NASSIR Posted January 7, 2009 Range's fortunes in Puntlanders' hands Jan 7, 2009 - 2:55:23 AM IT IS typical for a rights issue prospectus to be accompanied by a long list of potential risk factors for investors to consider. But those factors usually involve issues such as timing and future financing rather than "acts of piracy" and "a high risk the company would not be able to effectively and legally enforce any of its rights under its agreement". Unless, of course, the company is Range Resources, an oil and gas explorer in Somalia's semi-autonomous state of Puntland. Range is seeking to raise about $3 million through a rights issue of options to help cover ongoing exploration costs and working capital, amid the expectation its Canadian joint venture partner, Africa Oil, will drill two wells this year following delays last year. The plans are not set in stone. Range does not plan to mail its prospectus to shareholders until January 20, as it is awaiting the outcome of Puntland's presidential election this weekend. The company claimed it was "confident of the re-election of current President [Mohamud Musse] Hersi" who signed the initial agreement giving Range exclusive mineral and oil rights to Puntland in 2005. The presidential race initially drew about 35 candidates, but the two main challengers to Mr Hersi's rule appear to be General Abdullahi Ahmed Ilkajir, and the opposition leader, Abdirahman Mohamed Farole. Mr Farole, a doctoral candidate in the history department at La Trobe University, returned to Puntland in November after two years in Melbourne. He has been an outspoken critic of Range's rights to Puntland's resources since the initial agreement was signed. In contrast, Mr Hersi's government has in the past received funding from Range and provides the company with armed security guards when its executives visit the region, which is often a staging ground for offshore pirates and onshore kidnappings of Westerners. Range will require extra protection for a planned offshore seismic survey that has already been delayed. "We don't deal with any of the opposition leaders," said Range's executive director, Peter Landau. "From our perspective, Hersi getting back in is very important." Also important is Africa Oil's ability to fund the joint venture's ongoing exploration efforts. Africa Oil is spending $US45.5 million ($64 million) on exploration of two onshore blocks to earn an 80 per cent interest in those areas. The Canadian company completed an onshore seismic program last year, but as of the end of September it had only $US2.25 million cash on hand and had received $C6 million ($7 million) in loans from its major shareholder, Sweden's Lundin family. Mr Landau said he was confident the Lundins would continue to support Africa Oil, particularly since it recently received almost $C300 million from selling a major stake in Syrian oil producer Tanganyika Oil to China's Sinopec. Reuters this week reported that Africa Oil had stopped exploration in Puntland and had not paid staff for three months. Mr Landau claimed the report was inaccurate and was instead a typical dispute with a contractor. A representative of Africa Oil, based in Vancouver, did not respond to the Herald's request for comment. The Sydney Morning Herald Quote Share this post Link to post Share on other sites
