Half Yearly Report 31 December 2013
17 March 2014 ASX Code: RRS and AIM Code: RRL
Range Resources
("Range" or "the Company")
Half Yearly Report and Issue of Shares
The Board of Range is pleased to present the Company's half yearly report for
the 6 months ended 31 December 2013, with the following key points:
* Subsequent to period end, Range announced the appointment of Mr. Rory Scott
Russell as the Company's new Chief Executive Officer and the appointment of
two new Non-Executive Directors, Mr. Graham Lyon and Dr. Christian
Bukovics. Together these appointments bring a wealth of technical,
operational and financial experience onto the Board, to fully support the
Company's future growth and development
* Additionally, the Company announced two senior management appointments, Dr.
Douglas Field and Mr. William Duncan as Vice President of Production and
Vice President of Exploration, respectively
* The core team is now in place to run the Company and its portfolio of
assets, with the clear objective of delivering value to shareholders
* Range continued with the planned rig maintenance programme required to
execute the Trinidad Field Development Plan, with key drilling rigs 2, 5
and 8 operational
* The farm-in agreement with Niko Resources Ltd, regarding the Guayaguayare
Block in Trinidad formally approved by Trinidadian authorities, adding
280,000 acres to Range's net Trinidad acreage position
* Range announced that it has been successful with its bid for the St. Mary's
block in Trinidad following the submission in the Trinidad Onshore Bid
Round 2013. The addition of 44,731 acres further consolidates the Company's
position and commitment to exploring and developing onshore oil in Trinidad
* Certificate of Environmental Clearance ("CEC") approvals received for the
drilling of a total of 40 wells, 8 well deepenings and commencement of the
enhanced recovery waterflood programme ("EOR") on Company's Beach Marcelle
license in Trinidad
* The previously proposed merger with International Petroleum Ltd will not be
proceeding, with constructive negotiations continuing with regards to
Range's $8m loan to International Petroleum
Rory Scott Russell, Chief Executive Officer of Range, commented:
"I joined Range at the beginning of February 2014, and during this initial
period as CEO the Company has already gone through considerable change, not
least with key board and management hires, but also with the award of
significant new acreage in Trinidad following our successful bid for the St.
Mary's block. We now have the core team in place and our efforts are firmly
focused on developing and managing our assets, to grow the Company and deliver
maximum shareholder value.
There is clearly more to do, including the rationalization of our portfolio but
Range remains a fundamentally strong business with a unique position in
Trinidad, and I am confident that we will be able to take full advantage of
upcoming opportunities."
Please find attached extracts from the Company's Half Year Report for the
period ended 31 December 2013, being the:
* Directors Report;
* Consolidated Statement of Profit or Loss and other Comprehensive Income;
* Consolidated Statement of Financial Position; and
* Consolidated Statement of Cashflow.
A copy of the full Half Year Report is available on the company's website:
www.rangeresources.com.au
Issue of shares
Range Resources Limited announces the issue of the following securities:
76,346,484 Ordinary Fully Paid Shares pursuant to the conversion of debt at £0.0095 per share
50,000,000 Ordinary Fully Paid Shares issued as collateral shares as per the loan agreement
which can be cancelled upon repayment of the loan
1,450,690 Unlisted Options issued for debt conversion as per agreement (£0.010, 28 February 2017)
3,125,000 Unlisted Options issued for debt conversion as per agreement (£0.008, 31 March 2017)
7,250,000 Unlisted Options issued as facility options as per loan agreement (£0.012, 1 March 2017)
Application will be made for the 126,346,484 new shares to be admitted to trading on ASX and AIM.
Trading in the new shares is expected to commence on or around 21 March 2014.
The majority of the shares and options being issued relate to the previously
announced loan facility arrangement with YA Global Master SPV Ltd, Empery Asset
Master Limited, and the Cranshire Capital Master Fund.
RANGE RESOURCES LIMITED
ABN 88 002 522 009
DIRECTORS' REPORT
Your directors submit the consolidated financial report of Range Resources
Limited for the half-year ended 31 December 2013.
1. Directors
The names of the Directors who held office during or since the end of the
half-year:
Rory Scott Russell Chief Executive Officer (appointed 3 February 2014)
Anthony Eastman Executive Director
Sir Samuel Jonah Non-Executive Chairman
Marcus Edwards-Jones Non-Executive Director
Peter Landau Non-Executive Director
Graham Lyon Non-Executive Director (appointed 3 February 2014)
Christian Bukovics Non-Executive Director (appointed 3 February 2014)
2. Results
The Consolidated results from operations are as follows.
31 December 2013 31 December 2012
US$ US$
Net profit/(loss) after income tax (18,139,205) (9,682,470)
3. Review of Operations
Trinidad
During the period, Range continued with the planned rig maintenance programme
required to execute the Trinidad Field Development Plan ("FDP"), compiled by
management and reviewed by independent third parties. The FDP sets out the
geological, operational and financial parameters for the development of the
Company's P1 Reserves over the next three (3) years. This represents more than
three (3) months' work by both internal and external sources and provides a
clear development framework for our initial production increase in Trinidad.
The FDP is expected to result in increased production, cashflow and proved
reserves through drilling and testing. In addition the Company will target the
exploitation of undeveloped Proved Reserves associated with enhanced recovery
projects such as the Beach Marcelle and Morne Diablo waterflood programmes.
Range identified the need to effectively take its drilling rigs offline and
subject them to a rigorous maintenance and testing programme to ensure that the
drilling targets can be met and previous delays and downtime are minimised, a
process that has largely been completed.
The timing of the ramp up in production with drilling activity ramping up in
Trinidad will allow the company to maximise benefits from the proposed changes
and tax incentives in country.
The Company also announced that it formally executed the farm–in agreement with
Niko Resources Ltd. ("Niko"), regarding the Guayaguayare Block in Trinidad
(subject to final regulatory approval), adding 280,000 acres to Range's
Trinidad acreage position
Guatemala
During the period, the Company secured a strategic stake in Citation Resources
Limited ("Citation") (ASX: CTR) and a direct 20% equity stake in Latin American
Resources Ltd ("LAR" and "Operator"), with interest in two oil and gas blocks
in the South Peten Basin in Guatemala. The Operator successfully drilled Atzam
#4 well to a target depth of 4,054 ft. and now producing.
Georgia
During the period Range and Operator, Strait Oil & Gas UK (Strait) finalised a
programme for the development of Blocks VIa and VIb after the completion of an
extensive data review.
Agreement has been reached with the State Agency for the Regulation of Oil and
Gas for the timetable of the drilling campaign with the final work programme
passed by the Coordination Committee of the National Oil Corporation. This
programme will involve the tender for drilling rigs as well as the procurement
of all associated well services and equipment.
Initial targets will be for oil and gas but it is anticipated that it will be
necessary to hydraulically fracture the structures which lie in the Upper
Bathonian section. The Operator also advised they will be determining the CBM
potential of the reservoir. The drill programme has necessitated a revision of
the PSA extending the drilling timetable into 2015.
The Joint Venture ("JV") continues to advance discussions with potential farm–
in partners and buy out parties. In the meantime the JV remains committed to
progressing and meeting the commitments on the licenses.
Conventional Targeted Conventional Oil Conventional Gas
Oil/ Gas in place (mmbbls) (Tcf)
Total Oil / Gas in Place 403 18.44
Range Attributable 181 8.30
CBM Opportunity 3P Reserve (Tcf) Targeted Gas- in -
Place (Tcf)
Total Gas In Place 0.59 3.16
Range Attributable 0.23 1.42
Hydrocarbons in–place and Reserve Calculations for Blocks VI a and VI b
Texas
During the period the Company entered into a sale agreement and concluded all
key completion requirements for the sale of its Texas assets for a total pre–
tax cash consideration of US$30m (US$25m initial payment plus US$5m in royalty
production payments to be received from future production). However, the
purchaser failed to meet the originally agreed timetable for payment of the
sale consideration. The Company understands that this failure is due to
internal structuring and related issues of the purchaser. During the period,
the Company continued to work with the purchaser to enable sale completion as
soon as possible, extending the payment deadline on an ongoing basis. The
Company also continues to consider its alternatives in relation to this sale.
Puntland
Whilst there was little on–ground activity carried out by the Joint Venture in
Puntland over the period, a number of key initiatives have been outlined by
Range's partner and operator, Horn Petroleum (TSXV: HRN) including field
research and reconnaissance across both sites, face–to–face liaison with key
stakeholders and updated security assessments of both blocks (and potential
drilling sites).
Colombia
During the period, the Company progressed potential farm in interests with
respect to the Company's interest in Colombia and would progress the
exploration program subject to successful outcome.
4. Events Subsequent to Reporting Date
Trinidad
Subsequent to period end, Range announced that it has been successful with its
bid for the St. Mary's block in Trinidad following the submission in the
Trinidad Onshore Bid Round 2013.
The St. Mary's block comprises 44,731 acres spread over 4 sub-blocks contiguous
to Range's existing Morne Diablo license and the Guayaguayare license. The main
reservoir targets identified in St Mary's block are Pliocene Deltaic sands,
Miocene Herrera sands, Cretaceous sands and the source rock itself.
Additionally, Range provided an update on operations at its Trinidad assets
with the following highlights:
1. Drilling rigs 2, 5 and 8 resumed operations following completion of their
maintenance programs.
2. The maintenance programme for the remaining drilling fleet (light rig 1 and
heavy rigs 6 & 7) continues as planned
3. Zero safety incidents since September 2013, approaching six months LTI-free
operations
Guatemala
Subsequent to period end, LAR confirmed the Harold Lee 500 rig commenced
drilling operations on the Atzam #5 well at the Atzam Oil Project. The Atzam #5
well was spudded on 14 January 2014 following a final operational meeting on
site with the Operator, Schlumberger and the Ministry of Mines. The well will
target the C18 and C19 carbonate reservoirs as the primary objectives, in
addition to the current producing C17 carbonate reservoir in the Atzam #4 well.
The Operator is managing the drilling programme with Schlumberger providing
specialist logging and cementing services on the well.
Corporate
Key Board and Management Appointments
Subsequent to period end, The Board of Range announced the appointment of Mr.
Rory Scott Russell as the Company's new Chief Executive Officer and the
appointment of two new Non-Executive Directors, Mr. Graham Lyon and Dr.
Christian Bukovics. Together these appointments bring a wealth of technical,
operational and financial experience onto the Board, to fully support the
Company's future growth and development.
Mr. Peter Landau, stepped down from his position as Executive Director but will
continue to support the business by remaining on the Board as a Non-Executive
Director.
Additionally, the Company announced two senior management appointments, Dr.
Douglas Field and Mr. William Duncan as Vice President of Production and Vice
President of Exploration, respectively.
Proposed Merger with International Petroleum
Range announced that the previously proposed merger with International
Petroleum will not be proceeding, however constructive negotiations continue
with regards to Range's $8m loan to IOP and commitment to generate positive
returns from the transaction.
5. Outlook
Range intends to continue with the onshore development drilling campaign in
Trinidad in line with the Company's Field Development Plan and also rationalize
parts of the Company's asset portfolio through divestment and farm-outs. The
Company's priority is to unlock shareholder value through development
activities and as such the team continues to work on addressing production
decline whilst maintaining zero LTI's since September 2013.
Rory Scott Russell, Chief Executive Officer of Range, commented:
"I joined Range at the beginning of February 2014, and during this initial
period as CEO the Company has already gone through considerable change, not
least with key board and management hires, but also with the award of
significant new acreage in Trinidad following our successful bid for the St.
Mary's block. We now have the core team in place and our efforts are firmly
focused on developing and managing our assets, to grow the Company and deliver
maximum shareholder value.
There is clearly much more to do, including the rationalization of our
portfolio but Range remains a fundamentally strong business with a unique
position in Trinidad, and I am confident that we will be able to take full
advantage of upcoming opportunities."
With the exception of Guatemala, all of the technical information, including
information in relation to reserves and resources that is contained in this
document has been reviewed internally by the Company's technical advisor, Mr
Mark Patterson. Mr Patterson is a petroleum geologist and geophysicist who is a
suitably qualified person with over 30 years' experience in assessing
hydrocarbon reserves and has reviewed the release and consents to the inclusion
of the technical information.
The reserves estimates for the 3 Trinidad blocks and update reserves estimates
for the North Chapman Ranch Project and East Texas Cotton Valley referred above
have been formulated by Forrest A. Garb & Associates, Inc. (FGA). FGA is an
international petroleum engineering and geologic consulting firm staffed by
experienced engineers and geologists. Collectively FGA staff has more than a
century of world–wide experience. FGA have consented in writing to the
reference to them in this announcement and to the estimates of oil and natural
gas liquids provided. The definitions for oil and gas reserves are in
accordance with SEC Regulation S–X an in accordance with the guidelines of the
Society of Petroleum Engineers ("SPE"). The SPE Reserve definitions can be
found on the SPE website at spe.org.
The technical information included in this document with respect to Georgia was
prepared by Dr. M. Arif Yukler, COO of SOG Georgia. Dr Yukler is a geologist
who is a suitably qualified person with more than 38 years of experience in the
international oil & gas industry, and in assessing hydrocarbon reserves. Dr
Yukler has advised companies and government entities of all size from small
caps to super-majors, as well as state regulatory authorities on the management
of resources and exploration areas. Dr. Yukler has reviewed the release and
consents to the inclusion of the technical information with respect to Georgia.
The reserves estimate for the Guatemalan Blocks in which LAR (and CTR) have an
interest in is as reported by CTR. CTR has not reported 1P and 3P estimates,
but Range is seeking such information from CTR for future reporting purposes.
RANGE RESOURCES LIMITED
ABN 88 002 522 009
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE HALF-YEAR ENDED
31 DECEMBER 2013
Consolidated
Notes 31 December 31 December
2013 2012
US$ US$
Revenue from continuing operations
Revenue from sale of goods 2 12,045,142 15,702,743
Operating expenses (8,216,143) (9,986,451)
Depreciation and amortisation (3,787,090) (3,237,035)
Cost of sales 3a (12,003,233) (13,223,486)
Gross Profit 41,909 2,479,257
Interest and other revenue 2 1,195,708 335,805
Depreciation 3b (28,697) (32,567)
Finance costs 3b (10,158,032) (1,202,129)
Exploration expenditure - (4,254,973)
Technical, consultancy and administration 3c (7,020,724) (4,056,304)
expenses
Impairment loss on available for sale - (38,131)
financial assets
Foreign exchange gain / (loss) 12 (1,711,174) 87,744
Share of net profit of associates 102,291 -
accounted for using the equity method
Loss before income tax expense from (17,578,719) (6,681,298)
continuing operations
Income tax expense (560,486) (3,001,172)
Loss after tax from continuing operations (18,139,205) (9,682,470)
Net loss for the half-year attributable to (18,139,205) (9,682,470)
equity holders of Range Resources Ltd
Other comprehensive income
Items that may be reclassified to profit
or loss
Changes in the value of available-for-sale (917,540) (1,105,173)
investments
Exchange differences on translation of (7,940) 2,298,302
foreign operatives
Other comprehensive income/ (loss) for the (925,480) 1,193,129
half-year, net of tax
Total comprehensive income/(loss) (19,064,685) (8,489,341)
attributable to equity holders of Range
Resources Ltd
Loss per share for the half year
attributable to members of Range Resources
Ltd.
Basic loss per share (cents per share) (0.80) (0.48)
Diluted loss per share (cents per share) N/A N/A
The Company's potential ordinary shares were not considered dilutive as the
Company is in a loss position.
The above Consolidated Statement of Profit or Loss and Other Comprehensive
Income should be read in conjunction with the accompanying notes.
RANGE RESOURCES LIMITED
ABN 88 002 522 009
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2013
Consolidated
Notes 31 December 2013 30 June 2013
US$ US$
Current Assets
Cash and cash equivalents 4,361,205 1,732,231
Restricted deposits 3,480,000 3,480,000
Trade and other receivables 7,855,071 14,297,007
Other current assets 6 2,720,689 3,818,816
18,416,965 23,328,054
Non-current asset held for sale 7 8,960,478 8,769,792
Total Current Assets 27,377,443 32,097,846
Non-Current Assets
Goodwill 46,198,974 46,198,974
Available for sale financial assets 8 2,954,043 822,751
Property, plant & equipment 11,508,612 12,300,418
Exploration & evaluation 10 9,468,635 9,453,636
expenditure
Producing assets 11 83,453,292 85,422,826
Prepayments for investments - -
Deferred tax asset 236,758 216,920
Investments in associates 12 42,269,566 37,295,453
Non-current receivable 9,204,024 15,324,218
Total Non-Current Assets 205,293,904 207,035,196
Total Assets 232,671,347 239,133,042
Current Liabilities
Trade and other payables 13 4,483,975 7,170,178
Current tax liabilities 381,416 1,806,030
Borrowings at fair value 14 12,779,405 11,026,440
Provision 672,801 654,873
Total Current Liabilities 18,317,597 20,657,521
Non-Current Liabilities
Other non-current liabilities 431,211 431,211
Deferred tax liabilities 44,108,145 44,995,633
Employee service benefit 553,488 482,092
Total Non-Current Liabilities 45,092,844 45,908,936
Total Liabilities 63,410,441 66,566,457
Net Assets 169,260,906 172,566,585
Equity
Issued capital 15 329,948,653 314,199,634
Reserves 26,075,780 26,991,273
Accumulated losses (186,763,527) (168,624,322)
Total Equity 169,260,906 172,566,585
The above Consolidated Statement of Financial Position should be read in
conjunction with the accompanying notes.
RANGE RESOURCES LIMITED
ABN 88 002 522 009
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE HALF-YEAR ENDED
31 DECEMBER 2013
Consolidated
Notes 31 December 31 December
2013 2012
US$ US$
Cash Flows from Operating Activities
Receipts from customers 11,971,371 15,523,562
Payments to suppliers and employees (17,237,342) (13,453,672)
Payments for exploration and evaluation - (4,254,973)
expenditure in relation to the Somalia
interests
Income taxes refunded/ (paid) 1,139,235 (4,493,334)
Interest, deposits and royalties received 2,692,077 42,909
Interest paid/finance cost (2,513,366) (962,395)
Net cash provided by/(used in) Operating (3,948,025) (7,597,903)
Activities
Cash Flows from Investing Activities
Payments for plant and equipment (360,799) (2,754,785)
Payments for development expenditure (678,403) (3,385,882)
Payments for exploration and evaluation (205,498) (1,057,026)
expenditure
Payment to restricted deposits - (3,480,000)
Proceeds / (payments) from available for - 2,091,522
sale financial assets
Loans to other entities (949,068) (550,000)
Loans to associate (930,373) (5,997,884)
Net cash used in Investing Activities (3,124,141) (15,134,055)
Cash Flows from Financing Activities
Proceeds from issues of shares 4,180,719 2,072,187
Payment of share issue costs - -
Loan funds received 13,663,281 15,400,000
Repayment of borrowings (8,142,860) (1,466,667)
Net cash from Financing Activities 9,701,140 16,005,520
Net Increase/(decrease) in Cash and Cash 2,628,974 (6,726,438)
Equivalents Held
Cash and cash equivalents at beginning of 1,732,231 10,578,562
period
Exchange rate adjustment - -
Cash and cash equivalents at end of period 4,361,205 3,852,124
The above Consolidated Statement of Cash Flows should be read in conjunction
with the accompanying notes.
Yours faithfully
Rory Scott Russell
Chief Executive Officer
Contacts
Range Resources Limited Buchanan (Financial PR - UK)
Rory Scott Russell Tim Thompson / Helen Chan
T: +44 (0) 20 7466 5000
E: rangeresources@buchanan.uk.com
GMP Securities Europe LLP (Broker) RFC Ambrian Limited (Nominated Advisor)
Richard Greenfield / Rob Collins / Stuart Laing
Alexandra Carse T: +61 (8) 9480 2500
T: +44 (0) 207 647 2800
PPR (Financial PR -Australia) Dahlman Rose & Company (Principal American Liaison)
David Tasker OTCQX International Market (U.S.)
T: +61 (8) 9388 0944 Christopher Weekes / Stephen Nash
E: david.tasker@ppr.com.au T: +1 (212)-372-5766
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