11 May 2010 08:10
ABN 88 002 522 009Level 3, 1 Havelock StreetWest Perth, WA 6005P +61 8 9488 5220F +61 8 9324 240011 May 2010Company AnnouncementsAustralian Securities ExchangeExchange Plaza2 The EsplanadePERTH WA 6000By E-lodgement
Independent Reserves Report Confirms Significant Find at North Chapman Ranch
Field
Highlights:
* Independent Petroleum Engineers, Lonquist & Co LLC, have completed an independent reserves and valuation report on the North Chapman Ranch Field in Nueces County, Texas, USA * Reserves report estimates total gross commercially recoverable Reserves ( 1P, 2P and 3P) of the North Chapman Ranch Field: * 215 Bcf of natural gas (attributable to Range - 45 Bcf) * 15.9 mmbbl of oil (attributable to Range - 3.3 mmbbls) * 15.5 mmbbl of natural gas liquids (attributable to Range - 3.2 mmbbls) * The planned multi-well program is anticipated to move Possible (P3) R eserves into the Probable (P2) and Proved (P1) Reserve categories * Independent PW10 DCF valuation of Range's net interest of US$226m
International oil and gas company Range Resources Limited ("Range" or "the Company") continues the development of its North Chapman Ranch Field in Texas, USA, with independent certification by Independent Petroleum Engineers, Lonquist & Co LLC ("Lonquist") confirming the field contains significant oil and gas reserves.
Range holds a 25% interest in the North Chapman Ranch project's first well - Smith #1 - and 20% in all subsequent wells assuming the exercise of certain clawback provisions by joint venture partners based on the current success of the Smith #1 well. The project area encompasses approximately 1,680 acres in one of the most prolific oil and gas producing trends in the State of Texas. Drilling of the first well resulted in a commercial discovery with first production and sales occurring in February 2010.
Range, through its technical consultants Texas Energy Advisors LLC, engaged Lonquist to compile geological, geophysical and engineering data and provide an Independent Reserves Report and Valuation for the project.
Lonquist's independent reserves report has estimated the following gross commercially recoverable reserves from the North Chapman Ranch Field:
Category Natural Gas Oil (mmbbls) Natural Gas (Bcf) Liquids (mmbbls) Proved (P1) 33.3 2.5 2.4 Probable (P2) 31.8 2.4 2.3 Possible (P3) 150.4 11.1 10.8 Total Reserves 215.5 16.0 15.5
Set out below is Range's attributable interest in the gross recoverable reserves on 25% of the Smith #1 well and on 20% of the remaining wells assuming the exercise of certain clawback provisions by joint venture partners occurs following the success of the Smith #1 well:
Category Natural Gas Oil Natural Gas (Bcf) (mmbbls) Liquids (mmbbls) Proved (P1) 8.3 0.6 0.6 Probable (P2) 6.4 0.5 0.5 Possible (P3) 30.1 2.2 2.1 Total Reserves 44.8 3.3 3.2
The planned multi-well program is anticipated to move Possible (P3) Reserves into the Probable (P2) and Proved (P1) Reserve categories. The second well on the North Chapman Ranch Project, the Russell-Bevly Unit #1 is expected to spud in the coming days.
Based on the reserve numbers cited above, Lonquist's estimated net undiscountedcash flow value to Range, along with PW10 discounted cash flow (at a 10%discount rate) based on Nymex forward strip prices reported on 31 December2009, following reductions for royalties, opex, capex, production taxes etc areas follows:Reserve Undiscounted PW10 US$ US$ Category Proved (P1) 52m 36m Probable (P2) 53m 37m Possible (P3) 258m 153m
Estimated Future Cashflow (Range's net interest) 363m 226m
A copy of Lonquist's North Chapman Prospect - Estimated Future Reserves and Revenues for Range is on the company's website and contains further details on the assumptions on which these valuation estimates are based.
Range Executive Director, Mr Peter Landau, commented, "Range is pleased that from an initial investment of US$1.8m to drill, test and commercialise the Smith #1 well, we have been able to achieve a significant uplift in shareholder value based on independently assessed reserves and valuations reported on the North Chapman Ranch Project."
"We feel that the upcoming development and appraisal activities will add additional value to Range as we continue to add reserves, production and cash flow to create a balanced portfolio of lower-risk development and production projects in the US with high potential exploratory prospects in Puntland and Georgia," Mr Landau added.
The Company will continue to provide further updates on the progress of its portfolio of assets.
For and on behalf of the Board
RegardsPeter LandauExecutive DirectorContactsRange ResourcesPeter LandauTel : +61 (8) 8 9488 5220Em: plandau@rangeresources.com.auAustralia LondonPPR Conduit PRDavid Tasker Jonathan CharlesTel: +61 (8) 9388 0944 Tel: + 44 (0) 20 7429 6611Em: david.tasker@ppr.com.au Em: jonathan@conduitpr.comRFC Corporate Finance (Nominated Advisor) Old Park Lane Capital (Broker)Stuart Laing Michael ParnesTel: +61 (8) 9480 2500 Tel: +44 (0) 207 493 8188Range Background
Range Resources is a dual listed oil & gas exploration company with oil & gas interests in the frontier state of Puntland, Somalia, the Republic of Georgia and Texas, USA.
* Range holds a 25% interest in the initial Smith #1 well and 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. Drilling of the first well has resulted in a commercial discovery with independently assessed gross recoverable reserves in place of 215 Bcf of natural gas, 16 mmbbls of oil and 15 mmbbls of natural gas liquids. * In Puntland, Range holds a 20% working interest in two licences encompassing the highly prospective Dharoor and Nugaal valleys with plans to drill two wells - 65% Operator, in 2010. * In the Republic of Georgia, Range holds a 50% farm-in interest in onshore blocks VIa and VIb, covering approx. 7,000sq.km. Currently, Range has recently completed a 410km 2D seismic program.
Lonquist & Co LLC are Petroleum Consultants based in the United States with offices in Houston and Austin. Lonquist provides specific engineering services to the oil and gas exploration and production industry, and consults on all aspects of petroleum geology and engineering for both domestic and international projects and companies. Lonquist & Co LLC have consented to the reference to them in this announcement and to the estimates of oil, natural gas and natural gas liquids and valuations provided herein. These estimates were formulated in accordance with the guidelines of the Society of Petroleum Engineers ("SPE"). The SPE Reserve definitions can be found on the SPE website at www.spe.org as well as in the Lonquist report on the Range website.
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