range left out in the cold

Puntland poll leaves Range out in the coldJamie Freed
January 10, 2009
RANGE RESOURCES has a particularly apt corporate motto: "If you can find a path with no obstacles, it probably doesn't lead anywhere."

Yesterday a potentially large obstacle was placed in front of the oil and gas explorer, which holds the oil and mineral rights to Somalia's semi-autonomous state of Puntland.

The company's close ally, the President, Mohamud Musse Hersi, lost an election for a second four-year term and has since been replaced by the former opposition leader, Abdirahman Mohamed Farole.

Mr Farole returned to Puntland in November after spending two years studying at LaTrobe University in Melbourne.

He had been expelled from Mr Hersi's cabinet in 2006 after expressing strong opposition to the agreement signed with Range, having reportedly preferred to conduct an international tender process for exploration rights rather than award them to the tiny Australian company.

Before the election, Range had been hopeful Mr Hersi would be returned to office.

"From our perspective, Hersi getting back in is very important," Range director, Peter Landau, told the Herald on Tuesday.

Yesterday Range entered a trading halt after the election results were published. Mr Landau said Range representatives had arranged to meet Mr Hersi at the weekend to discuss the future of the company and its Canadian joint venture partner, Africa Oil, in the country.

Africa Oil recently completed seismic surveys over areas prospective for oil and had been expected to drill two wells later this year.

Mr Landau said he was hopeful Range would keep its exploration rights under Mr Farole's administration, since a royalty and profit-sharing agreement meant Puntland's economy would be boosted if oil was found.

Mr Landau added it would take 18 to 24 months for another oil explorer to replicate the work Range had undertaken in the region, so it was likely to be able to develop oilfields more quickly than rivals.

But he admitted it was possible Range might have to cede significant portions of its ground, and potentially its all-encompassing right to minerals such as zinc and uranium, as part of a compromise that would allow it to keep the main areas it has marked as prospective for oil.

"We're realists," Mr Landau said. "There is no doubt [Farole] might want to put a compromise deal in."

Range on Monday revealed plans to raise about $3 million through a rights issue, but Mr Landau said it was possible the proposed timeframe could be extended.