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Range Resources

Malcy's Blog

(ASX:RRS / AIM:RRL / PINK:RGRLF & RGRYY)
Informed Discussion. No ramping. No deramping.

Malcy's Blog

Post Fri Mar 16, 2018 3:36 pm

Range Resources
Interims to 31/12/17 are out this morning and present a welcome return to health for Range where genuine operational focus is leading to positive results. I visited Trinidad last week and was allowed full access to all its operations and met with CEO Yan Liu and the new COO, Lubing Liu, no relation. As readers know I always think that field trips are important for two main reasons, one obviously to take a look at the assets but also to spend some time with the management and the operational leaders.

I am happy to say that Range ticked the boxes in all these areas, operationally things are picking up and specifically, as can be seen in today’s results, the Beach Marcelle waterflood is reacting positively to investment of time and money. We were also able to take a good look at the fleet of rigs which are indeed modern and in one case almost ready to go out on assignment. On the management front it was more important than usual to meet the CEO, Mr Yan Liu who as far as I know has not yet met many analysts or investors, this being the first visit to the company for some considerable time. He, and the new COO who is new in his position but not to the company, having been a non-exec until recently are clearly hands on and determined to make a success of the company.

Today’s results therefore give an indication as to how things are progressing under their charge, early doors admittedly but there are definite signs of a recovery. Operationally, in Trinidad production in the period averaged 606 b/d, up 22% which was mainly due to concentration on the waterflood programme, selective development drilling where two wells were brought on-stream, and with workovers where 130 were completed. The Beach Marcelle waterflood is a ‘vast majority’ of the company’s reserves in Trinidad and it already accounts for around 30% of production.

The recent CPR confirmed net 2P reserves of 16 MMstb and net 2C net resources of 8 MMstb which gives plenty of room for upside now that the work programme is being put into action.

In Indonesia the company are in the process of building an experienced operational team and undertaking initial geological and geophysical studies as well as preparing a suitable work programme for which a budget is being finalised. Here the CPR gives Range confirmed net 2C contingent resources of 10.9 Bscf and 3.1 MMstb. The company has a fairly undemanding set of work commitments and I expect that they will easily pass through them as they re-initiate production in this area.

The RRDSL acquisition gives Range a Trinidad based fleet of modern drilling rigs, workover rigs and equipment that will reduce costs and provide ‘operational flexibility’ as well as expand its third party client base. We saw rig 19 ready to go onsite and I noted that the drilling manager had already made some very smart adaptations so that it could be used in tight locations with a smaller load of kit if needed, often the case here. Rig 16 is a more powerful rig and could easily be moved elsewhere in the Caribbean or nearby Latin America as it can easily handle a +13,000 foot drill, deeper than normal on Trinidad. We also saw a number of workover rigs either working or on warm stand-by all having been used recently either by Range or for other local drillers, the fleet is more modern than almost anything in the region and whilst margins could be better will provide very useful ‘flexibility’ as they say.

On the numbers things are also looking up, there is a 77% reduction in pre-tax losses to $8.5m, revenues are up 39% to $5.4m and with opex down 14% to $34.50 a barrel and G&A down 40% things are moving in the right direction. Cash is $10.9m down after recent spending and for the first time in a while the CFO hasn’t had to report an impairment charge.

It has been a long haul but much went on when the shares were suspended last year, as the operational success in Trinidad continues, Indonesia starts to see some action and RRDSL gets some 3rd party work should easily see Range be back on the right road.
Celticheart07
 
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