Range Close to Sale of Trinidad LIcences
UK-listed Range Resources has agreed to sell its oil and gas projects in Trinidad & Tobago, it said September 3, leaving it debt-free.
Its creditor Hong Kong-based LandOcean Energy Services is to take over Range Resources Trinidad (RRTL) in exchange for offsetting all outstanding debt and payables – including a $20mn convertible note – estimated at $91mn, and a cash consideration of $2.5mn. The deal is subject to government and both companies’ shareholders’ approvals and so it might not go ahead.
The first tranche of the cash consideration of $0.5mn will be payable upfront as a deposit. Range will provide mortgages over its workover and swabbing rigs as security, with such mortgages to be released upon completion or termination of the agreement.
As part of a wider restructuring, Range said it continues to evaluate new opportunities and to review its strategy with regards to the drilling business in Trinidad and interests in the oil and gas project in Indonesia.
Range chairman Kerry Gu said the deal, if it proceeds, would leave Range “completely debt-free” and with sufficient cash resources to progress with new opportunities. He added that the consideration value of RRTL of almost $95mn was a “testament to the quality of our Trinidad upstream assets.”
Range will also continue to evaluate new acquisition targets and review opportunities for its drilling business in Trinidad and interests in the Indonesian oil and gas project, he said.
RRTL holds interests in all of Range's oil and gas licences in Trinidad (onshore), namely Morne Diablo, South Quarry, Beach Marcelle (where RRTL holds a 100% interest), and St Mary's (where RRTL holds an 80% interest). In the quarterly activities report for the three months ending 30 June 2019, the company reported that total oil production by RRTL was 45,590 barrels, or 501 b/d. Net proven and probable reserves attributable to the Beach Marcelle, Morne Diablo and South Quarry licences were reported as 15.2mn barrels. RRTL's losses for the year ending 30 June 2018 were $14,810,577.
Analyst Malcolm Graham-Wood in his blog said it was a "cracking deal for Range," with "cash resources bringing increased liquidity and of course improved shareholder sentiment. Getting $95mn for these assets is by any matter of means incredible and should have an immediate knock on effect for other players in the area."