Attached files
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EXCEL - IDEA: XBRL DOCUMENT - RANGE RESOURCES CORP | Financial_Report.xls |
EX-31.2 - EX-31.2 - RANGE RESOURCES CORP | d70383exv31w2.htm |
EX-23.4 - EX-23.4 - RANGE RESOURCES CORP | d70383exv23w4.htm |
EX-23.2 - EX-23.2 - RANGE RESOURCES CORP | d70383exv23w2.htm |
EX-23.3 - EX-23.3 - RANGE RESOURCES CORP | d70383exv23w3.htm |
EX-23.1 - EX-23.1 - RANGE RESOURCES CORP | d70383exv23w1.htm |
EX-99.3 - EX-99.3 - RANGE RESOURCES CORP | d70383exv99w3.htm |
EX-21.1 - EX-21.1 - RANGE RESOURCES CORP | d70383exv21w1.htm |
EX-31.1 - EX-31.1 - RANGE RESOURCES CORP | d70383exv31w1.htm |
EX-32.2 - EX-32.2 - RANGE RESOURCES CORP | d70383exv32w2.htm |
EX-99.1 - EX-99.1 - RANGE RESOURCES CORP | d70383exv99w1.htm |
EX-32.1 - EX-32.1 - RANGE RESOURCES CORP | d70383exv32w1.htm |
10-K - 10-K - RANGE RESOURCES CORP | d70383e10vk.htm |
EXHIBIT 99.2
DeGolyer and MacNaughton
5001 Spring Valley Road, Suite 800 East
Dallas, Texas 75244
5001 Spring Valley Road, Suite 800 East
Dallas, Texas 75244
February 1, 2010
Range Resources Corporation
100 Throckmorton Street
Suite 1200
Fort Worth, Texas 76102
100 Throckmorton Street
Suite 1200
Fort Worth, Texas 76102
Gentlemen:
Pursuant to your request, we have conducted a reserves audit of the net proved crude oil,
condensate, natural gas liquids (NGL), and natural gas reserves, as of December 31, 2009, of
certain selected properties owned by Range Resources Corporation (Range). Range has represented
that these properties account for 32 percent on a net equivalent basis of Ranges net proved
reserves as of December 31, 2009, and that the net proved reserves estimates have been prepared in
accordance with the reserves definitions of Rules 410(a) (1)(32) of Regulation SX of the
Securities and Exchange Commission (SEC) of the United States. We have reviewed information
provided to us by Range that it represents to be Ranges estimates of the net reserves, as of
December 31, 2009, for the same properties as those which we evaluated.
Reserves included herein are expressed as net reserves as represented by Range. Gross reserves
are defined as the total estimated petroleum to be produced from these properties after December
31, 2009. Net reserves are defined as that portion of the gross reserves attributable to the
interests owned by Range after deducting all interests owned by others.
Estimates of oil, condensate, NGL, and natural gas should be regarded only as estimates that
may change as further production history and additional information become available. Not only are
such reserves estimates based on that information which is currently available, but such estimates
are also subject to the uncertainties inherent in the application of judgmental factors in
interpreting such information.
Data used in this audit were obtained from reviews with Range personnel, Range files, from
records on file with the appropriate regulatory agencies, and from public sources. Additionally,
this information includes data supplied by Petroleum Information/Dwights LLC; Copyright 2009
Petroleum Information/Dwights LLC. In the preparation of this report we have relied, without
independent verification, upon such information furnished by Range with respect to property
interests, production from such properties, current costs of operation and development, current
prices for production, agreements relating to current and future operations and sale of production,
and various other information and data that were accepted as represented. A field examination of
the properties was not considered necessary for the purposes of this report.
Methodology and Procedures
Estimates of reserves were prepared by the use of standard geological and engineering methods
generally accepted by the petroleum industry. The method or combination of methods used in the
analysis of each reservoir was tempered by experience with similar reservoirs, stage of
development, quality and completeness of basic data, and production history.
When applicable, the volumetric method was used to estimate the original oil in place (OOIP)
and the original gas in place (OGIP). Structure and isopach maps were constructed to estimate
reservoir volume. Electrical logs, radioactivity logs, core analyses, and other available data were
used to prepare these maps as well as to estimate representative values for porosity and water
saturation. When adequate data were available and when circumstances justified, material balance
and other engineering methods were used to estimate OOIP or OGIP.
Estimates of ultimate recovery were obtained after applying recovery factors to OOIP or OGIP.
These recovery factors were based on consideration of the type of energy inherent in the
reservoirs, analyses of the petroleum, the structural positions of the properties, and the
production histories. When applicable, material balance and other engineering methods were used to
estimate recovery factors. An analysis of reservoir performance, including production rate,
reservoir pressure, and gas-oil ratio behavior, was used in the estimation of reserves.
For depletion-type reservoirs or those whose performance disclosed a reliable decline in
producing-rate trends or other diagnostic characteristics, reserves were estimated by the
application of appropriate decline curves or other performance relationships. In the analyses of
production-decline curves, reserves were estimated only to the limits of economic production or to
the limit of the production licenses as appropriate.
Petroleum reserves estimated by Range and by us are classified as proved and are judged to be
economically producible in future years from known reservoirs under existing economic and operating
conditions and assuming continuation of current regulatory practices using conventional production
methods and equipment. In the analyses of production-decline curves, reserves were estimated only
to the limit of economic rates of production under existing economic and operating conditions using
prices and costs consistent with the effective date of this report, including consideration of
changes in existing prices provided only by contractual arrangements but not including escalations
based upon future conditions. Proved reserves classifications used by Range are in accordance with
the reserves definitions of Rules 410(a) (1)(32) of Regulation SX of the SEC.
Definition of Reserves
Petroleum reserves included in this report are classified as proved. Only proved reserves have
been evaluated for this report. Reserves classifications used in this report are in accordance with
the reserves definitions of Rules 410(a) (1)(32) of Regulation SX of the SEC. Reserves are
judged to be economically producible in future years from known reservoirs under existing economic
and operating conditions and assuming continuation of current regulatory practices using
conventional production methods and equipment. In the analyses of production-decline curves,
reserves were estimated only to the limit of economic rates of production under existing economic
and operating conditions using prices and costs consistent with the effective date of this report,
including consideration of changes in existing prices provided only by contractual arrangements but
not including escalations based upon future conditions. The petroleum reserves are classified as
follows:
Proved oil and gas reserves Proved oil and gas reserves are those quantities of oil
and gas, which, by analysis of geoscience and engineering data, can be estimated with
reasonable certainty to be economically produciblefrom a given date forward, from
known reservoirs, and under existing economic conditions, operating methods, and
government regulationsprior to the time at which contracts providing the right to
operate expire, unless evidence indicates that renewal is reasonably certain,
regardless of whether deterministic or probabilistic methods are used for the
estimation. The project to extract the hydrocarbons must have commenced or the
operator must be reasonably certain that it will commence the project within a
reasonable time.
(i) The area of the reservoir considered as proved includes:
(A) The area identified by drilling and limited by fluid contacts, if any, and
(B) Adjacent undrilled portions of the reservoir that can, with reasonable
certainty, be judged to be continuous with it and to contain economically
producible oil or gas on the basis of available geoscience and engineering
data.
(ii) In the absence of data on fluid contacts, proved quantities in a reservoir
are limited by the lowest known hydrocarbons (LKH) as seen in a well
penetration unless geoscience, engineering, or performance data and reliable
technology establishes a lower contact with reasonable certainty.
(iii) Where direct observation from well penetrations has defined a highest
known oil (HKO) elevation and the potential exists for an associated gas cap,
proved oil reserves may be assigned in the structurally higher portions of the
reservoir only if geoscience, engineering, or performance data and reliable
technology establish the higher contact with reasonable certainty.
(iv) Reserves which can be produced economically through application of
improved recovery techniques (including, but not limited to, fluid injection)
are included in the proved classification when:
(A) Successful testing by a pilot project in an area of the reservoir with
properties no more favorable than in the reservoir as a whole, the operation of
an installed program in the reservoir or an analogous reservoir, or other
evidence using reliable technology establishes the reasonable certainty of the
engineering analysis on which the project or program was based; and (B) The
project has been approved for development by all necessary parties and
entities, including governmental entities.
(v) Existing economic conditions include prices and costs at which economic
producibility from a reservoir is to be determined. The price shall be the
average price during the 12-month period prior to the ending date of the period
covered by the report, determined as an unweighted arithmetic average of the
first-day-of-the-month price for each month within such period, unless prices
are defined by contractual arrangements, excluding escalations based upon
future conditions.
Developed oil and gas reserves Developed oil and gas reserves are reserves of any
category that can be expected to be recovered:
(i) Through existing wells with existing equipment and operating methods or in
which the cost of the required equipment is relatively minor compared to the
cost of a new well; and
(ii) Through installed extraction equipment and infrastructure operational at
the time of the reserves estimate if the extraction is by means not involving a
well.
Undeveloped reserves Undeveloped oil and gas reserves are reserves of any category
that are expected to be recovered from new wells on undrilled acreage, or from
existing wells where a relatively major expenditure is required for recompletion.
(i) Reserves on undrilled acreage shall be limited to those directly offsetting
development spacing areas that are reasonably certain of production when
drilled, unless evidence using reliable technology exists that establishes
reasonable certainty of economic producibility at greater distances.
(ii) Undrilled locations can be classified as having undeveloped reserves only
if a development plan has been adopted indicating that they are scheduled to be
drilled within five years, unless the specific circumstances, justify a longer
time.
(iii) Under no circumstances shall estimates for undeveloped reserves be
attributable to any acreage for which an application of fluid injection or
other improved recovery technique is contemplated, unless such techniques have
been proved effective by actual projects in the same reservoir or an analogous
reservoir, as defined in [section 210.410 (a) Definitions], or by other
evidence using reliable technology establishing reasonable certainty.
Primary Economic Assumptions
The following economic assumptions were used for estimating existing and future prices and
costs:
Oil, Condensate, and NGL Prices
Range has represented that the oil, condensate, and NGL prices were based on a
12-month average price (reference price), calculated as the unweighted
arithmetic average of the first-day-of-the-month price for each month within
the 12-month period prior to the end of the reporting period, unless prices are
defined by contractual arrangements. Range supplied differentials by field to a
West Texas Intermediate reference price of $60.85 per barrel and the prices
were held constant thereafter.
Natural Gas Prices
Range has represented that the natural gas prices were based on a reference
price, calculated as the unweighted arithmetic average of the
first-day-of-the-month price for each month within the 12-month period prior to
the end of the reporting period, unless prices are defined by contractual
arrangements. The gas prices were calculated for each property using
differentials to the reference price of $3.87 per Mcf furnished by Range and
held constant thereafter.
Operating Expenses and Capital Costs
Operating expenses and capital costs, based on information provided by Range,
were used in estimating future costs required to operate the properties. In
certain cases, future costs, either higher or lower than existing costs, may
have been used because of anticipated changes in operating conditions. These
costs were not escalated for inflation.
While the oil and gas industry may be subject to regulatory changes from time to time that
could affect an industry participants ability to recover its oil and gas reserves, we are not
aware of any such governmental actions which would restrict the recovery of the December 31, 2009,
estimated oil and gas volumes. The reserves estimated in this report can be produced under current
regulatory guidelines.
Range has represented that estimated net proved reserves attributable to the reviewed
properties are based on the definitions of proved reserves of the SEC. Range represents that its
estimates of the net proved reserves attributable to these properties which represent 32 percent of
Ranges reserves on a net equivalent basis are as follows, expressed in thousands of barrels
(Mbbl), millions of cubic feet (MMcf), and millions of cubic feet equivalent (MMcfe) of gas:
DeGolyer and | Range | |||||||
MacNaughton | Resources | |||||||
Proved Net Reserves |
||||||||
Oil and Condensate, Mbbl |
9,379 | 9,581 | ||||||
Natural Gas Liquids, Mbbl |
22,214 | 22,405 | ||||||
Sales Gas, MMcf |
777,898 | 806,271 | ||||||
Net Equivalent, MMcfe |
967,456 | 998,191 | ||||||
Future Gross Revenue, M$ |
3,320,751 | 3,425,690 | ||||||
Production and Ad Valorem Taxes, M$ |
232,877 | 241,607 | ||||||
Operating Expenses, M$ |
816,474 | 841,076 | ||||||
Capital Costs, M$ |
390,488 | 380,005 | ||||||
Future Net Revenue, M$ |
1,880,911 | 1,963,002 | ||||||
Present Worth at 10 Percent, M$ |
834,999 | 866,871 |
Notes:
1. | Net equivalent million cubic feet is based on 1 barrel of oil, condensate, or natural gas liquids being equivalent to 6,000 cubic feet of gas. | |
2. | The numbers in this table may not exactly add due to rounding. |
In our opinion, the information relating to estimated proved reserves, estimated future net
revenue from proved reserves, and present worth of estimated future net revenue from proved
reserves of oil, condensate, natural gas liquids, and gas contained in this report has been
prepared in accordance with Paragraphs 932-235-50-4, 932-235-50-6, 932-235-50-7, 932-235-50-9,
932-235-50-30 and 932-235-50-31(a), (b), and (e) of the Accounting Standards Update 932-235-50,
Extractive Industries Oil and Gas (Topic 932): Oil and Gas Reserve Estimation and Disclosures
(January 2010) of the Financial Accounting Standards Board and Rules 410(a) (1)(32) of Regulation
SX and Rules 302(b), 1201, 1202(a) (1), (2), (3), (4), (8)(i), (ii), and (v)(x), and 1203(a) of
Regulation SK of the Securities and Exchange Commission; provided, however, future income tax
expenses have not been taken into account in estimating the future net revenue and present worth
values set forth herein.
In comparing the detailed net proved reserves estimates prepared by us and by Range, we have
found differences, both positive and negative. It is our opinion that the net proved reserves
estimates prepared by Range on the properties reviewed by us and referred to above, when compared
on a net equivalent basis, do not differ materially from those prepared by us.
DeGolyer and MacNaughton is an independent petroleum engineering consulting firm that has been
providing petroleum consulting services throughout the world for over 70 years. DeGolyer and
MacNaughton does not have any financial interest, including stock ownership, in Range. Our fees
were not contingent on the results of our evaluation. This letter report has been prepared at the
request of Range and should not be used for purposes other than those for which it is intended.
DeGolyer and MacNaughton has used all procedures and methods that it considers necessary to prepare
this report.
Submitted, | ||||
DeGOLYER and MacNAUGHTON | ||||
Texas Registered Engineering Firm F-716 | ||||
/s/ Paul J. Szathowski, P.E. | ||||
Senior Vice President | ||||
DeGolyer and MacNaughton |
CERTIFICATE of QUALIFICATION
I, Paul J. Szatkowski, Petroleum Engineer with DeGolyer and MacNaughton, 5001 Spring Valley Road,
Suite 800 East, Dallas, Texas, 75244 U.S.A., hereby certify:
1. | That I am a Senior Vice President with DeGolyer and MacNaughton, which company did prepare the letter report addressed to Range dated February 1, 2010, and that I, as Senior Vice President, was responsible for the preparation of this report. | ||
2. | That I attended Texas A&M University, and that I graduated with a Bachelor of Science degree in Petroleum Engineering in the year 1974; that I am a Registered Professional Engineer in the State of Texas; that I am a member of the International Society of Petroleum Engineers and the American Association of Petroleum Geologists; and that I have in excess of 35 years of experience in the oil and gas reservoir studies and reserves evaluations. |
/s/ Paul J. Szathowski, P.E. | ||||
Senior Vice President | ||||
DeGolyer and MacNaughton | ||||