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  • Range Resources And International Petroleum To Merge 0 comments
    Apr 23, 2013 10:53 PM

    Range Resources (ASX: RRS, AIM: RRL) is set to turn into a global oil and gas production company after proposing to merge with International Petroleum.

    Range will make an offmarket takeover offer of three Range ordinary shares for every two International Petroleum ordinary shares, which is subject to various conditions such as final due diligence and regulatory approvals.

    Based on Range's current share price (on the AIM market), this values International Petroleum at approximately A$105 million.

    Peter Landau, Executive Director of Range, commented: "Range and International Petroleum have excellent project and management synergies, with advanced oil & gas projects across Eastern Europe, Trinidad, Central Asia, Latin America and Africa."

    International Petroleum holds highly prospective assets in Russia, Kazakhstan, and Niger with total 3P Reserves of 233 mmbbls of oil and best estimate prospective resources of 761 mmbbls of oil and 157 Bcf of gas.

    The merger will create a leading ASX & AIM listed oil and gas company with a strong production growth profile. The key near term focus of the merged entity will be the expansion and development of the projects in Trinidad, Russia and onshore Africa.

    Another point of merit is that International Petroleum's recently acquired assets in Niger provide a strong exploration upside fir to Range's own portfolio of large potential onshore projects.

    Range has received commitments to a A$20 million placement to major funds and institutions and agreed to provide US$15 million to International Petroleum by way of a secured loan over International Petroleum's Russian assets.

    'New entity' reserves, resources and production

    The new entity would hold estimated 1P, 2P and 3P reserves of 23.6 mmbbls, 100 mmbbls and 264 mmbbls of oil respectively, and best estimate prospective resources of 802 mmbbls of oil and 156 Bcf of gas.

    Current production for the 'new Range' would be approximately 1,000 bopde, with a target of increasing production to 10,000 bopde from conventional operations and an additional 3,000 bopde from unconventional operations by the end of 2015.

    The key near term focus of the merged entity will be the expansion and development of the projects in Trinidad, Russia and onshore Africa.

    Agreement to merge

    The board of International Petroleum is supporting the offer, unanimously agreeing to recommend the proposed merger in the absence of a superior proposal.

    Chris Hopkinson is currently the CEO of International Petroleum, with the company looking to appoint Hopkinson as a Managing Director of the merged entity.

    Hopkinson has over 23 years' experience in the oil and gas industry, including senior management positions with BG Group, TNK‐BP, Yukos, Imperial Energy Corporation PLC and Lukoil.

    Landau added, "The proposed Managing Director, Mr Chris Hopkinson has immense technical and operational experience which will drive the merged company's production growth in the short and medium term."

    Proposed new board

    The board of Range would invite two directors from International Petroleum to join the board, with the new board comprising:

    - Sir Sam Jonah (current Range Non‐Executive Chairman).
    - Chris Hopkinson (current International Petroleum Director and proposed Managing Director).
    - Peter Landau (current Range Executive Director).
    - Anthony Eastman (current Range Finance Director).
    - Pierre Godec (current International Petroleum Non‐Executive Director).
    - Marcus Edwards Jones (current Range Non‐Executive Director).

    Range's A$20 million placement

    Range has received commitments from a number of institutional investors to raise around A$20 million through the issue of 338.983 million Range ordinary shares at an issue price of £0.04 per share (A$0.059) along with an attaching unlisted warrant for every two shares subscribed for (£0.04, 30 April 2016) with the warrants subject to shareholder approval.

    Application will be made for the Placement shares to be admitted for trading on the ASX and AIM markets, with trading in the Placement shares to commence on AIM on or around 29 April 2013.

    Funds raised through the Placement will be used to fund a secured loan to International Petroleum, and for operational and working capital requirements.

    Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.

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