Attached files
file | filename |
---|---|
10-K - FORM 10-K - RANGE RESOURCES CORP | d78300e10vk.htm |
EX-31.1 - EX-31.1 - RANGE RESOURCES CORP | d78300exv31w1.htm |
EX-31.2 - EX-31.2 - RANGE RESOURCES CORP | d78300exv31w2.htm |
EX-32.1 - EX-32.1 - RANGE RESOURCES CORP | d78300exv32w1.htm |
EX-32.2 - EX-32.2 - RANGE RESOURCES CORP | d78300exv32w2.htm |
EX-23.3 - EX-23.3 - RANGE RESOURCES CORP | d78300exv23w3.htm |
EX-23.1 - EX-23.1 - RANGE RESOURCES CORP | d78300exv23w1.htm |
EX-21.1 - EX-21.1 - RANGE RESOURCES CORP | d78300exv21w1.htm |
EX-99.3 - EX-99.3 - RANGE RESOURCES CORP | d78300exv99w3.htm |
EX-23.2 - EX-23.2 - RANGE RESOURCES CORP | d78300exv23w2.htm |
EX-23.4 - EX-23.4 - RANGE RESOURCES CORP | d78300exv23w4.htm |
EX-99.1 - EX-99.1 - RANGE RESOURCES CORP | d78300exv99w1.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
January 21, 2011
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, 2010, of
certain properties owned by Range Resources Corporation (Range). This evaluation was completed on
January 21, 2011. Range has represented that these properties account for 28 percent on a net
equivalent barrel basis of Ranges net proved reserves as of December 31, 2010, 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, 2010, 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, 2010. 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.
2
DeGolyer and MacNaughton
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 2010
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 appropriate geologic, petroleum engineering,
and evaluation principals and techniques that are in accordance with practices generally recognized
by the petroleum industry as presented in the publication of the Society of Petroleum Engineers
entitled Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information
(Revision as of February 19, 2007). 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
3
DeGolyer and MacNaughton
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.
Definition of Reserves
Petroleum reserves estimated by Range and by us included in this report are classified as
proved. Only proved reserves have been evaluated for this report. Reserves classifications used by
Range and by us 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.
4
DeGolyer and MacNaughton
(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
5
DeGolyer and MacNaughton
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 oil and gas 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)
6
DeGolyer and MacNaughton
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
$79.81 per barrel and the prices were held constant thereafter. The
volume-weighted average price was $76.64 per barrel for oil and condensate
and $39.60 per barrel for natural gas liquids.
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 Henry Hub reference price of $4.38 per Mcf
furnished by Range and held constant thereafter. The volume-weighted
average price was $3.53 per Mcf.
Operating Expenses and Capital Costs
Operating expenses and capital costs, based on information provided by
Range, were used in estimating future costs required to operate the
properties. In certain cases, future
7
DeGolyer and MacNaughton
costs, either higher or lower than
existing costs, may have been used because of anticipated changes in
operating conditions. These costs were not escalated for inflation.
While the oil and gas industry may be subject to regulatory changes from time to time that
could affect an industry participants ability to recover its oil and gas reserves, we are not
aware of any such governmental actions which would restrict the recovery of the December 31, 2010,
estimated oil and gas volumes. The reserves estimated in this report can be produced under current
regulatory guidelines.
Range has represented that estimated net proved reserves attributable to the reviewed
properties are based on the definitions of proved reserves of the SEC. Range represents that its
estimates of the net proved reserves attributable to these properties which represent 28 percent of
Ranges reserves on a net equivalent basis are as follows, expressed in thousands of barrels
(Mbbl), millions of cubic feet (MMcf), and millions of cubic feet equivalent (MMcfe) of gas.
Our estimates of Ranges net proved reserves attributable to the reviewed properties are based
on the definitions of proved reserves of the SEC and are as follows, expressed in thousands of
barrels (Mbbl), millions of cubic feet (MMcf), and millions of cubic feet of gas equivalent
(MMcfe):
DeGolyer and | Range | |||||||
MacNaughton | Resources | |||||||
Proved Net Reserves |
||||||||
Oil and Condensate, Mbbl |
10,411 | 10,476 | ||||||
Natural Gas Liquids, Mbbl |
31,951 | 33,495 | ||||||
Sales Gas, MMcf |
921,662 | 962,893 | ||||||
Net Equivalent, MMcfe |
1,175,829 | 1,226,724 | ||||||
Future Gross Revenue, M$ |
5,316,816 | 5,522,292 | ||||||
Production and Ad Valorem Taxes, M$ |
389,983 | 409,415 | ||||||
Operating Expenses, M$ |
1,084,172 | 1,107,021 | ||||||
Capital Costs, M$ |
572,306 | 544,735 | ||||||
Future Net Revenue, M$ |
3,270,355 | 3,461,120 | ||||||
Present Worth at 10 Percent, M$ |
1,355,582 | 1,398,319 |
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. |
8
DeGolyer and MacNaughton
In our opinion, the information relating to estimated proved reserves, estimated future
net revenue from proved reserves, and present worth of estimated 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), 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.
To the extent the above-enumerated rules, regulations, and statements require determinations
of an accounting or legal nature, we, as engineers, are necessarily unable to express an opinion as
to whether the above-described information is in accordance therewith or sufficient therefor.
In comparing the detailed net proved reserves estimates prepared by us and by Range, we have
found differences, both positive and negative, resulting in an aggregate difference of 4.1 percent
when compared on the basis of net equivalent gas. 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 the basis of net equivalent barrels, in aggregate, 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
9
DeGolyer and MacNaughton
Range. DeGolyer and MacNaughton has used all assumptions, data, procedures, and methods that it
considers necessary and appropriate to prepare this report.
Submitted,
DeGOLYER and MacNAUGHTON
Texas Registered Engineering Firm F-716
Texas Registered Engineering Firm F-716
/s/ Paul J. Szatkowski | ||||
Senior Vice President |
||||
DeGolyer and MacNaughton |
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 January 21, 2011, 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 1974; that I am a Registered Professional Engineer in the St.ate 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 36 years of experience in oil and gas reservoir studies and reserves evaluations. |
/s/ Paul J. Szatkowski | ||||
Senior Vice President |
||||
DeGolyer and MacNaughton |