Range has announced this morning that it has signed a MOU with Core Capital Management, a China based institutional investor who proposes to put up to $50m into the company. The initial investment will be by buying $20m of shares at 1p a share which is a 26% premium to the closing price last Friday. In addition Core will subscribe for $30m of convertible bonds which will convert at 1p and make up the $50m total investment. It is envisaged that Core will end up with 19.9% of Range which might mean that exact numbers are tweaked in order not to breach Aussie securities rules. This is a major investment and whilst dilutive it proves that there are funds out there looking to invest in the right projects and managements.
Range say that the money will be used for ‘drilling and acquisition targets’ which I hope that means both in Trinidad only, after all it is the core area and there are still disposals to come before any further world domination is considered. The deal has its merits as Range is only really profitable going forward if it is well funded, by which I mean not going to very side-street money lender for wonga when you need to drill some wells to hit your production target. This deal ticks those boxes and I am quite surprised that the shares havent risen more this morning.
I have given Range the benefit of the doubt since I started looking at them seriously back in the spring and it has been one hell of a ride, for those longer term investors it has been worse. This deal might just be the ‘firm foundation’ that the company is hoping will provide the springboard for future sustainable growth but they will understand if the shareholders, like the jury, remain out until solid proof of a Lazarus-like recovery is evident…Whatever you say though it means that they have raised a decent amount of money through equity and can start to get rid of that expensive debt, it was after all only a bridging loan. Getting the St Mary’s block finalised is a timely result and the money can be used to drill some wells which are in effect near existing production and may not even be farmed down, at least until de-risked. Finally the water-flood development is the real prize for Range and there was a risk that without proper funding this may have been on the back burner for a long time, now it is genuinely on the cards.
I am going to stick with my bullish stance on Range although it does come with some caveats as which is no great surprise. Although as I have said this is dilution, this deal is as good as any I can think of the company doing and the management should be applauded, you never know they might have created the conditions whereby the Chinese investors want to buy the whole company…
CTR Price at posting:
0.3¢ Sentiment: Hold Disclosure: Held
RRS Price at posting:
1.5¢ Sentiment: Buy Disclosure: Held
