Range releases spending plan
Range Resources said Monday it will spend $1.3 billion on drilling natural gas wells in 2015, an 18 percent decrease from this year.
However, the Fort Worth, Texas, oil and gas exploration company, which has its Appalachian Basin natural gas operations headquartered in Southpointe, said it expects to continue to grow natural gas production in the 20 to 25 percent range in the coming year.
As it has over the past several years, Range said its spending plan anticipates nearly all of the money – 92 percent – will be spent in the Marcellus shale region, where it has focused most of its drilling activities.
On the same day it released its spending plan, Range announced initial results from its Utica/Point Pleasant well located in Donegal Township.
The company said it achieved an average 24-hour test rate of 59 million cubic feet per day against simulated pipeline pressure and conditions during the initial flow back.
According to Range, the well was drilled and cased to a vertical depth of 11,693 feet with the 5,420-foot horizontal lateral completed with 32 frac stages.
It said initial calculations indicate an initial production rate that equates to a 10.9 Mmcf per day rate per 1,000 foot of lateral. “We believe this is a record for any horizon drilled in the Appalachian Basin and also represents the highest IP rate of any Utica well,” the company stated, adding that it “believes this well confirms its geological interpretation and enhances the value of Range’s stacked-pay acreage position in Southwest Pennsylvania.”
Range spokesman Matt Pitzarella said later Monday there are around 1,000 Utica wells drilled in eastern Ohio, with another “handful” drilled in Western Pennsylvania. He said about half of the Ohio Utica wells have been capped because of the lack of pipelines to move the gas to market.
The Range well in Donegal, known as the Claysville Sportsman 11-H, is 75 percent owned by Range.
The company has a current leasehold position of 400,000 acres in Southwestern Pennsylvania, which it considers as prospective for the Utica/Point Pleasant. The well is currently shut-in for 90 days while facilities are completed. Afterwards, the well is expected to be produced under “facility-constrained conditions,” which Pitzarella explained as adjusting the flow of gas to match the existing gathering system.
Crediting improved capital efficiencies from its Marcellus activities, Range said it expects to continue to deliver year-over-year production growth in the 20 to 25 percent range.
The new spending plan includes $1.065 billion for drilling and recompletions, $155 million for leasehold and renewals, $55 million for pipeline tie-ins and facilities and $25 million for seismic and other activities.
By division, the 2015 capital budget is approximately 92 percent directed to the Marcellus, Southern Appalachia 4 percent; and Midcontinent 4 percent.
As previously announced, Range will increase the lateral lengths and the number of frac stages for its 2015 Marcellus wells to average 6,200 feet with 31 frac stages, or approximately 200 feet between stages. The laterals for a third of the 2015 wells are expected to be over 7,000 feet as the company continues to optimize its well designs.
Commenting on Monday’s announcements, Range President and Chief Executive Officer Jeff Ventura said, “Our continued capital efficiency improvement is enabling Range to maintain our 20 to 25 percent growth target for 2015, while reducing our capital budget by 18 percent.
“This capital efficiency improvement coupled with our favorable hedge position and strong balance sheet gives us confidence that we can deliver substantial shareholder value in 2015 despite the challenging commodity price environment.
Ventura added the initial results for the Utica/Point Pleasant well should bode well for the company’s future.
“Given our 400,000 net acre acreage position in the area, coupled with existing well control and 3-D seismic, we believe this translates into significant potential,” he said. “Being able to drill additional Utica wells on the same locations as our Marcellus wells should further enhance our capital efficiency for many years to come.”
In a separate announcement Monday, Range announced Ventura would also become chairman of the company.