Range Resources improves results as funding source closes

Range Resources released its unaudited half-yearly report for the six months ending 31 December on Friday, with revenues increasing by 38% to $3.8m, which the board said was mainly due to a higher realised oil price of $42 per barrel.

The AIM-traded company said its operating expenses improved by 9% to $40 per barrel, and it retained a “healthy” unrestricted cash position of $20.6m, up from $13m at the start of the period.

Its board said it was “encouraged” by the improved financial performance seen in the core operations of the company during the period compared to the second half of 2016, adding that its balance sheet remained “sound” with total assets of $152m and no debt payments due within the next 15 months.

Following the agreement to acquire RRDSL, Range said it would no longer be able to rely upon the funding arrangement with LandOcean for future work undertaken in Trinidad, and instead will fund work programmes through cash on hand and revenues generated from production.

Based on available funding, the company reassessed the work programme and production outlook for Trinidad and as a result chose to fully impair the remaining goodwill related to the Trinidad assets of $29m.

The balance sheet valuation of Trinidad did not take into consideration the value in the earlier stage exploration and appraisal acreage in Trinidad, and the board said it continued to believe there is substantial value to shareholders within the overall Trinidad asset portfolio.

Range’s net loss for the period, post-impairment, was $35.1m, widening from $18.7m.

Its calculated underlying net profit after tax for the period demonstrated what the board called “significant positive progress”, with its loss reducing 23% to $7.3m.

Borrowings and other interest-bearing payables increased during the period to $55.2m from $25.3m, which it said was a result of continued expenditure on the waterflood programme, development drilling and other study and research work undertaken in Trinidad.

During the period, $20m of the total outstanding amount due to LandOcean was transferred to a three year convertible bond with LandOcean, which significantly extended the average tenor for payments of these amounts.

The board confirmed there were no payments due to LandOcean for any of the purchase orders until the second half of 2018, so Range continued to have sufficient liquidity on hand to fund its obligations and the Trinidad work programme from existing cash on hand and revenues from production.

“Whilst there are encouraging trends during the period, there is clearly still much work to do to achieve our objective of generating sustainable profitability and positive cashflows,” commented chairman Kerry Gu.

“Range remains focused on this target through growing production and monetising the substantial reserve base of the company.

“In addition, we continue to seek suitable value enhancing upstream acquisition opportunities and have been actively screening a large number of possible transactions over recent months. “

Gu said the board appreciated the patience of shareholders as it executed its strategy.

“We would like to reassure all involved that the entire board and management team remain focused on achieving our goals and the creation of long-term value for the company's shareholders.”