Range Resources merger to provide foundation for production growth
By Jamie Ashcroft April 25 2013, 2:27pm Projects in Russia and Trinidad will provide the initial impetus for this period of growth

Projects in Russia and Trinidad will provide the initial impetus for this period of growth
Range Resources’ (LON:RRL, ASX:RRS) merger with International Petroleum (IOP) will provide the foundation for a period of rapid production growth, according to Range director Peter Landau.
Range revealed on Wednesday that it would merge with IOP in a deal that, at the time, valued the latter at A$105mln.
For Range investors, the merger adds exposure to assets in Russia, Kazakhstan, and Niger. Investors also benefit from the appointment of Chris Hopkinson as the chief executive of the enlarged company.
“We see that the merger will obviously be beneficial to both parties,” Landau told Proactive Investors.
“However, for Range it will bring a proven management team led by Chris Hopkinson, who has a wealth of experience and proven track record through his time with Shell and in particular with Imperial Energy where he was CEO.”
With the enlarged asset base and strengthened management team, the company aims to grow production significantly over the next two years, from 1,000 to 10,000 barrels of oil per day.
Projects in Russia and Trinidad will provide the initial impetus for this period of growth, Landau explains.
“The Russia asset will see near term production with a forecast production ramp up to circa 4,000 bopd day in the first quarter of 2014, adding to the production ramp up forecast in Trinidad.
Once the firm has established this valuable production base the focus is expected to turn to Africa, through the assets in Niger and possibly other new opportunities.
Landau explains the increasing production base will open up funding opportunities, specifically facilities tied to reserves and production.
IOP alone brings 3P - proved + probable + possible – reserves of 233mln barrels of oil, as well as prospective resources in the order of 761mln barrels of oil and 156bn cubic feet of gas.
This means that, once merged, the enlarged company will have 3P reserves of 264mln barrels, and prospective resources of 802mln barrels and 156bn cubic feet of gas.
Range has agreed to secure funding ahead of the merger for the group’s growth plans.
It will raise A$20mln through a share placing to a mixture of UK and Australian institutions and funds; 338mln new shares will be sold at 0.04p each.
Range will also provide a US$15mln loan to International Petroleum, secured against the latter's Russian assets.
Once the dust settles on the merger and the placing, current Range shareholders will own 62.4% of the enlarged company.
Landau expects that the AIM market will see the majority of the liquidity in Range’s shares, as is currently the case, though he believes that the corporate manoeuvres announced yesterday will also see an increase in the liquidity on the ASX.