At year-end 2012, the Company recognized 307 Bcfe of incremental ethane reserves as NGL proved reserves in the Marcellus Shale associated with initial ethane deliveries under contracts commencing in 2013. The remaining Marcellus ethane reserves continue to be included as natural gas reserves until additional ethane contracts commence in 2014 and 2015. As a result, the majority of its ethane volumes are currently left in the natural gas stream and sold on an energy equivalent basis. If ethane recovery were occurring at year-end 2012 for all the ethane deliveries under currently executed contracts, the Company’s estimated proved reserves by volume would have been 7.0 Tcfe, composed of 66% natural gas, 30% NGLs and 4% crude oil. In all geographical areas other than the Marcellus, ethane is normally included in the NGL reserves under customary reporting practices.As noted above, Range replaced 773% of production from drilling in 2012 including performance revisions. The Company's estimate of drilling and development costs incurred during 2012 including acreage, exploration and seismic expenses is approximately $1.65 billion which is subject to year-end audit. Included in the $1.65 billion capital spending amount is approximately $190 million for acreage. Finding and development cost from all sources averaged $0.87 per mcfe including price and performance revisions. Drill bit development cost (which excludes price revisions and acreage cost) averaged $0.68 per mcfe. The Securities and Exchange Commission ("SEC") rules require that proved reserve calculations be based on the prompt month average prices over the preceding twelve months. For the year-end 2012 reserve evaluation, the benchmark prices were $2.76 per Mmbtu for natural gas and $95.05 per barrel for crude oil (Cushing), representing the simple average of the prices for the first day for each month of 2012. Comparative prices for year-end 2011 were $4.12 per Mmbtu for natural gas and $95.61 per barrel for crude oil (Cushing). Based on these prices adjusted for energy content, quality and basis differentials ($2.75 per Mmbtu, $32.23 per barrel of natural gas liquids and $86.91 per barrel of crude oil, respectively), the pre-tax discounted (10%) present value (“PV10”) of the Company's proved reserves was $4.0 billion for year-end 2012 compared to $6.1 billion at year-end 2011. The Company’s PV10 value of its proved reserves includes estimated future development costs to develop the proved undeveloped reserves of $3.5 billion. Using the 10-year future strip benchmark prices as of December 31, 2012, the Company’s PV10 value would have been $8.2 billion. The 10-year future strip benchmark prices were $4.84 per Mmbtu and $87.90 per barrel. The comparative prior year PV10 value using 10-year future strip benchmark prices as of December 31, 2011 of $4.90 per Mmbtu and $92.66 per barrel, was $7.4 billion.
|SUMMARY OF CHANGES IN PROVED RESERVES|
|Balance at December 31, 2011||5,054|
|Extensions, discoveries and additions||1,767|
|Balance at December 31, 2012||6,505|