Range Resources (LON:RRL, ASX:RRL) today confirmed it is mulling a number of corporate initiatives to enhance the group’s appeal to long term institutional investors.
The most significant of these initiatives include a potential spin-off of Range’s assets in the Puntland region of Somalia, and a potentially concurrent share consolidation and buy-back.
It is hoped that these measures would remedy the perception among some investors that Range is a ‘penny stock’.
These plans have been a point of speculation for some time, and they were confirmed by an investor Q&A forum that was published on the company’s website today.
According to Range, the spin-off plan is still coming together and whether it happens at all will be subject to regulatory and funding considerations. The outcome of the current operations in Puntland will also play a part in the decision making, it said.
A second well, Shabeel North, is currently being drilled in Puntland.
Range says it is likely that the spin-out would be co-ordinated to happen around the same time as the share consolidation. It added that any consolidation would reduce the number of issued shares by 10-20 times.
It may also coincide with a share buy-back though this would be subject to future cashflows, Range explained.
“The share price doesn't always reflect the true underlying potential and value of the company's assets and performance,” the company said.
“This is one of the key drivers for the board to consider actions, such as a Puntland spin off, share consolidation and buyback, that may reduce such activity and enhance the Company’s appeal to long term institutional investors.”
The Q&A forum addressed questions put forward by investors and it also covered some of the ongoing operations across Range’s project portfolio.