Range Resources (ASX:RRS, LON:RRL) said its Georgian acreage had been withdrawn by the authorities due to what the Energy ministry there called "non-performance of obligations".
The PSC (production sharing contract) on the Block VIb has been terminated. The operator is Strait Oil & Gas (SOG), in which Range holds a 45% stake. Red Emperor (LON:RMP) is a joint venture partner.
SOG now faces a penalty from the ministry of US$1 million, payable immediately.
Range has invested around US$40 million into the project since 2009, it said, highlighting this was more than the original costs were expected to be.
Range said subject to conditions on previous agreements, it would have been required to fund the costs of a second exploration well.
However, Range believes that SOG failed to comply with terms of the agreements and notified SOG of a dispute.
Range added that Georgia was a non-core asset for the firm and that it continued to explore potential disposal options for its interest.
Referring to Red Emperor, broker SP Angel said the loss of Georgia would not have a significant impact on Red Emperor’s overall valuation.....
"The company must now focus on its remaining assets especially its recent Palawan Basin entry, as we believe the remainder of its portfolio, especially the Puntland assets, are significantly longer term."
Trading in Range Resources shares, on the AIM and ASX exchanges, is suspended.
