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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Range Resources Limited | LSE:RRL | London | Ordinary Share | AU0000065989 | ORD NPV (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.035 | 0.03 | 0.04 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMRRL
RNS Number : 7417Z
Range Resources Limited
17 March 2017
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.
Half-Yearly Report
Range today releases the half-yearly report (unaudited) for the 6 months ending 31 December 2016, with the following key points:
Operational:
Hot Features
Premium
-- The average production for the period in Trinidad of 495 bopd was broadly unchanged from average production
during the prior 6 months (i.e. FY16 H2);
-- The Company completed an independent reserves audit, showing increase in total 2P reserves to 24.4 mmboe;
-- Water injection has been ongoing on two waterflood projects, with production as a result of waterflooding
commencing on one of the projects;
-- Four development wells successfully completed;
-- Subsequent to the period end, the Company reassessed its work programme and production outlook for Trinidad. As a
result, Range does not believe it will meet its previously stated production target of 2,500 bopd by the end of
2017; and
-- The Company continues with implementation of the waterflood projects, which account for the vast majority of
Range's reserves in Trinidad.
Financial and Corporate:
-- Revenues increased by 38% to US$3.8 million (FY16 H2:US$2.8 million), mainly due to higher realised oil price of
US$42 per barrel (FY16 H2: US$31 per barrel);
-- Operating expenses improved by 9% to US$40 per barrel (FY16 H2: US$44 per barrel);
-- The Company has a healthy unrestricted cash positon of US$20.6 million (FY16 H2: US$13 million);
-- The Board is encouraged by the improved financial performance seen in the core operations of the Company during
the period compared to FY16 H2;
-- The balance sheet remains sound with total assets of US$152.0 million and no debt payments due within the next 15
months;
-- Following the agreement to acquire RRDSL, Range will no longer be able to rely upon the funding arrangement with
LandOcean for future work undertaken in Trinidad and instead will fund work programme through cash on hand and
revenues generated from production. Based upon this available funding, Range reassessed the work programme and
production outlook for Trinidad and as a result has chosen to fully impair the remaining goodwill related to the
Trinidad assets of US$29.0 million. The balance sheet valuation of Trinidad does not take into consideration the
value in the earlier stage exploration and appraisal acreage in Trinidad and the Board continues to believe that
there is substantial value to shareholders within the overall Trinidad asset portfolio;
-- Net loss for the period (post-impairment) of US$35.1 million (FY16 H2: US$18.7 million);
-- The calculated underlying NPAT for the period demonstrates significant positive progress with a reduced loss by
23% to US$7.3 million (FY16 H2: loss of US$9.5 million);
-- Borrowings and other interest bearing payables have increased during the period (from US$25.3 million to US$55.2
million) which is a result of the continued expenditure during the period on the waterflood programme,
development drilling and other study and research work undertaken in Trinidad;
-- During the period, US$20 million of the total outstanding amount due to LandOcean was transferred to a 3-year
convertible bond with LandOcean, which significantly extended the average tenor for payments of these amounts;
and
-- There are no payments due to LandOcean for any of the purchase orders until 2H 2018 so Range continues to have
sufficient liquidity on hand to fund its obligations and Trinidad work programme from existing cash on hand and
revenues from production.
Events subsequent to the period end (proposed acquisition of RRDSL):
-- Range signed a binding Heads of Agreement for the acquisition of RRDSL, an established oilfield services company
in Trinidad;
-- The Board believes the proposed acquisition will provide Range with greater control over its operating costs in
Trinidad and will directly lead to a significant reduction in its operating cost per barrel (Range will no longer
have to pay third party margins on the work undertaken). RRSDL is also expected to provide an additional income
stream from work undertaken for third parties;
-- The cost of the proposed acquisition would not be payable for three years post-acquisition so whilst the
acquisition will lead to an increase in interest-bearing liabilities, the Company expects to have more than
sufficient time to make appropriate arrangements to repay or refinance such repayments prior to their payment
date; and
-- The proposed transaction, if completed, would constitute a reverse takeover that will be subject to a vote of the
Company's shareholders and relevant regulatory stock exchange approvals. Accordingly, as required by Rule 14 of
the AIM Rules for Companies, an admission document will be published and notice of general meeting will be sent
to the Company's shareholders which will, among other things, convene a general meeting of the Company at which a
resolution approving the transaction will be proposed.
Kerry Gu, Chairman commented:
"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. 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.
The Board appreciates the patience of shareholders as we execute our 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."
Competent Person statement
In accordance with AIM Rules, Guidance for Mining and Oil & Gas Companies, the information contained in this announcement has been reviewed and approved by Mr Lijun Xiu. Mr Xiu is a suitably qualified person with over 30 years' experience in assessing hydrocarbon reserves, and holds a Bachelor degree in Geological Prospecting. In addition, he holds a number of professional titles, including Reserves Evaluation Specialist from the Ministry of Land and Resources of the People's Republic of China. Mr Xiu is a member of the SPE (Society of Petroleum Engineers). Mr Xiu holds a role of a Vice President of Operations and Production with the Company.
The reserves statement is in accordance with the definitions and guidelines of the SPE Petroleum Resources Management System (SPE-PRMS).
Contact details
Cantor Fitzgerald Europe (Nominated Advisor and Broker)
Range Resources Limited David Porter / Sarah Wharry (Corporate Finance)
Evgenia Bezruchko (Group Corporate Development Manager) David Banks (Corporate Broking)
e. admin@rangeresources.co.uk t. +44 (0)20 7894 7000
t. +44 (0)20 7520 9486
Glossary:
bopd: Barrels of oil per day mmboe: Million barrels of oil equivalent 2P: Proven plus Probable reserves
CONTENTS
Directors' Report............................................................................................................................................................................ 2
Auditor's Declaration of Independence........................................................................................................................................... 8
Consolidated Statement of Profit or Loss and Other Comprehensive Income.................................................................................. 9
Consolidated Statement of Financial Position................................................................................................................................. 10
Consolidated Statement of Changes in Equity............................................................................................................................... 11
Consolidated Statement of Cash Flows ........................................................................................................................................ 12
Notes to and Forming Part of the Consolidated Financial Statements............................................................................................ 13
Directors' Declaration................................................................................................................................................................... 26
Independent Review Report to the Members............................................................................................................................... 27
Corporate Directory..................................................................................................................................................................... 29
The Directors of Range Resources Limited ("Range" or the "Company") and the entities it controls (together, the "Group") present the financial report for the half-year ended 31 December 2016.
DIRECTORS
The persons who were Directors at any time during or since the end of the half-year are:
Mr Zhiwei Non-Executive
Gu Chairman
Mr Yan Liu Executive Director
Ms Juan Wang Non-Executive
Director
Mr Yu Wang Non-Executive
Director
Mr Lubing Non-Executive
Liu Director
Dr Yi Zeng Non-Executive
Mr David Director resigned 24 November
Yu Chen Non-Executive 2016
Director
The Directors were in office for the entire period unless otherwise stated.
PRINCIPAL ACTIVITIES
The principal activity of the Group during the financial year was oil and gas exploration, development and production in Trinidad. The Company holds further interests in non-core oil and gas projects in Georgia and Guatemala.
In line with the growth strategy of the Company, Range continues to evaluate potential acquisitions of high quality value-generating assets.
DIVIDS
No dividends have been declared, provided for or paid in respect of the financial half-year ended 31 December 2016.
FINANCIAL POSITION
The loss for the financial half-year ended 31 December 2016 after providing for income tax amounted to US$39,120,872 (half-year ended 31 December 2015: US$25,218,937). At 31 December 2016, the Group had net assets of US$33,567,739 (30 June 2016: US$72,237,132), cash and restricted cash assets of US$20,628,847 (30 June 2016: US$21,001,252), and amortised borrowings of US$20,267,397 (30 June 2016: Nil).
AUDITOR'S INDEPENCE DECLARATION
The Lead auditor's independence declaration under section 307C of the Corporations Act 2001 is set out on page 8 for the half-year ended 31 December 2016. This report is made in accordance with a resolution of the Board of Directors.
REVIEW OF OPERATIONS
Reserves
During the period, the Company published the results of a reserves audit compiled by the independent petroleum consultants, Rockflow Resources Limited as at 30 June 2016. The audit showed an increase in the Company's total 2P reserves in Trinidad by 11% from the previously reported 22.0 million barrels of oil equivalent ("mmboe") (30 June 2015) to 24.4 mmboe.
Production
The Company's oil and gas production for the period in Trinidad was 91,197 barrels (average of 495 barrels of oil per day ("bopd")) net to Range, which is broadly unchanged from the immediately preceding 6 month period.
The average production during the current quarter up to the date of this report is 558 bopd.
Work programme
During the period, the Company continued its focus on full implementation of the waterflood projects, which account for the vast majority of Range's reserves in Trinidad. In addition, during the period, the Company successfully completed its 2016 drilling campaign by drilling four remaining development wells. At the date of this report, these wells are flowing at a stabilised combined rate of 130 bopd.
Range has taken into consideration the progress of the waterflood programme against the original plan and has made adjustments to the future programme to reflect certain delays and the slower production growth seen to date. Based on the latest estimates, the revised work programme is expected to result in a lower peak production, and lower overall cumulative production across the full field life for the Trinidad assets. The Company will be publishing its updated work programme and production forecast in due course.
Morne Diablo waterflood
During the period, production commenced at an average rate of 60 bopd. To increase water injection rates by approximately 3,000 bwpd, the Company signed an agreement with Petrotrin to use produced water from Petrotrin's existing operations. The Company will be required to construct a new water pipeline, as well as the gathering and transfer stations to access this additional water supply with all major approvals already in place. The engineering designs and plans for this remaining work programme are being finalised.
Beach Marcelle waterflood
Following commencement of the initial water injection on the South East Block, the Company has been focused on completing the remaining work programme on the project, including water source wells, injection stations, power network, transfer and gathering stations and water pipeline.
The Company has been experiencing electrical outages in the area during the period, which has effected some of the injection pumps and resulted in reduction in water injection rates to approximately 700 bwpd. In order to improve reliability of the electrical power supply, the Company has been working with Petrotrin and the national power company to reach the most efficient and cost effective solution for upgrading the electrical power in the area, with formal arrangements yet to be finalised.
Once the remaining work programme has been completed, the water injection rates are expected to increase to approximately 6,000 bwpd. In the meantime, the Company signed agreements with Petrotrin to use produced water from their operations, which will increase injection rates by a further 700 bwpd. The Company has recently received environmental approvals for this work.
Waterflood injectivity testing
The Company has identified additional areas on its fields which could be suitable for waterflooding. During the period, the Company commenced injectivity testing on the MD 10 area of the Morne Diablo field at an average rate of 130 bwpd using one existing well. The results to date have been encouraging and the Company is preparing an application for a pilot waterflood project on the MD 10 area.
In addition, the Company is preparing to undertake injectivity testing on the QU 280 area of the South Quarry block and the Central area of the Beach Marcelle block to determine waterflooding feasibility in the area.
FINANCIAL PERFORMANCE
Measure Unit FY17 FY16 Change %
H1 H2
------------------------ --------- ------------- ------------- ------------- ---------
Total production barrels
(Trinidad) of oil 91,197 90,675 522 0.6%
------------------------ --------- ------------- ------------- ------------- ---------
Revenue US$ 3,853,414 2,793,705 1,059,709 37.9%
------------------------ --------- ------------- ------------- ------------- ---------
Average received
oil price US$/bbl 42.25 30.81 11.34 37.1%
------------------------ --------- ------------- ------------- ------------- ---------
Reported NPAT
/ (loss) US$ (39,120,872) (18,655,948) (20,464,924) (109.7%)
------------------------ --------- ------------- ------------- ------------- ---------
Underlying NPAT
/ (loss) US$ (7,285,858) (9,500,719) 2,214,861 23.3%
------------------------ --------- ------------- ------------- ------------- ---------
Underlying EBITDAX US$ (4,212,159) (3,366,077) (846,082) (25.1%)
------------------------ --------- ------------- ------------- ------------- ---------
Underlying NPAT (Net Profit after Tax) and Underlying EBITDAX (Earnings before interest, tax, depreciation, amortisation and exploration expenditure written off) are not defined measures under Australian Accounting Standards or IFRS, and are not audited. These measures have been calculated by the Company who believe they provide meaningful analysis of underlying performance.
The Group reports a loss after tax for the 6-month period of US$39,120,872 compared to a loss for the immediately preceding 6-month period of US$18,655,948. To provide a more meaningful comparison of performance, as in previous reports the Company also presents an adjusted underlying calculation of NPAT which shows a modest 23% improvement on the prior period, albeit still showing a loss of US$7.3million. This underlying NPAT calculation excludes a number of non-recurring and exceptional items which adversely affected the financial performance during the period. These items principally constitute non-cash impairments to the goodwill associated with the Trinidad assets and other one-off costs that were incurred in the period.
Range is encouraged by the improved financial performance seen in the core operations of the Company during the first half of this year, when compared to the last 6 months of the prior year. As was stated in the last annual report, the Board is focused on the creation of long term value and returns for all shareholders through growing production and monetising the substantial reserve base of the Company. Whilst there are encouraging trends, clearly there remains much work still to do to generate sustainable positive cashflow and profitability. The Board and management remain focused on this objective and continue to devote substantial efforts to creating a growing and profitable company.
Subsequent to the period end (and as detailed later in this report), Range has agreed terms with LandOcean to reacquire Range Resources Drilling Services Limited ("RRDSL"). This acquisition will provide Range with greater control over its operating costs in Trinidad and Range is confident that it will deliver an improved netback per barrel for the Trinidad projects. It will also provide an additional income stream from work undertaken for 3(rd) parties. Range also expects to benefit from lower costs through undertaking work 'in-house'. Following this agreement, Range will no longer be able to rely upon the previous funding arrangement with LandOcean for future work undertaken in Trinidad and this has led Range to reassess the work programme and production outlook. Range has also taken into consideration the progress of the waterflood programme against plan at this stage and has made adjustments to the future programme to reflect certain delays and the slower production growth seen to date. Range intends to finance its ongoing work programme through existing cash on hand, revenues from production and other funding sources (as necessary). The revised overall work programme will show a lower peak production, and lower overall cumulative production across the full field life for the assets. The carrying value of the Trinidad assets in the balance sheet has therefore been reassessed against this backdrop and at this time Range has decided to fully impair the remaining goodwill associated with the Trinidad assets of US$29.0million. The remaining balance sheet value of Trinidad does not take into consideration the value in the earlier stage exploration and appraisal acreage in Trinidad and the Board continues to believe that there is substantial value to shareholders within the overall Trinidad asset portfolio.
Looking at key areas in the income statement:
-- Revenue was 38% higher than in the last 6-month period at US$3.8million. Production was broadly stable during the two periods with the growth due to higher realised oil price of US$42/bbl (prior period: US$31/bbl); and
-- Operating expenses on a per barrel basis have improved to $40/bbl (prior period: US$44/bbl). Whilst pleasing to see a reduction in the per barrel cost, Range believes that this level remains too high and expects to see notable further reduction following the acquisition of RRDSL (Range will no longer have to pay 3(rd) party margins on the work undertaken). Given the inherent level of fixed cost, the key to making substantial reductions in the cost per barrel will be increasing production.
Cash management remains a critical focus for the Company and it is pleasing to report a healthy unrestricted cash balance of US$20.6million (30 June 2016: US$13million). Borrowings and other interest bearing payables have clearly increased during the period (from US$25.3million to US$55.2million) which is a result of the continued expenditure during the period on the Trinidad waterflood programme, development drilling and other study and research work undertaken. US$20million of the total outstanding amount due to LandOcean was transferred to a 3-year convertible bond during the period which significantly extended the average tenor for payments of these amounts. There are also no payments due to LandOcean for any of the purchase orders until into 2H 2018 so Range continues to have sufficient liquidity on hand to fund its obligations and Trinidad work programme.
The cost of the proposed acquisition of RRDSL would not be payable for 3 years' post-acquisition so whilst the acquisition will lead to an increase in interest-bearing liabilities, the Company will have more than sufficient time to make appropriate arrangements to repay or refinance such payments prior to their payment date.
Whilst clearly disappointing to report a loss and a further impairment on the Trinidad asset value, Range believes that the balance sheet remains sound overall with satisfactory levels of liquidity and no debt payments due within the next 15 months. The work programme in Trinidad can continue to be financed from existing cash on hand and revenues from production. The work programme is expected to lead to increased production which will subsequently lead to higher revenues and positive cashflow. The proposed acquisition of RRDSL will directly lead to reduction in cost per barrel and will provide Range with access to alternative 3(rd) party revenues.
The Board appreciates the patience of shareholders over recent years as the Company seeks to turn around the financial performance. The entire Board and management remain focused on the goal of delivering long-term, sustainable profitability
CORPORATE
US$20 million convertible note financing
During the period, Range signed an agreement with LandOcean Energy Services Co., Ltd. ("LandOcean") for the issuance of a US$20 million convertible note by Range. The issue of the convertible note replaced a portion of the outstanding payable balance due to LandOcean under the terms of the Integrated Master Services Agreement.
Subsequent to the period end, the convertible element of the financing was approved by the Company's shareholders at the general meeting.
Acquisition of new assets
The Board remains focused on expanding the Company's operations through acquisition of new upstream projects. During the period, the Company has been very active in pursuing numerous projects with solid existing production as well as the opportunity to develop new reserves and increase production.
Non-core assets
Georgia
Range continues to explore options to maximise the value of its 45% shareholding in Strait Oil & Gas Limited. Range remains confident that a deal can be finalised to monetise the value of this investment and is in discussions with potential purchasers.
Directorate change
During the period, Mr David Yu Chen tendered his resignation as Non-Executive Director.
SIGNIFICANT EVENTS SUBSEQUENT TO REPORTING DATE
Agreement to acquire RRDSL
Subsequent to the period end, Range announced the signing of binding Heads of Agreement (the "Heads of Agreement") for the acquisition of 100% of RRDSL. RRDSL is an established oilfield services company in Trinidad with of a large modern fleet of 12 rigs, including 4 drilling rigs purchased during 2014. RRDSL currently employs over 160 staff.
The Board believes the acquisition will provide Range with substantial operational flexibility and significantly decrease the operating costs associated with Range's upstream operations in Trinidad. It will allow Range's business in Trinidad to grow and prosper as a part of a unified group, and realise increased value for shareholders.
The recent oil price recovery is having a favourable impact on drilling activities in the E&P sector globally, and consequently oilfield service providers. The Board believes that the acquisition will provide the Company with a platform to capitalise on this recovering market.
Currently there is a limited number of drilling rigs available in Trinidad, with RRDSL's drilling fleet being the most efficient and modern in the market. Range believes there is potential to capitalise on this and to substantially increase upon the existing levels of business with other upstream companies in Trinidad. RRDSL is in discussions with other operators in Trinidad and South America with a view to assisting them in monetising their oil and gas resources and believes it will be in a position to secure further contract work for the drilling fleet based on interest seen to date.
Following the acquisition, Range will aim to take further steps to reduce costs, improve drilling efficiency, secure contracts and diversify the customer base. The Company plans to establish RRDSL as a profitable oilfield services company, providing onshore operations to Range and a wide range of counterparties Trinidad, as well as internationally.
The amount of consideration for the proposed acquisition is US$5.5 million (subject to adjustment as set out below). In addition, RRDSL has a loan from LandOcean which totals approximately US$19.5 million ("Existing Debt"). Payment of the consideration is due by no later than the date falling three years after completion and is subject to 6% interest per annum. Similarly, repayment of the Existing Debt will be due to be made in cash no later than three years from completion date, subject to 6% interest per annum.
Full terms of the Heads of Agreement are provided in the Company's announcement published on 13 March 2017.
Proposed Reverse Takeover
The proposed transaction to acquire RRDSL, if completed, would constitute a reverse takeover that will be subject to a vote of the Company's shareholders and relevant regulatory stock exchange approvals. Accordingly, as required by Rule 14 of the AIM Rules for Companies, an admission document and notice of general meeting will be sent to the Company's shareholders which will, among other things, convene a general meeting of the Company at which a resolution approving the transaction will be proposed. A competent persons' report will be commissioned as part of the admission document which will provide detail on the Company's reserves and resources.
The Company currently anticipates the general meeting will take place during the second half of the 2017 financial year.
Approval of convertible Note Financing
Following Shareholder approval at the General Meeting of the Company held on 7 February 2017, all the conditions for the US$20 million convertible note financing were met and therefore the convertible feature of the loan was approved.
AUDITORS INDEPENCE DECLARATION
The lead auditor's independence declaration under section 307C of the Corporations Act 2001 for the half-year ended 31 December 2016 can be found on the following page.
This report is made in accordance with a resolution of the Board of Directors.
Zhiwei Gu
Chairman
Dated this 16(th) day of March 2017
DECLARATION OF INDEPENCE BY AUDITOR TO THE DIRECTORS OF RANGE RESOURCES LTD.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE HALF-YEARED 31 DECEMBER 2016
Consolidated
31 December 31 December
2016 2015
Notes US$ US$
Revenue 2 3,853,414 4,268,521
Operating expenses (3,729,934) (3,232,903)
Royalties (1,077,954) (1,337,789)
Depreciation, depletion
and amortisation (1,759,672) (2,149,686)
--------------- ---------------
Cost of sales 3a (6,567,560) (6,720,378)
--------------- ---------------
Gross loss (2,714,146) (2,451,857)
Other income 2 62,944 63,927
General and administrative
costs 3c (2,550,383) (2,220,250)
Other expenses (2,850,000) -
Exploration costs - (1,616,898)
Impairment 3d (28,985,014) (17,290,361)
Finance costs 3b (770,246) (768,093)
Loss before income tax expense (37,806,845) (24,283,532)
Income tax expense (1,314,027) (935,405)
--------------- ---------------
Net loss for the half-year
attributable to equity holders
of Range Resources Limited (39,120,872) (25,218,937)
Other comprehensive income
Items that may be reclassified
to profit or loss
Exchange differences on
translation of foreign operatives 491,987 349,902
Other comprehensive income
for the half-year, net of
tax 491,987 349,902
Total comprehensive loss
attributable to equity holders
of Range Resources Limited (38,628,885) (24,869,035)
=============== ===============
Loss per share for the half
year from continuing operations
attributable to the equity
holders of the company
Basic loss per share (cents
per share) (0.52) (0.36)
Diluted loss per share (cents N/A N/A
per share)
Loss per share for the half
year attributable to the
equity holders of the company
Basic loss per share (cents
per share) (0.52) (0.36)
Diluted loss per share (cents N/A N/A
per share)
The Company's potential ordinary shares were not considered dilutive as the Company is in a loss position.
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016
Consolidated
31 December 2016 30 June 2016
US$ US$
Notes
Current assets
Cash and cash equivalents 20,628,847 13,001,252
Restricted cash 5 - 8,000,000
Trade and other receivables 5,979,412 4,620,266
Inventory 2,430,653 -
Other current assets 101,075 178,158
----------------- --------------
Non-current asset held for sale 7 1,250,000 1,250,000
----------------- --------------
Total current assets 30,389,987 27,049,676
----------------- --------------
Non-current assets
Goodwill 6 - 28,985,014
Available for sale financial assets 45,238 45,238
Property, plant & equipment 2,183,994 2,329,228
Exploration & evaluation expenditure 648,883 645,801
Producing assets 9 113,897,577 95,077,882
Deferred tax asset 4,861,080 3,959,803
Total non-current assets 121,636,772 131,042,966
----------------- --------------
Total assets 152,026,759 158,092,642
----------------- --------------
Current liabilities
Trade and other payables 10 12,311,623 12,244,873
Current tax liabilities 286,723 286,723
Option liability 517,051 835,714
Provisions 785,627 740,268
----------------- --------------
Total current liabilities 13,901,024 14,107,578
----------------- --------------
Non-current liabilities
Trade and other payables 10 34,132,178 23,764,005
Borrowings 11 20,267,397 -
Deferred tax liabilities 49,765,784 47,561,612
Employee service benefit 392,637 422,315
----------------- --------------
Total non-current liabilities 104,557,996 71,747,932
----------------- --------------
Total liabilities 118,459,020 85,855,510
----------------- --------------
Net assets 33,567,739 72,237,132
================= ==============
Equity
Issued capital 12 383,918,398 383,882,192
Reserves 17,533,860 24,227,125
Accumulated losses (367,884,519) (335,872,185)
----------------- --------------
Total equity 33,567,739 72,237,132
================= ==============
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF-YEARED 31 DECEMBER 2016
Contributed Accumulated Foreign Share Option Total
Equity Losses Currency Based Premium Equity
Translation Payment Reserve
Reserve Reserve
US$ US$ US$ US$ US$ US$
------------ -------------- ------------- ------------ ----------- -------------
Balance at 1 July 2015 363,205,277 (297,930,701) 3,459,939 14,231,578 12,057,363 95,023,456
Exchange difference
on translation of foreign
operations - - 349,902 - - 349,902
Loss for the half-year - (25,218,937) - - - (25,218,937)
------------ -------------- ------------- ------------ ----------- -------------
Total comprehensive
loss for the half-year - (25,218,937) 349,902 - - (24,869,035)
Transactions with equity
holders in their capacity
as equity holders:
Shares issued during
the half-year 22,338,345 - - - - 22,338,345
Value of share based
payments issued - - - 123,250 - 123,250
Expired options -
reclassified 828,819 - (828,819) - -
Balance at 31 December
2015 385,543,622 (322,320,819) 3,809,841 13,526,009 12,057,363 92,616,016
------------ -------------- ------------- ------------ ----------- -------------
Contributed Accumulated Foreign Share Option Total
Equity Losses Currency Based Premium Equity
Translation Payment Reserve
Reserve Reserve
US$ US$ US$ US$ US$ US$
Balance at 1 July 2016 383,882,192 (335,872,185) 3,620,738 8,549,024 12,057,363 72,237,132
Exchange difference
on translation of foreign
operations - - 491,987 - - 491,987
Loss for the half-year - (39,120,872) - - - (39,120,872)
------------ -------------- ------------- ------------ ----------- -------------
Total comprehensive
loss for the half-year - (39,120,872) 491,987 - - (38,628,885)
Transactions with equity
holders in their capacity
as equity holders:
Shares issued during
the half-year 36,206 - - - - 36,206
Value of share based
payments issued - - - (76,714) - (76,714)
Expired options -
reclassified - 7,108,538 - (7,108,538) - -
------------ -------------- ------------- ------------ ----------- -------------
Balance at 31 December
2016 383,918,398 (367,884,519) 4,112,725 1,363,772 12,057,363 33,567,739
------------ -------------- ------------- ------------ ----------- -------------
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE HALF-YEARED 31 DECEMBER 2016
Consolidated
31 December 31 December
2016 2015
US$ US$
Cash flows from operating
activities
Receipts from customers 3,925,371 4,971,094
Payments to suppliers and
employees (4,237,038) (8,167,194)
Income taxes paid (11,130) (23,778)
Interest, deposits and royalties
received 12,806 12,156
Interest paid/finance cost - (135,179)
Net cash used in operating
activities (309,991) (3,342,901)
------------ --------------
Cash flows from investing
activities
Payments for property, plant
and equipment (1,745) (63,604)
Payments for producing assets - (260,888)
Payments for exploration
and evaluation expenditure - (6,784)
Payment for available for (6,830) -
sale assets
Proceeds from disposal of
property, plant and equipment 4,256 8,453
Transfer from restricted 8,000,000 -
deposit
Net cash from/(used in)
investing activities 7,995,681 (322,823)
------------ --------------
Cash flows from financing
activities
Proceeds from issues of
equity - 22,316,345
Transfer to restricted deposit - (8,000,000)
Repayment of borrowings - (7,225,997)
------------
Net cash from financing
activities - 7,090,348
------------ --------------
Net increase in cash and
cash equivalents held 7,685,690 3,424,624
Cash and cash equivalents
at beginning of period 13,001,252 10,530,104
Exchange rate adjustment (58,095) (34,697)
------------ --------------
Cash and cash equivalents
at end of period 20,628,847 13,920,031
============ ==============
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEARED
31 DECEMBER 2016
Note 1: Basis of preparation
The half-year consolidated financial statements are a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001 and Accounting Standard AASB 134: Interim Financial Reporting.
The half-year financial statements do not include all the notes of the type normally included in an annual financial report. Accordingly, it is recommended that these financial statements be read in conjunction with the annual financial report for the year ended 30 June 2016 and any public announcements made by Range and its controlled entities during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001.
Impact of standards issued but not yet applied by the entity
The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period. There were no new standards issued since 30 June 2016 that have been applied by Range. The 30 June 2016 annual report disclosed that Range anticipated no material impacts (amounts recognised and/or disclosed) arising from initial application of those standards issued but not yet applied at that date, and this remains the assessment as at 31 December 2016.
Reporting Basis and Conventions
The half-year financial statements have been prepared on an accruals basis and are based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.
New and amended standards adopted by the Group
None of the new standards and amendments to standards that are mandatory for the first time for the financial year beginning 1 July 2016 affected any of the amounts recognised in the current period or any prior period and is not likely to affect future periods.
Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.
Going Concern
The Directors have prepared the financial statements on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business.
As disclosed in the financial statements, the Group incurred losses of US$39.1m for the period ending 31 December 2016 which includes significant non-cash items of US$29.0m. The Group also had net cash outflows from operating activities for the period totalling US$0.3m. Range considers that with anticipated production growth from its waterflood programme combined with an anticipated reduction in operating costs on a per barrel basis, this cash outflow will be eliminated in the 2017 financial year.
At the reporting date, Range had US$20.6m of unrestricted cash at bank. Range has net current liabilities (excluding cash, option liability and provisions) of US$2.8m. This unrestricted cash combined with net revenue from production will be more than sufficient to cover the Group's cash requirements for the 12 months from date of sign off including any net current liabilities due.
The Company will continue to seek to rationalise the portfolio of non-core assets and redeploy capital to maximise production from its assets in Trinidad and pursue growth opportunities that enhance cash generation and returns to shareholders.
The financial report does not include any adjustments relating to the amounts or classification of recorded assets or liabilities that might be necessary if the Group does not continue as a going concern.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEARED
31 DECEMBER 2016
Note 2: Revenue Consolidated
31 December 31 December
2016 2015
From continuing operations US$ US$
* revenue from sale of hydrocarbons 3,853,414 4,268,521
Other income
* interest 12,807 9,431
* rental income 47,368 41,637
* FX gains 2,769 12,859
------------ ------------
Total other income 62,944 63,927
------------ ------------
Note 3: Expenses Consolidated
31 December 31 December
2016 2015
Loss before income tax US$ US$
includes the following
specific expenses:
(a) Cost of sales
* Cost of production 2,669,816 2,017,953
* Royalties 1,077,954 1,337,789
* Staff costs 1,060,118 1,214,950
* Oil and gas properties depreciation, depletion and
amortisation 1,759,672 2,149,686
6,567,560 6,720,378
------------ ------------
(b) Finance costs
* Interest expense 1,062,850 275,512
* Interest and premium paid on financial liabilities at
fair value - 334,982
* Other finance costs 26,059 8,562
* Fair value movement of option liability (318,663) 149,037
------------ ------------
* Total Finance Costs 770,246 768,093
------------ ------------
(c) General and administration
costs
Directors and officers
fees and benefits 386,216 307,398
Share based payments:
Employee options (76,714) 123,321
Foreign exchange 259,340 (150)
Other expenses 1,981,541 1,789,681
2,550,383 2,220,250
---------- ----------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEARED
31 DECEMBER 2016
Note 3: Expenses (cont'd)
Consolidated
(d) Impairment 31 December 31 December
2016 2015
US$ US$
Impairment (i) 28,985,014 17,213,961
Write down of investment
in International Petroleum
Ltd. - 76,400
28,985,014 17,290,361
------------ ------------
i) The Group recorded an impairment in relation to goodwill on its Trinidad asset. For further details see Note 6.
Note 4. Contingent liabilities and contingent assets
Colombian exploration licences
In January 2016, Range received notification from the Agencia Nacional de Hidrocarburos ("ANH") in Colombia advising that the licences over three exploration blocks PUT-5, VMM-7, and VSM-1 had been revoked. The licenses had been awarded to a consortium of Optima Oil Corporation ("Optima") and the Company in December 2012. ANH alleges that various obligations and commitments contained within the exploration licences had not been fulfilled and that invalid letters of credit had been presented by Optima to support the minimum work obligations. The effect of revocation of the licences by ANH is: (i) expiry of the contracts, (ii) Range would be unable to enter into any further agreement with Colombian State for a period of 5 years, (iii) final settlement and liquidation of the licences, and (iv) joint and several liability of the consortium partners to ANH for all sums due to ANH and for potential damages claim of up to the aggregate financial value of the work commitments of the consortium for the three licences which totalled approximately US$53million.
A Joint Operating Agreement ("JOA") is in place amongst the consortium partners. Under the terms of the JOA it was agreed between the consortium that it was the sole responsibility of Optima to complete the minimum work obligations and to provide all necessary funding, including the provision of valid letters of credit in favour of ANH. Under the JOA, Range has an indemnity to recover from Optima any payment incurred by Range for any contractual obligations under the licences which were not paid by Optima.
In September 2016, Range received a demand notice from ANH addressed to the consortium seeking payment of the full amount of the outstanding obligations due to ANH totalling up to approximately US$53 million. Range submitted a comprehensive response to ANH on 7 September 2016. This defence addressed the numerous areas in which Range and the consortium object to the demand which was received from ANH.
The Company continues to work with Optima and legal advisers to defend its position to the maximum extent possible and is considering what further action can be taken to challenge the actions taken by ANH. At this stage, Range is unable to determine the likely timescale for resolution of this matter.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEARED
31 DECEMBER 2016
Note 4. Contingent liabilities and contingent assets (continued)
Geeta Maharaj
Range has received an invoice from Geeta Maharaj, a Trinidad based attorney seeking payment for legal services in the amount of approximately US$1.9million. The invoice purports to relate to legal work undertaken during mid-2014 including the preparation of inter-company loan agreements. Range strongly refutes the amount of this purported invoice and considers it to be vastly excessive and therefore not payable. In the circumstances, we intend to vigorously defend our position. We have therefore engaged Trinidad legal counsel to assist in this matter.
Subsequent to the period end, Range has received further correspondence from Ms Maharaj on a related matter claiming damages of US$890,000 on the basis of a conspiracy designed to damage Ms. Maharaj's reputation. Again, Range firmly refutes the allegation and in conjunction with its legal counsel in Trinidad is in the process of responding to this demand.
Guayaguayare licence
On 21 May 2015, Range announced that it had signed an amendment agreement in respect of its interest in the Guayaguayare Block in Trinidad. As a result of the amended agreement, Range acquired the full interest of Niko Resources Ltd. (Niko), which is 32.5% in the Shallow and 40% in the Deep Production Sharing Contracts (PSCs). Following completion of the agreement, Range holds 80% interest in the Deep PSC and 65% interest in the Shallow PSC.
The consideration payable for the increased interest is contingent upon commercial discovery and subsequent production, whereby Range will pay Niko upon certain production milestones being achieved from the two PSCs, with the maximum payable of US$19 million based on production in excess of 10 million barrels. Range is currently unable to assess the likelihood of these milestones being met, and consequently, no provision has been raised.
There are no other material changes since June 2016 to note.
Note 5: Restricted cash
Consolidated
31 December 30 June
2016 2016
US$ US$
Cash held in secured
account - 8,000,000
Total - 8,000,000
------------ ----------
Note 6: Goodwill
Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill is not amortised but it is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. The Group reported goodwill of US$Nil (30 June 2016: US$28,985,013), which was derived from the acquisition of SOCA Petroleum Limited through the parent's subsidiary Range Resources (Barbados) Ltd.
Consolidated
31 December 30 June
2016 2016
US$ US$
Cost 46,198,975 46,198,975
Accumulated amortisation and impairment
(a) (46,198,975) (17,213,961)
Net book amount - 28,985,014
------------- -------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEARED
31 DECEMBER 2016
Note 6: Goodwill (continued)
(a) The Group recorded an impairment based on the carrying value of the cash generating unit exceeding the recoverable amount. The impairment was primarily due to revised production forecasts.
The recoverable amount is based on an asset's fair value less costs to sell (level 3 fair value hierarchy) using a discounted cash flow method and is most sensitive to the following key assumptions:
- Obtaining all required approvals and permissions to undertake waterflood development
- Obtaining lease extensions until 2030 - 1P and 2P recoverable reserves - Commodity price of between US$57 and US$81 per barrel dependent on the year. - Average operating costs estimated at 19% of revenue. - Post-tax discount rate of 10% - Licence life until 2030
Economical recoverable reserves represent management's expectations at the time of completing the impairment testing and based on the reserves statements and exploration and evaluation work undertaken by appropriately qualified persons. A summary of the Company's Trinidad reserves and resources are published on the company's website.
The commodity price for oil was based on mean WTI forecast oil price data from a variety of different analysts and other sources. Estimates are US$57/bbl in 2017, US$66/bbl in 2018, US$66/bbl in 2019, US$67/bbl in 2020 and then escalating at 2% per annum for the remainder of the project.
Operating cost assumptions were based on FY17 budgets, actual costs incurred in 2016 and estimates of additional operating costs for waterflood activities based on an internal assessment and work by LandOcean. Reductions in costs associated with the purchase of RRDSL have also been incorporated into the workings.
An adverse 20% change to oil prices, production, operating costs and the discount rate would result in additional impairments of US$23.8million, US$28.6million, US$11.4million and US$6.6million respectively to the Trinidad CGU, which includes goodwill, property, plant and equipment, producing assets and deferred tax liabilities.
Any impairment charge in excess of the goodwill value would be applied against producing assets.
Note 7: Non-current assets held-for-sale
Consolidated
31 December 30 June
2016 2016
US$ US$
Investment in Strait Oil & Gas
Limited - 45% equity interest 1,250,000 1,250,000
1,250,000 1,250,000
------------ ------------
Consolidated
31 December 30 June
2016 2016
US$ US$
Opening net book amount 1,250,000 6,000,000
Impairment loss relating to discontinued
operations - (4,750,000)
Closing net book amount 1,250,000 1,250,000
------------ ------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEARED
31 DECEMBER 2016
Note 7: Non-current assets held-for-sale (continued)
Significant judgement
During 2014, as part of a strategy to rationalise non-core assets, the Company committed to a plan to dispose its shares in Strait. The Company is in advanced discussions and negotiations surrounding the sale of this asset which is currently anticipated to complete in the coming months. The asset is recognised at its fair value being the expected recoverable value on sale.
Note 8: Segment information
The Group has determined that its operating segments
reflect the areas in which it is active. In line
with the Group's ongoing development and strategy,
the operating segments have been reduced to one
segment, being oil and gas development and production
in Trinidad. The reporting segments are shown below
31 December 2016 Trinidad Unallocated Total
US$ US$ US$
Segment revenue
Revenue 3,853,414 - 3,853,414
Other income 50,137 12,807 62,944
-------------- ------------- --------------
Total revenue 3,903,551 12,807 3,916,358
Segment result
Segment expenses (40,607,158) (1,116,045) (41,723,203)
-------------- ------------- --------------
Loss before income
tax (36,703,607) (1,103,238) (37,806,845)
Income tax (1,314,027) - (1,314,027)
-------------- ------------- --------------
Loss after income
tax (38,017,634) (1,103,238) (39,120,872)
Segment assets
Segment assets 131,810,730 20,216,029 152,026,759
-------------- ------------- --------------
Total assets 131,810,730 20,216,029 152,026,759
Segment liabilities
Segment liabilities 113,586,010 4,873,010 118,459,020
-------------- ------------- --------------
Total liabilities 113,586,010 4,873,010 118,459,020
31 December 2015 Trinidad Unallocated Total
US$ US$ US$
Segment revenue
Revenue 4,268,521 - 4,268,521
Other income 41,637 22,290 63,927
-------------- ------------- --------------
Total revenue 4,310,158 22,290 4,332,448
Segment result
Segment expenses (27,117,958) (1,498,022) (28,615,980)
-------------- ------------- --------------
Loss before income
tax (22,807,800) (1,475,732) (24,283,532)
Income tax (935,405) - (935,405)
-------------- ------------- --------------
Loss after income
tax (23,743,205) (1,475,732) (25,218,937)
30 June 2016
Segment assets
Segment assets 144,249,237 13,843,405 158,092,642
-------------- ------------- --------------
Total assets 144,249,237 13,843,405 158,092,642
Segment liabilities
Segment liabilities 81,191,617 4,663,893 85,855,510
-------------- ------------- --------------
Total liabilities 81,191,617 4,663,893 85,855,510
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEARED
31 DECEMBER 2016
Note 8: Segment information (continued)
Segment revenues and expenses are those directly
attributable to the segments and include any joint
revenue and expenses where a reasonable basis of
allocation exists. Segment assets include all assets
used by a segment and consist principally of cash,
receivables, plant and equipment and exploration
and development expenditure. While most such assets
can be directly attributed to individual segments,
the carrying amount of certain assets used jointly
by two or more segments is allocated to the segments
on a reasonable basis. Segment liabilities consist
principally of payables, employee benefits, accrued
expenses, provisions and borrowings.
(i) Unallocated assets
Segment assets
31 December 30 June
2016 2016
US$ US$
Cash 18,846,297 12,189,822
Assets held for
sale 1,250,000 1,250,000
Other 119,732 403,583
----------------------- ------------- ------------
Total segment assets 20,216,029 13,843,405
Intersegment transfers
Segment revenues, expenses and results include
transfers between segments. The prices charged
on intersegment transactions are the same as those
charged for similar goods to parties outside of
the economic entity at an arm's length. These transfers
are eliminated on consolidation. Consolidated
31 December 30 June
2016 2016
US$ US$
Note Producing assets
9.
Cost 155,311,338 134,697,008
Accumulated amortisation (41,413,761) (39,619,926)
Net book value 113,897,577 95,077,082
------------- -------------
Opening balance 95,077,882 90,350,492
Foreign currency movement (49,132) (1,747,957)
Additions 20,485,775 15,007,723
Impairment charge - (3,350,869)
Amortisation charge (1,616,948) (5,181,507)
Closing net book amount 113,897,577 95,077,882
------------ ------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEARED
31 DECEMBER 2016
Consolidated
31 December 30 June
2016 2016
US$ US$
Note Trade and other payables
10.
a) Current
Trade payables 447,071 1,048,601
Interest bearing trade
payables (i) 1,510,849 1,556,463
Sundry payables and accrued
expenses 10,353,703 9,639,809
12,311,623 12,244,873
------------ -----------
b) Non-Current
Interest bearing trade
payables (i) 33,450,022 13,998,006
Interest bearing accrued
expenses (i) 682,156 9,765,999
34,132,178 23,764,005
------------ -----------
(i) Payables are non-interest bearing with the exception of amounts due to LandOcean classed under interest bearing trade payables and interest bearing accrued expenses.
Consolidated
31 December 30 June
2016 2016
US$ US$
Note Borrowings
11.
Opening balance - 7,518,077
Trade payables converted 20,000,000 -
to borrowings
Repayment of borrowings - (7,655,997)
Interest due on outstanding
balance 267,397 137,920
Closing net book amount 20,267,397 -
------------ ------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEARED
31 DECEMBER 2016
Note 11. Borrowings (continued)
On 31 October 2016, Range announced that it had signed an agreement with LandOcean for the issuance of a US$20 million convertible note. The proceeds from this convertible note were utilised solely to replace a portion of the outstanding payable balance due to LandOcean under the terms of the Integrated Master Services Agreement. The terms of this loan are as follows:
Issuer: Range Resources Limited
------------------ -----------------------------------
Noteholder: LandOcean Energy Services Co., Ltd
------------------ -----------------------------------
Amount: US$20,000,000
------------------ -----------------------------------
Tenor: 3 years
------------------ -----------------------------------
Repayment: Bullet at maturity date
------------------ -----------------------------------
Interest: 8% per annum, payable annually in
arrears
------------------ -----------------------------------
Security: None
------------------ -----------------------------------
Conversion Price: 0.88p per share
------------------ -----------------------------------
Lender Conversion At any time, in a minimum amount
Right: of US$10 million
------------------ -----------------------------------
The convertible feature of the loan was approved at a General Meeting held on 7 February 2017. As a result, the loan will be carried at fair value through profit and loss, taking into account the conversion features of the loan from this date.
Prior period borrowings relate to the financing facility with Lind Asset Management LLC.
Consolidated
31 December 30 June
2016 2016
US$ US$
Note Contributed equity
12.
Issued share capital
7,595,830,782 (30 June 2016:
7,589,790,100) ordinary shares,
fully paid 404,910,285 404,874,079
Share issue costs (20,991,887) (20,991,887)
-------------- -------------------
383,918,398 383,882,192
31 December 30 June
2016 2016
No. of No. of
Shares Shares
Balance at the beginning of
the period 7,589,790,100 5,767,169,188
Ordinary shares issued during
the period 6,040,682 1,822,620,912
Balance at the end of the period 7,595,830,782 7,589,790,100
-------------- -------------------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEARED
31 DECEMBER 2016
Note Contributed equity (continued)
12.
Details Number Issue US$
of shares Price
US$
1 July
2016 Opening balance 7,589,790,100 404,874,079
Shares issued in lieu
of contract 6,040,682 0.010 36,207
31 December
2016 Balance 7,595,830,782 404,910,286
-------------- -------- --------------
2015 Details Number Issue US$
of shares Price
US$
1 July
2015 Opening balance 5,767,169,188 382,535,744
(Tranche 2) Share placement
to Beijing Sibo Investment
Management LP 1,797,620,912 0.012 22,033,080
Share placement to
directors and employees 25,000,000 0.012 305,255
-------------- -------- --------------
30 June
2016 Closing balance 7,589,790,100 404,874,079
-------------- -------- --------------
Options:
The Company has on issue 830,161,340 (30 June 2016: 883,055,747) options over un-issued capital in the Company.
31 December 30 June
2016 2016
Number Number
of options of options
Movements in options:
Balance at the beginning of
the period 883,055,747 788,998,289
Options issued during the period 50,500,000 406,143,136
Options expired or cancelled
during the period (103,394,407) (312,085,678)
Balance at the end of the period 830,161,340 883,055,747
-------------- --------------
.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEARED
31 DECEMBER 2016
Note Related parties 13.
Key management personnel
During the financial year ended 30 June 2016 the Company agreed to grant 42.5 million options as an equity incentive to Mr Kerry Gu and Mr Yan Liu. These options were approved by shareholders at the company's Annual General Meeting on 25 November 2016 and issued on 15 December 2016. The terms of the options are stated below.
(a) 25% become exercisable immediately.
(b) 25% will become exercisable upon the Company reaching production of 1,500 barrels of oil per day for a continuous 15 day period in Trinidad
(c) 25% will become exercisable upon the Company reaching production of 2,500 barrels of oil per day for a continuous 15 day period in Trinidad
(d) 25% will become exercisable upon the Company reaching production of 4,000 barrels of oil per day for a continuous 15 day period in Trinidad
The value per option at the grant date was 0.21 cents, determined using the Black Scholes option price model using the following key inputs:
Volatility: 100% Probability of meeting vesting conditions: 100%
Risk free rate: 1.92% Exercise price: GBP0.01
USD/GBP exchange rate: 0.8028 Share price on grant date GBP0.0037
The share based payment expense recognised in the period in relation to these Share based payments was $31,466.
Additionally, during the period David Yu Chen tendered his resignation from Range. As per the terms of his contract, termination benefits of $38,750 have been recognised in relation to his resignation.
Other than the above, there were no other significant changes to related party transactions to those reported in the annual report for the year ended 30 June 2016
Note Events subsequent to reporting 14. date
Agreement to acquire RRDSL
Subsequent to the period end, Range announced the signing of binding Heads of Agreement (the "Heads of Agreement") for the acquisition of 100% of RRDSL. RRDSL is an established oilfield services company in Trinidad with of a large modern fleet of 12 rigs, including 4 drilling rigs purchased during 2014. RRDSL currently employs over 160 staff.
The Board believes the acquisition will provide Range with substantial operational flexibility and significantly decrease the operating costs associated with Range's upstream operations in Trinidad. It will allow Range's business in Trinidad to grow and prosper as a part of a unified group, and realise increased value for shareholders.
The recent oil price recovery is having a favourable impact on drilling activities in the E&P sector globally, and consequently oilfield service providers. The Board believes that the acquisition will provide the Company with a platform to capitalise on this recovering market.
Currently there is a limited number of drilling rigs available in Trinidad, with RRDSL's drilling fleet being the most efficient and modern in the market. Range believes there is potential to capitalise on this and to substantially increase upon the existing levels of business with other upstream companies in Trinidad. RRDSL is in discussions with other operators in Trinidad and South America with a view to assisting them in monetising their oil and gas resources and believes it will be in a position to secure further contract work for the drilling fleet based on interest seen to date.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEARED
31 DECEMBER 2016
Note Events subsequent to reporting 14. date (continued)
Following the acquisition, Range will aim to take further steps to reduce costs, improve drilling efficiency, secure contracts and diversify the customer base. The Company plans to establish RRDSL as a profitable oilfield services company, providing onshore operations to Range and a wide range of counterparties Trinidad, as well as internationally.
The amount of consideration for the proposed acquisition is US$5.5 million (subject to adjustment as set out below). In addition, RRDSL has a loan from LandOcean which totals approximately US$19.5 million ("Existing Debt"). Payment of the consideration is due by no later than the date falling three years after completion and is subject to 6% interest per annum. Similarly, repayment of the Existing Debt will be due to be made in cash no later than three years from completion date, subject to 6% interest per annum.
Full terms of the Heads of Agreement are provided in the Company's announcement published on 13 March 2017.
Proposed Reverse Takeover
The proposed transaction to acquire RRDSL, if completed, would constitute a reverse takeover that will be subject to a vote of the Company's shareholders and relevant regulatory stock exchange approvals. Accordingly, as required by Rule 14 of the AIM Rules for Companies, an admission document and notice of general meeting (the "Notice of Meeting") will be sent to the Company's shareholders which will, among other things, convene a general meeting of the Company at which a resolution approving the transaction will be proposed. A competent persons' report will be commissioned as part of the admission document which will provide detail on the Company's reserves and resources.
The Company currently anticipates the general meeting will take place during the second half of 2017.
Approval of convertible Note Financing
Following Shareholder approval at the General Meeting of the Company held on 7 February 2017, all the conditions for the US$20 million convertible note financing were met and therefore the convertible feature of the loan was approved.
Note Fair value measurement of financial instruments 15. (a) Fair value hierarchy
AASB 13 requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:
(a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1),
(b) Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly (level 2), and
(c) Inputs for the asset or liability that are not based on observable market data (unobservable inputs (level 3).
The following table presents the Group's financial assets and financial liabilities measured and recognised at fair value at 31 December 2016 and 30 June 2016 on a recurring basis:
Level Level Level Total
1 2 3
At 31 December 2016 US$ US$ US$
Assets
Available-for-sale
financial assets
Equity securities - - 45,238 45,238
Total assets - - 45,238 45,238
======= ======== ======= ========
Liabilities
Option liability at
fair value through
profit or loss - 517,051 - 517,051
Total liabilities - 517,051 - 517,051
======= ======== ======= ========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE HALF-YEARED
31 DECEMBER 2016
Note Fair value measurement of financial instruments
15. (continued)
Level Level Level Total
1 2 3
At 30 June 2016 US$ US$ US$
Assets
Available-for-sale
financial assets
Equity securities - - 45,238 45,238
------- -------- ------- --------
Total assets - - 45,238 45,238
======= ======== ======= ========
Liabilities
Option liability at
fair value through
profit or loss - 835,714 - 835,714
Total liabilities - 835,714 - 835,714
======= ======== ======= ========
The Group did not measure any financial assets or financial liabilities at fair value on a non-recurring basis as at 31 December 2016.
The Group's policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the end of the reporting period. There were no transfers between the levels of the fair value hierarchy in the six months to 31 December 2016.
(a) Valuation techniques used to derive level 2 and level 3 fair values
The fair value of financial instruments that are not traded in an active market (for example, derivatives) is determined using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. An instrument is included in level 2 when all significant inputs required to fair value an instrument are observable.
If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
Specific valuation techniques used to value financial instruments include:
-- The use of quoted market prices.
-- The fair values of the convertible note derivative liabilities and option and share repricing derivative liability is determined based on a Black Scholes option pricing model, based upon various inputs at the end of the reporting period.
During the period, the Group made no changes to the valuation techniques that were applied at 30 June 2016.
(b) Fair values of other financial instruments
Due to their short term nature, the carrying amounts of the current receivables, current payables, current borrowings, and current other financial liabilities is assumed to approximate their fair value.
DIRECTORS' DECLARATION
FOR THE HALF-YEARED
31 DECEMBER 2016
The Directors of the Group declare that:
1. the financial statements comprising the consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position, consolidated statement of cash flows, consolidated statement of changes in equity and accompanying notes, are in accordance with the Corporations Act 2001 and:
(a) comply with Accounting Standard AASB 134 Interim Financial Reporting, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(b) give a true and fair view of the consolidated entity's financial position as at 31 December 2016 and of its performance for the half-year ended on that date.
2. In the Directors' opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the Directors by:
Zhiwei Gu
Chairman
Dated this 16(th) day of March 2017
Independent review report - BDO
CORPORATE DIRECTORY
DIRECTORS Zhiwei Gu (Non-Executive
Chairman)
Yan Liu (Executive Director
and CEO)
Juan Wang (Non-Executive
Director)
Yu Wang (Non-Executive
Director)
Lubing Liu (Non-Executive
COMPANY SECRETARY Director)
Yi Zeng (Non-Executive
Director)
REGISTERED OFFICE AND
PRINCIPAL PLACE
OF BUSINESS
Nick Beattie and Sara
Kelly
Ground Floor, BGC Centre
28 The Esplanade
SHARE REGISTRY (AUSTRALIA) Perth WA 6000
Australia
Telephone: +61 8 6205
3012
Facsimile: +61 8 6316
SHARE REGISTRY (UNITED 2211
KINGDOM)
Computershare Investor
Services Pty Ltd
Level 11, 172 St Georges
Terrace
Perth WA 6000
Telephone: +61 3 9415
AUDITOR 4000
Computershare Investor
Services plc
The Pavilions
STOCK EXCHANGE LISTING Bridgwater Road
Bristol
UK BS99 6ZZ
Telephone: +44 370 702
0000
COUNTRY OF INCORPORATION
BDO Audit (WA) Pty Ltd
WEBSITE 38 Station Street
Subiaco WA 6008
Australia
Range Resources Limited
shares are listed on the
Australian Securities
Exchange (ASX code: RRS)
and Alternative Investment
Market (AIM) of the London
Stock Exchange (AIM code:
RRL)
Australia
www.rangeresources.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR QQLFFDXFEBBX
(END) Dow Jones Newswires
March 17, 2017 03:00 ET (07:00 GMT)
1 Year Range Resources Chart |
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