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Range Resources Clears Green Tape For Beach Marcelle Development

Range Resources (ASX: RRS) is on track to increase both production and reserves after receiving environmental approval to start its development plans for the Beach Marcelle licence in Trinidad.

This includes the key enhanced recovery waterflood program that is targeted to add between 3,000 and 3,500 barrels per day (bpd) of oil to its production for at least eight years.

The Certificate of Environmental Clearance approvals from the regulatory authorities cover 40 wells, 8 well deepenings and the start of the enhanced recovery waterflood program.

Final project plans will be submitted to the regulatory authorities for final formal approval and operations are scheduled to being in the first quarter of 2014.

The principal development strategy will be to convert undeveloped Proved Reserves into production and cash flow while seeking to add new Proved Reserves through the upgrade of existing Probable and Possible Reserves through further drilling and testwork.

It also targets undeveloped Proved Reserves associated with secondary recovery projects such as the Beach Marcelle waterflood program.

Once production and cash flow from development of Range's Proved Reserves have been increased, field extensions, exploratory prosects and unconventional resource potential will be tested.

Waterflood Program

Range has already completed the Beach Marcelle project development plans and recently presented its waterflood development program to Trinidad's state petroleum company, Petrotrin.

It is also assessing the potential use of nitrogen injection to further increase production rates and recoveries from the field while leading to additional increases in Proved Reserves.

Development opportunities in Beach Marcelle includes infill drilling within under-drilled fault blocks and waterflooding for increased oil recovery.

With 75%, or 12.8 million barrels, of Range's undeveloped Proved Reserves associated with the Beach Marcelle waterflood project, its focus remains on expediting the on-going engineering and simulation phase of the waterflood program, in parallel with moving a rig to the field to begin well integrity and workover operations.

In addition, its technical teams has identified additional potential recoverable volumes that it will seek to certify as reserves after full appraisal.

The waterflood program builds upon 3 previously successful, but prematurely abandoned waterflood programs performed by Texaco in the 1950's.

It is expected that with the use of modern reservoir and waterflood simulation technology, Range will be able to more efficiently sweep the remaining recoverable reserves.

Conventional Program

Range is also evaluating the option to deepen up to 8 wells along with the drilling of 40 wells which could include in-fill / step out and further appraisal wells.

Successful deepening of existing well bores is expected to recover up to 90,000 barrels per well at initial production rates of 80bpd each and at costs significantly lower than drilling and completing new wells.

Beach Marcelle

The Beach Marcelle field comprises 3,964 acres and falls within the Guayaguayare subā€basin that has numerous oilfields around its rim, including the Navette and Goudron fields and the offshore Galeota and Samaan fields.

The first well in the Beach field was drilled in May 1902. A comprehensive field map was compiled by
Texaco and to date approximately 230 wells have been drilled on the license.

Previous owners had maintained a well ordered database and Range has access to this comprehensive set of basic subsurface data.

Oil gravities within Beach average 34 degrees API and cumulative oil production to date has been 30.4 million barrels at an average of 125,000 barrels per well.

The main producing horizons are the Upper, Middle and Lower Gros Morne formation, which are geologically equivalent to the Forest formation in Morne Diablo and South Quarry, that range in depths from 300 feet to 500 feet.

Oil is currently produced from eleven wells at a rate of roughly 22bpd per well.

Analysis

Environmental approval for Range Resource's Beach Marcelle waterflood program allows it to unlock its largest block of undeveloped Proved Reserves of 12.8 million barrels of oil, or 75% of its total.

That this is expected to add between 3,000 and 3,500 barrels per day of oil once completed, well above its oil production of just under 700bpd in the September quarter of 2013.

Potential also exists for further recoverable volumes to be certified as reserves.

2014 is shaping up to be a pivotal year for Range with share price catalysts including:

- Start of the Beach Marcelle waterflood program;
- Drilling of conventional Beach Marcelle wells;
- Results from drilling at the Morne Diablo field; and
- Results from the initial exploration well at the Guayaguayare farm-in block in early 2014.

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