Range Resources (ASX:RRS, AIM:RRL) is poised for growth after reporting encouraging results in the South Quarry field, increasing reserves in Trinidad and completing management team changes in the June 2014 quarter.
Total gross oil production for the quarter was 48,173 barrels, or an average of 529 barrels per day, essentially unchanged from production in the March 2014 quarter.
It also completed a US$12 million financing agreement placing 712 million shares priced at £0.01 with Hong Kong-based private institutional investor Abraham Ltd.
This represented a premium of approximately 49% to the mid-market share price at the close of business on the London Stock Exchange's Alternative Investment Market on 14 May 2014.
These funds were used to repay its convertible debt, leaving the company debt free as of 30 June 2014.
“This has been a transformational quarter for Range as we continue to focus on our core development assets in Trinidad,” chief executive officer Rory Scott Russell said.
“We have completed our management team changes and reported a material increase in our proved reserves in Trinidad, alongside encouraging operational results in the South Quarry field.
“Our achievements to date signify a new beginning for Range and the company is now poised for growth.”
Operations
In Trinidad, the company’s drilling campaign is continuing with four of its six drill rigs currently operational.
Excellent results were encountered at the South Quarry QU 452, the first development well to be drilled in the South Quarry licence since 2007.
The outstep development well confirmed the extension of the shallow producing trend and was reported on 16 June 2014 to be producing at a stabilised rate of 70 barrels of oil per day.
Notably, it is expected to result in additional development drilling targets and a further increase to the company’s Proved and Probable (2P) Reserves.
Range had also increased its total 2P Reserves by 9% to 22.1 million barrels due to its ongoing development drilling program and consequent update to development schemes in Trinidad during the period.
The Government of Trinidad and Tobago’s new budget incentives for oil and gas companies are also expected to have a positive impact on the company’s cash flows and returns from its ongoing production growth.
These reward companies with accelerated development and exploration program and will be effective retrospectively from 1 January 2014.
Georgia
During the quarter, the company’s joint venture partner and operator Strait Oil & Gas UK continued to advance discussions and negotiations with respect to potential transactions associated with the JV and its Production Sharing Contracts (PSCs) in Georgia.
Strait advised Range that a positive outcome to these discussions is still likely to occur.
In June, Strait signed a one year extension of the PSC for Block VIb with the State Agency for Regulation of Oil and Gas.
Guatemala
The Company’s equity interest in Citation Resources (ASX:CTR) reduced to 6.67%. Following this change, Range has a direct and indirect interest of approximately 24% in the Guatemalan Project (previously 32%).
Colombia
During the quarter, Range announced that it made a strategic decision for a partial withdrawal from Colombia and relinquished its investment obligations on PUT-7 block in the Putumayo Basin.
Integrated Master Services Agreement with LandOcean
The Company signed an Integrated Master Services Agreement (IMSA) with LandOcean Energy Services Co Ltd (SHE:300157).
According to the agreement, LandOcean will act as the preferred services contractor (subject to all tendering and procurement rules) for Range for oilfield services including geoscience, engineering,
procurement and construction.
Services provided under the IMSA will be agreed in individual purchase orders as the need for services arises. The agreement provides Range with an extremely capable and technically sophisticated preferred services provider.
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