(Sharecast News) - Oil and gas and oilfield services company Range Resources has signed a sale and purchase agreement with Wilson Energy Services - a private company incorporated in Canada - for the sale of four drilling rigs and related equipment for a total cash consideration of $3.6m, it announced on Wednesday.
The AIM-traded firm said the key terms of the agreement were that its wholly-owned subsidiary Range Resources Drilling Services, registered in Trinidad and Tobago, has entered into the deal with the buyer for the sale of the four onshore drilling rigs 16, 17, 18, and 19, and related equipment.
It said Wilson would pay Range the total cash consideration of $3.6m, payable in full-on completion of the transaction.
Completion of the transaction remained subject to satisfaction or waiver of a number of conditions, including final inspection of the rigs and equipment to the satisfaction of the buyer.
It was also subject to the delivery of various documents related to the rigs by the seller to the buyer, including documentation required for the transfer of ownership of the rigs by the Trinidad Transport Board and the licensing authority.
The company said the buyer could purchase the rigs in its name or that of a nominee, which would be an affiliate or subsidiary of Wilson to be incorporated in Trinidad and Tobago prior to completion of the transaction, with the agreed long stop date for the transaction being 8 November.
Range said the asset value of the four rigs as at 30 June was $17.36m, and the estimated loss before tax attributable to the rigs for the year ended 30 June was $2.16m.
If the transaction completed, Range Resources Drilling Services' residual rigs would comprise seven workover and swabbing rigs and one drilling rig, and the subsidiary would continue to provide oilfield services to Range and other operators in Trinidad.
The board warned that there could be no guarantee that the transaction would complete.
"Given challenges experienced by Range Resources Drilling Services at winning new service contracts, as well as our proposed sale of Trinidad upstream assets announced in September, we have been actively looking at options to further reduce costs of our operations, selectively streamline our assets and increase our liquidity," said Range Resources chairman Kerry Gu.
"I am, therefore, pleased with the signing of the agreement for the sale of the drilling rigs and look forward to working with our colleagues and partners on bringing these important transactions to completion."
13 Apr 2016 07:40