LONDON (Alliance News) - Range Resources Ltd Thursday said it has finalised the 2015 exploration work programme and budget for the St Mary's block in Trinidad with its state-owned partner, the State Oil and Gas Co of Trinidad and Tobago Ltd.
In a separate statement later Thursday, Range said it also has signed an agreement for the Guayaguayare Block in Trinidad which will lead to Range holding an increased stake in production sharing contracts that cover the block.
The work programme is scheduled to begin in the second half of the year and will consist of auditing existing field infrastructure, facilities and wells, preparing for environmental permitting to allow drilling and to commence an electro magnetic survey, and completing the tendering process for a drilling rig, equipment, and other oilfield services.
Range will also prepare a work programme and budget for 2016, which will include both exploration and development components.
"In addition to significant exploration potential of the St Mary's block, there are additional development opportunities associated with pre-existing fields," said Range.
Range has committed to drilling four exploration wells, shooting 160 kilometres of 2D seismic and 60 kilometres squared of 3D seismic, along with various other technical studies before the end of 2018.
No details regarding the budget for the work programme or the asset were revealed by Range.
Range holds an 80% interest in the St Mary project, with the state-owned company holding the remaining 20% stake.
In a separate statement, Range said it has signed an amendment agreement for the Guayaguayare Block, which will lead to Range acquiring the entire stake held in two production sharing contracts that cover the block held by Niko Resources Ltd.
Niko holds a 32.5% stake in the shallow production sharing contract and a 40% stake in the deep production sharing contract, which Range will acquire. Following that deal, Range will hold a 80% interest in the deep contract and a 65% stake in the shallow contract, with the remaining stake of both contracts being held by its existing partner, the State Oil and Gas Co of Trinidad and Tobago.
The shallow contract covers shallow horizons of up to a depth of 5,000 feet onshore and 10,500 feet offshore at the Guayaguayare block, whilst the deep contract covers both onshore and offshore depths exceeding the shallow contract depths.
Range did not reveal the details of the deal, but said it would allow the company to "double its working interest" in the area, adding it will only have to pay Niko after certain production milestones are reached under the production sharing contracts. The maximum consideration Range will pay Niko is USD19 million based on production of over 10.0 million barrels of oil, it said.
The agreement remains subject to government and regulatory approvals and upon completion, Range will be appointed as the operator of the block. Both contracts are due to expire in July 2015, but Range said it will seek to extend them once the deal is completed.
There is no change to the existing drilling commitments, and Range plans to fulfil its obligations by drilling two onshore exploration wells in 2015.
Range said the engineering and procurement preparations are underway on the upcoming Canari North exploration well onshore Trinidad, ahead of an anticipated spud date of early June 2015. The Canari North well is the first well to evaluate the Guayaguayare shallow production sharing contract and will fulfil the first shallow onshore exploration well commitment.
Range will drill the well at its sole expense with well costs estimated at USD2.25 million, and the funding available under the extended 12 month credit facility with LandOcean.
The well will be drilled by Range Resources Drilling Services Ltd, its subsidiary, using Rig 8, which has been awarded the contract via tender. Construction of a 620 metre road and location building are almost complete and the well site services including logistics, road and site construction are also being provided by Range Resources Drilling Services.
Range shares were up 4.7% to 0.560 pence per share on Thursday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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