One of the beautiful things about large Natural Gas finds like the Marcellus Shale is that company’s will compete with each other and will create a mini boom in which everyone benefits and it is a perfect example of why competition is healthy. Say your a Natural Gas company looking to expand operations in the Marcellus Shale. Before arriving, you know it is going to be a battle to compete against some of the top plays like Chesapeake Energy and Range Resources. So, you try to higher away talent by offering a higher salary and more perks. You also want a strong local workforce so you recruit from the local university’s and seek out potential local talent. You also need new equipment, but you want more modern equipment. As you can see, just about everyone benefits and the economic numbers are proving it as the Pennsylvania Marcellus Shale natural gas industry triggered $11.2 billion in economic activity in 2010. One of the company’s that have benefited from the Marcellus Shale is Range Resources Corp. (RRC).
Many consider Range Resources (simply known as “Range”) as the pioneer driller in the Marcellus Shale when it successfully drilled the first vertical well in 2004, the Renz #1. Little did it know it had discovered one of the largest fields in the country. Since then, Range has scaled up its operations and has positioned itself to further develop deeper shales like the Utica Shale. Nowadays, it has committed 86% of its capital region to drill in the region (source).
Range Resources-Marcellus Shale Facts
- Total Potential- Between 36- 46 tcf
- Acreage- 790,000
- First started drilling in the Marcellus Shale in 2004.
*source http://www.rangeresources.com/Operations/Marcellus-Division.aspx
Range plans to build on its early momentum and expand operations in the deeper Utica Shale. As of 2010, proved reserves grew 42% and production grew 14%. This came as natural gas trended lower for the greater part of 2010. Nevertheless, Range has positioned itself to be the king of the Marcellus Shale. It has sold much of its assets in other shales to extract as much as possible from the Marcellus and Utica Shales.To give you an example of its all in bet, Range plans to double its production from 2010 200 mmcf to rates of 400 mmcf in 2011 and 600 mmcf in 2012 (source). The large Natural gas fields being found all over the U.S. have put pressure on the price of Natural Gas but that has not stopped Range. As a matter of fact, can you imagine of Natural Gas was to climb to pre crisis levels. Range believes it could earn a 50% return if Natural Gas prices reach $4.
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