Range Resources Continues to Expand Barnett Shale Position
Range Resources is continuing to expand its Barnett Shale holdings in the Fort Worth Basin. Range has entered into definitive agreements with a subsidiary of DTE Energy and a private company to acquire producing and non-producing Barnett Shale properties for $305 million. The transaction is expected to close in January 2008, at which time Range will assume operation of the properties.
The properties comprise approximately 14,000 net acres located in Tarrant, Denton, Johnson, Ellis, Parker and Hill counties, 73% of which is held by production. Current production is 14 Mmcfe per day, which is expected to increase to approximately 18 Mmcfe per day in the first quarter of 2008 as several newly drilled wells are in the process of being placed on production. The properties currently contain 51 producing wells and Range has identified 183 drilling locations. Range estimates proven and unproven reserves attributable to the properties of 334 Bcfe. Range intends to initially finance the purchase by drawing under its bank credit facility. Range has identified several non-core properties from its existing property base that it plans to sell in 2008 to help fund acquisitions. Production from the acquired properties is expected to offset production lost through these property sales.
In addition to the acquisition, the Company provided an update on recent operational developments. In the Fort Worth Basin, drilling continues to generate excellent results. Most notable, two recently drilled wells in northeastern Johnson County were placed on production at initial rates of 7.6 and 6.1 Mmcfe per day. In the Pennsylvania Marcellus Shale play, Range's horizontal program continues to achieve encouraging results. At the end of the third quarter, two wells had been placed online at rates of 1.4 and 3.2 Mmcfe per day. Since then, three additional horizontal wells have been drilled, completed and tested at initial rates of 3.7, 4.3 and 4.7 Mmcfe per day. In addition, Range's technical team is continuing to make solid progress in refining its drilling and completion technologies and reducing well costs. Recently five vertical shale wells were drilled and completed at an average cost of less than $850,000 per well. In the Nora field, Range and partner Equitable Resources have drilled and completed the first horizontal Devonian Shale well ever drilled in the State of Virginia. The well is located in Dickenson County where Range holds interest in approximately 250,000 gross acres. The Nora field is located just southeast of the Big Sandy field, where several successful horizontal shale wells have recently been drilled by third parties. Range's well was drilled to a measured depth of 8,150 feet including a 3,000-foot horizontal interval at a cost of approximately $1.2 million. The well recently went on to production at an initial rate of 1.1 Mmcfe per day. Due to the success of the drilling program, Range's fourth quarter production will exceed the high end of its previous guidance, which was 333 to 335 Mmcfe per day.
Commenting on the announcement, John Pinkerton, Range's President and CEO said, "Upon the closing of this transaction, Range's position in the Barnett Shale will expand to 104,000 net acres and production will increase to over 90 Mmcfe per day. Many of the properties to be acquired are in proximity to our existing leasehold position and therefore we have a high degree of confidence in their productivity. Similar to the $237 million of property sales completed in 2007, the divestitures contemplated for 2008 should serve to high grade our asset base and help fund capital expenditures. Importantly, with strong fourth quarter production growth, exceptional drilling results and the additional Barnett Shale properties to be acquired, Range is closing 2007 with considerable momentum. We are looking to 2008 with great anticipation."
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