£4M Placement What Could happen

[omadawn]

My thoughts and Observations

RRL want to raise £4M, they know that the current SP is 1p (and possibly engineered to this level) so these will be distributed at 0.8p.

This results in the issue of 500M shares

Along side this based on RRL’s normal options issue there will be 250M options at 1p.

At that point in time these will be the lowest priced options on issue.

Initially shares issued rise to 3.9B and then on take up of the options 4.2 B

RRL have 250M shares available to them on the 30th April under the 15% rule so the options are covered and range receive another £2.5M.

This gives a total of $10M. The same as the withdrawn placement from last year!

This gives the purchaser around 18% of the company. There is some room for error but it seems to be engineered to be just below the 20% threshold.

ASX Rule 7.3.4 requires the names of the persons to whom the entity will issue the securities (if known) or the basis upon which those persons will be identified or selected.

Now read the RNS. Given Eastman has signed this in his capacity as Director and Company Secretary he should know this rule. However he has rather carefully avoided naming the company despite the fact they say that they know who is going to receive the shares!

There is also a rule that allows you to commit shares under this placement to 3rd or related party, at 80% vwap, subject to shareholder approval, for a period up to 2 months before approval.

Now look at the Texas RNS date in Jan. We will be more or less exactly 2 months after we were told the company was considering alternatives. The same appears to have happened with delay excuses in September 2013 and then exactly 2 months later a $10M placement under the same rules was proposed.

This hangs together rather well on the basis that you would not put this placement out, damaging the SP, if you new Texas was immininent.

Who wants to buy just below the 20% threshold ? Adamant Ventures could under ASX rules.
If this is the turn of events then Mr Eastman’s position would be under considerable scrutiny.

[Longgoodfriday32]

Sounds dodgy to me. Perhaps a FSA investigation is needed

[Momo]

Oma any theories on how much lower this can go? how long we will stay at that bottom price? and at what point/price this marvelous investment starts to rise instead of fall?

Wont hold you to your answer just curious!

[Razzledazzle]

OMA - Im curious and you dont have to answer...have you been offloading if you believe we have dilution coming? Or are you hedging with a short?

[spud57]

We are no longer holding @ anything like a penny , so has the market messed the cunning plan ?

[kev yorks]

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?

[mmm281664]

Momo it can only fall 0.094p more, it's hardly a lot considering how much it's fallen already.

My worry is we end up like VOG.

If we do need the placement then a 10p sp will equate to a £400m mkcap.... So any one with averages over that can forget it. Questions is do u dare average down or is that throwing good money after bad, whose to say many more dilutions won't happen , maybe we end up 6billion shares in issue etc etc ffs

[Razzledazzle]

Very true mmm. We need funding announced urgently, as in next week to put paid to any further dilution and avoid a consolidation.

[Razzledazzle]

Also if we did place 500 million more Rory has set himself a 200 million m/c target to unlock a 3rd of his options at 4p

[spud57]

Hope you are right Kev, but meanwhile, minnow LGO are getting on with an ever rising bopd, local drill outsourcing, cautious jv stuff while we still aren't doing any of that , in real time.

With cock up after cock up, no wonder folk smell a rat, excuses, churn, dilution, pass the parcel a la CTR give away of licence etc

Can you summarise how Q2 may pan out and whether there is chance of more organic growth with the funds we have in the bank, apparently.?

[willo]

Kev, you certainly like to give the impression that you have greater knowledge than most regarding Range, and I believe that to be true.

But as you seem insistent that all of Oma's theories are wrong, why not tell us what your take on all this is? I for one won't hold you to it, pretty much as i don't hold Oma to any of the many theories he has put forward, but some constructive addition might be better received than the constant sniping from the sidelines, you sound a bit like a kid whose balloon has been popped?

Grow up and tells us what you think.

You probably won't like this post much, but there you go...

[Razzledazzle]

Kev, therein lies the problem...the company seem in no hurry to blow anything out of the water.It's March for goodness sake and we have no outstanding cash received...noooooothing.

March in the year of our lord 2000 and 14.

I'm still smarting about the end Jan Texas fail that was hidden away in the quarterly and breezed over by Rory when he read his inaugural from his bedroom at his mom's house.

[omadawn]

Momo,
It could go anywhere. As long as any placement is done and announced before the 31st April quarterlies, I don’t see us falling below 0.8p. (The 80% is the lowest they can sell not a fixed multiplier).
After the 1st May even with some increased production, if the placement is not used then the combination with the 15% normal placement becomes “difficult” and a real drag on the SP.
We are just going to have to ride this through until the full funding facility and plans are announced.
Things are clearly not as rosy as a few have made out. Announcing a RBL with the likes of Credit Suisse and having what appears as a desperate £4M fund raising in the market do not go together, Common sense dictates that the placement option has to be closed before funding is announced.
The upside is clearly still there with RRL, I suspect that we will start to see this June onwards.
IMO

[kev yorks]

So on the latest supposition Oma any ASX listed Co who have the share placement facility in place and there are many as it's normal can't raise funds period with the likes of CS period?

Doesn't seem to of stopped CS entering into RBL negotiations though does it which would seem strange if they were excluded from being able to complete them. Also the self same facility has been there for the last 10 years so it's not as if it's just been dropped on CS is it.

Willo wish I could but it'd compromise people, worst case scenario IF the sky falls in there were no RBL and divestment then the back up plus back ups back up also went tits up I'd see them maybe using a quarter of the facility max.

[miniboy]

KY.
"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?"

It said so in the RNS ! It said they would raise £4m and told you what they intend to use it for. RIG asked Buchanans and they told them to look at the RNS. Why do you continually try to misinform?

Not sure if Oma is but I have suspected that and said so all along. What happened to 135? The SP may recover a little if they announced more about actual drilling results. Complicit?

and as for "Willo wish I could but it'd compromise people"

There you go pretending you know something again. Bollocks! 12p by end March? LOL

[kev yorks]

Try reading rns because it's all there for 135 though in the normal shit format and presentation. In that regard they're getting worse not better off late.

[miniboy]

There was not the level of details re 135 that we are entitled to in any RNS I have seen.

So all these highly paid people cant string a couple of comprehensive sentences together. Complicit?

[kev yorks]

For once we can agree it's a constant issue shit levels of detail within RNS and if anything it's getting worse of late.

[verno]

So basically Kev you don't think the £4m placement will happen as you still believe asset divestment and RBL are still going to happen, (but if these take much longer and we don't increase BOPD in the very short term, surely we will need this money as we are very top heavy at board level and senior management and they all want paying and 600 barrels a day won't meet our bills).

Is it possible that Credit Suisse have insisted that all other debt is paid off before they will release RBL hence the need for placement ?

[miniboy]

K.Y. So they must be complicit along with the Nomad.

[martyboy27776]

Is it not more likely the RBL is dependent on the result of the deeper wells. I don't see anyone providing up front capital to range to continue the shallow well operations that have been treading water for the last 2 years or whatever time we have had it. If 248 is a success then it mitigates a lot of the risk with increased flows (projected) and multi producing zones.

Is it purely coincidence that 248 should have been completed months ago, bit like the RBL?

pure conjecture but feasible.

martin

[kev yorks]

Verno it would actually not surprise me in the slightest to see the 4m placing res pulled prior to the meeting again and there is no requirement with CS (I've checked) re clearing debt.
Further the BOPD now the rigs are again turning will start a upward trajectory especially if SQ is a good as it now seems likely, that really is a huge result given both the shallower depth and minimal reserves allocated to that block.

[Wiggy]

We'll find out soon enough.... But must say it's impossible to call what's going to happen regarding further issue of shares. If it happened, and I do believe it's an absolute last resort (as Kev says), it wouldnt be a great start for the new bod, in particular Rory.

I also know for a fact that PL was intent on the buy back idea before he moved aside. Dilution is the polar opposite.

The GM appears to be more about directors options than anything else, and res 3 seems fairly standard. It's not a given we will use it imo but if Texas is further delayed, etc, we may need to use some of it. Just to tide us over.

W

[Razzledazzle]

Imagine what pulling res 3 before the gm would do to sentiment! :-)

[Solidfoundations]

OMA,

Have you sold down your investment? Razzle asked this earlier, but you appear to have missed the post?

Didn't you also have an avatar with good old Santa stating 5p by Xmas? And then you pulled this just as (I believe), you sold down your investment at about the same time?

Be careful all, dont trust anybody....... not even me.

OMA may appear to be an intelligent and well meaning chap, but he can be wrong just as much as the rest of us..... and he, as the rest of us, has an agenda,

GL ALL

[Sue]

Wiggy wrote:

I also know for a fact that PL was intent on the buy back idea before he moved aside. Dilution is the polar opposite.

W

Can agree with that, maybe they thought Texas was 100% nailed on for the end of Jan, even that article came out as completed, anyways looks like there is still a chance that the sale will go ahead with said buyer maybe one last deadline before alternatives are sought.

[mmm281664]

Who cares what PL wanted to do the useless tosser.

[Sue]

mmm281664 wrote:
> Who cares what PL wanted to do the useless tosser.

:-)

[Targa]

Is that the same PL that's stolen all our money, eats children for breakfast while supping on the blood of a virgin ..and worst of all..is Australian ? :-)

[mmm281664]

Australian...that's the worst bit :)

[Mike_Mac]

Kev

Can you back up your statement that they don't want to raise £4m with any proof/facts?

Thanks


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?

[brgmg69]

kev yorks wrote:

>
> Doesn't seem to of stopped CS entering into RBL negotiations though does it
> which would seem strange if they were excluded from being able to complete
> them. Also the self same facility has been there for the last 10 years so
> it's not as if it's just been dropped on CS is it.

So

'CS have entered RBL negotiations'

Does this mean that they have entered negotiations since the 4M placing was announced or they have recently entered negotiation?

Either way it points to RBL no being close to sorted. never mind the November theory.

[Wiggy]

There was no RBL November 'theory'.

It was stated as fact in an email from Pete himself.

Heaven knows what the delays are (Ptrin?) but I've no doubt we must be close or the deal would have been called off a long time ago and we'd know the score?

W

[miniboy]

Wiggy, Despite what the dribblers will try and tell you It is very likely to have been dependent on the Texas proceeds. Banks NEVER lend you 100%

[TWINE]

Mini, yes they do.

[Sue]

See that's where problems arise

If you ask PL directly if RBL is dependant on Texas money he will say NO

But he dont say what it is dependant on and so leads to assumptions

Maybe its more down to having x amount of rigs active ? to meet FDP

[cjv]

Exceptional circumstances Twine ?

[miniboy]

Twine. Can you point me in the direction of any RBL where 100% was given.

[miniboy]

Twine. Xcite with P1 and P2 of 250m barrels cant borrow 100%. There is no way on this earth RRL will get 100% borrowing for Trinidad. IMHO we are waiting for Texas before any bank would offer an RBL. It is now a year ago that resident rampers said it was in the bag.

It could of course be a huge coincidence that the RBL supposedly in the bag (pending RRL meeting conditions) has dragged on in line with the Texas debacle but I think not.

[Sue]

Just to add to OMA’s theories

To increase production and so increase cash flow to be able to service an RBL agreement I am sure the lender would require not all but say 5 of our 6 rigs to be fully refurbished and signed off and also to be actively drilling to meet any FDP requirements.

If the above is correct which I don’t see why not then with Rigs 1 and 6 hopefully active before the end of Q1 then RBL should be ready to go.

Looking back at previous production rates v’s decline with only 2 rigs ever drilling and producing I am sure our Bopd will increase at a very good rate with 5 Rigs on the go.

[RichTheNewbie]

That actually makes more sense Sue :p

[miniboy]

Sue, yep, if we could boost production significantly and not have to rely on receipt of the Texas proceeds that would be preferable. However, would have thought they would have announced it if we had 3 more rigs drilling. (unless they are complicit in the SP fall). However, we still haven't heard what is happening with RigL8

[Sue]

Hi Mini

Just trying to look at things differently from OMA’s theories, I just don’t buy it that we need to raise x amount at a horrendously low SP to be able to secure an RBL facility.

If we have an RBL facility available for x amount we would only need to draw down a percentage to start the waterflood not 10’s of millions all in one go, plus we still have x amount of money in the bank.

31/01/2014 - Rigs 2 and 5 are online and drilling ahead and with Rig 8 ready to commence sidetrack operations on MD248 well following well clean up. Rigs 1 and 6 scheduled to be active during Q1 2014

As for Rigs 1 and 6 – Rig 6 was being prepared for mobilization a few weeks ago (31/01/2014) so should be on location now or very soon IMO.

Rig 1 is a baby but a great work horse so shouldn't take long to be up n running again.

Rig L8 has to start the sidetrack soon can’t see why or how Petrotrin wouldn't sign this off sooner rather than later after all the delays.

Range stated 26/11/2013: The Company is also finalising negotiations with respect to the financing of 2 additional drilling rigs (with technical assistance and support crew) to continue with Range’s Herrera drilling programme, the Niko Resources farm-in and the potential block being awarded in the recent bid round.

[TWINE]

Mini, you made the statement that " banks never lend you 100%" I just said "yes they do" I said that because they do, does the company that you ref own their own drilling company and infrastructure?

[miniboy]

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.

[omadawn]

SF / RAZ.
I sold down my position in December at a loss and repurchased in January. This was to do with Capital Gains Tax as I live in Spain. The losses were offset against gains primarily from Lloyds.
I now have a larger holding and will purchase more if the placement is approved.

For me the end game with RRL has not changed and my agenda is to take advantage of the poor RRL management. I don’t short to try to pick up an extra 20% etc when the upside is in 3 figures.

I sold my entire holding at a small profit after the merger announcement because there was no synergy with the then current assets.

I have mentioned it on the board before but if you want to look me up the name is John Murphy on Linkedin..

OMA

[TWINE]

Mini, not irrelevant at all and our setup is not like other small O&G. Do you know what the 100% needed is ?

[omadawn]

Summary of my thinking,
Resolution 3, specifically states that the placement shares will be used rather than the company’s 15% annual placement for a 3 month period. So any single share that is issued will be from an approved placement, NOT the 15%.

As I explained on another thread, unless IOP sell the Russian Assets it appears our only recourse is a stake in the holding company for the Russian licences based on the info RRL &IOP have provided and Russian Law. RRL appear to have been expecting this at the end of November. My guess was to trigger the RBL in the absence of Texas funding.

On the RBL. The lender has the upper hand in all negotiations. The more risk that is put onto the Lender the higher the interest rate. The lender will also need to ensure that the company has sufficient cash flow to service its other needs, other debts as well as the initial period of servicing the RBL. In the case of RRL, I believe that the RBL will be secured against the Trinidad Holding Company. It will be prudent of RRL to ensure that they have sufficient cash resource to avoid a default and lose the assets!

Considerable work will have gone into the FDP, which is independently verified. If Rory changes this there will be time delays, as the analysis has to be reworked. There is an argument that the additional funds are to enable the FDP to be accelerated.

RBL is not used for financing exploration. Just think about the risk and security. Those that are invested in FRR will be very conversant with this and you have to ask why was this not used on the NIKO resources. RRL could finance Exploration through security against production from other assets but are not currently in a position to do so.

My personnel view is that we are struggling with the RBL approval based on fundamentals, rather than just formalities. The fact that the term “financing” is now used suggests alternatives are being considered.

IOP / Texas may surprise us before the EGM. If not do the placement, remove the uncertainty, push on and restructure the share base just before we enter the ASX 300 if we retain a dual listing.

IMO

[omadawn]

I do agree with Mimi on the 100%

The RBL lenders look at the planned production and cash flows. They base cash flows on 70% to 90% of the Nymex price. They then test again to ensure that loan conditions can be met at a base case level of around 80% production.

If you are securing against current production to expand then you can borrow circa $50M per 600 bopd.

If the P1 reserves are associated with a single field then you can borrow less than if P1 reserves are across several fields.

With 75% of P1 reserves in BM this will be a restriction on the headline figure.

To gain further security the RBL is then structured in different ways so for example achieving an additional 250 bopd would trigger the release of a 2nd tranche.

The maximum RBL is based on 90% of P1 Reserves.

Some say as guidance that at LIBOR plus 8% you can take the maximum RBL and double it to obtain the value in the company’s MCap. So in RRL’s case a £30M RBL should be reflected as £60M on the MCap before the required increase in production.

These figures do vary across lenders, other forms of security are used, fiscal conditions and operating costs make comparisons between companies more difficult and these figures are based on an extraction / production licence.

IMO

[mmm281664]

Oma what do u mean upside in three figures?