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Range Resources updates on progress in Q4

Published: 13:25 02 Aug 2010 BST

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Range Resources Ltd (ASX:RRS; LON:RRL) reported on the progress made in the fourth quarter to end-June2010 and subsequently, noting that its joint venture partner in Somalia’s Puntland province, Africa Oil Corp, announced the farm-out of a 10 percent interest in the JV to ASX listed entity, Red Emperor Resources (ASX:AMP) during the period.

Under the terms of the Letter of Intent, Red Emperor will earn a 10 percent interest in both the   Dharoor and Nugaal Valley Blocks. Red Emperor may, at its own discretion, exercise a right to increase its participating interest by an additional 10 percent in each of the Dharoor and Nugaal Blocks. Red Emperor must advise Africa Oil on or before August 31 2010 if they wish to exercise this option.

Range’s JV patner during the quarter also continued its efforts to finalise terms with international drilling related contractors willing to participate in the proposed drilling program in Puntland

In Texas, as part of the North Chapman Ranch joint centure's multi-well program, the Russell Bevly #1 appraisal well was spudded as announced on 11 May 2010.

After drilling to a revised total depth of 4,337m, the operator concluded open hole logging operations that indicated the presence of approximately 130 feet of net oil and gas pay in the Howell Hight formation.

This exceeded the net pay thickness of the Smith #1 discovery well and identified a new, potentially productive interval. The well was equipped with 4 1/2" production casing and currently awaits completion and installation of surface infrastructure in readiness for first sales late August /early September.

Russell Bevly #1 confirms the company's structural and stratigraphic models across the north western flank of the field, and once completed for production, the well is expected to add significant Proven Reserves, production, and cash flow to Range's Texas operations.

It is anticipated that the multi-well program will continue on North Chapman Ranch with the third well anticipated to spud Q4 2010.

Building on its success at North Chapman Ranch, during the quarter, Range acquired a 13.56 percent interest in approximately 1,570 gross acres encompassing a recent oil discovery located in Red River County, Texas, for total leasehold acquisition costs of US$254,000.

Development of the shallow oil reservoir in the Cotton Valley formation is expected to begin during Q3 2010 with the drilling of a horizontal appraisal well, Morris 3H, expected to encounter good quality Cotton Valley sandstones along a horizontal well path approximately 2,500 ft long.

The well is projected to pass within 500 ft of the Morris 2H well, the first horizontal well drilled in the project area. The Morris 2H encountered good quality Cotton Valley reservoir rock and oil saturation, but was badly damaged during completion. If successful, the Morris 3H could trigger a horizontal development  drilling program of 20-25 wells,  each of which could recover more than 225,000 barrels of oil at an expected completed well cost of approximately US$1.6 million.

In Georgi, following the successful acquisition of 410km of seismic at the end of March 2010, seismic processing and interpretation commenced during the quarter. It is forecast that final interpretations and identification of potential drilling targets will be completed during Q3 2010.

In support of the identification of drill targets during 3Q 2010, initial logistics planning has commenced with regards to the development of anticipated drilling programs. As previously announced, assuming the successful identification of drillable targets, already indicated in three areas of the Blocks, the company will elect to either progress the targets at the current 50:50 equity basis with its partner Strait Oil and Gas (UK) Ltd or look to attract potential farm-in partners to joint fund a drilling program.

Subsequent to quarter end the company entered into a binding Heads of Agreement through SOCA Petroleum to acquire its rights to a 10 percent interest in companies whose wholly owned subsidiaries hold production licences for three blocks in producing onshore oilfields in Trinidad and a major local drilling company.

The production acreage and operating wells cover the Morne Diablo, Beach Marcelle and South Quarry oilfields, with the total acreage covering 16,253 gross acres on the southern coast onshore Trinidad. Current production from the fields is 700 bopd, however Range believes a minimal work program could lift production to more than 3,500 bopd within 36 months on the known reserves.

In addition to the two subsidiaries holding production licences for the onshore acreage, the proposed Range acquisition also includes a 10 percent interest in the parent of a wholly owned drilling company (located in Trinidad), which owns five onshore drill rigs, three production rigs, one swab rig and a full workshop and pipe yard, storage tanks and facilities.

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