Range Resources Proposes to Undertake Merger with International Petroleum
Range proposes to merge with International Petroleum on a ratio of three Range ordinary shares for every two International Petroleum ordinary shares (3:2 basis) subject to various conditions, including 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;
– 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 from the ongoing development of its significant reserves and resources base. The key near term focus of the merged entity will be the expansion and development of the projects in Trinidad, Russia and onshore Africa;
– The merged 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;
– Combined current production for the merged entity 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 company will be looking to appoint Mr Chris Hopkinson as a Managing Director of the merged entity. Mr Hopkinson is currently CEO of International Petroleum and 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;
– Subject to further considerations, the merger will be undertaken by way of either an off-market takeover offer by Range to International Petroleum shareholders or a proposed scheme of arrangement under Australian laws;
– The board of International Petroleum have unanimously agreed to recommend the proposed merger in the absence of a superior proposal; and
– 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 Limited by way of a secured loan over International Petroleum’s Russian assets.
International Petroleum holds interests in five projects in Russia, namely the Kransnoleninsky Project (75%), Yuzhno-Sardakovsky Project (100%), Zapadno-Novomolodezhny Project (100%), Yanchinsky Project (100%) and Druzhny Project (75%).
In the period from August 2012 to December 2012, International Petroleum produced 25,000 barrels of oil from well number 52 at the Zapadno – Novomolodezhny Project at an average flow rate of 197 bopd, which is projected to increase to 300 bopd with a planned pump upgrade this quarter.
Following the planned completion of 16 km of pipeline during Q4 2013 / Q1 2014, an additional 10 wells are proposed to be put into production, which are projected to increase production by a further 4,000 bopd. An additional 20 well targets have been mapped, providing excellent potential to further increase production.