Scott-Rodino filing.
Reflecting the divestitures and the acquisitions noted above, Range has increased its 2007 production growth target from 15% to 16%. In addition, the Company has increased its 2007 capital expenditure budget 18% to $822 million. Of the increase, approximately 50% is associated with drilling expenditures to exploit the newly acquired interests, 35% is associated with expanding the Nora field gathering system and 15% is attributable to other fields where recent drilling results provide exceptional additional near-term opportunities. Range's 2006 year-end reserves pro forma for the 2007 divestitures and acquisitions would be 1.87 Tcf, up 6.5%.
The funding of the acquisitions and capital program will be provided by operating cash flow, proceeds from the asset sales and bank borrowings. To maintain a strong financial condition, the Company expects to complete an equity offering subject to market conditions.
With the announcement of the Nora transaction, the Company provided additional operational updates:
John Pinkerton, Range's President and CEO, said, "In addition to a terrific start to our 2007 drilling program, we have been actively high-grading our property base. The net result of the divestitures and acquisitions noted above is that we have expanded our property base with high-quality, long-life reserves, and we have materially increased our upside potential. In particular, the Nora field, which encompasses 300,000 gross acres, puts us in an excellent position to more aggressively pursue the development of a field with tremendous potential. Besides increasing reserves and lengthening the reserve life, we have improved our cost structure by reducing unit operating costs and lowering our DD&A rate. We estimate these transactions are accretive to 2007 results, but most importantly, we believe these transactions will add materially to our future performance."
Range Resources Corp. is an independent oil and gas company operating in the Southwestern, Appalachian and Gulf Coast regions of the United States.
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