Range Resources

Range Resources Corporation

Type	Public company
Traded as	NYSE: RRC S&P 500 Component
Industry	Petroleum industry
Founded	1976
Headquarters	Fort Worth, Texas, United States
Key people	John H. Pinkerton, Chairman and CEO Jeffrey L. Ventura, President and COO Chad L. Stephens, Vice President Ray Walker, Vice President Matt Pitzarella, Spokesman[1]
Products	Petroleum Natural gas
Revenue	US$1.598 billion (2015)[1]
Operating income	-US$713.685 million (2015)[1]
Net income	-US$713.685 million (2015)[1]
Total assets	US$6.900 billion (2015)[1]
Total equity	US$2.759 billion (2015)[1]
Number of employees	744 (2015)[1]
Website	www.rangeresources.com

Range Resources Corporation is a petroleum and natural gas exploration and production company headquartered in Fort Worth, Texas.

Current operations

As of December 31, 2015, the company had 9.872 trillion cubic feet of natural gas equivalent of estimated proved reserves, of which 64% was natural gas, 33% was natural gas liquids, and 3% was petroleum.^[1] Approximately 97% of total proved reserves and 95% of 2015 production was in the Marcellus Formation.^[1]

In 2014, the company was the 3rd largest producer in the Marcellus Formation^[2]

In 2015, the company's total production was 1.395 billion cubic feet of natural gas equivalent.^[1]

History

Range Resources traces its roots to Lomak Petroleum, its predecessor company, which was founded in 1976 and based in Hartville, Ohio. The company drilled wells in eastern Ohio.^[3]

In 1992, it moved its headquarters to Fort Worth, Texas and merged in 1998 with Domain Energy Corp.^[3]

In 1997, Range acquired American Cometra for $385 million, which owned properties in the Permian Basin.^[3]

In 1999, the company formed a 50-50 joint venture with FirstEnergy called Great Lakes Energy Partners LLC to own properties in the Appalachian Basin. In 2004, Range Resources bought the 50% interest in the venture that it did not own for $290 million, including the assumption of debt.^[4]

Before its major expansion into the Marcellus Shale, Range Resources only held a small position in the Texas Barnett Shale and 9000 "worn-out gas wells across the Appalachian basin that had been producing for 25 years". However, geologist William Zagorski, who worked for the company, used the knowledge of fracking gained working in the Barnett Shale (pioneered in the region by Mitchell Energy & Development) to attempt fracking in Appalachia, where according to Ventura, "it worked on the first try".^[5]

In 2004, the company began operations in the Marcellus Shale in Pennsylvania.^[1]

In 2005, the company built horizontal test wells in Mount Pleasant Township, Washington County, Pennsylvania and began production in the Marcellus Shale and in 2007, the company spent $200 million to acquire additional land nearby.^[5]

In 2006, the company acquired Stroud Energy and its major position in the Barnett Shale for $450 million.^[6]

In 2010, Forbes Magazine called Range Resources "King of the Marcellus Shale".The company had spent less than $1,000 per acre on average to acquire land suitable for drilling, compared to larger traditional oil and gas players who joined the exploration rush late in the game who had paid as much as $14,000 an acre.^[5]

In 2014, the company exchanged its assets in the Permian Basin for assets in the Nora Field in Virginia plus $145 million in cash.^[7]

In 2015, the company sold its assets in the Nora Field in Virginia to EnerVest for $875 million.^[8]

Controversies

Environmental record

Chemicals used in hydraulic fracturing

Range Resources said it would list chemicals used in its hydraulic fracturing on its website, giving regulators and landowners an account of the chemicals injected into each well. The list includes the volume, concentration and purpose of the chemicals.^[9]

However, court documents show that Range Resources does not know the makeup of the products it uses to extract natural gas from shale.^[10]

Hydraulic fracturing critics list Range Resources wells and violations at FrackTrack ^[11]

Water and air pollution in Washington County, Pennsylvania

This American Life and the New York Times investigated the company's operations in Amwell Township and Mount Pleasant Township, Washington County, Pennsylvania. Journalists Eliza Griswold and Sarah Koenig found allegations that gas wells owned by Range Resources caused water pollution and air pollution. Residents complained of black running water that corroded faucets and household machinery, showers smelling of "rotten eggs" (hydrogen sulfide) and diarrhea, "mysterious stomach pains", extreme fatigue or anemia. Medical tests of residents complaining of headaches, nosebleeds and the inability to concentrate showed elevated blood levels of organic solvents and heavy metals such as toluene and arsenic. When presented with such complaints, Range Resources argued that its labs' test results show that complaints of illness and dying animals were not caused by its activities and instead had other causes.^[12][13]

According to a letter from Range Resources to a complainant dated January 14, 2011, "On November 10, 2010, you voluntarily supplied Range Resources with lab results from both your dog and horse veterinarians. Upon review of these results, Range contacted the canine and equine veterinarians. … [I]t was stated by the veterinarian that the test results were inconclusive for anti-freeze [ethylene glycol] poising. … The veterinarian indicated that the horse had toxicity of the liver, which he felt was not related to [ethylene glycol] poisoning.^[14]

One resident in Amwell Township was riding her horse behind Range Resources' pond for holding fracking chemical flowback when she noticed "a hissing and bubbling sound in the stream" and a "red foamy oil slick" that caused the stream to exhibit "rainbow water". Range maintained that it was likely caused by "decayed vegetation that gave off gas", having attributed previous complaints of malodor to harmless anaerobic bacteria that grew near its fluid compressor stations. However chemical tests of the area later "revealed the presence of acetone, toluene, benzene, phenol, arsenic, barium, heavy metals and methane".^[13] Range Resources then paid to have a water well drilled for the landowner, which the owner said also was contaminated.

According to a letter dated October 19, 2011, The Pennsylvania Department of Environmental Protection tested the landowner's well water twice, and found no contamination in the water.^[15]

Range Resources paid $219,875 in fines to the Commonwealth of Pennsylvania as of May 2010. The bulk was $141,175 levied for a fracking fluid spill that killed aquatic life in Brush Creek in Washington County, Pennsylvania, which is protected by the state as a "high-quality waterway" according to the Pittsburgh Business Times. However, Ray Walker, vice president, said that Range Resources has "made a lot of adjustments since then". The fluid spill was due to a "faulty elbow pipe"; according to Walker, Range has since "gone to a completely different pipe manufacturer and a completely different pipe design". Firings and changed procedures also followed the incident.

In September 2014, Range Resources was ordered to pay a $4.15 million penalty to settle violations related to six Marcellus Shale gas drilling and fracking wastewater impoundments in Washington County that contaminated soil and groundwater.^[16]

Contamination of water in Parker County, Texas

In 2010, the Environmental Protection Agency issued an emergency order against Range, stating that the company's drilling activities in Parker County, Texas had led to the contamination of at least two residential drinking water wells. The company denied the allegations, and said the presence of methane was a result of naturally occurring migration, and had shown up in nearby water wells long before Range drilled its gas wells. The Environmental Protection Agency (EPA) said that natural gas drilling by the company has contributed to the contamination of at least two residential drinking water wells in the county and ordered it to step in immediately. "Based on our findings to date, it's very clear that our activities have not had any impact on the water aquifer in southern Parker county or the subject water wells," Range Resources said in a statement. The company said its investigations revealed that methane in the aquifer existed long before its drilling and likely is a naturally occurring migration from several shallow gas zones immediately below the water aquifer.^[17][18]

However, after a hearing in 2011, Texas Railroad Commission staff concluded that, based on chemical composition, the gas in the water wells came from the shallow Strawn Formation, rather than the deeper Barnett Shale, in which the Range wells were completed. They also concluded that pressure tests by Range showed mechanical integrity of the casing. EPA and the two homeowners were invited to present evidence at the hearing, but did not.^[19]

In March 2012, the EPA dropped its order against Range.^[20] Range Resources said the move could help its $4.2 million defamation lawsuit against a Parker County couple who alleged in a $6.5 million lawsuit that Range contaminated their drinking water.^[20]

In December 2013, the federal Office of the Inspector General, addressing complaints by six US senators, issued a report concluding that the EPA had been justified in issuing its 2010 emergency order, and had acted reasonably in withdrawing the order after Range had agreed to groundwater quality monitoring.^[21]

Public relations campaign regarding zoning

Range Resources has sponsored public relations campaigns supporting permitted use zoning regulations rather than conditional use zoning, which would provide for case-by-case hearings for citizen review of Range's drilling near their land or neighborhoods. According to NPR: "Mount Pleasant and its three citizen supervisors were ridiculously outmanned...in [an ensuing] full-scale PR war" with Range Resources when the supervisors decided to follow conditional use zoning policy used in other states such as Texas, Colorado and Wyoming. Through letters to lessors, Range wrote that it might stop drilling in the township if the township enacted conditional use zoning. Other townships that enacted conditional use zoning have been sued by Range Resources.^[12]

Use of former military personnel

On November 8, 2011, CNBC reported on a conference which Range Resources attended, in which those in the energy industry were advised to "download the US Army / Marine Corps Counterinsurgency Manual, because we are dealing with an insurgency". In the conference, Range Resources spokesman Matt Pitzarella also said that Range had "several former psy ops folks...[who are] very comfortable in dealing with localized issues and local governments. Really all they do is spend most of their time helping folks develop local ordinances and things like that. But very much having that understanding of psy ops in the Army and in the Middle East has applied very helpfully here for us in Pennsylvania."^[22] Pitzarella later clarified that he meant to refer to "one employee of the firm", whose psy ops background made him adept at handling emotionally charged township meetings. However, Sharon Wilson, the recorder of the remarks, said "the comments reveal what the fracking industry thinks about people in the communities that are impacted by the industry." ^[22]

Public relations campaign regarding benefits of drilling to landowners

In 2011, as part of an effort to reassure the public of its activities, Range Resources started a campaign, "My Range Resources" which depict "ordinary people... who have benefited from allowing drilling on their land". The ad campaign includes, in the words of one Centre Daily Times journalist Bob Myers, "real Pennsylvanians talking earnestly about the wonderful experiences they’ve had with Range Resources".^[23] According to Elwin Green of the Pittsburgh Post-Gazette, Range Resources stands out because most gas companies generally prefer to keep a low profile, preferring to "tout their successes to Wall Street, but not to Main Street". In contrast, Range Resources' campaign uses testimonials such as, "Natural gas has been ... a godsend to this area," from farmers or "In the last two years, probably 60 percent of our business is natural gas," from local business owners.^[24] Vice president Ray Walker was quoted as saying, "A lot of people don't know much about our industry or about Range Resources...we're committed to being the very best that we can be. We want to be accountable, transparent and accessible to people." Videos produced by public relations firms Big Picture Communications and Downtown's Animal Inc. used "unscripted video and purposely avoided using company spokespeople". Blake Lewis, CEO of Lewis Public Relations in Dallas and a board member of the Public Relations Society of America gave Range Resources' website "high marks". However, journalists' reactions have been skeptical or mixed. According to Myers, "a quick review of the state Department of Environmental Protection records suggests that the truth is more complicated than the ads suggest...the folks at Range define good stewardship in a slightly different manner than is customary." Reg Henry of the Pittsburgh Post-Gazette thought "the whole promotion was skin crawling... but now I read MyRangeResources and I think: How cute is that for a gas drilling company? It makes me think of my daughter’s My Little Pony when she was a mite".^[25]

Litigation and settlements

Litigation regarding property damage in Pennsylvania

In 2011, Range Resources reached a $750,000 settlement agreement with a Pennsylvania family that alleged their 10-acre farm had been destroyed by oil and gas development. Between 2011 and 2013, the Pittsburgh Post-Gazette sought to obtain court records related to the case.^[26] When a judge ordered records unsealed, the settlement agreement was initially not included in the 900 pages of records released.^[26] The agreement itself was released after the Post-Gazette and another newspaper, the Observer-Reporter, sued to gain access.^[27] As part of the settlement, the family agreed to a gag order preventing them from talking about fracking for the rest of their lives. The gag order covered not just the adults, but also the children, then aged seven and ten years old.^[28]

Although the court transcript records an attorney for Range Resources saying that the order applies to the children and that the company "would certainly enforce it", the general counsel for Range Resources said otherwise after court records were unsealed. In a 2013 letter to the Hallowich's attorney that was also released to the media, the general counsel for the company said. "Range has never, at any time, had the intention of seeking to hold a minor child legally accountable for a breach of that provision of the settlement agreement." The lawyer for the Hallowich family said Range had waived the confidentiality of the agreement by releasing the letter to a cable network, and that the family would seek judicial remedy.^[29]

Litigation regarding royalty under-payments

In 2011, Range Resources settled for $22 million a class-action lawsuit alleging that royalty payments to Pennsylvania landowners had been improperly reduced.^[30][31]

In 2013, Range Resources settled for $87.5 million a class-action lawsuit alleging royalty underpayments on sales of natural gas in Oklahoma.^[32]

See also

• Stephanie Hallowich, H/W, v. Range Resources Corporation

References

External links

• Range Resources website

• • Business data for Range Resources: Google Finance
  • Yahoo! Finance
  • Reuters
  • SEC filings