29 Jan 2010 08:55
29 January 2010
QUARTERLY REPORT FOR PERIOD ENDING 31 DECEMBER 2009
The Board is pleased to provide the following commentary to be read in conjunction with the Appendix 5B, which is available on the website.
Puntland
Following the conclusion of negotiations between Range Resources Limited's (" Range" or "the Company") Joint Venture Partner, Africa Oil Corp. ("Africa Oil") and the Government of the Puntland State of Somalia, Range, Africa Oil and the Puntland State of Somalia have entered into amending agreements modifying the terms of the existing Production Sharing Agreements ("PSAs") made in respect of the Dharoor and Nugaal Valley Exploration Areas. The revised agreements were signed by the parties in Garowe, Puntland, subsequently approved by the Cabinet of the Puntland Government and ratified by the Parliament of the Puntland State of Somalia during December 2009.
With the conclusion of the negotiations and the execution of the amending agreements, the PSAs, as amended, now provide for initial exploration periods in respect of both blocks that have been extended from 36 months to 48 months with a revised expiry of 17 January 2011. In addition, the terms of the exploration programs have been amended so that Africa Oil can, at its option, drill one exploratory well in each of the Nugaal and Dharoor Valley Exploration Areas, or two exploratory wells in the Dharoor Valley, during the initial exploration period. In consideration of the extension of the exploration period, the parties agreed to voluntarily relinquish 25% of the original agreement area on or before 17 January 2010.
Onshore Puntland Interest: Range - 20%
Africa Oil Corp - 65% Lion Energy Inc - 15%
The successful conclusions of these negotiations now paves the way for Africa Oil to commence operations and drilling of the first exploration well in Puntland for over 16 years.
Following the successful completion of negotiations regarding the onshore licences and previous technical presentations to the Government on the proposed offshore areas of interest, Range will look to continue negotiations regarding the formalisation of a new PSA with respect to the exploration and development of off shore Puntland in early 2010.
Georgia
Subsequent to completion of the Heads of Agreement, between Range Resources and Strait Oil & Gas (UK) Ltd to complete Phase II of the PSA, approval was obtained from the Georgian Government for The Geophysical Institute of Israel to commence the 2D seismic operation on both Block VIa and Block VIb.
Mobilisation of the vibrosis equipment was completed in October and after independent testing and technical audit the seismic operation started in November 2009. The operation has proceeded well and to date with over 150 kms of seismic acquisition having been completed despite some recent severe weather conditions. It is predicted that completion of this operation will occur sometime in end of February / early March of 2010.
The crew has been extremely diligent and the equipment is being maintained to manufacturer's specification and contract requirement. To date the seismic team has not had any incident of damage to buildings or the environment during the seismic acquisition and are continually monitoring for any environmental damage.
Data quality has been consistently good to very good and the highly structured overthrust features, that will require competent data processing, are expected to provide many potentially viable structures as drilling targets.
An assessment of previously drilled gas wells is currently being completed and will be followed by an independent review.
Figure 1 - Planned Seismic Program on Blocks VIa and VIb - please refer to the website.
Figure 2 - Seismic Vehicle - please refer to the website.
Texas
During the quarter drilling was completed on the Smith #1 well and the Company announced that testing confirmed a commercial discovery.
The Smith #1 was drilled and logged to a depth of 13,975' (4,260m). Based on open-hole logs indicating approximately 120' (37m) of net pay thickness in three zones with no water, 4 ½" production casing was run to TD and cemented in place. After an interval of just 20' (6.2m) in one of the three zones was perforated, bottom-hole pressure was estimated to be approximately 11,650 psi.
The well was unloaded on a 6/64" choke until gas reached the surface, and subsequently opened to a 10/64" choke for 5 hours to clean the well up. Despite the small choke size, the average rate during this period was 2.4 million cubic feet of gas and 191 barrels of oil per day with no water. Final flowing casing pressure was 6,354 psi.
The well was shut in with a final measured casing pressure of over 9,000 psi. The Smith well remains shut in awaiting production facilities and pipeline connection. Current plans are to perform additional testing of the well into the sales line and finish the completion at that time.
Also during the quarter, the well partners (Range - 25%) purchased anadditional 560 acres in the area bringing the total leased area in the prospectto 1,680 acres.Well DetailsName of well Smith #1 Spud date 4 September 2009 Total depth 13,975 ft (4,260m) RRS working interest 25%
Figure 3: Unit Texas Rig #35 drilling ahead on Smith #1 well - please refer to the website.
Corporate
The Company's Annual General Meeting was held on 20 November 2009 with all resolutions being passed.
Subsequent to quarter end, the Company announced a A$3.5m placement to sophisticated and institutional investors in both Australia and the United Kingdom, in conjunction with a 1:4 rights issue to existing shareholders, both at $0.05, raising approximately A$11m.
By order of the BoardPeter LandauExecutive DirectorContactsRange ResourcesPeter LandauTel: +61 8 9488 5220Em: plandau@rangeresources.com.auAustralia LondonPPR Conduit PRDavid Tasker Jonathan CharlesTel: +61 (8) 9388 0944 Tel: + 44 (0) 20 7429 6666Em: david.tasker@ppr.com.au Em: jonathan@conduitpr.comRFC Corporate Finance (Nominated Advisor) Old Park Lane Capital (Broker)Stuart Laing Michael ParnesTel: +61 (8) 9480 2500 Tel: +44 (0) 207 493 8188Range Background
Range Resources is a dual listed oil & gas exploration company with oil & gas interests in the frontier state of Puntland, Somalia, the Republic of Georgia and Texas, USA.
* In Puntland, Range holds a 20% working interest in two licences encompassing the highly prospective Dharoor and Nugaal valleys with plans to drill two wells - 65% Operator, in 2010. * In the Republic of Georgia, Range holds a 50% farm-in interest in onshore blocks VIa and VIb, covering approx. 7,000sq.km. Currently, Range is undertaking a 350km 2D seismic program. * Range holds a 25% interest in the North Chapman Ranch project, Texas. The project area encompasses approximately 1,680 acres in one of the most prolific oil and gas producing trends in the State of Texas. Drilling of the first well has resulted in a commercial discovery with production due to commence Feb 2010.
The references to gas flow rates with regards to Texas have been provided by the operator of the well, Crest Resources Inc., reviewed by Mark Patterson a petroleum geologist director and partner of Texas Energy Advisers LLC (who act as consultants to Range), who has over 25 years of relevant experience in the oil & gas sector, and found to be consistent with the SPE Guidelines.
vendor