ABN 88 002 522 009
Level 3, 1 Havelock Street
West Perth, WA 6005
12 July 2010
Company Announcements
Australian Securities Exchange
Exchange Plaza
2 The Esplanade
PERTH WA 6000
By Elodgment
RANGE ACQUIRES INTEREST IN ONSHORE TRINIDAD OILFIELDS AND LOCAL DRILLING COMPANY
Highlights
·
Range signs HoA to acquire a 10% ownership interest in holding companies whose wholly
owned subsidiaries hold three production licences in producing onshore oilfields in
Trinidad and significant local onshore drilling operations.
·
Trinidad has produced over 3b bbls and currently produces 100,000 bopd with both major
and smaller operators. All locally produced onshore oil is acquired by the state owned
refinery with logistics already established.
·
Independent experts Forrest Garb and Associates
1
have assessed that the producing fields
subject to this agreement contain:
o
Proved plus Probable Reserves (2P) of 4.8 million barrels.
o
Undeveloped Prospective Resources of 20 million barrels.
·
Current production is 700 bopd (100% basis) with a planned work program expected to lift
production to more than 3,500 bopd within 36 months on known reserves.
·
Planned production doesn't take into account exploration upside with significant potential
from deeper formations which host substantial producing reserves on adjacent blocks,
including reported 3P reserves (of third parties) of 30 MMbo for one such reservoir
formation.
·
Acquisition comes with established drilling inventory (including suitable rigs), personnel
and operations all in place on site.
Australianbased oil and gas company Range Resources Limited ("Range" or "the Company") has
entered into a binding Heads of Agreement ("HOA") through SOCA Petroleum ("SOCA") to acquire
its rights to a 10 percent interest in companies whose wholly owned subsidiaries hold production
licences for three blocks in producing onshore oilfields in Trinidad (see Figure 1) and a major local
drilling company.
The production acreage and operating wells cover the Morne Diablo, Beach Marcelle and South
Quarry oilfields, with the total acreage covering 16,253 gross acres on the southern coast onshore
Trinidad. Current production from the fields is 700 bopd, however Range believes a minimal work
program could lift production to more than 3,500 bopd within 36 months on the known reserves.
In addition to the two subsidiaries holding production licences for the
onshore acreage, the
proposed Range acquisition also includes a 10 percent interest in the parent of a wholly owned
drilling company (located in Trinidad), which owns five onshore drill rigs, three production rigs, one
swab rig and a full workshop and pipe yard, storage tanks and facilities.
Importantly, Range will be carried through initial development expenditure. The company is
planning to use companyowned drilling rigs and equipment and, with cashflow from existing
production, is expected to be selfsufficient (other than a significant initial working capital injection
of which Range will be carried) in its forward program which aims to increase the production from
700 bopd to 3,500 bopd within 36 months from known reserves without taking into account any
exploration upside.
In addition to the known reserves, significant potential exists in the deeper Herrera Formation (refer
below). The Deeper Herrera Formation will be a primary target of future drilling using company
owned drilling rigs, which are capable of reaching the depth of these formations. Subject to the
successful drill testing of this formation, the Company is ultimately targeting an increase in the
production level to between 800 1,000 bopd attributable to Range.
Range's executive director, Peter Landau commented, "the acquisition represents the last of Range's
`pre Puntland drilling' strategic plays of seeking early stage, low risk production / mature exploration
opportunities with exposure to measurable exploration upside to complement its existing
portfolio."
"Onshore Trinidad is a low cost, high operating margin environment with oil production sold at the
wellhead, with oil production transported to the PointeaPierre Refinery, which has capacity for all
additional planned production."
"The Company believes that there is significant potential for value enhancement given the known
management team and target an ultimate production profile of 1,000 bopd (attributable to Range)
over the next 2 3 years (fully funded)," he added.
Consideration
Under the terms of the HOA, Range is required to pay two instalments:
US$2m upon execution of definitive agreements; and
US$2.25m upon formal completion of the acquisition.
Technical Overview of assets to be acquired
Historical and current oil production is from the Forest and Cruse Formations which are shallow
fluviodeltaic reservoirs with Proved plus Probable plus Possible Reserves (3P) of 20 million barrels of
oil (MMbo) (Forest A. Garb & Associates report
1
). Current production is approximately 700 bopd
from the Morne Diablo, South Quarry and Beach Marcelle fields.
Figure 1. Location of License areas onshore Trinidad
Significant potential exists in the deeper Herrera Formation. The Herrera Formation is a Miocene
aged deepwater turbidite. Production is typically found in the northeast to southwest thrusted
structures to the east and north of the subject acreage, where the Penal field has produced more
than 60 MMbo to date. 3D Seismic was used to identify prospective drilling locations in the license
area that have a further undiscovered oil potential of 100 MMbo.
The Deeper Herrera Formation will be a target of future drilling using companyowned drilling rigs,
which have the capability to reach these formations.
An independent recoverable reserves assessment by Forrest A. Garb & Associates
1
has provided the
following certified Reserves and Resources for the 3 blocks.
Oil and
Condensate
(MMbbl) (100%)
Attributable to
Range (10%)
Proved Reserves
2.6
0.26
Probable Reserves
2.2
0.22
Possible Reserves
2.1
0.21
Total Reserves (3P)
6.9
0.69
Prospective Resources (Undeveloped)
20
2.0
The planned forward development program encompasses replacement, infill and stepout wells and
deeper horizon drilling on the licences, as the current fields exploit only 5 percent of the available
area.
Geological Background
Geologically, Trinidad lies on the South American tectonic plate and falls within the Orinoco Fold Belt
which is a prolific oil producer in adjacent Venezuela some 14km to the southwest. The area is
recognised as a worldclass petroleum province with over 3 billion barrels of oil produced to date
and current production in the order of 100,000 bopd.
The Morne Diablo, South Quarry and Beach Marcelle
licences are all within a complex thrust belt, with
surface expression known as the Southern Range. The
Southern Range, which contains numerous oil seeps,
stretches from west to east forming the south coast of
the island. Fluvialdeltaic sediments, ranging to tidal
and wavedominated, characterize the shallower
producing zones in the Morne Diablo and South Quarry
fields.
Due to growth faulting in the Beach Marcelle area,
these sands are thicker and better developed there.
The Plioceneaged Cruse sands (orange layers in Figure
2), can be segmented into 3 different members. The
Lower Cruse is productive in the area, but largely
unexplored. Just above the Lower Cruse, the Middle
Cruse is widespread, and is the main producer in this
area. The Upper Cruse consists of nicely developed sands that offer the possibility of more localized
production.
The Plioceneaged Forest sands (pink layers) represent the shallowest targets. Forest sands are
comprised of two main oil producing members. The Lower Forest ranges from 250 to 300 meters
deep, and the Shallow Forest ranges from 100 to 150 meters deep. These sands are ubiquitous, and
are the shallowest most accessible targets. In the Beach Marcelle area, the Forest equivalent is
called the Gros Morne formation, where the company is considering reactivation and expansion of a
waterflood to increase production. The deepwater turbidite Herrera Formation (green layers) is a
prolific producer to the north, and is the target of future exploration drilling on the existing licenses.
Most of the fields are simple fourway dip structural rollover anticlines with significant closure to
create multiple oil entrapment horizons. In some areas these anticlines show overturned reservoirs,
thereby creating repeated reservoir intervals capable of trapping oil
_________________________________________________________________
On iii board:
Range will be carried through initial development expenditure I just love the term in this case
" Cash and carried "
" Whats currently not evident is the size of the expected field with that lower drilling, very much like prior to Smith 1 except this time the project comes with income and drilling assets
For 10% it costs Range $4.5M, so upwards of $45M for current asset, obviously more will unfold, rumblings of this one have been around for awhile as to potential, early days and I expect more on the asset will shortly unfold, could be 2-3 drills working on this site alone at any stage, the equipment will not be left around to sit idle and rust be assured "
Posted by MegaOil
___________________________________________________
Hotcopper view :
Whats not to like?
Low Cost
Low Risk
Attractive Upside Targets
Already Producing
Drill Rigs x 5 Owned and Operated
Very Importantly Range will be carried through initial development expenditure
Another very good aquisition on very favorable terms.
Onwards and upwards IMO.
Next cab of the Rank Texas Fracc Results and Flow Rates, which we would have to assume are very very good considering how long it is taking to release pressure?
Georgia Seismics Results due late July early August Confirmed by RRS, this IMO will really be the main share price driver short term, and would expect upon these results and Georgia Drilling Strategy release will see us through around 20-30c IMO.
Cheers
jamit01
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