Texas Reserves Upgrade
8 June 2012
The Manager
Company Announcements
Australian Securities Exchange Limited
Level 6, 20 Bridge Street
Sydney NSW 2000
By e-lodgement
TEXAS RESERVES UPGRADE
Highlights
- Range's net attributable interest * in Proved Reserves increase
by 54-57%
- Range's net attributable interest * in Probable Reserves
increased by 16-20%
* net of government and overriding royalties
Range Resources Limited ("Range" or "the Company") is pleased to announce a
significant increase in Proved (P1) and Probable (P2), reserves for the North
Chapman Ranch Project, in which Range holds a 20-25% interest.
The Company engaged leading Independent Petroleum Consultants
Forrest A. Garb and Associates ("Forrest Garb") to complete a review of the
North Chapman Ranch reserves following the successful completion of the Smith
#2 and Albrecht wells that has seen a significant reclassification of the
previous Possible (P3) reserves into the Proved (P1) and Probable (P2)
categories.
Set out below is a comparison of the gross reserves (100% basis)
for the Company's North Chapman Ranch asset between the previous reserve
update in December 2011 and the current gross reserves update for June 2012.
Category Oil Natural Gas Natural Gas Liquids
(MMbbls) (Bcf) (MMBbls)
Dec Jun %age Dec Jun %age Dec Jun %age
`11 `12 Mvmt `11 `12 Mvmt `11 `12 Mvmt
Proved (P1) 5.1 8.4 +64% 64.3 106.0 +65% 5.0 8.0 +60%
Probable (P2) 3.7 4.4 +19% 48.6 56.7 +17% 3.8 4.4 +16%
Possible (P3) 9.9 5.0 -50% 129.6 64.8 -50% 10.1 5.1 -50%
Total Reserves 18.7 17.8 242.5 227.5 18.9 17.5
Set out below is the comparison between June 2012 and December 2011
of Range's attributable interest in the net reserves on the Company's North
Chapman Ranch asset which is net of government and overriding royalties and
represents Range's economic interests in its development and production assets
as classified in the report from Forest Garb.
Category Oil Natural Gas Natural Gas Liquids
(MMbbls) (Bcf) (MMBbls)
Dec Jun %age Dec Jun %age Dec Jun %age
`11 `12 Mvmt `11 `12 Mvmt `11 `12 Mvmt
Proved (P1) 0.7 1.1 +57% 7.6 11.7 +54% 0.7 1.1 +57%
Probable (P2) 0.5 0.6 +20% 5.5 6.4 +16% 0.5 0.6 +16%
Possible (P3) 1.3 0.7 -46% 14.6 7.3 -50% 1.3 0.7 -46%
Total Reserves 2.5 2.4 27.7 25.4 2.5 2.4
Based on the reserve numbers cited above, Forrest Garb's estimated
net undiscounted cash flow value to Range for Proved (P1), Probable (P2) and
Possible (P3), along with discounted cash flow (at a 10% discount rate)
valuation based on the Nymex forward strip prices reported on 7 March 2012
following reductions for royalties, opex, capex, production taxes etc is as
follows:
Nymex Forward Strip Nymex Forward Strip
Price at Price at
1 October 2011 7 March 2012
Category Undiscounted PV10 Undiscounted PV10
US$'m US$'m US$'m US$'m
Proved (P1) 116 67 165 93
Probable (P2) 86 43 89 39
Possible (P3) 246 95 102 37
Total 448 205 356 169
The Company notes that the valuation of the Company's interest in the Proved
and Probable Reserves has not increased to the same extent of the actual
percentage increase in physical volumes, which is primarily related to the
significant reduction in the futures gas price since the previous report.
With the drilling of the Smith #2 and Albrecht #1 wells, gross current average
production from the field increased to approximately 4.5 MMcfd and 394 Bopd.
With the field having now been largely appraised and value demonstrated, the
Company has commenced with the sale of its North Chapman Ranch interests
targeting completion in Q3 2012 so that it can focus its capital on higher
value adding opportunities in its portfolio. Any such divestiture decision
will be based on market conditions and the ability to achieve a sales price
that appropriately reflects the value of the project interest.
East Texas Cotton Valley
Work also continues in the Company's East Texas Cotton Valley project area,
where additional sections of the Ross 3H horizontal well were recently
fracture stimulated and are currently unloading frac fluids. With
approximately 5000 barrels of load left to recover, the well has already
yielded early indications of oil saturation, consistent with strong oil shows
recorded during drilling.
If successful, the Ross 3H well is expected to form the basis of a new
horizontal development of the shallow oil reservoir within the Cotton Valley
formation. The project is considered to be analogous to the neighbouring
Clarksville Field, which is expected to ultimately produce more than 7 million
barrels of oil.
Added Peter Landau, Range's Executive Director, "We are extremely pleased with
the recent results from our Texas drilling programs, which has confirmed what
the Company had strived to do in increasing shareholder value through the
increase in the Company's share of Proved and Probable reserves from the North
Chapman Ranch Project. This now paves the way for the Company to commence
divestment of the Company's interest in the project during Q3 2012. The sales
prices of similar production assets in the region have been encouraging, and
any such divestment will provide significant funding that could be applied to
Range's current activities and other possible corporate initiatives such as an
on market share buy back."
The Company looks forward to providing operational updates for Trinidad and
Colombia next week.
Yours faithfully
Peter Landau
Executive Director
Contacts
Range Resources Limited
Peter Landau
Tel : +61 (8) 9488 5220
Em: plandau@rangeresources.com.au
Australia London
PPR Tavistock Communications
David Tasker Ed Portman/Paul Youens
Tel: +61 (8) 9388 0944 Tel: + 44 (0) 20 7920 3150
Em: david.tasker@ppr.com.au Em: eportman@tavistock.co.uk
RFC Ambrian Limited (Nominated Advisor) Old Park Lane Capital (Joint Broker)
Stuart Laing Michael Parnes
Tel: +61 (8) 9480 2500 Tel: +44 (0) 207 493 8188
Panmure Gordon (Joint Broker)
Katherine Roe
Tel: +44 (0) 207 459 3600
Range Background
Range Resources Limited is a dual listed (ASX:RRS; AIM:RRL) oil &
gas exploration company with oil & gas interests in the frontier state of
Puntland, Somalia, the Republic of Georgia, Texas, USA and Trinidad.
- In Trinidad Range recently completed the acquisition of a 100% interest in
holding companies with three onshore production licenses and fully operational
drilling subsidiary. Independently assessed Proved (1P) reserves in place of
15.4 MMbls with 19.6 MMbls of proved, probable and possible (3P) reserves and
an additional 20 MMbls (mean) of prospective resources.
- In the Republic of Georgia, Range holds a 40% farm-in interest in onshore
blocks VIa and VIb, covering approx. 7,000sq.km. Range completed a 410km 2D
seismic program with independent consultants RPS Energy identifying 68
potential structures containing an estimated 2 billion barrels of undiscovered
oil-in-place (on a mean 100% basis) with the first (Mukhiani-1) well drilled
in Q4 2011. The Company is focusing on a revised development strategy that
will focus on low-cost, shallow appraisal drilling of the contingent resources
around the Tkibuli-Shaori ("Tkibuli") CBM deposit, which straddles the central
sections of the Company's two blocks.
- In Puntland, Range holds a 20% working interest in two licences
encompassing the highly prospective Dharoor and Nugaal valleys. The operator
and 60% interest holder, Horn Petroleum Corp. (TSXV: HRN) has completed the
first exploration well (Shabeel-1) to a final depth of 3,470m having
encountered a 12-20m zone of significant hydrocarbon pay in the Upper
Cretaceous Jesomma Formation. The second well spud in early June 2012 and
targeting best estimate Prospective Resources (100% basis) across the two
wells of 170-300 mmbbls.
- Range holds a 25% interest in the initial Smith #1 well and a 20%
interest in further wells on the North Chapman Ranch project, Texas. The
project area encompasses approximately 1,680 acres in one of the most prolific
oil and gas producing trends in the State of Texas. Independently assessed 3P
reserves in place (on a 100% basis) of 228 Bcf of natural gas, 18 mmbbls of
oil and 17 mmbbls of natural gas liquids.
- Range holds a 21.75% interest in the East Texas Cotton Valley Prospect in
Red River County, Texas, USA, where the prospect's project area encompasses
approximately 1,570 acres encompassing a recent oil discovery. The prospect
has independently assessed 3P reserves in place (on a 100% basis) of 3.3mmbbls
of oil.
The reserves estimates for the 3 Trinidad blocks and update
reserves estimates for the North Chapman Ranch Project and East Texas Cotton
Valley referred above have been formulated by Forrest A. Garb & Associates,
Inc. (FGA). FGA is an international petroleum engineering and geologic
consulting firm staffed by experienced engineers and geologists. Collectively
FGA staff has more than a century of world–wide experience. FGA have
consented in writing to the reference to them in this announcement and to the
estimates of oil and natural gas liquids provided. The definitions for oil and
gas reserves are in accordance with SEC Regulation S–X an in accordance with
the guidelines of the Society of Petroleum Engineers ("SPE"). The SPE Reserve
definitions can be found on the SPE website at spe.org.
RPS Group is an International Petroleum Consulting Firm with
offices worldwide, who specialise in the evaluation of resources, and have
consented to the information with regards to the Company's Georgian interests
in the form and context that they appear. These estimates were formulated in
accordance with the guidelines of the Society of Petroleum Engineers ("SPE").
The prospective resource estimates for the two Dharoor Valley
prospects are internal estimates reported by Africa Oil Corp, the operator of
the joint venture, which are based on volumetric and related assessments by
Gaffney, Cline & Associates.
In granting its consent to the public disclosure of this press
release with respect to the Company's Trinidad operations, Petrotrin makes no
representation or warranty as to the adequacy or accuracy of its contents and
disclaims any liability that may arise because of reliance on it.
The Contingent Resource estimate for CBM gas at the Tkibuli project
is sourced from the publically available references to a report by Advanced
Resources International's ("ARI") report in 2009: CMM and CBM development in
the Tkibuli-Shaori Region, Georgia. Advanced Resources International, Inc.,
2009. Prepared for GIG/Saknakhshiri and U.S. Trade and Development Agency.-
.globalmethane.org/documents/toolsres_coal_overview_ch13.pdf. Range's
technical consultants have not yet reviewed the details of ARI's resource
estimate and the reliability of this estimate and its compliance with the SPE
reporting guidelines or other standard is uncertain. Range and its JV partners
will be seeking to confirm this resource estimate, and seek to define
reserves, through its appraisal program and review of historical data during
the next 12 months.
SPE Definitions for Proved, Probable, Possible Reserves and
Prospective Resources
Proved Reserves are those quantities of petroleum, which by
analysis of geoscience and engineering data, can be estimated with reasonable
certainty to be commercially recoverable, from a given date forward, from
known reservoirs and under defined economic conditions, operating methods, and
government regulations.
Probable Reserves are those additional Reserves which analysis of
geoscience and engineering data indicate are less likely to be recovered than
Proved Reserves but more certain to be recovered than Possible Reserves.
Possible Reserves are those additional reserves which analysis of geoscience
and engineering data indicate are less likely to be recoverable than Probable
Reserves.
Prospective Resources are those quantities of petroleum estimated, as of a
given date, to be potentially recoverable from undiscovered accumulations by
application of future development projects. Prospective Resources have both an
associated chance of discovery and a chance of development. Prospective
Resources are further subdivided in accordance with the level of certainty
associated with recoverable estimates assuming their discovery and development
and may be sub-classified based on project maturity.
Contingent Resources are those quantities of hydrocarbons which are estimated,
on a given date, to be potentially recoverable from known accumulations, but
which are not currently considered to be commercially recoverable.