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Range Resources

£4M Placement What Could happen

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

Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 12:30 am

Twine.We have 6 clapped out rigs (and 300 untrained locals) that have taken 3 years to refurb. You are right in saying "our setup is not like other small O&G". there is not many small O&G where the management have raised so much moolah and 'lost' it

As for "Do you know what the 100% needed is" None of us of do but I do know that banks expect borrowers to have some significant skin in the game. The Texas money would allow that or as Sue has said said significant increase in BOPD but neither look likely short term.
.

Oma. re your "I do agree with Mimi on the 100%"

Can I just point out that I am only Mimi on a weekend!
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 12:33 am

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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 12:58 am

Hi Oma

Do you know what % of any RBL Range requires immediately for the planned waterflood ?

Do some RBL facilities have deferred payment periods at the beginning ?

Just curious to know why we need RBL at this moment in time and the amounts we need, especially as most rigs have been fully overhauled over the last 6 months at the cost of constant dilution to us shareholders.

Thanks Sue
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 1:14 am

OMA , exactly......... now you include it in your list...... "other forms are used".......... And therefore comparison to other examples go out of the window. And 100% IS an option.

But again the question you should ask is how much is the 100% ? None of the intended (if drawn) final figures you have used are correct but only time will show that to be the case.
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 1:15 am

Also hasn't it been mentioned RBL is usually drawn down on certain amounts at certain milestones, if this is the case its not like we are going to be given 100m dropped straight into the bank.

If we only require say 10m for stage 1, then isn't the lenders risk reduced massively ?
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 1:25 am

Mini, I knew that you would come back with that. Whatever you think of our rigs (I am fully aware of the poor track record with some of them) and our now significant list of supplies and equipment they have a value far greater then people think. What people need to remember is we have more assets in T&T than just the right to extract oil on certain claims, and that is why comparison to other RBL and funding cases makes no sense. Anyway looks like we won't see eye to eye on this so will have to wait for it to play out.
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 1:29 am

Sue, exactly.... it has been raised before but some people like to ignore these things. As I say we have more than enough assets to cover risk.
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 2:53 am

miniboy wrote:
> Twine. No they haven't but that is irrelevant.
> Let me rephrase. Banks do not lend small
> O&G companies 100% of the money they need even if with proven reserves
> let alone give 100% where exploration is involved.
> If you have seen any I would be very interested to understand more.


Mini

This is what they need to read

http://www.ogfj.com/articles/print/volu ... nance.html

As for 100% the only 100% they can borrow is 100% of the facility agreed which is not going to be 100% of the net discounted cash flows.

This is for starters.

You will see that an RBL would normally be the only debt facility which means all the other borrowings would need to be repaid and the facilities cancelled.

The £4m placement resolution 3 mentions that its purpose is for debt repayment and working capital so as I have said before I believe we need this in place to arm Rory with all the weapons necessary to both protect the share price and expand production.

That said this placement is only to be used progressively because it may not be necessary depending on when Range manage to obtain money from either the Texas or Georgia assets or the repayment of the IOP loan.

Additionally it is possible that Range could borrow against the Guatemala assets or even sell them. This will be considered by Rory in his strategic review.

His main goal is the protection of shareholder value which means the last thing he wants to do is dilute and he would only do this if he had no other option.

Increasing the oil production in Trinidad is critical and I would imagine that his new VP's will be working flat out on this as intimated by Buchanan's.

I am pig sick of the constant share price manipulation, as is the company we have been told, so stopping the issue of shares to Yorkville is critical.

I realise this is a simplistic view of things with no conspiracy theories but we must give the new management time to get Range moving in the right direction and all the negative sentiment is no help in that, neither is voting against the new CEO in his first GM, however frustrated you are.
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 2:58 am

Hi Mini

I had missed your post with the same attachment I put in.

What is that saying, "Great minds think alike".

Not necessarily in all things but at least we can agree on the 100% and important things like getting this share price above 5p.

ATB

Rex
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 3:00 am

miniboy wrote:
> Twine.We have 6 clapped out rigs (and 300 untrained locals) that have taken
> 3 years to refurb. You are right in saying "our setup is not like
> other small O&G". there is not many small O&G where the
> management have raised so much moolah and 'lost' it
>
> As for "Do you know what the 100% needed is" None of us of do but
> I do know that banks expect borrowers to have some significant skin in the
> game. The Texas money would allow that or as Sue has said said significant
> increase in BOPD but neither look likely short term.
> .
>
> Oma. re your "I do agree with Mimi on the 100%"
>
> Can I just point out that I am only Mimi on a weekend!

But Mimi it is the weekend
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 9:24 am

kev yorks wrote:
> I'm curious what the next theory will be when the current ones are blown
> out of the window as no where have I seen them state they intend to issue
> 500m shares.
> Even if they wanted to raise 4m which they don't it'd be done off the back
> of positive news so at a higher level anyway................. unless your
> saying the company are complicit Oma and working in cahoots with persons
> unknown?
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 9:27 am

MMM,

I wouldn’t short to try to gain 20% when the share could increase 100% plus in a corresponding period of time. I can take this position because I have further funds to invest.

SUE,
The last figures I had for BM water flood was an initial cost of $12M. However since then RRL have indicated they may consider N2 injection. I was also given an estimated cost of $8M for capital equipment. I’m working on an initial drawdown of $20M.
I’m not familiar with any RBL that will lend you money to pay the initial service costs. There are also set up fees to pay and an annual % fee for the portion of the loan not drawn down. Given the nature of the security that the RBL lender will require, it would not be wise for RRL to start in a –ve equity position !
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 10:58 am

OMA

Must admit I am not familiar with the costs associated for the Beach Marcelle water Flood

If we work on the assumption of using Water Injection rather than Nitrogen do you know how many Injectors are required ? How much the Injectors cost ? Will the Injectors be placed in the the wells that Rig 6 is on its way to work over and deepen.

Thanks Sue
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 11:12 am

Ok Im a little confused now as to which Water Flood program we need some RBL for is it for Morne Diablo

Following the final receipt of approvals on the proposed water flood programme for Morne Diablo, Range said it will now commence field development with surface equipment and facilities installation followed by a targeted production rate of up to 650 barrels of oil per day (bopd).

On its Beach Marcelle water flood programme, Range said: “The current focus remains on expediting the ongoing engineering and simulation phase of the waterflood programme in parallel with moving a rig to site to begin well integrity and workover operations. The current programme will be targeting additional fault blocks within the Beach Marcelle license, not yet previously waterflooded, yet comprising a portion of the 12.8 million barrels (75 per cent of Range’s proved undeveloped reserves).

“The new technical team has looked at the data and has identified additional recoverable reserves, which will be formalised after full appraisal. Once production commences, the waterflood programme is expected to add 3,000-3,500 bopd for a minimum of eight years.”

In addition, Range said it is currently assessing the potential of a turnkey facilities contractor for the Beach Marcelle waterflood project and the use of nitrogen injection to assist in better recoveries and economics. “Nitrogen gas injection is one of the most-commonly used approaches in enhanced oil recovery. The nitrogen injection increases the pressure in the oil wells so that fossil resources can be more easily recovered and oilfield yields significantly improved,” the statement said.
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 11:39 am

Found it :-)

Within the Morne Diablo license is the shallow pilot water flood program over 8 acres (refer to photo below), which has produced an incremental 35,000 bbls since its inception in December 2009 from a depth of circa 150-300 ft in the shallow forest formation. It is the intention of commencing the expansion of this 8 acre pilot program up to a total of 80 acres with the commencement of injection early 2013 subject to approvals, targeting a production rate of up to 700 bopd estimated capex of circa $2.5m.

[attachment=0]trinidad2.jpg[/attachment]
Attachments
trinidad2.jpg
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 11:49 am

Sue,

Not my area of expertise. I asked for the rough capex figures for BM on the basis that with 75% P1 reserves in BM it gives an indication of the initial loan tranche for an RBL

Oma
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 11:53 am

But isn't Beach Marcelle a way off yet and as such wont require any RBL at this stage.

Just to summarise what I am trying to say is why do we need a large RBL facility at this point in time ?
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 11:57 am

Sue,

My assumptions are once final approval for BM is given they will want to start placing orders for capital equipment and constructing the extensive above ground facilities. I assumed that the delay was more associated with the time to pressurise and then sweep.

Others will be better informed and may advise.

Oma
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 12:02 pm

Thanks Oma so we don't need to raise 4m to secure an RBL at this moment in time then.
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 12:50 pm

Sue,

No my view is that the placement is required as an enabler for financing, Others have a different view. The only short term other source of funds is Texas and I suspect that given the delays that the purchaser will do another round of due diligence. There is no heads up on Georgia funds arriving and IOP appears to be a cash requirement from RRL. RRL have no placement capacity until the 30th April.

In the absence of other sources I don't see any other options.

Oma
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 2:41 pm

I agree that we could do with some type of short term financing to clear any outstanding debts, I just cant see what amounts we require at this stage and for what for trini operations e.g. waterflood ? Need to go reading up on Beach Marcelle to see at what stages we may require a large RBL facility.

What is on the shopping list for Trini is the real question, more spare parts to keep all rigs going, more production / workover rigs as Walter was suggesting last year, $2.5m for Morne Diablo Waterflood

New Rigs ? I think an OSP will be the better bet here Im not sure we have the staff and experience to operate more of our own rigs in the field.

So $5 - $6m would seem sufficient moving forward and dont we have this banked add 5 Rigs hopefully online by the end of Q1 with production Increasing, better fiscal terms, the fact that every well finds Oil and the majority come in above expectations.
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 3:59 pm

With the appointment of a VP exploration and a VP development it does look like we are going to accelerated the original plan to accommodate both St Mary & Nico.

I know that you can’t get a RBL for Exploration.

As I see it the way forward is to raise funds from bank balance plus placement and possibly the 15% to fund the Exploration business.

The fact that you have a cash resource then provides an equity cushion to enable the RBL to be released for development activities. As development activities increase bopd and cash, the cash reserves for exploration can be released. IMO
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 4:14 pm

This all gets put to bed pretty quickly the instant we close Texas, Georgia or iop.
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 5:04 pm

Razzledazzle wrote:
> This all gets put to bed pretty quickly the instant we close Texas, Georgia or iop.

Yep thats very true Raz

Will be interesting to see if the following happens, what Installation / support / upfront costs we may be able to negotiate with the following:

Range said it is currently assessing the potential of a turnkey facilities contractor for the Beach Marcelle waterflood project and the use of nitrogen injection to assist in better recoveries and economics
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 7:56 pm

Remember King Dribbler suggesting we were employing an OSP on a shared income basis which would actually make sense considering no one has yet offered us an RBL.

I know it was a while ago but it would be a sensible option. No idea why it never came to pass as a share of something would be better than 100% of very little which we have now.
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 8:52 pm

Was actually reading about this earlier "OSP on a shared income basis" but unable to find it at present was a Q's and A's I think around last July.

Will try and dig it up its sat in my history somewhere.
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 9:34 pm

Oma

Just starting to read up on RBL and the different types available under different circumstances.

Is the below site a good start seems up to date etc:

http://www.ogfj.com/articles/print/volu ... nance.html

Thanks Sue
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Re: £4M Placement What Could happen

Post Sun Mar 09, 2014 10:24 pm

Sue,

It is an excellent article as an introduction. The bits and pieces I have been posting are based on the North Sea model, which is where I gained my experience. This model is more aligned to Range who appear to be borrowing against development reserves rather than producing reserves and hence the need for the equity cushion.

It is worth noting also the entry of non bank lenders into the market now that it is well established and has been shown to be a low risk approach. Pension funds etc are starting to show an interest in these days of low returns on conventional bonds.

I'm sure that you will realise were I am coming from on some of the statements I have made.

Oma
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Re: £4M Placement What Could happen

Post Mon Mar 10, 2014 12:06 am

Sue, you mention "the fact that every well finds Oil and the majority come in above expectations." I'm not sure what the RNAs report on. My projections going forward with monthly decline rates didn't yield results comparable to that in the quarterlies etc.

An assumption from this is that we have been advised on initial production or peak initial production as opposed to a sustained production rate over say 96 days. Decline rates from peak initial production can be markedly different if considering exponential drop off, which we factor in A 30-40% decline rate. Begins to look more & more like an unconventional play. I look forward to the next RNA & trust it resolves my concern, as the more I question, the less confident I become. All IMHO in the absence of company clarity.
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Re: £4M Placement What Could happen

Post Mon Mar 10, 2014 12:34 am

Has any one else questioned why RRL have reduced from 3 brokers to 1 broker a week or so before RRL announced resolution 3. ?

On the face of it, it looks like cost rationalisation and could well be, however:-

It is common practice to give the placement shares to a broker to then distribute at the maximum price they can obtain without distorting the market and enabling them to make a profit.

With the potential number of shares that could be issued, particularly if you combine resolution 3 with the 15% normal capacity, all the shares could end up with one broker. (The RNS said ,known to the company)

I had a look at the ASX rules. One broker can hold up to 20% of the issued capital without running into restrictive rules with the ASX. It doesn’t look like we will exceed 20% under a worse case scenario.

The other interesting point was that it was permitted to hold the shares to sell into a takeover offer and off course we know the placement unusually is in sterling.

I worked on a couple of options based on past share price etc. The lowest cost option appeared to be an offer of 4 to 5p per share to enable at least a 51% share ownership. This was based on gaining a further 31% or 1250M shares at a higher price then these were sold for over the last 12 months.

Range end up with £8M of funds, possibly avoiding an RBL pending divestment of other assets.

Those choosing to hold would see a new base on the SP with potential for significant upside and restoration of value to longer-term holders.

IMO but gives us something to talk about while we await updates !!
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Re: £4M Placement What Could happen

Post Mon Mar 10, 2014 12:44 am

Oma - I suspect this will be rubbished by those who's own theories have delivered nothing either. In reality, I'm only bothered now by the SP and what comes across via official RNAs.

Onwards and upwards, 100% November, Humble pie, gorillas in the mist, ducks in a row, hearing thunder etc etc.
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Re: £4M Placement What Could happen

Post Mon Mar 10, 2014 12:49 am

One way or another, it promises to be an interesting week.
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Re: £4M Placement What Could happen

Post Mon Mar 10, 2014 12:58 am

I need news quickly as I've only got 2 theories left.
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Re: £4M Placement What Could happen

Post Mon Mar 10, 2014 1:08 am

omadawn wrote:
> I need news quickly as I've only got 2 theories left.

Lol :-)
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Re: £4M Placement What Could happen

Post Mon Mar 10, 2014 2:20 am

omadawn wrote:
> I need news quickly as I've only got 2 theories left.

That's more than me Oma.
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Re: £4M Placement What Could happen

Post Mon Mar 10, 2014 5:06 am

Momo

You obviously meant YEAR and not week !

Unless of course you mean a Range WEEK (WEAK).

GLA
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Re: £4M Placement What Could happen

Post Mon Mar 10, 2014 5:15 am

omadawn wrote:
> I need news quickly as I've only got 2 theories left.<<

Split one into 3 "ideas", let them grow and you can propagate more theories, enought to last until the SP hits 24p again.

Best wishes,
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Re: £4M Placement What Could happen

Post Tue Mar 11, 2014 5:30 pm

post from Great Rom on iii

--------

I had expected funding to have been disclosed by now, so I am disappointed that it has not. Did some further digging and I'm convinced now that Adamant will be, or already are investing in Range.

This chap is a NED at Adamant.

Mr. John A. Manzoni, BEng, MEng, MBA, serves as an Executive Director of BP Trinidad & Tobago LLC. He served as the Chief Executive Officer and President at Talisman Energy Inc. from September 1, 2007 to September 10, 2012. Mr. Manzoni has held several senior strategic and operational leadership positions with BP plc and its global group of companies in past 24 years. He served in various roles at BP Plc, including Chief Executive, Refining & Marketing from 2002 to May ...

Just too much of a coincidence that Adamant's founder is now on our board and then they appoint BP Trinidad's former boss to the board. I'm sure he knows more than anyone that there is money to be made in Trinidad. Adamant also have one of BP's most respected scientists on board.

Whether or not Adamant invest in a nefarious manner or not remains to be seen. But I'm convinced they will be involved.

As soon as funding is secured, we should rerate enormously. At today's mcap, TT has been given a zero valuation which is absolutely crazy. It's the uncertainty regarding funding that has disproportionately punished the sp.

I can't call when the turnaround will begin but it surely can't be far off now.

GR
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Re: £4M Placement What Could happen

Post Tue Mar 11, 2014 5:56 pm

OMA said that about a month ago ;0)
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Re: £4M Placement What Could happen

Post Tue Mar 11, 2014 6:30 pm

exactly, posted on this thread as a confirmation of OMA's post
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Re: £4M Placement What Could happen

Post Wed Mar 12, 2014 12:38 am

A long time ago, in a galaxy far, far away....

It is a period of civil war. RRL
oil rigs, drilling from a hidden
base, have won their first victory
against the evil OKAP Empire.

During the drilling, RRL spies managed
to steal secret plans to the Empire's
ultimate weapon, the Placement, a
GM resolution with enough
dilution to destroy an entire O&G company.

Pursued by the Empire's sinister agents,
Mrs T races home aboard her
starship, custodian of the stolen plans
that can save her people and restore
freedom to the galaxy...
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Re: £4M Placement What Could happen

Post Wed Mar 12, 2014 12:43 am

Help me Rexcobionekinobi you're my only hope…...
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Re: £4M Placement What Could happen

Post Wed Mar 12, 2014 1:05 am

Landau - 'I am your father.....'

Rory - 'Noooooooooooooooooo!'
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