STA.L Regulatory News (STA)

27 September 2013 The ManagerCompany AnnouncementsAustralian Securities Exchange LimitedLevel 6, 20 Bridge StreetSydney NSW 2000 By e-lodgement ANNUAL REPORT Range Resources Limited ("Range" or the "Company") is pleased topresent the Company's annual report for the year ending 30 June 2013, with thefollowing highlights in comparison to year ending 30 June 2012: - Group revenue increasing by 9%; - Trinidad revenue increasing by 18%; - Gross profit increasing by 516% to $5.4M (2011 / 2012: Gross loss of $1.3M); - Group oil / liquids production increasing by 27% to 286,000 barrels; - Trinidad oil production increasing by 35% to 275,000 barrels; - Operating expenses reduced by 19%; - Loss before interest / tax / depreciation / amortisation reduced by 74%; and - Loss after tax reduced by 35%. Highlighted below is the comparison of the financial performance ofthe group for the years ending 30 June 2013 and 30 June 2012 respectively. SUMMARY OF FINANCIAL PERFORMANCE (US$m) 2013 2012 Change Revenue 27.259 24.998 +9%Operating Expenses (13.525) (16.797) -19%Cost of sales (21.833) (26.303) -17%Gross profit / (loss) 5.425 (1.305) +516%EBITDA (5.805) (21.963) +74%EBIT (14.177) (31.517) +55%Net profit / (loss) after tax (20.304) (31.095) +35% Please find attached extracts from the Company's Annual Report forthe year ended 30 June 2013, being the: - Directors Report; - Statement of Comprehensive Income; - Statement of Financial Position; and - Statement of Cashflow. A copy of the full Annual Report is available on the company's website: www.rangeresources.com.au DIRECTORS REPORT The names of the directors in office and at any time during, orsince the end of, the year are: Sir Samuel Jonah Mr Peter Landau Mr Marcus Edwards-Jones Mr Anthony Eastman Directors have been in office since the start of the financial yearto the date of this report unless otherwise stated. COMPANY SECRETARY The following persons held the position of company secretary at theend of the financial year: Mr Anthony Eastman Ms Jane Flegg PRINCIPAL ACTIVITIES The principal activity of the economic entity during the financialyear was hydrocarbon exploration and development within Trinidad, Republic ofGeorgia, Texas, Guatemala, Somalia and Colombia. The following significant changes in the nature of the principleactivity occurred during the financial year: - Acquisition of a 19.9% strategic stake in Citation ResourcesLimited who hold a farm in right to acquire a 70% interest in Latin AmericanResources Ltd ("LAR"), which holds an 80-100% interest in two oil and gasdevelopment and exploration blocks in Guatemala and is operator of the blocks.This was consummated subsequent to year-end with the conversion of debtfunding into ordinary fully paid shares in Citation. Additionally Range alsoacquired a direct 10% equity stake in LAR during the year and moved to a 20%stake subsequent to year end. - The Company extended its existing farm out agreements ("FOA's")for the Company's Morne Diablo and South Quarry licenses in Trinidad until 31December 2021, with the minimum work commitments for each license well withinthe Company's current development plans, and included reductions in theenhanced royalty rate resulting in significant net back before tax increases. OPERATING RESULTS The consolidated loss of the economic entity for the financial yearafter providing for income tax are as follows: 30 June 2012 30 June 2013 US$ US$ Restated* Net profit/(loss) after income (20,304,261) (31,094,991)tax DIVIDENDS PAID OR RECOMMENDED The directors recommend that no dividend be paid for the year-ended30 June 2013, nor have any amounts been paid or declared by way of dividendsince the end of the previous financial year. REVIEW OF OPERATIONS - 29% increase in Proved, Probable and Possible (3P) netattributable reserves across the Company's three Trinidad onshore licenses. - An additional 3,000 acres were obtained to the east of theexisting Morne Diablo license, extending the current Lower Forest developmenttrend which will potentially add further reserves along with potential forother deeper targets. - Completion of the two well exploration well program in theDharoor Valley in Puntland. Based on the encouragement provided by these twoShabeel wells, the JV entered into the next exploration period in both theNugaal and Dharoor Valley Production Sharing Contracts ("PSC's") which carry acommitment to drill one well in each block within an additional 3 year term. - Completion of the acquisition of 200km of 2D seismic with themajority of the seismic being acquired over Block VIb which was combined withthe previous 410km 2D seismic program, along with older Soviet Era data withthe results being incorporated into the Company's geological model thatencompasses the whole license area. Trinidad Reserves and Valuation Upgrades - Trinidad During the year, the Company announced a 29% increase in Proved,Probable and Possible (3P) net attributable reserves across the Company'sthree onshore Trinidad licenses, following the Company's independent petroleumconsultants, Forrest A. Garb and Associates ("Forrest Garb") having completeda review of the Trinidad reserves following the first year of Range'soperations in Trinidad. Below is the comparison between October 2012 and December 2011 ofthe oil and gas reserves attributable to Range's (100%) interest in itsTrinidad Licenses, net of government and overriding royalties, as describedmore fully in the report from Forest Garb & Associates. Category Oil (MMBO) Dec `11 Oct `12 %age Mvmt Proved (P1) 15.4 17.5 +14%Probable (P2) 2.2 2.7 +23%Possible (P3) 2.0 5.0 +150%Total 3P Reserves 19.6 25.2 +29%Prospective Resource (unrisked)Low 2.0 8.1Best 10.0 40.5High 19.9 81.0 Based on the reserve numbers shown above, Forrest Garb estimatesthe net cash flow attributable to Range's interests for Proved, Probable andPossible reserves as shown below, based on average WTI prices for 2011, andcompared to the $85 / bbl case per the December 2011 reserves report. US$85 / bbl case US$94 / bbl case December 2011 October 2012Category Undiscounted PV10 Undiscounted PV10 US$M US$M US$M US$MProved 679 385 799 446Probable 133 73 142 81Possible 120 49 276 153Total 932 507 1,217 680 The valuations above are based on forecast production rates thatreflect the current drilling and development schedule, and estimatedindividual well decline profiles derived from the Company's recent operatingresults. As reported above, the recent reserves report saw a 30.5 millionbarrels (305%) increase in total unrisked net prospective (best estimate)resources across the Company's licenses to 40.5 million barrels. Of the 40.5 million barrels in unrisked prospective resources,circa 30.5 million barrels are associated with identified Herrera prospectsthat have been mapped on the Company's 3D seismic database. Operations The Company continued with its Lower Forest development program onthe Morne Diablo license during the year, reaching peak production in excessof 1,000 bopd during Q3 2012 which was a 120% increase in production sinceacquisition. Conventional Programme The Company completed a number of successful wells targeting theUpper Cruse formation, some circa 1,000-1,500ft. below the Lower Forestformation and given the early success of these wells, the Company will look atthe potential of a separate drilling program targeting the Upper Cruseformation, in a similar way the early success on the Lower Forest formationhas been targeted. During the year, the Company also spudded its first deeper welltargeting the Lower Cruse formation, the MD 248 well, with a target depth of6,500ft. Positive results from the MD 248 well Lower Cruse test would allowRange to expedite a development program for this horizon by deepening existingMiddle Cruse wells in the Morne Diablo field to the Lower Cruse depths.Deepening would require drilling only 2,500ft. of additional footage versusthe 6,500ft. for a new well, thus significantly reducing the costs whilstobtaining swift access to a potential highly prospective new development zonewithin the Lower Cruse formation. Unconventional (Waterflood) Program Morne Diablo During the year, the Company has presented its proposed waterfloodprogram to the Mininstry of Energy of Trinidad and state company Petrotrin.Following written approvals from Petrotrin, the Company will immediatelycommence field development in line with the work program. Beach Marcelle With 75% (12.8 MMbbls) of Range's 1P proved undeveloped reservesbelonging to the Beach Marcelle waterflood project, the focus remains onexpediting the current simulation phase in parallel with moving a rig to siteto begin well integrity and workover operations. Range's waterflood program in the Beach Marcelle field builds upon3 previously successful, but prematurely halted, waterflood programs performedby Texaco in the 1950's. With modern reservoir and waterflood simulationsoftware available, it is expected that Range will sweep the remaining provenreserves a lot more efficiently than the 3 original waterflood programs. Theprogram will also be targeting additional fault blocks within the BeachMarcelle license, not yet previously waterflooded, yet comprising a portion ofthe 12.8 MMbbls of 1P proved undeveloped reserves. The new technical team havelooked at the data and have identified additional recoverable reserves, whichwill be incorporated into the Range's existing reserves report after fullappraisal. During the year, the Company experienced a number of operationaland supply chain difficulties which resulted in fewer-than expected wellsbeing drilled, and subsequent fall in production, however encouragingly, theactual results from the Lower Forest development program exceeded theCompany's expectations in terms of average well performance. Afterexperiencing production decline in April 2013, production rebounded andincreased by 20% in June 2013 from the lows of April. In response to the operational and supply chain difficulties, theCompany commenced the implementation of best practice procedures and processeswith respect to maintenance programs / drilling inventory and spare partmanagement, which was further strengthened by the recruitment of a suitablyqualified Maintenance Superintendent to manage and ensure that all rigs andequipment are serviced efficiently and fully operational. In conjunction with the maintenance and inventory managementprograms, the Company is looking at refining the drilling strategy to furtherreduce the drilling time and an increase in wells being drilled, across thevarious horizon depths. To reduce drilling time and improve hole quality, the Company isreviewing the following areas: - Drill bit selection - Drilling parameter optimisation - Casing point depths - Down hole tools including hole openers, logging-while-drilling, and potentially casing while drilling These improvements will ensure minimum unscheduled equipmentdowntime and mechanical safety and efficiency throughout the Trinidadoperations, allowing the work schedule to progress smoothly and efficiently. Additionally, with the increase in oil prices, the Company hasundertaken a program to re-evaluate all existing wells with a focus onoptimization and reactivation where warranted. These works may includeperforating by-passed oil sands pay in the existing well bores, chemicaltreatment / stimulation of perforations, jet washing or cleanout ofperforations, water shut off where water break out has occurred and isnegatively affecting oil inflow, mechanical repairs to down hole equipment,and initiation of swabbing on previously capped wells. An estimated 200-300bopd may be added to production from the optimization program. The Company isplanning to use Rig 6 to perform the heavy work overs on the Morne Diablolicense. Range continues to focus on Health, Safety and Environment as Safeto Work ("STOW") procedures and processes are constantly implemented andupdated, moving towards full STOW certification in early 2014. In addition to the engagement of a suitably qualified MaintenanceSuperintendent as referred above, subsequent to year end, the Companyappointed Mr Ash Mangano to the position of Vice President in Trinidad. MrMangano has significant experience in international oil and gas globally,having spent time with Halliburton, Baker Hughes and CB&I in variety oftechnical (drilling engineering) and commercial roles and will complement theexisting team in accelerating the development on the Company's existingreserve base, re-evaluation of all existing wells along with new venturesincluding the proposed Niko farm-in. Subsequent to year end, Range also engaged a Senior ReservoirEngineer with over 15 years' experience in enhanced oil recovery projects andreservoir characterisation in Trinidad, to work with the Exploration andExploitation group in expediting the Beach Marcelle and Morne DiabloWaterflood projects, which progressed through the simulation and regulatoryapproval processes during the year. Corporate - Trinidad During the year, Range extended its existing farm out agreements("FOA's") for the Company's Morne Diablo and South Quarry licenses until 31December 2021, with the minimum work commitments for each license well withinthe Company's current development plans. The extended FOA now includes an additional circa 3,000 acres(Block A) to the east of the existing license area. Block A is an extension tothe east of the current Lower Forest development trend where the Company iscurrently drilling. The current Lower Forest wells that have been drilled andtested to date are showing sands which correlate to the sands encountered inthe QUN16 well that was drilled and tested in 1942, which is located some3,000ft. to the east of the current development wells, on the edge of theexisting Morne Diablo license. The reserves upgrades across the Company's Trinidad licenses, didnot include any reserves / resources associated with Block A, with the Companylooking to engage its independent reserves auditor to perform an initialreserves / resource assessment across the additional 3,000 acres of Block Awhich the Company believes will further add to the 420% P1 and P2 reserveadditions that the Company has booked since it acquired the Trinidad assetsmidâ€2011. The new FOA's saw a reduction in the enhanced royalty previouslybeen paid by the Company with a significant improvement in the net backamounts before tax being achieved for the Company, and with an effective dateof 1 January 2012 for both FOA's, the new enhanced royalty rates will beretrospectively applied. Subsequent to year end, the Minister of Finance and Economy ofTrinidad and Tobago proposed attractive budget incentives for oil and gascompanies in the 2014 Budget Statement. The proposed changes are aimed atincentivising companies that invest in exploration and production, with asignificant increase in the capital deductions allowable on development,exploration and work-over expenditure. In addition to the increase in capitalallowances the investment tax credit (being 20% of capital expenditure)against the Special Petroleum Tax is proposed to be carried forward into thesubsequent year (previously could only claimed in year of expenditure). The new proposed budget incentives will have a significant positiveimpact on Range's returns as the Company looks to accelerate both itsdevelopment and production activities on the existing reserves, along with itsintensive exploration program both internally and in partnership with NikoResources Ltd. In anticipation of the increased activity in Trinidad, the Companycommenced discussions during the year with a leading International Drillingand Oilfield Services provider, with a view to maximise the development ofcurrent acreage and potential new licenses along with the proposed farm-inwith Niko Resources. Puntland Onshore In January 2012, Range together with its equity partnerssuccessfully spud the historic Shabeel-1 well in the Dharoor Valley, the firstin a two well exploration program and the first exploration well in Puntlandin over 25 years. The Shabeel North well having been spud soon after thecompletion of the Shabeel-1 well, was successfully completed during the year,having reached a target depth of 3,945m. Following on from the completion ofthe two wells, the drilling rig and associated equipment was successfullydemobilised and restoration of both drilling locations completed. Despite the non-commercial nature of the two wells the equitypartners were extremely encouraged that all of the critical elements exist foroil accumulations, namely a working petroleum system, good quality reservoirsand thick seal rocks. Based on the encouragement provided by these two Shabeel wells, theJV entered into the next exploration period in both the Nugaal and DharoorValley Production Sharing Contracts ("PSC's") which carry a commitment todrill one well in each block within an additional 3 year term. The currentoperational plan would be to contract a seismic crew to acquire additionaldata in the Dharoor block and to hold discussions with the Puntland Governmentto gain access to drill ready prospects in the Nugaal Valley block. To that extent, Range's JV partner and operator, Horn Petroleum,has been focussed on making preparations for a seismic acquisition campaign inthe Dharoor PSA, which will include a regional seismic reconnaissance grid inthe previously unexplored eastern portion of the basin as well as prospectspecific seismic to delineate a drilling candidate in the western portion ofthe basin, where an active petroleum system was confirmed by the drilling atthe Shabeel-1 and Shabeel North locations. The focus of the Dharoor seismicprogram will be to delineate new structural prospects for the upcomingdrilling campaigns. Offshore During the prior year, Range entered into a conditional agreementwith the Puntland Government with respect to obtaining a 100% working interestin an Offshore Block in the highly prospective Nugaal Basin. The Block is anextension of the onshore Nugaal Region which has the potential for deltaicdeposits from the Nugaal Valley drainage system and comprises over 10,000km. The agreement is subject to a formal Production Sharing Agreement(PSA) being entered into and the receipt of all necessary regulatoryapprovals. Texas During the year, Range reached an agreement to sell its Texasproducing assets which was executed subsequent to year-end. As per theexecuted agreement, the Company will sell its interest in the North ChapmanRanch and East Clarksville fields for $US25 million in cash at closing plus$US5 million in production payments from future production. Georgia During the year the joint venture through Strait Oil and Gas("SOG") completed the acquisition of 200km of 2D seismic, with the majority ofthe seismic being acquired over Block VIb, to firm up leads identified in theprevious 410km 2D seismic program, along with targeting two gas wells, whichwere drilled and suspended in Soviet times. These results were incorporatedinto SOG's geological model that encompasses the whole of the two licenseareas. SOG engaged Senior Geologist, Dr. M. Arif Yukler and his team toperform a full review of both the conventional and unconventional (Coal BedMethane) hydrocarbon potential on blocks VI a and VI b. Dr Yukler's review incorporated the 610 km of 2D seismic acquiredacross the two licences in 2009 and 2012/13, along with incorporating all ofthe older Soviet data that existed across the blocks including seismic, welllogs and geochemical information into a geological model. Results of thegeological model, will enable SOG to confirm potential drilling locations inBlock VIb that were highlighted as prospective from the initial survey in2009, along with allowing SOG to update the reserve and resource potentialacross the two license areas. SOG also continued the evaluation of the shale gas / oil potentialthat has been identified on approximately 3,000 km2 and has commenced thegeological mapping and modelling of this potential. Subsequent to year end, following the extensive review, whichincluded pseudo 3D quantitative basin modelling of the blocks, the targetedhydrocarbon in-place and reserve calculations for blocks VI a and VI b werecompleted with the results being highly encouraging as summarised below: Conventional Conventional Oil Conventional GasUndiscovered (mmbbls) (Tcf)Oil / Gas in Place (best estimate) (best estimate) Total Oil / Gas in 403 18.4PlaceRange Attributable 181 8.3(45%)* Low to high ranges of the in-place undiscovered oil and gasvolumes have not yet been estimated. Range is currently undertaking furthermodelling work to provide such ranges. Proved & Proved & Probable & EstimatedCBM Reserve Proved (1P) Probable (2P) Possible (3P) TotalEstimates Reserve (Bcf) Reserve (Bcf) Reserve (Bcf) Gas-in-Place (Tcf) Total Gas In Place 0 0 508 3.16Range Attributable (45%) 0 0 229 1.42 * The reserve estimates reflect conservatively applied recoveryfactors. It is noted that recovery factors for CBM range as high as 60% basedon feasibility work performed to date. Coal Bed Methane During the year SOG, together with the Georgian Industrial Group("GIG"), continued with the feasibility and technical studies on the CBMproject, which was also reviewed by Dr Yukler along with a review of the coalbed methane potential that existed across the licences, over and above thepreviously reported Tkibuli prospect, with the total CBM resource calculatedusing the isopach maps for the Upper Bathonian coaly section. Subsequent to year end, results of the review indicated the coalysection covering 368 km2 and 83 km2 in blocks VIa and VIb, respectively. Acontinuously thick and high quality coal area of 36 km2 was delineated by morethan 300 wells in Block VI a. All these wells encountered gas in the UpperBathonian coally section. The CBM reserves in this area are computed as beingat the Proved, Probable & Possible (3P) category. The blocks are estimated tocontain 3P gas reserves of 508 Bcf (100% bais) and a total of CBM gas in placeof 3.16 Tcf (100% basis). The results of this extensive review clearly show that both blockshave significant gas potential and good oil potential. The compilation of allthe available data and re-evaluation of the geochemical data show the coalpresent in the blocks have similar high hydrocarbon generation capabilities asthe coals in the North Sea, Indonesia and New Zealand. With the addition ofthe amounts of hydrocarbon generation in the Upper Bathonian, the totalresource is anticipated to be higher than the amounts given above and will bedetermined at a later date. SOG has presented the CBM potential to the Georgian State Agencyand the Georgian Oil and Gas Corporation with both parties agreeing on thesignificant potential that exists across the licence areas. The news of thehighly prospective hydrocarbon play has been conveyed to the Energy Ministerand the Prime Minister, who see this potential as an opportunity to improvethe energy outlook for the Country. During the year the SOG along with its equity partners commenceddiscussions with a number of parties with respect to potential farm-inopportunities across both the conventional and unconventional prospectsidentified across the two licenses with advanced discussions continuingsubsequent to year end. Colombia During the year, the consulta previa process continued whichinvolves liaison with the various indigenous communities within the licenseareas. Once completed, the Company anticipates to initiate mobilisation aheadof the proposed seismic program. Initial G&G evaluation of the blocks shows 15potential leads, with further potential upside to be imaged in greater detailwith high resolution 3D seismic surveys. The blocks lie to the north of largeproven reserves across the border in Ecuador, with production in excess of30,000 bopd. The blocks are surrounded by successful producing fields,(Ecopetrol, Gran Tierra, Suroco). Typical well productivity in the Putamayobasin ranges from 1,000 to 2,000 bopd, with oil producing wells being light(23 API on average). Range and the operator have received farm-in interest from a numberof parties for the blocks, and will be considering different potential optionswith regards to how best to finance the upcoming 350 km2 of 3D seismicprogram. Guatemala During the year, Range acquired a strategic stake in CitationResources Limited ("Citation) (ASX:CTR). Citation holds a farm in right toacquire a 70% interest in Latin American Resources Ltd ("LAR"), which holds an80-100% interest in two oil and gas development and exploration blocks inGuatemala ("Projects") and is operator of the blocks. Additionally, Range alsoacquired a direct 10% equity stake in LAR. The Projects consist of Block 1-2005 and Block 6-93 in the SouthPeten Basin in Guatemala ("Guatemalan Blocks"). The Guatemalan Blocks haveCanadian NI 51-101 certified proved plus probable (2P) reserves of 2.3 MMBBL(with approximately 0.45 - 0.6 MMBBls attributable to Range's combined equityinterest in CTR and 10% direct interest in LAR), with significant explorationupside potential. In addition, the blocks have had significant previousexploration with the two well appraisal drilling program currently underwaywith the Atzam #4 well having already been successfully completed to a depthof 4,054ft with significant initial oil and gas production of 610 bopd averagerate over a 24 hour period from a perforated 7ft. section in the Upper C17carbonates. The Projects and drilling/operational infrastructure are owned byLAR together with its minority equity partners in a similar set up to Range'sTrinidad operations. Subsequent to year end, independent reservoir engineers recommendedthat the optimal production rate of the Atzam #4 well would be 466 bopd,however the Operator is currently producing the well on a restricted choke dueto the limited onsite tank storage capacity of 7,000 barrels. The Operatorplans to increase the choke over time to maintain the reservoir integrity inthis initial production phase and to establish the optimal production rateonce the Atzam oil storage facilities are upgraded. In additional to reporting on the optimal production rate, thereservoir engineers reported an initial proven reserve (1P) of 362,515 barrelsof oil for the producing section of the C17 carbonate section reported above.An adjacent 7ft section in the C17 carbonate is still to be bought ontoproduction, and once this occurs, it would be converted into 1P reservesestimated in excess of 500,000 barrels of oil. The highly prospective C13 andC14 carbonates in the Atzam #4 well are still to be flow tested and would alsobe converted from 2P to 1P reserves following a successful program. Range moved to acquire the 19.9% strategic interest in Citation, byconversion of existing debt funding provided by Range to Citation intoordinary Citation shares (subject to any necessary Citation shareholderapprovals) at $0.02 with a 1 for 2 free attaching listed Citation option($0.04, June 2015), which is approximately $2m for the 19.9% interest. Inaddition, Range paid $2m for the 10% interest in LAR, which is finance carriedthrough the first US$25m spent on the Project. CORPORATE Effective 1 July 2012, the Group changed its functional andpresentation currency from Australian dollars (AU$) to United States dollars(US$) as significant portion of the Group's revenues, expenses and cash flowsare denominated in US$. The functional currency of an entity is the currencyof the primary economic environment in which the entity operates, which shouldreflect the economic substance of the underlying events and circumstancesrelevant to the Group. The change in presentation currency is to better reflect theGroup's business activities and to improve investors' ability to compare theGroup's financial results with other publicly traded businesses in theinternational oil and gas industry. The change in functional currency wastriggered by the Group's transition from an exploration to a productioncompany which has resulted in generating significant cash flows from sale ofoil. The transactions are denominated in US$ which combined with recentborrowings; indicate that a significant portion of cash flows going forwardwill be denominated in US$. The consolidated financial report for the year ended 30 June 2013,including comparative information (Restated), has been presented in US$. Proposed Merger with International Petroleum During the year, the Company announced its proposal to undertake astrategic merger with International Petroleum Limited ("International") (NSX:IOP) to create a leading ASX and AIM listed oil and gas Company with a strongproduction growth profile from the on-going development of its significantreserves and resources base. International holds highly prospective assets inRussia, Kazakhstan, and Niger with total 3P Reserves of 233 mmbbls of oil andbest net estimate prospective resources of 367 mmbbls of oil and 61 Bcf ofgas. Range and International have excellent project and managementsynergies, with advanced oil and gas projects across Eastern Europe, theCaribbean, Central Asia, Latin America and Africa. The merger would build astronger, more robust company with greater financial and technical resources,with a particular focus on applying its onshore exploration and developmentexpertise to growing production from its pipeline of projects. Subsequent to year end, the Company has been informed thatInternational is in negotiations with a third party relating to the potentialsale of its Russian assets for cash consideration. In the course of discussions and due diligence in connection withthe proposed merger of the two companies, Range remains committed in principleto pursue a merger transaction pending final confirmation of the sale terms. Financings During the year, the Company raised circa US$42m through a numberof debt facilities and placements with institutional and sophisticatedinvestors. In addition, the Company advanced discussions on financing for itsTrinidad operations through a reserve based lending facility which is lookingto finalise soon after the date of this report. FINANCIAL POSITION The net assets of the economic entity have increased byUS$8,578,386, from US$163,988,199 (Restated) at 30 June 2012 to US$172,566,585in 2013. This increase has resulted primarily from the associated explorationand development expenditure during the year of US$10,599,410. The directors believe the economic entity is in a strong and stablefinancial position to expand and grow its current operations. SIGNIFICANT CHANGES IN STATE OF AFFAIRS The following significant changes in the state of affairs of theparent entity occurred during the financial year: - Acquisition of a strategic stake in Citation Resources Limitedwho hold a farm-in right to acquire a 70% interest in Latin American ResourcesLtd ("LAR"), which holds an 80-100% interest in two oil and gas developmentand exploration blocks in Guatemala ("Projects") and is operator of theblocks. This was consummated subsequent to year-end with the conversion ofdebt funding into ordinary fully paid shares in Citation. - The Company extended its existing farm out agreements ("FOA's")for the Company's Morne Diablo and South Quarry licenses until 31 December2021, with the minimum work commitments for each license well within theCompany's current development plans. - Proposal to undertake a strategic merger with InternationalPetroleum Limited (NSX: IOP) to create a leading ASX and AIM listed oil andgas Company with a strong production growth profile from the on-goingdevelopment of its significant reserves and resources base. EVENTS SUBSEQUENT TO REPORTING DATE - Execution of agreement to dispose of the Company's Texan Assetsfor $25m upfront cash payment and a $5m to be paid from future production. - Highly encouraging results of an extensive review of theCompany's Georgian assets including gross best estimate of undiscovered oiland gas in place at 403 mmbbls and 18.4 Tcf respectively along with gross 3PCBM reserves of 3.16 Tcf. - Conversion of amounts advanced to Citation resulting in Range toacquire up to 19.9% of Citation along with a further 10% interest in LatinAmerica Resources - effectively giving Range a see through 32% interest intothe Guatemalan projects. - Proposed farm-in with Niko Resources Ltd on the Guayaguare blockin Trinidad, which would result in an increase in gross acreage footprint by+280,000 acres - refer below. - The Company was informed that International Petroleum (thesubject to a proposed merger) is in negotiations with a third party relatingto the potential sale of its Russian assets for cash consideration with Rangecommitted in principle to pursue a merger transaction pending finalconfirmation of the sale terms. Trinidad In July 2013, Range entered into a proposed farm-in agreement withNiko Resources Ltd ("Niko") (TSK: NKO) on the Guayaguayare Block in Trinidad,which encompasses circa 280,000 acres across both the shallow and deephorizons, onshore and offshore, with proven producing trends.Niko currently holds shallow and deep Production Sharing Contractsfor 65% of the onshore portion and 80% of the offshore portion of the licensesarea with Guayaguayare Block comprising 280,170 shallow acres and 293,999 deepacres. Trinidad's state owned Petroleum Company Petrotrin holds the remainingbalance of the interests (35% onshore and 20% offshore). According to the agreement in principle, Range will earn 50% ofNiko's existing interests in the deep and shallow rights covering both onshoreand offshore areas, with the consortium to drill two onshore wells: oneshallow to a maximum of 5,000 ft., and one deep onshore well to a minimum of5,000 ft. In the event of a discovery from either of the two initial wells,the consortium will look to drill an initial appraisal well. Range will fund the two onshore wells and the potential initialappraisal well at its sole expense, and will split the costs 50/50 with Nikoin the offshore well, and any other costs moving forward. The agreement is subject to completion of final transactiondocuments and government and regulatory approval, as well as approval by theRange and Niko boards. As shown in the map above (Figure 11), the Guayaguayare Block iscomprised of over 280,000 contiguous acres covering both onshore and offshoreportions of known, productive trends along the southern coast of Trinidad, inthe transition area between the transpressional Southern basin and theextensional Columbus basin. A regional wrench fault, and extension of the LosBajos fault, cuts through the onshore to offshore transition zone. Trapsassociated with this fault produce oil in Southwest Trinidad and off the EastCoast from Upper Miocene / Pliocene Sands. The Block surrounds Range's Beach Marcelle Field, and extends southto the limits of Trinidad's territorial waters. In addition to provenTertiary-age exploration targets, the block is believed to hold significantpotential in the Cretaceous section, which has been successfully developed inthe Eastern Venezuelan basin. There are four prospective onshore fields within the Guayaguayareblock, each considered to have significant potential for oil, whilst theoffshore structural complex is believed to have significant potential forlarge gas discoveries with several large structures mapped. To date, the following work has been completed by Niko and previousoperators on the block: Onshore: - Acquired and processed 217km2 3D land survey Offshore: - Acquired and processed 277km2 3D marine survey (2011) - Two 3D marine surveys were reprocessed (ELF 1997 and Mobil 1990) - All 3 offshore 3D surveys have been merged prestack (total 836 km2) FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES To further improve the economic entity's profit and maximiseshareholders wealth, the Company is looking to accelerate the developmentacross all of the three onshore licenses in Trinidad with regards to bothconventional and unconventional (waterflooding) programs, leading to increasesin production and reserves as well as potentially expanding its footprint inthe Country through the proposed farm-in with Niko and other potentialopportunities. The Company is also committed to further developing theexploration potential of its Puntland, Georgian and Colombian ExplorationProjects and invite interested parties into joint venture arrangements onthese assets. The Company will await the results from Citation on itsGuatemalan projects to determine appropriate paths forward for Range'sstrategic investment in both Citation and at project level. LIKELY DEVELOPMENTS Other than information disclosed elsewhere in this annual report,information on likely developments in the operations of the economic entityand the expected results of those operations in future financial years has notbeen included in this directors' report because the directors believe, onreasonable grounds, that to include such information would be likely to resultin unreasonable prejudice to the economic entity. ENVIRONMENTAL REGULATION The economic entity's operations are not regulated by anysignificant environmental regulation under a law of the Commonwealth or of astate or territory. The Directors have considered compliance with the NationalGreenhouse and Energy Reporting Act 2007 which requires entities to reportannual greenhouse gas emissions and energy use. For the first measurementperiod 1 July 2008 to 30 June 2009 and subsequent periods the directors haveassessed that there are no current reporting requirements, but may be requiredto do so in the future. GREENHOUSE GAS AND ENERGY DATA REPORTING REQUIREMENTS The Directors have considered compliance with the NationalGreenhouse and Energy Reporting Act 2007 which requires entities to reportannual greenhouse gas emissions and energy use. The directors have assessedthat there are no current reporting requirements, but may be required to do soin the future. CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2013 Note Consolidated 2012 2013 US$ US$ Restated* Revenue from continuing operations 4 27,258,691 24,997,980 Operating expenses (13,525,286) (16,796,698)Depreciation, depletion and amortisation (8,307,574) (9,506,504)Cost of sales 5a (21,832,860) (26,303,202) Gross Profit / (Loss) 5,425,831 (1,305,222)Other income and expenses from continuingoperationsOther income 4 484,539 6,559,987Finance costs 5b (4,027,704) (2,827,201)Exploration expenditure 20 (5,839,253) (21,753,481)Depreciation - general 5b (63,938) (46,810)Directors fees 7 (902,597) (547,096)Corporate management services (866,617) (970,324)Consultants (4,337,657) (5,467,306)Foreign exchange loss (135,462) (928,933)Share-based payment (2,907,084) (1,495,798)Marketing and public relations (581,339) (524,238)Costs associated with AIM listing (181,138) (447,299)Travel expenditure (863,263) (1,648,835)Impairment loss on available for sale assets - (115,613)Share of net loss on investment in associates - (407,326)Other expenses 5b (2,924,048) (1,859,583) Loss before income tax expense from continuingoperations (17,719,730) (33,785,078) Income tax benefit/(expense) 6 (2,584,531) 2,690,087Loss after income tax for the year attributableto equity holders of Range Resources Limited (20,304,261) (31,094,991) Other comprehensive income/(loss)Items that can be reclassified to profit and lossRevaluation of available for sale assets 29d (1,105,172) 768,816Exchange difference on translation of foreignoperations 29c (681,064) (5,923,382) Other comprehensive income/(loss) for the year,net of tax (1,786,236) (5,154,566) Total comprehensive loss attributable to equityholders of Range Resources Limited (22,090,497) (36,249,557) Overall operationsEPS from continuing operations:Basic loss per share (cents per share) 9 (0.95) (1.57)Diluted loss per share (cents per share) 9 n/a n/a CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2013 Note Consolidated 2012 2011 2013 US$ US$ US$ Restated* Restated*ASSETSCURRENT ASSETSCash and cash equivalents 10 1,732,231 10,578,562 18,396,514Restricted deposits 3,480,000 - -Trade and other receivables 11 14,297,007 11,373,559 3,181,683Other current assets 12 3,818,816 926,294 327,466 23,328,054 22,878,415 21,905,663Non-current asset classified as held 14for sale 8,769,792 6,323,453 -TOTAL CURRENT ASSETS 32,097,846 29,201,868 21,905,663 NON-CURRENT ASSETSGoodwill 16 46,198,974 46,198,974 -Available for sale financial assets 13 822,751 3,299,034 966,822Property, plant and equipment 17 15,109,215 15,605,563 20,204Exploration & Evaluation Expenditure 18 9,453,636 7,250,706 4,430,443Development Assets 19 82,614,029 82,732,320 6,507,736Prepayments for Investments - - 57,676,819Deferred tax asset 6 216,920 348,113 -Investments in Associates 21 37,295,453 30,333,035 6,243,411Non-Current Assets 22 15,324,218 4,839,713 12,846,052 TOTAL NON-CURRENT ASSETS 207,035,196 190,607,458 88,691,487 TOTAL ASSETS 239,133,042 219,809,326 110,597,150 CURRENT LIABILITIESTrade and other payables 23 7,170,178 2,500,628 1,504,420Current tax liabilities 1,806,030 4,247,557 -Borrowings 24 11,026,440 - -Provision 25 654,873 602,378 12,340TOTAL CURRENT LIABILITIES 20,657,521 7,350,563 1,516,760 NON-CURRENT LIABILITIESOther non-current liabilities 27b 431,211 2,970,284 -Deferred tax liabilities 26 44,995,633 44,859,854 -Employee service benefit 27a 482,092 640,426 -TOTAL NON-CURRENT LIABILITIES 45,908,936 48,470,564 - TOTAL LIABILITIES 66,566,457 55,821,127 1,516,760 NET ASSETS 172,566,585 163,988,199 109,080,390 EQUITYContributed equity 28 314,199,634 283,645,540 200,968,352Reserves 29 26,991,273 28,662,720 25,337,108Accumulated losses (168,624,322) (148,320,061) (117,225,070) TOTAL EQUITY 172,566,585 163,988,199 109,080,390 CONSOLIDATED STATEMENT OF CASH FLOWS FOR YEAR ENDED 30 JUNE 2013 Note Consolidated 2012 2013 Restated* US$ US$CASH FLOWS FROM OPERATING ACTIVITIESReceipts from customers 24,662,614 22,135,754Payments to suppliers and employees (25,042,225) (16,730,138)Payments for exploration and evaluationexpenditure in relation to the Somaliainterests (5,839,253) (15,225,120)Income taxes paid (4,736,902) (6,984,390)Interest received 183,714 325,745Interest & other finance costs (1,678,438) - Net cash inflow/(outflow) from operatingactivities 33 (12,450,490) (16,478,149) CASH FLOWS FROM INVESTING ACTIVITIESPayment for property, plant & equipment (1,661,699) (12,607,762)Payment for available for sale financialassets (200,000) (2,502,578)Sale of available for sale financial assets 2,091,522 2,604,908Payment for development assets (8,396,480) (6,404,445)Payment to investments in associates (6,962,418) (12,626,155)Payments for exploration and evaluationassets (2,202,930) (7,872,856)Payments for assets held-for-sale (912,687) -Payments for acquisition of subsidiary, netof cash acquired - (4,704,346)Payment to restricted deposits (3,480,000) -Loans to external parties (9,001,871) (6,428,993) Net cash outflow from investing activities (30,726,563) (50,542,227) CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issue of equity 21,504,846 64,811,576Payment of equity issue costs (350,917) (5,068,593)Proceeds from borrowings 21,499,815 -Repayment of borrowings (8,323,022) - Net cash inflow from financing activities 34,330,722 59,742,983 Net increase / (decrease) in cash and cashequivalents (8,846,331) (7,277,393)Cash and cash equivalents at beginning offinancial year 10,578,562 18,396,514Effect of exchange rate changes on thebalance of cash held in foreign currencies - (540,559)Cash and cash equivalents at end offinancial year 10 1,732,231 10,578,562Issue of Shares Range Resources Limited announces the issue of the followingsecurities: - 133,681,977 Ordinary Fully Paid Shares issued in lieu of debtconversion, and financing costs - 5,000,000 listed options ($0.05, 31 January 2016) in lieu offinancing costs. - 4,809,524 unlisted options (£0.021, 31 August 2016) followingdebt conversion as per convertible loan agreements. - 9,000,000 unlisted options (£0.02, 31 August 2016) following debtconversion as per convertible loan agreements. - 3,947,369 unlisted options (£0.019, 31 August 2016) followingdebt conversion as per convertible loan agreements. - 7,555,558 unlisted options (£0.018, 31 August 2016) followingdebt conversion as per convertible loan agreements. Application will be made for the 133,681,977 new shares to beadmitted to trading on the ASX and AIM. Trading in the new shares is expectedto commence on or around 4 October 2013. Following the issue of these securities the total number ofsecurities on issue are as follows: 3,148,485,061 Ordinary Fully Paid Shares (RRS) 70,241,168 Listed Options ($0.05, 31 January 2016) 855,166 Unlisted Options (£0.04, 30 June 2015) 7,058,824 Unlisted Options (£0.17p, 30 April 2016) 5,180,000 Unlisted Options (£0.075p, 31 January 2017) 9,000,000 Unlisted Options (£0.125p, 31 March 2015) 17,921,146 Class B Performance Shares 15,708,801 Unlisted Options (£0.0615, 19 October 2015) 32,275,862 Unlisted Options (£0.05075, 30 November 2015) 5,000,000 Unlisted Options (A$0.10, 31 January 2016) 5,000,000 Unlisted Options (A$0.06, 10 February 2016) 146,533,850 Unlisted Options (£0.04, 30 April 2016) 5,000,000 Unlisted Options (£0.037, 11 July 2016) 476,190 Unlisted Options (£0.021, 27 July 2016) 952,381 Unlisted Options (£0.021, 29 July 2016) 6,714,284 Unlisted Options (£0.021, 31 August 2016) 9,000,000 Unlisted Options (£0.020, 31 August 2016) 3,947,369 Unlisted Options (£0.019, 30 September 2016) 7,555,558 Unlisted Options (£0.018, 30 September 2016) Yours faithfully Peter Landau Executive Director Contacts Range Resources Limited PPR (Australia)Peter Landau David TaskerT: +61 (8) 9488 5220 T: +61 (8) 9388 0944E: plandau@rangeresources.com.au E: david.tasker@ppr.com.au GMP Securities Europe LLP (Joint Broker) RFC Ambrian Limited (Nominated Advisor)Richard Greenfield / Rob Collins / Stuart LaingAlexandra Carse T: +61 (8) 9480 2500T: +44 (0) 207 647 2800 Fox-Davies Capital Limited (Joint Broker) Old Park Lane Capital (Joint Broker)Daniel Fox-Davies Michael ParnesT: +44 (0) 203 463 5000 T: +44 (0) 207 493 8188 Dahlman Rose & Company (Principal American Liaison)OTCQX International Market (U.S.)Christopher Weekes / Stephen NashT: +1 (212)-372-5766 Range Background Range Resources Limited is a dual listed (ASX:RRS; AIM:RRL) oil & gasexploration company with oil & gas interests in the frontier state ofPuntland, Somalia, the Republic of Georgia, Texas, USA, Trinidad and Colombia. - In Trinidad Range holds a 100% interest in holding companies with threeonshore production licenses and fully operational drilling subsidiary.Independently assessed Proved (P1) reserves in place of 17.5 MMBO with 25.2MMBO of proved, probable and possible (3P) reserves and an additional 81 MMBOof unrisked prospective resources. - In the Republic of Georgia, Range holds a 40% farm-in interest in onshoreblocks VIa and VIb, covering approx. 7,000sq.km. Range completed a 410km 2Dseismic program with independent consultants RPS Energy identifying 68potential structures containing an estimated 2 billion barrels of undiscoveredoil-in-place (on a mean 100% basis) with the first (Mukhiani-1) explorationwell having spudded in July in 2011. The Company is focussing on a reviseddevelopment strategy that will focus on low-cost, shallow appraisal drillingof the contingent resources around the Tkibuli-Shaori ("Tkibuli") coaldeposit, which straddles the central sections of the Company's two blocks. - In Puntland, Range holds a 20% working interest in two licenses encompassingthe highly prospective Dharoor and Nugaal valleys. The operator and 60%interest holder, Horn Petroleum Corp. (TSXV:HRN) has completed two explorationwells and will continue with a further seismic and well program over the next12-18 months. - Range holds a 25% interest in the initial Smith #1 well and a 20% interestin further wells on the North Chapman Ranch project, Texas. The project areaencompasses approximately 1,680 acres in one of the most prolific oil and gasproducing trends in the State of Texas. Independently assessed 3P reserves inplace (on a 100% basis) of 228 Bcf of natural gas, 18 MMbbl of oil and 17MMbbl of natural gas liquids. - Range holds a 21.75% interest in the East Texas Cotton Valley Prospect inRed River County, Texas, USA, where the prospect's project area encompassesapproximately 1,570 acres encompassing a recent oil discovery. The prospecthas independently assessed 3P reserves in place (on a 100% basis) of 3.3mmbblsof oil. - Range is earning a 65% (option to move to 75%) interest in highlyprospective licences in the Putumayo Basin in Southern Colombia. The Companywill undertake a 3D seismic program in the near term as part of itsexploration commitments on the Company's Colombian interests. - Range has taken a strategic stake (19.9%) in Citation Resources Limited(ASX: CTR) which holds a 60% interest in Latin American Resources (LAR). LARholds an 80-100% interest in two oil and gas development and explorationblocks in Guatemala with Canadian NI 51-101 certified proved plus probable(2P) reserves of 2.3 MMBBL (100% basis). Range also holds a 20% interest inLAR. Table of Reserves and Resources Detailed below are the estimated reserves for the Range project portfolio. All figures in Gross Oil Range's Net AttributableMMboe Reserves Project 1P 2P 3P Interest 1P 2P 3P Operator Oil & NGL Texas - NCR * 16.4 25.2 35.3 20-25% 2.2 3.4 4.8 Western GulfTexas - ETCV 1.0 1.6 3.3 22% 0.2 0.3 0.6 Crest ResourcesTrinidad 17.5 20.2 25.2 100% 17.5 20.2 25.2 RangeGuatemala ** 2.3** ** 32% ** 0.74** ** Latin American ResourcesTotal Oil & 34.9 47.0 63.8 19.9 21.3 28.9LiquidsGas ReservesTexas - NCR * 106.0 162.7 228 20-25% 11.7 18.1 25.4 Western GulfTotal Gas 106.0 162.7 228 11.7 18.1 25.4Reserves* Reserves attributable to Range's interest in the North Chapman Ranch asset,which are net of government and overriding royalties as described in theForrest Garb report. ** The reserves estimate for the Guatemalan Blocks in which LAR (and CTR) havean interest in is as reported by CTR. CTR has not reported 1P and 3Pestimates, but Range is seeking such information from CTR for future reportingpurposes. Detailed below are the estimated resources and oil-in-place delineated acrossRange's portfolio of project interests. All figures in MMboe Gross Oil Reserves Range's Net Attributable Project Low Best/ High Interest Low Best/ High Operator Mean MeanProspective ResourcesTrinidad 8.1 40.5 81.0 100% 8.1 40.5 81.0 RangeTotal Prospective 8.1 40.5 81.0 8.1 40.5 81.0ResourcesUndiscoveredOil-In-PlacePuntland - 16,000 - 20% - 3,200 - Horn PetroleumGeorgia - 2,045 - 40% - 818 - Strait Oil & GasColombia - 7.8 - 65-75% - 5.1 - 5.8 - Petro Caribbean All of the technical information, including information in relation toreserves and resources that is contained in this document has been reviewedinternally by the Company's technical consultant, Mr Mark Patterson. MrPatterson is a geophysicist who is a suitably qualified person with over 25years' experience in assessing hydrocarbon reserves and has reviewed therelease and consents to the inclusion of the technical information. The reserves estimate for the Guatemalan Blocks in which LAR (and CTR) have aninterest in is as reported by CTR. CTR has not reported 1P and 3P estimates,but Range is seeking such information from CTR for future reporting purposes. All of the technical information, including information in relation toreserves and resources that is contained in this document has been reviewedinternally by the Company's technical consultant, Mr Mark Patterson. MrPatterson is a geophysicist who is a suitably qualified person with over 25years' experience in assessing hydrocarbon reserves and has reviewed therelease and consents to the inclusion of the technical information. The reserves estimates for the 3 Trinidad blocks and update reserves estimatesfor the North Chapman Ranch Project and East Texas Cotton Valley referredabove have been formulated by Forrest A. Garb & Associates, Inc. (FGA). FGA isan international petroleum engineering and geologic consulting firm staffed byexperienced engineers and geologists. Collectively FGA staff has more than acentury of worldâ€wide experience. FGA have consented in writing to thereference to them in this announcement and to the estimates of oil and naturalgas liquids provided. The definitions for oil and gas reserves are inaccordance with SEC Regulation Sâ€X an in accordance with the guidelines ofthe Society of Petroleum Engineers ("SPE"). The SPE Reserve definitions can befound on the SPE website at spe.org. RPS Group is an International Petroleum Consulting Firm with officesworldwide, who specialise in the evaluation of resources, and have consentedto the information with regards to the Company's Georgian interests in theform and context that they appear. These estimates were formulated inaccordance with the guidelines of the Society of Petroleum Engineers ("SPE"). The prospective resource estimates for the two Dharoor Valley prospects areinternal estimates reported by Africa Oil Corp, the operator of the jointventure, which are based on volumetric and related assessments by Gaffney,Cline & Associates. The TSX certified 51-101 certified reserves with respect to the Guatemalanproject are as reported by ASX listed Company Citation Resources (ASX: CTR). In granting its consent to the public disclosure of this press release withrespect to the Company's Trinidad operations, Petrotrin makes norepresentation or warranty as to the adequacy or accuracy of its contents anddisclaims any liability that may arise because of reliance on it. The Contingent Resource estimate for CBM gas at the Tkibuli project is sourcedfrom the publically available references to a report by Advanced ResourcesInternational's ("ARI") report in 2009: CMM and CBM development in theTkibuli-Shaori Region, Georgia. Advanced Resources International, Inc., 2009.Prepared for GIG/Saknakhshiri and U.S. Trade and Development Agency. -.globalmethane.org/documents/ toolsres_coal_overview_ch13.pdf. Range'stechnical consultants have not yet reviewed the details of ARI's resourceestimate and the reliability of this estimate and its compliance with the SPEreporting guidelines or other standard is uncertain. Range and its JV partnerswill be seeking to confirm this resource estimate, and seek to definereserves, through its appraisal program and review of historical data duringthe next 12 months. Reserve information on the Putumayo 1 Well published by Ecopetrol 1987. SPE Definitions for Proved, Probable, Possible Reserves and ProspectiveResources Proved Reserves are those quantities of petroleum, which by analysis ofgeoscience and engineering data, can be estimated with reasonable certainty tobe commercially recoverable, from a given date forward, from known reservoirsand under defined economic conditions, operating methods, and governmentregulations. Probable Reserves are those additional Reserves which analysis of geoscienceand engineering data indicate are less likely to be recovered than ProvedReserves but more certain to be recovered than Possible Reserves. Possible Reserves are those additional reserves which analysis of geoscienceand engineering data indicate are less likely to be recoverable than ProbableReserves. 1P refers to Proved Reserves, 2P refers to Proved plus Probable Reserves and3P refers to Proved plus Probable plus Possible Reserves. Prospective Resources are those quantities of petroleum estimated, as of agiven date, to be potentially recoverable from undiscovered accumulations byapplication of future development projects. Prospective Resources have both anassociated chance of discovery and a chance of development. ProspectiveResources are further subdivided in accordance with the level of certaintyassociated with recoverable estimates assuming their discovery and developmentand may be sub-classified based on project maturity. Contingent Resources are those quantities of hydrocarbons which are estimated,on a given date, to be potentially recoverable from known accumulations, butwhich are not currently considered to be commercially recoverable. Undiscovered Oil-In-Place is that quantity of oil which is estimated, on agiven date, to be contained in accumulations yet to be discovered. Theestimated potentially recoverable portion of such accumulations is classifiedas Prospective Resources, as defined above.