Quarterly Activities Report for the period ended 30 June 2017
26 July 2017
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATIONS (EU) NO. 596/2014 ("MAR"). UPON THE PUBLICATION OF THIS ANNOUNCEMENT VIA REGULATORY INFORMATION SERVICE ("RIS"), THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
The Company provides its quarterly activities report for the period ended 30 June 2017.
PRODUCTION AND FINANCIAL SUMMARY
|
Key Performance Metrics |
|
June Quarter Q4 FY17 |
March Quarter Q3 FY17 |
Change % |
|
Total oil production (net to Range) |
bbl |
48,294 |
51,055 |
(5%) |
|
Daily average oil production (net to Range) |
bopd |
531 |
567 |
(6%) |
|
Receipt from sales and debtors |
US$m |
2.3 |
2.5 |
(8%) |
|
Capital expenditure |
US$m |
0.2 |
0.7 |
(71%) |
|
Closing cash position |
US$m |
17.5 |
19.9 |
(12%) |
CORPORATE
Proposed reverse takeover
During the period, Range signed a Sale and Purchase Agreement (the "SPA") with LandOcean Energy Services Co., Ltd ("LandOcean") for the acquisition of 100% of Range Resources Drilling Services Limited ("RRDSL"), an established oilfield services business based in Trinidad (the "Transaction"). The amount of consideration is US$5.5 million due by no later than the date falling three years after completion and is subject to 6% interest per annum. In addition, RRDSL has a loan from LandOcean which totals approximately US$19.5 million ("Existing Debt"). Repayment of the Existing Debt will be due to be made in cash no later than three years from completion date, subject to 6% interest per annum.
The proposed Transaction, if completed would constitute a reverse takeover pursuant to Rule 14 of the AIM Rules for Companies and will be subject to a vote of the Company's shareholders. The Company will convene a General Meeting of Shareholders to consider the Transaction and currently anticipates this will take place during October 2017.
The Company's shares will remain suspended from trading on AIM and ASX pending the publication of an admission document. Once the admission document has been published (anticipated during Q3 2017), the shares are expected to resume trading on AIM and ASX.
Revised repayment terms agreed
During the period, Range reached an agreement with LandOcean to revise the repayment terms on all amounts due from Range to LandOcean (excluding the existing Convertible Bond announced on 31 October 2016). The date for repayment was extended for a new three-year term, meaning therefore that Range has no repayment obligation to LandOcean until April 2020. In addition, LandOcean had agreed to reduce the interest rate on the outstanding amount due from 10% to 6% per annum.
Acquisition strategy
In line with the growth strategy of the Company to create value for shareholders, and to provide Range with additional production and revenue, the Board continues to evaluate potential acquisitions of upstream assets. The Company will update the market accordingly upon any material developments.
American Depository Receipt ("ADR") termination
Subsequent to the period end, as part of continued cost cutting exercise the Company announced its decision to close its ADR programme. Further information for ADR holders can be found on the Bank of New York Mellon website at https://www.adrbnymellon.com/directory/dr-directory.
OPERATIONS - TRINIDAD
The Republic of Trinidad and Tobago was affected by Tropical Storm Bret on 29 and 30 of June 2017. Consequently, Range's production has been negatively affected during the period, mainly due to electrical outages and wells shut-in for safety reasons on its fields. Production operations were quickly and safely resumed after the storm passed and current production (at the date of this announcement) is approximately 600 bopd.
Beach Marcelle waterflood
During the period production at the South East Block of Beach Marcelle field continued at an average rate of 40 bopd and water injection rate of 1,000 bwpd.
In order to increase the water injection rate, the Company signed agreements with Petrotrin to use produced water from their operations, which will increase the rates by a further 700 bwpd. During the period, the Company obtained approvals for a pipeline crossing to access Petrotrin's water supply. The pipeline construction is underway and is expected to be completed and commissioned during August 2017.
Morne Diablo waterflood
During the period, production at the project continued at an average rate of 45 bopd.
To increase the water injection rate by approximately 3,000 bwpd, the Company signed an agreement with Petrotrin to use produced water from Petrotrin's existing operations. The Company would be required to construct a new water pipeline, as well as the gathering and transfer stations to access this additional water supply. Before progressing with this work, the Company made a decision to undertake further injectivity testing on the Morne Diablo field.
Other waterflood projects
During the period, the Company continued injectivity testing on the South Quarry field (the QU 444 area) and is continuing to analyse the results.
Development drilling
During the period, the Company has been evaluating further drilling locations on its acreage. As a result, three new development well locations have been identified on the Morne Diablo field. The Company is preparing drilling approvals for these wells to be submitted to the regulatory bodies and expects to commence drilling operations on the first well in August 2017. The wells will be drilled by RRDSL.
NON-CORE INTERESTS
Georgia
During the period, the Government of Georgia represented by the LEPL State Agency of Oil and Gas of the Ministry of Energy of Georgia (the "Agency"), announced an open international tender on Block VIA in Georgia.
Range believes that any purported relicensing of Block VIA by the Agency would be a flagrant breach of the terms of the Production Sharing Contract over Block VIA (the "PSC"). Range is working with its legal advisers to seek an amicable resolution to this matter and is exploring relevant routes to preserve the value of its investment.
Range holds a 45% interest in Strait Oil and Gas Limited, which is a party to the PSC. As at 31 December 2016, Range had a carried value of US$1.25 million attributed to its interest in the project on its balance sheet.
Guatemala
During the period, Range continued to engage with Latin American Resources ("LAR"), the operating company which holds the Guatemala project interests with an intention to agree a mutually beneficial arrangement to restructure Range's interest in LAR and to accelerate production growth. Range has not yet been able to reach an agreement with LAR. Additionally, despite the contractual arrangements in place, Range has not been able to validly confirm its equity ownership in LAR. Range will continue to seek an acceptable resolution to this investment however, given the lack of title to a shareholding in LAR Range no longer reflects any interest in Guatemala in its petroleum tenements list (Appendix A).
As at 31 December 2016, Range had zero carried value attributed to its investment in LAR on its balance sheet.
Petroleum tenements held at the end of the quarter (Appendix A)
|
Tenement Reference |
Location |
Working Interest |
Operator |
|
Morne Diablo |
Trinidad |
100% |
Range |
|
South Quarry |
Trinidad |
100% |
Range |
|
Beach Marcelle |
Trinidad |
100% |
Range |
|
St Mary's |
Trinidad |
80% |
Range |
|
Guayaguayare Shallow* |
Trinidad |
65% |
Range |
|
Guayaguayare Deep* |
Trinidad |
80% |
Range |
|
Block VIA** |
Georgia |
45% |
Strait Oil & Gas |
Notes:
*Subject to final government approvals (the PSCs expired in July 2015).
**Range disputes the actions of the Georgian government in attempting to re-licence this block to third parties. Range is working with its legal advisers to seek an amicable resolution to this matter and is exploring relevant routes to preserve the value of its investment.
Competent Person statement
In accordance with AIM Rules, Guidance for Mining and Oil & Gas Companies, the information contained in this announcement has been reviewed and approved by Mr Lijun Xiu. Mr Xiu is a suitably qualified person with over 30 years' experience in assessing hydrocarbon reserves, and holds a Bachelor degree in Geological Prospecting. In addition, he holds a number of professional titles, including Reserves Evaluation Specialist from the Ministry of Land and Resources of the People's Republic of China. Mr Xiu is a member of the SPE (Society of Petroleum Engineers). Mr Xiu holds a role of a Vice President of Operations and Production with the Company.
|
Contact details
|
|
|
Range Resources Limited Evgenia Bezruchko (Group Corporate Development Manager) e. admin@rangeresources.co.uk t. +44 (0)20 3865 8430 |
Cantor Fitzgerald Europe (Nominated Advisor and Broker) David Porter / Sarah Wharry (Corporate Finance) David Banks (Corporate Broking) t. +44 (0)20 7894 7000
|
Appendix 5B
Mining exploration entity and oil and gas exploration entity quarterly report
Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16
|
Name of entity |
||
|
Range Resources Limited |
||
|
ABN |
|
Quarter ended ("current quarter") |
|
88 002 522 009 |
|
30 June 2017 |
|
Consolidated statement of cash flows |
Current quarter $US'000 |
Year to date (12 months) |
||
|
1. |
Cash flows from operating activities |
2,254 |
8,323 |
|
|
1.1 |
Receipts from customers |
|||
|
1.2 |
Payments for |
- |
- |
|
|
|
(a) exploration & evaluation |
|||
|
|
(b) development |
(76) |
(791) |
|
|
|
(c) production |
(155) |
(1,799) |
|
|
|
(d) staff costs |
(572) |
(2,759) |
|
|
|
(e) administration and corporate costs |
(403) |
(1,618) |
|
|
1.3 |
Dividends received (see note 3) |
- |
- |
|
|
1.4 |
Interest received |
14 |
78 |
|
|
1.5 |
Interest and other costs of finance paid |
- |
- |
|
|
1.6 |
Income taxes paid |
- |
- |
|
|
1.7 |
Research and development refunds |
- |
- |
|
|
1.8 |
Other (provide details if material) |
- |
- |
|
|
1.9 |
Net cash from / (used in) operating activities |
1,062 |
1,434 |
|
|
|
||||
|
2. |
Cash flows from investing activities |
- |
- |
|
|
2.1 |
Payments to acquire: |
|||
|
|
(a) property, plant and equipment |
|||
|
|
(b) tenements (see item 10) |
- |
- |
|
|
|
(c) investments |
- |
- |
|
|
|
(d) other non-current assets |
- |
- |
|
|
2.2 |
Proceeds from the disposal of: |
- |
- |
|
|
|
(a) property, plant and equipment |
|||
|
|
(b) tenements (see item 10) |
- |
- |
|
|
|
(c) investments |
- |
- |
|
|
|
(d) other non-current assets |
- |
- |
|
|
2.3 |
Cash flows from loans to other entities* |
(3,583) |
(5,144) |
|
|
2.4 |
Dividends received (see note 3) |
- |
- |
|
|
2.5 |
Other (provide details if material) |
- |
- |
|
|
2.6 |
Net cash from / (used in) investing activities |
(3,583) |
(5,144) |
|
|
*Loans to other entities represent amounts advanced to RRDSL pending completion of the acquisition |
||||
|
3. |
Cash flows from financing activities |
- |
- |
|
|
3.1 |
Proceeds from issues of shares |
|||
|
3.2 |
Proceeds from issue of convertible notes |
- |
- |
|
|
3.3 |
Proceeds from exercise of share options |
- |
- |
|
|
3.4 |
Transaction costs related to issues of shares, convertible notes or options |
- |
- |
|
|
3.5 |
Proceeds from borrowings |
- |
- |
|
|
3.6 |
Repayment of borrowings |
- |
- |
|
|
3.7 |
Transaction costs related to loans and borrowings |
- |
- |
|
|
3.8 |
Dividends paid |
- |
- |
|
|
3.9 |
Other (provide details if material) |
- |
- |
|
|
3.10 |
Net cash from / (used in) financing activities |
- |
- |
|
|
|
||||
|
4. |
Net increase / (decrease) in cash and cash equivalents for the period |
19,887 |
21,041 |
|
|
4.1 |
Cash and cash equivalents at beginning of period |
|||
|
4.2 |
Net cash from / (used in) operating activities (item 1.9 above) |
1,062 |
1,434 |
|
|
4.3 |
Net cash from / (used in) investing activities (item 2.6 above) |
(3,583) |
(5,144) |
|
|
4.4 |
Net cash from / (used in) financing activities (item 3.10 above) |
- |
- |
|
|
4.5 |
Effect of movement in exchange rates on cash held |
92 |
127 |
|
|
4.6 |
Cash and cash equivalents at end of period |
17,458 |
17,458 |
|
|
5. |
Reconciliation of cash and cash equivalents |
Current quarter |
Previous quarter |
|
5.1 |
Bank balances |
17,458 |
19,887 |
|
5.2 |
Call deposits |
- |
- |
|
5.3 |
Bank overdrafts |
- |
- |
|
5.4 |
Other (provide details) |
- |
- |
|
5.5 |
Cash and cash equivalents at end of quarter (should equal item 4.6 above) |
17,458 |
19,887 |
|
6. |
Payments to directors of the entity and their associates |
Current quarter |
|
6.1 |
Aggregate amount of payments to these parties included in item 1.2 |
163 |
|
6.2 |
Aggregate amount of cash flow from loans to these parties included in item 2.3 |
- |
|
6.3 |
Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2 |
|
|
Directors' fees and Directors' consulting fees
|
||
|
7. |
Payments to related entities of the entity and their associates |
Current quarter |
|
7.1 |
Aggregate amount of payments to these parties included in item 1.2 |
- |
|
7.2 |
Aggregate amount of cash flow from loans to these parties included in item 2.3 |
- |
|
7.3 |
Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2 |
|
|
-
|
||
|
8. |
Financing facilities available |
Total facility amount at quarter end |
Amount drawn at quarter end |
||||||||||||||||||
|
8.1 |
Loan facilities |
20,000 |
20,000 |
||||||||||||||||||
|
8.2 |
Credit standby arrangements |
- |
- |
||||||||||||||||||
|
8.3 |
Other (please specify) |
- |
- |
||||||||||||||||||
|
8.4 |
Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well. |
||||||||||||||||||||
|
The details of the US$20.0m loan facility are as follows:
|
|||||||||||||||||||||
|
9. |
Estimated cash outflows for next quarter |
$US'000 |
|
9.1 |
Exploration and evaluation |
|
|
9.2 |
Development |
86 |
|
9.3 |
Production |
904 |
|
9.4 |
Staff costs |
572 |
|
9.5 |
Administration and corporate costs |
517 |
|
9.6 |
Other (provide details if material)* |
2,615 |
|
9.7 |
Total estimated cash outflows |
4,694 |
* Loan to RRDSL pending completion of the acquisition
|
10. |
Changes in tenements |
Tenement reference and location |
Nature of interest |
Interest at beginning of quarter |
Interest at end of quarter |
|
10.1 |
Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced |
Block 1-2005, Guatemala*
|
- |
20%
|
Nil
|
|
10.2 |
Interests in mining tenements and petroleum tenements acquired or increased |
- |
- |
- |
- |
* Range is unable to verify its contractual right to ownership of shares in LAR, so has chosen to remove this from its list of tenements.
Compliance statement
1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.
2 This statement gives a true and fair view of the matters disclosed.
Sign here: Date: 25 July 2017
Director
Print name: Yan Liu
Notes
1. The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.
2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.
3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.