Quarterly Activities Report ending 30 September...
31 October 2011
QUARTERLY REPORT FOR PERIOD ENDING 30 SEPTEMBER 2011
Issued Capital 1,803m* ASX Code RRS Closing price $0.16*
Market Capital A$288m* AIM Code RRL Closing Price £0.1075*
* as at 30 September 2011
Gross Production for the Quarter
Gas 446k mcf Range Interest - 97k mcf
Oil 77,706 bbls Range Interest - 51,146 bbls
The Board of Range Resources Limited ("Range" or "the Company") is pleased to
provide the following commentary to be read in conjunction with the Appendix 5B
(Quarterly Cash Flow Report) which is attached.
Trinidad
Following the successful completion last quarter of the acquisition of three
production licences in producing onshore oilfields and significant local
onshore drilling operations in Trinidad, the Company successfully commenced its
initial 21 development well programme. This programme is utilising 3 of the
Company's rigs, targeting a significant increase in current production, an
increase and re-classification of reserves along with extending the limits of
the existing fields.
Two wells have been successfully completed, MD 247 and QUN 115, with the QUN
116 and QUN 117 wells nearing completion using two of the Company's rigs. The
third rig, Rig 8, is currently being rigged up on location and is expected to
commence operations shortly, following Ministerial approval. The first 2 wells
were shallow "in fill" (replacement) wells with production rates scheduled to
increase significantly with the additional 15 step out wells and 2 in-fill
wells that are planned to be drilled. The first Rig 8 well is targeting the
deeper reservoirs, including the Middle and Lower Cruse oil sands with target
depths averaging 6,500ft. The Middle and Lower Cruse reservoirs have
historically been the most prolific within the existing fields, but are
underdeveloped in certain areas. The Range drilling program is expected to add
reserves and production from these sands within the existing fields, while
extending the production trend into new areas.
Rig 8 is the third and last drilling rig to be introduced into the 2011
drilling program with the Company looking to introduce other drilling and
completion rigs into the fleet in early 2012 to further accelerate drilling and
production increases. The ability to develop reservoirs from deeper objectives
will become an increasing focus as the Company tests other known producing
horizons such as the Herrera formation.
The Company is expecting to release details of an upward revision of its Proved
(P1) Reserves in Trinidad shortly. The revised reserve estimates have been
calculated and the details will be released once the announcement has been
approved by the Trinidadian regulatory authority. The upward revisions follow
better than expected drilling results from the Company's initial 2011 drilling
program, along with recently completed engineering studies of secondary
recovery potential in the Beach Marcelle Block. The engineering review,
performed by the Company's Dallas-based reserve auditor Forrest A. Garb &
Associates, confirmed that significant volumes of crude remain in the Beach
Marcelle field that can be produced using standard secondary recovery
techniques such as water flooding.
It is worth noting that the operations in Trinidad have scaled up significantly
in preparation of both increased production and new developments. The project
is now a 24 hour operation with over 70 new staff employed to assist with the
development program.
Georgia
During the quarter, the Company, along with its joint venture partners, Strait
Oil & Gas (UK) Limited ("Strait") and Red Emperor Resources NL ("Red Emperor")
spudded the Mukhiani Well on the Vani 3 Prospect.
Drilling operations continued during the current quarter with the well having
reached a depth of 1,550m. A full suite of wireline logs has been successfully
recorded and additional valuable information has been obtained through the
successful collection of 10 sidewall cores from critical intervals. A Vertical
Seismic Profile (VSP) survey was completed on the well with the Company then
commencing to flow test two zones of interest whilst waiting for VSP
interpretation results. The first test (open hole flow test) at 720m - 768m did
not flow with a second test (perforation formation flow test at 330 - 370m) to
be undertaken.
The VSP interpretation results will confirm whether or not the current zone of
hard rock that the well has reached is basement rock or a volcanic overthrust.
This current depth is significantly shallower than the initially planned total
depth (of approximately 3,500 m) to the primary objective based on surface
seismic interpretation. If the VSP interpretation confirms the rock encountered
is indeed basement, drilling will not continue with preparations to commence
for the drilling of the second exploration well, the Kursebi 2, while if it
indicates it is a volcanic overthrust, a decision will be made whether to
proceed drilling after reassessing the likely lithography and target potential.
Puntland
During the quarter the operator of the Puntland Project, Africa Oil Corp
("Africa Oil"), signed a landmark drilling contract with Sakson Drilling and
Oil Services who will provide a 1,500 horse-power, top drive drilling rig to
drill two highly anticipated exploration wells in Puntland, Somalia.
All subsequent drilling-related third party service contracts were entered into
with the mobilisation of required personnel and equipment commencing during the
quarter to allow for the expected spudding of the first well during the current
quarter of this year.
Drilling locations have been selected over two robust prospects targeting total
gross best estimate Prospective Resources of 675 million barrels of oil (with
135 million barrels of oil net attributable to Range). The first prospect,
Shabeel-1, is targeting Prospective Resources of in excess of 300 million
barrels of oil (with 60 million barrels net to Range).
Texas
North Chapman Ranch
During the quarter, the second location in the Company's two well program, on
the North Chapman Ranch Project, was confirmed with spudding occurring
subsequent to quarter-end. The Smith #2 well will be an offset to the existing
Smith #1 well and has been categorised as a proved undeveloped location.
Drilling to date has reached 10,500 ft with a significant show in the Manley
section (at 10,000 ft) having been logged, representing another productive
interval, in addition to the expected primary field pay zones. It is expected
that the well will reach an intermediate pipe point in the coming days, at
which time it will be logged to this intermediate depth and 9 5/8" casing run
before drilling ahead to total well depth of 14,000 ft.
Once the Smith #2 well is successfully completed the rig is expected to move to
the Albrecht #1 well site, a step-out well that is intended to extend the North
Chapman Ranch field to the south east with the objective of adding significant
reserves, production and cashflow. Should the Smith #2 and Albrecht #1 wells
prove successful; the partners will jointly consider a multi-well program for
2012 that could see as many as four additional wells drilled in the field.
As previously reported, the successful drilling of the third and fourth wells
on North Chapman is expected to lead to a reclassification of the Company's
reserves from the possible category to the higher confidence proved and
probable categories.
Leading Petroleum Consultants, Lonquist & Co LLC's independent reserves report
has estimated the following gross commercially recoverable reserves from the
North Chapman Ranch Field:
Category Natural Gas Oil (Mmbbls) Natural Gas
(Bcf) Liquids (M
mbbls)
Proved (P1) 62.4 4.8 4.5
Probable (P2) 34.6 2.7 2.5
Possible (P3) 142.5 10.9 10.3
Total Reserves 239.5 18.4 17.3
Set out below is Range's attributable interest in the gross recoverable
reserves on 25% of the Smith #1 well and on 20% of the remaining wells assuming
the exercise of certain clawback provisions by joint venture partners occurs
following the success of the Smith #1 and Russell-Bevly wells:
Category Natural Gas Oil (Mmbbls) Natural Gas
(Bcf) Liquids (M
mbbls)
Proved (P1) 12.7 1.0 0.9
Probable (P2) 6.9 0.5 0.5
Possible (P3) 28.5 2.2 2.1
Total Reserves 48.1 3.7 3.5
East Texas Cotton Valley Prospect
The operator resumed testing of the Ross 3H horizontal wells with additional
perforations being added between 7,245 and 7,675 feet in the horizontal
section. Swabbing operations have commenced that are looking to confirm oil
saturation and will be followed by additional horizontal sections being
perforated and swabbed, before the commencement of fraccing operations to the
reservoir.
Lonquist & Co LLC's independent reserves report has estimated the following
gross commercially recoverable oil reserves from the East Texas Cotton Valley
Prospect (operated by Range's private US partner):
Oil (Mmbbls)
Reserves Category Gross Net Attributable
(100%) to Range
(21.75%)
Proved (P1) 1.5 0.33
Probable (P2) 2.7 0.59
Possible (P3) 5.4 1.17
Total Reserves 9.6 2.09
Corporate
Strategic Investment
During the quarter the Company completed a strategic investment in Tangiers
Petroleum Limited ("Tangiers", ASX:TPT). Tangiers is an ASX listed exploration
company which has a portfolio of two potentially world class oil and gas
projects located in Morocco and Australia.
Tangiers Moroccan assets include the highly prospective offshore Tarfaya block.
Netherland, Sewell & Associates conducted an independent review of the first
four prospects on this block and concluded a best estimate prospective resource
of approximately 870 Million Barrels, and a high estimate of almost 5 Billion
Barrels.
Tangiers has since mapped numerous other prospects in Tarfaya which are
expected to add significantly to the existing prospective resource estimates.
Tangiers holds 75% equity in Tarfaya and intends to farm down its interests in
the near term. It is anticipated that a 3D campaign and two wells will be
drilled in 2012.
In Australia, Tangiers holds a 90% interest in the significant Nova and Super
Nova gas prospects located offshore Northern Australia. These structures are
extremely large with a physical closure of approximately 240km2 each. Initial
volumetrics indicate a P90 size of 70 Tcf for the combined structures. These
structures are located near an existing and proposed LNG terminal in Darwin in
what is regarded as a growing global gas and LNG hub. Tangiers expects to
acquire further seismic and drill two wells in Australia in 2012.
Due to strong European investor interest Tangiers is planning to dual list on
the AIM market during 2011. RFC Corporate Finance has recently been appointed
as the company's Nomad and planning is well underway.
Range subscribed for 5 million shares at AUD $0.40 for a placement of AUD$2m
and has seen the value of this investment increase significantly to the date of
this report.
Capital Raisings
During the quarter the company completed a US$15m placement of shares and
options to Socius CG II, an established and highly successful United States
based investment group and wholly-owned subsidiary of Socius Group ("Socius"),
with the share placement price being at a 10% premium to the Company's share
price at the time of the placement.
The Company also raised circa $400k through the exercise of circa 7.8m $0.05
options during the quarter and also increased its existing credit facility with
First Columbus by £30m.
Appendix 5B Summary - Consolidated Statement of Cashflow
Current Quarter Year to date
$A'000 (3 months)
A$'000
Cashflows related to operating activities
Receipts from product sales and related 6,744 6,744
debtors
Payments for:
* exploration and evaluation (5,947) (5,947)
* development (907) (907)
* production (4,215) (4,215)
* administration (2,570) (2,570)
Dividends received - -
Interest and other items or a similar nature 106 106
received
Interest and other costs of finance paid - -
Taxes paid (753) (753)
Other - -
Net operating cashflow (7,542) (7,542)
Cashflows related to investing activities
Payments for the purchase of:
* prospects (4,199) (4,199)
* equity investments (2,000) (2,000)
* other fixed assets (118) (118)
Proceeds from the sale of:
* prospects - -
* other fixed assets - -
Loans to other entities - -
Other - net cash acquired on acquisition of 628 628
subsidiary
Net investing cashflows (5,689) (5,689)
Cashflows related to financing activities
Proceeds from issue of shares, options etc. 15,763 15,763
Proceeds from sale of forfeited shares - -
Proceeds from borrowings - -
Repayment of borrowings - -
Dividends paid - -
Costs associated with issue of shares (refer (766) (766)
to note)
Net financing cashflows 14,997 14,997
Net increase / (decrease) in cash held 1,766 1,766
Cash at the beginning of the quarter / year to 17,360 17,360
date
Exchange rate adjustments - -
CASH AT THE END OF THE QUARTER 19,126 19,126
Yours faithfully
Peter Landau
Executive Director
Contacts
Range Resources Limited
Peter Landau
Tel : +61 (8) 8 9488 5220
Em: plandau@rangeresources.com.au
Australia London
PPR Tavistock Communications
David Tasker Ed Portman/Paul Youens
Tel: +61 (8) 9388 0944 Tel: + 44 (0) 20 7920 3150
Em: david.tasker@ppr.com.au Em: eportman@tavistock.co.uk
RFC Corporate Finance (Nominated Advisor) Old Park Lane Capital (Joint Broker)
Stuart Laing Michael Parnes
Tel: +61 (8) 9480 2500 Tel: +44 (0) 207 493 8188
Panmure Gordon (Joint Broker)
Katherine Roe / Brett Jacobs
Tel: +44 (0) 207 459 3600
Range Background
Range Resources Limited is a dual listed (ASX: RRS; AIM: RRL) oil & gas
exploration company with oil & gas interests in the frontier state of Puntland,
Somalia, the Republic of Georgia, Texas, USA and Trinidad.
* In Trinidad Range recently completed the acquisition of a 100% interest in
holding companies with three onshore production licenses and fully
operational drilling subsidiary. Independently assessed gross recoverable
3P reserves in place of 6.9 MMbls (on a mean 100% basis) with an additional
20 MMbls of prospective resources.
* In the Republic of Georgia, Range holds a 40% farm-in interest in onshore
blocks VIa and VIb, covering approx. 7,000sq.km. Currently, Range has
recently completed a 410km 2D seismic program with independent consultants
RPS Energy identifying 68 potential structures containing an estimated 2
billion barrels of oil-in-place (on a mean 100% basis) with the first of
two exploration wells having spudded in July in 2011.
* In Puntland, Range holds a 20% working interest in two licences
encompassing the highly prospective Dharoor and Nugaal valleys with the
operator and 45% interest holder, Africa Oil Corp (TSXV: AOI) planning to
commence the two well programme in 2011 (targeting (on a mean 100% basis)
300mmbls and 375mmbbls of best estimate gross recoverable oil in place)
following the recent awarding of the rig contract.
* Range holds a 25% interest in the initial Smith #1 well and 20% interest in
further wells on the North Chapman Ranch project, Texas. The project area
encompasses approximately 1,680 acres in one of the most prolific oil and
gas producing trends in the State of Texas. Drilling of the first well has
resulted in a commercial discovery with independently assessed gross
recoverable reserves in place (on a mean 100% basis) of 240 Bcf of natural
gas, 18 mmbbls of oil and 17 mmbbls of natural gas liquids.
* Range holds a 21.75% interest in the East Texas Cotton Valley Prospect in
Red River County, Texas, USA, where the prospect's project area encompasses
approximately 1,570 acres encompassing a recent oil discovery.
Independently assessed gross recoverable reserves in place (on a mean 100%
basis) of 5.4 mmbbls of oil.
The reserves estimate for the North Chapman Ranch Project and East Texas Cotton
Valley has been formulated by Lonquist & Co LLC who are Petroleum Consultants
based in the United States with offices in Houston and Austin. Lonquist
provides specific engineering services to the oil and gas exploration and
production industry, and consults on all aspects of petroleum geology and
engineering for both domestic and international projects and companies.
Lonquist & Co LLC have consented in writing to the reference to them in this
announcement and to the estimates of oil, natural gas and natural gas liquids
provided. These estimates were formulated 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 reserves estimates for the 3 Trinidad blocks 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.
RPS Group is an International Petroleum Consulting Firm with offices worldwide,
who specialise in the evaluation of resources, and have consented to the
information with regards to the Company's Georgian interests in the form and
context that they appear. These estimates were formulated in accordance with
the guidelines of the Society of Petroleum Engineers ("SPE").
The prospective resource estimates for the two Dharoor Valley prospects are
internal estimates reported by Africa Oil Corp, the operator of the joint
venture, which are based on volumetric and related assessments by Gaffney,
Cline & Associates.
In granting its consent to the public disclosure of this press release with
respect to the Company's Trinidad operations, Petrotrin makes no representation
or warranty as to the adequacy or accuracy of its contents and disclaims any
liability that may arise because of reliance on it.
Forward Looking Statements
Certain statements contained in this announcement, including information as to
the future financial or operating performance of Range Resources Limited and
its projects, are forward–looking statements. Such forward–looking statements:
* are necessarily based upon a number of estimates and assumptions that,
while considered reasonable by Range Resources Limited, are inherently
subject to significant technical, business, economic, competitive,
political and social uncertainties and contingencies;
* involve known and unknown risks and uncertainties that could cause actual
events or results to differ materially from estimated or anticipated events
or results reflected in such forward–looking statements; and
* may include, among other things, statements regarding targets, estimates
and assumptions in respect of production and prices operating costs
production prices, and results, capital expenditures, reserves and
resources and anticipated flow rates, and are or may be based on
assumptions and estimates related to future technical, economic, market,
political, social and other conditions.
Range Resources Limited disclaims any intent or obligation to update publicly
any forward–looking statements, whether as a result of new information, future
events or results or otherwise.
The words "believe", "expect", "anticipate", "indicate", "contemplate",
"target", "plan", "intends", "continue", "budget", "estimate", "may", "will",
"schedule" and similar expressions identify forward–looking statements.
All forward–looking statements made in this presentation are qualified by the
foregoing cautionary statements. Investors are cautioned that forward–looking
statements are not guarantees of future performance and accordingly investors
are cautioned not to put undue reliance on forward–looking statements due to
the inherent uncertainty therein
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