LONDON (Alliance News) - Range Resources Ltd shares were up early Monday after the company confirmed it has now signed the exploration and production licence for the St Mary's Block in Trinidad and secured a memorandum of understanding for USD50 million in new financing.
Range said it has now signed the licence for St Mary's with the Government of the Republic of Trinidad and Tobago, having originally announced the deal back in February.
The licence has been awarded for 25 years should a commercial discovery be made, the company said. During the six-year initial period of the licence, Range said it is committed to drilling four exploration wells and seismic surveys.
As part of the licence, Trinidad state oil company Petrotrin has been given a 20% carried interest in the exploration licence.
In addition, Range has signed a binding MoU with China-based institutional investor Core Capital Management Co Ltd. Under the terms of the deal, Core will provide approximately USD20 million in cash to subscribe to shares issued by Range at an approximate 26% premium to the mid-market share price at the close of business on Friday.
In addition, Core will provide convertible bonds with a total value of USD30 million, increasing its total financing package for Range to USD50 million.
After completing the USD20 million equity investment, Core will have a 20% stake in the enlarged share capital of Range.
"The proposed financing puts Range on a firm footing and allows us to repay existing debt, as well as progress our rig maintenance, development and exploration programmes in Trinidad, which will in turn lead to significant production increases," said Range Chief Executive Officer Rory Scott Russell.
Range shares were trading higher on the back of the news, up 10.7% to 0.88 pence.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
Copyright 2014 Alliance News Limited. All Rights Reserved.