(MENAFN - ProactiveInvestors - Australia) Range Resources (LON:RRS, ASX:RRS) said the licence periods for its Morne Diablo and South Quarry assets in Trinidad have been extended by ten years.
The farm out agreements for Morne Diablo and South Quarry now stretch to the end of 2021.
"The process of extending the Morne Diablo and South Quarry contracts is a clear demonstration of the Trinidad authorities and stakeholder's commitment to work with partners such as Range to increase drilling activity and raise production," said Peter Landau, Range's executive director.
The Morne Diablo licence now includes an additional circa 3,000 acres, designated as Block A, to the east of the existing licence area. Block A is an extension to the east of the current Lower Forest development trend where the company is currently drilling.
The company said the extension adds potential to exploit other, deeper targets.
As previously announced, the new farm out agreements (effective from 1 January 2012), will see a reduction in the enhanced royalty currently being paid by the company with the revised terms seeing an improvement in the net back amount received by the company per barrel of oil produced.
The revised royalty rates at production rates of 1,000 barrel of oil per day (bopd) will see net-backs increase to circa US40 a barrel before tax, and circa US50 a barrel before tax at 2,000 bopd, assuming US90 per barrel of oil and operating expenditure at similar levels.
The company also revealed that it has secured a US35mln debt financing facility with Meridian SEZC. The Cayman Islands-based finance company has agreed to purchase US35mln of five-year monetary production payment (MPP) securities from Range Resources.
The MPPs carry a coupon of 12%.
"With the new debt facility in place, we intend to fulfil our part of that commitment [to actively drill and raise production] and now have the additional time, acreage, and capital to achieve those objectives. In addition to the contract extensions with their enhanced economics, Range has initiated third party discussions regarding additional opportunities to expand our operating base outside of the existing contract areas and grow the Trinidad portfolio into a core producing area for the company for decades to come," Landau said.
