AUDITED ANNUAL RESULTS FOR THE 12 MONTHS ENDED 30 JUNE 2018
Range, an international company with oil and gas projects and oilfield service businesses in Trinidad and Indonesia, today releases its Annual Report for the 12 months ended 30 June 2018.
Range's Chairman, Zhiwei Gu, commented:
“After another busy period, it is our pleasure to be reporting on significant operational and financial improvements delivered by the team. Looking ahead, we remain focused on achieving long-term profitability and positive operating cashflow through growth in revenues and production whilst maintaining a tight control over costs. On behalf of the Board, I would like to express our gratitude to our stakeholders and staff for their continued commitment and hard work to maximise the value of our high-quality assets. We look forward to reporting on our progress during the year ahead.”
During the year, the Company's focus has been on growing production from its Trinidad assets with 25% increase in production achieved during the period (total production of 237,352 barrels and average of 650 bopd net to Range). Production growth was achieved as a result of the ongoing work programme, which included drilling of two new development wells, workovers on 250 wells, and production growth from the Beach Marcelle waterflood project. The Company also completed an upgrade to its oil handling and storage facilities at the Beach Marcelle field to accommodate production growth at the field.
In addition, the Company has been focused on integrating the newly acquired oilfield services business into the Group. The acquisition is particularly significant as it allows Range to have greater control over operating and drilling costs in Trinidad and the benefits of this acquisition have already been seen with the total cost for drilling the GY684 well in late 2017 being over 1/3rd cheaper than the cost of drilling the comparable GY681 well drilled prior to the acquisition. RRDSL has also been actively marketing its services to 3rd parties and has generated revenues of US$0.43 million.
In Indonesia, two offices and a services company have been established. The operations at the Perlak field commenced in May 2018, with reactivations on two wells underway. The initial production and well performance are below the original expectations, however work is still underway to establish stable production.
Range reports a significant improvement in the financial performance for the year with a materially reduced loss after tax of US$17.5 million compared to a loss in the prior year of US$54.4 million. Whilst still disappointing to be reporting a loss, the Company believes there has been positive progress seen in several key areas, including:
During the year, Range continued to invest in growing the asset base of the Group with US$3.9 million capital expenditure in Trinidad in drilling, waterflood and workover activity. In addition to the activity undertaken at the core Trinidad fields, the Group also completed two important acquisitions. With the Perlak field in Indonesia, Range has invested approximately US$3.8 million during the year to firstly acquire its interest and then to fund its share of the operating costs during the first year of operation.
It is important to highlight that this is the first financial year since 2013 where there has been no impairment charge recognised and the Company continues to see significant value in the Trinidad asset base which can be released in the years ahead as production growth is delivered.
Cash management remains a critical area of focus and at the period end the Group had cash on hand and other liquid assets of US$6.7 million (including a US$2.8 million refundable deposit). Post-reporting period, Range completed an equity placement raising gross proceeds of GBP 1 million.
The acquisition of RRDSL has resulted in an increase in the level of net borrowings and other interest-bearing payables to US$87 million (2017: US$61.9 million). Range continues to benefit from highly competitive terms offered by LandOcean across the various funding arrangements with no security provided over any assets, no financial covenants or restrictive controls in place, no amortisation due until maturity and a competitive interest rate of between 6-8% pa. The first repayment is due at the end of November 2019 and Range has held initial discussions with LandOcean regarding potential refinancing options. The Company will be considering the most appropriate means to repay or refinance the balance during the coming months.
The upcoming work programme in Trinidad is principally focused on completing the upgrades to sales infrastructure at the Beach Marcelle field. Once this work has been completed, Range will be in a position to grow production through new drilling activity and other field work. Regrettably, the infrastructure upgrade programme is running behind the original schedule and Range currently anticipates this will not be fully completed until late 2018 / early 2019.
Once most of the upgrades are completed, the Company can commence drilling a new development well at the Beach Marcelle field (the GY684 400'NE well). Range has already commenced initial planning work for this well and received the relevant government approvals with the intention to commence drilling operations in December 2018. It is currently expected that the second development well will be drilled in 2019. As part of the ongoing optimization programme, the Company will also be undertaking workovers on approximately 50 wells.
In addition, the Company is planning to undertake expansion of the Beach Marcelle waterflood project to incorporate more producer and injector wells. The programme is expected to deliver enhanced production during early 2019. The Company has already commenced data collection on some of the selected wells as part of expansion programme.
Range is also acquiring a new geological tool which will be instrumental in developing an extensive, shallow well drilling programme initially focused on the Morne Diablo field. This new tool is an enhanced version of the stratagem tool which was used very successfully by Range in the past and Range expects to receive the new tool later this year.
The delay to the infrastructure programme and the knock-on delay to drilling will clearly have an impact upon production growth and Range no longer expects to achieve its previous target of 1,000 bopd by the end of 2018. Range remains focused on seeking sustainable production growth from its Trinidad operations but given the anticipated timeline for infrastructure works and drilling, it will be into 2019 until that growth can be achieved.
In Indonesia, Range intends to undertake G&G studies to improve reservoir understanding and to assist in establishing a longer-term development plan for the field. Given that the results from the reactivation programme on two wells are below the original expectations, the Company does not believe the previous production guidance from Indonesian project of 200 bopd (gross) by the end of 2018 is achievable.
RRDSL has got off to an encouraging start to the FY2019 with 3rd party turnover year to date already in excess of the full year results for 2018. The focus for RRDSL remains securing 3rd party work and the Company is encouraged by the pipeline of drilling activity anticipated across both Trinidad and the wider Caribbean/Latin America region.
The Company will continue to provide updates on the progress of its operations as appropriate.
The full annual report can be viewed here.