Range Resources Corp. (NYSE: RRC) announced Jan. 15 it has lowered its 2015 capex by about 67% to $870 million.
In December, Range announced a planned 2015 capital budget of $1.3 billion. That budget included capital efficiencies Range expected to realize with its longer laterals, better lateral targeting and improved completions based on its 2014 results. No reductions in service costs were included in the initial budget.
With the continuing erosion in commodity prices, Range has further high-graded its planned capital program for 2015 and reduced its planned capex for 2015 to $870 million.
Nearly 95% of the capital budget is targeted to the Marcellus. Concentration of its operations in the Marcellus, coupled with continuing operating efficiencies and now anticipated cost reductions, allows Range to target 20% production growth for 2015 with this revised capital budget.
"I believe that there are three essential components to be successful in this commodity price environment—a large, high quality asset base, a very low cost structure and a strong financial position. Range has all three," said Jeff Ventura, Range chairman and CEO, in a statement.
Ventura said Range has all the ingredients to execute its business plan to drive 20% production growth for 2015 despite significantly reducing the company's capital budget. The company has a significant percentage of cash flow protected with hedges and substantial liquidity with no bond maturities until 2020.
"The time and effort that Range spent in identifying and capturing one of the largest acreage positions in the core of the Marcellus with three stacked reservoirs and low development costs, gives Range a distinct competitive advantage in this period of low commodity prices and we will continue to adapt and take advantage of opportunities as commodity markets change," he said.
Range also announced Jan. 15 that its proved reserves increased 26% to a record high of 10.3 trillion cubic feet equivalent (Tcfe).
For 2014, Range added 2,399 Bcfe of proved reserves through the drillbit, driven by the company's Marcellus development. The extensions, discoveries and additions amount excludes 450 Bcfe of reserves associated with improved recovery on previously booked undrilled locations as a result of drilling longer laterals, better lateral targeting and increasing the number of frack stages in the Marcellus which remain in the development plan.
Proved Reserves Highlights:
- Range replaced 581% of production in 2014 from drilling;
- Finding and development costs from all sources are expected to average $0.64/Mcfe;
- Drillbit development costs are expected to average $0.55/Mcfe;
- Proved developed producing reserves increased 876 Bcfe, or 22% year-over-year;
- Proved developed reserves increased 1,157 Bcfe, or 28% year-over-year;
- Proved undeveloped reserves were 48% at year-end 2014, compared to 49% year-end 2013;
- Year-end 2014 proved reserves by volume were 67% natural gas, 30% NGL and 3% crude oil and condensate;
- Range has moved 8.8 Tcfe of reserves from resource potential to proved reserves in the last five years; and
- PV-10 value of the company's proved reserves increased 28% to $10.1 billion at year-end 2014.
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