Attached files
file | filename |
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10-K/A - FORM 10-K/A - RANGE RESOURCES CORP | d77860ae10vkza.htm |
EX-23.2 - EX-23.2 - RANGE RESOURCES CORP | d77860aexv23w2.htm |
EX-31.1 - EX-31.1 - RANGE RESOURCES CORP | d77860aexv31w1.htm |
EX-31.2 - EX-31.2 - RANGE RESOURCES CORP | d77860aexv31w2.htm |
Exhibit 99.1
November 19, 2010
Range Resources Corporation
100 Throckmorton Street
Suite 1200
Fort Worth, TX 76102
100 Throckmorton Street
Suite 1200
Fort Worth, TX 76102
ATTENTION: Mr. Alan W. Farquharson
SUBJECT: | Amended Report Letter | |||
Reserves Audit of Internally Assigned Oil and Gas Reserves to the Interests of |
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Range Resources Corporation | ||||
In Certain Selected Properties | ||||
Pursuant to the Requirements of the | ||||
Securities and Exchange Commission | ||||
Effective December 31, 2009 | ||||
Job 10.1163 |
At the request of Range Resources Corporation (Range), Wright & Company, Inc. (Wright) has
performed a reserves audit pursuant to 1209(a)(9) of Regulation S-K to estimate proved oil & gas
reserves and associated cash flow and economics from certain properties to the subject interests.
This evaluation was authorized by Mr. Alan W. Farquharson of Range. Projections of the reserves
and cash flow to the evaluated interests were based on specified economic parameters, operating
conditions, and government regulations considered applicable at the effective date and are pursuant
to the financial reporting requirements of the Securities and Exchange Commission (SEC). Wright
was requested to compare its results to the internal estimates made by Range as of December 31,
2009. It is the understanding of Wright that the purpose of this reserves audit was to opine as to
the reasonableness of Ranges internal projections, in the aggregate, of the selected properties.
The properties evaluated in this report are located in the states of Ohio, Pennsylvania and
Virginia. According to Range the total proved reserves subject to this evaluation and
reasonableness opinion represent approximately 52 percent of Ranges reported Total Proved
reserves.
Range provided to Wright their internal total summaries for the certain evaluated properties
by reserves categories. Range internally estimated net reserves, future net cash flows, and
discounted net cash flows as of December 31, 2009, the results of which are summarized in the
following table:
Mr. Alan W. Farquharson
Range Resources Corporation
November 19, 2010
Page 2
Range Resources Corporation
November 19, 2010
Page 2
Total | Total | |||||||||||||||||||
Range Resources | Proved Developed | Proved | Proved | Total | ||||||||||||||||
Corporation | Producing | Nonproducing | Developed | Undeveloped | Proved | |||||||||||||||
SEC Parameters | (PDP) | (PNP) | (PDP & PNP) | (PUD) | (PDP, PNP & PUD) | |||||||||||||||
Net Reserves to the Evaluated Interests |
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Oil, Mbbl: |
5,050.524 | 15.330 | 5,065.854 | 6,232.877 | 11,298.731 | |||||||||||||||
Gas, MMcf: |
607,905.126 | 23,901.088 | 631,806.214 | 737,355.923 | 1,369,162.137 | |||||||||||||||
Plant, Mbbl: |
9,547.481 | 193.566 | 9,741.047 | 19,441.828 | 29,182.875 | |||||||||||||||
Gas Equivalent, MMcfe (6 Mcf = 1 bbl) |
695,493.156 | 25,154.464 | 720,647.620 | 891,404.153 | 1,612,051.773 | |||||||||||||||
Cash Flow (BTAX), M$ Undiscounted: |
1,854,928.367 | 56,603.823 | 1,911,532.190 | 1,757,615.787 | 3,669,147.977 | |||||||||||||||
Discounted at 10% Per Annum: |
880,823.278 | 18,838.927 | 899,662.205 | 339,977.323 | 1,239,639.528 |
Wrights projections of the net reserves and cash flow to the evaluated interests in the
certain selected properties are summarized in the following table by reserves category, effective
December 31, 2009.
Total | Total | |||||||||||||||||||
Proved Developed | Proved | Proved | Total | |||||||||||||||||
Wright & Company, Inc. | Producing | Nonproducing | Developed | Undeveloped | Proved | |||||||||||||||
SEC Parameters | (PDP) | (PNP) | (PDP & PNP) | (PUD) | (PDP, PNP & PUD) | |||||||||||||||
Net Reserves to the Evaluated Interests |
||||||||||||||||||||
Oil, Mbbl: |
4,788.367 | 14.411 | 4,802.778 | 5,667.440 | 10,470.218 | |||||||||||||||
Gas, MMcf: |
592,211.186 | 27,139.702 | 619,350.888 | 736,041.014 | 1,355,391.902 | |||||||||||||||
Plant, Mbbl: |
9,778.374 | 187.204 | 9,965.578 | 20,552.344 | 30,517.922 | |||||||||||||||
Gas Equivalent, MMcfe (6 Mcf = 1 bbl) |
679,611.632 | 28,349.392 | 707,961.024 | 893,359.718 | 1,601,320.742 | |||||||||||||||
Cash Flow (BTAX), M$ Undiscounted: |
1,825,750.035 | 65,804.905 | 1,891,554.940 | 1,742,007.009 | 3,633,561.949 | |||||||||||||||
Discounted at 10% Per Annum: |
882,398.207 | 21,523.653 | 903,921.860 | 314,623.883 | 1,218,545.743 |
Comparing the results found in the previous tables of Ranges and Wrights independent
evaluations, the aggregate percentage difference between the reserves estimates is approximately
one (1) percent based on gas equivalent volumes. Based upon the results of Wrights evaluation, it
is Wrights conclusion that Ranges estimates of proved reserves are, in the aggregate, reasonable.
Proved oil and gas reserves are those quantities of oil and gas which can be estimated with
reasonable certainty to be economically producible under existing economic conditions, operating
Mr. Alan W. Farquharson
Range Resources Corporation
November 19, 2010
Page 3
Range Resources Corporation
November 19, 2010
Page 3
methods, and government regulations. As specified by the SEC regulations, when calculating
economic producibility, the base product price must be the 12-month average price, calculated as
the unweighted arithmetic average of the first-day-of-the-month price for each month within the
prior 12-month period. The benchmark base prices used for this evaluation were $3.87 per Million
British Thermal Units (MMBtu) for natural gas at Henry Hub, LA, and $60.85 per barrel for West
Texas Intermediate oil at Cushing, OK. These benchmark prices were adjusted for energy content,
quality and basis differential, as appropriate. With the appropriate adjustments applied, the
average adjusted product prices used to estimate proved reserves are $3.33 per Mcf and $50.51 per
barrel. Prices for oil and gas were held constant for the life of the properties.
Oil and other liquid hydrocarbons are expressed in thousands of United States (U.S.) barrels
(Mbbl), one barrel equaling 42 U.S. gallons. Gas volumes are expressed in millions of standard
cubic feet (MMcf) at 60 degrees Fahrenheit and at the legal pressure base that prevails in the
state in which the reserves are located. No adjustment of the individual gas volumes to a common
pressure base has been made.
The estimates of reserves contained in this report were determined by accepted industry
methods and the procedures used in this evaluation are appropriate for the purpose served by the
report. Where sufficient production history and other data were available, reserves for producing
properties were determined by extrapolation of historical production or sales trends. Analogy to
similar producing properties was used for development projects and for those properties that lacked
sufficient production history to yield a definitive estimate of reserves. When appropriate, Wright
may have also utilized volumetric calculations and log correlations in the determination of
estimated ultimate recovery (EUR). These calculations are often based upon limited log and/or core
analysis data and incomplete reservoir fluid and rock formation data. Since these limited data
must frequently be extrapolated over an assumed drainage area, subsequent production performance
trends or material balance calculations may cause the need for significant revisions to the
estimates of reserves. Wright has used all methods and procedures as it considered necessary under
the circumstances to prepare this report.
Net income to the evaluated interests is the cash flow after consideration of royalty
revenue payable to others, standard state and country taxes, operating expenses, and investments as
as applicable. The cash flow is before federal income tax (BTAX) and excludes consideration of
any encumbrances against the properties if such exist. The cash flow (BTAX) was discounted at an
annual rate of 10.00 percent (PCT) in accordance with the reporting requirements of the SEC.
Oil and gas reserves were evaluated for the proved developed producing (PDP), proved developed
non-producing (PNP) and proved undeveloped (PUD) reserves categories. The summary classification
of total proved reserves combines the PDP, PNP and PUD categories. In preparing this evaluation,
no attempt has been made to quantify the element of uncertainty associated with any category.
Reserves were assigned to each category as warranted. Wright is not aware of any local, state, or
federal regulations that would preclude Range from continuing to produce from currently active
wells or to fully develop those properties included in this report.
There are significant uncertainties inherent in estimating reserves, future rates of
production, and the timing and amount of future costs. Oil and gas reserves estimates must be
recognized as a subjective process that cannot be measured in an exact way and estimates of others
might differ
Mr. Alan W. Farquharson
Range Resources Corporation
November 19, 2010
Page 4
Range Resources Corporation
November 19, 2010
Page 4
materially from those of Wright. The accuracy of any reserves estimate is a function
of quantity and quality of available data and of subjective interpretations and judgments. It
should be emphasized that production data subsequent to the date of these estimates, or changes in
the analogous properties, may warrant revisions of such estimates. Accordingly, reserves estimates
are often different from the quantities of oil and gas that ultimately are recovered.
All data utilized in the preparation of this report were provided by Range. No inspection of
the properties was made as this was not considered to be within the scope of this evaluation.
Wright has not independently verified the accuracy and completeness of information and data
furnished by Range with respect to ownership interests, oil and gas production or sales, historical
costs of operation and development, product prices, or agreements relating to current and future
operations and sales of production. Wright requested and received detailed information allowing
Wright to check and confirm any calculations provided by Range with regard to product pricing,
appropriate adjustments, lease operating expenses, and capital investments for drilling the
undeveloped locations. Furthermore, if in the course of Wrights examination something came to our
attention that brought into question the validity or sufficiency of any information or data, we did
not rely on such information or data until we had satisfactorily resolved our questions relating
thereto or independently verified such information or data. In accordance with the requirements of
the SEC, all operating costs were held constant for the life of the properties.
It should be noted that neither salvage values nor abandonment costs were included in the economic
parameters in accordance with the instructions of Range. It was assumed that any
salvage value would be directly offset by the cost to abandon the property. Wright has not
performed a detailed study of the abandonment costs or the salvage values and offers no opinion as
to Ranges assumptions.
No consideration was given in this report to potential environmental liabilities that may
exist concerning the properties evaluated. There are no costs included in this evaluation for
potential liability for restoration and to clean up damages, if any, caused by past or future
operating practices.
Wright is an independent petroleum consulting firm founded in 1988 and does not own any
interests in the oil and gas properties covered by this report. No employee, officer, or director
of Wright is an employee, officer, or director of Range; nor does Wright or any of its employees
have direct financial interest in Range. Neither the employment of nor the compensation received by
Wright is contingent upon the values assigned or the opinions rendered regarding the properties
covered by this report.
This report was prepared for the information of Range and for the information and assistance
of its independent public accountants in connection with their review of and report upon the
financial statements of Range This report is also intended for public disclosure and for use in
filings made by Range with the SEC.
The professional qualifications of the petroleum consultants responsible for the evaluation of
the reserves and economics information discussed in this report meet the standards of Reserves
Mr. Alan W. Farquharson
Range Resources Corporation
November 19, 2010
Page 5
Range Resources Corporation
November 19, 2010
Page 5
Auditor as defined in the Standards Pertaining to the Estimating and Auditing of Oil and Gas
Reserves Information as promulgated by the Society of Petroleum Engineers.
It has been a pleasure to serve you by preparing this evaluation. All related data will be
retained in our files and are available for your review.
Very truly yours, Wright & Company, Inc. |
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By: | /s/ D. RANDALL WRIGHT | |||
D. Randall Wright | ||||
President | ||||