By OGJ editors
HOUSTON, Dec. 2 -- Range Resources Corp., Fort Worth, said 100-150 new wells will be drilled in West Virginia and Virginia in 2005 on $219 million of Appalachian basin properties it is acquiring from a private seller.
The latest acquisition, to close by Dec. 31 retroactive to Oct. 1, comes on the heels of Range's purchase of the 50% of Appalachian operator Great Lakes Energy Partners Inc. that it did not own (OGJ Online, June 7, 2004).
The latest deal will add 205 bcf of gas-equivalent proved reserves and 14.8 MMcfd of net production. Production should rise 10-15%/year for at least the next 8 years with ongoing development, Range said.
About 85% of the production being acquired is in Nora gas field, Dickenson County, southwestern Virginia.
The two acquisitions will have more than tripled Range's Appalachian production and reserves in 2004 from 262 bcf of gas equivalent at yearend 2003.
The acquisition
Range is acquiring 417,000 acres, and the interests being acquired on 373,000 mineral acres include royalty and working interest.
About 30% of the proved reserves are derived from royalty interests, which bear no operating cost. Only 40% of the reserves being acquired are developed, and more than 80% are coalbed methane (CBM), Range said.
Of the 1,872 producing wells to be acquired, the company will own a royalty interest in 1,317 wells, royalty and working interest in 516 wells, and working interest in 39 wells. It has identified 1,550 drilling locations, of which 790 are classed as proven. Range will own a 50% working interest and 12.5% royalty on 90% of the locations.
Rights to all depths are being acquired, and deeper potential on the properties has yet to be evaluated, Range added.
"The acquisition involves the legacy oil and gas assets of an eastern coal company which date back almost a century," Range said.
Nora field
Nora gas field is Virginia's largest gas resource, according to the state Division of Mineral Resources.
Production of conventional and shale gas began in 1951 and was joined by CBM in 1988. State figures show Nora averaged 21 MMcfd in 1997, two thirds of which was CBM. Federal data show the field averaged 44 MMcfd for an unspecified period earlier in this decade (see table, OGJ, Apr. 19, 2004, p. 40). The field covered 170 sq miles and had 649 wells in 1997.
Today, Nora has nearly 1,900 wells on 339 sq miles and has at least a further 1,408 identified drilling locations, Range said. Range will own interests in 742 CBM wells 1,200-2,500 ft deep and 373 tight sands wells 4,500-5,500 ft deep in the field.
Equitable Supply, Pittsburgh, operates nearly all of Nora field. After the acquisition, Range would have the right to propose wells and the right to participate for a 50% working interest in all CBM wells and a 20% working interest in tight gas wells drilled by Equitable in Nora field on non-Range acreage.
The other main fields in which Range is acquiring interests are Haysi and Slate Creek in Virginia and Widen/Fola and Blue Creek in West Virginia.
