Australian (ASX) Stock Market Forum

RRS - Range Resources

I stand corrected on time-frames. What follows is a post on another bb by someone I can vouch for, "mingle3" on the advfn board. Some time back he made contact with a geologist employed to study seismic in various east african locations. This is their most recent correspondence with an explanation to begin.
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Most of you longtermers will remember about a year ago I had correspondence with the gentleman that carried out the World Bank coordinated study in 1991 which was intended to encourage private investment in the petroleum potential of eight African nations where Somalia and the Sudan topped the list of potential commercial oil producers! His name is Thomas O'connor......

To refresh your memory you can see the email/post here:

http://rangeresources.narutorpg.org/t7-oil-in-puntland-mr-right

Today I decided to follow him up and ask him a few questions on whether he thinks it would be possible to drill both exploration wells as set out in yesterdays RNS before the expiry dates. His response was very informative and helpful............Here it is!

Dear Thomas

I hope you are keeping well and enjoying life.

Do you remember I emailed you a while back regarding oil in Puntland and the complications drilling in such an area could prove to be due to the Geology??

Our Operator Africa Oil have stated that they will drill two exploration wells this year, One must spud before the 27th of July, the second must spud before the 27th of September. Looking at the dates do you think it would be possible to drill the first well and then relocate the rig to spud the second well before the dates set out. How long does it take to drill a exploration well in this kind of Geology? Looking over recent drills in similar ares it takes 5-6months minimum and usually some difficulty occurs due to high gas pressures. What is your View? The basins where we will be drilling are Dahroor and Nugal.

I hope you can offer any information and many thanks for taking the time,

Kind Regards

xxxxx
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Yes, good morning xxxxxxx:

I too saw the note regarding Africa Oil's drilling plans in yesterday's trade press and had the same thoughts as you have had. On reflection however, my thinking has changed somewhat.

As you recall, Africa Oil had planned to drill its first well, at Dahour, I think, last summer. I have not heard anything direct from Africa Oil since I met with them last Easter, so the remainder of what I have to say is speculation.

Firstly, there appears to have been an issue with commencing the well last year; this could either be a case of rig non-availability, in which the rig had to be used elsewhere first, or something to do with political risk and/or security. Either case is equally possible.

Secondly, in the type of area in which Africa Oil is operating, these things are fairly common and work obligations are often renegotiated with the Government. This appears to be the case here, in which, in return for extending the "Drill before" date for the first well, AO has agreed to drill the second well immediately thereafter, without releasing the rig, evaluating the results of the first well and making fine tuning adjustments to the second well location. Since the two wells are in what are thought to be two different basins, this is a reasonable compromise.

I have briefly seen the seismic from the first location, but not the second; as I recall neither well were programmed to go too deep; something on the order of 9,000 feet comes to mind. This is not a great depth, does not require a large, heavy duty rig and depending on the rocks encountered, 60 days should be sufficient to drill, evaluate, cap/plug the well and move the rig to the second location.

Unless there are major and unanticipated problems with the drilling, I don't see where either well should take longer than 30-45 days from spud to completion. The information which you have referred to, seems to me to be inappropriate. Having said that however, very little is known of the subsurface in Puntland and analogies made from elsewhere such as southern Sudan or Yemen ............(continued next post)
 
continued from previous post...........................................

Unless there are major and unanticipated problems with the drilling, I don't see where either well should take longer than 30-45 days from spud to completion. The information which you have referred to, seems to me to be inappropriate. Having said that however, very little is known of the subsurface in Puntland and analogies made from elsewhere such as southern Sudan or Yemen may or may not be relevant. If you could provide me with the general location of the similar areas in which there was high pressure gas, I will provide whatever information I can regarding the appropriateness of the comparison. At the moment, I don't think there is much indication of high pressure gas in either proposed location, but that is of course, speculation.

Having said that, 60 days is a tight schedule; there are likely few roads between the first and second location and considerable work will have to be done on the transportation infrastructure during the drilling of the first well in order to accommodate the rig move.

The worst case scenario is that, should there be a timing problem with the commencement of the second well, the deadline will have to be renegotiated. It is in the Government's best interest to have the second well drilled, rather than revoke the license for non-compliance. In order to achieve governmental concurrence, there will clearly have to be an inducement to the Government to accommodate AO in this case, and that could entail either additional work, or a cash bonus.

My guess is that AO is committed to start the first well by the agreed upon date and it would be very difficult to renegotiate that date, in contrast to the second spud date.

I hope that this has helped you in your thinking. Good luck and please let me know what happens.

All the best,

Tom O'Connor
 
I stand corrected on time-frames.

Thanks those posts look fairly genuine, well no reason to suspect they are not.

As for your timeframes, you might be readjusting again next week? Interesting news on Red Emporer capital raising, now how much and what can that possibly be for :rolleyes:
 
Thanks those posts look fairly genuine, well no reason to suspect they are not.

As for your timeframes, you might be readjusting again next week? Interesting news on Red Emporer capital raising, now how much and what can that possibly be for :rolleyes:


It looks as if they will target a depth of approx 8,000'now instead of the original 14,800'. The well I believe will still take around 45 days to drill + 6 weeks mobilsing at start + 4-6 weeks strip-down re-camp.

I do not change my view that rig-mob will commence in next few weeks.:)
 
Thanks those posts look fairly genuine, well no reason to suspect they are not.

As for your timeframes, you might be readjusting again next week? Interesting news on Red Emporer capital raising, now how much and what can that possibly be for :rolleyes:

Balder i realise I did not directly answer your question re Red Emperor cap raising. No doubt this will be to raise funds to participate in Georgia drills. RMP share is 40% of drill costs to a maximum (capped) of $5.6m. The question is will they raise the full $10m allowed for in their last AGM, resolution 4., or will they just raise what is necessary for this drill, $7-8m approx.? I wouldn't think they would want to dilute any more than necessary.

Oh I see...I just noticed your roll-eyes after the question! Never mind, I'll leave it in as some might find it useful. :)
 
Announcement today regarding ongoing funding and a new free-carry arrangement for Puntland - http://www.asx.com.au/asxpdf/20110127/pdf/41wcyr30885x1l.pdf

Precis;
1. Range get free carry by AOI on 2nd Puntland drill to tune of US$15m in lieu of current spending shortfall by AOI.
2. Range have secured a 3 year Equity Line Facility for £20m for ongoing capital requirements. Only drawn down on an as-needed basis. No debt established as draw-downs will be exchanged for shares at 7% discount to market at the time of each draw-down which will be at a time of Range's choosing.

This is GREAT news as it enables some certainty regarding funding as and when needed and also mitigates Range's finacial commitment in Puntland.
 
Prozac are you looking at the Red emporer $0.20c shares or trying to, my broker is not being very helpful.

Wondered if you had any joy or was of interest?
 
Prozac are you looking at the Red emporer $0.20c shares or trying to, my broker is not being very helpful.

Wondered if you had any joy or was of interest?

They are not offering a great many to supporters. :mad: Seems it is a case of looking after the bigger institutions first which does not seem to be the way to reward those who are taking the larger commensurate risk (the smaller bloke). :(

There is only $800k up to a possible $1.8m available to shareholders of Range and RMP, though they haven't actually made the offer to RMP share holders.

I will make the observation that there was keen interest in RMP today with 500,000 shares sold, on the higher side than normal and at an 8% plus higher share price. Makes me wonder if Range are only a day or two away from making another significant announcement.:(
 
Apparently high net worth individuals, who have a couple of grand in loose change :eek:

Guess those with a few cents wait , bring on the drill bit!
 
Well there's the announcement, and there is the price rise! 18c early on and now back to 17c, still up almost 20%, and with more to come to I imagine.:)

Balder regarding the high net worth indies you mention, that is only applicable to UK shareholders due to ASX rules. If you are an aussie share-holder you can apply for as many as you can afford, though of-course that does not mean you will get them. I sent a cheque in last week so hope to pick up some more.

The helium survey results were good. Did you notice the mention of gas? This is fantastic news as it means a rapid return from direct sales to Georgia who are dependant on imports for nearly all their gas requirements.

I am expecting this is just the start of good news for the month of february, and personally I am expecting big things.
 
Well there's the announcement, and there is the price rise! 18c early on and now back to 17c, still up almost 20%, and with more to come to I imagine.:)

Balder regarding the high net worth indies you mention, that is only applicable to UK shareholders due to ASX rules. If you are an aussie share-holder you can apply for as many as you can afford, though of-course that does not mean you will get them. I sent a cheque in last week so hope to pick up some more.

The helium survey results were good. Did you notice the mention of gas? This is fantastic news as it means a rapid return from direct sales to Georgia who are dependant on imports for nearly all their gas requirements.

I am expecting this is just the start of good news for the month of february, and personally I am expecting big things.

Looks like a few more are too, thats some volune for RRS going through.

Did notice gas comments, it's getting a bit exciting here now.
 
Well it is nice to be at the top of the stock-tipping for February.:) I did my best to let you all know it was happening, and maybe some of you jumped on board.

My belief is that this is only the start and we will continue onwards and upwards with a steady flow of positive news.
 
Possibly more acreage?

Have you seen the Straits rumours on block VIII ;)


I was aware of this some time ago (a bit of sleuthing).:) There is no guarantee that Strait will sell a share of this to RRS, and could even choose to go with Red Emperor or even go it alone! Although a private company Strait have shareholders for whom they need to get the best deal they can. Maybe they will do a deal with Alecto.

I can't believe we are head of the leader-board (Feb Competition) and there is no-one else in the world here Balder but you and I!!! Range even got a right-up this week in all regional papers across Australia by financial columnist Bill Harcourt.

Onward and upward.
 
continued from previous post...........................................

Unless there are major and unanticipated problems with the drilling, I don't see where either well should take longer than 30-45 days from spud to completion. The information which you have referred to, seems to me to be inappropriate. Having said that however, very little is known of the subsurface in Puntland and analogies made from elsewhere such as southern Sudan or Yemen may or may not be relevant. If you could provide me with the general location of the similar areas in which there was high pressure gas, I will provide whatever information I can regarding the appropriateness of the comparison. At the moment, I don't think there is much indication of high pressure gas in either proposed location, but that is of course, speculation.

Having said that, 60 days is a tight schedule; there are likely few roads between the first and second location and considerable work will have to be done on the transportation infrastructure during the drilling of the first well in order to accommodate the rig move.

The worst case scenario is that, should there be a timing problem with the commencement of the second well, the deadline will have to be renegotiated. It is in the Government's best interest to have the second well drilled, rather than revoke the license for non-compliance. In order to achieve governmental concurrence, there will clearly have to be an inducement to the Government to accommodate AO in this case, and that could entail either additional work, or a cash bonus.

My guess is that AO is committed to start the first well by the agreed upon date and it would be very difficult to renegotiate that date, in contrast to the second spud date.
I hope that this has helped you in your thinking. Good luck and please let me know what happens.

All the best,

Tom O'Connor

Someone has got their guesswork wrong, if not the author, maybe AOI :banghead:

Jurassic Rift (Dharoor and Nugaal Blocks (Puntland, Somalia))

Exploration activities in Puntland are focused on drilling the first exploration well in Somalia in over 20 years. The Company plans to spud the first well in the Dharoor Block during Q3 2011. Activities are currently focused on the identification and contracting of drilling and drilling support contractors willing to operate in Puntland on commercially acceptable terms. A second well in the Dharoor Block is planned to commence following completion of the first exploration well.

http://www.thepressreleasewire.com/....jsp?year=2011&actionFor=1399347&releaseSeq=1
 
I was aware of this some time ago (a bit of sleuthing).:) There is no guarantee that Strait will sell a share of this to RRS, and could even choose to go with Red Emperor or even go it alone! Although a private company Strait have shareholders for whom they need to get the best deal they can. Maybe they will do a deal with Alecto.

Range's financial report for 2010 states

"During the year, the Company entered into a transaction to acquire a
50% interest in Strait Oil and Gas (UK) Limited, which holds
two licenses in the Republic of Georgia. Under the terms of the
Agreement, Range must issue 30m shares and 30m options ($0.05,
31 December 2011) upon the completion of two wells or commercial
discovery."

I believe this means Range would gain 50% of the latest block by default.

Feel free to correct me...
 
Range have not yet drilled 2 wells nor issued said capital to complete the movement to 50% ownership. Even if it could be said Range have ownership in principal, 50% does not give them rights beyond an equal say in what could happen and so is not definitive.

That said Strait have not stated that they have tendered and won these blocks, and all conjecture (mine included) may be wrong. I think we will have to wait some time to find out who actually owns these blocks.
 
More news from Texas, nice way to finish the week, all going to plan out there. P.L must be one cheshire cat right now.

Wonder where the extra funds are going :D
 
More news from Texas, nice way to finish the week, all going to plan out there. P.L must be one cheshire cat right now.

Wonder where the extra funds are going :D

Columbia? :p:

Interesting report out. Texas news keeps flowing. Big stuff still on track.
 
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