Full coverage of all our assets. Newly invested? This report is...

Full coverage of all our assets. Newly invested? This report is a must read, though a few weeks old now?
The pictures are nice as well, especially for 'the hard of reading'...
http://www.rangeresources.com.au/investors/news/news-single-display/?tx_ttnews%5Btt_news%5D=69&cHash=76fe968fd97f2a458ef4115c55a8ec95

(edited)by me d3t...too long!
http://www.rangeresources.com.au/investors/news/news-single-display/?tx_ttnews%5Btt_news%5D=69&cHash=76fe968fd97f2a458ef4115c55a8ec95

RANGE RESOURCES LTD
Investment Highlights 12 August 2011

Value per share A$ 0.28
Analyst: Scott Simpson
Phone: (+61 8) 9263 1679
Email: [email protected]
We are initiating coverage on Range Resources Ltd (RRS) with a
SPECULATIVE BUY recommendation and a price target of
$0.28/sh. RRS is a unique oil and gas explorer with frontier
exploration programs in Georgia and in Puntland and underpinned by its
recently acquired Trinidad oil project. It is leveraged to significant
upside via a busy exploration program through 2011, with the ongoing
drilling of its first of two planned wells in Georgia, the upcoming drilling
of the first two wells in Puntland in 20 years, a significant 21 well
development drilling program underway in Trinidad aimed at doubling
production and further drilling planned in the US at its Texas oil and gas
projects.
 Drilling of Mukhiani-1 underway. RRS?s first exploration well in
Georgia is underway, targeting a mean 115mmbbls of oil place in
the Vani-3 prospect. This will be followed by a second well on Block
VIa, targeting the Kersubi-2 with an estimate of 165mmbbls of oil
in place. We estimate unrisked upside for the program of $0.20/sh.
 Mobilisation of rig in Puntland in the Sep Q. Drilling of two
prospects, targeting 300mmbbls and 375mmbbls of prospective
resource is set to commence in the Dec Q. While Puntland is
frontier exploration, it is potentially high value given RRS?s
coverage across two of the most prospective basins in Puntland -
thought to be Anogulous to Yemen, located across the Gulf of Aden.
 Trinidad provides a profitable production base. Trinidad
provides a low cost and low risk production asset, with scope for a
material expansion in production from targeting booked reserves.
The company recently successfully drilled the first of a 21 well
program aimed at doubling production from the current ~700bopd.
 Significant upside in reserves expansion and exploration.
There is significant upside potential in Trinidad via ramp-up of
production, expansion of reserves from step-out drilling and
significant upside potential in the underlying Herrera formations
(and potentially Cretaceous) which has provided material
discoveries in adjacent acreage.

RESEARCH NOTE ? PATERSONS SECURITIES LIMITED 1
All information and advice is confidential and for the private information of the person to whom it is provided and is provided without any responsibility
or liability on any account whatsoever on the part of this firm or any member or employee thereof.12 August 2011 Range Resources Ltd
Company Overview
Range Resources Ltd is an oil and gas exploration and production company, which is duallisted on the ASX (RRS) and AIM (RRL). Its initial focus was the exploration of 2 x highly
prospective PSA?s in Puntland, Somalia which were awarded in 2005 and then in 2009 RRS
broadened its portfolio via an agreement to acquire an interest in 2 x exploration blocks in
Georgia. Since then RRS has de-risked its portfolio of assets with the addition of a number
of producing oil and gas fields. In 2009 RRS purchased interest in its first production asset,
acquiring interest in a gas/condensate fields in Texas, followed by the acquisition of an
interest in an oil project in East Texas in 2010 and in addition entered into an agreement to
acquire a 10% interest in several producing oil assets in Trinidad. In early 2011 RRS
acquired the remaining 90% interest in the Trinidad oil assets, which are currently
producing at a rate of ~700bopd. Very little investment has been made in maintaining
production over the previous years and RRS believes that a minimal work program should
boost production to +4000bopd within 2-3 years. A key highlight of the Trinidad acquisition
is the inclusion in the purchase of a fleet of drilling and work-over rigs, experienced
personnel, workshops and other integrated equipment services that provides for an almost
self-sufficient project.
Figure 1: Trinidad Oil Tank Battery Figure 2: Mukhiani Well Site, Georgia
Source: RRS Investor Presentation ? June 2011 Source: RRS Operations Update ? August 2011
The recent acquisition of the remaining interest in Trinidad has significantly shifted the risk
profile of the company, with a low risk development drilling program aimed at targeting
certified reserves and is likely to result in a significant boost in production and earnings. In
addition, the assets present the potential for significant upside with production currently
focused on only 5% of the permitted area and the deeper Herrera and potentially
Cretaceous formations providing significant exploration potential. The assets balance the
company?s exploration programs in Georgia and particularly in Puntland which is inherently
high risk but potentially high value, given the location, prospectivity and size of the
acreage.
RRS has a busy program ahead for the remainder of 2011 and is leveraged to a number of
activities across its asset base, including the ongoing drilling of its first major exploration
well in Georgia, mobilization of a rig in Puntland for the drilling of the states first
exploration well in ~20 years, a significant 21 well development drilling program underway
in Trinidad aimed at doubling production and further drilling planned in the US at its Texas
projects.
RESEARCH NOTE ? PATERSONS SECURITIES LIMITED 2
All information and advice is confidential and for the private information of the person to whom it is provided and is provided without any responsibility
or liability on any account whatsoever on the part of this firm or any member or employee thereof. 12 August 2011 Range Resources Ltd
Asset Overview
Trinidad Oil Project
Overview
During the June Q 2011 RRS completed the acquisition of the remaining interest 90%
interest in the holding and subsidiary companies to three production licences in Trinidad.
The acquisition provides operatorship of an oil producing asset with significant scope for
expansion of production, based on the development of known reserves. The project consists
of the Morne Diablo, Beach Marcelle and South Quarry Blocks which cover 16,253acres
onshore the southern region of Trinidad. The country has produced some 3bnbbls to date
and currently produces at a rate ~100kbopd. It lies within the Orinoco Fold belt - which is a
prolific producer in Venezuela, situated some 14km to the south-west. Some 94% of the
country?s oil is produced by the state oil company, Petrotrin, with other producers including
BG, BHP, Repsol, EOG, Primera Energy and Parex Resources.
Historic and existing production is from the company?s oil projects is from the regionally
prolific and shallow Forest and Cruse formations which form that basis of the certified
6.9mmbbls of 3P reserves. However there is substantial exploration upside in the deeper
Herrera formation which is productive in adjacent acreage. A key highlight of the acquisition
was that in addition to the 3 x large acreage blocks, it included a 100% owned drilling
company with a fleet of drilling rigs, work over rigs, drilling services, maintenance
workshops and support services. The ownership of its own drilling rigs and services is
invaluable, providing an almost self sufficient project which can schedule its activities as
desired. RRS recently announced success from the drilling of 1
st
well in a 21 well program,
encountering 145ft of oil pay in the Shallow Forest formation. The program is targeting an
increase in production to 1,400-1,800bopd from current production levels of ~700bopd.
Figure 3: Trinidad License Locations
Source: RRS Investor Presentation ? June 2011

RESEARCH NOTE ? PATERSONS SECURITIES LIMITED 3
All information and advice is confidential and for the private information of the person to whom it is provided and is provided without any responsibility
or liability on any account whatsoever on the part of this firm or any member or employee thereof. 12 August 2011 Range Resources Ltd
Geological Setting
Trinidad lies on the South American tectonic plate and is part of the Orinoco Fold belt which
is a prolific producer in Venezuela. The three project licences are located within a complex
thrust belt and along a surface geological feature called the Southern Range, which
stretches from East to West along the southern coast of the island. There is a very active oil
system with surface oil seeps commonly observed along the Southern Range. The shallower
producing zones in the Morne Diablo and South Quarry fields are characterised by fluvialdeltaic sediments ranging to tidal and wave dominated sediments. Due to faulting in the
Beach Marcelle area, the sands are thicker in this area and better developed.
The Pliocene aged Forest zones (pink in the figure below) provide the shallow targets, with
the Lower Forest from 250-300m and the Shallow Forest at depths of 100-150m. In the
beach Marcelle area, the sands are known as the Gros Morne formation, where RRS is
considering a water flood program to increase production. The Cruse formation (orange in
the figure below) ranges in depth from 600m to 2,000m and is divided into three distinct
zones, namely the Upper, Middle and Lower formations, with the middle Pliocene aged
reservoir providing the most extensive and productive zone in the region. The Lower Cruse
is productive but is relatively underexplored in the region. Most of the fields are simple 4-
way dip structures with sufficient closure to provide multiple oil bearing horizons, as
detailed in the cross section below.
The deeper Herrera formation is productive in adjacent acreage and provides considerable
exploration upside. The formation is a Miocene-aged deepwater turbidite that is
predominantly found in to the north east of the acreage. The Penal/Barrackpore oil field
provides a prolific field analogue, located some 5-10km to the Northeast of Morne Diablo
block and has produced some 60mmbbls to date from the Herrera formation which ranges
in thickness from 50-800ft at depths of 1,200m to 3,000m. In mid-2010, Parex Resources
drilled the successful Firecrown-1 well on the Moruga Block, intersecting oil bearing Herrera
at 8,4000ft some 5-10km from Morne Diablo. Existing 3D seismic across the permit
provides a large inventory of Herrera prospects and RRS is hoping to spud a Herrera well in
late 2011. Success in the Herrera could have a substantial impact on production and
reserves, despite a relatively low well estimated cost of US$1.5m. The deeper upper
Cretaceous formation is also highly prospective; however at this stage no drilling is
planned.
Figure 4: Morne Diablo Cross Section Figure 5: Independent Reserves Assessment for Trinidad
Source: RRS Release ? April 2011 Source: RRS Release ? April 2011
RESEARCH NOTE ? PATERSONS SECURITIES LIMITED 4
All information and advice is confidential and for the private information of the person to whom it is provided and is provided without any responsibility
or liability on any account whatsoever on the part of this firm or any member or employee thereof. 12 August 2011 Range Resources Ltd
Asset Background
In July 2010 the company announced that it had entered into a binding Heads of
Agreement (HOA) through SOCA Petroleum, to acquire a 10% interest in companies and
wholly owned subsidiaries that hold production licences for 3 x onshore production licences
in Trinidad and 100% of a local drilling contractor for a total of $US4.25m. Then in April it
announced it had entered into an agreement for the acquisition of the remaining 90%
interest, which was completed in June 2011. The cost of the acquisition was a further
US$52m, the issue of 35.84m ordinary shares plus the potential for two additional
milestone share issues of 17.9m shares a piece upon reaching production of 1,250bopd and
2,500bopd.
The Morne Diablo block is the main producing field, comprising the vast majority of booked
reserves. The field was discovered in 1938 and some 340 wells have been drilled on the
block in depths ranging from 200-6,000ft. Approximately 50% of these wells remain in
production with 9.75mmbbls produced to date. Current production is around 500bopd.
The South Quarry and Beach Marcelle blocks total 7,200 acres, with 220 wells drilled to
date in the Cruse and Forest formations. Current production is estimate at ~200bopd.
Reserves Certification
An independent recoverable reserves assessment was completed by Forrest Garb and
Associates. The assessment estimates some 6.9mmbbls of 3P reserves and a prospective
resource of a further 20mmbbls. The certification did not include the Beach Marcelle
acreage or any potential for the Herrera formation. It is also worth noting that a large
proportion of the probable reserves are incremental recoveries for proven locations that
RRS believe are easily recoverable with modern techniques but were unable to be included
in the proven undeveloped category, given historic production. We would view the
additional probable reserves as low risk given the large amount of well data and production
history available for the acreage and hence have used the 3P figure as the basis of our
valuation.
Drilling and Services
A key highlight of the acquisition was the inclusion of the drilling equipment and services
sub-contractor. It includes 5 x drilling rigs, 3 x work-over rigs, 1 x swab rig, plus a service
workshop, pipe yard, storage tanks and production facilities. The drilling and services is an
invaluable asset, eliminating reliance on third parties in terms of cost and schedule.
Replacement cost of the business is estimated at US$25m. It is worth noting that several of
the rigs have the capability of drilling the Herrera formation.
Current Operations and Forward Program
RRS suggests that the current production of around 700bopd is a result of underinvestment
in drilling and work-over activities at the project and is undertaking an initial 21 well
production program to boost production to 1,400 to 1,800bopd. Drilling will initially focus
entirely on the Morne Diablo permit, with development plans for the other two permits
currently being assessed. RRS recently announced the completion of drilling at its first well
in the program and its first well as operator, completing the MD247 well at 900ft into the
Shallow Forest formation. The well intersected 145ft of oil pay and will be completed as a
producer with an expected IP (Initial Production) rate of ~30bopd. The forward program will
target the Lower Forest formation at 1000ft and the Upper Cruse at 2,000ft, plus the Lower
Cruise at 6,500ft via a series of infill and step-out wells on the primary Morne Diablo block
which should result in an increase and reclassification of reserves, plus expansion of
mapped field limits. Following this initial program, RRS believes that a dedicated work
program could lift production to 4,000bopd within 24-36months and success in the Herrera
could boost production to 8,000-10,000bopd. Herrera wells in adjacent acreage range on
IP from 1,000-3,000bopd.
RESEARCH NOTE ? PATERSONS SECURITIES LIMITED 5
All information and advice is confidential and for the private information of the person to whom it is provided and is provided without any responsibility
or liability on any account whatsoever on the part of this firm or any member or employee thereof. 12 August 2011 Range Resources Ltd
Figure 6: Morne Diablo Field Figure 7: Herrera Prospectivity ? Nearby Discoveries
Source: RRS Investor Presentation ? June 2011 Source: RRS Investor Presentation ? June 2011
Project Economics
We have valued the Trinidad project based on NPV analysis of a full field development to
target the recovery of certified 3P reserves. We have assumed that a targeted drilling
program achieves an increase in production form current rates of ~700bopd to around
4,000bopd over a period of 36-months. Well costs are expected to range from $100k for
the shallower Forest formation, US$200K for an Upper Cruse, US$650k for Lower Cruse and
~US$1.5k for a Herrera well. In total we forecast expenditure of US$35m to target reserves
of 6.9mmbbls, equating to ~$5/bbl in finding costs. Production results will vary from well to
well depending on location. However in broad terms wells are expected to IP at ~30bopd in
the lower Forest and 50-100bopd in the Upper to Lower Cruse. Herrera wells in adjacent
acreage range in IP from 1,000-3,000bopd.
We have assumed operating costs average US$10/bbl. Produced oil is sold to Petrotrin?s
Pointe-a-Pierre Refinery and attracts a ~$10/bbl discount to WTI. Trinidad Government and
over-riding royalties total 27.5% and a Special Petroleum Tax is levied at 18% of net
revenue, after deductions for 100% of exploration costs and 40% of development costs.
Tax is then levied at 55%.
Note that there is material scope for exploration upside, given that the current fields only
cover 5% of the licence area and 3D seismic across its acreage has yielded a number of
Herrera prospects for drilling. While we have not included any Herrera wells in our project
NPV we have included Herrera prospects in our exploration and appraisal valuation. Our
valuation is based on certified reserves over the Morne Diablo and South Quarry areas and
did not include the Beach Marcelle area. We believe that there is also material upside in
booking reserves in this area and have allowed for some reserves upside in our valuation.
RESEARCH NOTE ? PATERSONS SECURITIES LIMITED 6
All information and advice is confidential and for the private information of the person to whom it is provided and is provided without any responsibility
or liability on any account whatsoever on the part of this firm or any member or employee thereof. 12 August 2011 Range Resources Ltd
North Chapman Ranch ? Texas, USA
Overview
RRS holds a 20-25% interest in the Chapman Ranch project, a gas/condensate field located
in South Texas. There have been 2 x wells drilled on the project to date and over the June
Q gross production averaged ~4.8mmscf/d and 400bcpd but was reportedly as high as
9.3mmscf/d and 800bcpd. The field is located in the Nueces County in Texas on North
Chapman Ranch which is situated in the prolific Frio trend north of the large Mobil David
and Doughty fields. The Mobil David field was discovered in 1965 and has produced some
250bcf and 10mmbbls of condensate, predominantly from the Anderson sandstone. More
recently, several operators in the area have successfully produced from the Howell Hight
formation, the key target in the company?s project area. Based on the results of the first
Smith#1 well, an independent reserve assessment was completed and then upgraded on
the back of subsequent data to gross 3P reserves of 239.5bcf of gas, 18.4mmbbls of
condensate and 17.3mmbbls of NGL?s (Natural Gas Liquids). The 3P certification is based on
reasonable assumptions for well spacing and recoveries and represents a full development
of the field. However at this stage we have conservatively based our assessment on
recovery of the 2P volumes only, until further results become available. With over 30
potential well locations the field provides a productive development asset which will
continue to de-risk as additional wells are brought online, resulting in conversion if 3P to 2P
reserves.
Figure 8: Chapman Ranch - Wellhead Figure 9: Chapman Ranch ? Field Outline
Source: RRS Investor Presentation ? June 2011 Source: RRS Investor Presentation ? June 2011
Background
In 2009 RRS farmed into the North Chapman Ranch Project, acquiring a 25% interest in the
Smith#1 well which was already underway and 20% in subsequent wells on the 1,680acre
project. It acquired its interest from Crest Resources Inc, a private US company, which had
previously drilled the Zdansky#1 well into the targeted formation but due to hole problems
was unable to complete the well. The Smith#1 well was the first successful well on the
project and RRS secured entry at a minimal upfront cost contribution of $1m for the drilling
of the well plus $350k to fund costs to production. This vertical well was drilled 13,975ft
into the target formation, cased and then connected to sales. In February 2010 the well
was flowed (pre-frac) at an IP of 2.5mmscf/d at a pressure of 8,000psi from one of three prospective zones before stabilising at 3.3mmscf/d and 290bcpd (barrels of condensate per
day). In May 2010 the JV spudded its second well, the Russell Bevly #1, some 1,900ft
north-northwest of Smith#1, with Range meeting its 20% WI share of the US$3.8m cost.
The well was drilled to a depth of 14,225ft and completed for production after open-hole
logging confirmed the presence of 130ft of net oil and gas pay in the Howell Hight
formation. In September 2010 the well was tested from an 11ft of perforation into a single
zone, with an IP of 1mmscf/d and 90bcpd at a pressure of 8,000psi. The two wells were
produced for several months before a fracture stimulation program was undertaken in the
March Q 2011 which dramatically increased rates. Specialists FracTech.

The report also provided a summary of an economic evaluation for the project, on a P1, P2
and P3 basis for on an undiscounted and discounted NPV(10) basis. The figures provided
are based on net cash flows to RRS and are pre-corporate tax. Hence the pre-tax 2P value
of (P1+P2) US$106m is close to our post-tax net NPV valuation of A$63m and highlights
the upside from conversion if 3P to 2P reserves.
Field Development
The North Chapman Ranch provides a material development asset with some 30+ possible
well locations across the 1,680acre field required to develop the estimated 3P reserves. The
company suggests it is targeting an average IP rate (post-frac of 4mmscf/d and 320bcpd
which represents a CGR (Condensate to Gas Ratio) of 80bbls/mmscf. The operator recently
reported that it had signed a rig for the drilling of a 3rd and potentially 4th well, expected to
commence in mid-October. The next well to be drilled will be Albrecht #1, located 1 mile
south-east of Smith#1. The well is important in confirming reserves to in the southeast of
the field and in addition will test the Anderson and an additional formation. It is also
important in securing acreage under production which eliminates the requirement for renegotiating leases, thought to be in the order of $500-600/acre initially but likely higher
now.
Project Economics
Our project valuation of $63m is currently based on development of 2P reserves only but
will look to move to risked valuation of 3P reserves and further production results become
available. We have assumed a total of 18 wells are drilled to recover gross 2P reserves as
detailed above, with individual well EUR?s of 5.2bcf of gas, 0.4mmbbls of condensate and
0.4mmbbls of NGL?s. Our production assumptions for gas have been grossed-up to reflect
the full gas stream (inclusive of NGL?s) which we have later accounted for by assuming gas
shrinkage of 20%, an NGL ratio of 57bbls/mmscf and sales at 50% of the assumed oil
price. Well costs are estimated at a $3.8m dry hole, $5.5m completed for production and
$7.0m including frac. However there is potential for lower longer term costs as the project
moves into costs to development phase. We have allowed for operating expenses of
US$10k/well/month, plus production taxes. Royalties are believed to be in the order of
30%. We have assumed the JV drills 2 more wells this year followed by 4 wells in 2012 and
8 wells per year thereafter. As discussed later in the document we have also allowed for
some risked 3P reserves upside, to capture the value from conversion of 3P to 2P reserves.
RESEARCH NOTE ? PATERSONS SECURITIES LIMITED 8

Cotton Valley - Texas, USA
Overview
RRS holds a 21.75% interest in the East Texas Cotton Valley project, located in the Red
River County in East Texas. The project covers an area of 1,570acres across a shallow oil
reservoir in the Cotton Valley formation which was discovered in 2008 with the drilling of a
vertical well to 5,300ft which encountered more than 100ft of gross oil pay. In June 2010
RRS entered into the project and in early 2011 the Ross 3H was drilled to total depth of
8,900ft with a 3,400ft horizontal section through the targeted horizon. Prior to fracture
stimulation, swabbing tests of the perforated section revealed unexpected water. The
presence of this water may be due to water flooding operations in the adjacent acreage and
is the subject of ongoing investigation. Independent assessment of the project has
estimated 3P reserves of some 5.4mmbbls of oil which appears reasonable on the assumed
recoveries and well spacing. However given that the project is yet to produce commercially,
we have provided a risked valuation for the project based on development of the
2.7mmbbls of gross 2P reserves, with the additional possible volumes providing potential
upside.
Background
In June 2010 RRS announced that it had entered into an agreement to acquire a 13.56%
interest across some 1,570acres comprising the newly discovered East Cotton Valley Oil
Field for total leasehold acquisition costs of US$254k. The field was discovered in 2008 with
the drilling of a vertical well to 5,300ft which discovered some 100ft of gross pay and was
immediately put into production. A subsequent horizontal appraisal well was drilled but was
never tested due to damage incurred during completion. However the well reportedly
encountered good quality reservoir in the horizontal section. In January 2011 the company
increased its stake in the project to 21.75% after acquiring an additional 8.1875% WI for a
total of US$148k in lease acquisition costs and an over riding royalty (ORR) retained by the
seller. Then in March 2011 the JV commenced drilling of the Ross 3H well. The well was
drilled to a depth of 5,500ft vertically before commencing the 3,400ft horizontal section
which reached a total measured depth of 8,900ft. Open-hole logs, samples and consistent
oil shows while drilling provided significant encouragement for a successful production test.
However following perforation, two swabbing runs yielded unexpected water which is the
subject of ongoing investigations. The operator believes that there is a strong likelihood
that neighbouring water flood operations may be the cause of the issue and water samples
are currently being analysed. Given the proven production from an offset well and
indications while drilling, RRS remains confident that the Ross 3H will be successfully
completed for production.

Field Development
The forward field development plan is largely dependent on the outcome of investigations
into the source of water at Ross 3H and the subsequent successful completion of the well.
However assuming that these issues are resolved the RRS will move to implement a full
field development of the field, with potential for +20 horizontal wells to be drilled into the
shallow oil formation to target an estimated 5.4mmbbls of 3P volumes. Each horizontal
well is expected to initially produce at a rate of around 1,000bopd with an EUR of
0.22mmbbls and is expected to cost $1.6m per well on a dry hole basis. The well recovery
assumptions appear conservative given that vertical wells in adjacent projects have
reportedly averaged 0.2mmbbls and a horizontal well should provide 3-4 x these volumes.
Project Economics
While the 3P volumes are representative of a full field development at East Cotton Valley,
based on reasonable well spacing and EUR assumptions, our current valuation is based on
development of 2P estimates at this stage. In addition we have risked our 2P valuation at this stage at 50% until the water issues are resolved and production is demonstrated inline
with our assumptions. Our valuation is based on the drilling of 10 horizontal wells with
individual well EUR?s of ~0.3mmbbls, assuming that 2 wells are drilled in 2012 followed by
4 wells in 2013 and 3 wells in 2013. However, following drilling and successful production
from 1-2 further wells it is likely that the JV could accelerate drilling to 6 wells per year to
drill the 20+ 3P locations. We have assumed completed well costs of $2.8m and allowed for
operating expenses of US$10k/well/month plus production taxes. Royalties are believed to
be in the order of 30%.