Southwestern PA Production Potential

Range Resources published informative production graphs and pricing information in their September 26, 2013 Company Presentation here .  See pages 38-42.  Lots of other interesting stuff there as well.

Your Mileage May Vary!!

 

Phil

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Permalink Reply by mark on October 9, 2013 at 2:32am

mornin phil
 could you pleeze provide a link to this presentation or a address for this?  thankx mark

P.S. inquiring minds want to know!!!!!!!!!!!!!

Permalink Reply by Philip Thackray on October 9, 2013 at 3:27am

Mark,

Click the link above or copy paste this into your browser:

http://www.rangeresources.com/rangeresources/files/81/81a51477-395f...

In general, these presentations update about once a month and can be found here:

www.rangeresources.com

Then click Company Presentation.

The Rex equivalent is at:

www.RexEnergy.com

Scroll over Investor Relations then click Events and Presentations then click View Presentation under Featured Event

Phil

Permalink Reply by FairMktValue on October 9, 2013 at 3:46am

Hi Phil,

These presentations along with the conference call w/analyst are usually very informative. I have been following Rex for about the last year or so and I think I may need to keep an eye on Range . Seem to be movin in to the southeast Butler Co.

Cheers

Permalink Reply by Philip Thackray on October 9, 2013 at 4:35am

Hi FMV!

The Range wet Marcellus numbers are basically Washington County and relfect Range's RCS (Reduced Cluster Spacing) and full ethane recovery.  Butler County numbers that I have seen are not this good.

The real price wild card is ethane.  If ethane gets back near $1/gallon that adds more than $2 to 1000 cubic feet at the well head.

Phil

Permalink Reply by al raptoria on October 9, 2013 at 5:52am

This report might be of interest too - I started a new thread with it before seeing this thread: Good Luck All!

http://www.energyandcapital.com/articles/fracking-companies-gain-gr...

Permalink Reply by mark on October 9, 2013 at 11:02pm

morning phil  I got it can you tell me where i kind find a legend to decipher all the abrevations that these people use in these reports makes it hard for a layman to make sense of ?? you and tim tarr seem to have it going on if you guys could friend me up and maybe I could get a list to print out appreciate it thankx      mark

Permalink Reply by Craig Cooper on October 10, 2013 at 6:39am

mark,

Schlumberger's oilfield glossary is a useful reference and can be found at:

http://www.glossary.oilfield.slb.com/

Permalink Reply by Tim Tarr on October 9, 2013 at 7:41am

What's really interesting is how the EUR (estimated ultimate recovery) numbers have changed in last 18-24 months.

In late 2011 it was 281 Mbbls (24 Mbbls condensate and 257 Mbbls NGL) and 4.2 Bcfe of gas.

Latest #'s             978 Mbbls (27 Mbbls condensate and 951 Mbbls NGL) and 6.4 Bcfe of gas.

              Even better is the down-spacing data:

from 1000 feet to 500 feet shows 80% of those newest #'s.

Those are all (RRC) Wet Gas #'s  similar changes for dry gas and super rich.

In 2 years the EUR has almost tripled If those down-spacing numbers hold. They haven't even got serious about Upper Devonian yet. Let alone Utica/Point Pleasent potential.

Just keeps getting more gooder. : ))

Permalink Reply by Philip Thackray on October 10, 2013 at 1:53am

Mark,

The abbreviations Mmboe, Bcfe etc, and terminology “shrinkage”, “rejection”, “equivalent” and so forth are confusing but definable.  But there is also much ambiguity.  For example EUR’s (Estimated Ultimately Recoverable) may be expressed as Mmboe (Thousand – Thousand barrels of oil equivalent which is one million barrels of oil equivalent).  The concept of “equivalent” is based on BTUs so to convert Mmboe to Bcfe (Billion cubic feet equivalent) multiply Mmboe by six to get the Bcfe.  From the recent Range report, (page 23) we see the EUR of a Super-Rich well (or combination of wells to make 80 acres) listed as 1.82 Mmboe and as 10.9 Bcfe.  If you use the current prices for oil and gas you see that these 80 acres produce $183 million dollars (using Mmboe) or $40 million dollar (using Bcfe).  Which dollar number is correct --- NEITHER.  A true calculation of ultimate production requires a complete breakdown of all produced components; methane (aka residual), condensate (aka oil), NGL’s (with or without ethane) going out in time and their prices also going out in time.  Not to mention deductions.  So a lot of assumptions have to be made (principal among them “are these published numbers real”) before a lifetime production number can be reached or more usefully a NPV (Net Present Value) calculation can be made which itself requires a guess at what your capital could earn elsewhere.  RBN energy published a spread sheet for a NPV calculation based on a dry gas well out west.  Go here.  You may have to join but it is free.

And as much as I’ve looked at this stuff over the last five years, I still have questions.

As shown above, the problem is not just a glossary of terms.  Such a list would make reading the presentations more “familiar” but would not solve the problem of actually evaluating the lifetime dollar projection or NPV which is what everyone really wants to know.

More later,

Phil

Permalink Reply by Philip Thackray on October 10, 2013 at 2:06am

Tim Tarr,

I hope the published numbers are close to real.  The closer horizontal spacings create some real fracking problems.  I know that both Rex (600’) and XTO (500’) have tried closer spacings here in Southern Butler County.  I have already heard of an XTO frack blowing into the horizontal next to it.  I’m not sure what that spacing was.  An XTO completion engineer (frack designer) told me that the closer spacing are possible problems.

From production data available at Marcellusgas.org I’m not sure that one can compare Range numbers from Washington County to Rex numbers in Butler County.

And both of the recent Range and Rex projections assume ethane recovery in a tough ethane market.

Phil

Permalink Reply by Tim Tarr on October 10, 2013 at 7:01am

Phil,

  I see I made an error on those EUR #'s. Those latest #'s are with slightly longer Laterals. I like that they now show #'s per 1000 feet of lateral.

From production data available at Marcellusgas.org I’m not sure that one can compare Range numbers from Washington County to Rex numbers in Butler County.

I agree 100%.

I don't think you would even get same results if Rex and RRC drilled at the same pad !!

From page 24

 Range has completed two 500 foot spaced pilot projects in the
super-rich and wet areas of the Marcellus Shale in Washington
County PA that have been online for three years
 Results from these projects have been very promising with
EURs for 500 foot spaced wells averaging 80% of EURs for
1,000 foot spaced wells
 Assuming full development of the super-rich and wet areas of
the Marcellus, tighter spacing adds an incremental 12 to 15
Tcfe of resource potential (including ethane extraction)
 Dry gas areas also have tighter spacing potential

  

  What is really interesting is that 12 Bcfe (150 MMcfe/acre) using 80 acre spacing (no down-spacing). Three years ago I was thrilled with 6 Bcfe (75 MMcfe/acre). Than again I thought Natural Gas would be $7 Mcf. So I guess it's just a wash on the bottom line.

Permalink Reply by Philip Thackray on October 10, 2013 at 9:23am

Tim,

It certainly is fun stuff to think about!!

Regards,

Phil

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