Range Resources Share Discussion Threads

[cashandcard] 21/4/2010 10:02

CNF,

Certainley better to take the cautious approach at this stage. Undeveloped P2 should fetch $10/bbl at the moment. But in all fairness, I can see a point not far-off where, with a continuely rising OP, $10-$12/bbl deals will happen. Now, that is unlikely at the moment (& I don't want to get carried away) but I also wouldn't write it off just yet. Smith has proved what the acreage holds. The existance of extensive infrastructure in the area make these seriously valueable barrels. Its clear the real winners from the current high OP are operators who had low capex & now have low opex on their oilfields, the margins will get better and better. In this oilprice environment, I believe there is a case for some fields to command a premium for their P2 oil over others. The gas reserves are a different question. Reserve potential, although promising, is tempered by depressed Nat Gas price. I'll keep a conservative outlook for the time being on Gas.

Cash

[captainnelsonforties] 21/4/2010 09:50

Twisso,

So you strip off DEVEX and cost of production you think that is the value of your assets? Name one other company that trades on the NPV of its reserves? If IAE were to do that I would fall off my seat with joy! No buyer would ever buy assets anywhere near the NPV, nor would any oil and gas company put reserves on their balance sheet at the NPV. 10% or 15% NPV is about the best you're gonna get, in this business you have to risk your assets. If RRL fully develop and produce from their field over the life of the asset then they'll return much more cash than the NAV of the asset as the NAV of the asset is risked and cash is cash. You seem to be confusing asset value and NPV. A little word of advice though for future oil and gas investment use 10-15% NPV or you will lose a vast volume of cash.

Captain Nelson Forties

[twissso] 21/4/2010 09:28

The value of the reserves in ground differs from the value to develop and sell. If you work back from the value of oil and gas sales to account for taxes, transport, operational expenses and whatever other costs get top sliced off you'll get figures greater than the fractions you keep putting forward.

Agree to disagree. I don't think Range will sell the assets so my own valuation will be based on how much it's going to cost to sink further wells, the size of the reservers and the cost to bring to market.

[7kiwi] 21/4/2010 09:26

I agree, I prefer to keep feet on the ground.

[captainnelsonforties] 21/4/2010 09:23

Kiwi,

Spot on, true I was thinking around proven undeveloped at the moment as its one well and currently another imminently. Agreed once its all proven developed and producing its gonna attact a higher price as all the DEVEX for flow lines, tanks, wellheads and gas handling will be behind them on the project. Was just trying to keep some feet on the ground here. ;)

Captain Nelson Forties

[twissso] 21/4/2010 09:23

The financial statements will speak for themselves and when they do a wee celebration until my tail turns hairy will be in order.

[captainnelsonforties] 21/4/2010 09:19

Happy Birthday Queenie!

Twisso,

Not really sure where you're coming from, we were discussing the Net asset value of undeveloped reserves. Well no-one buys non-commercial oil and gas reserves so an assumption of gross/net profitability is a given as marginal economics won't attract a buyer regardless of the value of gas and oil we were discussing. I was working on the global average acquisition price of oil and gas for 2008 and 2009 as reference. The top end of the range would be paid for fully developed quality offshore assets with the majority of devex covered. Acquisitions in Texas wouldn't be at the top end of this scale, GoM is another issue though.

True the balance sheet will reflect the economics of smith, again that's deviating from the point of discussion. My purpose was trying to reign in a conversation that was going to build in a lot of hype to the value of Smith. that's the last thing that's needed. Its better to have the company grow on realistic vaulations than to hype up an asset at an early stage (it'll build false hope and ultimately damage the share price). Something that I'd prefer not to see here at RRL.

Who mentioned the number of threads? I realise there are a number of RRL threads, and your point being? That doesn't change the point that I was making that regarding over hyping the value of oil and gas in the ground. To suggest that Range should be at 10p on the back of Texas I would count as fairlyland to suggest that Texas is worth about 5p and 5p for the rest I wouldn't argue too much about that. But anyways we're all here with different opinions, so I've said my bit. Hopefully the future wells will be as successful as Smith-1 and the cash flow will drive the company forward.

Captain Nelson Forties

[7kiwi] 21/4/2010 09:06

I agree with CNF.

Well head gas prices are ~$4/mcf. Personally, I wouldn't think a buyer would pay more than $0.5/mcf for gas.

2P oil maybe fair at $10/bbl. But a developed field with more PDP reserves would command a greater price for the PDP's; but on balance for all of 2P, $10/bbl sounds about right, maybe $12/bbl if the oil price rises a bit more and stays high.

[mingle3] 21/4/2010 09:06

haha! or hairytail?

[ram6ler] 21/4/2010 09:01

i hate to sound a bit picky, buttttt...shouldnt that be..fairytale.?

[twissso] 21/4/2010 08:58

CNF,

Those posts were directed at me et al I believe and again you've failed to make a vital distinction between the value of oil and gas in the ground and gross profit of oil and gas sale in Texas that Range will book.

The financial statement will give a true picture of the current gross profit from oil and gas sales in Texas.

Nothing I've seen suggests that Range intends on selling a half-developed field to another player. It looks to me like the intend on developing and capitalising on sales. In this scenarios I stand by a valuation of greater than $1.25/mbtu and $10/bbl.

Can we agree that there are two threads here or do you maintain that some of us are living in a fairytail?

Twissso

[greatfull dead] 21/4/2010 08:14

Its the Queens birthday.

[captainnelsonforties] 21/4/2010 08:12

2187,

I wasn't referring to your numbers as fairlyland, I was referring to the suggestion that they should be nearly double that because its Texas as fairyland. An acquisition price for gas of $1.25/Mcf is a little on the high side when the wellhead is around $4.00, certainly no operator is going to pay in the region of $2/Mcf. The liquids side at around $10/bbl looks about right. So just to carify those suggesting that the value to RRL of these reserves is well in excess of $1/mcf and $10/bbl are imo in fairyland. Once the field is fully developed the value will increase, but we're still a little ways off a fully developed field when we're about to drill our first of six appraisals. So to clarify my post wasn't directed at you it was those posts that suggested the valuation should be much higher because its Texas.

Captain Nelson Forties

[mingle3] 21/4/2010 08:06

just purchased 100k at 3.85 on a t-25. that should cover any good news due :)

[alistair4444] 21/4/2010 00:53

Work Program Puntland Dharoor-1. End of AUG 2010 - Dec 2010
Nogal-1 from Dec 2010 - Mar 2011 ....................................

[pottingon] 20/4/2010 22:32

O well
What a dustardly trick 2 play on a dustgustingly naive investor
I was looking forward 2 his inside leg measurement. immensely.
Disappointed
dustyPotts.

[mingle3] 20/4/2010 22:24

2187 im sure CNF didnt mean to offend you, im sure its just a break down in communication :-)

come on we're in this all together x

[2187] 20/4/2010 21:44

CNF,

You say fairyland.....

I shan't bother with my thoughts here any further

You appear to have the conch and I will leave you to it

Good bye

jr

[mingle3] 20/4/2010 21:40

p2 reserves. Texas is looking to make range $40-$60 mill over 2 years.

[mickey take] 20/4/2010 21:33

mingle - Thank You

Did they quote the 10mill as PI or P2 reserves?

[mingle3] 20/4/2010 21:27

mickey Take,

We have a producing well at texas which is producing 191 barrels a day and some gas (cant remember how much) from 1 of 3 zones. we are waiting on a reserve report which is due this week which has been indicated to show reserves in the region of 200bcf and 10mill barrels. this is going to be a 7 well development.

weve just completed seismics in our georgia assets and drilling will commence this year around aug.

puntland drilling in sep time to target a 2-10 billion oil reservoir which is compared to that of yemen.

100% puntland offshore licence looking for a farm in.

hope that helps

[mickey take] 20/4/2010 21:26

Thank you Mr Pottingman

What do you know of the management and their experience in the oil and gas industry?

Or is your reference to checkered referring to the management?

[pottingon] 20/4/2010 21:16

High M/t
Well that will B useful later at the mo we have a part interest in one hole
In Texas in a area that has produced H/c in past. Not much research required
The rest is ifs N buts.
The history is checkered.
Potts.
Ps very attractive ifs.

[mickey take] 20/4/2010 21:13

Hawk-I do some times :)

But others can testify otherwise.....

[hawks11] 20/4/2010 21:07

Mickey Take - I think you are taking the micky.