LONDON (Alliance News) - Range Resources Ltd Tuesday said it has been advised by authorities in Colombia that three exploration licences that were awarded to the company and its partners have been revoked.
The National Hydrocarbons Agency of Colombia has informed Range that the PUT-5, VMM-7 and VSM-1 licenses which were awarded to a consortium of Optima Oil Corp and Range in December 2012, have been revoked, claiming minimum work commitments were not fulfilled and that invalid letters of credit were presented by Optima.
The three blocks are found in mature basins of the Putumayo and Magdalena Valley and hydrocarbon accumulations are found in the vicinity of each block.
Range holds a 10% interest in the joint operating agreement covering those three licences, with Optima holding an 80% stake and Petro Caribbean Resources Ltd holding the remaining 10%.
"The aggregate value of the exploration work commitments for the three licences amounts to approximately USD53.0 million. Under the terms of the joint operating agreement between the consortium parties, it is the sole responsibility of Optima to complete the work commitments and provide all necessary letters of credit," said Range in a statement.
Under the agreement, Optima is responsible for covering 100% of the costs and expenses of exploring and developing the three licenses up until production starts.
"Both the company and the consortium are obtaining legal advice with regard to this matter and it is currently anticipated that the consortium will lodge an appeal against the decision. The company will update shareholders as appropriate," the company added.
Colombia is a "non-core" area of Range's business and said the assets were valued at nil on its balance sheet at the end of June 2015. If the decision to revoke the licenses is upheld, it will mean Range will no longer have any assets in Colombia, leaving it with operations in Trinidad, Georgia and Guatemala.
Range Resources shares were trading up 2.0% to 0.250 pence per share on Tuesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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