Range profitable in Trinidad &Welcome to Breaking News Trinidad and Tobago Sunday,
October 12 2014 @ 06:26 AM AST Range profitable in Trinidad & Tobago Sunday, October 12 2014 @ 12:00 AM AST Contributed by: AleemKhan Views: 145
Although it deepened its loss from US$20 million in 2013 to US$102 million in 2014, Range Resources Ltd is profitable in T&T, the company's chief executive officer Rory Scott Russell said in an interview at the Hilton in Port of Spain Thursday (Oct 2). "We've had a difficult year. We were brought in to turn around the business," he said. Russell was recruited from Royal Dutch Shell. "We want to pretty much get out of everything (else around the world) so we can focus on the onshore here," he said in response to a question about expansion plans. "We've got enough on our plate," he said when asked if Range might be looking at offshore T&T. He said the company's US$102 million financial loss for the year ended June 30 is "the lowest point it's going to get. It'll come back." Range's share price has been taking a beating on the London Stock Exchange since the loss deepened. Amidst what appears to be spiralling losses, Range has partnered with Niko Resources of Canada though a 50-50 farm out agreement. Asked if he is not concerned about Niko, its financial troubles and work programme shortcomings in T&T, he said Range is not constrained by Niko's worries, and expects to drill well in the Niko farm out acreage over the next few months. "Actually in Trinidad we made a profit last year. We'd like to be profitable and we already are in Trinidad. Once we get rid of everything else we will stop the drain on our financial resources," he said. "Looking at our financial statements it is, of course, disappointing to report an overall loss of US$102 million. However, I believe it is important to look at this result in context of the year overall," he said. Given Range's strategy of focusing on Trinidad, it was important to review the overall carrying value in the balance sheet of the non-core assets, Russell said in a statement to the London Stock Exchange. The non-cash loss from discontinued operations and asset write-downs account for almost 60 per cent of the total loss, Russell said. Similarly, there were substantial non-cash related finance costs incurred as a result of the numerous historic financing arrangements that had been in place during the year, he added. "Our core business in Trinidad, however, continued to produce a credible and profitable performance with earnings before income tax, depreciation and amortization (EBITDA) for the year of approximately US$2.1 million. I believe this is a very encouraging result given the lack of investment in the business during the year and it underlines the potential for significant growth in profitability that can be achieved through increased production," he said. "It is clear that the year to June 30 (2014) has been particularly challenging for Range but I am firmly of the view that developments over the last six months have put the company on to a much more solid footing. Since becoming Chief Executive, I have worked tirelessly with the rest of the Board and new senior management team to stabilise the situation we inherited and while there is still work to be done, we can be pleased with what we have achieved so far," said Russell. First step, fresh start The first step in rebuilding the company was the appointment of a new management team and organisational restructure to ensure a fresh start, and to address the need for the right skills and expertise that were severely lacking, Russell said. New hires from board level through to the technical and operational level means that Range now has the appropriate team in place to deliver on its plans, the CEO said. "I cannot overemphasise how important these changes are as we look to rapidly grow the company and I am particularly excited that we have been able to attract these high quality individuals to Range - clear testimony to their belief in the Company's assets and shared desire to create material value for shareholders," he told investors. The next significant milestone, Russell said, was securing US$12 million in equity financing from a new investor, allowing us to refinance the complicated and expensive short-term debt from numerous providers that had plagued the company for some time. The investor, Abraham Ltd, subscribed to Range shares at a significant premium to the market price at the time, demonstrating its confidence in the new team, as well as the underlying quality of assets and newly focused strategy at Range, Russell said. Further notable achievements centre on core assets in Trinidad, he said. "We reported an increase of over 9 per cent in proven plus probable (2P) reserves as a result of our ongoing development drilling work, which more than replaces production since the last independent reserves report and again highlights the potential of our acreage. We also signed an Integrated Master Services Agreement with LandOcean, an extremely capable international oilfield services provider and I am delighted with the support they are providing to our technical teams both in Trinidad and London," he said. It is critical that Range operates its assets safely and responsibly, Russell said, and "I would particularly like to highlight our health, safety, security and environment (HSSE) performance in Trinidad. The new management team has implemented comprehensive new set of HSSE policies and monitoring procedures to significantly improve our performance. During the year, we have seen a substantial improvement in all key HSSE indicators including lost time incident (LTI) frequency and environmental incidents. As part of our commitment to continuous improvement, we are looking forward to becoming certified under the Trinidad Energy Chamber's STOW (Safe to Work) initiative, one of the first onshore operators in Trinidad to achieve this." Trinidad remains a favourable country to operate in, he said, and the recently ratified fiscal incentives are expected to have a significant positive impact on Range's cashflows and returns. Adding low risk onshore exploration acreage in Trinidad continues to be a strategic priority for Range, Russell said, and immediately followed with how pleased he is that "earlier this year we were awarded the highly prospective St Mary's block as part of the Trinidad Onshore Bid Round 2013." However, he said, there is no denying that the production figures reported for the year are disappointing and "below where we were hoping to be at the time of reporting these results." This was largely due to a historic lack of investment in drilling rigs which has prevented drilling operations from running at full capacity, he said. Although Range's fleet has benefited from some maintenance improvements, Russell said, its rigs will require further investment before they are capable of carrying out ongoing drilling plans and running at a capacity that will enable the company to achieve its production targets. Good progress He said: "That said, we were able to complete seven development wells during the year, six of which were drilled and completed since my appointment in February 2014, including the South Quarry QU 452 well which encountered encouraging results and has resulted in additional development targets. Whilst the slower than expected progress in Trinidad means we are unlikely to meet our previously stated target of an exit rate of 1,000 barrels of oil a day by the end of 2014, we are confident that the preparation work we have done to date, the ongoing improvements to our rig fleet and the improved understanding of our acreage that we have obtained through our relationship with LandOcean, will enable us to meet the previously stated production forecasts during the first half of 2015. I am particularly excited about the upcoming onshore exploration well on the Guayaguayare licence that is due to spud by the first quarter (Q1) 2015. It will be the deepest well to be drilled by Range to date and will test two sandstone targets in the highly prospective Gros Morne formation. We are also busy progressing activity across our acreage including a multi-well reactivation programme at Beach Marcelle and the much anticipated waterflood programmes." Russell also said Range has made good progress on its strategy of disposing of non-core assets. Since the new management team was appointed, it has reduced Range's stake in the Guatemalan project through a partial sale of its shareholding in Citation Resources, and has refocused its Colombia strategy to a carried position on three exploration assets in the highly prospective Magdalena and Putumayo basins, and exited from high-commitment PUT-6 and PUT-7 blocks. Additionally, given the company's focus on onshore assets and Trinidad in particular, Range will not be pursuing any formal agreements relating to potential offshore blocks in Puntland, whilst maintaining our non-operated stake in onshore blocks. The CEO said Range has also reached a commercially satisfactory outcome to the International Petroleum loan (subject to the sale of the Russian assets) and continue to see good progress with the disposal processes underway for Texas and Georgia. Regarding financing, Range also announced the signing of an up to US$15 million loan financing with Lind Asset Management LLC. "This is a very important step in our new financing structure and it provides Range with flexible, medium-term financing from one single party, which allows us to progress our near to medium-term plans in Trinidad and once we demonstrate progress in this regard, we believe we will be in a strong position to obtain longer-term finance which remains an important target for the company as we grow and develop our reserve base in Trinidad," he said. Prior to entering into the Lind agreement, Range undertook a detailed review of all the financing options that are available to Range at this time and, Russell said, "we firmly believe that this facility is the most appropriate, and attractive option for us." "In summary," he said, "although I can fully understand that some shareholders remain impatient for further positive news, in reality the company in its current form is still young and there is no quick fix for certain inherited legacy issues. It is my intention to continue to transform Range in a pragmatic way for the long-term benefit of all shareholders. So far, a large amount of time and effort has gone into cleaning up the business at a corporate level and refocusing the company's strategy. These priorities are outlined in further detail in this announcement. The year ahead will see the company maintaining focus on creating value from our assets in Trinidad and rationalising the remaining non-core assets in the portfolio. Range has evolved significantly since my appointment and I am confident that the future is bright for the company and our shareholders."
Add to My Watchlist
What is My Watchlist?