Range Resources (RRC) touted the economics of its Marcellus Shale properties during its quarterly earnings conference call held on July 30, 2010. The company believes that the Marcellus Shale is one of the highest rates of return plays in North America, particularly in the wet gas area where Range Resources holds acreage.
“The Marcellus Shale, and especially the liquid-rich portion of the Marcellus, is extremely economic even at low gas prices. Our analysis indicates that $2.50 flat NYMEX gas and $60 flat oil or liquid ridge area in Southwest PA generates a 35% rate of return.”
“Our midyear estimate for all of our horizontal wells that are online averages 5 Bcfe per well. The five Bcfe average is based on 95 horizontal wells that all have greater than 30 days of production and they're all in the southwest part of the play. Our estimate of reserves per well per acreage has been 4 to 5 Bcfe. To date, we are clearly at the high end of that range.”
“In the southwest part of the play, given our current average lateral length of 3,050 feet with 10 frac stages, our completed well cost is about $4 million. The rate of return for our wells in Southwest Pennsylvania, which is in the wet gas area, assuming that we spent $4 million to get 5 Bcfe and that the gas price is $4 dollars per Mcf flat forever is 60%, and $5 flat forever, the rate of return at 79% and that's $6 flat and increases to 100%.”
“I believe that this is one of the highest, if not the highest rate of return gas play in the United States. Again, the qualifiers that we are drilling in the core portion of the wet gas area of the play in the Southwest Pennsylvania.”Source