Range Resources reports ongoing progress in first half

Range Resources (AIM: RRL, ASX: RRS), the diversified oil and gas junior with assets in Somalia, Georgia and the United States, narrowed its net loss in the first half to end-December 2009 to US$1.7m compared to US$5.59m in the comparable period of 2008. In terms of its operations, the company noted considerable progress during the period.

In Ethiopia, Range and its joint venture partners are preparing to begin work on the first exploration well to be drilled in Puntland for over 16 years, after concluding negotiations with the Government of the Puntland State during H1. Also during the period, the company expanded its exploration foot-print, by signing a farm-in agreement for two oil and gas blocks in Georgia in July and acquiring a 25% working interest in the North Chapman Ranch Project in Texas.

In the Puntland region of north-eastern Somalia, the company’s joint venture partner Africa Oil Corp (TSX-V: AOI) concluded its negotiations with the autonomous region’s government. Africa Oil and the Puntland State of Somalia entered into amending agreements modifying the terms of existing production sharing agreements (PSA), made in respect of the Dharoor and Nugaal Valley exploration areas, on-shore Puntland.

The revised agreements were signed by the parties in December 2009, and were subsequently approved and ratified by the relevant state departments. Additionally, the terms of the exploration programs have been amended so that Africa Oil are able to drill two exploratory wells in Puntland during the initial exploration period, which has a revised expiry of 17th January 2011.

Range has a 20% interest in the onshore Puntland projects, and with 65% interest, Africa Oil Corp is the largest stakeholder and operator of the projects, while Lion Energy  (TSX-V: LEO) owns a 15% interest. According to Range, the successful conclusion of the negotiations paves the way for Africa Oil to commence operations and drilling.

Elsewhere in Puntland, Range intends to continue negotiations regarding the formalisation of a new PSA with respect to the exploration and development of offshore Puntland concessions in early 2010.

In the United States, the company acquired the 25% working interest in the North Chapman Ranch Project in September 2009, the project area currently encompasses 1,680 acres, and according to Range it is situated in one of the most prolific oil and gas producing trends in the state of Texas.

During the half year, drilling was completed on the Smith #1 well with testing confirming a commercial discovery. Smith-1 was drilled and logged to a depth of 4,260m, and open-hole logs indicated approximately 37m of net pay thickness, in three zones with no water.

Since the end of the period, Smith-1 was successfully connected to the commercial sales line earlier this month, with initial production from the middle zone significantly reported to be better than expected.

The company anticipates that the well will be producing from this zone for several months before it will be shut in and a completion rig likely moved in. Once the completion rig is in place, the lower zone is expected to be fracture stimulated and tested, along with the upper zone. All three zones will then be comingled and produced.

In Georgia, Range entered into an agreement with un-listed UK Company, Strait Oil & Gas Ltd to acquire a 50% farm-in interest in two contiguous blocks, covering 7,000 square klilometres.

Following the mobilisation of vibrosis equipment, independent testing and a technical audit, the seismic exploration work started in November. According to Range, the data quality has been consistently good/very good, and the company expects the data to provide many potentially viable structures as drilling targets.

Additionally the company said that an assessment of previously drilled gas wells in the area is progressing, and they will be followed by an independent review.