Attached files
file | filename |
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10-K/A - 10-K/A - RANGE RESOURCES CORP | d84473e10vkza.htm |
EX-23.3 - EX-23.3 - RANGE RESOURCES CORP | d84473exv23w3.htm |
EX-99.3 - EX-99.3 - RANGE RESOURCES CORP | d84473exv99w3.htm |
EX-99.1 - EX-99.1 - RANGE RESOURCES CORP | d84473exv99w1.htm |
EX-31.1 - EX-31.1 - RANGE RESOURCES CORP | d84473exv31w1.htm |
EX-23.1 - EX-23.1 - RANGE RESOURCES CORP | d84473exv23w1.htm |
EX-31.2 - EX-31.2 - RANGE RESOURCES CORP | d84473exv31w2.htm |
EX-23.2 - EX-23.2 - RANGE RESOURCES CORP | d84473exv23w2.htm |
EXHIBIT 99.2
DeGolyer and MacNaughton
5001 Spring Valley Road
Suite 800 East
Dallas, Texas 75244
5001 Spring Valley Road
Suite 800 East
Dallas, Texas 75244
August 31, 2011
Range Resources Corporation
100 Throckmorton Street
Suite 1200
Fort Worth, Texas 76102
100 Throckmorton Street
Suite 1200
Fort Worth, Texas 76102
Gentlemen:
Pursuant to your request, we have conducted a reserves audit of the net proved crude oil,
condensate, natural gas liquids (NGL), and natural gas reserves, as of December 31, 2010, of
certain properties owned by Range Resources Corporation (Range). These properties consist of
certain productive lease hold interests located in New Mexico and Texas. This evaluation was
completed on August 31, 2011. This report was prepared in accordance with guidelines specified in
Item 1202 (a)(8) of Regulation S-K and is to be used for inclusion in certain United States
Securities and Exchange Commission filings by Range. Range has represented that these properties
account for 28 percent on a net equivalent barrel basis of Ranges net proved reserves as of
December 31, 2010, and that the net proved reserves estimates have been prepared in accordance with
the reserves definitions of Rules 410(a) (1)(32) of Regulation SX of the Securities and
Exchange Commission (SEC) of the United States. We have reviewed information provided to us by
Range that it represents to be Ranges estimates of the net reserves, as of December 31, 2010, for
the same properties as those which we evaluated.
Reserves included herein are expressed as net reserves as represented by Range. Gross reserves
are defined as the total estimated petroleum to be produced from these properties after December
31, 2010. Net reserves are defined as that portion of the gross reserves attributable to the
interests owned by Range after deducting all interests owned by others.
Estimates of oil, condensate, NGL, and natural gas should be regarded only as estimates that may
change as further production history and additional
DeGolyer and MacNaughton
information become available. Not only are such reserves estimates based on that information which
is currently available, but such estimates are also subject to the uncertainties inherent in the
application of judgmental factors in interpreting such information.
Data used in this audit were obtained from reviews with Range personnel, Range files, from
records on file with the appropriate regulatory agencies, and from public sources. Additionally,
this information includes data supplied by Petroleum Information/Dwights LLC; Copyright 2010
Petroleum Information/Dwights LLC. In the preparation of this report we have relied, without
independent verification, upon such information furnished by Range with respect to property
interests, production from such properties, current costs of operation and development, current
prices for production, agreements relating to current and future operations and sale of production,
and various other information and data that were accepted as represented. A field examination of
the properties was not considered necessary for the purposes of this report.
Methodology and Procedures
Estimates of reserves were prepared by the use of appropriate geologic, petroleum
engineering, and evaluation principals and techniques that are in accordance with practices
generally recognized by the petroleum industry as presented in the publication of the Society of
Petroleum Engineers entitled Standards Pertaining to the Estimating and Auditing of Oil and Gas
Reserves Information (Revision as of February 19, 2007). The method or combination of methods used
in the analysis of each reservoir was tempered by experience with similar reservoirs, stage of
development, quality and completeness of basic data, and production history.
For depletion-type reservoirs or those whose performance disclosed a reliable decline in
producing-rate trends or other diagnostic characteristics, reserves were estimated by the
application of appropriate decline curves or other performance relationships. In the analyses of
production-decline curves, reserves were estimated only to the limits of economic production or to
the limit of the production licenses as appropriate.
Definition of Reserves
Petroleum reserves estimated by Range and by us included in this report are classified as
proved. Only proved reserves have been evaluated for this report.
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Reserves classifications used by Range and by us in this report are in accordance with the
reserves definitions of Rules 410(a) (1)(32) of Regulation SX of the SEC. Reserves are judged
to be economically producible in future years from known reservoirs under existing economic and
operating conditions and assuming continuation of current regulatory practices using conventional
production methods and equipment. In the analyses of production-decline curves, reserves were
estimated only to the limit of economic rates of production under existing economic and operating
conditions using prices and costs consistent with the effective date of this report, including
consideration of changes in existing prices provided only by contractual arrangements but not
including escalations based upon future conditions. The petroleum reserves are classified as
follows:
Proved oil and gas reserves Proved oil and gas reserves are those quantities of
oil and gas, which, by analysis of geoscience and engineering data, can be
estimated with reasonable certainty to be economically produciblefrom a given
date forward, from known reservoirs, and under existing economic conditions,
operating methods, and government regulationsprior to the time at which
contracts providing the right to operate expire, unless evidence indicates that
renewal is reasonably certain, regardless of whether deterministic or
probabilistic methods are used for the estimation. The project to extract the
hydrocarbons must have commenced or the operator must be reasonably certain that
it will commence the project within a reasonable time.
(i) The area of the reservoir considered as proved includes:
(A) The area identified by drilling and limited by fluid contacts, if any,
and (B) Adjacent undrilled portions of the reservoir that can, with
reasonable certainty, be judged to be continuous with it and to contain
economically producible oil or gas on the basis of available geoscience
and engineering data.
(ii) In the absence of data on fluid contacts, proved quantities in a
reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a
well penetration unless geoscience, engineering, or performance data and
reliable technology establishes a lower contact with reasonable certainty.
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(iii) Where direct observation from well penetrations has defined a
highest known oil (HKO) elevation and the potential exists for an
associated gas cap, proved oil reserves may be assigned in the
structurally higher portions of the reservoir only if geoscience,
engineering, or performance data and reliable technology establish the
higher contact with reasonable certainty.
(iv) Reserves which can be produced economically through application of
improved recovery techniques (including, but not limited to, fluid
injection) are included in the proved classification when:
(A) Successful testing by a pilot project in an area of the reservoir with
properties no more favorable than in the reservoir as a whole, the
operation of an installed program in the reservoir or an analogous
reservoir, or other evidence using reliable technology establishes the
reasonable certainty of the engineering analysis on which the project or
program was based; and (B) The project has been approved for development
by all necessary parties and entities, including governmental entities.
(v) Existing economic conditions include prices and costs at which
economic producibility from a reservoir is to be determined. The price
shall be the average price during the 12-month period prior to the ending
date of the period covered by the report, determined as an unweighted
arithmetic average of the first-day-of-the-month price for each month
within such period, unless prices are defined by contractual arrangements,
excluding escalations based upon future conditions.
Developed oil and gas reserves Developed oil and gas reserves are reserves of
any category that can be expected to be recovered:
(i) Through existing wells with existing equipment and operating methods
or in which the cost of the required equipment is relatively minor
compared to the cost of a new well; and
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(ii) Through installed extraction equipment and infrastructure operational
at the time of the reserves estimate if the extraction is by means not
involving a well.
Undeveloped oil and gas reserves Undeveloped oil and gas reserves are reserves
of any category that are expected to be recovered from new wells on undrilled
acreage, or from existing wells where a relatively major expenditure is required
for recompletion.
(i) Reserves on undrilled acreage shall be limited to those directly
offsetting development spacing areas that are reasonably certain of
production when drilled, unless evidence using reliable technology exists
that establishes reasonable certainty of economic producibility at greater
distances.
(ii) Undrilled locations can be classified as having undeveloped reserves
only if a development plan has been adopted indicating that they are
scheduled to be drilled within five years, unless the specific
circumstances justify a longer time.
(iii) Under no circumstances shall estimates for undeveloped reserves be
attributable to any acreage for which an application of fluid injection or
other improved recovery technique is contemplated, unless such techniques
have been proved effective by actual projects in the same reservoir or an
analogous reservoir, as defined in [section 210.410 (a) Definitions], or
by other evidence using reliable technology establishing reasonable
certainty.
Primary Economic Assumptions
The following economic assumptions were used for estimating existing and future prices
and costs:
Oil, Condensate, and NGL Prices
Range has represented that the oil, condensate, and NGL prices were based
on a 12-month average price (reference price), calculated as the
unweighted arithmetic average of the first-day-of-the-month price for each
month within the 12-month period prior to the end of the reporting period,
unless
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prices are defined by contractual arrangements. Range supplied
differentials by field to a West Texas Intermediate reference price of
$79.81 per barrel and the prices were held constant thereafter. The
volume-weighted average price was $76.64 per barrel for oil and condensate
and $39.60 per barrel for natural gas liquids.
Natural Gas Prices
Range has represented that the natural gas prices were based on a
reference price, calculated as the unweighted arithmetic average of the
first-day-of-the-month price for each month within the 12-month period
prior to the end of the reporting period, unless prices are defined by
contractual arrangements. The gas prices were calculated for each property
using differentials to the Henry Hub reference price of $4.38 per Mcf
furnished by Range and held constant thereafter. The volume-weighted
average price was $3.53 per Mcf.
Operating Expenses and Capital Costs
Operating expenses and capital costs, based on information provided by
Range, were used in estimating future costs required to operate the
properties. In certain cases, future costs, either higher or lower than
existing costs, may have been used because of anticipated changes in
operating conditions. These costs were not escalated for inflation.
While the oil and gas industry may be subject to regulatory changes from time to time that
could affect an industry participants ability to recover its oil and gas reserves, we are not
aware of any such governmental actions which would restrict the recovery of the December 31, 2010,
estimated oil and gas volumes. The reserves estimated in this report can be produced under current
regulatory guidelines.
Range has represented that estimated net proved reserves attributable to the reviewed
properties are based on the definitions of proved reserves of the SEC. Range represents that its
estimates of the net proved reserves attributable to these properties which represent 28 percent of
Ranges reserves on a net equivalent basis
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are as follows, expressed in thousands of barrels (Mbbl), millions of cubic feet (MMcf), and
millions of cubic feet equivalent (MMcfe) of gas.
Our estimates of Ranges net proved reserves attributable to the reviewed properties are based
on the definitions of proved reserves of the SEC. Estimates of proved reserves by DeGolyer and
MacNaughton are as follows, expressed in thousands of barrels (Mbbl), millions of cubic feet
(MMcf), and millions of cubic feet of gas equivalent (MMcfe):
Net Proved | Net Proved | |||||||
Reserves | Reserves | |||||||
Estimated by | Estimated by | |||||||
DeGolyer and | Range | |||||||
MacNaughton | Resources | |||||||
as of | as of | |||||||
December 31, 2010 | December 31, 2010 | |||||||
Proved Net Reserves |
||||||||
Oil and Condensate, Mbbl |
10,411 | 10,476 | ||||||
Natural Gas Liquids, Mbbl |
31,951 | 33,495 | ||||||
Sales Gas, MMcf |
921,662 | 962,893 | ||||||
Net Equivalent, MMcfe |
1,175,829 | 1,226,724 | ||||||
Future Gross Revenue, M$ |
5,316,816 | 5,522,292 | ||||||
Production and Ad Valorem Taxes, M$ |
389,983 | 409,415 | ||||||
Operating Expenses, M$ |
1,084,172 | 1,107,021 | ||||||
Capital Costs, M$ |
572,306 | 544,735 | ||||||
Future Net Revenue, M$ |
3,270,355 | 3,461,120 | ||||||
Present Worth at 10 Percent, M$ |
1,355,582 | 1,398,319 |
Notes:
1. | Net equivalent million cubic feet is based on 1 barrel of oil, condensate, or natural gas liquids being equivalent to 6,000 cubic feet of gas. | |
2. | The numbers in this table may not exactly add due to rounding. |
In our opinion, the information relating to estimated proved reserves, estimated future net
revenue from proved reserves, and present worth of estimated gas contained in this report has been
prepared in accordance with Paragraphs 932-235-50-4, 932-235-50-6, 932-235-50-7, 932-235-50-9,
932-235-50-30, and 932-235-50-31(a), (b), and (e) of the Accounting Standards Update 932-235-50,
Extractive Industries Oil and Gas (Topic 932): Oil and Gas Reserve Estimation and
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DeGolyer and MacNaughton
Disclosures (January 2010) of the Financial Accounting Standards Board and Rules 410(a) (1)(32)
of Regulation SX and Rules 302(b), 1201, 1202(a) (1), (2), (3), (4), (8), and 1203(a) of
Regulation SK of the Securities and Exchange Commission; provided, however, future income tax
expenses have not been taken into account in estimating the future net revenue and present worth
values set forth herein.
To the extent the above-enumerated rules, regulations, and statements require determinations
of an accounting or legal nature, we, as engineers, are necessarily unable to express an opinion as
to whether the above-described information is in accordance therewith or sufficient therefor.
In comparing the detailed net proved reserves estimates prepared by us and by Range, we have
found differences, both positive and negative, resulting in an aggregate difference of 4.1 percent
when compared on the basis of net equivalent gas. It is our opinion that the net proved reserves
estimates prepared by Range on the properties reviewed by us and referred to above, when compared
on the basis of net equivalent barrels, in aggregate, do not differ materially from those prepared
by us.
DeGolyer and MacNaughton is an independent petroleum engineering consulting firm that has been
providing petroleum consulting services throughout the world since 1936. DeGolyer and MacNaughton
does not have any financial interest, including stock ownership, in Range. Our fees were not
contingent on the results of our evaluation. This letter report has been prepared at the request of
Range. DeGolyer and MacNaughton has used all assumptions, data, procedures, and methods that it
considers necessary and appropriate to prepare this report.
Submitted, DeGOLYER and MacNAUGHTON Texas Registered Engineering Firm F-716 |
||||
/s/ Paul J. Szatkowski, P.E. | ||||
Paul J. Szatkowski, P.E. Senior Vice President DeGolyer and MacNaughton |
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CERTIFICATE of QUALIFICATION
I, Paul J. Szatkowski, Petroleum Engineer with DeGolyer and MacNaughton, 5001 Spring Valley
Road, Suite 800 East, Dallas, Texas, 75244 U.S.A., hereby certify:
1. | That I am a Senior Vice President with DeGolyer and MacNaughton, which company did prepare the letter report addressed to Range dated August 31, 2011, and that I, as Senior Vice President, was responsible for the preparation of this report. |
2. | That I attended Texas A&M University, and that I graduated with a Bachelor of Science degree in Petroleum Engineering in 1974; that I am a Registered Professional Engineer in the St.ate of Texas; that I am a member of the International Society of Petroleum Engineers and the American Association of Petroleum Geologists; and that I have in excess of 37 years of experience in oil and gas reservoir studies and reserves evaluations. |
/s/ Paul J. Szatkowski, P.E. | ||||
Paul J. Szatkowski, P.E. | ||||
Senior Vice President DeGolyer and MacNaughton |