Thanks for that it appears I was looking at the wrong Range Resources. Some interesting reading there on their website which could be applicable to OEX if they get it together in the coming years.
In the early stages of the Marcellus play, Range anticipated that successful development would inevitably create a regional oversupply beyond what local demand could absorb. At that time, Range began focusing its marketing efforts on developing new markets outside the Appalachian basin, along with securing transportation arrangements at a reasonable cost to serve these markets. As a result, Range anticipates having the capability of selling Appalachian gas to a customer base that stretches from the Northeast to the Upper Midwest, the Gulf Coast and Texas, Florida and the Atlantic Coast. To this end, the Company has added 45 new natural gas customers so far in 2014. This has allowed Range to diversify its natural gas pricing, as we expect to move gas to over 20 different indices by 2018. Accordingly, the Company expects its Marcellus price realizations to improve in the years ahead compared to prices being received in Appalachia today, given the almost 34 Bcf per day of announced Appalachian basin pipeline takeaway projects that are expected to be in service by the end of 2018. Range expects that long-term differentials in Appalachia will ultimately equal the cost of transport out of the basin.
At the end of the third quarter, Range has contracts in place for approximately 1.1 Bcf per day of transportation capacity, increasing to 2.4 Bcf per day by 2018. Range's objective has been to layer in additional commitments that follow the Company's growing production volumes. These future capacity additions, to multiple markets outside the Appalachian region, will support Range's growth while maximizing net realized gas prices. As a result of discovering the Marcellus and being a first mover in securing transportation, Range has been able to secure its firm transportation and firm sales through 2016 at an expected average cost of $0.28 per Mmbtu in 2016, rising to $0.39 through 2018. Range expects that costs can be further reduced with our contractual marketing arrangements. Importantly, the Company has the option to renew many of these transportation agreements at the currently contracted rate.
- See more at: http://phx.corporate-ir.net/phoenix...l-newsArticle&ID=1983298#sthash.XGdtfgoc.dpuf
