Somalia: Puntland Oil is transformational moment for the Somali's...

[General Duke]

Red Emperor and Range Resources prepare for a potentially transformational phase in their development

14th Jul 2011, 12:12 pm by Ian Lyall Drilling is underway in Georgia and the partners are now gearing up for their assault on Puntland.

 

Earlier today we heard the Mukhiani-1 well in the former Soviet state of Georgia had been successfully spudded.

 

As the drill-bit began turning it marked the start of an exciting and potentially transformational period for the two AIM-listed companies involved in the project.

 

Range Resources (LON:RRL, ASX:RRS) and Red Emperor Resources (LON:RMP, ASX:RMP) respectively own 40 and 20 per cent of two onshore blocks in the country covering 6,500 square kilometres.

 

The Range/Red Emperor collaboration doesn’t end here. The pair have identical 20 per cent stakes in a high impact exploration project in Puntland, a semi-autonomous region of Somalia.

 

For Range, Georgia fires the starting pistol on a drilling programme that could, if all goes to plan, elevate it to mid-cap respectability.

 

“(It) is entering a potentially transformational phase in its development,” said Edison analyst Peter Dupont in a recent research note.

 

“Over the next four months Range has three high-impact exploration wells scheduled in Puntland and Georgia plus a development well in Texas.

 

“Near-term, Range is very much a play on the outcome of the high impact drilling projects, but investors should not lose sight of the Texas and Trinidad assets, which offer both excellent cash generating and development potential.”

 

For Red Emperor success in Georgia and and Puntland will be key to narrowing the valuation gap between itself and Range.

 

While Range has more bells and whistles – including producing assets in Trinidad and Texas – there is still a very strong case to be made that Red Emperor’s market cap of £38 million should be a little closer to Range’s £230 million price tag than it currently is.

 

“Over the last 18 months Range has really been the darling of the market over here in the UK,” Red Emperor managing director Greg Bandy told Proactive Investors recently.

 

“They have gained a great deal of traction and success, and a lot of the interest has been around the assets (Puntland and Georgia) that we have also got.

 

“We are on AIM because Range has shown there is a large appetite for these assets over here.”

 

In Georgia the Mukhiani-1 well is targeting the Vani-3 prospect, which was estimated to have between 41.7 million and 115.2 million barrels of oil-initially-in-place (P90 - P10).

 

It is expected that Mukhiani-1 will be drilled to a depth of 3,500 metres within 45-55 days. After drilling Mukhiani-1 the rig will move on to spud a second exploration well.

 

Range completed 410 kilometres 2D seismic on the Georgian acreage which revealed its huge potential.

 

From this work the independent consultant RPS Energy identified 68 potential structures containing an estimated 2.045 billion barrels of oil‐in‐place.

 

Puntland, meanwhile, could be of a different order of magnitude again.

 

The exploration area is 40,000 square kilomttres in total and focuses on the highly prospective Dharoor and Nugaal valleys, which potentially contain 19.9 billion barrels of oil in-place. The pair’s joint venture partner and operator is Africa Oil Corp. (CVE:AOI).

 

Drilling here is expected to get underway at some point this quarter with a two-well exploratory programme planned.

 

It is thought the first well will be on the Dharoor Block about 120 kilometres west of the Indian Ocean shoreline and roughly 200 kilometres south-east of the principal Gulf of Aden port of Boosaaso.

 

It is expected to be relatively deep at 4,000-5,000 metres and will target the Upper Jurassic horizons.

 

Reflecting the depth, gross drilling costs will be substantial at about US$25 million. So both companies will need to look closely at their financing options.

 

“If we get some definitive news on the drilling timetable and a rig being mobilised then we probably hit the market to cover this cost,” Red Emperor’s Bandy revealed recently.

 

That said, the company has around A$14 million in the bank, which will fund the imminent two-well programme in Georgia with probably enough left over to meet the costs of the first Puntland well.

 

“We don’t want to drill three wells with no cash in the bank afterwards,” added Red Emperor’s executive consultant Tony King.

 

“We want to be fully buffered with some cash underpinning the business. We’ve got that at the moment.”

 

The reaction to today’s news was somewhat muted with shares in Range up 1.12 pence at 56 pence, and Red Emperor off 0.12 pence at 26.88 pence.

 

However the importance of today’s release shouldn’t be under-estimated.

[General Duke]

Aoil

[Saalax]

The phantom oil? kkkk.

[General Duke]

Saalax;735917 wrote:

The phantom oil? kkkk.

Oil and Gas Exploration and Production in Puntland, Somalia,

the Republic of Georgia, onshore Texas, USA and Trinidad.

Range website

 

Welcome to Range Resources Ltd

Range Resources Limited (“Range” or “the Company”) is both an ASX-listed (ASX: RRS) and AIM-listed (AIM: RRL) exploration and production Company, with its principal activities directed towards finding and delineating hydrocarbons in Puntland, Somalia; the Republic of Georgia, onshore Texas, USA and Trinidad.

 

With the planned onshore exploration drilling program in Puntland and Georgia coupled with the exploration and development programs in Texas and Trinidad, Range is well on its way to establish itself as a diversified international oil and gas exploration, development and production company with significant upside potential.

[Saalax]

kkkkk i doubt you would get any penny from the oil if there is any at all anyway. Shaddy companies own over 55% Share k.

[General Duke]

Overview

The company holds two blocks in Puntland, Somalia: the Nugaal Block and the Dharoor Block.

http://www.africaoilcorp.com/s/Somalia.asp?ReportID=352284

[General Duke]

Puntland has Range Resources[Australia] & Africa Oil [Canada] exploring. Somaliland has Maryan Mursal[somalia] exploring Hargaysa...............

[General Duke]

Dharoor basin, Ufain, Somalia

[oba hiloowlow]

I hope crazy imaam faroole does something good for the money oo horumariyo deeganadda puntland iyo qeybaha kale ee somalia!

[General Duke]

^^^This has nothing to do with Faroole or anyone else. It was before him and will last after him.This is a long term project that will take a few years to complete but it must not be stopped by anyone or for any clanish, or selfish reasons. The oil in Puntland will change Somalia as a whole.

[oba hiloowlow]

Duke bro yeah but he is the president thats what im talkin about, nothin personal,,,

[General Duke]

^^Yeah he is and there will be others after him, it will take some time and I doubt he or anyone in his admin will benefit from this..

[oba hiloowlow]

well lets hope for the best!!

[Timur]

Puntland will be Somalia's Dubai. I so badly yearn to see the momentous day of the first well.

[General Duke]

 

Range Resources Executive Director Interview Q3 2011

 

Tuesday, Jul 26 2011 by Elias Jones 0 comments 8

 

Range Resources (LON:RRL) is a dual listed (ASX: RRS) Exploration and Production company with interests covering 4 geographical areas; onshore Texas USA, The Republic of Georgia, Puntland Somalia and Trinidad. The major near term focus for Range Resources and its partners will be the high impact exploration drilling in Puntland and Georgia, targeting combined potential structures amounting to multi billion barrels of oil. However, for many, the Range Resources investment case became even more appealing recently when the company announced it had completed the acquisition of SOCA Petroleum which holds 100% ownership of three exploration and production onshore Trinidad oil and gas licences, along with its wholly owned drilling company, including operational staff, rigs and equipment.

 

Following on from an earlier ‘Could Trinidad be the Game Changer’ article and the recent busy period for Range Resources and its partners which also includes the successful spudding of Mukhiani 1 well in Georgia targeting a prospect with a mean estimate of undiscovered oil in place of 115 million barrels, Peter Landau, the Range Resources Executive Director, has taken time out to discuss various aspects of the business, including the Trinidad acquisition, their stakeholder approach, possible expected news flow, potential new farm-in opportunities, returning value and a potential market capitalisation target.

 

Q1. Earlier this year it was indicated that Range would not be looking to acquire the whole of the Trinidad asset, and that potentially 20% would be its maximum share, so what changed?

 

In essence, Range’s market cap – doing a $60-$70m deal with a cap of $90m is vastly different to a cap of $400m. We always loved the asset and the play but were conscious of dilution with upcoming drilling in Georgia and Puntland.

 

Q2. Does the additional number of shares issued to fund the Trinidad deal hinder the potential upside to shareholders from the Puntland and Georgia prospect?

 

As per the above, we think we found a good balance between preserving the upside of Georgia and Puntland (15% placement and equity on the deal), providing a genuine underpin to a base valuation of circa $400m for Range and also providing shareholders with significant upside with Trinidad in the form of P1 and P2 development and Herrera exploration success. From our perspective there is no hindrance – the upside is preserved (through additional lower risk exposure in Trinidad) and exploration and delay risk reduced significantly.

 

Q3. For many investors, they have invested in Range for the deal making ability and for a non-operational role. However, Range now own three producing oilfields, a drilling company and have around 150 staff on its books in Trinidad. How ready is Range for this strategic change? And what approach will Range have towards its various stakeholders in Trinidad?

 

I don’t necessarily agree with the non-operational role assessment. We have managed Georgia and, like with anything, the key question is not whether you are operator or not but who is doing the job. In Trinidad’s case, we get the whole team who have been operating the projects for plus 5 years – from general manager, exploration manager, accounts and government liaison through to drilling crews and workshop mechanics. They have been desperate for development capital as opposed to simply extracting the greatest amount of oil for the lowest possible cost and Range has stepped in with the key aim of providing all necessary financial and technical support to ensure that the 2-3 year plan to get to between 4,000 and 10,000 bbls / day (the latter on the basis of Herrera developments) will be achieved.

 

We adopt a “win – win” approach for all of our stakeholders (not just in Trinidad) which ensures that relevant incentives are in place to make sure everyone benefits – the bottom line to any incentives is that they have to be aligned to what will deliver genuine value and upside to Range shareholders

 

Q4. Many view the Trinidad acquisition as a potential game changer for Range Resources, do you share this view?

 

Game changer is probably not the right term. As you know any of the 3 big plays we have – Georgia, Puntland or Trinidad - could be the “game changer”. Wwhat Trinidad does is change the way Range is perceived in the market place from an investment perspective and attract a far greater investment audience (both institutional and retail) because of what we call the “valuation underpin” that Trinidad brings to the table.

 

Q5. Briefly could you touch on the expected near term news flow for the Puntland, Georgia and Texas assets.

 

Rig mobilisation Q3 and spud date early Q4 for Puntland, completion of the first well in Georgia (Mukhiani) this Quarter, Ross 3H (Cotton Valley) update Q3 and spudding of the Albrecht well (North Chapman Ranch) late Q3, early Q4.

 

Q6. Bar the Texas, Trinidad, Georgia and Puntland projects, do you expect to acquire other any other projects over the short to medium term?

 

Not so much acquisitions but we are looking at a few farm in opportunities (not massive cash out flows). We wouldn’t do more than 1 or 2 (onshore and oil only) and clearly timing is paramount. As with Trinidad, we think we can complete some very good plays (probably higher risk spectrum than Trinidad which means a lot greater potential from a reserve perspective eg. the billion barrel plus type plays) but we will always adopt a prudent approach on timing based on market circumstances.

 

Q7. Going forward, how do you see the financial demands regarding working capital and capital expenditure being met over the next 12 months?

 

We have a number of fund raising mechanisms being offered to us – equity, convertible and pure debt. As stated above, market circumstances will dictate to a degree how we play it from a size, pricing and timing perspective. I know the response sounds a bit obtuse but, at the end of the day, we like to think we know how to manage the financial demands and will always have shareholder interests front and centre in our considerations.

 

Q8. Would you consider at some stage, crystallising assets such as the Texas NCR or ECV and returning shareholder value through a special dividend?

 

Absolutely – whether it be special dividend, capital return, share buyback. Any number of mechanisms are available and would definitely be an option as opposed to keeping all the cash and looking for another suite of assets (we like the assets we have and the value proposition they represent over the next 12 months).

 

Q9. Going forward, what’s your vision for Range Resources and what’s your aim in terms of a future market capitalisation for the company?

 

Without pigeonholing the vision, it actually is pretty simple – get a minimum market cap of $1bn in 12 months with only spending between $25-$40m in development and exploration.

 

Thanks for taking the time to discuss the various business aspects and for sharing your thoughts.