Barnett Shale

Range reports higher first-quarter production

Fort Worth-based Range Resources said today its first-quarter production was the equivalent of 876 million cubic feet of natural gas a day, a record to for the independent producer and driven by rising Marcellus Shale output. Production of crude oil and condensate  was up 52 percent, natural gas was up 34 percent and natural gas liquids were up 22 percent. That put the company's overall production at 79 percent natural gas, 14 percent NGLs and 7 percent crude oil and condensate.

The average price for all products slipped 3 percent to $5.06 per 1,000 cubic feet (mcf) equivalent. Range realized $4.09 an mcf for gas, $35.29 a barrel for NGLs and $85.46 for oil and condensate. Costs for gathering, compression and transportation were estimated at 80 cents per mcf. CEO Jeff Ventura said the company is on track for production growth of 20 to 25 percent in 2013 and "for many years" as it develops about 1 million net acres in the Marcellus in Pennsylvania.

-- Jim Fuquay

Pennsylvania contamination case to be unsealed

A Pennsylvania ruled the settlement of a water contamination case between drillers, including Fort Worth-based Range Resources, and two homeowners should be unsealed. According to a Bloomberg News report, "Chris and Stephanie Hallowich, told National Geographic magazine in 2010 that their water was polluted by the wells, pipelines, processing operations and truck traffic that came into the rural area where they had built their home. They also said they suffered burning eyes, sore throats and other symptoms when gas was released into the air."

Range spokesman Matt Pitzarella said the company, which had opposed the unsealing, is fine with it now. In an e-mail, he told Bloomberg that unsealed documents "should provide the public with even greater clarity that shale gas is being developed safely and responsibly." The National Geographic story, posted online on Oct. 17, 2010, recounts the Hallowich family's  experience buying 10 acres in southwestern Pennsylvania in 2007, then finding themselves in the middle of natural gas development.  "From a nuisance perspective, I will tell you they have a legitimate concern," the online report quotes Pitzarella as saying of the Hallowich family of four. Range drilled a well "that produces gas beneath the Hallowich site," the report says, and the "company and others say the bulk of their operations—the well sites themselves—are short-term disruptions and that the land is restored, as the state of Pennsylvania requires, within nine months after drilling is complete." It says there are unresolved disputes over water quality from a well on the family's property, which was drilled after Range commenced its own drilling operations.

Bloomberg News has a report on the judge's ruling here.

-- Jim Fuquay

Range Resources earns $53 million in fourth quarter, announces asset sale

Fort Worth-based Range Resources said it earned $53 million in the fourth quarter on sharply higher revenues of $458 million. The oil and gas producer also said it agreed to sell properties in West Texas and New Mexico for $275 million, a transaction it expects to close in April. For the year, Range earned $13 million on $1.46 billion in revenue. The results included $55.5 million in impairments taken during the quarter and more than $160 million in impairments for the year. . After adjusting for unusual items, Range earned $73 million, or 46 cents a share, in the quarter, easily topping financial analysts' consensus estimate of 29 cents. It finished the year with nearly $2.9 billion in long-term debt, up from $1.97 billion a year earlier.

CEO Jeff Ventura, in a prepared release, said the company had "outstanding operational results" last year. As previously reported, the company said it had record production in 2012. It spent $234 million to drill 64 wells in the quarter and $1.36 billion for 298 wells in the year. He said the company expects total production to increase by 20 percent to 25 percent in 2013 and liquids production to grow more than that. 

Range said the Permian Basin properties it is selling include 7,000 acres producing the equivalent of about 18 million cubic feet a day, approximately 70 percent natural gas and 30 percent liquids. The company sold about $170 million worth of properties in all of 2012.

-- Jim Fuquay

 

Swiss firm moves to ship Marcellus ethane overseas

Ineos Group AG, a Swiss chemicals manufacturer, has contracted with a Danish shipbuilder to transport ethane from a Philadelphia-area terminal to its petrochemicals plant in Norway. The deal impacts Fort Worth-based Range Resources, which last year agreed to supply ethane, a component of natural gas, to Ineos from a facility in Marcus Hook, Penn., starting in 2015. Range is one of the largest producers in the Marcellus Shale, a fast-growing field in the Appalachians. Range last year committed to be the anchor shipper of natural gas liquids on the Mariner East Project, running from southwestern Pennsylvania to Marcus Hook. on Wednesday, Ineos said it will buy an undisclosed number of liquefied natural gas (LNG) tankers from Evergas of Copenhagen, Denmark, to transport the ethane to an Ineos facility in Rafnes, Norway. Ethane can be processed into ethylene, a basic feedstock in the production of plastics.

-- Jim Fuquay

 

Range Resoures geologist honored for Marcellus discovery

Fort Worth-based producer Range Resources says geologist William A. Zagorski, vice president of geology for Range's Marcellus Shale Division, will receive the Norman H. Foster Outstanding Explorer Award from the American Association of Petroleum Geologists. Range said the award is "for his leading role in the development of the Marcellus Shale, which is the largest producing gas field in the United States, and believed to be among the world's largest known natural gas fields." 

Zagorski was already named the “Father of the Marcellus” by the Pittsburgh Association of Petroleum Geologists. He will receive his award during AAPG's annual convention in Pittsburgh in May. The company says Zagorski led Range's geosciences team that pioneered the development of the Marcellus Shale in Washington, Pa., in 2004.

-- Jim Fuquay

Range Resources to spend $1.3 billion in 2013, sell Permian assets

Fort Worth-based Range Resources, one of the largest operators in the Marcellus Shale, said Wednesday it set a 2013 capital spending budget of $1.3 billion, 85 percent of which will go to liquids-rich and oil projects mostly in the Marcellus and Horizontal Mississippian plays. It has about 500,000 acres in the two fields. That budget is down about $300 million from 2012, "reflecting a $200 million decrease in dry gas drilling and a $100 million reduction in expected leasehold expenditures."

Range will fund the 2013 budget from cash flow, asset sales and borrowings under its bank credit facility. It said it retained Merrill Lynch to market "certain of its Permian Basin properties in southeast New Mexico and West Texas," with a data room expected to open in January. Range said it expects production to rise 20 to 25 percent year-over-year.

-- Jim Fuquay

W. Virginia gas utility line fire closes interstate highway

A 20-inch natural gas transmission line in West Virginia exploded Tuesday, destroying five homes and closing Interstate 77 for at least two days. The  line belongs to NiSource, the area's local natural gas utility. The accident happens outside of Sissonville, in the west-central part of the state. Much of West Virginia is in the busy Marcellus Shale, but the area around Sissonville is not the busiest part of the field. Here's an Associated Press report and photo, above.

-- Jim Fuquay

Reuse of water for fracturing growing, Wall Street Journal says

Monday's Wall Street Journal has a good update on recycling and reuse of water for hydraulic fracturing, a topic we've covered in the Barnett Shale previously (here and here:  Download Water recycling). The Journal's report addresses the entry of oilfield servicing giants Halliburton and Schlumberger into the market. A link is here.

-- Jim Fuquay

Spat between Range, Pennsylvania lawmaker continues

Fort Worth-based Range Resources and a Pennsylvania state representative are conducting what has become an increasingly public war of words having to do with why the legislator emerged as a critic of the producer's Marcellus Shale operations. Here's a  link to one of the latest news reports out of Pittsburgh that covers a lot of ground.

-- Jim Fuquay

Chesapeake: Gas production will decline in 2013

Chesapeake Energy's natural gas production will decline next year, a first in the company's 23-year history, chief operating officer Steve Dixon told analysts during the producer's Friday morning conference call regarding third-quarter earnings. The company said the previous day it lost about $2 billion in the quarter, largely because of big asset write-downs. Dixon said the company is projecting a 7 percent drop in total gas production in 2013, with the Haynesville Shale expected to decline 9 percent just between the third quarter and fourth quarter of 2012. CEO Aubrey McClendon said Chesapeake's production in the Barnett Shale is already down 11 percent from its peak, and even rising production in the Marcellus Shale won't be able to overcome those declines. The declines are the result of Chesapeake cutting its natural gas drilling fleet from 81 a year earlier to nine  currently, including just  two in the Barnett. Its drilling budget will see "a very material decrease" next year, Dixon said.

In other remarks, McClendon said the company is "just about there today" as far as drilling enough wells to hold its Barnett Shale leasehold with production. (A lease is said to be "held by production" when it has a well, and that prevents the producer's lease from expiring otherwise.) He said the Barnett shale's profitability, generally speaking, is "a toss-up" when prices are between $5 and $6 per 1,000 cubic feet.

-- Jim Fuquay