old park lane update

Copied from the Old Park Lane Report out today in UK!

RANGE RESOURCES LTD 9.27p
Puntland firmly on track 18 January 2011
Range and its joint venture partners in Puntland have entered into amending agreements with the
Government of Puntland in respect of their two production sharing agreements (PSAs). Under new
amendments, the first exploration well must be spudded by 27 July 2011 with a second scheduled to
commence by 27 September 2011. This is very good news for Range as it implies that full mobilisation is
likely in Q2, providing the company with exposure to multi-billion barrel upside potential.
Range, in tandem with its joint venture partners, Africa Oil (operator with 65%) and Lion Energy (15%), has
amended its agreements with the Government of Puntland in respect of its PSAs for the Dharoor Valley
Exploration Area and the Nugaal Valley Exploration Area.
Under the terms of the amended PSAs, the First Exploration Agreement has been extended for a further 12
months from 17 January 2011 to 17 January 2012.
Range and its partners must spud a minimum of one exploration well by 27 July 2011 in the Dharoor Valley. A
second well is also required to be spudded in the Nugaal Valley before 27 September 2011, at the option of
Africa Oil.
Range will have a contributing interest in an exploration well on Dharoor. However, we estimate that Africa Oil
has only spent approximately $7.5m on Nugaal and consequently, Range will be carried on any further activity
up to $22.5m. After which, Range will participate in its 20% working interest.
The proposed farm-out of a 20% interest in each PSA to Red Emperor, as announced on 15 June 2010, has
also been approved by the Puntland Government. This is further good news for Range as Red Emperor will be
required to pay a disproportionate share of the costs relating to the outlined drilling commitments.
In November 2010 we increased our risk parameters to reflect the longer lead times for mobilisation in
Puntland. However, with the extension of the PSAs and renewed visibility on mobilisation ahead of a July
spud, we are confident that success in Puntland will transform Range into a major player in the E&P sector.
Recommendation BUY
Sector: Oil & Gas
Exchange & Ticker: AIM All Share: RRL
ASX: RRS
Shares in issue: 1,230.6m
Fully diluted shares 1,609.5m
Market cap: 114.1m
Target price: 14.1p
ANALYST: Barney Gray
+44(0)20 7518 2607
[email protected]
CORPORATE BROKING: Forbes Cutler
+44(0)20 7518 2603
[email protected]