U.S. shale leader Range Resources said it trimmed 2015 spending plans by more than 30 percent, but was betting on Marcellus shale for continued success.
Low commodity prices are forcing major energy companies to revisit their spending plans for 2015. Range, which has headquarters in Texas, said it was trimming its capital budget from $1.3 billion to $870 million in response to "the continuing erosion in commodity prices."
Last year, the company said it added nearly 2.4 trillion cubic feet of gas reserves, driven largely by developments in the Marcellus shale play near Pennsylvania.
Nearly 95 percent of the revised capital budget will target the Marcellus gas reserve area.
"Concentration of its operations in the Marcellus, coupled with continuing operating efficiencies and now anticipated cost reductions, allows Range to target 20 percent production growth for 2015 with this revised capital budget," the company said.
Energy consultant group Wood Mackenzie describes Marcellus as the largest natural gas basin of its kind in the world when based on production. The group said there may be more than $90 billion left in value in the play based on projected output from new wells.
Wood Mackenzie says the number of active rigs in the Marcellus play have fallen since the beginning of 2012. Energy companies are getting better at pulling gas from the reserve area, however, which is contributing to expected production growth.
Range Chairman and Chief Executive Officer Jeff Ventura said low-cost operations and quality assets in plays like Marcellus mean his company can be successful in the slumping commodity market
By 2020, Wood Mackenzie estimates Marcellus should produce an average of 20 billion cubic feet of equivalent per day, which it said would represent 25 percent of the total U.S. natural gas supply.
