Puntland scenarios

The other day I worked out my estimated net asset value per share for the two current Texas fields (NCR and RRC), working them out at 19.47p per share should the reserves be confirmed.

I'm also invested in HOIL who are awaiting sale of their share of two Ugandan fields to Tullow.
The price of this sale - $1.5bn for 300mmbbls net - works out at $5/bbl reserves, so thought I would apply this figure to some RRL Puntland scenarios. In my opinion, this $5/bbl figure can only go up based on future oil price.

Lets say we find 250mmbbls total, so a sale price based on $1/bbl (20% of $5) net to RRL of $250m represents 16.8p per share with the following multiples:
500mmbbls - 33.6p
750mmbbls - 50.4p
1000mmbbls - 67.2p
1500mmbbls - 100.8p
2000mmbbls - 134.4p

...and so on.

This is all net to Range and just solely for Puntland.
Even a tiny find of 250mmbbls represents huge upside to current SP but, given that the most recent independent assessment was 18.2billion bbls OIP, I think one man and a shovel could dig up 250mmbbls.

Then, add on the value of Texas, the new acquisition, Georgia..... how high can we go? Are we really still hanging around 5p?

This was keeping me awake last night thinking I must be wrong as I did the sums in my head, but there you go - the figures are there in black and white.

I think it's fair to say we WILL find oil in Puntland when we finally get the drill in the ground, it's now just a question of WHEN.

At current SP, this is almost like buying ten pound notes for a quid each.

As someone eloquently put yesterday "fill yer boots lads"!

DD

wow!

so if we find anything near to expected OIP of 18bill we could potentially sell off puntland onshore blocks for anything like £1.50+

I will certainly be keeping a 100-200k holding here for that day.

Lundin are specialists in building up great assets and selling on for 1000x more. I can see this happening here 2011/2012

any views?

I'd expect the 18.2b bbls OIP to be confirmed, the important bit will be how much of it is recoverable.

10% - 1.82b bbls? Sounds good to me...

Is that the industry standard 10%? what was gkp's find in Iraq?

http://en.wikipedia.org/wiki/Oil_in_place

Quote: "Current recovery factors for oil fields around the world typically range between 10 and 60 percent; some are over 80 percent."

Now, 80%...????? That's what I would call life changing!

GKP's find in Iraq (Kurdistan) was between 2-4 billion OIP, of which they have a 50% stake.

Puntland has always been a great scenario.It's the reason most people are here.But when you work that in with Georgia,Texas,and the new project that is due to improve the nav 50%,then Puntland will be the icing on the cake.I hope PL has more tricks up his sleeve and more projects to follow.I don't want to miss any of it.The best roller- coaster in the world.

leatherneck, he has or you have forgotten. Range also has 100% of the offshore licenses for Puntland. That's 1300klm of coastline. The jewel in the crown of that is the ancient river delta sands off the Nugaal Valley. That is probably the most prospective acreage of any in Puntland.

Once we sell-on the JV reserves onshore, we will be gazillionaires all over again in the offshore basin!!!

Notra a poster on iii claims that the psa for the offshore basins havent been secured yet? is that wrong then? he said its mor than likely we'll get them but its not guaranteed yet?

Who is he I'll pay him a visit!

Twisso! he's a great poster on iii but i think he may have got that one wrong

the offshore PSA's have not been dealt with

for the sake of credibility, it is likely they will be dealt with once AOI/Range can prove they can do what they say they can onshore and mobilise before offshore will be given any further thought

to me that's appropriate

jr

2187 wrote:

the offshore PSA's have not been dealt with

for the sake of credibility, it is likely they will be dealt with once AOI/Range can prove they can do what they say they can onshore and mobilise before offshore will be given any further thought

to me that's appropriate

jr

an email and response from range below

==========================================================

Good morning Mr Landau I am sorry to disturb your weekend but there seems to be a bit of confusion on the subject of Puntland offshore .
Could you please confirm if Range has a licence in place for Puntland offshore as there are two very informed posters on one of the BB,s I attend one seems to think there is , and the other says there is not .
Thanks in advance

----------------------------------------------------------------
Dear Ricky,

Response from Peter Landau:

Thank you for your email. At this stage, there is no formal licence in place (with us or anyone else). However, we are well positioned to get one if we chose to pursue. At this stage we are still evaluating costs/ benefits.

Thank you,

Kind regards,

Sally

On behalf of Peter Landau

So doesn't that confirm what 2187 has already advised? I was wrong in my assumption and 2187 put the record straight, I deferred to his better judgment on the matter.

In my mind following on with the current thread of future potential is if/when a US or Chinese major comes in and makes an offer for the lot?

If they were interested would they be looking at Puntland onshore and buying out that element from AOI and RRL or looking at a T/O of RRL completely to hoover up Texas and Georgia? And if so....................WHEN??????!

I've been in a couple of AIM oilers, for example Aricom where they were absorbed back into POG before they had reached their potential and as such investors whilst doing well missed out on the greater potential. At this stage I would be disappointed if an offer came too early.

I was very happy to see in the above email exchange with Peter Landau that he is confident that RRL and I assume their partners, have first dibs on the Puntland offshore.

On the matter of whether Range would be taken out and at what point in time, I think you need only look at the Director's options that were recently granted.

Whilst they have a strike price of 10 cents (almost in the money already - LOL) they are not tradable and have an expiry date 31/12/2011.

Presuming the Directors are not likely to be either able or willing to pay $1.5million each to convert their options to shares. Then it would appear to me that Mr. Landau has put a deadline on a takeover to be done by 31/12/2011.

The Directors could ofcourse seek approval to have said options converted to shares for no consideration by having whatever amount that would equal the conversion price be waived in lieu of shares granted. i.e. if the shareprice was $2, then they get 5% less shares (based on 10 cents conversion).

Anyway, there's a view of what might lay ahead.

Also, given the Directors interests are now aligned with all shareholders (via these options) then as much as they can get for them, we benefit from the same pricing mechanism.

Expect this month of July to be the mother of all months, announcement wise and shareprice wise.

Good day,

jr

Thank you JR, interesting theory and one that carries a good deal of practical sense. Another question for you - do you think there are any potential surprises lurking with the Puntland Government once oil reserves start to be measured? I know they are playing ball rather nicely at the moment however, I worry a little that once the drills are a little further down the line and the $$ signs start to flash, greed might start to influence their Governmental Policy. Whilst I appreciate that Puntland is autonomous and by comparision with Somalia itself, stable, there are always those out there who will attempt to put a spanner in the works. Watermark Global (WET) have encounted similar issues in South Africa (corrupt but more stable than Somalia) and they appear to be currently held to ransom somewhat.

I hope your prediction to a busy July is borne out also, what with Puntland Rig Mobilisation, detail on 'The America's' aquisition, further numbers to come on Russel Bevly and the Smith Frac, not to mention Georgia I am perched on the edge of my seat, strapped in and ready to fly!!

Mrs. T,

It's all about getting the yanks back into the Horn......

There won't be a problem

jr

Thanks to Twisso on iii

Now that the the room is being decorated for a Puntland rig mobilisation announcement party, I though it would be a good time to dig out some Puntland onshore NAV calculations I worked out a while back.

The first set of calculation is based on drilling one well on each block, proving the Gross Best Estimates published by Africa Oil (link at the end of this post) and targetting the largest prospects (which is unlikely in reality - they should be going after targets that are the least technical and have the highest chance of success). I've then calculated the NAV if all reserves are proven across all blocks/licenses.

The calculations are based on the gross best estimate x 20% which is Ranges interest x $5 for a value per barrel x 50% for the recovery rate. GBP/USD rate used is .65 and fully diluted shares / options (1.6b) were used to derive a price.

Now that the caveats are out of the way....


The two most promising blocks across the two liceses are these -

*****
Dharoor
Potential value if successful = $1810m - $452.5m
(18p to 73p fully diluted)
*****
Kalis East
$2087m - $522m
Potential value if successful = (21p to 84p fully diluted)
*****


If you do the same exercise for ALL the blocks within each licence you get the following numbers, which are BONKERS! The 5 year chart will look like a deranged Jokers smile if this plays out.

*****
Nogal and Darin license
Potential value if successful = $9102.5m - $2276.5m
(92p - £3.7 fully diluted)


Here are my working and a final caveat

Workings

Gross Best Estimate In Place Oil for all Puntland Nogal and Darin blocks =
18,209MMBbl

Gross Best Estimate (MMBbl) for all Puntland Nogal and Darin blocks =
2959.8MMBbl

Range has 20% interest so those figures Net to Range are -
3641.8MMBbl Net Best Estimate In Place Oil and;
910.6MMBbl Net Best Estimate

Going by the reserve estimates only, the two best leads are Dharoor in the Darin block and Kalis East in the Nogal Block.

Gross Best Estimate In Place Oil for Dharoor in the Darin block =
3620MMBbl (Net 724MMBbl to Range)
Gross Best Estimate for Dharoor in the Darin block
905 MMBbl (Net 181MMBbl to Range)

Gross Best Estimate In Place Oil for Kalis East in the Nogal Block
4174MMBbl (Net 834.8 MMBbl to Range)
Gross Best Estimate for Kalis East in the Nogal Block
10440MMBbl (Net 208.8MMBbl to Range)

Data source - http://www.africaoilcorp.com/s/Reserves_Resources.asp



These calculations are proved as is and with the assumption that you're intelligent enough to pick apart the numbers to reach your own informed conclusion.

Enjoy