I'm not saying it's a bad deal, and neither of us know the term of the agreement but imo with LO being the designer, credit provider, and contractor for waterflood they will have the last say on whether it happens. Similarly the current well, their expertise was used to analyse previous well results, design and drill the well and fund it. If they thought it would be a dud they wouldn't have funded it.
They have too much jnvolvement from start to finish to be a simple credit provider.
I am not here to argue with anybody but the following statement you made is neither logical or accurate, hemce my comment.
"All I know is that if LO was my company and I was offering credit on such terms I would want significant input into how and where that money was spent. In fact only a fool would hand over the money for RRL to do as they wish."
"LO will have the right of veto over the whole project as they hold the purse strings."
You obviously have no experience of lending or credit facilities. If you do not trust the company with the money you are lending them you do NOT lend them the money.
In this case it is a moot point since LO's subsidiary is the service company doing the drilling and most of the operational side is being carried out by LO and RRDSL. So it is basically a partnership where Range set out what they want done and LO/RRDSL do it. Whilst LO/RRDSL will be providing Range with expert advice it is RRL's own oil experts who will make the final decision.
Obviously if you contact Investor Relations and they advise us in a Q&A that RRL is being run by LO and not RRL's board of directors then all shareholders will have a major problem with RRL since in the end it is the shareholders of RRL who should have control of RRL.
Rex, not sure what I said that wasn't logical, and if you read your post about the service agreement you are kind of agreeing. If RRLs proposals meet LOs criteria they release the funds/services. LO must surely review any request. My other comments that RRL have no choice but to use LO stand as we don't have sufficient funds to do it alone.
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