It seems like every week another E&P makes a move on
the mighty Marcellus shale. Most recently, it was
Newfield Exploration (NYSE: NFX) hitching up
with
Hess (NYSE: HES) to exploit 140,000 gross
acres in Pennsylvania. With the Marcellus coming to the fore
as one of the top destinations for domestic drilling, lots of
companies are playing catch-up. Not
Range Resources (NYSE: RRC).
Range
pounced on this playearly, having drilled 77 horizontal
wells in the Marcellus to date. The company estimates that it
has about 900,000 acres in the "fairway," or most prospective
land within the broader play. In southwestern Pennsylvania
alone, where about 320 industry wells have helped to
delineate the shale resource, Range sees the potential for
3,900 horizontal well locations. Overall, the Marcellus will
keep the company busy for a very long time.
In the third quarter, Range delivered another strong
performance, with overall production up 13% over last year.
The Marcellus is on track for 90 million to 100 million cubic
feet per day of production by the end of the year, up from 26
million at the end of 2008. That number is set to double
again in 2010, thanks to more custom-built Drake rigs being
delivered by
National Oilwell Varco (NYSE: NOV).
All-in costs came in at $4.69 per mcfe (thousand cubic
feet equivalent), just a bit higher than when we checked on
Range and
Cabot Oil & Gas (NYSE: COG) in the
first quarter. Range Resources remains a low-cost leader,
with cash flow margins of 67% this quarter. That's not
terribly far off from
Ultra Petroleum (NYSE: UPL)
territory. The fact that Ultra is also making moves on
the Marcellus makes it a tougher call on which horse to back
in this shale race. Let's put it to a vote, shall we? Take
the poll then let us know your reasoning in the comments
section below.
This article was originally published as
Magnificence in the Marcelluson
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