Range Resources Ltd

Range Resources Limited (“Range” or “the Company”) is both an ASX-listed (ASX: RRS) and AIM-listed (AIM: RRL) exploration and production company with assets in Texas- U.S, Republic of Georgia, Trinidad and Puntland- Somalia.
 
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 East Cotton Reserve Report

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PostSubject: East Cotton Reserve Report   Tue Jun 29, 2010 6:39 am

Independent valuation of Range’s Interest in East Texas Cotton
Valley Prospect, Texas, USA, at US$18M

Highlights:

Independent Petroleum Engineers, Lonquist & Co LLC, have completed an independent reserves and valuation report on East Texas Cotton Valley Prospect in Red River County, Texas, USA

• Reserves report estimates total gross commercially recoverable Reserves (1P, 2P and 3P) of the East Texas Cotton Valley Prospect as 5.4 mmbbl of oil (attributable to Range – 0.7 mmbbls)

• The planned multi‐well program is anticipated to move Possible (P3) Reserves into the Probable (P2) and Proved (P1) Reserve categories

• Independent PW10 DCF valuation of Range’s net interest of US$18m

International oil and gas company Range Resources Limited (ASX: RRS) (“Range” or “the Company”) is pleased to announce the results of independent certification by Independent Petroleum Engineers, Lonquist & Co LLC (“Lonquist”) 1 of the Company’s interest in the East Texas Cotton Valley Prospect in Red River County, Texas, USA.

Range holds a 13.56% interest in East Texas Cotton Valley Prospect, with Crest Resources Inc. as operator (refer ASX Announcement dated 17 June 2010), with the prospect’s project area covering approximately 1,570 acres, encompassing a recent oil discovery.

Development of the shallow oil reservoir (which is a combination trap type) in the Cotton Valley formation is expected to begin in 3Q 2010, with the drilling of a horizontal appraisal well in the field.

Range, through its technical consultants Texas Energy Advisors LLC, engaged Lonquist to compile geological, geophysical and engineering data and provide an Independent Reserves Report and Valuation for the prospect.

Lonquist’s independent reserves report has estimated the following gross commercially recoverable reserves from the East Texas Cotton Valley Prospect:
Category

Oil
(mmbbls)
Proved (P1) 1.5
Probable (P2) 1.2
Possible (P3) 2.7
Total Reserves 5.4
Set out below is Range’s attributable interest in the gross recoverable reserves on 13.56% of the East
Texas Cotton Valley Prospect:
Category
Oil
(mmbbls)
Proved (P1) 0.20
Probable (P2) 0.16
Possible (P3) 0.36
Total Reserves 0.72
The planned multi‐well program is anticipated to move Possible (P3) Reserves into the Probable (P2) and Proved (P1) Reserve categories, with the drilling of a horizontal appraisal well in the field scheduled for Q3 2010.

Based on the reserve numbers cited above, Lonquist’s estimated net undiscounted cash flow value to Range, along with PW10 discounted cash flow (at a 10% discount rate) based on Nymex forward strip prices reported on 31 December 2009, following reductions for royalties, opex, capex, production taxes etc are as follows:

Reserve
Category
Undiscounted
US$
PW10
US$
Proved (P1) 8.5m 5.4m
Probable (P2) 7.0m 4.4m
Possible (P3) 14.7m 8.1m
Estimated Future Cashflow (Range’s net interest) 30.2m 17.9m

A copy of Lonquist’s East Texas Cotton Valley Prospect ‐ Estimated Future Reserves and Revenues for Range is attached and contains further details on the assumptions on which these valuation estimates are based.

***********************************************************************************************
Range Executive Director, Mr Peter Landau, commented, ”Range is pleased that from an initial investment of US$256k for leasehold acquisition costs, plus an estimated US$220k (Range’s net share) to drill and develop the first well scheduled for 3Q 2010, we have been able to achieve a significant uplift in shareholder value, based on independently assessed reserves and valuations reported on the East Texas Cotton Valley Prospect.”
**********************************************************************************************
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