Range Resources (LON:RRL) , the AIM and ASX listed oil and gas group, has released details of an independent assessment of the recoverable reserves at its 1,680 acre North Chapman Ranch acreage in Texas, US. The assessment was launched following confirmation in March that the first well on the project, Smith #1, had been hooked up to sales. Range holds a 25% interest in Smith #1 and a 20% stake in all future wells.
Petroleum engineers Lonquist & Co have now estimated the 3P (possible) reserves of natural gas at 215 billion cubic feet, together with 19.9 million barrels of oil and 15.5 million barrels of natural gas liquids. The figures attributable to Range are 45 billion cubic feet of gas, 3.3 million barrels of oil and 3.2 million barrels of natural liquid gas. An independent PW10 discounted cash flow valuation of Range's net interest stands at US$226m.
The Smith #1 well was confirmed as a commercial discovery in December last year and launched into production during February. It has since been stabilised and is producing into the sales line at rates of between 2.2-2.8 million cubic feet of gas per day and 200-250 barrels of oil per day. In April, Range and its partners set out plans for a multi-well drilling programme at North Chapman, with the Russell Bevly #1 appraisal well due to begin drilling shortly. That programme is aiming to move possible (P3) reserves into the probable (P2) and proved (P1) reserve categories.
Range’s executive director, Peter Landau, said: “Range is pleased that 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 and valuations reported on the North Chapman Ranch Project.”
Shares in Range have been rising sharply since last Wednesday, when they were trading at 3.6p, before finishing yesterday at 5.5p. This morning they were down by just over 2% at 5.3p.
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