The US$15mln financing deal unveiled by Range Resources (LON:RRL) will start to put right years of under investment in the company’s Trinidad operations, according to chief executive Rory Scott Russell.
Speaking with Proactive Investors Scott Russell said Tuesday’s results and the financing represents a final line in the sand between Range and what he hopes will be viewed as legacy problems.
“We’re drawing the line here. We had to get everything out there warts and all (the annual results). There’s no more talk of a new beginning after this.”
Scott Russell says steering the company in the months since taking over, in February, has been quite a challenge but now he is confident that the group’s difficulties can be overcome and the business will be able to move forward on a more cost efficient basis.
“Really the problem has simply been years of under investment, something which the secured financing addresses. It is not like we’re trying to drill something that might not exist or having to downgrade reserves or lost a licence or something like that.
“The production target is a few months delayed, mainly because it took longer to find the appropriate financing.
“But, despite the disappointment, the encouraging thing is we’ve got a profitable business here.
“Our Trinidad business was profitable on an EBITDA basis generated positive net operating cash flow, which highlights the underlying strength of our Trinidad business and the potential that exists to grow.
“There are a few profitable AIM businesses out there, and I hope we’ll soon be recognised as being one of them.”
New York based investment group Lind Asset Management is lending Range up to US$15mln, starting with US$10mln which can be added to in about six months’ time. Range will have the option to either repay Lind in either cash or shares, and the repayment amount for full US$15mln loan will total US$18.375mln.
Range also reported a US$65mln loss from continuing operations - it made non-cash write-offs totalling US$24.5mln and revealed US$22mln of finance costs.
The gross loss for the year was US$3.2mln.
Scott Russell expects Range’s rigs will soon be turning around the clock in Trinidad, following the investment into the fleet, and as a result he expects production to ramp up to the 1,000 barrel a day target in the first half of 2015.
Once there, the operation will be approaching something close to optimal performance with improved cost management enhancing cash-flows further.
“Our costs are going to be much slimmer. It is a case of building a strong business. So now, with the financing secured our first priority is to get rigs working to full capacity, and we’ll start improving production.
“What this financing will enable us to do is really kick start production growth now.
“We could’ve gone for bigger numbers [in the financing] and all kinds of different structures, but after we undertook a detailed review of all available options, we firmly believe that this facility is the most appropriate and attractive option for us at this moment in terms.
“It provides the company with flexible, medium-term financing can be repaid at any time and has limited security most importantly with Trinidad remaining unencumbered.
“Our problem was not about oil, we have plenty of oil. It has just been a question of financing. Without enough money we couldn’t really do anything.
“Now it’s all down to the delivery.”