(Alliance News) - Range Resources Ltd on Tuesday said it has agreed to sell Range Resources Trinidad Ltd to LandOcean Energy Services Co Ltd to offset debt.
Shares in oil and gas projects and oilfield services firm Range were trading at 0.05 pence on Tuesday, nearly triple the company's Monday closing price of 0.18p.
Range and LandOcean signed a binding conditional sale and purchase agreement to sell Range Resources Trinidad for USD2.5 million in cash, plus the offsetting of the approximately USD91 million debt and payables due from Range to LandOcean.
All debt agreements between Range and LandOcean have now been deferred until the deal completes and, once the deal is complete, Range's "indebtedness will be fully extinguished and all debt agreements will be terminated".
The first USD500,000 of the USD2.5 million will be payable as an upfront deposit, with Range providing mortgages over its swabbing and workover rigs as security. The mortgages will be released once the sale purchase agreement is complete or if it terminates.
Government and shareholder approval is still required for the deal to go ahead, with a shareholder meeting expected in November.
Range Chair Kerry Gu said: "I am delighted that we have been successful at signing this milestone agreement with LandOcean, which (if completed) will allow the company to be completely debt-free and have sufficient cash resources to progress with new opportunities. The removal of debt is a fantastic outcome for the company's shareholders and is vital to restore our financial health, increase liquidity and improve shareholder sentiment. I am also pleased with the consideration value of [Range Resources Trinidad] of almost USD95 million which is a testament to the quality of our Trinidad upstream assets.
"Over the coming months, our focus will be aimed at securing the necessary approvals to complete this transformative transaction. As part of a wider strategy, we will also continue to evaluate new acquisition targets and review opportunities for our drilling business in Trinidad and interests in the Indonesian oil and gas project."
Range had a previous debt restructuring agreement with LandOcean, but it was conditional on the acquisition of an educational business in China. When the acquisition fell through in July, it necessitated a new solution to Range's debt.
At the start of August, the stock exchange in Australia refused to restore Range's shares after the acquisition fell through due to debt concerns.