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25 January 2012
The Manager
Company Announcements
Australian Securities Exchange Limited
Level 6, 20 Bridge Street
Sydney NSW 2000
By e-lodgement
PARTNERSHIP AGREEMENT IN TRINIDAD - amended to link with Leni Gas & Oil Plc
Range Resources Limited ("Range" or "the Company") is pleased to announce the
formation of a partnership with Leni Gas & Oilplc ("LGO") to jointly develop
their interests in the Eastern Fields Area onshore southern Trinidad, including
the Goudron and Beach Marcelle fields.
In a binding Heads of Agreement ("HOA") Range and LGO have agreed that, subject
inter alia to full legal and technical due diligence (see Appendix below for
Conditions Precedent):
* Range will acquire a 30% interest in Goudron E&P Limited ("GEPL") in return
for contributing US$4 million at completion;
* For a further contribution of US$4 million during the first 12 months
following completion Range will increase their holding in GEPL to 50%;
* LGO will operate the Goudron field during the initial work-over phase, but
subject to Range exercising its option to acquire a total of 50% in GEPL,
Range will become operator during the infill drilling and water flood
phases;
* Range will obtain an accelerated return through 75% of the revenue interest
until their initial investment is recovered;
* LGO will have the option to acquire a 15% interest in the Beach Marcelle
waterflood project by contributing 22.5% towards the development costs
(i.e. paying a 50% promote), up to US$7 million, towards the development
costs;
* Range and LGO will work collaboratively to optimise and extend their joint
interests in the Eastern Fields Area in Trinidad.
GEPL, a wholly owned subsidiary of LGO, holds the exclusive rights to purchase
the existing Incremental Production Service Contract ("IPSC") for the Goudron
Field. Range, through its subsidiary Trincan Oil Limited, holds a 100% interest
in the Beach Marcelle IPSC where it has approved the redevelopment of the
existing field production by means of a water-flood.
LGO's Goudron Field was originally developed by Texaco with 150 wells and holds
an estimated 21.8 mmbbls of reserves in proven, probable and possible
categories. The block covers an area of 2,875 acres and produces from the
Goudron and Gros Morne (Cruse equivalent) sandstone formations at depths
between 300 and 3,500 feet. Current production averages below 100 bopd.
An initial work programme involving well work-overs and selected infill wells
is planned to bring Goudron production up to 450-500 bopd funded by the
consideration in this agreement. Additional infill drilling and hydraulic
fracturing of wells is expected to raise production to up to 4,000 bopd.
Further potential exists in deeper reservoirs and through the implementation of
secondary recovery techniques, such as a water-flood. Production from Goudron
will commence on assignment of the IPSC and is expected to rise steeply over
the first 6 months of operations.
Range's Beach Marcelle block covers an area of 624 acres and contains a proven
reserve of 12.8 mmbbls recoverable through secondary production techniques
involving a field-wide water-flood of the producing Forest and Cruse age
sandstones. Beach was also originally developed by Texaco and has produced over
30 mmbbls of oil to date through the drilling of approximately 230 wells. Range
has committed US$12 million over the first 12-18 months of the project which
will commence in 2012. Range expects production from Beach Marcelle to commence
in 2013 and to peak at 5,000 bopd in 2015.
Range also owns and operates a local drilling company with five onshore rigs,
three production / work-over rigs and a swabbing unit. LGO, through its
association with Altech Services Limited, also has access to five further
work-over rigs.
Both Range and LGO also own a range of other interests in Trinidad. LGO holds a
significant exploration land position in the Cedros Peninsular where it also
participates in the Icacos Field with a 50% interest. LGO also has a farm-in to
the North Moruga Field and associated exploration leases where LGO will earn up
to a 49% interest and where drilling is hoped to commence in 2012. Range hold a
100% interest in the Morne Diablo and South Quarry fields where it is engaged
in a 21 well programme to expand production and explore the deeper Lower Cruse
potential in these fields.
The assignment of the Goudron IPSC requires approval by the Trinidad and Tobago
Ministry of Energy and Energy Affairs and it is hoped to conclude that process
during the next few months.
Range's Executive Director, Peter Landau commented:
"This exciting agreement with LGO further enhances our position in Trinidad and
gives us additional access to reserves and production growth, especially in the
short-term whilst the Beach Marcelle water-flood project is ramping up to full
capacity during 2013. The opportunity is of particular importance to Range as
it is in the final stages of choosing an appropriate debt financing facility to
develop the major aspects of our Trinidad operations for the next 18-24 months.
The Goudron Field has enormous potential for increased production and reserves
and by collaborating closely with LGO we anticipate additional benefits and
synergies moving forward."
Neil Ritson, LGO's Chief Executive, commented:
"This agreement marks a turning point in our growth in Trinidad since we now
have access to full funding for the acquisition and the first phase of the
Goudron field re-development. Accessing an equity stake in Beach Marcelle
further diversifies and strengthens our Trinidad portfolio. A close
collaboration with Range offers some significant synergies and we look forward
to working closely to develop further opportunities."
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
Appendix 1
Conditions Precedent
Completion will be subject to the following conditions precedent:
a. completion by Range, to the reasonable satisfaction of the directors of all
necessary due diligence;
b. the passing of such shareholder resolutions as may be necessary by both
Range and LGO to give effect to the transaction;
c. the execution of the formal agreement by the parties;
d. GEPL acquiring the Goudron Field IPSC;
e. LGO and GEPL procuring any necessary third party consents to the
transaction;
f. receipt of all necessary ministerial, government and regulatory approvals
in respect of the transaction;
g. receipt of all applicable waivers of any pre-emption or similar rights in
respect of the assigned interests.
If the Conditions Precedent are not satisfied (or waived by the parties) within
90 days of execution of the HOA (unless extended by the parties) either party
may within 30 days serve written notice to the other and in that event the HOA
will be at an end and the parties released from their obligations under the
HOA. The parties will use their best efforts to ensure that the Conditions are
satisfied.
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 Proved (1P)
reserves in place of 15.4 MMbls with 19.6 MMbls of proved, probable and
possible (3P) reserves and an additional 20 MMbls (mean) 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. 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 undiscovered oil-in-place (on a mean 100% basis) with
the first (Mukhiani-1) of two exploration wells having spudded in July in
2011. Re-interpreted seismic supported by the Mukhiani-1 vertical seismic
profiling has identified new fault and stratigraphic trapping potential
with the possibility of a side track well to be drilled post additional
seismic in 2H 2012.
* In Puntland, Range holds a 20% working interest in two licences
encompassing the highly prospective Dharoor and Nugaal valleys. The
operator and 60% interest holder, Horn Petroleum Corp. (TSXV: HRN) has spud
the first well in a two well programme in early 2012 targeting 300mmbls and
375mmbbls of best estimate Prospective Resources (100% basis). Site
construction has commenced on the second well with the setting of the 30
inch surface casing and the drilling of a 50 meter pilot hole in readiness
for spudding following the completion of the first well.
* Range holds a 25% interest in the initial Smith #1 well and a 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 3P
reserves in place (on a 100% basis) of 242 Bcf of natural gas, 15 mmbbls of
oil and 19 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. The prospect
has independently assessed 3P reserves in place (on a 100% basis) of
3.3mmbbls of oil.
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 information contained in this announcement with respect to the Goudron
Field in Trinidad has been reviewed and approved by Neil Ritson, Chief
Executive Officer and Director for Leni Gas & Oil Plc who has 35 years of
relevant experience in the oil industry. Mr. Ritson is a member of the Society
of Petroleum Engineers, an Active Member of the American Association of
Petroleum Geologists and is a Fellow of the Geological Society of London.
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.
SPE Definitions for Proved, Probable, Possible Reserves and Prospective
Resources
Proved Reserves are those quantities of petroleum, which by analysis of
geoscience and engineering data, can be estimated with reasonable certainty to
be commercially recoverable, from a given date forward, from known reservoirs
and under defined economic conditions, operating methods, and government
regulations.
Probable Reserves are those additional Reserves which analysis of geoscience
and engineering data indicate are less likely to be recovered than Proved
Reserves but more certain to be recovered than Possible Reserves.
Possible Reserves are those additional reserves which analysis of geoscience
and engineering data indicate are less likely to be recoverable than Probable
Reserves.
Prospective Resources are those quantities of petroleum estimated, as of a
given date, to be potentially recoverable from undiscovered accumulations by
application of future development projects. Prospective Resources have both an
associated chance of discovery and a chance of development. Prospective
Resources are further subdivided in accordance with the level of certainty
associated with recoverable estimates assumingtheir discovery and development
and may be sub-classified based on project maturity.
ABN 88 002 522 009
www.rangeresources.com.au
ABN 88 002 522 009
www.rangeresources.com.au
London
Suite 1A, Prince's House, 38 Jermyn Street, London SW1 6DN
t: +44 (0)207 025 7040, f: +44 207 287 8028
Australia
Ground Floor, 1 Havelock Street, West Perth WA 6005, Australia
t: +61 8 9488 5220, f: +61 8 9324 2400
e: admin@rangeresources.com.au
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