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Range Resources In 2011
Range Resources (NYSE:RRC) is targeting 25% production growth in 2011, as the company plans further development of its extensive holdings in the Appalachian Basin that are prospective for the Marcellus Shale. The company is also developing liquids areas in the Permian Basin and Granite Wash.
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Marcellus Shale
Range Resources has 1.3 million acres that are prospective for the Marcellus Shale, including 850,000 net acres in the fairway or core area of the play. Range Resources projects that its production from the Marcellus Shale will reach between 400 million and 420 million cubic feet equivalent per day by the end of 2011. This would represent production growth of 25% over 2010.
Range Resources favors the Marcellus Shale because much of its acreage in the play is in the wet gas area in Pennsylvania. Wells here produce significant amount of natural gas liquids, including propane, butane and ethane, which yield higher revenues compared to a dry gas well.
Divestitures
Range Resources has traditionally sold non-core assets to help fund its development program. The company will continue this in 2011, and plans to sell the company's Barnett Shale properties in 2011.
Other companies that are active in the Barnett Shale include Quicksilver Resources (NYSE:KWK), which has 163,000 net acres in the Fort Worth basin. The company estimates that its production grew between 12% and 15% from this basin in 2010 over last year.
Permian Basin
Range Resources is also moving into basins in the United States that are exposed to oil and liquids. The company has 105,000 acres in the Permian Basin in Texas and New Mexico, and is looking at the Wolfberry and Bone Spring formations. The company plans its first well in 2011.
Granite Wash
Range Resources also has approximately 42,000 net acres in the panhandle area of Texas that is prospective for the Granite Wash. The company plans four test wells in 2011 on its properties.
Unit Corp (NYSE:UNT) is active in the Granite Wash, and has 38,000 net acres in the play. The company plans to drill 22 operated wells in the Granite Wash in 2011. SM Energy (NYSE:SM) has properties in Oklahoma that are prospective for the Granite Wash, and has allocated $60 million in capital in 2011 to develop these properties.
Hedges
Range Resources is also protected from continued weak natural gas prices in 2011, as the company has hedged 84% of its natural gas production at a floor price of $5.56.
The Bottom Line
Range Resources is planning to grow production by 25% in 2011, as the company will continue to harvest the large bet it made on the Marcellus Shale. The company is also expanding into the Permian Basin and Granite Wash to boost oil and liquids production. (For related information, take a look at Natural Gas Industry: An Investment Guide.)
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IN PICTURES: Baby Buffett Portfolio: His 6 Best Long-Term Picks
Marcellus Shale
Range Resources has 1.3 million acres that are prospective for the Marcellus Shale, including 850,000 net acres in the fairway or core area of the play. Range Resources projects that its production from the Marcellus Shale will reach between 400 million and 420 million cubic feet equivalent per day by the end of 2011. This would represent production growth of 25% over 2010.
Range Resources favors the Marcellus Shale because much of its acreage in the play is in the wet gas area in Pennsylvania. Wells here produce significant amount of natural gas liquids, including propane, butane and ethane, which yield higher revenues compared to a dry gas well.
Divestitures
Range Resources has traditionally sold non-core assets to help fund its development program. The company will continue this in 2011, and plans to sell the company's Barnett Shale properties in 2011.
Other companies that are active in the Barnett Shale include Quicksilver Resources (NYSE:KWK), which has 163,000 net acres in the Fort Worth basin. The company estimates that its production grew between 12% and 15% from this basin in 2010 over last year.
Range Resources is also moving into basins in the United States that are exposed to oil and liquids. The company has 105,000 acres in the Permian Basin in Texas and New Mexico, and is looking at the Wolfberry and Bone Spring formations. The company plans its first well in 2011.
Granite Wash
Range Resources also has approximately 42,000 net acres in the panhandle area of Texas that is prospective for the Granite Wash. The company plans four test wells in 2011 on its properties.
Unit Corp (NYSE:UNT) is active in the Granite Wash, and has 38,000 net acres in the play. The company plans to drill 22 operated wells in the Granite Wash in 2011. SM Energy (NYSE:SM) has properties in Oklahoma that are prospective for the Granite Wash, and has allocated $60 million in capital in 2011 to develop these properties.
Hedges
Range Resources is also protected from continued weak natural gas prices in 2011, as the company has hedged 84% of its natural gas production at a floor price of $5.56.
The Bottom Line
Range Resources is planning to grow production by 25% in 2011, as the company will continue to harvest the large bet it made on the Marcellus Shale. The company is also expanding into the Permian Basin and Granite Wash to boost oil and liquids production. (For related information, take a look at Natural Gas Industry: An Investment Guide.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Eric Fox
Eric J. Fox, CFA, is a freelance financial writer and has previous experience working in the asset management industry as an equity analyst and portfolio manager on the buy side. His favorite area to write on is the energy sector and he keeps current on the industry by reading Haynesville Shale, Permian Oil and Gas and various other blogs.
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