Range Resources increases oil and gas reserves 18%

Range Resources Corporation (RRC) announced today that its proved reserves at December 31, 2009 increased 18% to 3.1 Tcfe. From all sources, Range replaced 486% of production in 2009 with all the reserve replacement occurring through the drill bit and positive performance revisions. Finding and development costs from all sources, including leasehold additions and all price and performance revisions, averaged $0.98 per mcfe. Excluding price revisions, finding and development costs averaged $0.89 per mcfe. Drill bit development costs averaged $0.68 per mcfe. 

For 2009, Range added 770 Bcfe of proved reserves through the drill bit. No reserves were added through acquisitions. Performance revisions added 90 Bcfe, while price revisions reduced proved reserves by 86 Bcfe. During 2009, Range sold properties containing 140 Bcfe of proved reserves and production was 159 Bcfe. As a result, year-end 2009 reserves totaled 3.1 Tcfe; up 18% from the 2.7 Tcfe at year-end 2008. 

At year-end 2009, 84% of Range's proved reserves by volume were natural gas, 10% were natural gas liquids and 6% were crude oil. Of the total, 77% of proved undeveloped reserves were located in the Marcellus, Barnett and Nora properties. The percentage of reserves in the proved undeveloped category was 45% at year-end 2009, versus 38% at year-end 2008. The increase in percentage of proved undeveloped reserves was primarily due to the recording of additional proved undeveloped reserves in the Marcellus Shale play where Range had outstanding results in 2009. As of year-end 2009, for each of its proved developed wells in the Marcellus Shale play, Range recorded on average 1.2 offset drilling locations as proved undeveloped reserves. Range currently estimates that its unproven Marcellus acreage position contains resource potential, net to its interest, of 18 to 25 Tcfe. 

As noted above, from all sources, Range replaced 486% of production in 2009. Excluding the 86 Bcfe of price revisions, reserve replacement would have been 540% of production in 2009. The Company's estimate of cash drilling and development costs incurred during 2009 including exploration expenses is $585 million. The Company estimates that it spent $177 million for acreage in 2009. Finding and development cost from all sources averaged $0.98 per mcfe with price revisions, or $0.89 per mcfe excluding price revisions. Drill bit development cost (excludes price revisions and acreage cost) was $0.68 per mcfe. 

In 2009, Range sold properties containing 140 Bcfe of proved reserves. The sold properties included the Fuhrman Mascho field in West Texas and essentially all of the Company's properties in the State of New York. These properties included 2,291 producing and non-producing wells. 

For year-end 2009, new SEC ("Securities and Exchange Commission") rules were implemented requiring that the reserve calculations be based on the average prices throughout the year, versus the previous method which required year-end prices. The benchmark cash prices under the new method were $3.87 per Mmbtu for natural gas and $60.85 per barrel for crude oil (Cushing), representing the simple average of the prices for the first day for each month of 2009. Based on these prices adjusted for energy content, quality and basis differentials ($3.19 per Mmbtu and $54.65 per barrel, respectively), the pre-tax discounted (10%) present value of the year-end 2009 reserves was $2.6 billion. Using the previous SEC pricing method (year-end benchmark prices of $5.79 per Mmbtu and $79.36 per barrel with similar adjustments) proved reserves would have been 3.2 Tcfe and the pre-tax discounted present value would have been $5.1 billion. Using the 10-year futures strip prices at December 31, 2009 (averaging $6.91 per Mmbtu and $92.36 per barrel with similar adjustments), reserves would have been 3.3 Tcfe with a pre-tax discounted present value of $6.6 billion. 

In addition to the new SEC rules regarding oil and gas prices, the SEC also implemented new rules regarding proved undeveloped reserves. The rule change allows for additional drilling locations to be classified as proved undeveloped reserves assuming such locations are supported by reliable technologies. As noted above for year-end 2009 using the new SEC rules for both oil and gas prices and proved undeveloped reserves, Range's finding and development cost from all sources, including leasehold additions and all price and performance revisions averaged $0.98 per mcfe. Based on the previous SEC rules for determining reserves and pricing, Range's finding and development cost at year-end 2009, including leasehold additions and all price and performance revisions, would have been $1.21 per mcfe. The $1.21 per mcfe average for 2009 based on the previous SEC rules compares to Range's historical average of $1.97 per mcfe for the five year period 2004 through 2008. The "apples-to-apples" decrease of approximately 40% in finding and development cost for 2009 versus the prior five-year period is a reflection of Range's high-graded property portfolio and, in particular, the impact of the Marcellus Shale play. 

Commenting, John H. Pinkerton, Range's Chairman and CEO, said, "Range's strategy is to consistently grow production and reserves at low cost. Earlier this week, we reported our sixth consecutive year of double-digit production growth. Today, we are reporting that our proved reserves grew 18% in 2009 at an all-sources reserve replacement ratio of 486% and at an all-in finding and development cost of $0.98 per mcfe. The 18% increase in proved reserves was achieved despite selling non-core properties containing 140 Bcfe of proved reserves, losing 86 Bcfe of proved reserves due to the decline in natural gas prices and despite the fact that we added no reserves through property acquisitions. All of our production and reserve growth was the result of our very successful drilling program. While proved reserves grew 18%, our estimate of the net unproved resource potential has increased to 22 to 30 Tcfe. Importantly, the largest portion of our unproved resource potential relates to the Marcellus Shale play where our drilling results and those of the industry have materially de-risked a significant portion of our acreage position. Based on the available public information, we believe that Range's per-share exposure to the Marcellus Shale play exceeds that of any other Marcellus producer. Given the progress made in our core areas, and in particular the Marcellus Shale play, we are extremely well positioned to continue to add significant per-share value over the next several years."



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