city analysts cheer range's progress

http://www.proactiveinvestors.co.uk/companies/news/33002/city-analysts-cheer-range-resources-progress-33002.html


City analysts cheer Range Resources' progress
Mon 2:40 pm by Giles Gwinnett Moreover, the company said a second step-out well had also been completed on Morne Diablo and the results indicated ?extremely attractive? resistivity oil sands across 215 feet
City analysts hailed the progress and potential of Range Resources (LON:RRL, ASX:RRS) today as the firm revealed it had successfully completed the first two wells of its 21 well programme in Trinidad.

Barney Gray at Old Park Lane Capital rated the company's shares a "buy" targeting a price of 27 pence, while FoxDavies analyst Shahin Amini also gave the stock a "buy" recommendation targeting a price of 24 pence.

The company's shares are currently trading at 12 pence each.

Range said it was "extremely pleased" after the first well on the Morne Diablo block in Trinidad hit a higher than expected net pay zone.

This well, a replacement to an old one, is now producing high quality oil at a test rate of 20 barrels per day and higher rates could be achieved depending on pump selection, said the firm.

Moreover, the company said a second step-out well had also been completed on Morne Diablo and the results indicated ?extremely attractive? resistivity oil sands across 215 feet.

Plans for this well's completion have been lodged for approval with Trinidad authorities and the aim is to have it producing within the week.

"Range has successfully completed the first two wells of a 21 well programme on the Morne Diablo Block in Trinidad.

"The first well delivered a higher than expected net pay and the second is anticipated to go on production within a week. With a third well expected to commence imminently, we believe that Range is making good progress to its target output of 1,400 ? 1,800 bopd from this initial programme, said analyst Gray, at Old Park Lane Capital.

Range is focused on finding hydrocarbons in Puntland, Somalia, the Republic of Georgia, onshore Texas, USA and Trinidad.

In Georgia, the firm said drilling had restarted at the Mukhiani well after a blowout preventer was installed and it was now at 1,339 metres. Total depth of 3,500 metres is expected later this month.

The firm also told investors today that it had extended its equity line of credit facility for an extra ?30 million with First Columbus/Duchess.

Range said it was fully funded for its exploration activities with existing cash and around ?15 million due from the exercise of `in-the-money' options due to expire before the end of 2011.

Thus, in the event of a discovery on any of Range?s exploration wells being drilled in the coming months, the firm will have immediate access to funds for any appraisal operations if necessary.

In a note, Gray added: "... with an aggressive drilling programme focusing on four fronts, the likelihood of a discovery and further appraisal work implies the need for additional funds."

Meanwhile, analyst Amini, at broker FoxDavies, commented: "Range has an extensive drilling programme underway with four high impact wells expected to be drilled by the end of this year.

"These wells will test exploration plays with an aggregate potential of 1 billion barrels of un-risked resources net to the company. The company?s exploration risk profile is balanced by a portfolio of producing and development assets onshore USA and Trinidad."

The analyst added that the broker's core net asset value NAV estimate (producing and development assets) is 8.4p per share and its risked NAV (including risked exploration NAV) is 23.8p per share and near term drilling activities in Georgia and Trinidad had the potential to unlock resources with an un-risked upside of 48p per share or about four times the current share price.

"We believe that the recent moves into onshore USA and Trinidad are positive developments in diversifying the asset base, presenting investors with a more balanced portfolio that now includes production and near-term development opportunities," added the FoxDavies note.