Feb 27, 2013 4 min read

FORT WORTH, Texas – Range Resources Corp. on Tuesday reported record annual natural gas production for 2012 of 753 million cubic feet per day, a 36 percent increase over 2011, with fourth-quarter oil and natural gas liquids volumes increasing 41 percent.

The record production amounts were presented with the Fort Worth oil and gas producers fourth quarter and annual financial results, reported after the close of Tuesday’s stock market.

The company said revenues for 2012 totaled $1.5 billion, an 18 percent increase as compared to 2011, with earnings totaling $13 million or 88 cents per share, versus $58 million or 36 cents per share in 2011. The company noted that 2012 results were driven by record high production and a decrease in unit costs, offset by a 23 percent decline in realized prices.

Fourth-quarter revenues totaled $458 million, a 51 percent increase compared to fourth quarter 2011 on earnings of $53 million, or 32 cents per share per share versus a net loss of $3 million, or a loss of 2 cents per share) in 2011. Fourth quarter results were driven by a 35 percent increase in production and lower unit costs.

Proved reserves increased 29 percent year-over-year to 6.5 trillion cubic feet, driven by a 64 percent increase in liquids reserves. Range said its unrisked unproved resource potential at year-end 2012 increased to 48-68 Tcfe, including 2.3 to 3.5 billion barrels of NGLs and crude oil.

Range Chief Executive Officer Jeff Ventura noted that the Marcellus Shale play that Range discovered in 2004 became the largest producing field in the U.S. in 2012.

“Our million acre position in Pennsylvania provides for future growth with low reinvestment risk and strong rates of return,” Ventura said in a statement. “The Marcellus fueled our 29 percent increase in proved reserves while increasing our liquids reserves by 64 percent.”

Ventura said that in 2013, the company expects to grow production by 20 to 25 percent, with its liquids production is expected to grow disproportionately as Range continues to focus the majority of its capital in its liquids-rich areas.

During 2012, Range strengthened its balance sheet with the sale of its Ardmore Woodford and other miscellaneous properties for approximately $170 million. The sale proceeds were used to pay down the outstanding balance on its bank credit facility. At year-end 2012, following the redemption of $250 million in high-coupon 7.5 percent bonds, the company had more than $900 million of liquidity on its credit facility.

The company noted that it recently entered into an agreement to sell 7,000 acres of its Permian Basin properties in southeast New Mexico and West Texas for a purchase price of $275 million. The sale is expected to close in April.

Range currently has more than 70 percent of its expected 2013 natural gas production hedged at a weighted average floor price of $4.18per mcf. Similarly, it has hedged more than 80 percent of its projected crude oil production at a floor price of $94.55 and more than 50 percent of its composite NGL production near current market prices.

The company said fourth quarter drilling expenditures of $234 million funded the drilling of 64 wells, with a 100 percent success rate. Drilling expenditures for 2012 totaled $1.36 billion, with Range drilling 298 wells and four recompletions during the year. Total capital spending for 2012 was $1.62 billion, including $189 million for leasehold. All-in finding and development cost for 2012 averaged $0.86 per mcfe, with drill bit reserve replacement of 773 percent. Drill bit only finding cost averaged $0.67 per mcfe.

Range said it continued to make significant progress in the Marcellus Shale during 2012 as it continued to grow production and reserves and delineate its sizable acreage position while expanding current and future marketing and transportation capabilities for natural gas and NGLs. It was able to reach its year-end production target of 600 Mmcfe per day net with approximately 75 percent of that production coming from the liquids-rich area of the play. Another milestone in 2012 was the signing of two additional ethane transportation agreements, ATEX and Mariner East; the culmination of several years of planning. Mariner East will also transport propane to the northeastUnited States for both domestic consumption and export to international markets. Ethane exports to Canada under the first ethane sales agreement are expected to commence on time in mid-2013. These ethane sales are expected to allow Range to meet natural gas pipeline quality requirements for the foreseeable future and are expected to eliminate shut-in production risk in the liquids-rich area.

During the fourth quarter, the company’s Southrn Marcellus division brought online 30 horizontal wells in southwest Pennsylvania, 26 of which were located in the liquids-rich area of the play.

In the southwest Marcellus, the company drilled and cased 25 wells in the fourth quarter.

In the northeast Marcellus, Range drilled and cased eight wells in the fourth quarter.