Range Resources Share Discussion Threads

[cashandcard] 11/5/2010 10:55

CNF,

Thanks. True, pound for pound we've got a much better producer here than some of those shale wells to the west of us.

Cash

[alistair4444] 11/5/2010 10:54

Captain - Once again I thankyou for your free analysis of the report.

[jathomas] 11/5/2010 10:49

Unbelievable Aim manipulation with this now going red! Another top up opportunity beckons.

[captainnelsonforties] 11/5/2010 10:42

Alistair,

Not sure who the independent was reviewing this field and well data but I'm sure they see their figures as accurate as possible using the information presently on hand. Sure its going to be more accurate when you fully test and fully appraise your field. that is why the bulk of the reserves at the moment are booked as possible. Even smith-1 has the possiblity of increasing the P2 significantly in terms of both oil and liquids. this would be after the well is stimulated and fully tested. So yes its early days yet in terms of a very accurate reserve picture. After wells are on long term production testing the reserve position would again be review. These independent reserve reports are a best quess by a suitably qualified party in this field and carried out to an industry standard (P3, N51-101, C3 etc etc) Its a best guess until more information is gathered from ongoing production and future well results. The results of the smith frac will be of imporatance to teh overall P2 position and how much of the P3 can be upgraded. that's why its not wise for folks to value Smith on P3 as if it were proven. These things take time, a steady rising share price is more important than a volatile swing trading share that ultimately ends up over sold.

Morning Cash,

Well its a traditional sandstone trap here not non-conventional carbonates/shales. So we have a much higher production index of 850boepd approx on 18ft of perforated reservoir. Those eagleford wells do on average about 2000boepd from 5000ft frac'd payable. Significantly higher production index and ultimate recoverability from traditional sandstone units like at Smith/NCR. Its excellent the high proportion of oil and condensate from these reserves at present. that's in line with Mobil DAvid one of the biggest fields in the nearby area. The lease area here is smaller than if it were a non-conventional shale, but the economics are much better for an aggressive and relatively low cost development (no need for horizontal completions and frac over 5000ft, 120ft vertical frac is much less expensive).

Spangles spot on.

Smoke,

Base your valuation on P2 proven and probable reserves, its standard practice when valuaing your oil stocks. P3 into P2 is what may be if all other appraisal wells come in as expected and produce. We've just another 6 wells to drill in the developmental programme before we're at that stage! So early days yet. Value in your reserves and your production and you'll get an underlying value of the company. As they develop Smith and North/Chapman more successful wells will lead to increased P2 and enhanced value to the company. If folks expect too much too soon all they'll get is hype and disappointment, rather than a steadily increasing share price. Serious money will be looking at a companies P2 and their production or ability to develop their assets. I've been in this business long enough to know that oil companies always find fair value eventually.

Captain Nelson Forties

[cashandcard] 11/5/2010 10:36

Spangle,

Good point. I am confident that, with further wells to come & three zones co-mingled in each, Crest, RRL and partners are able to realise much more of the P3 that is there. Today is good because those P3 oil figures are substantial. The natgas liquids are a revelation as I've never read about them before on our acreage. Had the oil resources been to the lower end, 5mmbbl, then I think this price would be justified. But its much higher and with further appraisal/development drilling to come, we will realise upside gradually. For now, this should put a floor under us.

Of course, valuations are made on P2 figures. With clear intent to develop the acreage I see our P1/2 increasing as the multi-well development campaign gets going with the second well shortly. I can't tell you, in this OP environment, how great a potential resource RRL have in Nth Chapman. Eme would kill for these kind of numbers that are in the process of moving from P3 into P1 & P2 at 20-25% WI.

Cash

[monkey puzzle] 11/5/2010 10:30

You have to remember this news was flagged up some time ago....alot of t-traders would have bought their trades on news coming out now and will be closing their deals and banking profits......happens all the time

[spangle93] 11/5/2010 10:19

C&C, you and others are focusing on 3P figures, which have a relatively low chance of coming in. Probably better than 1 in 10, but not greater than 1 in 5. The 1P + 2P is rather lower, since the figures are stacked towards the "possible" category.

Looking at the ratio of 3P:1P and the ratio of values associated with them, on page 2, they're both about 5:1, so the valuation seems to ascribe the same value to each reserve category, although discounting very slightly the possible (presumably since it will be delivered later?). I'm not sure how that's how analysts would see it. In the US, they usually just look at proved volumes, whereas the UK and Aus regard 2P as a better indicator of a company's assets.

So I'm happy with the position the Lonquist has painted, and I feel it underpins the price with exploration thrown in for free, but some of the higher numbers for price per share posted here based on this report alone are optimistic, especially if you take into account the large number of 5c warrents that are likely to be encashed.

[alistair4444] 11/5/2010 10:07

Tuesday, May 11, 2010
Range Resources confirms North Chapman Ranch Field oil and gas reserves

Range Resources (ASX: RRS) has reported that independent certification of the North Chapman Ranch Field in Texas has found the field contains significant oil and gas reserves.

Petroleum engineers, Lonquist & Co LLC (Lonquist) have estimated the total gross commercially recoverable reserves (1P, 2P and 3P) of the North Chapman Ranch Field are:

- 215 Bcf of natural gas (attributable to Range – 45 Bcf)

- 15.9 mmbbl of oil (attributable to Range – 3.3 mmbbls)

- 15.5 mmbbl of natural gas liquids (attributable to Range – 3.2 mmbbls)

Range holds a 25% interest in the North Chapman Ranch project's first well – Smith #1 – and 20% in all subsequent wells assuming the exercise of certain clawback provisions by joint venture partners based on the current success of the Smith #1 well.

Peter Landau, executive director of Range said, "from an initial investment of US$1.8m to drill, test and commercialise the Smith #1 well, we have been able to achieve a significant uplift in shareholder value based on independently assessed reserves andvaluations reported on the North Chapman Ranch Project."


The company anticipates the planned multi-well program will move possible (P3) reserves into the probable (P2) and proved (P1) reserve categories.

The report has made an independent PW10 DCF valuation of Range's net interest of US$226 million.

"We feel that the upcoming development and appraisal activities will add additional value to Range as we continue to add reserves, production and cash flow to create a balanced portfolio of lower‐risk development and production projects in the US with high potential exploratory prospects in Puntland and Georgia," Landau said.

The project area encompasses approximately 1,680 acres in one of the most prolific oil and gas producing trends in the State of Texas. Drilling of the first well resulted in a commercial discovery with first production and sales occurring in February 2010.

Range, through its technical consultants Texas Energy Advisors LLC, engaged Lonquist to compile geological, geophysical and engineering data and provide an Independent Reserves Report and Valuation for the project.

[maxmarilli] 11/5/2010 09:57

what we need here is a couple of rns a la "RKH style"....and we will forget 4/5 and 6 p for good....i will add pretty soon,max

[monkey puzzle] 11/5/2010 09:53

There's the drop...MMs will no doubt spook a few more with that now.

[smokemonster] 11/5/2010 09:52

Thanks CNF

Using the issued shares and the current mid price of £0.05 gives a market cap of £43m.

Looking at the report the Smith discounted valuation is $226m of which $36m (about £24.2m) is confirmed. The difference between the valuation and the market cap must represent the market's estimate of the value of the probable and possible reserves at Smith and Puntland/ Georgia.

When comparing market cap to the reserves valuation is it legitimate to only consider confirmed reserves or a proportion of the probable and possible reserves as well? Would the valuations of the probably and possible reserves have been made at different discount rates to reflect the levels of risk.

Sorry to ask these questions but I'm not familiar with oil share valuations.

[twissso] 11/5/2010 09:49

This is an outstanding result for Range. They've invested $1.8 US to farm in, get Smith#1 into production with a 25% stake have a 20% stake in further wells. Well done guys.

No more dilution for working capital which is a nasty reality for many small cap explorers. We're producing and there's loads of development work to persue.

The ASX is cautious because they've been through the ringer with Range. They will judge the report largely by the P1 (proved) resources and treat P2 (probable) and P3 (possible) figures with a grain of salt at this time. As Livic mentioned in a post just below if this news was released to AiM first the outcomes would be difference. Instead fair value reflection will take a little more time.

Another note of caution from ASX is the projected pay out timescales. The field needs a couple of more wells before it truly start coining out. That's in progress -

RB#1 to spud within days which will help delineate the overall size and characteristics of the reserve. The P1/P2/P3 figures will adjust accordingly. If they intersect all three pay zones drilled through Smith#1 the P1 will increase significantly. We've additional acerage remember so they can sink another 4-7 wells to get the field paying out rapidly (this is O&G so rapid is a relative term, we're talking up to 18 months for full development).

Smith#1 completion on the horizon as well which will significantly increase the pay out in a small space of time. Target rates are up to 1000m boe and 12Mcf a day. Cha-ching.

Great result for oil, particularly in the short term as the spot prices will be proportionately higher than gas through the summer.

My calculations were just calculation were only that. I always suspected that this initial report would give a floor around 5p but given the amount of oil that could be slightly higher.

I'm pleased that the volume is high and that there is solid support over 5.25p. We've been stuck between 3p and 4p for 6 months now.

4.5m shares tranferred from ASX to AiM which is healthy 0.53% - AiM will overtake ASX at some stage and it's not that far off IMO.

Texas in development
Puntland onshore at pre-mobilisation stage
Puntland offshore at PSA / JV deal stage
Georgia in JV restructure / pre-appraisal

Exciting times, GL all.

[cashandcard] 11/5/2010 09:48

PWhite,

Everyone has the right top free speech and I do not want to be rude. After reading your posts I'm starting to think your comprehension isn't so great. 'Nth Chapman Ranch project' in the context of RRL means the 1,680 acre area which Crest, RRL and a few third parties with back-in rights share an interest in. Its this area where Smth-1 has been drilled and now flowing oil&gas to sales to be followed shortly by RB-1. RRL have a 25% WI over the 'acreage position' and wells drilled will be subject to 5% bck-in rights. Its all there in the update above. Seriously, its not so difficult when you look at it with a 'clear mind'.

Cash

[poisson rouge] 11/5/2010 09:46

Just topped up. This current price level is just silly. Smith worth $300m and still sub 6p? I'm filling my rhinestone's...

Yee haa!

[cockney sparrow] 11/5/2010 09:45

CNF, The conversation started on the RKH board this morning and spilled onto here.

Pwhite73 has tripped himself up it seems.

[cashandcard] 11/5/2010 09:41

CNF,

Good morning to you. The gas resource came in where most were expecting. I'm delighted by the Oil numbers as they have exceeded the 10mmbbl I was hoping for over the entire acreage. However, the natgas liquids are somewhat of a revelation. What are your thoughts re. the liquids over the project area? Do you think we are looking at something similar to Austin Chalk/Eagleford type oil/condensate window? I know you are in eme who deal with type of play so look forward to your informed response.

Cash

[alistair4444] 11/5/2010 09:39

Captain any of your views re this comment made this morning..

"All we have so far is a proved figure.......in my 10yrs in the industry the possible figure is very hard to attain. What Range needs to do is clear uncertainty around possible and add that volume to probable. Then clear uncertainty in probable and add that value proven. This can only be done by drilling more wells. The first well was a straw in a closed container.....its always going to be inaccurate."

Thanks Al

[captainnelsonforties] 11/5/2010 09:37

Smoke,

Sure.

"As at 31 March 2010 the Company had on issue 853,583,049 million ordinary
shares and a total of 568,372,541 million options"

[smokemonster] 11/5/2010 09:36

Can someone remind me of the total number of issued shares for this company?

[jackman2] 11/5/2010 09:34

Thanks for the explanation MP - I hold a small amount and have done since 3.7p - will hold on

[captainnelsonforties] 11/5/2010 09:33

IJ,

True. Just letting any new readers what's going on and giving mr white a little advice. Whether he takes that advice or not is up to him. He may well be shorting the company as he did mention that he'd never made money from AIM so you never know. I'll let the subect lie now as it has been kinda nailed to death. ;) Again agreed that was more lies and misinformation regarding this project.

Captain Nelson Forties

[maxmarilli] 11/5/2010 09:31

Good morning all...excellent news and for some games we are like yest share price ...let the funds manager put their orders and 10p will be here soon.....b4 spudding smith2,imo.....

[monkey puzzle] 11/5/2010 09:31

Jack,

That's how the MMs make their money...selling high and buying cheap....a few will no doubt move on after banking quick profits, the share price can mark time for a few hours, days or even weeks or months (look at GKP)....if you feel it has value to offer, and most genuine posters here do, then take advantage of any further dips to add now you have a further de-risked share.

[jackman2] 11/5/2010 09:28

so guys - good news and the price is down 2% -- 5.50 close yesterday tom 5.38 now.

[captainnelsonforties] 11/5/2010 09:26

CS,

I have to say I missed the post in where he stated that he was qualified in posting libellous material. ;) I just tend to speed read those but it was clear from his posting what he was trying to do. He was trying to disassociate a good report regarding Range from the company itself. I'm not going to repeat the other serious accusations that he made regarding RRL as putting those into print again is still libel. I hope noone from the company is monitoring the bb this morning or mr white will find himself in potentially very hot water.

Captain Nelson Forties