Range's Gas Output Temporarily Outstripping Infrastructure Here
Washington PA Observer
Reporter
28
April 2011
Range Resources said Monday that because of the outstanding performance
of its natural gas wells in the Marcellus Shale, it has temporarily
outgrown existing infrastructure in Southwestern Pennsylvania.
The comment came as part of the Fort Worth, Texas, oil and gas
exploration company's first-quarter results, which were reported after
the close of Monday's stock market.
Range, which has its Appalachian divison headquartered in Southpointe,
said its adjusted net income comparable to analysts' estimates, was
$35.2 million or $0.22 per diluted share for the quarter ended March
31. It reported a net loss of $25 million, or 16 cents per share, while
net cash from operating activiites totaled $140.6 million.
The company also reported a 17 percent increase in production over its
fourth-quarter results that ended Dec. 31.
John Pinkerton, Range's chairman and chief executive officer, said the
figures show the company's strong performance toward its strategy of
consistent growth at low cost.
"While partially obscured by the accounting treatment of the Barnett
sale and the non-cash charges, first-quarter results reflect a strong
performance toward Range's strategy of consistent growth at low cost.
Production rose 17 percent during the first quarter and also increased
17 percent on a per-share basis."
Pinkerton said the company also saw a 10 percent reduction in unit
costs for its five largest categories combined. Pinkerton also said
that Range's Barnett sale, scheduled to close later this week, will be
a significant catalyst to help fuel the company's future performance.
"Upon completion of the sale, we will have the strongest balance sheet
in our history with cash on hand and no amount outstanding on our $1.5
billion bank credit facility," he said, adding that the company expects
to grow full-year production 10 percent and make up all the production
sold from the Barnett by the end of third quarter.
For the quarter, production averaged 545.5 million cubic feet per day,
comprised of 429.9 Mmcf per day of gas (79 percent), 14,338 barrels per
day of natural gas liquids (16 percent) and 4,924 barrels per day of
oil (5 percent).
Realized prices, including all cash-settled derivatives, averaged $5.45
per mcfe, a 2 percent decrease versus the prior-year quarter but a 2
percent increase as compared to the fourth quarter 2010.The average
realized gas price was $4.41 per mcf, an 8 percent decrease from the
prior-year quarter. The natural gas liquids price increased 11 percent
to $47.96 a barrel versus the prior-year quarter. The average oil price
rose 14 percent to $79.48 a barrel over the prior-year quarter.
Reported GAAP natural gas, NGL and oil sale revenues for the quarter
were $226.9 million, an increase of 21 percent as compared to the prior
year excluding sales from the Barnett properties shown as discontinued
operations.
First-quarter drilling expenditures of $267 million funded the drilling
of 63 wells and the completion of wells drilled last year. A 100
percent drilling success rate was achieved. At March 31, 51 wells
drilled during the quarter were in various stages of completion or
waiting on pipeline connection. As of March 31, Range had drilled 244
horizontal Marcellus wells to date of which 49 are awaiting completion
and 24 are awaiting pipeline hook up. In the first quarter, $19 million
was expended on acreage, $6 million on gas gathering systems and $26
million for exploration expense.
The company said it finished the first quarter at approximately 260
Mmcfe per day net from the Marcellus Shale, up from approximately 200
Mmcfe per day at year-end 2010. During the first quarter, the Marcellus
Division brought online 26 horizontal wells in southwest Pennsylvania,
15 of which are located in the liquids-rich area of the play. An
additional 16 wells were completed in southwest Pennsylvania during the
first quarter and are awaiting connection to the gathering system.
Range said that because of the outstanding performance of its existing
wells combined with the initial performance of the newly connected
wells, its Marcellus production has temporarily outgrown the existing
infrastructure. In Southwestern Pennsylvania, the third expansion of
the MarkWest gas processing facilities has been completed and is in the
testing phase.
The company said that the 200 Mmcf per day of additional processing
capacity is expected to begin operation shortly and will expand Range's
total processing capacity to 350 Mmcf per day.