oilbarrel - 'exciting times ahead'

http://www.oilbarrel.com/nc/news/display_news/article/frac-work-boosts-production-for-range-resources-in-texas-as-excitement-mounts-ahead-of-georgia-and-p/771.html

June 02, 2011
Frac Work Boosts Production For Range Resources In Texas As Excitement Mounts Ahead Of Georgia And Puntland Drilling Campaigns


These are exciting times for shareholders in AIM-quoted Range Resources, which has already seen its shares double in value since January although there has been some weakening in recent weeks.

The E&P has development work underway in Texas and Trinidad, which if successful would put the company on a sustainable financial footing, as well as gearing up to drill some high impact exploration wells on its promising acreage in Georgia and Puntland.

First to the bread and butter stuff. In Texas, the company, which is also listed on the ASX, is completed a fraccing programme on its producing wells on the North Chapman Ranch property.

Fraccing of the uppermost zone of the Russell-Bevly-1 well has been declared a ?complete success?, with 150,000 pounds of frac sand pumped into the formation, delivering stabilised flow rates of 3.5 million cubic feet of gas and 350 barrels per day from this one zone.

When co-mingled with the other completed zones, this should see the well significantly exceed the budgeted 4 million cf/d and 350 bpd, adding substantially to the well?s overall recovery.

Range?s executive director Peter Landau said the company ?couldn't be more pleased with the results?.

?Initial rates from this one zone alone have surpassed what other operators are getting from several wells combined,? said Landau.

Fraccing will now move to the Smith-1 well, the company?s first commercial discovery on the North Chapman Ranch property in 2009.

This will be followed by the drilling of a third well, Albrecht-1 well, in Q3.

On the East Clarksville field, the company is awaiting the arrival of frac equipment and crews to begin work on the recently drilled Ross-3H horizontal well, which has a 3,400 feet lateral section with good oil shows observed throughout.

These properties may be modest in terms of reserves potential but low costs, high oil prices and some recovery in the US natural gas price mean they can make a very valuable contribution to the bottomline.

Trinidad is a new addition to the portfolio and the company has ambitious plans to ramp up production here from around 700 bpd to 4,000 bpd from the known P1 and P2 reserves of 4.8 million barrels over the next 36 months (there are also undeveloped prospective resources of 20 million barrels).

This work programme will initially target nine shallow wells in the Upper Cruse, Lower Forest and Shallow Forest formations, at depths of 250 to 2,000 ft, with initial flow rates of between 40 and 150 bpd.

The dual-listed company also intends to target the deeper and potentially bigger Herrera formation, which has not been included in any of the reserve calculations.

Range plans to reprocess existing 3D seismic to upgrade its current portfolio of 10 Herrera targets, with a first well expected to spud in 2011.

Analyst Barney Gray at Old Park Lane Capital said the progress in Texas and Trinidad ?continues to derisk the business?.

This is important because for many investors the main business of Range Resources remains its higher risk exploration projects in Georgia and Puntland.

The latter project carries a high degree of geopolitical and security risk ? Puntland is a semi-autonomous region of lawless Somalia ? but the geological prize could be company-making, with Range hoping to prove up an extension of the multi-billion barrel oil plays across the Gulf of Aden in nearby Yemen.

Range has a 20 per cent interest in two blocks here, Dharoor and the Nugaal Valley, alongside operator Africa Oil and co-venturers TSX-V-listed Lion Energy and the ASX-listed Red Emperor Resources.

The partners have signed a letter of intent with a drilling subcontractor to drill their first well in Q3.

This will be a significant milestone, for both Range and for Puntland, providing the first drillbit test of these frontier lands in the East African Rift Basin for a couple of decades.

Georgia also offers significant upside.

According to a recently announced RPS study, the company?s fold-thrust play in Blocks VIA and VIB could contain recoverable oil reserves of 613mm barrels gross.

The first of two planned wells, Mukhiani-1, is expected to spud this month, targeting some 115 million barrels of mean oil in place in the Vani-3 prospect (with a P90 to P10 range of 41.7 to 178.2 million barrels).

Range?s partners here are Strait Oil & Gas and ASX-quoted Red Emperor Resources.

?With Range participating in four high impact exploration wells over the next six months, we believe that investors should see the recent weakness in the share price as an opportunity,? said OPLC analyst Barney Gray in a recent note.