11 Oct 2012 07:08
11 October 2012The ManagerCompany AnnouncementsAustralian Securities Exchange LimitedLevel 6, 20 Bridge StreetSydney NSW 2000By e-lodgement
TRINIDAD RESERVES UPGRADE AND FINANCING PACKAGE
Highlights
* Range's net attributable interest in Proved, Probable and Possible Reserves
(3P) increased by 5.6 million barrels (29%) to 25.2 million barrels. * Range's PV10 valuation on Proved, Probable and Possible Reserves (3P) increased by US$173m (34%) to US$680m * Range's net unrisked prospective resources (best estimate) increased by 30.5 million barrels (305%) to 40.5 million barrels (high estimate 81.0 million barrels)
* Range enters into a US$15m loan agreement with the possibility to increase
it to US$25m based on production milestone (1,500 bopd)
Range Resources Limited ("Range" or "the Company") is pleased to announce a 29% increase in Proved (P1), Probable (P2) and Possible (P3) net attributable reserves across the Company's three onshore Trinidad licenses, in which it holds a 100% working interest.
The Company engaged leading independent petroleum consultants Forrest A. Garband Associates ("Forrest Garb") to complete a review of the Trinidad reservesfollowing the first year of Range's operations in Trinidad, which has seen theCompany successfully complete over 20 wells, add circa 200 employees to itsoperations and brought four of the Company's six drilling rigs into operationwith the remaining two rigs due to commence operations shortly.Below is the comparison between October 2012 and December 2011 of Range'sattributable interest in the net reserves on the Company's Trinidad Licenseswhich is net of government and overriding royalties and represents Range'seconomic interests in its development and production assets as classified inthe report from Forest Garb.Category Oil (MMbbls) 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 Low 2.0 8.1 Best 10.0 40.5 High 19.9 81.0
Based on the reserve numbers cited above, Forrest Garb's estimated net undiscounted cash flow value to Range for Proved (P1), Probable (P2) and Possible (P3), along with discounted cash flow (at a 10% discount rate) valuation on a price of $94 / bbl which is based on an average WTI price for 2011, following reductions for estimated royalties, opex, capex, production taxes etc and compared to the $85 / bbl case per December 2011 as follows:
US$85 / bbl case US$94 / bbl case December 2011 October 2012 Category Undiscounted PV10 US$'m Undiscounted PV10 US$'m US$'m US$'m Proved (P1) 679 385 799 446 Probable (P2) 133 73 142 81 Possible (P3) 120 49 276 153 Total 932 507 1,217 680 The valuation is based on forecast production rates which reflect the currentwell drilling and development schedule, and estimated individual well declineprofiles from well modelling and current operating experience.As reported above, the recent reserves report saw a 30.5 million barrels (305%)increase in total unrisked net prospective (best estimate) resources across theCompany's licenses to 40.5 million barrels.Of the 40.5 million 100% best estimate unrisked net prospective resource, circa30.5 million barrels is associated with identified Herrera prospects that havebeen mapped on the Company's 3D seismic database, which are scheduled to bedrilled after the completion of the MD248 well. Of the 40.5 million bestestimate unrisked net prospective resource associated with the Herreraprospects, a risk factor of 25% has been assigned, with the remaining barrels a45% risk factor having been assigned.Range's Executive Director, Peter Landau commented, "The Company is extremelypleased with the progress made in the first year of operations and the materialincreases in reserves and resources that we have added to the existing reservesand resource base. As development continues, so too will the increase inreserves along with the reclassification of the prospective resources intoreserves following discoveries on our deeper exploration targets."
RANGES SECURES USD$15M TO USD$25M LOAN FACILITY
Range is also pleased to announce that it has entered into a US$15 million LoanAgreement ("Loan Agreement") backed by Standby Equity Distribution Agreement("SEDA") for up to £20 million with YA Global Master SPV Ltd, an investmentfund managed by Yorkville Advisors ("Yorkville").The loan can be drawn down in tranches of US$5 million (12 month term) at theelection of the Company and carries a coupon of 10%. The tranches may beincreased to $10m (after an initial $5m drawdown - total facility $25m) uponRange achieving 1,500 bopd from its Trinidad operations and by mutualagreement. In addition, the Company will issue Yorkville warrants to purchase anumber of the Company's ordinary shares equal to 25% of the portion of the loandrawn down. The warrants will expire after three years and will have asubscription price equal to 125% of the trading price at the time of issuance.The loan facility and SEDA will provide flexibility over future funding, withthe Company having the option to service any outstanding loans under the Loanagreement through cash proceeds or issue of shares using the SEDA facility atits discretion. Use of the SEDA facility is entirely at the discretion of theCompany and there are no penalties for not requesting an advance.The Company is extremely pleased with the facility given its flexible natureand will utilise the funds to continue its development program in Trinidadalong with initial funding of the Colombia exploration program. Coupled withthe current sale process of Range's Texas assets (completion scheduled for thiscurrent quarter), the Company is well placed with regards to its short andmedium term funding requirements.The SEDA facility will be effective and available for 36 months. Under theterms of the SEDA, any shares issued would be priced at 95% of the prevailingmarket price over a pricing period of 5 to 10 days (which may be extended uponmutual agreement) subject to any minimum price set by the Company in advance.The number and timing of advances to be made pursuant to the SEDA shall be atthe discretion of the Company but the Company cannot make concurrent advanceswithout prior agreement with Yorkville. Furthermore, the advance amountrequested must not exceed, a mutually agreeable amount not greater than £3,000,000 or 200% of the average daily trading volume of shares multiplied bythe volume weighted average price on AIM for the five trading days prior to
thedrawdown request.Yours faithfullyPeter LandauExecutive DirectorContactsRange Resources LimitedPeter LandauTel : +61 (8) 9488 5220Em: plandau@rangeresources.com.auPPR (Australia) Tavistock Communications (London)David Tasker Ed PortmanTel: +61 (8) 9388 0944 Tel: + 44 (0) 207 920 3150Em: david.tasker@ppr.com.au Em: eportman@tavistock.co.ukRFC Ambrian Limited (Nominated Advisor) Old Park Lane Capital (Joint Broker)Stuart Laing Michael ParnesTel: +61 (8) 9480 2500 Tel: +44 (0) 207 493 8188Fox-Davies Capital Limited GMP Securities Europe LLP (Joint Broker)Daniel Fox-Davies / Richard Hail James Pope / Chris BeltgensTel: +44 (0) 203 463 5000 Tel: +44 (0) 207 647 2800Range Background
Range Resources Limited is a dual listed oil & gas exploration company with oil & gas interests in the frontier state of Puntland, Somalia, the Republic of Georgia, Texas, USA, Trinidad and Colombia.
* In Trinidad Range holds a 100% interest in holding companies with three
onshore production licenses and fully operational drilling subsidiary.
Independently assessed Proved (P1) reserves in place of 17.5 MMbls with
25.2 MMbls of proved, probable and possible (3P) reserves and an additional
40.5 MMbls of unrisked net prospective (best estimate) resources.
* In the Republic of Georgia, Range holds a 40% farm-in interest in onshore
blocks VIa and VIb, covering approx. 7,000sq.km. Range completed a 410km 2D
seismic program with independent consultants RPS Energy identifying 68
potential structures containing an estimated 2 billion barrels of
undiscovered oil-in-place (on a mean 100% basis) with the first
(Mukhiani-1) exploration well having spudded in July in 2011. The Company
is focussing on a revised development strategy that will focus on low-cost,
shallow appraisal drilling of the contingent resources around the Tkibuli-Shaori ("Tkibuli") coal deposit, which straddles the central sections of the Company's two blocks. * In Puntland, Range holds a 20% working interest in two licenses encompassing the highly prospective Dharoor and Nugaal valleys. The operator and 60% interest holder, Horn Petroleum
Corp. has completed two exploration wells and will continue with
a further seismic and well program over the next 12-18 months.
* Range holds a 25% interest in the initial Smith #1 well and a 20% interest
in further wells on 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. Independently assessed 3P
reserves in place (on a 100% basis) of 228 Bcf of natural gas, 18 mmbbls of
oil and 17 mmbbls of natural gas liquids.
* Range holds a 21.75% interest in the East Texas Cotton Valley Prospect in
Red River County, Texas, USA, where the prospect's project area encompasses
approximately 1,570 acres encompassing a recent oil discovery. The prospect
has independently assessed 3P reserves in place (on a 100% basis) of 3.3mmbbls of oil. * Range is earning a 65% (option to move to 75%) interest in the highly prospective PUT 6 and PUT 7 licences in Putumayo Basin in Southern
Colombia. The Company will undertake a 350km2 3D seismic program across the
two licences and drill one well per licence, as well as looking to re-enter
a previously suspended well that had a significant historical reserve
estimate.
All of the technical information, including information in relation to reservesand resources that is contained in this document has been reviewed internallyby the Company's technical consultant, Mr Mark Patterson. Mr Patterson is ageophysicist who is a suitably qualified person with over 25 years' experiencein assessing hydrocarbon reserves and has reviewed the release and consents tothe 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 referred abovehave been formulated by Forrest A. Garb & Associates, Inc. (FGA). FGA is aninternational 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 of theSociety 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 offices worldwide,who specialise in the evaluation of resources, and have consented to theinformation with regards to the Company's Georgian interests in the form andcontext that they appear. These estimates were formulated in accordance withthe guidelines of the Society of Petroleum Engineers ("SPE").
The prospective resource estimates for the two Dharoor Valley prospects are internal estimates reported by Africa Oil Corp, the operator of the joint venture, which are based on volumetric and related assessments by Gaffney, Cline & Associates.
In granting its consent to the public disclosure of this press release withrespect to the Company's Trinidad operations, Petrotrin makes no representationor warranty as to the adequacy or accuracy of its contents and disclaims anyliability 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's technicalconsultants have not yet reviewed the details of ARI's resource estimate andthe reliability of this estimate and its compliance with the SPE reportingguidelines or other standard is uncertain. Range and its JV partners will beseeking to confirm this resource estimate, and seek to define reserves, throughits appraisal program and review of historical data during the next 12 months.
Reserve information on the Putumayo 1 Well published by Ecopetrol 1987.
SPE Definitions for Proved, Probable, Possible Reserves and Prospective Resources
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 geoscience and engineering data indicate are less likely to be recovered than Proved Reserves 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 and 3P 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 a given date, to be contained in accumulations yet to be discovered. The estimated potentially recoverable portion of such accumulations is classified as Prospective Resources, as defined above.
ABN 88 002 522 009www.rangeresources.com.auLondon
Suite 1A, Prince's House, 38 Jermyn Street, London SW1 6DN t: +44 (0)207 025 7040, f: +44 207 287 8028
Australia
Ground Floor, 1 Havelock Street, West Perth WA 6005, Australia t: +61 8 9488 5220, f: +61 8 9324 2400
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