Range Resources
Range Resources Limited is both an ASX and AIM exploration Company, with its principal activity directed towards finding and delineating natural resources in the oil, gas and mineral sectors in Puntland, Somalia. Puntland is believed to have all the geological requirements to become a commercial oil-producing region. Somalia, and in particular Puntland, remains one of the last under-explored countries that has a high potential for considerable reserves of hydrocarbons which can be subsequently developed for the benefit of both the people of Puntland and Range Shareholders The Company believes that through the generation of work and government royalties from hydrocarbon and mineral exploration and development numerous social and economic benefits will result.
Interview with Range Resources
Please would you give us a brief introduction to Range Resources?
Range is listed on both the ASX and The London AIM markets; it’s focused purely on Puntland, which is an autonomous region in northern Somalia, on the true horn of Africa. Range initially got involved following an introduction through a western Australian charity group that had been assisting with the Tsunami relief effort. The president of Puntland, Mohamed Musa Hersi, asked if the charity group knew of anyone that would like to get involved in the development of Puntland's natural resources - because for the last decade, everyone had seen Puntland as synonymous with Mogadishu and all of the problems that faced Mogadishu people would automatically be assumed to extend into Puntland.
So we initially spent three months in Puntland with some NGOs, and then spent the next six months negotiating a formal contract of work with the government of Puntland. So as of today, we effectively have an interest in two major onshore delineated oil basins, the offshore oil concessions of Puntland, as well as some select mineral tenement areas - predominantly silver, lead, zinc, with potential for some uranium and coal as well.
Please fill us in on Puntland, Garowe, and Puntland’s relationship to Somaliland and to Somalia.
[Laughs] Somali politics is not straightforward.
Garowe is the capital of Puntland; it’s between 800 and 1,000 kilometres north of Mogadishu. The current set up of greater Somalia: you have Somaliland in the west, which is the former British colony, which basically has said it would like to be an independent country, and runs itself as an autonomous region. Directly east of Somaliland, you have Puntland, which also runs itself as an independently autonomous region but, unlike Somaliland, currently has said that if a federal Somalia can be established in the south then Puntland would be part of a federal Somalia - which is distinct from Somaliland which has always said it would like to be independent. In Puntland and Somaliland there is one distinct tribal unit, whereas in the south, in southern Somalia, there are both competing tribes, there are competing warlords and there are also the Islamic courts as well. Hence, everything you read about Mogadishu is pretty accurate, it is a very unstable city and the outcome of where southern Somalia will go is probably unknown at this stage. They have what is called the Transitional Federal Government (TFG), that has a charter to form a “Federal Somalia” which would obviously include Puntland and Somaliland - Puntland will only be part of it if the terms of a Federal Somalia are acceptable to it. The biggest problem that the TFG faces is control of their own region, given the competing interests of local warlords and the Islamic courts. There is no argument that southern Somalia is still one of the most volatile regions in the world.
Pete, what makes it credible that your prospects in Puntland could hold five or more billion barrels of oil?
That assessment comes from an independent expert that was engaged as part of our AIM listing process, in aid of the competent persons report, and that was a review of all data that was prepared by the former concession holder, Conoco - who were there in the mid eighties, very early nineties. Now, they obviously undertook a significant amount of exploration including a seismic programme and the drilling of, I think it was three wells, and the independent assessment of the Nogal valley - which is the southern valley - is in place; with reserves of potentially, between two and ten billion barrels.
Now, remember we also have the Northern Dharoor Valley, which geologically is almost a mirror image of Nogal and the two main basins in Yemen. None of the work that Conoco did has been applied to the Dharoor valley, so whilst from an exploration perspective it is nowhere near as advanced as the Nogal Valley, it is considered just as prospective. So, we would anticipate the numbers - similar sort of “in place” numbers that have been independently assessed in Nogal - to exist in Dharoor. And then, obviously, you've got the offshore as well, which is probably the least explored region.
How accessible are the structures that hold this oil on your prospect?
[Laughs] That’s the million dollar, or multi million-dollar question.
Are the trap structures and the appropriate seals in place to produce the giant oil basins that we hope that are there? Now, you are looking at two pay zones, one starting around 8,000 ft and the other at 12,000 ft. In terms of drilling environment, obviously they are quite deep, but on the surface the infrastructure is there, it’s not difficult, there's a sealed road providing easy access to rigs and crews. Currently all the camping, drilling and headgear and everything associated with the programme is being established in Puntland. And upon a discovery, the ability to build what would be a 150 to 200 km pipeline for the coast is not considered of any great engineering difficulty. Right now it looks like the oil is definitely there and drilling will tell us whether or not the structures are going to be there.
What is Range’s deal with Africa Oil?
We're not oil and gas people, technically, we are all from various mining and resource backgrounds, and one of our first jobs when we took on the Puntland project was to find a credible joint venture partner. Now, Africa Oil and the personnel involved all have decades of experience in exploring and developing oil fields across the world, in particular in Yemen, which is considered the geological equivalent of what’s in Puntland. And so to have them as a joint venture partner on the two onshore basins is obviously, we believe, incredibly beneficial for what we're doing. They basically spend US$50 million with a minimum commitment of four wells to earn 80% of the two main onshore basins, Nogal and Dharoor. So Range is free carried for the first fifty million dollars on its twenty per cent. We're obviously contributing after that, but we also retain 100 per cent interest in the offshore, as well as 100 per cent in the mineral rights.
Has Range Resources been affected by the Opes Prime or Lift Capital affairs?
Well, Lift Capital we aren't sure of at this stage, but based on our knowledge of our share register, we doubt it.
Opes Prime: none of the directors, obviously, held their stock through Opes Prime and it was less than one per cent of our share register – I think it was 1.4 million shares - was caught up in Opes Prime, which has already been sold.
What are your thoughts about the AIM market and the ASX markets these days?
[Laughs] Well, it’s interesting in terms of the ASX market.
I think what’s happened in the last three months, in addition to Opes, is that people are going to have an incredible re-rating. One obviously reason is being down in line with world markets, but obviously the credibility of the junior, small and mid-cap sector, based on Opus and Lift and Tricom earlier, may come into question. Alternatively, the fact that this has come out now, it might clean up the market. The ASX market has always been considered a very good market for liquidity purposes, given that Australians are, on a percentage basis, the largest holders of stocks in the world. More Australians hold stocks on the stock market, per population, than anywhere else in the world. So, from a liquidity perspective and a marketing perspective, the ASX has always been a very good market. The AIM market is much more renowned for being a very good market to raise capital. Obviously, institutionally, with all the major funds based in London, the AIM market is a very good capital raising market. It does suffer from liquidity issues. Then you've got a joint listing in that you basically do have the beauty of having both ASX and AIM, where you have the liquidity of ASX and the ability to raise major capital on AIM – which we did last year; we raised over A$25 million dollars.
I've got a long question coming up now Pete. What are your comments on the article, “Minerals Minister accused of receiving kick-backs in the six figure number”, published in the Somaliland Times on 22nd March, and reproduced on the website Garowe online on the 29th March?
The comment is as stated in the company announcement that we made in relation to the article. Obviously, the allegations made were completely untrue, and as we stated in the article, the Minister has commenced proceedings against the Somaliland Times for the article. The comment I would make more of as a general point is given the potential for what is in Puntland, in terms of the size of the oil potential, and the fact that it is still seen as politically unstable, although we are comfortable, the whole region is seen as politically unstable, there are a number of commercial interests that will try and destabilize what is going on in Puntland. When you are talking anywhere of five, ten, fifteen billion barrels, it is one the largest known onshore prospects in the world.
Pete, what can we expect from Range Resources over the next six months?
The next six months is probably the most exciting time in Range's existence. We've got seismic crews ready to commence seismic shooting on the northern Dharoor basin, onshore. We've already commenced rig mobilization with the spudding of the first of two wells, this year. In Nogal we've a spudding date in July, this year. Obviously, all going to plan, we will then have another well being spudded September, or October. So, the first of two wells will definitely be done this year, based on current timing, and we'd hope to have announced a joint venture partner for the offshore.
Where do you hope to see Range Resources in the next five or six years?
The hope is that with our joint venture partners, we will have found and developed producing oil fields, the benefits of which would have been passed, not only to Shareholders and to Range and Africa Oil, but also to the people of Puntland. Under the production sharing agreement, they effectively are entitled to - if you take into account the off the top royalty and the profit share - call it around fifty, fifty-five, sixty per cent of the oil that we hope is there. So, the benefits to Puntland are going to be significant and, likewise, the benefits to our shareholders are going to be significant. So, either Range will be enjoying a significantly increased market capitalisation and potentially pay dividends at that time, or we would have been taken out by a major by that time.
Other Range Resources articles
Other Range Resources news
-
21/11/08 Range Resources denies ‘defamatory’ comments by Australian broadsheet over alleged ties to Somali pirates
-
01/10/08 Range Resources aiming to spud first well around year end
-
23/07/08 Range Resources shuffles board of directors
-
16/07/08 Range Resources seismic programme starts
-
30/05/08 Firebird Global Master Fund increases stake in Range Resources
-
27/05/08 Range Resources confirms arrival of seismic equipment
-
29/04/08 Drilling delay hits Range Resources hard
-
09/04/08 Range Resources challenges defamatory article
-
03/04/08 Range Resources says Opes Prime holds less than1%
-
26/03/08 Range Resources rebounds on Puntland update