LONDON (Alliance News) - Range Resources Ltd Thursday said it has finalised and received the funds from the second tranche of funding from Beijing Sibo Investment Management LP, putting the company on a "sound footing" to move forward with its work programme in Trinidad.
However, the company said it has already had to use USD8.0 million of the funds from the second tranche to provide authorities with a performance bond to support the minimum work obligations on one of its licences, which it is trying to replace through "alternative sources".
Range Resources shares were up 18% to 0.648 pence per share on Thursday afternoon.
The company has now secured the second tranche of USD22.1 million from Beijing Sibo, and when combined with the first tranche of funding worth USD5.2 million, Beijing Sibo has ploughed a total of USD30 million into the business.
In May, Range executed the definitive subscription agreement with Beijing Sibo, a new Chinese investment vehicle with the purpose of investing in Range. The investors in Sibo are composed of a number of "high-net-worth individual investors with strong interests in the global energy sector", it said at the time.
In early June, Range received the first tranche of funding, totalling GBP5.2 million, resulting in Range issuing 650 million new shares to Beijing Sibo at the subscription price of GBP0.008 per share, giving it an 11.5% stake in Range. Shareholder approval was not needed for that first tranche.
The second tranche, which was approved by shareholders on Tuesday, was received after Beijing Sibo agreed to subscribe to further shares at the same price as the first tranche.
Now that the second tranche is completed, Beijing Sibo owns a 32% stake in the company.
In July, Range said that the directors investing are Chairman David Chen who is investing USD96,000, Executive Director Yan Liu with USD76,000 and Non-Executive Directors Zhiwei Gu and Juan Wang who will invest USD25,000 each.
However, on Thursday, the company said USD8.0 million of the second tranche will be used to provide the Ministry of Energy and Energy Affairs with the required performance bond in support of the minimum work obligations on the St Mary's licence.
"The company is seeking alternative sources of finance to replace this bond, which would allow the cash collateral to be released and used for other purposes," said the company.
Despite that unexpected loss, Range said the financing package, when combined with its credit facility with LandOcean, has put the company "on a sound footing" to execute the planned work programme of 22 development and exploration wells in Trinidad.
"With highly prospective licences, drilling underway, and funding in place, the management believes the Company is well positioned for future success by growing production, reserves and transforming Range into a significant oil producing company," said Range.
LandOcean, in conjunction with Chinese-based Sinosure are looking to provide Range with up to USD50 million by way of a credit facility of two years to fund the development programme in Trinidad. The facility is subject to final approvals by Sinosure, and payment of a security deposit of USD7.5 million by Range.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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