Range Resources Secures Funding Boost and Agrees New Deal on Second Puntland Well
he AIM and ASX listed oil and gas group said Thursday morning that it had secured a three year £20m equity line facility to help fund the rapid development of its assets. The deal has been set up with Dutchess Capital and will allow Range to access cash when it needs it by issuing shares at a 7% discount to market value.
In today’s update, Range said it was also now set to be carried on the second of two wells planned to be drilled on its licences in the Somali state of Puntland later this year. The move comes after it emerged that its joint venture partner on the project, Africa Oil, still has US$15m of expenditure commitments outstanding in the region as part of the agreement between the two sides. The Range Resources share price responded with a 0.2% dip to 9.1p during morning trading in London.
Earlier this month, the JV partners negotiated an extension with Puntland officials to production sharing contracts covering their Dharoor Valley and Nugaal Valley exploration areas. Under the terms of those contracts, the partners are committed to spud a minimum of one exploratory well in Dharoor Valley by July 27, 2011 and a second well in either Nugaal Valley or Dharoor Valley by September 27, 2011. The JV agreement obliges Africa Oil to spend US$22.5m in both Dharoor and Nugaal before Range reverts to a contributing basis. With US$15m still not spent in Nugaal, the two sides have agreed that Range will be carried for the first US$15m spent on the well that is drilled there.
Peter Landau, Range’s executive director, said: “Alongside our existing funds, this facility will allow the company to continue its rapid development of assets. Importantly the facility allows the company flexibility to draw only as needed and therefore protect our shareholders from unnecessary dilution as well as restrictions on the lender with regards to the borrowing and short selling of Range shares.”
Range has a broad geographical spread of projects, with its main focus being on the prospective terrain in Puntland. It also has exploration and production interests in Texas, US, the former Soviet state of Georgia and Trinidad.
Landau said the company was “very well placed” to fund its comprehensive drilling and development programme during 2011. Range now has cash available from the new facility, existing funds, a farm-in deal with Red Emperor in Georgia announced earlier this month, the Africa Oil carry on the second well and option exercise monies and revenue from its Texan operations.
