ABN 88 002 522 099 4/50 Bourke Street Melbourne VIC 3000 G.P.O. BOX 1086 Melbourne VIC 3001 p +61 3 9662 1407 f +61 3 9662 1409 [email protected] 12 July 2006 Companies Announcement Office Australian Stock Exchange Limited 20 Bond Street SYDNEY NSW 2000 Puntland Update The Board of Range is pleased to announce the following key initiatives in respect of the development of Puntland’s mineral and hydrocarbon resources: • Following completion by Range of a tenement management system for the Puntland Government, Range has agreed with the Puntland Government to return certain land areas to assist the Government in expediting the social and economic development of Puntland. • Recent events in Mogadishu are not viewed by the Range Board as having any significant impact on its activities in Puntland. • KNOC continuing negotiations and due diligence with regard to the proposed farm in. • Key negotiations continuing in respect of other significant developments for Puntland. Exploration Survey and Ground Relinquishment Program As referred to in the Company’s announcement in June 2006; the Board is pleased to further clarify the Company’s position with regard to exclusivity for exploration and the so-called ‘blocks’ within Puntland. The Contract of Work entered into by the Company with the Puntland Government provides for a period of 4 years exclusivity for the Company to undertake general exploration activity over the entire State of Puntland. This period was to provide for the Company to identify and delineate specific exploration areas for oil/gas and minerals. These defined exploration areas are then subject to longer terms of tenure subject to normal work programs and reporting. Specifically, under the Company’s Contract of Work with the Puntland Government, the Company is required to commence, a General Survey of the Contract Area (the State of Puntland) to determine in what parts of the Contract Area deposits of Subsoil Resources are most likely to occur. In addition, it is required to submit to the Puntland Government a general geological map of the whole Contract Area (including a state of the art digital exploration database) and attendant reports based on the Company’s geological observations which have been made by the Company during the General Survey and Exploration. The Company has moved quickly in the last 6 months with its general survey and evaluation and is now in a position to define the areas of exploration interest it wishes to retain. Whilst the 4-year exclusivity period is still contractually in place the Company has decided to relinquish areas it regards as lower prospectivity. This is a normal part of the exploration process and the Company is pleased it has been able to progress rapidly. This relinquished ground which will be returned to the Puntland Government is still considered prospective and in fact has previously been subject to well drilling programs. The Puntland Government has been approached by a number of parties requesting access to ground within the State and therefore will be able to independently enter into discussions on this relinquished ground with potential joint venture partners. The ground retained onshore by the Company is still in excess of 100,000 square kilometres and encompasses the major identified potential oil basins in the Nogal and Dharoor Valleys, areas that are considered to be analogous to the Yemen Marib Shabwa and Sirr-Sayun Basins. These Yemen basins are mature explored basins that have had an estimated resource of 19.25 Billion barrels of oil (Trollinger-March April 1987) and proven oil reserves of 9 billion barrels. In addition, the Company has retained the mineral areas it has determined to be of interest and all the offshore rights. The latter still requires a great deal more evaluation. Oil Reserves19.254.715.766.309.057.686.850.005.0010.0015.0020.0025.0019861987198819891990199119921993199419951996199719981999200020120022003200420052006 Years Reserves in MMMBBL Trollinger-March Resources 1987 April, 1987 Reserves (2000- 2005) *Summary of Yemen Oil Reserves and Resources Graticular Grid/Block System As part of the process of providing a state of the art exploration database the Company has constructed a GIS (Geographic Interface System) based system to host the comprehensive datasets being compiled. The system is also designed to be the basis for a lease/tenement system to manage the exploration licencing and exploration reporting. In order to facilitate this, the State of Puntland has been divided into a graticular grid or block system based on International Standards. In line with the criteria set out in the former 1984 Somali Mining Code the smallest block size and basic ‘building block’ of the system are blocks measured as 5 minutes of latitude by 5 minutes of longitude (approximately 80 km2). Exploration licence areas or typically termed ‘concession areas ’in the oil exploration industry are made up of contiguous combinations of these blocks or grids. The total exploration licence areas that may be granted will vary in size dependent on their prospectivity. There is no intention of returning to the old 1980’s Block allocation, which covered the whole of Somalia. Current Situation in Somalia. In recent weeks it has been reported that the control of Mogadishu has been achieved by Islamic groups. The Company’s discussions with the Puntland Government indicate very strongly that this turn of events will not impact on Puntland or its stability. The vast majority of Somalis are Muslim and it is not surprising that an Islamic faction would gain support in the hope of providing order from the chaos of warlord domination in Mogadishu. Somalia has no record of Islamic militancy and it is expected by the Puntland Authorities that the situation will stabilise in a pragmatic way. KNOC Extension Following recent meetings with KNOC regarding the exploration and development opportunities in Puntland, Range and KNOC have agreed to extend the relevant due diligence period until 31 July 2006. The primary reason for this is to allow more time for the acquisition of data located within Puntland and evaluation of additional data recently acquired from a site visit to the old Conoco camp site in the Nogal Valley. The data pertaining to the wells drilled in the Nogal Valley area by Conoco includes original daily well reports and wireline logs The camp is shown below and the site includes approximately 6000 metres of drill pipe and casing that was to be used for drilling the exciting Prospect 28B target in 1991. Old Conoco Camp Site in the Nogal Valley Drill Pipe at the Camp Site As previously reported the acquisition of data is ongoing as a lot of the data has been dispersed since the civil war in Somalia. More data has been sourced in Puntland that had previously been stored away and will be reviewed by Company personnel in the coming week. MEPS Agreements The Company has agreed with Middle East Petroleum Services (MEPS) to dissolve the relationship under the Technical Services Agreement (including the farm in and facilitation arrangements) by way of mutual agreement and the issue of 10m shares and 10m options (existing RRSO). The Company has entered into discussions with a number of other interested parties and intends to engage a senior experienced oil exploration team to head up its oil exploration work in a similar manner to that being done so successfully in its minerals exploration. The Company looks forward to shortly reporting on other key developments as negotiations conclude. Yours sincerely MIKE POVEY Executive Chairman www.rangeresources.com.au
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