Range Resources Ltd

Range Resources Limited (“Range” or “the Company”) is both an ASX-listed (ASX: RRS) and AIM-listed (AIM: RRL) exploration and production company with assets in Texas- U.S, Republic of Georgia, Trinidad and Puntland- Somalia.
 
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 Old Park Lane Valuation 14.1p

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PostSubject: Old Park Lane Valuation 14.1p   Thu Nov 18, 2010 4:55 pm

http://www.proactiveinvestors.co.uk/companies/news/23157/analyst-expects-range-resources-to-drill-new-georgian-oil-targets-in-q1-2011--23157.html

Barney Gray, oil analyst at Old Park Lane Capital, expects a drilling rig will be mobilised to Georgia early in the New Year.

“We expect that Range will probe the first of these targets; likely to be Kursebi-1, with an exploration well in mid-Q1 next year,” Grey said in a note to clients.

Grey also noted that Range may look for a contributing farm-in partner to help fund exploration stage.

Currently, the analyst believes the company’s 50 percent stake in the newly identified Georgian prospects could be worth US$75 million - a fully risked valuation - which equates to almost 3 pence per share.

Grey added: “we believe that the shares will rally strongly on the back of a raft of exciting operational updates over the next six months”.

In light of the new prospects the analyst reviewed his valuation for the company.

And with a particularly conservative 1-in-12 chance of success in Georgia, as well as assuming a value of just $5.85 per discovered barrel, Grey still gave an attractive preliminary valuation to the untested acreage.

“We are increasing our valuation of Range from 12.5p to 14.1p per fully diluted share to reflect the value of the company’s Georgian assets for the first time,” Grey said.

“Within our assessment, we have pared down our valuation of Range’s Puntland assets given that mobilisation is likely to slip to mid-2011.”

“Nevertheless, we believe that exploration success in Georgia will provide investors with a very attractive degree of near term upside.”

By mid-afternoon on Thursday, Range shares had climbed 1.2 pence to 7.41 pence on London’s AIM market, up 19.5 percent from Wednesday’s close.

In total RPS identified 68 ‘structural culminations’ that potentially contain stacked oil reservoirs.

The consultant estimated that the blocks have just over 2 billion barrels of un-risked oil-in-place. It also gave a conservative estimate that 30 percent of the oil is recoverable.

RPS prioritised the top six structures for drilling, and of them four have more than 100 million barrels of oil in place. Range said the partners are currently finalising the details of a planned drilling campaign.

Vani 1 (V1) has an estimated 171 million barrels of oil, Kursebi 2 (K2) has 160 million barrels, Vani 3 (V3) has 145 million barrels and Kursebi 1 (K1) has 123 million barrels.

According to Range, Georgia is a relatively well established hydrocarbon province.

It highlighted that there are a number of discoveries along the Greater Caucasus and Achara-Trialet frontal folds – which are also present along the northern and southern margins of the licenses.

“The trend of oil discoveries in Georgia confirms the presence of a working hydrocarbon system that extends from Georgia into the Black Sea”, Range said.

Range also has assets in the Puntland region of Somalia and in Texas.
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