Range has announced the acquisition of oil and gas assets in Indonesia with the signing of an SPA with Hengtai to buy 23%, rising to 42%, on completion of a minimum work programme in the Perlak field. The cost is $3.2m which will be paid from cash resources and brings RRL 500m bbls of total reserves and resources left in place. The low risk, low cost work programme is not dissimilar to the Caribbean or South America, with workovers and re-initiating existing wells to increase production.
The programme will consist of four workovers which should up production by 120 b/d and the minimal commitment to drill one well within three years should be easily achieved. Indeed the company are looking to expedite it and go beyond these minimum targets. The company have a put option in place to ensure milestones are passed which include include, achieving minimum production of 800 bopd from the Perlak field over a continuous 90-day period, as well as proving up independently audited 1P reserves of at least 10 mmbbl within a three-year period.
This seems like an eminently sensible deal to me, RRL get a reserves addition, low cost production and diversifies them from their existing asset base. They have kept their commitment to make further acquisitions in and outside Trinidad so this is not a change of strategy in any way. Unfortunately the shares are still suspended but should return to the market next month when the RTO document is published, patient investors will be pleased to see that management continue to deliver with smart deals like this one.
RRS Price at posting:
0.6¢ Sentiment: Hold Disclosure: Held
