Nemaha ridge key to Range's Mississippi play approach

Range Resources Corp., Fort Worth, said it has already activated the five-rig drilling program that it had planned to institute in the first quarter of 2013 in the horizontal Mississippian lime play on the 157,000 net acres it holds in Kay County, Okla., and Cowley County, Kan.

The company has completed 18 horizontal wells in 2012 and that production results reaffirm its projected estimated ultimate recovery of 600,000 bbl of oil equivalent for the greater than 3,500-ft lateral well design.

Current plans call for Range to run five rigs in 2013, 10 in 2014, and 15 in 2015, the levels needed to hold all acreage. The five-rig 2013 program is expected to yield 51 producing wells and 17 water disposal wells. Range will continue testing completion and drilling techniques to improve on the current results while varying lateral lengths and the number of frac stages.

Range believes that all necessary infrastructure needed is in place to allow for the planned growth in 2013. Contracts are in place with two gathering and processing companies covering five facilities in the area with sufficient capacity for the expected growth in natural gas liquids and natural gas.

Range targets one disposal well for each five to eight producing wells drilled. The company believes its planned water disposal facilities will handle all of the produced water required for the 2013 program. In addition, Range is moving forward with plans to recycle produced water for fracture stimulations.

Chat with the lime

Almost all of Range’s acreage is on the Nemaha ridge, which runs primarily north-south and is 15-20 miles wide.

The Mississippi lime formation was developed years ago with vertical wells. More than 4,500 older vertical wells are scattered amidst Range’s leasehold position. Historically, the better vertical oil wells were drilled along the Nemaha ridge.

A chat component in the formation along portions of the ridge provides porosities of 30-40% compared with 3-5% in the lime portion of the formation. In addition, since the ridge was thrusted up, Range believes that the area along the ridge has more natural fracturing, creating better permeability in the reservoir that enhances hydrocarbon flow.

Historical vertical well results indicate that the eastern part of the play, where Range’s acreage is located, is more “oily” and that the play becomes more “gassy” as it moves west. Over 90% of the historical vertical wells on the eastern side of the play have been classified as oil wells.

Range has been testing and evaluating the Mississippi play methodically since 2006. The company drilled more than 100 new vertical wells before shifting to horizontal development in 2009.

Meanwhile, Range has updated its decline curves for the play. Given the characteristics of a depletion drive reservoir, the company said, initial oil production rates are expected to approach 50% of production but are expected to decline faster over time than the associated natural gas and NGL production.

Therefore, the decline curves are anticipated to be different for each product component which is consistent with historical results. For its acreage position, Range projects that the EUR per well will approximate one-third oil, one-third natural gas liquids, and one-third gas.

Wells and rates of return

Four of the 18 horizontal wells Range turned to sales this year have initial 24-hr production rates greater than 1,000 boe/d and average 83% liquids.

The Balder 1-30N well peaked at 782 b/d of oil, 339 b/d of NGL, and 1,448 Mcfd of gas after 19 frac stages in a 3,911-ft lateral. The Dakota 9-5S well peaked at 528 b/d of oil, 311 b/d of NGL, and 1,328 Mcfd of gas after 20 frac stages in a 4,296-ft lateral.

The Nancy Ann 1-1S well peaked at 834 b/d of oil, 230 b/d of NGL, and 980 Mcfd of gas after 20 frac stages in a 3,985-ft lateral. And the Troche 1-4N well peaked at 680 b/d of oil, 224 b/d of NGL, and 961 Mcfd of gas after 20 frac stages in a 3,946-ft lateral.

The Balder and Dakota wells are 11 miles apart, being on the eastern and western sides of the Nemaha ridge with the Nancy Ann and Troche wells in between. Range believes these wells greatly derisk this area and expects to recover 10% of the original oil in place drilling 4,000-ft laterals on 80-acre spacing. The company is generally drilling on 640s to hold leases and install infrastructure.

The 18 2012 wells Range has completed had an average 24-hr peak rate of over 500 boe/d. Ten of those wells have been online for 30 days or more, and the 30-day average rate for these ten wells is more than 390 boe/d, consistent with Range’s forecast type curve for these wells. The 18 wells averaged 19 frac stages in 3,800-ft laterals.

Based on the updated decline curves and estimated reserves of 600,000 boe, Range projects a well level rate of return of 96% based on a flat $80 WTI oil price and a flat $4 NYMEX gas price. This projected return is based on expected drilling and completion costs of $3.4 million/well which includes $200,000 for water disposal infrastructure and includes all estimated costs for gathering, pipeline, and processing.

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