8 Jun 2012 08:02
8 June 2012The ManagerCompany AnnouncementsAustralian Securities Exchange LimitedLevel 6, 20 Bridge StreetSydney NSW 2000By e-lodgementTEXAS RESERVES UPGRADEHighlights
- 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 MvmtProved (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 MvmtProved (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 2.4Based on the reserve numbers cited above, Forrest Garb's estimatednet undiscounted cash flow value to Range for Proved (P1), Probable (P2) andPossible (P3), along with discounted cash flow (at a 10% discount rate)valuation based on the Nymex forward strip prices reported on 7 March 2012following reductions for royalties, opex, capex, production taxes etc is asfollows: Nymex Forward Strip Nymex Forward Strip Price at Price at 1 October 2011 7 March 2012Category Undiscounted PV10 Undiscounted PV10 US$'m US$'m US$'m US$'mProved (P1) 116 67 165 93Probable (P2) 86 43 89 39Possible (P3) 246 95 102 37Total 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 faithfullyPeter LandauExecutive DirectorContactsRange Resources LimitedPeter LandauTel : +61 (8) 9488 5220Em: plandau@rangeresources.com.auAustralia LondonPPR Tavistock CommunicationsDavid Tasker Ed Portman/Paul YouensTel: +61 (8) 9388 0944 Tel: + 44 (0) 20 7920 3150Em: david.tasker@ppr.com.au Em: eportman@tavistock.co.ukRFC Ambrian Limited (Nominated Advisor) Old Park Lane Capital (Joint Broker)Stuart Laing Michael ParnesTel: +61 (8) 9480 2500 Tel: +44 (0) 207 493 8188 Panmure Gordon (Joint Broker) Katherine Roe Tel: +44 (0) 207 459 3600Range Background
Range Resources Limited is a dual listed 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. 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 worldâ€"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 Sâ€"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.
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