Trinidad Presentation - proactiveinvestors.com€¦ · Company Presentation January 2015...

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Company Presentation January 2015

Trinidad

Presentation

January 2015

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Forward Looking Statement

Certain information in this document is forward-looking and is subject to important risks

and uncertainties. The results or events predicted in this information may differ from actual

results or events.

Factors which could cause actual results or events to differ materially from current

expectations include, among other things, the ability of Range Resources Limited to

successfully implement its strategic initiatives and whether such strategic initiatives will

yield the expected benefits, the availability and price of energy commodities, regulatory

environment, competitive factors in the oil and gas industry and the prevailing economic

conditions in Trinidad and Tobago.

Range Resources Limited disclaims any intention or obligation to update or revise any

forward-looking statements, whether as a result of new information, future events or

otherwise.

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Company Overview

The assets

• Trinidad onshore is a fundamentally strong business, that has

suffered from years of underinvestment

• Solid reserve base, certified 1P of 19 mmbo in well-known,

easy-to-access reservoirs

• Low-risk waterflood projects, combined with extensive low-cost

shallow onshore development drilling programme

• Well-developed field infrastructure and off-take facilities,

capacity in place for drilling programme

Access to funding and strong strategic partnerships

• Integrated Master Services Agreement in place with oilfield services

partner LandOcean

• US$60 million equity based financing secured from Core Capital to

strengthen Range’s balance sheet (subject to shareholder approval)

• US$50 million credit facility arranged with Sinosure for Trinidad

Beach Marcelle, Morne Diablo and South Quarry waterflood

programmes

• Range will fully exploit and develop the potential of the Trinidad

assets with the US$110 million total financing package

The management

• All Range staff are focused on stabilising and turning around the

Company

• The management is confident that it has all the right elements in

place to deliver growth and shareholder value in 2015

• Strong operational team with over 20 years experience in Trinidad

Range Resources is a dual listed (ASX: RRS; AIM; RRL) Trinidad-focused independent E&P company

Range’s CEO Mr Yan Liu visiting Trinidad operations

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Our Vision

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Today

• Extensive acreage position in world class petroleum

province

• Solid reserve base in Trinidad, certified 1P of 19

mmbo in well-known, easy-to-access reservoirs

• Focus on production growth from core assets in

Trinidad

• Majority of current production which ranges between

500-600 bopd comes from infill drilling

• Access to sizeable drilling fleet (rig fleet undergoing

improvement)

• Strong support from strategic partnership with

LandOcean

• Capabilities – strong senior management team

supported by experienced Board of Directors,

focused on delivery and production growth

• Divesting non-core assets

The 3 to 5 year vision

• Leading Trinidad focused mid-cap E&P

Company

• Significant oil production and reserves growth

• Value growth through a portfolio of secondary

recovery projects, exploration and infill drilling

• Continue to evolve through strong strategic

partnerships

• Strong balance sheet

• Enhanced cash generation and returns to

shareholders

• Balanced shareholder mix of institutional and

retail holders

• Pursue growth opportunities in line with

regional focus

• Balanced risk profile

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Strong Strategic Partners

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• Oilfield Services Partner: LandOcean Energy Services Co., Ltd (IMSA in place)

• Funding Partners: Abraham Ltd – sophisticated long-term investor

(14% shareholder)

• Additional Financial Backing: US$60 million equity based financing secured from

Core Capital to strengthen Range’s balance sheet (subject to shareholder

approval); US$50 million credit facility arranged with Sinosure for Trinidad

waterflood programmes

• Trade between China and Trinidad and Tobago has been growing, with figures from

the International Monetary Fund suggesting it has gone up from $174m to $450m

over the last six years

Prime Minister Kamla Persad-Bissessar with Ambassador

Singh, and China’s vice-minister of Foreign Affairs, Xie

Hangsheng, cut the ribbon to signal the opening of T&T’s

embassy in Beijing, China (February, 2014)

Chinese President Xi Jinping visiting Trinidad and Tobago

(2013)

“We both agree to actively advance cooperation in key areas of energy, minerals

and infrastructure development and also to advance our cooperation in new

energy, telecommunications and agriculture,”

Chinese President Xi Jinping said after meeting Prime Minister Kamla Persad-Bissessar.

Mrs Kamla Persad-Bissessar said her country sees China

“as a key business partner and potential new market for our energy products.”

“We have to adopt policies, principles and procedures to operate in a way that will

not deny T&T from the benefits that can accrue from an incredible country like

China,” T&T’s ambassador to China, Chandradath Singh said during the opening of the first T&T

embassy in Beijing in 2014.

Range’s strong strategic

Chinese partnerships provide access to sophisticated services as well as financial backing

http://www.guardian.co.tt/sites/default/files/field/image/PM cuts ribbon.png

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Strategic Partner – LandOcean

LandOcean Energy Services

• LandOcean is one of the largest oil and gas services companies

in China, listed in Shenzhen with market cap c.US$ 1.4 billion

• Headquartered in Beijing with c.2,000 employees

• LandOcean provides a wide variety of services across the

upstream development cycle, from frontier geological studies

through to engineering and procurement for development and

production projects

• Range is very pleased to have LandOcean as a highly capable

and technically sophisticated preferred services provider

Strategic partnership provides access to sophisticated

oilfield services as well as additional financial backing

• In June 2014, Range entered into an Integrated Master Services

Agreement with LandOcean

• In December 2014, Range has entered into the second

purchase order, for the provision of technical services by

LandOcean to implement waterflooding plans in Trinidad,

including reservoir geology, reservoir engineering, drilling

engineering, production engineering, surface facilities

engineering and economic evaluation

• Funding for the waterflood projects has been arranged through

US$50 million credit facility with Sinosure

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Production Growth in Trinidad Driven by Three Projects 1. Secondary recovery – waterflood

• Range and LandOcean are finalising proposed plans for extended

waterflooding of Range’s Trinidad Beach Marcelle, South Quarry,

Morne Diablo licences with subsurface studies successfully

completed

• Majority of production growth to come from waterflood programme

centred on Beach Marcelle

• 73% (14 mmbo) of Range’s 1P Reserve base is found in

Beach Marcelle

• Waterflood is a common and technically proven secondary oil

recovery technique

• Existing wells and infrastructure will be utilised where possible

• The Company will also implement the Morne Diablo Shallow

Forest waterflood – successful pilot programme already completed

2. Development drilling

• Shallow drilling in well known reservoirs with quick development

from spud to production

• Historical underinvestment has hindered rig upgrade, maintenance

and efficient drilling operations

• Focus now is on improving operational efficiency, and sub-surface

evaluation to reduce risk and increase reward

3. Large prospective exploration acreage

• Exploration of the deeper potential of the existing licences

• Exciting exploration activity on Guayaguayare and newly awarded

St Mary’s licences

Range’s assets locations in Trinidad

Range is the largest

private onshore acreage

holder in Trinidad and has an extensive network of partners across the country’s

oil & gas industry

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Waterflood Programme and Technology

Current status of Range’s waterflood programmes

• Range and LandOcean are finalising proposed plans for extended

waterflooding of Range’s Trinidad licences, with subsurface studies

successfully completed

• Funding for the waterflood projects has been arranged through US$50

million credit facility with Sinosure

• Dr. Wang Guohui, a deputy General Manager of LandOcean with over 25

years of experience in oilfield production analysis and management has

been appointed as LandOcean’s Head of Trinidad project to complement

Range’s Trinidad team

Waterflood technology

• Most fields in Trinidad have been traditionally produced by “primary

recovery”, which uses the solution gas dissolved in the oil to provide the

driving force to produce the oil to surface

• This is a cost effective way to produce initial oil, but recovers only about

15% of the oil-in-place – 85% of the oil remains in the reservoir

• Waterflooding can recover at least a further 15% of the oil-in-place

Analogues (Primary then waterflood recovery)

• Texaco used this technique successfully in parts of the Beach Marcelle

field in the1950s/1960s

• The technique has been used in many onshore fields in regions with

a long history of oil production, such as USA, Middle East, China,

Latin America

Waterflood Technology

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Planned Waterflood Programmes

Beach Marcelle and South Quarry waterflood

• In total five prospective areas were identified and evaluated both technically and economically between the licences. Blocks identified are

C, NE, and SE blocks in Beach Marcelle; and Ⅱand Ⅲ blocks in South Quarry

• The next key steps in the programme will be to finalise preferred plan for waterflooding and commence surface studies, which will include well integrity surveys and sourcing injection water

• Forecasts indicate oil production could exceed 3,000 bopd for the Beach Marcelle waterflood project

• The Beach Marcelle waterflood project has received a Certificate of Environmental Clearance from the Environmental Management Authority. Regulatory approvals are currently pending review

Morne Diablo waterflood

• The Company had previously completed a successful pilot waterflood scheme on Morne Diablo, and can now proceed to expand this project to the remaining shallow wells

• The waterflood will be conducted in a phased manner with the conversion of the downdip producers to water injection wells which is expected to commence in Q1 2015

• The Company has received all environmental and government approvals to proceed with the Morne Diablo waterflood expansion project

Remaining

project areas

Texaco

Waterflood

Beach Marcelle Waterflood (C, NE and SE blocks)

South Quarry Extended Waterflood (Ⅱ and Ⅲblocks)

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Development Drilling Programme

Development drilling programme

• Well developed infrastructure allows quick spud to production timeline

• The Company plans to drill a total of 6 new wells on the Morne Diablo, Beach Marcelle,

South Quarry and Guayaguayare licences during Q1 2015 utilizing 3 existing drilling rigs

ranging in depths from 800 to 5000 feet*

Access to sizeable drilling fleet

• Following a review of its business plan, Range agreed to sell its drilling services

company to its strategic partner LandOcean, to be operated by Chengdu Western Union

Petro Engineering Technology Co., Ltd, a subsidiary of LandOcean

• Chengdu Western Union Petro Engineering Technology Co., Ltd. was founded in 2006

and offers highly professional oilfield services, including oil and gas products and

equipment supply; technical services; and logistical support services

• The drilling services company will continue to provide full oilfield operations services to

Range in Trinidad, to accelerate Range’s planned development and exploration drilling

programmes

• The drilling services company has a fleet of 12 drilling and workover rigs and currently

employs over 250 staff

• LandOcean is looking to inject additional investment into new equipment and current

rigs updates, as well as adding in new rig capacity of at least two further rigs (one

shallow and one deep) to the existing fleet

• The management believes that this partnership will allow the drilling services company

to grow and prosper as a part of a larger and more focused oilfield services provider

with better capital support

*Given the recent management and corporate changes, including sale of the drilling company, these

projected activities may be subject to change during the quarter

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New Technology – Electromagnetic Surveying

• Onshore seismic data is realtively poor in Trinidad due to structural complexity

• To help reduce exploration and development risk, the Company has initiated the

use of an Electromagnetic Surveying tool – Stratagem

• The Company recently purchased an upgrade of the Stratagem tool in an attempt

to image deeper targets

• Now planning to survey Morne Diablo and South Quarry licences to detect new fields

Concept

• Measurements of surface electrical and magnetic fields along a series of profiles

are used to infer changes in subsurface resistivity

• Oil sands are resistive while reservoirs containing saline formation water are conductive

• Potential to be used as Direct Hydrocarbon Indicator survey tool for shallow reservoirs

less than 600m depth

Stratagem Example – cross

section of survey line showing

resistive areas in blue

The Company has

initiated the use of

an Electromagnetic

Surveying tool –

Stratagem

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Exploration Prospects on Existing Blocks

• Range has a portfolio of deep and

shallow exploration targets defined on

3D seismic data

• As part of the field licence obligations,

Range has exploration commitments on

its existing blocks

• The prospects underlie or are adjacent

to the existing fields, making them

relatively low risk

• Principal targets are in the Middle

Cruse, Lower Cruse and prolific Herrera

sands

Range has a large portfolio of deep exploration targets to be drilled

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Exploration: St Mary’s and Guayaguayare St Mary’s

• Awarded the 182 km² St Mary’s block via competitive tender

• Highly prospective acreage with multiple plays, on trend with several

significant recent onshore discoveries, including the

150 mmbl Penal / Barrackpore field, the 20 mmbl / 0.5 tcf gas

condensate Carapal Ridge field and other fields ranging in size

between 10 and 25 mmbl

• The western block is adjacent to Range’s production infrastructure

• E&P Licence and JOA executed with government and Petrotrin

respectively

• Range’s evaluation of existing seismic and well data has enabled

the Company to high-grade a number of areas for immediate drilling

• The exploration potential of St Mary’s will be assessed further

through the acquisition and interpretation of new seismic

Guayaguayare

• In 2013, Range agreed to acquire 50% of Niko’s interest and

operatorship in the Guayaguayare PSCs (Range is currently in

negotiations for a potential increase in its working interest)

• Niko has completed some of the current work programme

commitments including the acquisition of 217 km² of onshore 3D

seismic, and 277 km² of offshore 3D seismic

• Subject to government approvals, Range plans to fulfil the obligation

work programme of two onshore wells (one <5,000ft. and one

>5,000ft.)

High potential leads and prospects of St Mary’s

TT’s Energy Minister Kevin Ramnarine, greets Range’s CFO,

Nick Beattie, at the signing ceremony of St Mary’s

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Major Exploration and Development Activities Q1 2015*

Licence Operator Range’s WI Projected Activities

Beach Marcelle Range 100%

• Drill 3 shallow infill development wells

• Finalise preferred plan for waterflooding and commence

surface studies, which will include well integrity surveys

and sourcing injection water

Morne Diablo Range 100% • Drill 1 development well

• Commence the Shallow Forest waterflood

• Evaluate potential for waterflooding of deeper reservoirs

South Quarry Range 100%

• Drill 1 development well

• Finalise preferred plan for waterflooding and commence

surface studies, which will include well integrity surveys

and sourcing injection water

Guayaguayare Range 40% (Deep)**

32.5% (Shallow)**

• Drill 1 shallow exploration well

• Continue to seek approval from Ministry to assume

operatorship and conduct commitment work programme

St Mary's Range 80%

• Conduct environmental approval work and evaluation of

existing data

• Potentially reprocess existing 3D data and acquire gravity

and magnetic data

*Given the recent management and corporate changes, including sale of the drilling company, these projected activities may be subject

to change during the quarter

**Range is currently in negotiations for a potential increase in its working interest

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Range Resources Limited

e. [email protected]

www.rangeresources.co.uk

Appendix

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Health, Safety and Environment (HSE)

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• In the last year, the management team has

implemented comprehensive new HSE

policies and monitoring procedures to

significantly improve HSE performance

• Subsequently, we have seen a substantial

improvement in all key HSE indicators

including Lost Time Incidents and Near Misses

• The Company is now achieving a Lost Time

Incident frequency rate similar to that reported

by the American Petroleum Institute for the

onshore US Oil & Gas Industry

• HSE performance underlies good operational

performance as well as being a critical

performance measure for the state

STOW (Safe to Work) audit has been successfully completed and awarded to Range in 2014

Range Trinidad HSE Activity - 12 month rolling average

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Range’s Trinidad Reserves Overview

Summary of Trinidad reserves*

(mmbo) 1P 2P 3P

Morne Diablo 4.5 7.1 12.5

South Quarry 0.6 1.0 1.3

Beach Marcelle 13.9 14.0 14.4

Total 19.0 22.1 28.2

*Certified by Forrest A. Garb & Associates (January, 2014)

Total 2P reserves of 22.1 mmbo

• Large certified oil reserves base

onshore Trinidad

• Shallow easy-to-access reservoirs with

low cost and low risk development and

production

• Low risk 2P reserves, constitute >85%

of 1P

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Trinidad – Geology and Oil Prospects

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• Trinidad lies within the Eastern Venezuelan Basin, with the

petroleum of Trinidad generated by prolific Upper Cretaceous

source rocks, equivalent to the La Luna and Querecual

formations in Colombia and Venezuela

• Range’s blocks are located in the mature Southern Basin. The

total production to date from this basin exceeds 1.5 billion

barrels of oil

• There are significant resources of oil and gas remaining to be

found in the various geologic basins of Trinidad & Tobago –

estimated at 2-3 bn bbl of oil yet to be found

• In addition there are estimated further 3 bln bbl which is

potentially recoverable using enhanced recovery methods

(Krishna M. Persad PhD, President, Geological Society of

Trinidad and Tobago)

Range’s Blocks are located in Southern Trinidad

There are estimated to be a further 3 bln bbl of oil potentially recoverable using enhanced recovery methods in Trinidad

Trinidad lies within the Eastern Venezuelan Basin

Trinidad Presentation - proactiveinvestors.com€¦ · Company Presentation January 2015...

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