Attached files
file | filename |
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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-99.2 - EX-99.2 - RANGE RESOURCES CORP | d78300exv99w2.htm |
EX-21.1 - EX-21.1 - RANGE RESOURCES CORP | d78300exv21w1.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 99.3
January 18, 2011
Range Resources Corporation
100 Throckmorton Street
Suite 1200
Fort Worth, TX 76102
100 Throckmorton Street
Suite 1200
Fort Worth, TX 76102
Attention: Mr. Alan W. Farquharson
SUBJECT: | Reserves Audit of Internally Assigned Oil and Gas Reserves to the Interests of Range Resources Corporation In Certain Selected Properties Pursuant to the Requirements of the Securities and Exchange Commission Effective December 31, 2010 Job 10.1239 |
At the request of Range Resources Corporation (Range), Wright & Company, Inc. (Wright) has
performed a reserves audit to estimate proved oil & gas reserves and associated cash flow and
economics from certain properties to the subject interests. This evaluation was authorized by Mr.
Alan W. Farquharson of Range. Projections of the reserves and cash flow to the evaluated interests
were based on specified economic parameters, operating conditions, and government regulations
considered applicable at the effective date. This reserves audit is pursuant to the financial
reporting requirements of the Securities and Exchange Commission (SEC) as specified in Regulation
S-X, Rule 4-10(a) and Regulation S-K, Rule 1202(a)(8) and (a)(9). Wright was requested to compare
its results to the internal estimates made by Range as of December 31, 2010. It is the
understanding of Wright that the purpose of this reserves audit was to opine as to the
reasonableness of Ranges internal projections, in the aggregate, of the selected properties. The
effective date of this report is December 31, 2010. The report was completed January 18, 2011.
The properties evaluated in this report are located in the states of Pennsylvania and
Virginia. According to Range the total proved reserves subject to this evaluation and
reasonableness opinion represent approximately 60 percent of Ranges reported total proved
reserves.
Range provided to Wright their internal total summaries for the certain evaluated properties
by reserves categories. Range estimated net reserves, future net cash flows, and discounted net
cash flows as of December 31, 2010, the results of which are summarized in the following table:
Mr. Alan W. Farquharson
Range Resources Corporation
January 18, 2011
Page 2
Range Resources Corporation
January 18, 2011
Page 2
Total | ||||||||||||||||||||
Range Resources | Proved Developed | Proved | Proved | Total | ||||||||||||||||
Corporation | Producing | Nonproducing | Developed | Undeveloped | Proved | |||||||||||||||
SEC Parameters | (PDP) | (PNP) | (PDP & PNP) | (PUD) | (PDP, PNP & PUD) | |||||||||||||||
Net Reserves to the
Evaluated Interests |
||||||||||||||||||||
Oil, Mbbl: |
1,550.187 | 17.827 | 1,568.014 | 2,917.770 | 4,485.784 | |||||||||||||||
Gas, MMcf: |
786,208.583 | 64,623.280 | 850,831.863 | 1,271,758.470 | 2,122,590.333 | |||||||||||||||
Plant, Mbbl: |
19,545.287 | 38.186 | 19,583.473 | 53,288.188 | 72,871.661 | |||||||||||||||
Gas Equivalent, MMcfe
(1 bbl = 6 Mcfe) |
912,781.427 | 64,959.358 | 977,740.785 | 1,608,994.218 | 2,586,735.003 | |||||||||||||||
Cash Flow (BTAX), M$
Undiscounted: |
2,984,963.967 | 182,336.376 | 3,167,300.343 | 4,136,237.418 | 7,303,537.761 | |||||||||||||||
Discounted at 10%
Per Annum: |
1,353,797.837 | 86,416.257 | 1,440,214.094 | 1,037,224.500 | 2,477,438.594 |
Wrights projections of the net reserves and cash flow to the evaluated interests in the
certain selected properties are summarized in the following table by reserves category, effective
December 31, 2010.
Total | ||||||||||||||||||||
Proved Developed | Proved | Proved | Total | |||||||||||||||||
Wright & Company, Inc. | Producing | Nonproducing | Developed | Undeveloped | Proved | |||||||||||||||
SEC Parameters | (PDP) | (PNP) | (PDP & PNP) | (PUD) | (PDP, PNP & PUD) | |||||||||||||||
Net Reserves to the
Evaluated Interests |
||||||||||||||||||||
Oil, Mbbl: |
1,157.929 | 5.305 | 1,163.234 | 5,190.295 | 6,353.529 | |||||||||||||||
Gas, MMcf: |
766,800.183 | 65,153.477 | 831,953.660 | 1,341,143.323 | 2,173,096.983 | |||||||||||||||
Plant, Mbbl: |
18,907.175 | 38.186 | 18,945.361 | 58,111.541 | 77,056.902 | |||||||||||||||
Gas Equivalent, MMcfe
(1 bbl = 6 Mcfe) |
887,190.807 | 65,414.423 | 952,605.230 | 1,720,954.339 | 2,673,559.569 | |||||||||||||||
Cash Flow (BTAX), M$
Undiscounted: |
2,898,527.257 | 155,543.160 | 3,054,070.417 | 4,686,743.298 | 7,740,813.715 | |||||||||||||||
Discounted at 10%
Per Annum: |
1,342,474.114 | 58,487.243 | 1,400,961.357 | 1,288,065.509 | 2,689,026.866 |
Comparing the results found in the previous tables, the differences between Ranges total
proved reserves estimates and Wrights independent audit is 3.36 percent based on gas equivalent
volumes. Based upon the results of Wrights evaluation, it is Wrights conclusion that Ranges
estimates of proved reserves are, in the aggregate, reasonable.
Proved oil and gas reserves are those quantities of oil and gas which can be estimated with
reasonable certainty to be economically producible under existing economic conditions, operating
methods, and government regulations. As specified by the SEC regulations, when calculating
economic producibility, the base product price must be the 12-month average price, calculated as
Mr. Alan W. Farquharson
Range Resources Corporation
January 18, 2011
Page 3
Range Resources Corporation
January 18, 2011
Page 3
the unweighted arithmetic average of the first-day-of-the-month price for each month within the
prior 12-month period. The benchmark base prices used for this evaluation were $4.376 per Million
British Thermal Units (MMBtu) for natural gas at Henry Hub, LA, and $79.81 per barrel for West
Texas Intermediate oil at Cushing, OK. These benchmark prices were adjusted for energy content,
quality and basis differential, as appropriate. With the appropriate adjustments applied, the
average adjusted product prices used to estimate proved reserves are $3.70 per Mcf and $55.84 per
barrel. Prices for oil and gas were held constant for the life of the properties. The plant
product prices were estimated to be 50.52 percent of the base oil price, resulting in an average
adjusted price of $40.32 per barrel.
Oil and other liquid hydrocarbons are expressed in thousands of United States (U.S.) barrels
(Mbbl), one barrel equaling 42 U.S. gallons. Gas volumes are expressed in millions of standard
cubic feet (MMcf) at 60 degrees Fahrenheit and at the legal pressure base that prevails in the
state in which the reserves are located. No adjustment of the individual gas volumes to a common
pressure base has been made.
Net income to the evaluated interests is the cash flow after consideration of royalty revenue
payable to others, standard state and county taxes, operating expenses, and investments, as
applicable. The cash flow is before federal income tax (BTAX) and excludes consideration of any
encumbrances against the properties if such exist. The cash flow (BTAX) was discounted at an
annual rate of 10.00 percent (PCT) in accordance with the reporting requirements of the SEC.
The estimates of reserves contained in this report were determined by accepted industry
methods and the procedures used in this evaluation are appropriate for the purpose served by the
report. Where sufficient production history and other data were available, reserves for producing
properties were determined by extrapolation of historical production or sales trends. Analogy to
similar producing properties was used for development projects and for those properties that lacked
sufficient production history to yield a definitive estimate of reserves. When appropriate, Wright
may have also utilized volumetric calculations and log correlations in the determination of
estimated ultimate recovery (EUR). These calculations are often based upon limited log and/or core
analysis data and incomplete formation fluid and rock data. Since these limited data must
frequently be extrapolated over an assumed drainage area, subsequent production performance trends
or material balance calculations may cause the need for significant revisions to the estimates of
reserves. Wright has used all methods and procedures as it considered necessary under the
circumstances to prepare this report.
Oil and gas reserves were evaluated for the proved developed producing (PDP), proved developed
non-producing (PNP) and proved undeveloped (PUD) reserves categories. The summary classification
of total proved reserves combines the PDP, PNP and PUD categories. In preparing this evaluation,
no attempt has been made to quantify the element of uncertainty associated with any category.
Reserves were assigned to each category as warranted. Wright is
not aware of any local, state, or federal regulations that would preclude Range from continuing to
produce from currently active wells or to fully develop those properties included in this report.
There are significant uncertainties inherent in estimating reserves, future rates of production,
and the timing and amount of future costs. Oil and gas reserves estimates must be
recognized as a subjective process that cannot be measured in an exact way and estimates of
others might differ
Mr. Alan W. Farquharson
Range Resources Corporation
January 18, 2011
Page 4
Range Resources Corporation
January 18, 2011
Page 4
materially from those of Wright. The accuracy of any reserves estimate is a
function of quantity and quality of available data and of subjective interpretations and judgments.
It should be emphasized that production data subsequent to the date of these estimates, or changes
in the analogous properties, may warrant revisions of such estimates. Accordingly, reserves
estimates are often different from the quantities of oil and gas that ultimately are recovered.
All data utilized in the preparation of this report were provided by Range. No inspection of
the properties was made as this was not considered to be within the scope of this evaluation.
Wright has not independently verified the accuracy and completeness of information and data
furnished by Range with respect to ownership interests, oil and gas production or sales, historical
costs of operation and development, product prices, or agreements relating to current and future
operations and sales of production. Wright requested and received detailed information allowing
Wright to check and confirm any calculations provided by Range with regard to product pricing,
appropriate adjustments, lease operating expenses, and capital investments for drilling the
undeveloped locations. Furthermore, if in the course of Wrights examination something came to our
attention that brought into question the validity or sufficiency of any information or data, Wright
did not rely on such information or data until we had satisfactorily resolved our questions
relating thereto or independently verified such information or data. In accordance with the
requirements of the SEC, all operating costs were held constant for the life of the properties.
It should be noted that neither salvage values nor abandonment costs were included in the
economic parameters in accordance with the instructions of Range. It was assumed that any salvage
value would be directly offset by the cost to abandon the property. Wright has not performed a
detailed study of the abandonment costs or the salvage values and offers no opinion as to Ranges
assumptions.
No consideration was given in this report to potential environmental liabilities that may
exist concerning the properties evaluated. There are no costs included in this evaluation for
potential liability for restoration and to clean up damages, if any, caused by past or future
operating practices.
Wright is an independent petroleum consulting firm founded in 1988 and owns no interests in
the oil and gas properties covered by this report. No employee, officer, or director of Wright is
an employee, officer, or director of Range, nor does Wright or any of its employees have direct
financial interest in Range. Neither the employment of nor the compensation received by Wright is
contingent upon the values assigned or the opinions rendered regarding the properties covered by
this report.
This report was prepared for the information of Range, its shareholders, and for the
information and assistance of its independent public accountants in connection with their review of
and report upon the financial statements of Range and for reporting disclosures as required by the
SEC. This report is also intended for public disclosure as an exhibit in filings made by Range
with the SEC.
In compliance with the definitions of reserves audit referenced in item 1202(a)(9) of
Regulation S-K, Wright has reviewed the pertinent facts interpreted and assumptions underlying the
Mr. Alan W. Farquharson
Range Resources Corporation
January 18, 2011
Page 5
Range Resources Corporation
January 18, 2011
Page 5
reserves estimates prepared by Range. It is Wrights opinion that the methodologies employed, the
adequacy and quality of the data relied upon, the depth and thoroughness of the reserves estimation
process, the classification of reserves based on the relevant definitions used, and the
reasonableness of the estimated reserves quantities are appropriate for the purpose served by the
report and are in accordance with the guidelines set forth by the SEC.
The professional qualifications of the petroleum consultants responsible for the evaluation of
the reserves and economics information presented in this report meet the standards of Reserves
Auditor as defined in the Standards Pertaining to the Estimating and Auditing of Oil and Gas
Reserves Information as promulgated by the Society of Petroleum Engineers.
It has been a pleasure to serve you by preparing this evaluation. All related data will be
retained in our files and are available for your review.
Very truly yours, Wright & Company, Inc. TX Firm Registration No. F-12302 |
||||
By: | /s/ D. Randall Wright | |||
D. Randall Wright | ||||
President | ||||