Transcript: Range Resources Ltd –Peter Landau, Executive Director. 05/09/2013Question 1: Range Resources
(ASX:RRS) primary focus is on producing onshore oil fields in Trinidad. Executive Director Peter Landau outlines the company’s direction for the coming 6-12 months.
Peter Landau: Trinidad has always been our main focus and we have been waiting for two key events to fully finance what we are doing. The first one is the sale of our Texas assets, which has recently been concluded; and the second is the reserve based lending facility which should be concluded in the next week or two. With that in place, we can then basically fully exploit what we want to do in Trinidad.
We have the three blocks plus the Niko farm-in. On the Morne Diablo, South Quarry and Beach Marcelle block, over the next six-12 months there is probably at least 55 wells both new wells in terms of Lower Forrest, Middle Cruz and Lower Cruz. There will be three Herrera’s in addition to 12 deepening of wells in the Beach Marcelle block. There will be the commencement of the waterflood at Morne Diablo and then physical production from the waterflood. There will be commencement of the injectors in to the Beach Marcelle waterflood, production is probably going to be after a 12 month period.
With that plus two wells with the Niko farm-in, it is a pretty significant rollout that we have got going. We aim to increase production from current levels circa 1,000bpd up to –if you include the Morne Waterflood –around 4,000bpd. That’s our six-12 month target based on our P1 and P2 development and doesn’t include any exploration success we have on the Herrera’s or any of the wells we drill on the Niko farm-in.”
Question 2: The Company has entered in to a farm-in with TSX-listed Niko Resources. Can you please take viewers through the key aspects of the deal, and why this is important for Range Resources
(ASX:RRS)?
Peter Landau: Two points initially straightaway are geography and geology. Geographically, obviously the block is next door and fits in well with our existing operations and with the Niko block our onshore acreage position puts us definitely in the top three in Trinidad.
Geologically is why you do these things in the first place. They have done comprehensive 3D seismic both onshore and offshore and we think there are four genuine fields to be tested onshore and each of those fields are looking at anywhere from 20-30 million barrels recoverable per field. Then you have the offshore areas which can be drilled from onshore, and they are both oil and the potential for gas as well.
The significance is: one; land acreage, and two; the 3D seismic has been done and we do have the capability of drilling and getting it done in terms of getting those wells completed. More importantly adding to our P1 and P2 reserves.
Question 3: Trinidad is set to announce another round of licensing applications. Is Range Resources
(ASX:RRS) looking to apply and expand its footprint further?
Peter Landau: Everyone on the island is in the data room. There are three blocks up, and we are very interested in one of them. End of October is the time period for submissions so we will definitely be putting a bid in for one, if not two, of them.
Question 4: How are discussions revolving around lending facilities progressing?
Peter Landau: It is far more advanced than discussions; our RBL (Reserve Based Lending) has been a significant process. We have had both independent technical visits and reports done on our assets, both corporately and in Trinidad, so we are past that due diligence aspect and it is now just finalising the documentation for drawdown.
Imminent is the best word to use because it has been a longer process but we are almost there and very comfortable that we will be able to drawdown on the RBL, which in addition with the Texas sale will allow us to have sufficient capital –not just for Trinidad but other operations as well.
Question 5: You are developing a strategic alliance with a leading oilfield services provider –can you provide any comment on the progress of this relationship?
Peter Landau: The comment I would want to provide, especially without naming them, is especially with the Niko farm-in we are going to need an additional rig –if not two. The alliance we are looking at is to utilise one or two rigs, additional parts, crew and maintenance. But more importantly instead of just paying for it under a usual contractor/sub-contractor relationship, we are looking potentially for what you would call vendor finance type terms where they would take some risk and be paid out from oil produced from the wells. So either deferred payment terms with a bit of a kicker, or deferred payment based on revenue out of the wells.
It could be a very interesting relationship. The rigs are available, the parts are available, and shareholders are well aware of some of the troubles we have had with existing equipment and the need to bring in parts and fix up our current equipment. We believe the relationship could be very significant as we get our six rigs up and running at one time and more importantly take two of theirs.
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