Range ups Guatemala stake

Range Resources has increased its stake in its Guatemalan operations as associate Citation Resources announced plans to drill a new Atzam well in the country.

A debt-conversion agreement between the two companies will convert all loans and interest owed to Range into direct equity in Australia-listed Citation and the transfer of a 10% working interest in Latin American Resources. Range will therefore hold a 19.9% interest in Citation and a 20% interest in Latin American, which owns the Guatemalan licences.

The agreement came about as a result of the decision to spud the Atzam #5 development well, which is planned for September.

The companies are also awaiting an updated well reserve report on the Atzam #4 well, which currently has an estimated probable reserve of 2.3 million barrels.

Atzam #4 is producing oil at rates of between 130 and 140 barrels of oil per day (bopd), with plans to increase production once storage issues have been resolved.

Latin American said it was "in advanced negotiations" with several companies for off-take contracts for the oil produced by Atzam #4.

Range also updated the market on the Tortugas Salt Dome project, its second Guatemalan licence. There are plans to complete two well re-entries at the project, with the potential for six new well locations.

Analyst view

Zac Philips, an analyst at broker Fox-Davies, described the news as "a welcome lift for Range as it provides the company with further exposure to near to medium-term cash-generating assets, which in turn will support its development of assets elsewhere in its portfolio.

"With a full field reserves upgrade from 2.4 million barrels likely, we believe that the timely investment in Citation will represent a substantial increase on value for the company."