RANGE RESOURCES CORPORATION provides its 2015 capital budget and the initial results from its Utica/Point Pleasant well located in Washington County, Pennsylvania.
Range has set its 2015 capital spending budget at $1.3 billion, a decrease of 18% versus its 2014 capital budget. As a result of improving capital efficiencies from its Marcellus activities, Range expects to continue to deliver year-over-year production growth in the 20% to 25% range despite the reduction in its capital budget. The 2015 capital budget includes approximately $1,065 million for drilling and recompletions, $155 million for leasehold and renewals, $55 million for pipeline tie-ins and facilities and $25 million for seismic and other. By division, the 2015 capital budget is approximately 92% directed to the Marcellus, Southern Appalachia 4% and Midcontinent 4%. As previously announced, Range will increase the lateral lengths and the number of frac stages for its 2015 Marcellus wells to average 6,200 feet with 31 frac stages, or approximately 200 feet between stages. The laterals for a third of the 2015 wells are expected to be over 7,000 feet as the Company continues to optimize its well designs.
Range also announced that its Utica/Point Pleasant well located in Washington County, Pennsylvania achieved an average 24-hour test rate of 59.0 Mmcf per day against simulated pipeline pressure and conditions during the initial flow back. The well was drilled and cased to a true vertical depth of 11,693 feet with the 5,420 foot horizontal lateral completed with 32 frac stages. Initial calculations indicate a 0.88 psi/foot pressure gradient. This initial production ("IP") rate equates to a 10.9 Mmcf per day IP rate per 1,000 foot of lateral. We believe this is a record for any horizon drilled in the Appalachian Basin and also represents the highest IP rate of any Utica well. Range believes this well confirms its geological interpretation and enhances the value of Range's stacked-pay acreage position in southwest Pennsylvania. The well is owned 87.5% by Range. Range has a current leasehold position of approximately 400,000 net acres in the southwest Pennsylvania area which it considers as prospective for the Utica/Point Pleasant. The well is currently shut-in for approximately 90 days while facilities are completed. Afterwards the well is expected to be produced under facility-constrained conditions.
Commenting on the announcements, Jeff Ventura, Range's President and CEO, said "Our continued capital efficiency improvement is enabling Range to maintain our 20% to 25% growth target for 2015, while reducing our capital budget by 18%. This capital efficiency improvement coupled with our favorable hedge position and strong balance sheet gives us confidence that we can deliver substantial shareholder value in 2015 despite the challenging commodity price environment.
"We are very excited about the initial test results of our Utica/Point Pleasant well. Given our 400,000 net acre acreage position in the area, coupled with existing well control and 3-D seismic, we believe this translates into significant potential. Being able to drill additional Utica wells on the same locations as our Marcellus wells should further enhance our capital efficiency for many years to come."
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