24 Jan 2013 07:12
RANGE RESOURCES LTD - Trinidad UpdateRANGE RESOURCES LTD - Trinidad Update
PR Newswire
London, January 24
Range Resources Limited ("Range" or "the Company") is pleased to announce thefollowing update with respect to the Company's Trinidad operations with thefollowing highlights:
- The QUN 139 well drilling ahead at 950 ft. with a revised target depth of 1,300
ft. having encountered approximately 80 ft. of good quality oil sands to 945 ft.;
- The QUN 135 well finds more than 80 ft. of oil pay and will be deepened after
indications of a possible new pay zone near TD;
- The Morne Diablo Waterflood programme is currently being simulated / modeled,
with completion estimated in February;
- The Beach Marcelle programme is looking to commence upon receipt of the
approvals to deepen six of the existing wells targeting production of 150-300
bopd per well; and
- The Company has received the final revised farm-out agreements that will see an
initial reduction in the enhanced royalty currently being paid by the Company.
The revised rates at 1,000 bopd will see net back prices increase to circa $40 /
barrel before tax and circa $50 / barrel before tax at 2,000 bopd.
Lower Forest Development Update
Development of the Lower Forest formation continues with the QUN 139 welldrilling ahead at 950 ft. with a revised target depth of 1,300 ft. havingencountered approximately 80 ft. of good quality oil sands to 945 ft. The QUN139 location is contiguous to producing wells QUN 119 and QUN 129 whichachieved initial production rates of 129 bopd and 138 bopd, respectively. Bothwells still flow under natural pressure, with QUN 129 having now produced for12 months since first production.The QUN 140 well is expected to spud shortly, with the Company awaiting receiptof necessary approvals. The well will be drilled to a target depth ofapproximately 1,000 ft. The QUN 140 well is contiguous and up-dip to therecently drilled QUN 138 well. As previously announced, the logging of the QUN138 well indicated 100 ft of net oil sands across a number of horizonsincluding a highly resistive zone between 770 and 810 ft. The Company awaitsapprovals which are anticipated shortly, with the production rig ready to moveimmediately onto site, perforate the well, and place it into production.Drilling Deeper Formations
The Company is pleased to report that after operational delays, the QUN 135 hasbeen successfully drilled to its planned total depth of 3,500 ft., withindications that it may have penetrated a new Middle Cruse pay zone. Followingconditioning of the well bore, logging operations were initiated and more than80 ft. of net oil pay was identified in the Lower Forest, Upper Cruse and MiddleCruse formations. Based on oil shows while drilling and induction logs indicatingthat the well reached its planned total depth in the top of a Middle Cruse oilzone, the 135 well will now be deepened to confirm what may represent apreviously undiscovered reservoir in the Middle Cruse section. Followingdeepening of the well and evaluation of open hole logs, the Company willdetermine which of the multiple oil zones present is the best candidate forinitial completion.In addition to the wells mentioned above, the Company is looking at re-enteringfour Lower Forest wells that have experienced comingling of oil and watersands. Remedial work will be performed on these wells with a small work-overrig, with additional perforations to be added in two of the four wells. Thiswork is expected to improve the performance of these wells and add further toproduction.The MD 248 well has reached 4,000 ft. and will continue to drill towards thetarget depth of 6,500 ft. to test the Lower Cruse formation. Followingequipment shortages that resulted in drilling delays, additional rig componentshave been procured to reduce future downtime.The previously drilled MD 19 well encountered well-developed Lower Cruse sands.However, they were structurally low and water-saturated at that location.
Morne Diablo Waterflood Project
The shallow Forest water flood project on the Morne Diablo license is currentlybeing simulated / modeled, with completion estimated for mid-February followedsoon thereafter by a presentation and application for approval to theregulatory authorities, with development still forecast to commence mid 2013.Beach Marcelle License
The Company has finalised the Environmental Impact Assessment (EIA) to besubmitted to the Environmental Management Authority (EMA) in application for aCertificate of Environmental Clearance (CEC) to drill up to 40 wells andconduct the water flood program. It is anticipated the EMA will takeapproximately two to three months to review and grant environmental approval.Final approvals will then be sought from the regulatory authorities. Once allpermits and approvals are in place, Range will commence development, currentlyforecast for mid-2013, after which the Company will look to commencepreparations for the 40 well work program and water flood.The Company has also applied for a separate CEC to deepen six wells in theBeach Marcelle license (without EIA) and anticipates that a favourable responsewill be received soon. Following receipt of the CEC for the deepening of thesesix wells, the Company will move one of the medium capability rigs to the BeachMarcelle license to commence the drilling program.The Company has recently received approval of a CEC on the Beach Marcellelicense (without EIA) to build a bio-remediation site, to aid in wastemanagement of the proposed drilling program. These bio-sites are present in allRange fields and unique in allowing Range complete on-site control of thedrilling-remediation process.
2013 Outlook
Range is looking forward to a prospective and busy 2013 across the Company'sthree onshore licenses. The Company is working towards having all six of itsdrilling rigs running to increase production and cash flow, as well asresolving the operational delays that have recently been experienced byimplementing processes and procedures across the board to minimise downtime.With a track record of early drilling success, the Company remains focused onmaintaining the continuous drilling and completion operations required forsustainable production growth.
Development of the Lower Forest formation on the Morne Diablo license willcontinue, utilising the Company's shallower capacity rigs, with an inventory of40+ wells still to be drilled. This shallow reservoir development is currentlyself-funding, with revenue from pre-existing wells and the Lower Forest wellsdrilled to date more than offsetting the capital required for these shallowwells.As mentioned above, work will commence on the Beach Marcelle block upon receiptof the approved CEC with respect to the deepening of six existing wells. Thesewells are to be drilled to depths between 3,000 and 4,000 ft., targeting theprolific Gros Morne formation with historical wells having demonstrated initialproduction in the range of 150-300 bopd.Once all six rigs are operational, the Company will move one of the mediumcapacity rigs to the South Quarry field to commence testing and development ofthe shallow targets that have been identified on the license. The initialshallow well program will involve the drilling of up to 10 wells and,contingent upon the success of this program, development will continue in asimilar manner as the Lower Forest development.
In addition, following completion of the MD 248 well, the Company will spud thefirst of a series of wells that will test the prolific Herrera formation as aprimary exploration target, with the Forest and Cruse formations as secondaryobjectives.Revised License AgreementsThe Company has received the final revised agreements that will see an initialreduction in the enhanced royalty currently being paid by the Company. Therevised terms will see an improvement in the net back per barrel of oilproduced. The revised royalty rates at production rates of 1,000 bopd will seenet backs increase to circa $40 / barrel before tax and circa $50 / barrelbefore tax at 2,000 bopd - assuming $90 barrel oil and opex at similar levels. Only minor administrative items relating to market communications remain to beresolved.In addition, discussions continue with the regulatory agencies and otherfarm-in operators for further performance-based drilling and productionincentives. Updates will be provided upon progress when available.
Executive Director Peter Landau commented:
"There is no doubt that it has been a challenging few months given theoperational delays experienced in getting certain wells drilled in Trinidad andthe softening of the Company's share price. As we continue to address thesupply chain issues that resulted in those delays, it is important to rememberthe key positives that will continue to underpin Range's performance movingforward in the short to medium term.Trinidad is fully funded through both existing facilities, the Texas sale and /or other reserve based lending options that are available to the Company. Thework program will continue assummarisedabove and further capital will bedeployed to ensure operational delays moving forward are reduced significantlywith spare plant and equipment and an increased number of specialised personnel. The revised fiscal terms will only serve to further benefit increased production over the coming year as production ramp up moves into full swing.With Range close to finalising the GIG joint venture in Georgia, the financialand operational focus will be firmly placed on Trinidad and our target of 6,000bopd by the second half of 2014 based on known PDP and PUD Reserves." Yours faithfullyPeter LandauExecutive Director ContactsRange Resources Limited Peter LandauTel: +61 (8) 9488 5220 Em: plandau@rangeresources.com.au RFC 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 Beltgens Tel: +44 (0) 203 463 5000 Tel: +44 (0) 207 647 2800PPR (Australia)David Tasker Tel: +61 (8) 9388 0944 Em: david.tasker@ppr.com.au Range BackgroundRange Resources Limited is a dual listed (ASX:RRS; AIM:RRL) oil & gasexploration 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 onshoreproduction licenses and fully operational drilling subsidiary. Independentlyassessed Proved (P1) reserves in place of 17.5 MMbls with 25.2 MMbls of proved,probable and possible (3P) reserves and an additional 81 MMbls of unrisked bestestimate 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 drilling ofthe 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 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% interest infurther 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 mmbbls of oil and 17mmbbls of natural gas liquids.Range holds a 21.75% interest in the East Texas Cotton Valley Prospect in RedRiver County, Texas, USA, where the prospect's project area encompassesapproximately 1,570 acres encompassing a recent oil discovery. The prospect hasindependently assessed 3P reserves in place (on a 100% basis) of 3.3mmbbls ofoil.Range is earning a 65% (option to move to 75%) interest in the highlyprospective PUT 6 and PUT 7 licences in Putumayo Basin in Southern Colombia.The Company will undertake a 350km2 3D seismic program across the two licencesand drill one well per licence, as well as looking to re-enter a previouslysuspended well that had a significant historical reserve estimate.Table of Reserves and Resources
Detailed below are the estimated reserves for the Range project portfolio.
All figures in MMboe Gross Oil Reserves Range's Net Attributable
Interest Project 1P 2P 3P 1P 2P 3P Operator Oil & NGL Texas - NCR * 16.4 25.2 35.3 20-25% 2.2 3.4 4.8 Western Gulf Texas - ETCV 1.0 1.6 3.3 22% 0.2 0.3 0.6 Crest Resources Trinidad 17.5 20.2 25.2 100% 17.5 20.2 25.2 Range Total Oil & Liquids 34.9 47.0 63.8 19.9 21.3 28.9 Gas Reserves Texas - NCR * 106.0 162.7 228 20-25% 11.7 18.1 25.4 Western Gulf Total Gas Reserves 106.0 162.7 228 11.7 18.1 25.4* 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.
Detailed below are the estimated resources and oil-in-place delineated acrossRange's portfolio of project interests.
All figures in MMboe Gross Oil Range's Net Attributable Resources Interest Project Low Best/ High Low Best/ High Operator Mean Mean Prospective Resources Trinidad 8.1 40.5 81.0 100% 8.1 40.5 81.0 Range Total Prospective 8.1 40.5 81.0 8.1 40.5 81.0 Resources Undiscovered Oil-In-Place Puntland - 16,000 - 20% - 3,200 - Horn Petroleum Georgia - 2,045 - 40% - 818 - Strait Oil & Gas Colombia - 7.8 - 65-75% - 5.1-5.8 - Petro Caribbean 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 world–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 S–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 areinternal estimates reported by Africa Oil Corp, the operator of the jointventure, 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'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 define reserves,through its appraisal program and review of historical data during the next 12months.Reserve information on the Putumayo 1 Well published by Ecopetrol 1987.
SPE Definitions for Proved, Probable, Possible Reserves and ProspectiveResources
Proved Reservesare 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 Reservesare those additional Reserves which analysis of geoscience andengineering data indicate are less likely to be recovered than Proved Reservesbut more certain to be recovered than Possible Reserves.Possible Reservesare those additional reserves which analysis of geoscience andengineering data indicate are less likely to be recoverable than ProbableReserves.
1P refers to Proved Reserves, 2P refers to Proved plus Probable Reserves and 3Prefers to Proved plus Probable plus Possible Reserves.
Prospective Resourcesare those quantities of petroleum estimated, as of a givendate, 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 Resourcesare 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-Placeis that quantity of oil which is estimated, on a givendate, to be contained in accumulations yet to be discovered. The estimatedpotentially recoverable portion of such accumulations is classified asProspective Resources, as defined above.