RRS - Range Resources

[prozac]

You're right Balder, the shareprice is totally underpinned by the Texas licenses with little or no regard given to the potential value of Somalia or Georgia. Hopefully the seismic report for Georgia will be signed-off in the next couple of weeks and a report released for investors to re-assess their goals. Everything I have read about Georgia suggests it's oil and gas potential, whilst largely unrecognised could be sizable.

Frontera have had mixed results in the east of Georgia in the Kura field. I would suggest that this has little correlation to Range as firstly Frontera is burdened by debt and secondly are operating in completely different geology.

Range has no debt and the field being targetted, the 'Rioni' field has been written about as having some potential analogous with exploration results on the northern (Russian) side of the Caucuses (1.). Rioni basin is on the southern or Georgian side of the Caucuses. The report quoted suggests similar discoveries on the Russian side are at only 2,500-3,000m depth, having 50% recoverable reserves, and daily flow rates between 3,000-15,000bbl. I would be delighted if Range made a discovery, producing at the lower end of that scale. Then Georgia would factor in the share-price!


Source: (1.) "Cretaceous Play - New Exploration Potential in the Eastern Georgia" D.Morariu & V.Noual

 

[prozac]

The quarterly report released Friday was reassuring across a number of subjects. Firstly the company carries no debt and has $7.98m in the bank. That is enough to pay for it's first well commitment in the Republic of Georgia without the need to raise further capital at this level. That is significant as the company could be re-rated if the well is successful.

It looks like this may well be the case with the company announcing it had been provided by its seismic analyst RPS a total of 58 possible targets with "the most prospective 6 specific targets awaiting the final report from RPS, which will provide an assessment of the potential recoverable volumes of these targets.". Noting that "The Company is extremely excited about the identified prospects and is eagerly awaiting the final report from RPS, which is anticipated to be received in the coming weeks."

So the quarterly is either a beat-up or indeed the company has good reason to be genuinely excited about Georgia. The coming weeks will be the deciding factor once the RPS report is released. If it is all the quarterly suggests then this could attract the right attention that will see the share price heading north once more.

The Texas license in North Chapman Ranch (NCR) has been producing well and according to the company the 2 existing wells are about to undergo a work-over with the fraccing team to move back in soon to open up more producing zones in these wells. The Russell Bevly well "continued to perform above expectations" however from just the one 11ft thick zone. It has 3 more pay zones which will be perforated in the work-over.

The next well in the NCR program is expected to be spudded by January 2011.

No updates on Puntland however, and it seems the company is getting it's updates on this project from the same place the shareholders are, from the Africa Oil presentations. A sad indictment of the working relationship between these 2 companies. Just as well Range had the foresight and acumen to de-risk itself over the past 2 years into new regions that could prove company makers in their own right.

 

[Balder]

Think the s.p of the last few days is saying Texas now finally (almost) underpins the value.

The lack of clarity on Puntland suggests as you say AOI is the only source of information and with that, might as well forget it for at least 6 months or more i.m.o

Georgia is a complete unknown, which seems a gamble, but worth taking and i've also been loading up, given the quarterly report on Texas. Thanks for sharing your thoughts, you have company fella.

 

[Balder]

Georgia. I feel this is the elephant in the room right now. QUOTE]

The elephant just jumped in front of the camera stark butt naked and it's waving a big sign Prozac!

From Oilbarrel presentation:

2 Billion barrels o.i.p, 600m recoverable (give or take a few mill) : thats just a conservative recovery of 30%.

6 immediate drill targets with 728 mill o.i.p (50% due to Range!)

Even better, well planning advanced, contractors identified - expect more news on this front soon enough.

WOW!

 

[prozac]

Well I did warn you he was hiding in there somewhere Balder. Now, there may be some other critters hiding behind that pile of books over there as well.

I won't try and predict any price momentum as that is quite pointless. For anyone just dropping in for the first time read the extract of the Georgia Paper I posted earlier for the potential of this asset. The market has not yet had time to swallow yet alone digest this news, and after the company present tonight at the Oilbarrel Conference in London there may be more than a few institutions who rue not having paid attention earlier and taken a position just in case. They will be scrambling for the exits by the time the presentation is over, trying to beat the headlines.

It needs to be remembered that this is listed on both the ASX and the LSE AIM market. Two thirds of the issued capital has migrated to LSE (68%) already with roughly only 300m shares left on ASX. Trade on the London exchange tonight may be brisk and it will be interesting to see how this affects the shareprice on the ASX tomorrow.

 

[prozac]

..............................................
It needs to be remembered that this is listed on both the ASX and the LSE AIM market. Two thirds of the issued capital has migrated to LSE (68%) already with roughly only 300m shares left on ASX. Trade on the London exchange tonight may be brisk and it will be interesting to see how this affects the shareprice on the ASX tomorrow.

Brisk, well that was an understatement!!! Approximately 20% of the issued capital currently held in the UK traded on Thursday in a what could only be described as feverish turnover. 164 million shares of 810m on LSE changed hands.

Certainly the chart has a gap to fill and the story now has to be taken-up in old Blighty, but it is apparent the Brits have a hunger for oil minnows with big prospects such as Range Resources and it will be interesting as this story unfolds over the coming months. This sort of trade cannot be ignored by the institutions and I think a gradual take-up of shares will occur now the initial flurry has subsided with higher average turnover now the norm.

Will this then lead to inclusion in the LSE All Aim Index, something akin to the ASX 200? If it does then every fund manager of UK weighted-funds will have to add Range to his or her fund. News of commencement of a Georgian drilling campaign will further fuel demand, and a successful drill will establish a stronger base for the share price.

Watch this space, but don't blink.

 

[prozac]

Thought some may be interested in some Georgia statistics.

Georgia Gas Consumption
1999 41Bcf
2008 61Bcf purportedly all imported

Georgia Oil
2000 Produced 2,200 barrels per day (bbl/d)
2008 Producing 980 barrels per day (bbl/d)

2008 Oil Imports 12,000 barrels per day (bbl/d)

In 2000 Georgia imported 98% of its natural gas requirements. In the drought of 2000 Georgia could not produce enough hydro power to supply it's capital Tbilisi, and because Turkmenistan and Russia had stopped supplying gas due to non-payment Georgian citizens across the country were restricted to less than 6 hrs of power per day. This in the midst of the Georgian winter with daily sub-zero temperatures. In reality the residents of Tbilisi, Georgia's capital received only around 2 hrs of power per day.

Even today Georgia is still considered to owe substantial sums for imported gas which remains unpaid. Georgia desperately needs a reliable supply of natural gas!

Range could probably sell every last cubic centimeter of gas it could produce to the Georgian Republic.

That nice I hear you say, so Range can sell some product. That's right but here's the rub. Range will probably be looking to commercialise any gas off-take from it's first well straight into the Georgian domestic network to immediately subsidise it's drilling program. Exepct this to be sooner rather than later and the first well to be not the most prospective, but the target most suitably located to supplying the domestic gas network of nearby city Kutaisi.

 

[prozac]

Range's Georgia play is running on track and just waiting on the final report from RPS. Meanwhile the company has not been sitting on it's hands and is n advanced stages of target work-up, with well and well-head design completed and ready to implement upon confirmation of these targets by RPS. I incorrectly suggested in last post the first well may not be the most prospective. Of-course Range would want to increase their Chance of Success of the first well to be as high as is possible and so will be targetting the most prospective location. The fact is the 6 targets selected are all reasonably well located anyway, and some are naturally better than others. Some of these targets are expected to turn out to be "stacked wells" where more than one field is expected to be intersected.

Texas NCR is only being held back by the lack of securing a fracing team. These specialists are in high demand in America at the moment so it is a matter of just waiting your turn. The oil majors seem to have these blokes tied up right now. When they are able to get on location they will perforate the remaining 3 zones of the Russel Bevly well & also re-visit the Smith #1 well in which the original frac remains incomplete. This came about because the individual zones were not isolated from one another when the frac job was performed. The well has not been performing to the model forcast, and when re-fraced flow rates should improve dramatically by all reports.

The new Albright well is soon to be spudded and will test Anderson Field.

Each new well in Texas NCR is costing Range $1m on a pro-rata basis. Once producing each is anticipated to return $2m p.a. after Opex, Capex, and royalties / taxes. Tidy.

 

[Balder]

News of commencement of a Georgian drilling campaign will further fuel demand, and a successful drill will establish a stronger base for the share price.

News being helium mapping? Now that's interesting, seems the Russian big boys have used this to a high success rate.

 

[prozac]

balder, helium testing relies on the fact that Helium as a basic element helium forms no bonds or compounds with any other elements, unlike hydrogen which is not too selective in its associations. It is possible to measure with some precision the absorption of helium within water, within oil and within gas.

Uranium and other radioactive substances within the earths crust give off helium. The passage of Helium is not impeded by fault lines or by chloride domes, crystaline structures etc. By measuring the concentration of helium in surface sub-soil over a grid of say 100m x 100m it is possible to determine the nature of any water, oil or gas structure through which the helium may have passed.

A bit Shirley MacLaine but evidently it does work.

 

[prozac]

This interview was released today and worth the watch imo.
http://www.rangeresources.com.au/MiningMaven-Interview-with-Peter-Landau.101.0.html

 

[Balder]

This interview was released today and worth the watch imo.
http://www.rangeresources.com.au/MiningMaven-Interview-with-Peter-Landau.101.0.html

Cotton Valley almost overdue then as next news?

 

[prozac]

Cotton Valley almost overdue then as next news?

I think Cotton Valley will pale into insignificance with other news-flow announcements. Don't get me wrong, ECV (East Cotton Valley) is a great return on capital (8-10 times investment), but it is small by comparison to the other projects.

Range will increase their holding in ECV 13% to 20%. Does this suggest that Crest the operator are strapped for cash, which is the reason Range got a stake in this project at an attractive rate in the first place? Is this partly the reason for delays in the North Chapman Ranch (NCR) licenses, Crest (a small private company) are short on available cash? Maybe we will see Range taking a larger percentage interest in NCR which is now essentially self-funding.

 

[Balder]

I think Cotton Valley will pale into insignificance with other news-flow announcements. Don't get me wrong, ECV (East Cotton Valley) is a great return on capital (8-10 times investment), but it is small by comparison to the other projects.

Range will increase their holding in ECV 13% to 20%. Does this suggest that Crest the operator are strapped for cash, which is the reason Range got a stake in this project at an attractive rate in the first place? Is this partly the reason for delays in the North Chapman Ranch (NCR) licenses, Crest (a small private company) are short on available cash? Maybe we will see Range taking a larger percentage interest in NCR which is now essentially self-funding.

Not sure on a larger stake in NCR when they had to reduce from 25-20% not that long ago; are they really that strapped?

However, many mutterings on Range's Trinidad partner issues being resolved soon-ish seem to be adding to the Georgia expectation pre new year.

EDIT: Take it you noticed P.L's mining maven interview?
http://www.rangeresources.com.au/MiningMaven-Interview-with-Peter-Landau.101.0.html

 

[prozac]

Not sure on a larger stake in NCR when they had to reduce from 25-20% not that long ago; are they really that strapped?

However, many mutterings on Range's Trinidad partner issues being resolved soon-ish seem to be adding to the Georgia expectation pre new year.

EDIT: Take it you noticed P.L's mining maven interview?
http://www.rangeresources.com.au/MiningMaven-Interview-with-Peter-Landau.101.0.html

Balder the reason Range had to reduce from 25-20% on subsequent NCR drills had to do with the original farm-in agreement that allowed for a claw-back to this level on future wells. I do not know fully the extent of this agreement except to say that there are 2 other partners in the farm in and perhaps the claw-back somehow relates to them. Regardless I consder that the license owner/operator would always try and excersize it's power of this clause for want of owning the biggest slice of the pie. I do not think that they have elected yet to state the arrangement for the next well, so it is not conclusive if they have the capital available or not.

In any event I am expecting a stellar performance and I have picked this stock for the January competition as I think there will be plethora of announcements over the coming month and that some will affect the share price.

 

[Balder]

Prozac, yes it was the claw back that made me question whether they were cash strapped? Should have explained my thoughts better, but agree it's inconclusive. Either way there is enough going on with Range. Just wondering if Trindad might move quicker than many think, small beer on the scale of other's, but more to the pot.

 

[prozac]

Prozac, yes it was the claw back that made me question whether they were cash strapped? Should have explained my thoughts better, but agree it's inconclusive. Either way there is enough going on with Range. Just wondering if Trindad might move quicker than many think, small beer on the scale of other's, but more to the pot.

Balder, I don't think Trinidad will be small beer. In fact I think it may be quite sizable and will surpise many.

This month (January) I believe will see a huge re-rating of the share price as the company are due to provide a raft of announcements that should see the release of 2 a week. Mostly these will be significant in nature imo.

 

[Balder]

This month (January) I believe will see a huge re-rating of the share price as the company are due to provide a raft of announcements that should see the release of 2 a week. Mostly these will be significant in nature imo.

Duly confirmed today

Like the subtle reference to the fact it has recieved a "2011 stock to watch" tip in the U.K

1c a day will need a breather at some point, do you think farm-ins will be the way forward to raising additional finance? Be good to clear that intention up with Georgia data.

 

[Balder]

So far then ECV increased stake confirmed and now Puntland extension to give a "little" more time. One wonders why

NCR spud news should come in before the month end, hopefully Georgia news soon? Will they possibly announce rig news with helium mapping findings do you think Prozac?

 

[prozac]

So far then ECV increased stake confirmed and now Puntland extension to give a "little" more time. One wonders why

NCR spud news should come in before the month end, hopefully Georgia news soon? Will they possibly announce rig news with helium mapping findings do you think Prozac?

The Perfect Storm
Balder, I may have mentioned I thought January would be when it all happened. Now we have all the conditions for the perfect storm imo. I believe in the next 2 weeks we will get the results of the Helium Survey in concert with the Siesmic Survey results for Georgia to confirm the drill targets. The company has stated as much. This would logically be followed with an announcement of rig mobilisation for Georgia. Trinidad should warrant a mention but perhaps should be removed from the equation as Range do not have full control over the timing of Trinie given Monitor Energy need to finalise their financing. But the last one could be from left field.

Did you notice in todays announcement of the granting of the extension of PSA in Puntland the timeframe for the dates by which drilling must commence? 27 July for 1st drill and 27 September for 2nd drill. Drilling of similar depth targets in neighbouring countries usually runs to 4 or 5 months. To spud the 2nd well by the due date I would suspect the 1st well would need to be drilled almost immediately. Let's say 1st well spuds on 1st March. Drilling takes 5 months. This takes you to 1st August, leaving only 1 month and 26 days to dismantle the rig move to the new location and set up again ready to drill by 27 September. I would expect, and I do not have a road map of Puntland nor the location of the targets, moving the rig location would be easiy a six week affair. This does not leave much contingency. So we are drilling by say 1st March, but that is only 6 weeks away!!! This could be the final part to the perfect storm imo.