Range announces the signing of a Sale & Purchase Agreement (SPA) for the disposal of 100% of Range Resources Drilling Services Limited ("RRDS") to LandOcean Petroleum Corp. Ltd ("LandOcean Petroleum"), a Hong Kong based company wholly owned by LandOcean Energy Services Co. Ltd., and operated by Chengdu Western Union Petro Engineering Technology Co., Ltd., a subsidiary of LandOcean, for total cash consideration of US$7.2 million. Chengdu Western Union Petro Engineering Technology Co., Ltd. was founded in 2006 and offers highly professional oilfield services, including oil and gas products and equipment supply, technical services, and logistical support services.
RRDS has a fleet of 12 drilling and workover rigs and currently employs over 250 staff. LandOcean Petroleum is looking to inject additional investment into new equipment and current rigs updates, as well as adding in new rig capacity of at least two further rigs (one shallow and one deep) to the existing fleet.
Following a review of its business plan, Range's Board has determined that the drilling business does not fit with the strategy of the E&P Company. Range's Board believes that the Company's time and resources will be best spent on efficiently running its upstream assets.
RRDS will continue to provide full oilfield operations services to Range in Trinidad, to accelerate its planned development and exploration drilling programme, with RRDS, LandOcean and Chengdu Western Union Petro Engineering Technology Co. working closely together to efficiently grow and develop. The Board believes that this partnership will allow RRDS to grow and prosper as a part of a larger and more focused oilfield services provider with better capital support. There will be no immediate changes to the current management team in Trinidad.
The Company will be providing further information on its upcoming development and exploration programmes in Trinidad in due course.
Terms of the SPA:
- Cash proceeds of US$4.37 million will be paid by LandOcean in the following tranches:
o US$1.3 million shall be paid within five Business Days of the date of this Agreement;
o US$1.0 million shall be paid on or before 15 January 2015; and
o The remaining amount of US$2.07 million shall be paid on Completion, which is expected to take place on or before 30 January 2015.
- Additionally, LandOcean Petroleum will repay all outstanding intercompany loans due by RRDS to Range. At the date of signing, these loans total approximately TT$17.7 million (US$2.8 million) and repayment will be made in instalments during 2016.
In line with the Company's strategic focus on its core assets in Trinidad, Range will use the proceeds from this transaction to fund the ongoing operations at these flagship assets, including (subject to government approvals) work commitments at the highly prospective St Mary's and Guayaguayare exploration blocks and for general working capital purposes.
As reported in the annual financial accounts for the year ending 30 June 2014, the net asset value of RRDS was approximately US$5.3 million, and the total loss for the financial year was approximately US$2 million. Range is forecast at end December to have total trade payables due to RRDS of approximately TT$6.3 million (US$1 million).
