STA.L Regulatory News (STA)

Annual Financial Report

Range today releases the financial report for the year ending 30 June 2015. A copy of the full Annual Financial Report is available on the Company's website www.rangeresources.co.uk and also the Australian Securities Exchange website www.asx.com.au (ASX code: RRS).

HIGHLIGHTS OF THE FINANCIAL YEAR

• Funding secured: Despite a challenging market for junior E&P companies, Range has established a stable funding position for the growth of the Company through attractive equity and supplier financing packages. In addition, the Company is looking to finalise a trade financing of up to US$50 million.

• Cutting costs and streamlining operations: The Board has been focused on driving efficiency and cost reduction by streamlining the scale and geographic footprint of non-core and cash draining businesses; and a reduction in G&A costs which have shown a material decrease in the last year, with the Company striving to reduce these costs even further. During the year, the Company has successfully completed the sales of its drilling business, Texas assets, Citation Resources equity holding and an exit from Puntland. These assets required capital funding so each disposal has eliminated imminent spending commitments whilst raising cash for the Company (during the year Range raised approximately US$5 million from these disposals).

• Trinidad operations: The Board is confident that the financial year of 2016 will be pivotal in improving operational performance and growing production (the average production for the period was 562 bopd). The expected access to four brand new drilling rigs during Q4 2015 will be crucial to improving capabilities and limiting the downtime of Range's development and exploration operations. The Company has finalised a 22 development and exploration well work programme, which commenced subsequent to the period end. In addition, the Company has commenced exploration operations on the two highly prospective St Mary's and Guayaguayare blocks. Waterflood projects are also progressing, with water injections planned to commence once the necessary approvals have been received.

• Licences: The Company successfully signed the Exploration & Production licence and negotiated the Joint Operating Agreement on the new St Mary's block. Range also completed assignment of the partial interest and the operatorship on the Guayaguayare block and applied for the approvals to transfer the remaining interest and extension of the PSCs.

• Environmental: Ongoing activities to comply with existing licence obligations and in preparation for drilling and exploration across five blocks in Trinidad.

• Financial: As a result of the actions taken by the Board and management, the financial performance during the year has substantially improved compared to the prior year. Despite the overall loss still recorded there is a notable, positive trend in financial performance with particular improvement being seen in key areas between the first and second half of the year.

- The Consolidated Statement of Profit or Loss and Other Comprehensive Income for the financial year shows a net loss attributable to owners of US$30,279,054 (2014: net loss of US$102,541,990).

- The Group's revenue was US$13,152,954 (2014: US$21,185,745). The decrease of US$8,032,791 was primarily due to lower oil prices during the period.

- The net loss after tax from continuing operations was US$22,581,895 (2014: US$59,096,590). Decrease in loss primarily due to large numbers of write-offs in the prior year.

- Net cash outflow from operating activities for the period was US$6,955,264 (2014: outflow US$6,221,781).

- General and administrative costs overall decreased by US$4,537,360 to US$9,948,494 (2014: US$14,485,854) as a result of cost cutting measures implemented across the Group.

- The net assets of the Group decreased by US$14,271,807 to US$95,023,456 (2014: US$109,295,263). This decrease is primarily due to impairments made in the year to the Group's Georgian assets (impairment of US$5,000,000) and Guatemalan assets (impairment of US$1,779,476), and other losses made by the Group.

Included with this announcement is a summary of Range's full year audited annual accounts for the year ended 30 June 2015 as extracted from the annual report, being:

· Consolidated Statement of Profit or Loss and Other Comprehensive Income;

· Consolidated Statement of Financial Position;

· Consolidated Statement of Changes in Equity;

· Consolidated Statement of Cashflows; and

· Notes to Financial Statements.

The Company expects to announce an updated reserves statement in due course.

CHAIRMAN'S STATEMENT

Dear Shareholder

On behalf of the Board of Directors, I would like to send a very warm welcome to all shareholders as this is the first Annual Report of the Company that we have the honour of presenting.

Despite the challenges facing the energy sector during the period, the last financial year was a year of change and unprecedented activity for the Company, and the progress made so far by our team has been extremely encouraging. With renewed leadership six months into the financial year, we were able to achieve a number of significant milestones in a relatively short period. We have completed an important equity transaction with a cornerstone investor at a significant premium to the share price and secured a credit facility with our strategic partner and oilfield services provider LandOcean, which not only allowed the Company to commence its work programme, but also enabled us to repay invoices through future cashflows.

Following a thorough review, we have adopted a revised Company strategy to focus on growing, managing and operating our upstream assets. We have driven efficiency and cost reduction by streamlining the scale and geographic footprint of our business. We successfully completed a number of non-core asset divestments, including sales of the drilling business, Texas assets, and equity holding in Citation Resources, as well as withdrawal from Puntland. For the first time in Range's history, following the sale of the drilling business, the Company has positive operating cashflows from its Trinidad operations.

During the year, we have successfully signed the Exploration & Production licence on St Mary's block and PSCs and operatorship on the Guayaguayare block. The first exploration well on the Guayaguayare Shallow PSC is expected to spud during Q4 2015. Range is one of the only operators to be undertaking an extensive exploration campaign onshore Trinidad. We feel extremely privileged to be in this advantageous position compared to our peers and very much look forward to our continued progress with these exciting opportunities.

Waterflood projects are also progressing well. During the year, Range and LandOcean have been evaluating multiple waterflood blocks on Beach Marcelle, South Quarry field, and Morne Diablo fields. Water injections are planned to commence during 2016 and the projects will play a key role in our next stage of growth as oil producer.

The progress made to date is a testimony of the impressive work that our team has achieved and validates the Company's strategy, prospectivity of the assets and the potential to achieve significant oil production growth. There is no doubt that the next few years will bring many challenges for the Board, management team and employees. However, we will continue to be focused on improving the results by executing a bold and simple agenda - expand drilling activities, grow production and cashflows.

I was extremely encouraged by the Directors and management team participating in the share purchases during the year to a value of US$300,000. By making personal investments, we have further aligned our and shareholders' interests and demonstrated our commitment and belief in the Company and return on the investment.

During the next financial year, shareholders can look forward to a number of key developments and steady positive newsflow, including:

· Drilling programme of initial 22 wells, aimed at production and cashflow growth

· Implementation of large scale waterflood projects

· Exploration programme on the Guayaguayare block, including drilling of at least two exploration wells

· Exploration programme on the St Mary's block, including audit of existing field infrastructure, facilities and wells and tendering for drilling rig, equipment, and other oilfield services

· Remaining non-core asset divestments (Georgia, and Guatemala)

· Continued reduction of G&A costs and streamlining of operations

· In line with the business growth strategy of the Company, the Board continues to evaluate potential acquisitions of high quality, near-term oil production assets at attractive valuations, which will create value for shareholders, provide Range with additional production and revenue, and leverage our partner's capabilities and resources.

The creation of long-term value for our shareholders remains the fundamental driver of everything we do and we look forward to demonstrating this as we develop our ambitious plans and achieve our goals. With the Company's highly prospective licences, drilling underway, and funding in place, I believe the Company is well positioned for future success by growing production and reserves, and transforming Range into a significant oil producing company, which is not yet reflected in today's share price.

On behalf of the Board, I thank all our shareholders, for your continued support through this past year and as we move forward and look forward to further success in the future.

Yours sincerely,

David Chen

Chairman

CHIEF EXECUTIVE'S STATEMENT

Dear Shareholder

Welcome to Range's Annual Report.

Introduction and progress overview

I joined Range mid-way through the financial year and have been encouraged by a portfolio of very attractive assets in Trinidad that the Company has built with experienced management team to support the future growth.

Given the low commodity price environment, we had to take a number of immediate actions in order to preserve cash and control costs. As a result, we completed a number of non-core asset divestments and streamlined our operations, which allowed us to focus our time and resources on growing our core assets. As a result of the drilling business sale, we have reduced our headcount across the Group from over 250 to 32. Our G&A costs were down significantly by 32% during the period and we are continuing to target cost savings across the business and improving efficiencies of our operations through maximising production and minimising downtime.

The newly completed funding with Sibo is transformative for the Company, and provides us with capability to progress with our work programme. I would like to thank Sibo for the support during the times of challenging markets. It is hugely significant for the Company to have such a supportive professional cornerstone investor, as we develop our ambitious plans.

In addition, LandOcean in conjunction with Sinosure are looking to provide Range with up to US$50 million. The package will provide us with further funding flexibility to fully exploit the Trinidad assets and we are hoping that it will be finalised shortly.

During the year, we have worked on enhancing our internal control and risk management processes to ensure they are implemented across our operations. Numerous policies and procedures to mitigate the risk (as described in more detail in the Directors' report) were implemented. Regular revision and reviews are conducted by the management with oversight at the Board level.

In addition to my CEO position, I have extended my role to that of Trinidad General Manager, focusing on managing the Trinidad business, growing production and driving profitability. Together with the local management team, we have been working on improving forward planning in permitting as much as possible, and have implemented new tracking systems which resulted in several of the approval application processes becoming more standardised. In addition, along with other operator companies in Trinidad, we have been working with the relevant authorities to define better guidelines, which have led to improved submissions and approval timelines. We are extremely pleased with continued support from the government of Trinidad and Tobago, and will continue to actively engage and cooperate with the government on our growth plans and strategy.

With funding in place, addition of four new rigs to the drilling fleet, and LandOcean as a key oilfield services provider, we are confident that we will be able to deliver on our plans and drill in excess of 20 exploration and development wells during 2015/ 2016. By expanding our drilling campaign and improving our knowledge of the reservoirs, not only we are aiming to achieve material production growth, we are also hoping to grow our reserves base.

Health, safety, and environment (HSE)

During the year, Range continued with its commitment to safe operations. Health and Safety inspections were regularly performed on all the assets, with no major issues identified. The management has HSE reporting and review processes as part of its operational management in place, which are regularly reviewed by the Board.

The Company is achieving a Lost Time Incident frequency rate of 2.5 which is below to that reported by the American Petroleum Institute for the onshore US Oil & Gas Industry.

During the year, the Company has successfully completed its accreditation process in Trinidad as per STOW ("Safe to Work") requirements and was granted two years certification, effective December 2014. This was a result of implementation of the various HSE management systems, and we will continue to manage, monitor and lend support towards the continued focus on HSE through effective leadership and involvement.

In addition, during the year Range's HSE and gathering station teams won a number of awards at Petrotrin's annual HSE Leadership Forum including the top award for best all round lease operator. I am pleased to acknowledge all the efforts and hard work from the team members for these achievements and hope that we will continue with such a dedication in 2016 and beyond.

Production

During the year, our average production of approximately 560 bopd was largely unchanged from the previous year. The lack of production growth was a result of few wells drilled during the year caused by failures of old rigs and equipment. In addition, results from the South Quarry development wells were disappointing and did not achieve the production rates that were anticipated.

Despite being disappointed by lack of new drilling during the period, it is important to recognise the hard work of our production team in Trinidad. As a result of 290 well workovers that were completed during the period, we were able to maintain the current production levels.

Total net production attributable to Range during the period was 205,209 bbls, which in turn generated revenue from sales of over US$13 million. We are confident that the production and cashflows from our Trinidad operations will show significant growth during FY 2016. Our previously announced production target of 1,000 bopd by the end of Q4 2015 remains unchanged.

Operational review - Trinidad

During the year, 11 development wells were drilled on the Company's Morne Diablo and South Quarry licences. Range and LandOcean have initiated a detailed analysis of the Company's three producing fields and the drilling results from the previous wells, aimed at improving the understanding of the structures and reservoirs. Further studies are ongoing. In addition, a number of past performance issues were identified, including a poor selection of previous drilling locations and targets, as well as engineering failures during drilling operations. The poor condition of the old rig fleet was also a major contributing factor for missed production targets in the past.

Therefore, I firmly believe that the next financial year will show substantial improvement in operational performance. With increased knowledge of the fields, we will be able to select the most prospective well locations, and thus increase economics from the future drilled wells. The addition of new rigs will also be pivotal to improving results and limiting the downtime of Range's development and exploration operations.

Subsequent to the year-end, we finalised the initial 22 development and exploration well programme, with the first well having spudded in September 2015. It is expected that the proposed wells will be drilled by the end of Q1 2016. We are optimistic about this target, however the drilling schedule remains subject to a number of variables, including availability of suitable rigs, arrival and commissioning of new rigs into RRDSL's rig fleet, various regulatory approvals, and the construction of drilling pads. RRDSL will also be required to recruit additional drilling staff to operate the new rigs.

We have also commenced Electromagnetic Surveying in our fields. This technology is used to image shallow resistive bodies and identify possible oil reservoirs at depths of 1,000 ft. or less, thus reducing exploration and development risks at a relatively low cost with minimal environmental impact.

I am particularly excited about commencing the waterflood projects on our Beach Marcelle and Morne Diablo fields during 2016. It is a large scale operation, which will be an essential component of our production growth. Surface facility planning and scheduling for implementation are currently underway. It will take approximately 6 months after injection commences until we can experience production growth, so we are likely to see the rewards towards 2017.

Exploration

Exploration is critical to the growth of any oil & gas company, and we are delighted to have finalised the agreements on two large and highly prospective blocks during the year - the Guayaguayare and St Mary's blocks. On the Guayaguayare block, we were also successfully awarded the operatorship and are finalising the transfer of the full remaining interest of Niko in the block. Both blocks have exciting prospects and we believe they will play a key role in our asset portfolio with plenty of newsflow to offer to our shareholders.

On the Guayaguayare block, we are looking to drill an initial two exploration wells (one shallow and one deep) during 2015 and 2016. We have also commenced exploration programme on the St Mary's block with the audit of existing field infrastructure, facilities and wells currently underway. In addition, we provided the MEEA with the required performance bond of US$8 million in support of the minimum work obligations on the licence.

Strong strategic partnership with LandOcean

We are delighted with our continued partnership with LandOcean, an emerging provider of a wide range of technical and production services, which not only provides us with access to sophisticated oilfield services provider but also additional financial backing and support.

During the previous financial year, we entered into an Integrated Master Services Agreement, whereby LandOcean will act as the preferred oilfield services contractor to Range in Trinidad. Under the first US$5 million purchase order (which was entered into in June 2014), LandOcean provided geological and engineering studies of secondary recovery projects, as follows:

· Screening study of all likely potential horizons and areas that could benefit from waterflooding in all three fields (Morne Diablo, South Quarry and Beach Marcelle);

· Technical review of additional reserves and production rates that could be achieved by waterflooding priority areas, including new well requirements and re-use / recompletion of existing wells. Identification of water volume requirements for waterflooding;

· Cost estimates of subsurface and surface infrastructure requirements for each waterflooding project, plus screening economics of each project;

· In collaboration with Range, identification of four priority waterflood projects (three in Beach Marcelle, and one in Morne Diablo); and

· Joint presentations to Petrotrin and the MEEA of detailed waterflooding plans for these four priority projects.

Subsequently, in December 2014, Range entered into the second purchase order of further US$50 million, which covers a wide range of activities over the coming years.

During the year, LandOcean also acquired Range's drilling business in Trinidad and added four brand new drilling rigs to the fleet, which are expected to be available for operations from Q4 2015 to ramp up Range's drilling activities. The sale of the drilling business has allowed us to focus time and resources on efficiently running Range's upstream assets and growing production, as well as transferring operational performance risk, improving financial stability and planning.

In addition, LandOcean agreed to provide Range with an extended 12 month credit facility on its services, which allowed the Company to commence its drilling programme and make repayments from future cashflows.

We are very grateful to LandOcean for their support and will continue to work with them to achieve further cost savings, optimisation and improved operational efficiencies.

Non-core assets

During the year, we continued with non-core asset rationalisation, and have completed sales of the Texas assets, Citation Resources equity stake, and exit from Puntland. We believe that it was in the best interest of all shareholders as these assets required imminent spending commitments which outweighed the potential return. During the next financial year, we are aiming to dispose of our interests in Guatemala and Georgia, and will keep our position in Colombia under review.

Financial review

As a result of the actions taken by the Board and management, the financial performance during the year has substantially improved compared to the prior year. Despite the overall loss still recorded there is a notable, positive trend in financial performance with particular improvement being seen in key areas between the first and second half of the year:

· The Group's revenue was US$13.2 million (2014: US$21.2 million), a decrease of approximately 38%, whilst Group's gross loss fell by 19% to US$2.9 million (2014: US$3.6 million). Revenues were clearly affected from low oil prices during the year, with an average WTI realised price of US$69.46/bbl (2014: US$101.33/bbl). However, the impact at an operating level was somewhat negated due to the Supplemental Petroleum Tax ("SPT") structure in Trinidad - at WTI oil prices below US$50 per barrel no SPT is payable. The Company continues to monitor the oil price as well as those related markets that could impact the Company's future project and operational development plans;

· The Group's loss after tax was reduced substantially compared to the prior year at US$30.3 million (2014: US$102.5 million);

· There were a number of exceptional and one-off charges during the year (including asset write-downs and loss on disposal) and the Group's net loss before tax from continuing operations prior to any exceptional costs also showed a marked improvement on the prior year at US$20.4 million (2014: US$40.5 million). There was an additional positive trend during the second half of the year which reflected a loss of US$7.9 million (compared to US$12.5 million in the first half);

· General and administrative costs overall decreased by 32% overall during the year and totalled US$9.9 million (2014: US$14.5 million). Notable again is the positive trend during the second half of the year when G&A costs were US$3.2 million (compared to US$6.7 million in the first half). This was achieved as a result of cost cutting measures implemented by the Board;

· The Group's EBITDA also showed improvement half year on half year, falling from a loss of US$16.7 million in H1 to US$6.9 million in H2;

· Net cash at 30 June 2015 was US$10.5 million (2014: US$3.0 million). This increase was largely a result of new equity financing completed during the year;

· Cash outflow from operating activities was broadly stable on the prior year (despite reduction in average oil price) at US$7.0 million (2014: outflow US$6.2 million); and

· Net cash inflow from investing activities was US$0.4 million (2014: outflow of US$8.1 million). Current year inflow was primarily a result of asset sales offsetting the continued investment made in Trinidad during the year.

Summary

Last year we were focused on cutting costs across the Group and driving forward our development programmes in Trinidad with the goal of achieving production and cashflows increase. Despite numerous challenges that we've had to overcome, we believe that the next year we can realise on our potential and unlock the true value of our assets. We have an extremely busy year ahead of us, with plenty of newsflow to offer to our shareholders.

The Company has solid production assets with substantial reserves and potential to significantly increase production; exploration upside; funding in place; and the team committed to growing shareholder value.

On behalf of the Board, management and employees, I would like to thank our loyal shareholders for their support as we progress through the period of high activity. I am extremely grateful to be part of the management team of the Company with such tremendous potential and look forward to focusing on valuable returns for our shareholders.

Yours Faithfully

Yan Liu

Chief Executive

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 FOR THE YEAR ENDED 30 JUNE 2015

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

Note 1: Statement of Significant Accounting Policies

These financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. Range Resources Limited is a for-profit entity for the purpose of preparing the financial statements.

The financial statements cover the Group consisting of Range Resources Limited and its controlled entities. Separate financial statements of Range Resources Limited are no longer presented as a result of a change to the Corporations Act 2001. Financial information for Range Resources Limited as an individual entity is disclosed in Note 34. Range Resources Limited is a listed public company, incorporated and domiciled in Australia.

The following is a summary of the material accounting policies adopted by the Group in the preparation of the financial statements. The accounting policies have been consistently applied, unless otherwise stated.

Basis of Preparation

Reporting Basis and Conventions

The financial statements have been prepared on an accruals basis and are based on historical costs modified by the revaluation of selected non-current assets, and financial assets and financial liabilities for which the fair value basis of accounting has been applied.

Compliance with IFRS

The financial statements of Range Resources Limited also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The financial statements were approved by the Board of Directors on 29 September 2015.

Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the "Functional Currency"). The consolidated financial statements are presented in United States Dollars (USD), which is Range Resources Limited's functional and presentation currency.

Going Concern

The Directors have prepared the financial statements on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business.

As disclosed in the financial statements, the Group incurred losses of US$30,279,054 for the year ending 30 June 2015. The Group also had net cash outflows from operating and investing activities for the year totalling US$6,516,556, and a net current liability position (excluding assets held for sale) of US$6,549,639.

As announced on 3 September 2015, post year end, the Group received Tranche 2 subscription proceeds of US$22.1 million in cash from Sibo financing. This was the final cash receipt following the issue of 1,822,620,912 new ordinary shares to Beijing Sibo Investment Management LP. In addition to this, on 11 December 2014 Range announced a proposed US$50m trade financing with Sinosure. These funding arrangements are more than sufficient to cover Range's cash requirements for the 12 months from date of sign-off.

The Company will seek to rationalise the portfolio of non-core assets and redeploy capital to maximise current production from its core assets in Trinidad and pursue growth opportunities that enhance cash generation and returns to shareholders.

The financial report does not include any adjustments relating to the amounts or classification of recorded assets or liabilities that might be necessary if the Group does not continue as a going concern.

Adoption of new and revised accounting standards

In the current year, the Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are relevant to its operations and effective for the current annual reporting period. The group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 July 2014:

Note 1: Statement of Significant Accounting Policies (continued)

· AASB 2013-3 Amendments to AASB 136 - Recoverable Amount Disclosures for Non-Financial Assets

· AASB 2013-4 Amendments to Australian Accounting Standards - Novation of Derivatives and Continuation of Hedge Accounting

· Interpretation 21 Accounting for Levies

· AASB 2014-1 Amendments to Australian Accounting Standards

The adoption of these standards did not have any significant impact on the current period or any prior period and is not likely to affect future periods.

The impact of standards and interpretations that have been published but are not mandatory for 30 June 2015 reporting periods and have not been early adopted are disclosed within note 39. There were no standards that were early adopted as of 30 June 2015.

Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by the Group.

(a) Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Range Resources Limited ("Parent Entity" or "Company") as at 30 June 2015 and the results of all subsidiaries for the year then ended. Range Resources Limited and its subsidiaries together are referred to as the "Group".

Subsidiaries are all those entities (including special purpose entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its investment with the entity and has the ability to affect those returns through its power to direct the activities of the entity.

Where controlled entities have entered or left the Group during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased. A list of controlled entities is contained in Note 14 to the financial statements. All controlled entities have a June financial year-end.

All inter-company balances and transactions between entities in the Group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the Company.

Associates are all entities over which the Group has significant influence but not control or joint control, generally accompanying a shareholding of between 20-50% of the voting rights. Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting, after initially being recognised at cost.

(b) Income tax

The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the reporting date within each jurisdiction.

Deferred tax is accounted for using the liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled. Deferred tax is credited in profit or loss except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in foreign operations where the company is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are

Note 1: Statement of Significant Accounting Policies (continued)

offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the Group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

 (c) Property, plant and equipment

Owned assets

Plant and equipment are measured on the historical cost basis less accumulated depreciation and impairment losses.

The cost of fixed assets constructed within the Group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

Oil and gas assets

These properties represents the accumulation of all exploration, evaluation and development expenditure, pre-production development costs and ongoing costs of continuing the develop reserves for production incurred by or on behalf of the entity in relation to areas of interests.

Where further development expenditure is incurred in respect of a property after the commencement of production, such expenditure is carried forward as part of the cost of that property only when expected future economic benefits are to be received, otherwise such expenditure is classified as part of the cost of production.

Depreciation

The depreciable amount of all fixed assets including capitalised lease assets is depreciated on a straight-line basis over their useful lives to the Group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable asset are:

The asset's residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the asset's employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

An asset's carrying amount is written down to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Note 1: Statement of Significant Accounting Policies (continued)

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in profit or loss. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to accumulated losses.

(d) Exploration and evaluation expenditure and the recognition of assets

Generally, exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

The recoverability of the carrying amount of the exploration and evaluation assets is dependent on the successful development and commercial exploitation, or alternatively, sale of the respective areas of interest.

The carrying values of expenditures carried forward are reviewed for impairment at each reporting date when the facts, events or changes in circumstances indicate that the carrying value may be impaired.

Accumulated expenditures are written off to profit or loss to the extent to which they are considered to be impaired.

Range Resources Limited is applying AASB 6 Exploration for and Evaluation of Mineral Resources which is equivalent to IFRS 6. The carrying value of exploration and evaluation expenditure is historical cost less impairment.

It's the Group's policy to capitalise exploration expenditure for all areas of interest apart from those in Somalia and Colombia. Exploration costs incurred in respect of the Group's Somalian and Colombian interests are expensed as incurred.

(e) Producing assets

Upon the commencement of commercial production from each identifiable area of interest, the exploration and evaluation expenditure incurred up to that point is impairment tested and then reclassified to producing assets.

When production commences, the accumulated costs for the relevant area of interest are amortised on a units of production method based on the ratio of actual production to remaining proved reserves (P1) as estimated by independent petroleum engineers over the life of the area according to the rate of depletion of the economically recoverable reserves.

Subsequent costs are included in the asset's carrying amount, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit and loss during the financial period in which they are incurred.

The carrying amount of producing assets is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount of an asset is the greater of its fair value less costs to sell and its value in use. In assessing value in use, an asset's estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash flows that are largely independent from other assets or groups of assets, the recoverable amount is determined for the cash generating unit to which the asset belongs. For producing assets, the estimated future cash flows for the value-in-use calculation are based on estimates, the most significant of which are 2P hydrocarbon reserves, future production profiles, commodity prices, operating costs and any future development costs necessary to produce the reserves. Under a fair value less costs to sell calculation, future cash flows are based on estimates of 2P hydrocarbon reserves. Estimates of future commodity prices are based on the Group's best estimate of future market prices with reference to external market analysts' forecasts, current spot prices and forward curves. Future commodity prices are reviewed at least annually.

An asset's carrying amount is written down to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.

Note 1: Statement of Significant Accounting Policies (continued)

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in profit or loss. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to accumulated losses.

The Group records the present value of the estimated cost of legal and constructive obligations to restore operating locations in the period in which the obligation arises. The nature of restoration activities includes the removal of facilities, abandonment of wells and restoration of affected areas. A restoration provision is recognised and updated at different stages of the development and construction of a facility and then reviewed on an annual basis. When the liability is initially recorded, the estimated cost is capitalised by increasing the carrying amount of the related exploration and evaluation/development assets.

Over time, the liability is increased for the change in the present value based on a post-tax discount rate appropriate to the risk inherent in the liability. The unwinding of the discount is recorded as an accretion charge within finance costs. The carrying amount capitalised in oil and gas properties is depreciated over the useful life of the related asset.

Costs incurred that relate to an existing condition caused by past operation and do not have a future economic benefit are expensed.

(f) Financial instruments

The Group's financial instruments include cash and cash equivalents, trade and other receivables and available-for-sale financial assets.

Recognition

Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition, these instruments are measured as set out below.

The Group classifies its financial assets in the following categories: loans and receivables and available-for-sale investments. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.

Available-for-sale financial assets

Available-for-sale financial assets include non-derivative financial assets designated in this category not included in any of the other categories. Available-for-sale financial assets are reflected at fair value. Unrealised gains and losses arising from changes in fair value are taken directly to the available for sale investment revaluation reserve in equity. Investments are designated as available-for-sale if they do not have fixed maturities and fixed determinable payments and management intends to hold them for the medium to long term.

Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities held at cost less impairment, including recent arm's length transactions, reference to similar instruments and option pricing models.

Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-for-sale are analysed between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security. The translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in the available for sale investment revaluation reserve in equity. Changes in the fair value of other monetary and non-monetary securities classified as available-for-sale are recognised in equity.

Impairment of assets

The Group assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered an indicator that the securities are impaired. If any

Note 1: Statement of Significant Accounting Policies (continued)

such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is removed from equity and included in profit or loss. Impairment losses recognised in the statement of profit or loss and other comprehensive income on equity instruments classified as available-for-sale are not reversed through profit or loss.

Recognition and de-recognition

Regular purchases and sales of financial assets are recognised on trade-date - the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs. Financial assets are de-recognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and reward of ownership.

When the securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are included in profit or loss as gains and losses for investment securities.

 (g) Foreign currency transactions and balances

Functional and presentation currency

The functional currency of each entity within the Group is determined using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in United States dollars which is the Company's functional and presentation currency.

Transaction and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in profit or loss.

Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity; otherwise the exchange difference is recognised in profit or loss.

(h) Provisions

Provisions for legal claims, service warranties and make good obligations are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects the current market assessments of the time value of money and the risk specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

(i) Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the statement of financial position.

Note 1: Statement of Significant Accounting Policies (continued)

(j) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are generally due for settlement within 30 days.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used when there is objective evidence that the Group will not be able to collect all amounts due, according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of impairment allowance is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

The amount of impairment loss is recognised in profit or loss within other expenses. When a trade receivable, for which an impairment allowance had been recognised, becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in profit or loss.

(k) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties. Revenue is recognised when the amount of revenue can be reliably measured, and it is probable that future economic benefits will flow to the Group.

Revenue from the sale of oil and gas and related products is recognised when the Group has transferred to the buyer the significant risks and rewards of ownership and the amounts can be measured reliably. In the case of oil, this usually occurs at the time of lifting.

Interest revenue is recognised on a time proportion basis taking into account the interest rates applicable to the financial assets.

(l) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST.

Cash flows are presented in the consolidated statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(m) Comparative figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

Note 1: Statement of Significant Accounting Policies (continued)

(n) Fair value estimation

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement for disclosure purposes.

The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Group is the current bid price.

The fair value of financial instruments that are not traded in an active market (for example over-the-counter derivatives) is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash follows at the current market interest rate that is available to the Group for similar financial instruments.

(o) Investments in associates

Investments in associates are accounted for using the equity method of accounting in the consolidated financial statements.

Under the equity method, the investment in the associate is carried in the consolidated statement of financial position at cost plus post-acquisition changes in the Group's share of net assets of the associate.

After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group's net investment in the associate.

The Group's share of the associate post-acquisition profits or losses is recognised in the statement of profit or loss and other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group's share of losses in the associate equals or exceeds its interest in the associate, including any unsecured long-term receivables and loans, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

The reporting dates of the associate and the Group are identical and the associate's accounting policies conform to those used by the Group for like transactions and events in similar circumstances.

(p) Prepayments for investments

Prepayments for acquisitions of financial assets are recorded at the fair value of consideration to acquire the assets.

On satisfaction of all terms of the acquisition contract have been satisfied the prepayment is transferred and accounted for as an investment.

 (q) Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

 (r) Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the financial year but not distributed at reporting date.

(s) Contributed equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Note 1: Statement of Significant Accounting Policies (continued)

(t) Earnings per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing the profit or loss attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

 (ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares.

(u) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the managing director.

(v) Impairment of assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which they are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

 (w) Intangible assets (goodwill)

Goodwill is measured as described in note 1(v). Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is not amortised but it is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose, identified according to operating segments (note 30).

(x) Share-based payments

The fair value of options granted is recognised as an expense with a corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the options granted, which includes any market performance conditions and the impact of any non-vesting conditions but excludes the impact of any service and non-market performance vesting conditions.

(y) Employee benefits

Wages and salaries and annual leave

Liabilities for wages and salaries, including non-monetary benefits are recognised in current liabilities in respect of employees' services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.

Long service leave

The liability for long service leave is recognised in current and non-current liabilities, depending on the unconditional right to defer settlement of the liability for at least 12 months after the reporting date. The liability is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.

Note 1: Statement of Significant Accounting Policies (continued)

 (z) Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and benefits incidental to ownership of leased assets, and operating leases, under which the lessor effectively retains substantially all such risks and benefits.

Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower, the present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.

Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the company will obtain ownership at the end of the lease term.

Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight-line basis over the term of the lease.

 (aa) Borrowings

Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method.

Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the loans or borrowings are classified as non-current.

(bb) Compound Financial Instruments

Compound financial instruments issued by the Group comprise convertible notes that can be converted to ordinary shares at the option of the holder, when the number of shares to be issued is fixed.

The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured subsequent to initial recognition.

Interest related to the financial liability is recognised in profit or loss. On conversion the financial liability is reclassified to equity and no gain or loss is recognised.

Convertible notes that can be converted to share capital at the option of the holder and where the number of shares is variable, contains an embedded derivative liability. The embedded derivative liability is calculated (at fair value) first and the residual value is assigned to the debt host contract. The embedded derivative is subsequently measured at fair values and movements are reflected in the profit and loss.

Certain convertible notes issued by the Group which include embedded derivatives (option to convert to variable number of shares in the Group are recognised as financial liabilities at fair value through profit or loss. On initial recognition, the fair value of the convertible note will equate to the proceeds received and subsequently the liability is measured at fair value at each reporting period until settlement. The fair value movements are recognised on the profit and loss as finance costs.

(cc) Finance costs

Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred.

Note 1: Statement of Significant Accounting Policies (continued)

(dd) Non-current assets classified as held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. They are measured at the lower of their carrying amount and fair value less costs to sell. For non-current assets to be classified as held for sale, they must be available for immediate sale in their present condition and their sale must be highly probable.

An impairment loss is recognised for any initial or subsequent write down of the non-current assets to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of a non-current asset, but not in excess of any cumulative impairment loss previously recognised.

Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of assets held for sale continue to be recognised.

Non-current assets classified as held for sale are presented separately on the face of the consolidated statement of financial position, in current assets. The liabilities of disposal groups classified as held for sale are presented separately on the face of the statement of financial position, in current liabilities.

(ee) Discontinued operations

A discontinued operation is a component of the Group's business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which:

- represents a separate major line of business or geographical area of operations

- is part of a single co-ordinated plan to dispose of a separate major line of business or geographical are of operations.

- is a subsidiary acquired exclusively with a view to re-sale.

Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale.

When an operation is classified as a discontinued operation, the comparative consolidated statement of profit or loss and other comprehensive income is re-presented as if the operation had been discontinued from the start of the comparative year.

Note 2: Critical accounting estimates and judgements

The directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group. Areas involving a higher degree of judgement or complexity, or areas where estimations and assumptions are significant to the financial statements are disclosed here.

Exploration and evaluation expenditure

Exploration and evaluation expenditure for each area of interest is carried forward as an asset provided certain conditions listed in Note 1(d) are met. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. These calculations and reviews require the use of assumptions and judgement. The related carrying amounts are disclosed in Note 17.

Producing asset expenditure

The classification of exploration and evaluation expenditure to producing assets is based on the time of first commercial production. Producing asset expenditure for each area of interest is carried forward as an asset provided certain conditions listed in Note 1(e) are met and depreciated on a unit of production basis on P1 reserves. P1 reserves have been determined by an independent expert.

Producing assets are assessed for impairment when facts and circumstances suggest that the carrying amount of a production asset may exceed its recoverable amount. These timings, calculations and reviews require the use of assumptions and judgement. The related carrying amounts are disclosed in Note 18.

Note 2: Critical accounting estimates and judgements (continued)

Investment in associate - LAR

In January 2013, Range acquired a stake in Citation Resources Limited (ASX: CTR) which held a 70% interest in Latin American Resources ("LAR"). Subsequently, Range acquired a direct 20% interest in LAR.

As at 30 June 2014, Range had a 6.33% interest in CTR and CTR had a 60% interest in LAR. Combined with the direct shareholding this gives Range an effective 24% interest in LAR, giving Range significance influence over the group. At 30 June 2014 the carrying value of the Group's 20% interest in LAR has been impaired down to US$2,779,476 which represents the Group's share of 20% of LAR net assets - refer Note 19. The impairment recognised in relation to LAR at 30 June 2014 was US$1,410,138, which is included in the consolidated statement of profit or loss and other comprehensive income within assets written-off.

During the year ended 30 June 2015, the asset was written down by a further US$600,118 to a value of US$2,179,358 and transferred to assets held for sale following the board's decision to actively market the asset. Once transferred to held for sale, a further write down of US$1,179,358 to US$1,000,000 was recognised

Provision for impairment of trade and other receivables

During the prior year, and given uncertainty over the counterparty's ability to repay, a provision for impairment of US$2,489,443 was recognised in relation to miscellaneous other receivables totalling US$3,179,394. A further provision of $17,937 was recognised in the current financial year.

Provision for impairment of other non-current receivable

In the year ended 30 June 2014, the Company recognised an impairment of US$7,354,469 with respect to the loan which had been advanced to International Petroleum Limited, reducing the carrying value of the loan to US$1,500,000 at 30 June 2014 as set out in note 20. US$500,000 of the balance was received in the year ended 30 June 2015, with the remaining balance exchanged into equity in IOP with a carrying value of $346,000.

Impairment of goodwill and producing assets

The Group tests annually whether goodwill or the producing assets has suffered any impairment in accordance with the accounting policies stated in notes 1(e) and 1(w). The recoverable amount of the cash-generating unit to which the assets belong is estimated based on the present value of future cash flows. The expected future cash flow estimation is always based on a number of factors, variables and assumptions, the most important of which are estimates of reserves, future production profiles, commodity prices and costs. In most cases, the present value of future cash flows is most sensitive to estimates of future oil price and discount rates. A change in the modelled assumptions in isolation could materially change the recoverable amount. Refer to note 15 for details of these key assumptions.

Deferred tax liability

Upon acquisition of SOCA Petroleum Ltd, in accordance with the requirement of AASB 112 Income Taxes, a deferred tax liability of US$46,979,878 was recognised in relation to the difference between the carrying amount for accounting purposes of deferred development assets and their actual cost base for tax purposes. The carrying value of this deferred tax liability has reduced to US$43,359,199 at 30 June 2015. In the event that the manner by which the carrying value of these assets is recovered differs from that which is assumed for the purpose of this estimation, the associated tax charges may be significantly less than this amount.

Impairment of assets held-for-sale

An impairment loss in respect of assets held-for-sale is generally measured at the lower of their carrying amount and fair value less costs to sell. Impairment losses on initial classification as held-for-sale and subsequent gains and losses on re-measurement are recognised in profit or loss. Once classified as held-for-sale, intangible assets and property, plant and equipment are no longer amortised or depreciated, and any equity-accounted investee is no longer equity accounted.

During 2014, as part of the Company's strategy to rationalise non-core assets, the Company committed to a plan to dispose its shares in Strait Oil & Gas (UK) Limited ("Strait").

In the current financial year, Range decided to actively market its Guatemalan assets for sale.

At 30 June 2015 impairment losses of US$34,281,987 and US$1,779,476 have been recognised in respect of Strait and the Guatemalan asset, respectively.

Note 2: Critical accounting estimates and judgements (continued)

Share based payments transactions

The Group measures the cost of equity-settled share-based payment transactions with employees by reference to the fair value of the equity instruments at the grant date. The fair value is determined using a Black-Scholes model. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity.

Classification of operations to discontinued

The assets classified as discontinued operations represent separate major lines of business and geographical areas of operations.

(i) 2014 figure relates primarily to the loan facility and interest revenue as per final settlement agreement between Citation Resources Ltd and the Group.

Details of loss on sale of subsidiaries

(i) Amounts expensed in the year in Trinidad relate to land fees in relation to Guayaguayare and St Mary's for which the company policy is to expense.

Note 5: Discontinued operations

In 2013, the Company indicated that it was in the process of disposing of the Company's North Chapman Ranch and East Texas Cotton Valley assets hence the transfer from producing assets to assets classified as held-for-sale in that accounting period. This sale was completed on 24 March 2015 through a disposal of Range Australia Resources (US) Limited.

During the 2014 financial year, the Company also committed to a plan to dispose its shares in the unlisted company Strait Oil & Gas (UK) Limited, representing 45% of the shares on issue of Strait to place greater focus on the Group's core producing assets in Trinidad. This has been written down by a further US$5,000,000 in the current financial period (2014: US$29,281,987) as Range continues to search for a buyer for the asset.

Impairment losses of US$6,779,476 (2014 - US$37,244,836) for write-downs of the disposal group to the lower of its carrying amount and its recoverable amount have been included in loss on discontinued operations (see note 5a). The impairment losses have been applied to reduce the carrying amount of the assets held-for-sale within the disposal group. There is no cumulative income or expenses included in other comprehensive income relating to the disposal group.

 (c) Details of sale of Range Australia Resources (US) Limited

Note 6: Income Tax Expense

Deferred tax assets not brought to account, the benefits of which will only be realised if the conditions for deductibility set out in Note 1(b) occur.

Note 6: Income Tax Expense (continued)

Deferred tax assets not brought to account, the benefits of which will only be realised if the conditions for deductibility set out in Note 1(b) occur.

Note 7: Auditors' Remuneration

Note 8: Earnings Per Share

Note 9: Cash and Cash Equivalents

Risk exposure

Information about the Group's exposure to credit risk, foreign exchange risk and price risk is provided in Note 35.

Note 10: Trade and Other Receivables

Fair value approximates the carrying value of trade and other receivables at 30 June 2015 and 30 June 2014.

(i) Trade receivables are generally due for settlement within 30 days. They are presented as current assets unless collection is not expected for more than 12 months after the reporting date. Trade receivables are neither past due nor impaired.

(ii) Accrued revenues relate to the Petrotrin overriding royalty refundable in the Trinidad subsidiaries.

(iii) Other debtors are comprised primarily of advances to unrelated third parties. Given the uncertainty over the likelihood of repayment these advances have been included within the provision for impairment raised at 30 June 2015 and 30 June 2014.

Risk exposure

Information about the Group's exposure to credit risk, foreign exchange risk and price risk is provided in Note 35.

Note 11: Other Current Assets

Note 12: Assets Held-for-Sale

Assets classified as held for sale are as follows:

Note 12: Assets Held-for-Sale (continued)

Movements in assets classified as held for sale are as follows:

Impairment losses of US$6.8 million for write-downs of the disposal group to the lower of its carrying amount and its recoverable amount have been included in 'loss on discontinued operations' (see note 5). The impairment losses have been applied to reduce the carrying amount of the assets held-for-sale within the disposal group. There is no cumulative income or expenses included in other comprehensive income relating to the disposal group.

Note 13: Financial Assets Available-For-Sale

Risk exposure

Information about the Group's exposure to credit risk, foreign exchange risk and price risk is provided in Note 35.

Note 14: Controlled Entities

(i) Dissolved in year

(ii) Disposed of in year as part of Texas sale

(iii) Amalgamated in year with Range Resources Trinidad Limited.

Note 15: Goodwill

Goodwill is measured as described in note 1(v). Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill is not amortised but it is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses.

The Group reported goodwill of US$46,198,974, which was derived from the acquisition of SOCA Petroleum Limited through the parent's subsidiary Range Resources (Barbados) Ltd.

(a) Impairment tests for goodwill

During the year ending 30 June 2015, the Group determined that there is no impairment of any of its cash-generating units or group of cash-generating units containing goodwill or intangible assets with indefinite useful lives.

Note 15: Goodwill (continued)

Goodwill has been allocated for impairment testing purposes to a single cash-generating unit (CGU), identified according to operating segments, being Trinidad.

Estimates of the recoverable amount is based on an an asset's fair value less costs to sell (level 3 fair value hierarchy) using a discounted cash flow method and is most sensitive to the following key assumptions:

- P1 and P2 Recoverable reserves

- Commodity price of between US$52 and US$82 per barrel dependent on the year.

- Operating costs at 7-14% of revenue, depending on oil price at that time.

- Post-tax discount rate of 10%

Economical recoverable reserves represent management's expectations at the time of completing the impairment testing and based on the reserves statements and exploration and evaluation work undertaken by appropriately qualified persons. A summary of the Company's Trinidad reserves and resources are published on the company's website.

The commodity price for oil was based on forecast oil price data compiled by Capital IQ, as used in the IER released on 31 July 2015. The data compiled by Capital IQ is taken from a number of economic and market analyst forecasts and averaged to present an estimated forecast price. Estimates are $52/bbl in 2015, $63/bbl in 2016, $70/bbl in 2017, $73/bbl in 2018, $78/bbl in 2019, $80/bbl in 2020 and $82/bbl from 2021.

Operating cost assumptions were based on management reports from June and July 2015.

(b) Sensitivity to change of assumptions

An individual movement of 20% against any one key assumption would cause the carrying value of the cash generating unit to materially exceed its recoverable amount. An adverse movement of 20% in reserves and resources, commodity prices, operating costs or discount rate would lead to an impairment of US$16.4m, US$32.3m, US$4.7m and US$4.7m respectively.

Note 16: Property, Plant & Equipment