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Range Resources: Trinidad news is 'unambiguously' positive, says OPL

Published: 20:41 16 Sep 2013 AEST

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Range Resources (LON:RRL, ASX:RRS) is in a "strong position" to benefit from the improving fiscal landscape for oil and gas firms in Trinidad and Tobago over the next three years, reckons broker Old Park Lane.

It comes after a budget statement on September 9, which revealed measures specifically rewarding those firms with accelerated exploration and development programmes.

Under the proposals, companies will be able to recover 100% of their exploration costs during the first year from 2014 to 2017.

From 2018, they will be able to recover 50% of their exploration costs in the first year, 30% in the second and 20% in the third.

For development work, the proposed incentives allow for 50% recovery of cost in the first year, 30% in the second and 20% in the third compared to the current system which mirrors recovery for exploration costs.

"After a long period of production decline in Trinidad, there has been a substantial expansion of E&P activity in Trinidad in recent years and this is expected to continue as the government improves the fiscal terms available to companies investing in upstream oil and gas activities," says analyst Barney Gray, who rates Range a 'buy'.

"Range is still awaiting completion of the sale of its Texas assets for which the company has received a $1mln non-refundable deposit and has extended the deadline for the completion of the deal. 

"The company will update the market when the balance of the funds has been received. Meanwhile, the news from Trinidad is unambiguously positive and Range is in a strong position to benefit from the improving fiscal environment over the next three years."

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