Annual Financial Report
27 September 2013
The Manager
Company Announcements
Australian Securities Exchange Limited
Level 6, 20 Bridge Street
Sydney NSW 2000
By e-lodgement
ANNUAL REPORT
Range Resources Limited ("Range" or the "Company") is pleased to
present the Company's annual report for the year ending 30 June 2013, with the
following highlights in comparison to year ending 30 June 2012:
- Group revenue increasing by 9%;
- Trinidad revenue increasing by 18%;
- Gross profit increasing by 516% to $5.4M (2011 / 2012: Gross loss of $1.3M);
- Group oil / liquids production increasing by 27% to 286,000 barrels;
- Trinidad oil production increasing by 35% to 275,000 barrels;
- Operating expenses reduced by 19%;
- Loss before interest / tax / depreciation / amortisation reduced by 74%; and
- Loss after tax reduced by 35%.
Highlighted below is the comparison of the financial performance of
the group for the years ending 30 June 2013 and 30 June 2012 respectively.
SUMMARY OF FINANCIAL PERFORMANCE (US$m)
2013 2012 Change
Revenue 27.259 24.998 +9%
Operating Expenses (13.525) (16.797) -19%
Cost of sales (21.833) (26.303) -17%
Gross profit / (loss) 5.425 (1.305) +516%
EBITDA (5.805) (21.963) +74%
EBIT (14.177) (31.517) +55%
Net profit / (loss) after tax (20.304) (31.095) +35%
Please find attached extracts from the Company's Annual Report for
the year ended 30 June 2013, being the:
- Directors Report;
- Statement of Comprehensive Income;
- Statement of Financial Position; and
- Statement of Cashflow.
A copy of the full Annual Report is available on the company's website:
www.rangeresources.com.au
DIRECTORS REPORT
The names of the directors in office and at any time during, or
since the end of, the year are:
Sir Samuel Jonah
Mr Peter Landau
Mr Marcus Edwards-Jones
Mr Anthony Eastman
Directors have been in office since the start of the financial year
to the date of this report unless otherwise stated.
COMPANY SECRETARY
The following persons held the position of company secretary at the
end of the financial year:
Mr Anthony Eastman
Ms Jane Flegg
PRINCIPAL ACTIVITIES
The principal activity of the economic entity during the financial
year was hydrocarbon exploration and development within Trinidad, Republic of
Georgia, Texas, Guatemala, Somalia and Colombia.
The following significant changes in the nature of the principle
activity occurred during the financial year:
- Acquisition of a 19.9% strategic stake in Citation Resources
Limited who hold a farm in right to acquire a 70% interest in Latin American
Resources Ltd ("LAR"), which holds an 80-100% interest in two oil and gas
development and exploration blocks in Guatemala and is operator of the blocks.
This was consummated subsequent to year-end with the conversion of debt
funding into ordinary fully paid shares in Citation. Additionally Range also
acquired a direct 10% equity stake in LAR during the year and moved to a 20%
stake subsequent to year end.
- The Company extended its existing farm out agreements ("FOA's")
for the Company's Morne Diablo and South Quarry licenses in Trinidad until 31
December 2021, with the minimum work commitments for each license well within
the Company's current development plans, and included reductions in the
enhanced royalty rate resulting in significant net back before tax increases.
OPERATING RESULTS
The consolidated loss of the economic entity for the financial year
after providing for income tax are as follows:
30 June 2012
30 June 2013 US$
US$ Restated*
Net profit/(loss) after income (20,304,261) (31,094,991)
tax
DIVIDENDS PAID OR RECOMMENDED
The directors recommend that no dividend be paid for the year-ended
30 June 2013, nor have any amounts been paid or declared by way of dividend
since the end of the previous financial year.
REVIEW OF OPERATIONS
- 29% increase in Proved, Probable and Possible (3P) net
attributable reserves across the Company's three Trinidad onshore licenses.
- An additional 3,000 acres were obtained to the east of the
existing Morne Diablo license, extending the current Lower Forest development
trend which will potentially add further reserves along with potential for
other deeper targets.
- Completion of the two well exploration well program in the
Dharoor Valley in Puntland. Based on the encouragement provided by these two
Shabeel wells, the JV entered into the next exploration period in both the
Nugaal and Dharoor Valley Production Sharing Contracts ("PSC's") which carry a
commitment to drill one well in each block within an additional 3 year term.
- Completion of the acquisition of 200km of 2D seismic with the
majority of the seismic being acquired over Block VIb which was combined with
the previous 410km 2D seismic program, along with older Soviet Era data with
the results being incorporated into the Company's geological model that
encompasses the whole license area.
Trinidad
Reserves and Valuation Upgrades - Trinidad
During the year, the Company announced a 29% increase in Proved,
Probable and Possible (3P) net attributable reserves across the Company's
three onshore Trinidad licenses, following the Company's independent petroleum
consultants, Forrest A. Garb and Associates ("Forrest Garb") having completed
a review of the Trinidad reserves following the first year of Range's
operations in Trinidad.
Below is the comparison between October 2012 and December 2011 of
the oil and gas reserves attributable to Range's (100%) interest in its
Trinidad Licenses, net of government and overriding royalties, as described
more fully in the report from Forest Garb & Associates.
Category Oil
(MMBO)
Dec `11 Oct `12 %age Mvmt
Proved (P1) 15.4 17.5 +14%
Probable (P2) 2.2 2.7 +23%
Possible (P3) 2.0 5.0 +150%
Total 3P Reserves 19.6 25.2 +29%
Prospective Resource (unrisked)
Low 2.0 8.1
Best 10.0 40.5
High 19.9 81.0
Based on the reserve numbers shown above, Forrest Garb estimates
the net cash flow attributable to Range's interests for Proved, Probable and
Possible reserves as shown below, based on average WTI prices for 2011, and
compared to the $85 / bbl case per the December 2011 reserves report.
US$85 / bbl case US$94 / bbl case
December 2011 October 2012
Category Undiscounted PV10 Undiscounted PV10
US$M US$M US$M US$M
Proved 679 385 799 446
Probable 133 73 142 81
Possible 120 49 276 153
Total 932 507 1,217 680
The valuations above are based on forecast production rates that
reflect the current drilling and development schedule, and estimated
individual well decline profiles derived from the Company's recent operating
results.
As reported above, the recent reserves report saw a 30.5 million
barrels (305%) increase in total unrisked net prospective (best estimate)
resources across the Company's licenses to 40.5 million barrels.
Of the 40.5 million barrels in unrisked prospective resources,
circa 30.5 million barrels are associated with identified Herrera prospects
that have been mapped on the Company's 3D seismic database.
Operations
The Company continued with its Lower Forest development program on
the Morne Diablo license during the year, reaching peak production in excess
of 1,000 bopd during Q3 2012 which was a 120% increase in production since
acquisition.
Conventional Programme
The Company completed a number of successful wells targeting the
Upper Cruse formation, some circa 1,000-1,500ft. below the Lower Forest
formation and given the early success of these wells, the Company will look at
the potential of a separate drilling program targeting the Upper Cruse
formation, in a similar way the early success on the Lower Forest formation
has been targeted.
During the year, the Company also spudded its first deeper well
targeting the Lower Cruse formation, the MD 248 well, with a target depth of
6,500ft.
Positive results from the MD 248 well Lower Cruse test would allow
Range to expedite a development program for this horizon by deepening existing
Middle Cruse wells in the Morne Diablo field to the Lower Cruse depths.
Deepening would require drilling only 2,500ft. of additional footage versus
the 6,500ft. for a new well, thus significantly reducing the costs whilst
obtaining swift access to a potential highly prospective new development zone
within the Lower Cruse formation.
Unconventional (Waterflood) Program
Morne Diablo
During the year, the Company has presented its proposed waterflood
program to the Mininstry of Energy of Trinidad and state company Petrotrin.
Following written approvals from Petrotrin, the Company will immediately
commence field development in line with the work program.
Beach Marcelle
With 75% (12.8 MMbbls) of Range's 1P proved undeveloped reserves
belonging to the Beach Marcelle waterflood project, the focus remains on
expediting the current simulation phase in parallel with moving a rig to site
to begin well integrity and workover operations.
Range's waterflood program in the Beach Marcelle field builds upon
3 previously successful, but prematurely halted, waterflood programs performed
by Texaco in the 1950's. With modern reservoir and waterflood simulation
software available, it is expected that Range will sweep the remaining proven
reserves a lot more efficiently than the 3 original waterflood programs. The
program will also be targeting additional fault blocks within the Beach
Marcelle license, not yet previously waterflooded, yet comprising a portion of
the 12.8 MMbbls of 1P proved undeveloped reserves. The new technical team have
looked at the data and have identified additional recoverable reserves, which
will be incorporated into the Range's existing reserves report after full
appraisal.
During the year, the Company experienced a number of operational
and supply chain difficulties which resulted in fewer-than expected wells
being drilled, and subsequent fall in production, however encouragingly, the
actual results from the Lower Forest development program exceeded the
Company's expectations in terms of average well performance. After
experiencing production decline in April 2013, production rebounded and
increased by 20% in June 2013 from the lows of April.
In response to the operational and supply chain difficulties, the
Company commenced the implementation of best practice procedures and processes
with respect to maintenance programs / drilling inventory and spare part
management, which was further strengthened by the recruitment of a suitably
qualified Maintenance Superintendent to manage and ensure that all rigs and
equipment are serviced efficiently and fully operational.
In conjunction with the maintenance and inventory management
programs, the Company is looking at refining the drilling strategy to further
reduce the drilling time and an increase in wells being drilled, across the
various horizon depths.
To reduce drilling time and improve hole quality, the Company is
reviewing the following areas:
- Drill bit selection
- Drilling parameter optimisation
- Casing point depths
- Down hole tools including hole openers, logging-while-drilling,
and potentially casing while drilling
These improvements will ensure minimum unscheduled equipment
downtime and mechanical safety and efficiency throughout the Trinidad
operations, allowing the work schedule to progress smoothly and efficiently.
Additionally, with the increase in oil prices, the Company has
undertaken a program to re-evaluate all existing wells with a focus on
optimization and reactivation where warranted. These works may include
perforating by-passed oil sands pay in the existing well bores, chemical
treatment / stimulation of perforations, jet washing or cleanout of
perforations, water shut off where water break out has occurred and is
negatively affecting oil inflow, mechanical repairs to down hole equipment,
and initiation of swabbing on previously capped wells. An estimated 200-300
bopd may be added to production from the optimization program. The Company is
planning to use Rig 6 to perform the heavy work overs on the Morne Diablo
license.
Range continues to focus on Health, Safety and Environment as Safe
to Work ("STOW") procedures and processes are constantly implemented and
updated, moving towards full STOW certification in early 2014.
In addition to the engagement of a suitably qualified Maintenance
Superintendent as referred above, subsequent to year end, the Company
appointed Mr Ash Mangano to the position of Vice President in Trinidad. Mr
Mangano has significant experience in international oil and gas globally,
having spent time with Halliburton, Baker Hughes and CB&I in variety of
technical (drilling engineering) and commercial roles and will complement the
existing team in accelerating the development on the Company's existing
reserve base, re-evaluation of all existing wells along with new ventures
including the proposed Niko farm-in.
Subsequent to year end, Range also engaged a Senior Reservoir
Engineer with over 15 years' experience in enhanced oil recovery projects and
reservoir characterisation in Trinidad, to work with the Exploration and
Exploitation group in expediting the Beach Marcelle and Morne Diablo
Waterflood projects, which progressed through the simulation and regulatory
approval processes during the year.
Corporate - Trinidad
During the year, Range extended its existing farm out agreements
("FOA's") for the Company's Morne Diablo and South Quarry licenses until 31
December 2021, with the minimum work commitments for each license well within
the Company's current development plans.
The extended FOA now includes an additional circa 3,000 acres
(Block A) to the east of the existing license area. Block A is an extension to
the east of the current Lower Forest development trend where the Company is
currently drilling. The current Lower Forest wells that have been drilled and
tested to date are showing sands which correlate to the sands encountered in
the QUN16 well that was drilled and tested in 1942, which is located some
3,000ft. to the east of the current development wells, on the edge of the
existing Morne Diablo license.
The reserves upgrades across the Company's Trinidad licenses, did
not include any reserves / resources associated with Block A, with the Company
looking to engage its independent reserves auditor to perform an initial
reserves / resource assessment across the additional 3,000 acres of Block A
which the Company believes will further add to the 420% P1 and P2 reserve
additions that the Company has booked since it acquired the Trinidad assets
midâ€2011.
The new FOA's saw a reduction in the enhanced royalty previously
been paid by the Company with a significant improvement in the net back
amounts before tax being achieved for the Company, and with an effective date
of 1 January 2012 for both FOA's, the new enhanced royalty rates will be
retrospectively applied.
Subsequent to year end, the Minister of Finance and Economy of
Trinidad and Tobago proposed attractive budget incentives for oil and gas
companies in the 2014 Budget Statement. The proposed changes are aimed at
incentivising companies that invest in exploration and production, with a
significant increase in the capital deductions allowable on development,
exploration and work-over expenditure. In addition to the increase in capital
allowances the investment tax credit (being 20% of capital expenditure)
against the Special Petroleum Tax is proposed to be carried forward into the
subsequent year (previously could only claimed in year of expenditure).
The new proposed budget incentives will have a significant positive
impact on Range's returns as the Company looks to accelerate both its
development and production activities on the existing reserves, along with its
intensive exploration program both internally and in partnership with Niko
Resources Ltd.
In anticipation of the increased activity in Trinidad, the Company
commenced discussions during the year with a leading International Drilling
and Oilfield Services provider, with a view to maximise the development of
current acreage and potential new licenses along with the proposed farm-in
with Niko Resources.
Puntland
Onshore
In January 2012, Range together with its equity partners
successfully spud the historic Shabeel-1 well in the Dharoor Valley, the first
in a two well exploration program and the first exploration well in Puntland
in over 25 years. The Shabeel North well having been spud soon after the
completion of the Shabeel-1 well, was successfully completed during the year,
having reached a target depth of 3,945m. Following on from the completion of
the two wells, the drilling rig and associated equipment was successfully
demobilised and restoration of both drilling locations completed.
Despite the non-commercial nature of the two wells the equity
partners were extremely encouraged that all of the critical elements exist for
oil accumulations, namely a working petroleum system, good quality reservoirs
and thick seal rocks.
Based on the encouragement provided by these two Shabeel wells, the
JV entered into the next exploration period in both the Nugaal and Dharoor
Valley Production Sharing Contracts ("PSC's") which carry a commitment to
drill one well in each block within an additional 3 year term. The current
operational plan would be to contract a seismic crew to acquire additional
data in the Dharoor block and to hold discussions with the Puntland Government
to gain access to drill ready prospects in the Nugaal Valley block.
To that extent, Range's JV partner and operator, Horn Petroleum,
has been focussed on making preparations for a seismic acquisition campaign in
the Dharoor PSA, which will include a regional seismic reconnaissance grid in
the previously unexplored eastern portion of the basin as well as prospect
specific seismic to delineate a drilling candidate in the western portion of
the basin, where an active petroleum system was confirmed by the drilling at
the Shabeel-1 and Shabeel North locations. The focus of the Dharoor seismic
program will be to delineate new structural prospects for the upcoming
drilling campaigns.
Offshore
During the prior year, Range entered into a conditional agreement
with the Puntland Government with respect to obtaining a 100% working interest
in an Offshore Block in the highly prospective Nugaal Basin. The Block is an
extension of the onshore Nugaal Region which has the potential for deltaic
deposits from the Nugaal Valley drainage system and comprises over 10,000km.
The agreement is subject to a formal Production Sharing Agreement
(PSA) being entered into and the receipt of all necessary regulatory
approvals.
Texas
During the year, Range reached an agreement to sell its Texas
producing assets which was executed subsequent to year-end. As per the
executed agreement, the Company will sell its interest in the North Chapman
Ranch and East Clarksville fields for $US25 million in cash at closing plus
$US5 million in production payments from future production.
Georgia
During the year the joint venture through Strait Oil and Gas
("SOG") completed the acquisition of 200km of 2D seismic, with the majority of
the seismic being acquired over Block VIb, to firm up leads identified in the
previous 410km 2D seismic program, along with targeting two gas wells, which
were drilled and suspended in Soviet times. These results were incorporated
into SOG's geological model that encompasses the whole of the two license
areas.
SOG engaged Senior Geologist, Dr. M. Arif Yukler and his team to
perform a full review of both the conventional and unconventional (Coal Bed
Methane) hydrocarbon potential on blocks VI a and VI b.
Dr Yukler's review incorporated the 610 km of 2D seismic acquired
across the two licences in 2009 and 2012/13, along with incorporating all of
the older Soviet data that existed across the blocks including seismic, well
logs and geochemical information into a geological model. Results of the
geological model, will enable SOG to confirm potential drilling locations in
Block VIb that were highlighted as prospective from the initial survey in
2009, along with allowing SOG to update the reserve and resource potential
across the two license areas.
SOG also continued the evaluation of the shale gas / oil potential
that has been identified on approximately 3,000 km2 and has commenced the
geological mapping and modelling of this potential.
Subsequent to year end, following the extensive review, which
included pseudo 3D quantitative basin modelling of the blocks, the targeted
hydrocarbon in-place and reserve calculations for blocks VI a and VI b were
completed with the results being highly encouraging as summarised below:
Conventional Conventional Oil Conventional Gas
Undiscovered (mmbbls) (Tcf)
Oil / Gas in Place (best estimate) (best estimate)
Total Oil / Gas in 403 18.4
Place
Range Attributable 181 8.3
(45%)
* Low to high ranges of the in-place undiscovered oil and gas
volumes have not yet been estimated. Range is currently undertaking further
modelling work to provide such ranges.
Proved &
Proved & Probable & Estimated
CBM Reserve Proved (1P) Probable (2P) Possible (3P) Total
Estimates Reserve (Bcf) Reserve (Bcf) Reserve (Bcf) Gas-in-Place (Tcf)
Total Gas In Place 0 0 508 3.16
Range Attributable (45%) 0 0 229 1.42
* The reserve estimates reflect conservatively applied recovery
factors. It is noted that recovery factors for CBM range as high as 60% based
on feasibility work performed to date.
Coal Bed Methane
During the year SOG, together with the Georgian Industrial Group
("GIG"), continued with the feasibility and technical studies on the CBM
project, which was also reviewed by Dr Yukler along with a review of the coal
bed methane potential that existed across the licences, over and above the
previously reported Tkibuli prospect, with the total CBM resource calculated
using the isopach maps for the Upper Bathonian coaly section.
Subsequent to year end, results of the review indicated the coaly
section covering 368 km2 and 83 km2 in blocks VIa and VIb, respectively. A
continuously thick and high quality coal area of 36 km2 was delineated by more
than 300 wells in Block VI a. All these wells encountered gas in the Upper
Bathonian coally section. The CBM reserves in this area are computed as being
at the Proved, Probable & Possible (3P) category. The blocks are estimated to
contain 3P gas reserves of 508 Bcf (100% bais) and a total of CBM gas in place
of 3.16 Tcf (100% basis).
The results of this extensive review clearly show that both blocks
have significant gas potential and good oil potential. The compilation of all
the available data and re-evaluation of the geochemical data show the coal
present in the blocks have similar high hydrocarbon generation capabilities as
the coals in the North Sea, Indonesia and New Zealand. With the addition of
the amounts of hydrocarbon generation in the Upper Bathonian, the total
resource is anticipated to be higher than the amounts given above and will be
determined at a later date.
SOG has presented the CBM potential to the Georgian State Agency
and the Georgian Oil and Gas Corporation with both parties agreeing on the
significant potential that exists across the licence areas. The news of the
highly prospective hydrocarbon play has been conveyed to the Energy Minister
and the Prime Minister, who see this potential as an opportunity to improve
the energy outlook for the Country.
During the year the SOG along with its equity partners commenced
discussions with a number of parties with respect to potential farm-in
opportunities across both the conventional and unconventional prospects
identified across the two licenses with advanced discussions continuing
subsequent to year end.
Colombia
During the year, the consulta previa process continued which
involves liaison with the various indigenous communities within the license
areas. Once completed, the Company anticipates to initiate mobilisation ahead
of the proposed seismic program. Initial G&G evaluation of the blocks shows 15
potential leads, with further potential upside to be imaged in greater detail
with high resolution 3D seismic surveys. The blocks lie to the north of large
proven reserves across the border in Ecuador, with production in excess of
30,000 bopd. The blocks are surrounded by successful producing fields,
(Ecopetrol, Gran Tierra, Suroco). Typical well productivity in the Putamayo
basin ranges from 1,000 to 2,000 bopd, with oil producing wells being light
(23 API on average).
Range and the operator have received farm-in interest from a number
of parties for the blocks, and will be considering different potential options
with regards to how best to finance the upcoming 350 km2 of 3D seismic
program.
Guatemala
During the year, Range acquired a strategic stake in Citation
Resources Limited ("Citation) (ASX:CTR). Citation holds a farm in right to
acquire a 70% interest in Latin American Resources Ltd ("LAR"), which holds an
80-100% interest in two oil and gas development and exploration blocks in
Guatemala ("Projects") and is operator of the blocks. Additionally, Range also
acquired a direct 10% equity stake in LAR.
The Projects consist of Block 1-2005 and Block 6-93 in the South
Peten Basin in Guatemala ("Guatemalan Blocks"). The Guatemalan Blocks have
Canadian NI 51-101 certified proved plus probable (2P) reserves of 2.3 MMBBL
(with approximately 0.45 - 0.6 MMBBls attributable to Range's combined equity
interest in CTR and 10% direct interest in LAR), with significant exploration
upside potential. In addition, the blocks have had significant previous
exploration with the two well appraisal drilling program currently underway
with the Atzam #4 well having already been successfully completed to a depth
of 4,054ft with significant initial oil and gas production of 610 bopd average
rate over a 24 hour period from a perforated 7ft. section in the Upper C17
carbonates.
The Projects and drilling/operational infrastructure are owned by
LAR together with its minority equity partners in a similar set up to Range's
Trinidad operations.
Subsequent to year end, independent reservoir engineers recommended
that the optimal production rate of the Atzam #4 well would be 466 bopd,
however the Operator is currently producing the well on a restricted choke due
to the limited onsite tank storage capacity of 7,000 barrels. The Operator
plans to increase the choke over time to maintain the reservoir integrity in
this initial production phase and to establish the optimal production rate
once the Atzam oil storage facilities are upgraded.
In additional to reporting on the optimal production rate, the
reservoir engineers reported an initial proven reserve (1P) of 362,515 barrels
of oil for the producing section of the C17 carbonate section reported above.
An adjacent 7ft section in the C17 carbonate is still to be bought onto
production, and once this occurs, it would be converted into 1P reserves
estimated in excess of 500,000 barrels of oil. The highly prospective C13 and
C14 carbonates in the Atzam #4 well are still to be flow tested and would also
be converted from 2P to 1P reserves following a successful program.
Range moved to acquire the 19.9% strategic interest in Citation, by
conversion of existing debt funding provided by Range to Citation into
ordinary Citation shares (subject to any necessary Citation shareholder
approvals) at $0.02 with a 1 for 2 free attaching listed Citation option
($0.04, June 2015), which is approximately $2m for the 19.9% interest. In
addition, Range paid $2m for the 10% interest in LAR, which is finance carried
through the first US$25m spent on the Project.
CORPORATE
Effective 1 July 2012, the Group changed its functional and
presentation currency from Australian dollars (AU$) to United States dollars
(US$) as significant portion of the Group's revenues, expenses and cash flows
are denominated in US$. The functional currency of an entity is the currency
of the primary economic environment in which the entity operates, which should
reflect the economic substance of the underlying events and circumstances
relevant to the Group.
The change in presentation currency is to better reflect the
Group's business activities and to improve investors' ability to compare the
Group's financial results with other publicly traded businesses in the
international oil and gas industry. The change in functional currency was
triggered by the Group's transition from an exploration to a production
company which has resulted in generating significant cash flows from sale of
oil. The transactions are denominated in US$ which combined with recent
borrowings; indicate that a significant portion of cash flows going forward
will be denominated in US$.
The consolidated financial report for the year ended 30 June 2013,
including comparative information (Restated), has been presented in US$.
Proposed Merger with International Petroleum
During the year, the Company announced its proposal to undertake a
strategic merger with International Petroleum Limited ("International") (NSX:
IOP) to create a leading ASX and AIM listed oil and gas Company with a strong
production growth profile from the on-going development of its significant
reserves and resources base. International holds highly prospective assets in
Russia, Kazakhstan, and Niger with total 3P Reserves of 233 mmbbls of oil and
best net estimate prospective resources of 367 mmbbls of oil and 61 Bcf of
gas.
Range and International have excellent project and management
synergies, with advanced oil and gas projects across Eastern Europe, the
Caribbean, Central Asia, Latin America and Africa. The merger would build a
stronger, more robust company with greater financial and technical resources,
with a particular focus on applying its onshore exploration and development
expertise to growing production from its pipeline of projects.
Subsequent to year end, the Company has been informed that
International is in negotiations with a third party relating to the potential
sale of its Russian assets for cash consideration.
In the course of discussions and due diligence in connection with
the proposed merger of the two companies, Range remains committed in principle
to pursue a merger transaction pending final confirmation of the sale terms.
Financings
During the year, the Company raised circa US$42m through a number
of debt facilities and placements with institutional and sophisticated
investors. In addition, the Company advanced discussions on financing for its
Trinidad operations through a reserve based lending facility which is looking
to finalise soon after the date of this report.
FINANCIAL POSITION
The net assets of the economic entity have increased by
US$8,578,386, from US$163,988,199 (Restated) at 30 June 2012 to US$172,566,585
in 2013. This increase has resulted primarily from the associated exploration
and development expenditure during the year of US$10,599,410.
The directors believe the economic entity is in a strong and stable
financial position to expand and grow its current operations.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
The following significant changes in the state of affairs of the
parent entity occurred during the financial year:
- Acquisition of a strategic stake in Citation Resources Limited
who hold a farm-in right to acquire a 70% interest in Latin American Resources
Ltd ("LAR"), which holds an 80-100% interest in two oil and gas development
and exploration blocks in Guatemala ("Projects") and is operator of the
blocks. This was consummated subsequent to year-end with the conversion of
debt funding into ordinary fully paid shares in Citation.
- The Company extended its existing farm out agreements ("FOA's")
for the Company's Morne Diablo and South Quarry licenses until 31 December
2021, with the minimum work commitments for each license well within the
Company's current development plans.
- Proposal to undertake a strategic merger with International
Petroleum Limited (NSX: IOP) to create a leading ASX and AIM listed oil and
gas Company with a strong production growth profile from the on-going
development of its significant reserves and resources base.
EVENTS SUBSEQUENT TO REPORTING DATE
- Execution of agreement to dispose of the Company's Texan Assets
for $25m upfront cash payment and a $5m to be paid from future production.
- Highly encouraging results of an extensive review of the
Company's Georgian assets including gross best estimate of undiscovered oil
and gas in place at 403 mmbbls and 18.4 Tcf respectively along with gross 3P
CBM reserves of 3.16 Tcf.
- Conversion of amounts advanced to Citation resulting in Range to
acquire up to 19.9% of Citation along with a further 10% interest in Latin
America Resources - effectively giving Range a see through 32% interest into
the Guatemalan projects.
- Proposed farm-in with Niko Resources Ltd on the Guayaguare block
in Trinidad, which would result in an increase in gross acreage footprint by
+280,000 acres - refer below.
- The Company was informed that International Petroleum (the
subject to a proposed merger) is in negotiations with a third party relating
to the potential sale of its Russian assets for cash consideration with Range
committed in principle to pursue a merger transaction pending final
confirmation of the sale terms.
Trinidad
In July 2013, Range entered into a proposed farm-in agreement with
Niko Resources Ltd ("Niko") (TSK: NKO) on the Guayaguayare Block in Trinidad,
which encompasses circa 280,000 acres across both the shallow and deep
horizons, onshore and offshore, with proven producing trends.
Niko currently holds shallow and deep Production Sharing Contracts
for 65% of the onshore portion and 80% of the offshore portion of the licenses
area with Guayaguayare Block comprising 280,170 shallow acres and 293,999 deep
acres. Trinidad's state owned Petroleum Company Petrotrin holds the remaining
balance of the interests (35% onshore and 20% offshore).
According to the agreement in principle, Range will earn 50% of
Niko's existing interests in the deep and shallow rights covering both onshore
and offshore areas, with the consortium to drill two onshore wells: one
shallow to a maximum of 5,000 ft., and one deep onshore well to a minimum of
5,000 ft. In the event of a discovery from either of the two initial wells,
the consortium will look to drill an initial appraisal well.
Range will fund the two onshore wells and the potential initial
appraisal well at its sole expense, and will split the costs 50/50 with Niko
in the offshore well, and any other costs moving forward.
The agreement is subject to completion of final transaction
documents and government and regulatory approval, as well as approval by the
Range and Niko boards.
As shown in the map above (Figure 11), the Guayaguayare Block is
comprised of over 280,000 contiguous acres covering both onshore and offshore
portions of known, productive trends along the southern coast of Trinidad, in
the transition area between the transpressional Southern basin and the
extensional Columbus basin. A regional wrench fault, and extension of the Los
Bajos fault, cuts through the onshore to offshore transition zone. Traps
associated with this fault produce oil in Southwest Trinidad and off the East
Coast from Upper Miocene / Pliocene Sands.
The Block surrounds Range's Beach Marcelle Field, and extends south
to the limits of Trinidad's territorial waters. In addition to proven
Tertiary-age exploration targets, the block is believed to hold significant
potential in the Cretaceous section, which has been successfully developed in
the Eastern Venezuelan basin.
There are four prospective onshore fields within the Guayaguayare
block, each considered to have significant potential for oil, whilst the
offshore structural complex is believed to have significant potential for
large gas discoveries with several large structures mapped.
To date, the following work has been completed by Niko and previous
operators on the block:
Onshore:
- Acquired and processed 217km2 3D land survey
Offshore:
- Acquired and processed 277km2 3D marine survey (2011)
- Two 3D marine surveys were reprocessed (ELF 1997 and Mobil 1990)
- All 3 offshore 3D surveys have been merged prestack (total 836 km2)
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
To further improve the economic entity's profit and maximise
shareholders wealth, the Company is looking to accelerate the development
across all of the three onshore licenses in Trinidad with regards to both
conventional and unconventional (waterflooding) programs, leading to increases
in production and reserves as well as potentially expanding its footprint in
the Country through the proposed farm-in with Niko and other potential
opportunities. The Company is also committed to further developing the
exploration potential of its Puntland, Georgian and Colombian Exploration
Projects and invite interested parties into joint venture arrangements on
these assets. The Company will await the results from Citation on its
Guatemalan projects to determine appropriate paths forward for Range's
strategic investment in both Citation and at project level.
LIKELY DEVELOPMENTS
Other than information disclosed elsewhere in this annual report,
information on likely developments in the operations of the economic entity
and the expected results of those operations in future financial years has not
been included in this directors' report because the directors believe, on
reasonable grounds, that to include such information would be likely to result
in unreasonable prejudice to the economic entity.
ENVIRONMENTAL REGULATION
The economic entity's operations are not regulated by any
significant environmental regulation under a law of the Commonwealth or of a
state or territory.
The Directors have considered compliance with the National
Greenhouse and Energy Reporting Act 2007 which requires entities to report
annual greenhouse gas emissions and energy use. For the first measurement
period 1 July 2008 to 30 June 2009 and subsequent periods the directors have
assessed that there are no current reporting requirements, but may be required
to do so in the future.
GREENHOUSE GAS AND ENERGY DATA REPORTING REQUIREMENTS
The Directors have considered compliance with the National
Greenhouse and Energy Reporting Act 2007 which requires entities to report
annual greenhouse gas emissions and energy use. The directors have assessed
that there are no current reporting requirements, but may be required to do so
in the future.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED
30 JUNE 2013
Note Consolidated
2012
2013 US$
US$ Restated*
Revenue from continuing operations 4 27,258,691 24,997,980
Operating expenses (13,525,286) (16,796,698)
Depreciation, depletion and amortisation (8,307,574) (9,506,504)
Cost of sales 5a (21,832,860) (26,303,202)
Gross Profit / (Loss) 5,425,831 (1,305,222)
Other income and expenses from continuing
operations
Other income 4 484,539 6,559,987
Finance costs 5b (4,027,704) (2,827,201)
Exploration expenditure 20 (5,839,253) (21,753,481)
Depreciation - general 5b (63,938) (46,810)
Directors fees 7 (902,597) (547,096)
Corporate management services (866,617) (970,324)
Consultants (4,337,657) (5,467,306)
Foreign exchange loss (135,462) (928,933)
Share-based payment (2,907,084) (1,495,798)
Marketing and public relations (581,339) (524,238)
Costs associated with AIM listing (181,138) (447,299)
Travel expenditure (863,263) (1,648,835)
Impairment loss on available for sale assets - (115,613)
Share of net loss on investment in associates - (407,326)
Other expenses 5b (2,924,048) (1,859,583)
Loss before income tax expense from continuing
operations (17,719,730) (33,785,078)
Income tax benefit/(expense) 6 (2,584,531) 2,690,087
Loss after income tax for the year attributable
to equity holders of Range Resources Limited (20,304,261) (31,094,991)
Other comprehensive income/(loss)
Items that can be reclassified to profit and loss
Revaluation of available for sale assets 29d (1,105,172) 768,816
Exchange difference on translation of foreign
operations 29c (681,064) (5,923,382)
Other comprehensive income/(loss) for the year,
net of tax (1,786,236) (5,154,566)
Total comprehensive loss attributable to equity
holders of Range Resources Limited (22,090,497) (36,249,557)
Overall operations
EPS from continuing operations:
Basic loss per share (cents per share) 9 (0.95) (1.57)
Diluted loss per share (cents per share) 9 n/a n/a
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT
30 JUNE 2013
Note Consolidated
2012 2011
2013 US$ US$
US$ Restated* Restated*
ASSETS
CURRENT ASSETS
Cash and cash equivalents 10 1,732,231 10,578,562 18,396,514
Restricted deposits 3,480,000 - -
Trade and other receivables 11 14,297,007 11,373,559 3,181,683
Other current assets 12 3,818,816 926,294 327,466
23,328,054 22,878,415 21,905,663
Non-current asset classified as held 14
for sale 8,769,792 6,323,453 -
TOTAL CURRENT ASSETS 32,097,846 29,201,868 21,905,663
NON-CURRENT ASSETS
Goodwill 16 46,198,974 46,198,974 -
Available for sale financial assets 13 822,751 3,299,034 966,822
Property, plant and equipment 17 15,109,215 15,605,563 20,204
Exploration & Evaluation Expenditure 18 9,453,636 7,250,706 4,430,443
Development Assets 19 82,614,029 82,732,320 6,507,736
Prepayments for Investments - - 57,676,819
Deferred tax asset 6 216,920 348,113 -
Investments in Associates 21 37,295,453 30,333,035 6,243,411
Non-Current Assets 22 15,324,218 4,839,713 12,846,052
TOTAL NON-CURRENT ASSETS 207,035,196 190,607,458 88,691,487
TOTAL ASSETS 239,133,042 219,809,326 110,597,150
CURRENT LIABILITIES
Trade and other payables 23 7,170,178 2,500,628 1,504,420
Current tax liabilities 1,806,030 4,247,557 -
Borrowings 24 11,026,440 - -
Provision 25 654,873 602,378 12,340
TOTAL CURRENT LIABILITIES 20,657,521 7,350,563 1,516,760
NON-CURRENT LIABILITIES
Other non-current liabilities 27b 431,211 2,970,284 -
Deferred tax liabilities 26 44,995,633 44,859,854 -
Employee service benefit 27a 482,092 640,426 -
TOTAL NON-CURRENT LIABILITIES 45,908,936 48,470,564 -
TOTAL LIABILITIES 66,566,457 55,821,127 1,516,760
NET ASSETS 172,566,585 163,988,199 109,080,390
EQUITY
Contributed equity 28 314,199,634 283,645,540 200,968,352
Reserves 29 26,991,273 28,662,720 25,337,108
Accumulated losses (168,624,322) (148,320,061) (117,225,070)
TOTAL EQUITY 172,566,585 163,988,199 109,080,390
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR YEAR ENDED
30 JUNE 2013
Note Consolidated
2012
2013 Restated*
US$ US$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers 24,662,614 22,135,754
Payments to suppliers and employees (25,042,225) (16,730,138)
Payments for exploration and evaluation
expenditure in relation to the Somalia
interests (5,839,253) (15,225,120)
Income taxes paid (4,736,902) (6,984,390)
Interest received 183,714 325,745
Interest & other finance costs (1,678,438) -
Net cash inflow/(outflow) from operating
activities 33 (12,450,490) (16,478,149)
CASH FLOWS FROM INVESTING ACTIVITIES
Payment for property, plant & equipment (1,661,699) (12,607,762)
Payment for available for sale financial
assets (200,000) (2,502,578)
Sale of available for sale financial assets 2,091,522 2,604,908
Payment for development assets (8,396,480) (6,404,445)
Payment to investments in associates (6,962,418) (12,626,155)
Payments for exploration and evaluation
assets (2,202,930) (7,872,856)
Payments for assets held-for-sale (912,687) -
Payments for acquisition of subsidiary, net
of cash acquired - (4,704,346)
Payment to restricted deposits (3,480,000) -
Loans to external parties (9,001,871) (6,428,993)
Net cash outflow from investing activities (30,726,563) (50,542,227)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of equity 21,504,846 64,811,576
Payment of equity issue costs (350,917) (5,068,593)
Proceeds from borrowings 21,499,815 -
Repayment of borrowings (8,323,022) -
Net cash inflow from financing activities 34,330,722 59,742,983
Net increase / (decrease) in cash and cash
equivalents (8,846,331) (7,277,393)
Cash and cash equivalents at beginning of
financial year 10,578,562 18,396,514
Effect of exchange rate changes on the
balance of cash held in foreign currencies - (540,559)
Cash and cash equivalents at end of
financial year 10 1,732,231 10,578,562
Issue of Shares
Range Resources Limited announces the issue of the following
securities:
- 133,681,977 Ordinary Fully Paid Shares issued in lieu of debt
conversion, and financing costs
- 5,000,000 listed options ($0.05, 31 January 2016) in lieu of
financing costs.
- 4,809,524 unlisted options (£0.021, 31 August 2016) following
debt conversion as per convertible loan agreements.
- 9,000,000 unlisted options (£0.02, 31 August 2016) following debt
conversion as per convertible loan agreements.
- 3,947,369 unlisted options (£0.019, 31 August 2016) following
debt conversion as per convertible loan agreements.
- 7,555,558 unlisted options (£0.018, 31 August 2016) following
debt conversion as per convertible loan agreements.
Application will be made for the 133,681,977 new shares to be
admitted to trading on the ASX and AIM. Trading in the new shares is expected
to commence on or around 4 October 2013.
Following the issue of these securities the total number of
securities on issue are as follows:
3,148,485,061 Ordinary Fully Paid Shares (RRS)
70,241,168 Listed Options ($0.05, 31 January 2016)
855,166 Unlisted Options (£0.04, 30 June 2015)
7,058,824 Unlisted Options (£0.17p, 30 April 2016)
5,180,000 Unlisted Options (£0.075p, 31 January 2017)
9,000,000 Unlisted Options (£0.125p, 31 March 2015)
17,921,146 Class B Performance Shares
15,708,801 Unlisted Options (£0.0615, 19 October 2015)
32,275,862 Unlisted Options (£0.05075, 30 November 2015)
5,000,000 Unlisted Options (A$0.10, 31 January 2016)
5,000,000 Unlisted Options (A$0.06, 10 February 2016)
146,533,850 Unlisted Options (£0.04, 30 April 2016)
5,000,000 Unlisted Options (£0.037, 11 July 2016)
476,190 Unlisted Options (£0.021, 27 July 2016)
952,381 Unlisted Options (£0.021, 29 July 2016)
6,714,284 Unlisted Options (£0.021, 31 August 2016)
9,000,000 Unlisted Options (£0.020, 31 August 2016)
3,947,369 Unlisted Options (£0.019, 30 September 2016)
7,555,558 Unlisted Options (£0.018, 30 September 2016)
Yours faithfully
Peter Landau
Executive Director
Contacts
Range Resources Limited PPR (Australia)
Peter Landau David Tasker
T: +61 (8) 9488 5220 T: +61 (8) 9388 0944
E: plandau@rangeresources.com.au E: david.tasker@ppr.com.au
GMP Securities Europe LLP (Joint Broker) RFC Ambrian Limited (Nominated Advisor)
Richard Greenfield / Rob Collins / Stuart Laing
Alexandra Carse T: +61 (8) 9480 2500
T: +44 (0) 207 647 2800
Fox-Davies Capital Limited (Joint Broker) Old Park Lane Capital (Joint Broker)
Daniel Fox-Davies Michael Parnes
T: +44 (0) 203 463 5000 T: +44 (0) 207 493 8188
Dahlman Rose & Company (Principal American Liaison)
OTCQX International Market (U.S.)
Christopher Weekes / Stephen Nash
T: +1 (212)-372-5766
Range Background
Range Resources Limited is a dual listed (ASX:RRS; AIM:RRL) oil & gas
exploration company with oil & gas interests in the frontier state of
Puntland, Somalia, the Republic of Georgia, Texas, USA, Trinidad and Colombia.
- In Trinidad Range holds a 100% interest in holding companies with three
onshore production licenses and fully operational drilling subsidiary.
Independently assessed Proved (P1) reserves in place of 17.5 MMBO with 25.2
MMBO of proved, probable and possible (3P) reserves and an additional 81 MMBO
of unrisked prospective resources.
- In the Republic of Georgia, Range holds a 40% farm-in interest in onshore
blocks VIa and VIb, covering approx. 7,000sq.km. Range completed a 410km 2D
seismic program with independent consultants RPS Energy identifying 68
potential structures containing an estimated 2 billion barrels of undiscovered
oil-in-place (on a mean 100% basis) with the first (Mukhiani-1) exploration
well having spudded in July in 2011. The Company is focussing on a revised
development strategy that will focus on low-cost, shallow appraisal drilling
of the contingent resources around the Tkibuli-Shaori ("Tkibuli") coal
deposit, which straddles the central sections of the Company's two blocks.
- In Puntland, Range holds a 20% working interest in two licenses encompassing
the highly prospective Dharoor and Nugaal valleys. The operator and 60%
interest holder, Horn Petroleum Corp. (TSXV:HRN) has completed two exploration
wells and will continue with a further seismic and well program over the next
12-18 months.
- Range holds a 25% interest in the initial Smith #1 well and a 20% interest
in further wells on the North Chapman Ranch project, Texas. The project area
encompasses approximately 1,680 acres in one of the most prolific oil and gas
producing trends in the State of Texas. Independently assessed 3P reserves in
place (on a 100% basis) of 228 Bcf of natural gas, 18 MMbbl of oil and 17
MMbbl of natural gas liquids.
- Range holds a 21.75% interest in the East Texas Cotton Valley Prospect in
Red River County, Texas, USA, where the prospect's project area encompasses
approximately 1,570 acres encompassing a recent oil discovery. The prospect
has independently assessed 3P reserves in place (on a 100% basis) of 3.3mmbbls
of oil.
- Range is earning a 65% (option to move to 75%) interest in highly
prospective licences in the Putumayo Basin in Southern Colombia. The Company
will undertake a 3D seismic program in the near term as part of its
exploration commitments on the Company's Colombian interests.
- Range has taken a strategic stake (19.9%) in Citation Resources Limited
(ASX: CTR) which holds a 60% interest in Latin American Resources (LAR). LAR
holds an 80-100% interest in two oil and gas development and exploration
blocks in Guatemala with Canadian NI 51-101 certified proved plus probable
(2P) reserves of 2.3 MMBBL (100% basis). Range also holds a 20% interest in
LAR.
Table of Reserves and Resources
Detailed below are the estimated reserves for the Range project portfolio.
All figures in Gross Oil Range's Net Attributable
MMboe Reserves
Project 1P 2P 3P Interest 1P 2P 3P Operator
Oil & NGL
Texas - NCR * 16.4 25.2 35.3 20-25% 2.2 3.4 4.8 Western Gulf
Texas - ETCV 1.0 1.6 3.3 22% 0.2 0.3 0.6 Crest Resources
Trinidad 17.5 20.2 25.2 100% 17.5 20.2 25.2 Range
Guatemala ** 2.3** ** 32% ** 0.74** ** Latin American Resources
Total Oil & 34.9 47.0 63.8 19.9 21.3 28.9
Liquids
Gas Reserves
Texas - NCR * 106.0 162.7 228 20-25% 11.7 18.1 25.4 Western Gulf
Total Gas 106.0 162.7 228 11.7 18.1 25.4
Reserves
* Reserves attributable to Range's interest in the North Chapman Ranch asset,
which are net of government and overriding royalties as described in the
Forrest Garb report.
** The reserves estimate for the Guatemalan Blocks in which LAR (and CTR) have
an interest in is as reported by CTR. CTR has not reported 1P and 3P
estimates, but Range is seeking such information from CTR for future reporting
purposes.
Detailed below are the estimated resources and oil-in-place delineated across
Range's portfolio of project interests.
All figures in MMboe Gross Oil Reserves Range's Net Attributable
Project Low Best/ High Interest Low Best/ High Operator
Mean Mean
Prospective Resources
Trinidad 8.1 40.5 81.0 100% 8.1 40.5 81.0 Range
Total Prospective 8.1 40.5 81.0 8.1 40.5 81.0
Resources
Undiscovered
Oil-In-Place
Puntland - 16,000 - 20% - 3,200 - Horn Petroleum
Georgia - 2,045 - 40% - 818 - Strait Oil & Gas
Colombia - 7.8 - 65-75% - 5.1 - 5.8 - Petro Caribbean
All of the technical information, including information in relation to
reserves and resources that is contained in this document has been reviewed
internally by the Company's technical consultant, Mr Mark Patterson. Mr
Patterson is a geophysicist who is a suitably qualified person with over 25
years' experience in assessing hydrocarbon reserves and has reviewed the
release and consents to the inclusion of the technical information.
The reserves estimate for the Guatemalan Blocks in which LAR (and CTR) have an
interest in is as reported by CTR. CTR has not reported 1P and 3P estimates,
but Range is seeking such information from CTR for future reporting purposes.
All of the technical information, including information in relation to
reserves and resources that is contained in this document has been reviewed
internally by the Company's technical consultant, Mr Mark Patterson. Mr
Patterson is a geophysicist who is a suitably qualified person with over 25
years' experience in assessing hydrocarbon reserves and has reviewed the
release and consents to the inclusion of the technical information.
The reserves estimates for the 3 Trinidad blocks and update reserves estimates
for the North Chapman Ranch Project and East Texas Cotton Valley referred
above have been formulated by Forrest A. Garb & Associates, Inc. (FGA). FGA is
an international petroleum engineering and geologic consulting firm staffed by
experienced engineers and geologists. Collectively FGA staff has more than a
century of worldâ€wide experience. FGA have consented in writing to the
reference to them in this announcement and to the estimates of oil and natural
gas liquids provided. The definitions for oil and gas reserves are in
accordance with SEC Regulation Sâ€X an in accordance with the guidelines of
the Society of Petroleum Engineers ("SPE"). The SPE Reserve definitions can be
found on the SPE website at spe.org.
RPS Group is an International Petroleum Consulting Firm with offices
worldwide, who specialise in the evaluation of resources, and have consented
to the information with regards to the Company's Georgian interests in the
form and context that they appear. These estimates were formulated in
accordance with the guidelines of the Society of Petroleum Engineers ("SPE").
The prospective resource estimates for the two Dharoor Valley prospects are
internal estimates reported by Africa Oil Corp, the operator of the joint
venture, which are based on volumetric and related assessments by Gaffney,
Cline & Associates.
The TSX certified 51-101 certified reserves with respect to the Guatemalan
project are as reported by ASX listed Company Citation Resources (ASX: CTR).
In granting its consent to the public disclosure of this press release with
respect to the Company's Trinidad operations, Petrotrin makes no
representation or warranty as to the adequacy or accuracy of its contents and
disclaims any liability that may arise because of reliance on it.
The Contingent Resource estimate for CBM gas at the Tkibuli project is sourced
from the publically available references to a report by Advanced Resources
International's ("ARI") report in 2009: CMM and CBM development in the
Tkibuli-Shaori Region, Georgia. Advanced Resources International, Inc., 2009.
Prepared for GIG/Saknakhshiri and U.S. Trade and Development Agency. -
.globalmethane.org/documents/ toolsres_coal_overview_ch13.pdf. Range's
technical consultants have not yet reviewed the details of ARI's resource
estimate and the reliability of this estimate and its compliance with the SPE
reporting guidelines or other standard is uncertain. Range and its JV partners
will be seeking to confirm this resource estimate, and seek to define
reserves, through its appraisal program and review of historical data during
the next 12 months.
Reserve information on the Putumayo 1 Well published by Ecopetrol 1987.
SPE Definitions for Proved, Probable, Possible Reserves and Prospective
Resources
Proved Reserves are those quantities of petroleum, which by analysis of
geoscience and engineering data, can be estimated with reasonable certainty to
be commercially recoverable, from a given date forward, from known reservoirs
and under defined economic conditions, operating methods, and government
regulations.
Probable Reserves are those additional Reserves which analysis of geoscience
and engineering data indicate are less likely to be recovered than Proved
Reserves but more certain to be recovered than Possible Reserves.
Possible Reserves are those additional reserves which analysis of geoscience
and engineering data indicate are less likely to be recoverable than Probable
Reserves.
1P refers to Proved Reserves, 2P refers to Proved plus Probable Reserves and
3P refers to Proved plus Probable plus Possible Reserves.
Prospective Resources are those quantities of petroleum estimated, as of a
given date, to be potentially recoverable from undiscovered accumulations by
application of future development projects. Prospective Resources have both an
associated chance of discovery and a chance of development. Prospective
Resources are further subdivided in accordance with the level of certainty
associated with recoverable estimates assuming their discovery and development
and may be sub-classified based on project maturity.
Contingent Resources are those quantities of hydrocarbons which are estimated,
on a given date, to be potentially recoverable from known accumulations, but
which are not currently considered to be commercially recoverable.
Undiscovered Oil-In-Place is that quantity of oil which is estimated, on a
given date, to be contained in accumulations yet to be discovered. The
estimated potentially recoverable portion of such accumulations is classified
as Prospective Resources, as defined above.
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