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Range Resources allows Red Emperor Resources to farm-in to oil and gas licenses

Last updated: 10:03 10 Jan 2011 GMT, First published: 11:03 10 Jan 2011 GMT

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Range Resources (ASX: RRS, AIM: RRL) has entered into an agreement with Red Emperor Resources (ASX: RMP) to acquire a 20% farm-in interest in two oil and gas exploration licenses in the Republic of Georgia.

The agreement was made along with Range's Georgian partner Strait Oil and Gas UK Limited for Block VIa and Block VIb.

Red Emperor will pay 40% of the costs of the two well program in return for acquiring the 20% interest (10% from Range and 10% from Strait) and intends to offer Range shareholders an opportunity to participate in future capital raising.

The transaction will reduces Range's financial exposure to the two well drilling program through the favourable two-for-one farm-in terms, whilst still maintaining a significant 40% interest in the two blocks.

Range currently holds a 50% farm-in interest in onshore blocks VIa and VIb, covering about 7,000 square kilometers.

The company has recently completed a 410km 2D seismic program identifying 68 potential structures containing an estimated 2.045 billion barrels of oil-in-place.

The terms of the agreement are as follows:

(a) Completion by Red Emperor, to the reasonable satisfaction of its directors, of all necessary due diligence investigations in respect of Strait and the Georgian Blocks by 31 January 2011 (or such later date as agreed by the parties);

(b) The execution of the share subscription agreement by the parties by 28 February 2011 (or such later date as agreed by the parties);

(c) Range and Strait procuring any necessary third party consents for the subscription of shares to the purchaser as a result of the transaction (if required) by 15 February 2011; and

(d) Receipt of all necessary ministerial consent, government and regulatory approvals, in respect of the subscription of shares by 15 February 2011 (or such later date as agreed by the parties).

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