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Range Resources' 67% reserves upgrade at North Chapman to boost production and cashflows

With an independent valuation of Range's interest in North Chapman at US$248m, this will boost production and cash flows for Range, ultimately driving valuation.

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With the successful completion of Russell-Bevly #1, a revised reserve report on the North Chapman Ranch has been released by Range Resources (ASX: RRS) following the successful drilling and completion of the Russell-Bevly #1 appraisal well earlier this year, increasing Range’s attributable commercially recoverable reserves by 67%.

The updated reserves report from Independent Petroleum Engineers Lonquist and Co., LLC, boosts proved (P1) to 12.7 Bcf (natural gas) and 1.9 Mmbbls (oil and natural gas liquids).

The Russell-Bevly well has recently confirmed the company's structural and stratigraphic models and established additional proved oil and gas reserves across the northwest flank of the closure.

There is now total commercially recoverable reserves (P1, P2, P3) attributable to Range of 48.1 Bcf (natural gas) and 7.2 Mmbbls (oil and natural gas liquids) and an independent (PV10) DCF valuation of Range’s net interest of US$248m.

Peter Landau, executive director, said "as expected, the Russell Bevly #1 well has added new reserves, production and cash flow to the company's portfolio, while helping to calibrate our development plans for the North Chapman Ranch field going forward."

The well averaged 1.3 MMcfd and 104 Bopd during the month of September from just 11 ft. of perforations in one of four identified pay zones totalling roughly 130 ft in thickness.

Early October results have already increased to approximately 1.8 Mcf and 140 Bopd over the same zone following the increase of well head pressure.

In addition, the first horizontal well (Range holds 13.56% interest) in the East Clarksville oil field will be spudded later this month, which will be another milestone in the company's international exploration and development program.

The Ross 3H horizontal well will be drilled to 8,200 ft (2,500m) measured depth, with a horizontal section approximately 2,500 ft (762m) in length.

The well will test the Cotton Valley formation and offset the Morris 2H well that previously found good quality oil and reservoir rock approximately 500 ft (152m) to the west.

The Ross 3H could trigger an oil development drilling program of 20-25 wells, with estimated recoveries of between 200,000 - 300,000 Bbls per well. The Ross 3H is expected to cost $US 2.8MM to drill and complete, or $US 380,000, net to Range's 13.56% working interest.

"We are confident that the Ross 3H well will not only add additional crude oil to Range's growing reserve base, but will give us valuable experience in the area of horizontal drilling applications for future upstream projects," added Landau.

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