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Range Resources Limited (LSE:RRL) has commenced preparations for the sale of its interest North Chapman Ranch Project in Texas, United States, following a reclassification that saw an increase in proven and probable reserves of the hydrocarbon acreage.
The Australia-incorporated oil and gas exploration and production company hopes to dispose its 20%-25% interest in the North Chapman Ranch Project by the third quarter of 2012 “so that it can focus its capital on higher value adding opportunities in its portfolio.”
“Any such divestiture decision will be based on market conditions and the ability to achieve a sales price that appropriately reflects the value of the project interest,” Range Resources stated.
Increased Reserves
Based on the review submitted by independent petroleum consultancy firm, Forrest A. Garb and Associates, the North Chapman Ranch Project saw a 64% increase in proven oil reserves, from 5.1 million barrels reported in December 2011 to 8.4 million barrels as of June 2012.
The same report also indicated new estimates of 106 billion cubic feet of proven gas reserves, representing a 65% rise from the previous estimates, and additional three million barrels of natural gas liquids to eight million barrels in proven reserves, also for the same period.
Range Resources’ net attributable interests in oil, natural gas, and natural gas liquids subsequently increased by 57%, 54%, and 57%, respectively, net of government and overriding royalties.
The percentage increase in Range Resources’ attributable interest, however, did not change proportionally with the increase in “physical volumes” due to “significant reduction in the futures gas price since the previous report”, the company explained.
Nonetheless, the company’s net attributable interest is valued at US$165 million in undiscounted cash flow and $93 million at 10% discounted cash flow for its proven reserves alone, based on the Nymex forward strip price as of 7th March 2012.
Executive Director Comments
Peter Landau, Executive Director of Range Resources, commenting on the progress at the North Chapman Ranch Project, said:
“We are extremely pleased with the recent results from our Texas drilling programs, which has confirmed what the Company had strived to do in increasing shareholder value through the increase in the Company’s share of Proved and Probable reserves from the North Chapman Ranch Project. This now paves the way for the Company to commence divestment of the Company’s interest in the project during Q3 2012. The sales prices of similar production assets in the region have been encouraging, and any such divestment will provide significant funding that could be applied to Range’s current activities and other possible corporate initiatives such as an on market share buy back.”
Company Spotlight
Range Resources Limited is a dually-listed oil and gas exploration and production company with assets in Somalia and the former Soviet state of Georgia.
Trading on the Alternative Investment Market in London, shares were up 11.4%, to 8.15 pence a share as of 11:00 AM GMT.
Neena…thanks for the update. Any word on how Kendall Norman did in the final? I know they only score the top ten, but he was 9th day one. Thanks