I'm personally watching with great interest. Sold out a while...

I'm personally watching with great interest. Sold out a while back (unfortunately at 16p rather than the 24p I could have taken a few weeks prior to that, but such is life), but definitely think the time to jump back in could be near.

Thanks to yet another share placing of $15m, Range will be fully funded for a good few months yet- even if Georgia fails. Should be long enough to get at least 1 well drilled in Texas to improve the P3 reserves which will allow Range to sell the thing. I do have to say reading the latest annual report this company does seem to burn through cash at a very fast rate, and the extended drilling timescale for Georgia (which has suffered delays, and is relatively recent, and hence will not be factored into the annual report) will not have helped this. However I suppose such cash burn is inevitable now the actual drilling is starting. Hopefully the second well, from a shareholder perspective, will be quicker, as lessons will be learned from the first.

The exciting part of all this (from a neutral perspective), is the possibilities of good returns IF the current well fails (I'm not saying it will, I've no idea either way). If it is uncommercial, make no mistake, the share will take a sharp nosedive. Expecially considering the market conditions we are in.

However, it's only one well. There'd still be Trinidad to come, and Texas to sell. Even with the low share price that would result from a non-commercial well, there'd be no immediate pressure to raise funds- thankfully that has been done already. By the time funds need raising Range would hopefully have more production coming from Trinidad, and another well would have been drilled in Texas (though it seems this third well is taking forever- remember when we were told it would be drilled 'early in 2011'?).

With P1+P2 Texas being worth £66m, and Trinidad P1+P2 worth about the same, based on the purchase price (caveat- this was based on WTI trading at $80 a barrel- it's now at $75 a barrel, so perhaps shave off a bit of profit), there's about £120m of hard assets here. With the current share price being around 10p, and 2 billion shares in issue, we're looking at a market cap of £200m currently, or around £80m priced in for 'potential'. No point in counting the cash in the bank, as that's going to be used for development expenditure. There's also going to be a 'time value' discount which is applied to all oilers, when it comes to the NAV of their assets- most trade at around 65% of their NAV.

With that in mind- there's some serious money to be made here if the well fails. The price would collapse, probably to around 65% of NAV, though in these current markets, who knows- which would give a share price of around 4p. Maybe 5p if investors are still prepared to price in a bit of 'potential', but looking at how the markets are currently, I wouldn't count on it.

But even at that share price, there'd still be the potential money to be made from Texas (when they eventually drill that 3rd well...), and of course when the expansion of Trinidad comes. While there would be short term pain, if you held for a few months (say, until June 2012), I'm sure things would get better, and that 4-5p a share would move back to 10-12p. That's the kind of trade I'm looking for, and so I definitely think there's money to be made here, if the right circumstances unfold. And who knows, maybe they'll be better market conditions by then. I'd suggest forgetting about the Puntland/Tangiers/Cotton Valley assets until there's some strong evidence they're actually doing anything for Range.

Might not happen though, Georgia could come in, and then all this waiting will have been a waste of time. Right now it's just a coin flip- gain 50% on good Georgia news, or lose 50% on bad Georgia news.

Definitely one to watch over the next month or so, either way.