pl interview- july 26th

another boring interview, from another spam poster..
courtesy SpikeyDT


Range Resources Executive Director Interview Q3 2011
Tuesday, Jul 26 2011 by Elias Jones
http://www.stockopedia.co.uk/content/range-resources-executive-director-interview-q3-2011-58505/

Range Resources (LON:RRL) is a dual listed (ASX: RRS) exploration and production Company with interests covering 4 geographical areas; onshore Texas USA, The Republic of Georgia, Puntland Somalia and Trinidad. The major near term focus for Range Resources and its partners will be the high impact exploration drilling in Puntland and Georgia, targeting combined potential structures amounting to multi billion barrels of oil. However, for many, the Range Resources investment case became even more appealing recently when the company announced it had completed the acquisition of SOCA Petroleum which holds 100% ownership of three exploration and production onshore Trinidad oil and gas licences, along with its wholly owned drilling company, including operational staff, rigs and equipment.

Following on from an earlier ?Could Trinidad be the Game Changer? article and the recent busy period for Range Resources and its partners which also includes the successful spudding of Mukhiani 1 well in Georgia targeting a prospect with a mean estimate of undiscovered oil in place of 115 million barrels, Peter Landau, the Range Resources Executive Director, has taken time out to discuss various aspects of the business, including, the Trinidad acquisition, their stakeholder approach, possible expected news flow, potential new farm in opportunities, returning value and a potential market capitalisation target.

Q1. Earlier this year it was indicated that Range would not be looking to acquire the whole of the Trinidad asset, and that potentially 20% would be its maximum share, so what changed?

In essence, Range?s market cap ? doing a $60-$70m deal with a cap of $90m is vastly different to a cap of $400m. We always loved the asset and the play but were conscious of dilution with upcoming drilling in Georgia and Puntland.

Q2. Does the additional number of shares issued to fund the Trinidad deal hinder the potential upside to shareholders from the Puntland and Georgia prospect?

As per the above, we think we found a good balance between preserving the upside of Georgia and Puntland (15% placement and equity on the deal), providing a genuine underpin to a base valuation of circa $400m for Range and also providing shareholders with significant upside with Trinidad in the form of P1 and P2 development and Herrera exploration success. From our perspective there is no hindrance ? the upside is preserved (through additional lower risk exposure in Trinidad) and exploration and delay risk reduced significantly.

Q3. For many investors, they have invested in Range for the deal making ability and for a non-operational role. However, Range now own three producing oilfields, a drilling company and have around 150 staff on its books in Trinidad. How ready is Range for this strategic change? And what approach will Range have towards its various stakeholders in Trinidad?

I don?t necessarily agree with the non-operational role assessment. We have managed Georgia and like with anything the key question is not whether you are operator or not but who is doing the job. In Trinidad?s case, we get the whole team who have been operating the projects for plus 5 years ? from general manager, exploration manager, accounts and government liaison through to drilling crews and workshop mechanics. They have been desperate for development capital as opposed to simply extracting the greatest amount of oil for the lowest possible cost and Range has stepped in with the key aim of providing all necessary financial and technical support to ensure that the 2-3 year plan to get to between 4,000 and 10,000 bbls / day (the latter on the basis of Herrera developments) will be achieved.

We adopt a ?win ? win? approach for all of our stakeholders (not just in Trinidad) which ensures that relevant incentives are in place to make sure everyone benefits ? the bottom line to any incentives is that they have to be aligned to what will deliver genuine value and upside to Range shareholders

Q4. Many view the Trinidad acquisition as a potential game changer for Range Resources, do you share this view?

Game changer is probably not the right term. As you know any of the 3 big plays we have ? Georgia, Puntland or Trinidad - could be the ?game changer?. Wwhat Trinidad does is change the way Range is perceived in the market place from an investment perspective and attract a far greater investment audience (both institutional and retail) because of what we call the ?valuation underpin? that Trinidad brings to the table.

Q5. Briefly could you touch on the expected near term news flow for the Puntland, Georgia and Texas assets.

Rig mobilisation Q3 and spud date early Q4 for Puntland, completion of the first well in Georgia (Mukhiani) this Quarter, Ross 3H (Cotton Valley) update Q3 and spudding of the Albrecht well (North Chapman Ranch) late Q3, early Q4.

Q6. Bar the Texas, Trinidad, Georgia and Puntland projects, do you expect to acquire other any other projects over the short to medium term?

Not so much acquisitions but we are looking at a few farm in opportunities (not massive cash out flows). We wouldn?t do more than 1 or 2 (onshore and oil only) and clearly timing is paramount. As with Trinidad, we think we can complete some very good plays (probably higher risk spectrum than Trinidad which means a lot greater potential from a reserve perspective eg. the billion barrel plus type plays) but we will always adopt a prudent approach on timing based on market circumstances.

Q7. Going forward, how do you see the financial demands regarding working capital and capital expenditure being met over the next 12 months?

We have a number of fund raising mechanisms being offered to us ? equity, convertible and pure debt. As stated above, market circumstances will dictate to a degree how we play it from a size, pricing and timing perspective. I know the response sounds a bit obtuse but, at the end of the day, we like to think we know how to manage the financial demands and will always have shareholder interests front and centre in our considerations.

Q8. Would you consider at some stage, crystallising assets such as the Texas NCR or ECV and returning shareholder value through a special dividend?

Absolutely ? whether it be special dividend, capital return, share buyback. Any number of mechanisms are available and would definitely be an option as opposed to keeping all the cash and looking for another suite of assets (we like the assets we have and the value proposition they represent over the next 12 months).

Q9. Going forward, what?s your vision for Range Resources and what?s your aim in terms of a future market capitalisation for the company?

Without pigeonholing the vision, it actually is pretty simple ? get a minimum market cap of $1bn in 12 months with only spending between $25-$40m in development and exploration.

Thanks for taking the time to discuss the various business aspects and for sharing your thoughts.

The main article image is with courtesy and the copyright of Range Resources. The interviewer holds shares in Range Resources (LON:RRL)