29 Oct 2008 08:17
Range Resources Ltd ABN 88 002 522 009 16 Southport Street West Leederville, 6007 Western Australia Tel: +61 8 6389 5700 Fax: +61 8 9381 4944 admin@rangeresources.com.au 29 October 2008
KEY APPOINTMENTS and INITIATIVES TO ACCELERATE PUNTLAND PROJECT
Key Highlights:
* Appointment of Mr Mark Patterson as Executive Consultant * Appointment of Mr Fawaz Mourad as a Non Executive Director * Appointment of two additional new consultants
* Proposed 1 for 2 non-renounceable rights issue to raise up to A$5.0 million
* Entry into a Letter of Understanding with one of the world's leading
geophysical services contractors, for the undertaking of 15,000 kilometres of
2-D seismic in Puntland's offshore oil and gas areas.
Australian Oil and Gas Company Range Resources Ltd ("Range" or "the Company") is accelerating its Horn of Africa oil and gas explorationprogramme following the appointment of a highly experienced executiveconsultant, board member and consultant group, together with the signing of aLetter of Understanding for the completion of a regional survey of offshorePuntland oil and gas areas.
Board and Consultant Appointments
The Company is pleased to announce that it has appointed Mr Mark Patterson asan Executive Consultant to Range moving to an executive Director followingsuccessful completion of the Rights Issue referred to below. The appointmenthas been structured through a consultancy agreement ("Consultancy Agreement")with Texas Energy Advisors LLC (TEA), a specialist energy advisory firm underwhich TEA will provide the services of Mr Mark Patterson as Executive and MrGreg Smith and Mr Pawan Sharma as consultants (Consultants). Further detailsare set out below:- Mark Patterson.Mr Patterson (age 53) has over 25 years experience in the oil and gas industry.He was Managing Partner of Calypso Energy LLC, an independent exploration anddevelopment company and part of the Calypso Energy group of companies heco-founded in 2000. He was also previously a non-executive director ofAIM-listed PetroLatina Energy Plc, an oil and gas exploration focused on LatinAmerica, and prior to which Chief Executive Officer of Compania General deCombustibles (CGC), one of Argentina's largest independent oil and gascompanies with over US$620 million in upstream and midstream assets. Under hisdirection, CGC generated record earnings and increased its net worth by morethan 70%.While at CGC, Mr Patterson served as Director of Transportadora de Gas delNorte (TGN), GasAndes, and several other companies in which CGC was a majorshareholder. Prior to joining CGC, he was Division Manager for Argentina's YPFin charge of 90,000 barrels per day of non-operated production. Since 1997, Mr.Patterson has participated in the successful completion of over $410 million inenergy-related transactions and arranged financing for an additional $120million.During his 13 years with Maxus Energy Corporation and its predecessor companyDiamond Shamrock, he occupied positions of increasing responsibility includingOffshore Exploration Manager, Exploration & Development Manager for NorthAmerica, and General Manager for Maxus Bolivia, Inc. prior to joining DiamondShamrock; he was Offshore Exploration Geophysicist for Getty Oil Company andEngineering Geophysicist for Fairfield Industries. Mr. Patterson and hisexploration teams are credited with the discovery of more than 85 millionbarrels of oil and 300 billion cubic feet of natural gas.
Mr. Patterson holds a Bachelors Degree in Geology from the University of California Santa Barbara and a Masters Degree in Business Administration from Houston Baptist University.
- Mr Gregory Smith
Mr Gregory Smith (age 47) has been involved in the resources business for inexcess of 20 years. He has a wide breadth of senior management and executiveexperience, having been associated with natural resource companies across theglobe - coal bed methane in Wyoming; onshore oil and gas in Guatemala andColombia; underground and open pit zinc mines in Canada; and corporate financeand advisory services throughout much of the world.
Mr. Smith is Chairman, CEO and founder of AIM-listed International Consolidated Minerals Inc, a South American focused mineral exploration and development company. Mr Smith is a founder of Texas Energy Advisors, formed in 2007.
From 2004 to June 2008, Mr. Smith founded and served as Executive Chairman ofPetrolatina Energy Plc, an AIM listed oil and gas company with operationsinitially in Guatemala and now in Colombia. Between 2003 and 2004, he providedcorporate advisory services to Ontzinc Corporation at its 1,000 tpd Balmat zincmine in New York State, USA, including advice on financing the explorationprogram and the acquisition of Hudson Bay Mining. He also investigated andprovided advisory services on possible mining acquisitions in Canada andAustralia.Between 1998 and 2001 he was the chairman of Powder River Basin GasCorporation, which was a successful operator of coal bed methane in Wyoming,US. Through a drilling program overseen by Mr Smith, Power River's reserve baseincreased from 0 to 17bcf of P1, P2 and P3 reserves. This entity merged withImperial Petroleum in April 2003.Mr Smith's 20 years of experience encompasses all of the major components ofinvestigation, analysis, conceptual planning, exploration, development,financing (equity and debt), environmental aspects, governmental dealings, highlevel negotiations, acquisitions, executive management and corporategovernance. He was educated in the United States, and received a degree inmanagerial sciences from the University of Nevada.
- Mr Pawan Sharma
Mr Pawan Sharma (age 34) has considerable legal and corporate financeexperience, having been a lawyer at US law firm Debevoise & Plimpton and, mostrecently, a partner in the corporate department of London law firm, StephensonHarwood. Mr Sharma has structured, led and advised on numerous debt and equitytransactions, mergers and acquisitions and other corporate transactions forboth start-up and FTSE 100 companies.
Mr Fawaz Mourad - New Board Appointment
Range is also pleased to announce the appointment, subject to standard AIMmarket related sign off requirements, Mr Fawaz Mourad as a Non ExecutiveDirector. Mr Mourad (age 52) has over 25 years of expertise in the oil and gasindustry in Africa and the Middle East and has assisted with major seismicacquisition exercises in the Eastern Mediterranean. In recent years, Fawaz hasbeen heavily involved in business development in North Africa and the MiddleEast. Mr Mourad is a director of Lake Energy Services and AFIL (Al FardoussInternational) which is a representative for Norway based PGS-Marine, PetroleumGeoservices, out of Norway. He has been instrumental in assisting Range withthe offshore transaction. Moving ForwardAs part of the changes to the Board of Directors, Mr Michael Povey will stepdown as a Director of Range with immediate effect. The Board thanks him for hiscontributions over the last 4 years. Mr Peter Landau will remain on the Boardin an executive capacity in assisting the new management team for an interimperiod.Mr Landau said "Range considers the appointments of Messrs Patterson and Mouradand the new consultancy team to be a strong indication of its commitment to thedevelopment of its oil and gas areas in the Puntland State of Somalia. Rangebelieves that the collective expertise of the new additions, together with thatof the existing Directors, will provide the Company with the leadership itrequires going forward and, particularly, in the development phase of thePuntland project. The Company will have representative offices in London,Perth, Dallas and Bosaso, Puntland."
Mr Patterson said "Range is entering an exciting phase and has demonstrated that it is committed to its projects in Puntland, Somalia by engaging the necessary expertise to drive these projects forward."
Issue of Shares and Options to New Management
As part of the Consultancy Agreement with the new management team, an equityincentive package is proposed to be issued to TEA subject to any necessaryapprovals. The package will be equivalent to approximately 10% of the issuedcapital of Range, and comprise:
* The immediate issue of 15 million Range shares and 4.5 million Range listed
options (expiring 1 October 2010 with a $1.00 exercise price) as a sign-on
fee;
* The contingent issue of a further 5 million Range shares subject to the
completion of the rights issue (see below);
* The contingent issue of a further 10 million Range shares on Range entering
into a formal joint venture agreement in relation to its offshore Puntland
acreage with a party introduced by the new management team;
* The issue of a further 6.575 million options on the achievement of various
performance milestones by the Company (full details will be provided with
the obtaining of requisite shareholder approvals); and
* The issue of 4 million incentive options expiring 31 December 2011 with an
exercise price of $0.20 on the following terms;
*
- 2 million incentive options to be issued in the event that Range's
ordinary market capitalisation exceeds $50 million for 10 consecutive
trading days on the ASX; and
- 2 million incentive options to be issued in the event that Ranges
ordinary market capitalisation exceeds $100 million for 10 consecutive
trading days on the ASX.
Under the Consultancy Agreement, TEA will also be paid a retainer of approximately US$45,000 per month for the services of the new management team (this includes the provision of support staff and offices in Dallas and London).
Subject to discussions that are yet to be finalised and any necessaryapprovals, Range may 'potentially' issue up to a further 36 million incentiveoptions to other parties not related to Range (also excluding its existingsignificant shareholders) or the new management team in relation to supportingthe proposed rights issue detailed below. Details of any such arrangements willbe announced as soon as they are finalised.
Letter of Understanding - Leading Chinese Geophysical Service Operator
Range is also pleased to announce that it has entered into a Letter ofUnderstanding (Agreement) with one of the world's leading Chinese GeophysicalService Operator (Geophysical Operator). The Agreement is in respect ofcompleting a regional survey of offshore Puntland comprising 15,000 kilometresof 2-D seismic data on Puntland's offshore oil and gas areas. Under the terms of the Agreement, the Geophysical Operator has conditionallyagreed to finance 50% of the costs associated with the Seismic programme, byway of a multi client tender programme for off shore Puntland and have aseismic charter available at this stage to commence before the end of 2008.
The estimated total cost of the seismic programme is US$30 million. Led by the new management team, the Company is in discussions with a number of parties regarding the joint venturing of Range's current 100% interest in offshore Puntland, and the balance of the funding of the seismic programme. The Agreement is expected to move into a formal contract over the next 30 days subject to the securing of a Joint Venture partner.
Proposed Rights Issue
Range is proposing a non-renounceable rights issue to raise up to $5.0 million (before expenses) (Rights Issue).
Key Terms of Rights Issue
The terms of the proposed Rights Issue remain subject to finalisation. Theintention is that Range shareholders shall be entitled to acquire one (1) newordinary Range share (New Share) for every two (2) existing Range shares heldat the record date. The New Shares will have an issue price of $0.05 per NewShare. For every two (2) New Shares subscribed, Shareholders shall receive one(1) free listed attaching option ($0.20; 31 December 2011) (Attaching Option).
Range is seeking advice on structuring the payment terms of the New Shares that will comply with regulatory requirements to allow Shareholders to have the option to part pay given current world markets and potential positive developments in Puntland moving forward.
Range will announce the full terms and conditions of the proposed Rights Issuetogether with the associated Appendix 3B and proposed timetable as soon as
theyare finalised. Bonus Option
In addition, the Attaching Option shall carry with it the right to a bonus,listed option (RRSOA; $1.00; 1 October 2010) (Bonus Option) if the AttachingOption is exercised by the holder before a specified date pursuant to a call bythe Directors as a result of a need for further capital to potentiallycontribute to any funding obligations for the Company's farm-in arrangements -as covered by the PSC's (and other agreements). Based on current budgets, it isexpected that Range will possibly have to begin to contribute to its 20%participating interest on or near to the commencement of drilling in theDharoor basin. There is no obligation on Option holders to exercise pursuantto a call. Shortfall
In the event any New Shares are not taken up by existing Range shareholders (Shortfall), the Company proposes to offer those persons who were registered asholders of $1.00 unlisted options (Expired Options), which expired on 1 October2008 (Expiry Date), on the date of such expiry (Ex-Optionholders), the right tosubscribe under the Shortfall for 1 New Share at $0.05 per New Share (with thefree Attaching 1 for 2 Option) on the basis of every 2 Expired Options held onthe Expiry Date.If the Shortfall is oversubscribed by the Ex-Optionholders, the Company willuse its 15% capacity pursuant to ASX Listing Rules to issue further New Shares(and Attaching Options) to the Ex-Optionholders.
Capital Structure
If the proposed Rights Issue is fully subscribed, 97,152,472 New Shares and48,576,236 Attaching Options will be issued. It is proposed that the fundsraised from the Rights Issue will be used to further progress Range's PuntlandProjects. A table setting out the indicative effect on Range's capitalstructure of the proposed Rights Issue and the issue of shares and options tothe new management team is annexed to this announcement. It is noted thatRange cannot lodge an Appendix 3B at this point in time as the terms of theRights Issue and other issues are still being finalised.
The Company is currently finalising the terms and timetable for the Rights Issue and also talking to potential underwriters for the issue. Details of these matters will be included in an offer document for the Rights Issue.
Yours faithfully Peter LandauDirector Contact:Director: Peter Landau+44 (0) 774 7577 815+61 (0) 407 751 1115plandau@rangeresources.com.au
PR
Australia
Professional Public RelationsDavid Tasker+61 (08) 9388 0944dtasker@pprwa.com.auUnited KingdomConduit PRJonathan Charles+44 (0) 207 429 661jonathan@conduitpr.com Range's Nominated Advisor for the AIM MarketRFC Corporate Finance LtdStuart Laing+61 (08) 9480 2506stuartl@rfc.com.au www.rangeresources.com.au RANGE RESOURCES LTD - CAPITAL STRUCTURE Note Shares Note Options Note Existing (as at 23/10/08) 194,304,944 60,401,186 1 2,952,029 2
Contingent obligation to issue contingent: contingent: securities to Original Vendor of 45,000,000 11 11,250,000
11 Puntland Project Proposed Rights Issue 3 97,152,472 48,576,236 4 New Management 15,000,000 4,500,000 7 contingent: contingent: 5,000,000 5 6,575,000 8 10,000,000 6 Incentive Options contingent: 20,000,000 9 20,000,000 10 NOTES
1. Listed ASX: RRSOA (1 October 2010; A$1.00)
2. Unlisted (30 June 2012; A$0.50).
3. 1 for 2 (non-renounceable) rights issue at A$0.05 per share with a 1 for 2free attaching option to raiseA$5 million. Assumes expired option holders do not subscribe for more rightsshares than the shortfall;
4. To be listed on ASX (31 December 2011; A$0.20).
5. Contingent on the completion of the Rights Issue referred to in note 3 above.
6. Contingent on Range entering into a joint venture agreement in relation to off-shore Puntland with a third party introduced by the new management.
7. Listed ASX: RRSOA (1 October 2010; A$1.00)
8. Various milestone options
9. Proposed Incentive Options (listed 31 December 2011; A$0.20) with respect toRange's market capitalisation equalling or exceeding A$50 million for a periodof 10 consecutive trading days on ASX.
10. Proposed Incentive Options (listed 31 December 2011; A$0.20) with respect to Range's market capitalisation (based on issued shares only) equalling or exceeding A$100 million for a period of 10 consecutive trading days on ASX.
11. Contingent on completion of first well as approved by shareholders in 2007.
vendor