Thurs...

Thurs 12:04pm
http://www.proactiveinvestors.co.uk/companies/news/32111/red-emperor-resources-and-range-resources-set-to-participate-in-first-somalia-drill-for-20-years-32111.html

Red Emperor Resources and Range Resources set to participate in first Somalia drill for 20 years
Thu 12:04 pm by Jon Mainwaring Red Emperor and Range Resources are also collaborating on oil exploration in the Republic of Georgia

Natural resources explorers Red Emperor Resources (LON:RMP, ASX:RMP) and Range Resources (LON:RRL, ASX:RRS) have welcomed the news that their joint venture partner, Africa Oil Corp (CVE:AOI), is set to drill the first well for 20 years at Puntland, in Somalia, this autumn.
At midday, shares in Red Emperor were up 3.2 per cent at 23.1 pence each, while those of Range Resources were down 1.8 per cent at 13.75 pence each. Old Park Lane Capital has reiterated its ?buy? view for both shares and set target prices of 115 pence and 27 pence for Red Emperor?s and Range Resource?s respective share prices.
Africa Oil, the operator of the project, has signed contracts for a drilling rig and third-party services, and mobilisation or the required personnel and equipment will begin soon with a view to the first drill target, Shabeel-1, spudding in the fourth quarter of this year.
Sakson Drilling and Oil Services will supply Africa Oil with a 1,500 horse power, top-drive drilling rig to drill two of what the firms describe as ?highly anticipated? exploration wells in the frontier state of Puntland, Somalia.
Speaking to Proactive Investors, Greg Bandy, Red Emperor?s executive director, said: ?This is quite a milestone and we are really excited.?
Bandy added that the commissioning of the drilling rig is ?the strongest indicator that these wells will now be drilled?.
The drilling locations were selected over two robust prospects, targeting total gross best estimate prospective resources of 675 million barrels of oil (which Range said includes 135 million barrels net attributable to it). Shabeel-1, the first prospect, is targeting in excess of 300 million recoverable barrels of oil (60 million barrels attributable to Range).
Both Red Emperor and Range Resources each hold a 20 per cent working interest in the two licences that encompass the Dharoor and Nugaal valleys, where the drilling is taking place.
Africa Oil holds its 45 per cent interest through its shareholding in Horn Petroleum, which recently completed a US$41 million capital raising.
Red Emperor has an option to participate in the second well. ?This means that we are able to look at the logs and other data to assess the first well before committing to the second well,? pointed out Bandy.
Red Emperor is already committed to paying around 30 per cent of the costs of drilling the first well, the total cost of which should be between US$20 million to US$25 million. To date it has contributed US$2.5 million to US$3 million, said Bandy.
Both Red Emperor and Range Resources added that the Puntland Government and Dharoor Valley communities have assured they will assist and support the joint venture to allow the project to move forward safely and quickly.
The Dharoor and Nugaal valleys cover nearly 36,000 square kilometres and have been assessed to potentially contain a combined 19 billion barrels of oil in place.
Red Emperor and Range Resources are also joint venture partners in the Republic of Georgia, where they have interests in onshore blocks VIa and VIb. Independent consultants, via a 2D seismic programme, have identified 68 potential structures containing an estimated 2.1 billion barrels of oil in place over this block. Last week, an update from Georgia reported that drilling of an initial pilot hole had reached planned depth of 700 metres at the firms? Mukhiani well at their Vani 3 prospect in the country.
Red Emperor also has a 25 per cent interest in the Jillewarra Project, a copper and gold project in Western Australia.
Last week, Range Resources?s shares received a boost after it reported it had found oil at its Morne Diablo block in Trinidad.
Commenting on today?s news, Barney Gray, an analyst at Old Park Lane Capital, said the firms had entered a very exciting stage in their involvement in Puntland. ?Although full mobilisation has been subject to several delays over recent years, it should be remembered that the company is poised to participate in the first exploration well in Somalia for 20 years,? he said. ?With Range also participating in high impact exploration drilling in Georgia and an intensive development drilling programme in Trinidad, the upside potential for the shares over the next six months is highly attractive.?
On Red Emperor, Gray said that with it also participating in Georgia ?we believe that Red Emperor provides very attractive leverage into two frontier exploration plays?.