Very interesting article on Range Resources, esp when read in...

Very interesting article on Range Resources, esp when read in conjunction with recent investor presentations:

http://www.ogj.com/articles/2012/11/nemaha-ridge-key-to-ranges-mississippi-play-approach.html

The takehome messages I got were:
1) Being on the East of the Nemaha ridge is key to optimal outcomes
- Chat is maximal and fractures are likely to be more in the uplift
- the East side has more oil

2) Too far East (ie not on the uplift) is not good
- the oil % is good but due to fewer fractures and thinner chert the production is lower

3) Too far west is even worse
- gas % is higher here which is not good given the glut in gas / gas liquids

4) The 96% IRR is based off their average 500BOE/d well (averaged across all their acres) and also assumes (a) oil is $80/bbl and (b) oil % drops with maturity of the well.
- AOK is likely to exceed these expectations given the Snake River project appears in the sweetest spot
- Other operators are likely to underachieve their stated IRR if they are not assuming a decline in oil % , or overquoting expected oil price / gas liquids price

5) Technique appears very important given much poorer performances from historic wells in adjacent locations


AOK really does seem to be in the sweet spot and have an excellent teacher in Range. Their own in-house vertical operations also seem to be extremely good. Their above average wells will also provide a good buffer to any decline in oil / gas / liquid prices.

I know alot of holders also hold SEA and RFE for exposure to the ML. Can anyone explain why other than diversification?