Quarterly Report Period Ending 30 June 2011

QUARTERLY REPORT FOR PERIOD ENDING 30 JUNE 2011                

 

                                                                
                                                                
Issued Capital      1,707 M *    ASX Code RRS    Closing price $0.23* 
                                                                
                                 AIM Code RRL    Closing Price £0.16 *
                                                                
Market Cap          A$395m*                                     
                                                                
*as at 30 June 2011                                             
                                                                

 

Gross Production for the Quarter                            
                                                            
Gas      440k mcf                Range Interest - 95k mcf   
                                                            
Oil      36,718 bbls            Range Interest - 7,863 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

During the quarter, the Company completed the acquisition of a 100% ownership
interest, through SOCA Petroleum, in the holding and subsidiary companies that
hold three production licences in producing onshore oilfields in Trinidad and
significant local onshore drilling operations.

The production acreage and operating wells cover the Morne Diablo, Beach
Marcelle and South Quarry oilfields, with the total acreage covering 16,253
gross acres on the southern coast of onshore Trinidad. Current production from
the fields is 600-700 bopd, however Range believes a minimal work program could
lift production to more than 4,000 bopd within 24-36 months on the known
reserves.

In addition to the production licences for theonshore acreage, the Range
acquisition also included a 100% interest in a wholly owned drilling company
(located in Trinidad), which owns 5 onshore drill rigs, 3 production rigs, 1
swab rig, storage tanks, a pipe yard and operating facilities that include a
workshop and a fabrication welding machine shop.

Over and above the known reserves, significant potential exists in the deeper
Herrera Formation (refer below). The Deeper Herrera Formation will be a primary
target of future exploration drilling using company-owned drilling rigs, which
are capable of reaching the depth of these formations.  Subject to the
successful drill testing of this formation, the Company is ultimately targeting
an increase in the production levels to between 8,000 - 10,000 bopd.

 

An independent recoverable reserves assessment by Forrest A. Garb & Associates1
(completed early 2010) has provided the following certified Reserves and
Resources for the 3 blocks (note: the report does not provide an assessment of
the Deeper Herrera Formations referred to above).

                                    Oil and Condensate (MMbbl) (100%)
                                    Recoverable                      
                                                                     
Proved Reserves*                                   2.6               
                                                                     
Probable Reserves                                  2.2               
                                                                     
Possible Reserves                                  2.1               
                                                                     
Total Reserves (3P)*                               6.9               
                                                                     
Prospective Resources (Undeveloped)                20                
                                                                     

*Net Reserves take into account payment of government royalty and overriding
revenue interests.

The planned production doesn't take into account exploration upside with
significant potential from the deeper 'Herrera Formations' which host
substantial producing reserves on adjacent blocks, with 10 Herrera Formation
Targets already mapped with extensive 3D Seismic existing on SOCA's three
onshore licences. Range has commissioned a revised independent report following
reprocessing of the Herrera seismic.

Subsequent to quarter-end, in less than 2 months from the acquisition of 100%
of the Trinidad assets, the Company has commenced its 21 development well
program utilizing 3 of the Company's rigs and is targeting an increase in
production to between 1,400-1,800 bopd, and an increase and reclassification of
reserves along with extending the limits of the existing fields.

Rig 1 was recently inspected and re-certified for drilling  by the Ministry of
Energy and has been mobilized to spud in the coming days, Rig 2 is due for
inspection and re-certification this week, soon followed by Rig 3, with both
then immediately mobilized to join Rig 1 in the development well 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")
commenced mobilisation in readiness for the spudding the joint venture's first
highly prospective exploration well - Mukhiani in Block Vla in Georgia.

The Mukhiani 1 Well is targeting the Vani 3 prospect which has the following
estimated potential undiscovered stock tank oil initially-in-place ("STOIIP"):

Vani3 Prospect -undiscovered STOIIP* (MMbbls)                            
                                                                         
                                              P90    P50    P10    Mean  
                                                                         
Gross                                        41.7   92.7   178.2   115.2 
                                                                         
Net Attributable to Range (40%)             16.7    37.1   71.3    46.1  
                                                                         

*STOIIP shown here assumes that the Vani 3 Prospect contains 3 stacked
reservoirs based on current stratigraphic understanding. Any given well may
encounter 1, 2, or 3 such potential reservoirs depending on the degree of
relative uplift and/or erosion at any given Prospect location.

 

 

The recently completed geochemical helium survey undertaken by Range confirmed
the suitability of the first drill location with oil exploration and
development prospectivity complementing the earlier seismic work completed on
the target.

Subsequent to quarter-end the rig arrived in country and on site and
successfully spudded mid-July. As recently announced, the Mukhiani 1 well was
progressing as planned with the lithology encountered being in line with
expectations (derived from seismic interpretations and analysis) with the aim
to reach 700m before casing would be set and logging performed.

Following the successful completion of the Mukhiani 1 well, the rig will then 
move on to spud the Company's second exploration well as part of the two well 
highly prospective drilling program in Georgia.

Puntland

During the quarter, Range's joint venture partner and Operator of the Puntland
joint venture, Africa Oil Corp. ("Africa Oil") announced the execution of a
letter of intent with a drilling subcontractor paving the way for the
mobilisation and drilling of the first milestone well in Q3 2011. Africa Oil
continued with negotiations with the Puntland Government on various items in
readiness for the historic well.

Range has agreed with its joint venture partner and operator Africa Oil that
the second exploration well, will be included as part of Africa Oil's
exploration commitments under the Joint Venture Agreement between Range and
Africa Oil.

Under this agreement, Africa Oil is obliged to spend US$22.5m in both Dharoor
and Nugaal before Range reverts on a contributing basis.

Africa Oil has satisfied its commitments with respect to Dharoor, however to
date, still has circa US$15m of expenditure commitments on Nugaal. With the
second well being able to satisfy the joint ventures obligations under the
Nugaal PSA, Range will be carried for the first US$15m spent on the well.

Africa Oil is continuing with finalising the appointment of drilling
contractors and it is Range's expectation that the appointment will occur
shortly allowing mobilisation to commence for the well in Dharoor during Q3
2011.

 

Texas

North Chapman Ranch

As reported above, production for the quarter was 95k mcf of gas and 7,863
barrels of oil net to Range, which was a significant increase from the previous
quarter as a result of the successful fracture stimulation of both the Smith #
1 and Russell Bevly wells. Since the fracture stimulation jobs were initiated
on these two wells, gross combined rates from the field hit a high of 9.3 MMcf
of gas and 800 bbl of oil per day during the month of March. During the
quarter, remedial work was performed on the Company's Smith #1 well with
production tubing being installed and subsequently completed, with the Smith #1
well back online.

In addition to the two existing wells in the field, Operator Western Gulf Oil &
Gas reports that it has signed a contract for a drilling rig to drill a third
well in the field, currently scheduled for mid-October.  The contract for the
rig provides Range and its partners with an option to drill a follow up well,
with no penalty if a second well is not drilled.  Discussions as to the
location of a second 2011 well (Range's fourth in the project) are currently
underway.

 

As previously reported, the successful drilling of the third and fourth wells
on North Chapman will look to reclassify the Company's reserves from the
possible category to the high confidence proved and probable category.

Leading Petroleum Consultants, Lonquist & Co LLC's independent reserves report
has estimated the following gross commercially recoverable reserves from the
North Chapman Ranch Field:

 

                    Natural Gas         Oil              Natural Gas Liquids   
                   (Bcf)              (Mmbbls)                (Mmbbls)         
Category                                                                       
                                                                               
Proved (P1)         62.4                 4.8                     4.5           
                                                                               
Probable            34.6                 2.7                     2.5           
(P2)                                                                           
                                                                               
Possible           142.5                10.9                    10.3           
(P3)                                                                           
                                                                               
Total              239.5                18.4                    17.3           
Reserves                                                                       
                                                                               

 

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:  

 

                    Natural Gas         Oil              Natural Gas Liquids   
                   (Bcf)              (Mmbbls)                (Mmbbls)         
Category                                                                       
                                                                               
Proved (P1)         12.7                 1.0                     0.9           
                                                                               
Probable            6.9                  0.5                     0.5           
(P2)                                                                           
                                                                               
Possible            28.5                 2.2                     2.1           
(P3)                                                                           
                                                                               
Total               48.1                 3.7                     3.5           
Reserves                                                                       
                                                                               

 

East Texas Cotton Valley Prospect

In the Company's East Texas Cotton Valley project, the Company successfully
reached target depth on the Ross 3H well at a total measured depth of 8,900 ft.
and cased the well to this total depth. Completion work was then commenced and
continues with open hole logs, sidewall cores, and mud logs all indicating good
porosity and oil saturation throughout the approximately 3,400 ft. horizontal
section.

Prior to initiating hydraulic fracturing operations in the reservoir section,
the Operator of the project perforated two sections near the northern terminus
of the lateral and swabbed in fluids in order to confirm oil productivity. In
both cases, swabbing runs yielded water. Because the project area is adjacent
to an oil field that is currently undergoing water injection as part of a
secondary recovery effort (water flooding), there is a strong likelihood that
neighboring operations have pushed injected water into the Company's acreage.
Water samples are currently being analyzed to determine whether or not this is
the case. Regardless of the outcome of the tests, over 2,250 feet of horizontal
section remain to be tested before final results are known.

Range remains optimistic about the probability of success in East Texas. Added
Pete Landau, Range's Executive Director, "The Ross 3H is a direct offset to a
known producing well and has a horizontal section that terminates near a well
that has produced over 70,000 barrels to date. We have every reason to believe
that the Ross will be successfully completed as a producer. In the meantime,
Range, along with its partners, is taking the proper steps to identify the
source of the water in order to adjust the Ross 3H completion and its
development drilling program going forward".

 

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)      
                                         
                  Gross    Net Attributable
Reserves Category (100%)   to Range     
                             (21.75%)    
                                         
                                         
Proved (P1)        1.5         0.33      
                                         
Probable (P2)      1.2         0.26      
                                         
Possible (P3)      2.7         0.59      
                                         
Total Reserves     5.4         1.18      
                                         

  

Corporate

During the quarter the Company successfully completed a capital raising net the
Company $49m before costs with the majority of the money used for the
acquisition of the 100% interest in the Trinidad assets as referred to above.
The Company also raised $1.1m through the exercise of options.

 

Appendix 5B Summary - Consolidated Statement of Cashflow

                                                           Current Year-to-date
                                                           Quarter  (12 months)         
                                                             $A'000     A$'000             
                                                                                      
Cashflowsrelated to operating activities                                       
                                                                               
Receipts from product sales and related debtors                759        1,814
                                                                               
Payments for:                                                                  
                                                                               
        -     exploration and evaluation                   (3,512)     (19,656)
                                                                               
        -     development                                    (188)      (2,515)
                                                                               
        -     production                                     (447)      (1,069)
                                                                               
        -     administration                               (2,212)      (4,672)
                                                                               
Dividends received                                               -            -
                                                                               
Interest and other items or a similar nature                   170          400
received                                                                       
                                                                               
Interest and other costs of finance paid                     (278)        (453)
                                                                               
Income taxes paid                                                -            -
                                                                               
Other                                                            -            -
                                                                               
                             Net operating cashflow       (10,884)     (26,151)
                                                                               
Cashflowsrelated to investing activities                                       
                                                                               
Payments for the purchase of:                                                  
                                                                               
        -     prospects                                   (48,504)     (51,108)
                                                                               
        -     equity instruments                             (380)        (380)
                                                                               
Proceeds from the sale of:                                                     
                                                                               
        -     prospects                                          -            -
                                                                               
        -     other fixed assets                                 -            -
                                                                               
Loans to other entities                                          -            -
                                                                               
Other                                                            -            -
                                                                               
                            Net investing cashflows       (48,884)     (51,488)
                                                                               
Cashflowsrelated to financing activities                                       
                                                                               
Proceeds from issue of shares, options etc.                 51,045       90,640
                                                                               
Proceeds from sale of forfeited shares                           -            -
                                                                               
Proceeds from borrowings                                         -            -
                                                                               
Repayment of borrowings                                          -            -
                                                                               
Dividends paid                                                   -            -
                                                                               
Costs associated with issue of shares                      (2,720)      (3,039)
                                                                               
                            Net financing cashflows         48,325       87,601
                                                                               
             Net increase / (decrease) in cash held        (6,267)        9,962
                                                                               
Cash at the beginning of the quarter / year to date         23,627        7,398
                                                                               
Exchange rate adjustments                                        -            -
                                                                               
                                                                               
                                                                               
CASH AT THE END OF THE QUARTER                              17,360       17,360
                                                                               

  

Yours faithfully

 

 

Peter Landau

Executive Director

 

 

Contacts

Range Resources

Peter Landau

Tel:       [phone]

Em:        [e-mail]



Australia                                 London                          
                                                                          
PPR                                       TavistockCommunications         
                                                                          
David Tasker                              Ed Portman/Paul Youens          
                                                                          
Tel:    [phone]                 Tel:     [phone]   
                                                                          
Em:    [e-mail]            Em:     [e-mail]
                                                                          
                                                                          
                                                                          
RFC Corporate Finance (Nominated Advisor) Old Park Lane Capital (Broker)  
                                                                          
Stuart Laing                              Michael Parnes                  
                                                                          
Tel:     [phone]                Tel:       [phone] 
                                                                          

  
Range Background

 

Range Resources 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.

 

- 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, with 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.

 

- 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 drill two wells in
2011.

 

- 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 and estimated 2 billion barrels
of oil-in-place (on a mean 100% basis) with the first of two exploration wells
to be drilled in 2011 having spud in July.

 

- 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 6.9MMbls (on a mean 100% basis).

 

 

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 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").

 

 

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;

 involveknown 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