If you invest in Range Resources you first of all have to understand what you are investing in.
Range Resources is one of a stable of resource companies run by serial Aussie financier Peter Landau out of his parent company OKAP ventures.
http://www.okapventures.com/
This outfit suppports a number of resource companies in diverse areas such as coal,oil, and now silver is the latest trick added to the pack. OKAP have no expertise - other than finance in any of these industries and rely on outside contractors to actually deliver anything.
The problem is that Landau does not seem to see the distinction between these companies.
The Range shareholders - having suffered the indignity of seeing their share diluted out of all recognition ( 2.4 billion shares in issue - 1000bpd production) were incandescent when Landau announced that he had lent $2m of their fast dwindling cash to another company in the stable Continental Coal while simultenously placing their shares on the market at ever decreasing prices.
Range have never in their history discovered a drop of oil anywhere ever.
Their initial story was based on a "King Solomon Mines" story that Conoco had discovered vast quantities of oil in Somalia and had to give it up as the country descended into chaos.
http://www.cod.edu/peopl...malia/exploring_e10.pdf This project took ages to come into fruition and in the meanwhile they acquired 40% of Straight Oil to kick off the Georgia project.
With the onset of the financial downturn Range struck a deal to liberate their Texas assets from a finacially constrained partner for $1million giving then a 20% interest in the Texan wells. This was the first evidence of any income albeit as a minority patner in an existing producing asset.
Similarly the Trinidad asset was purchased for over $100m as a distressed asset from a couple of waring partners who had let the asset decline as they fought with each other through the courts. These assets are basically delpeted oil fields abandonded by the oil majors which the wee boys pick over to eke out small amounts of already proven oil
As these assets were built up Range issued more and more shares based on the Puntland story.
Well sooner or later the baloon had to burst:
Georgia drilled straight into a slab of granite half way down the drill that seemed to have been completely invisible on the seismic to the contractor they had hired to do the job for them.
Result: oil exploration abandonned after half a well, contractor fired, new contractor appointed and a complete rework of the project into a low value coal bed methain project years away from generating any revenue.
Puntland
Farmed in AOI (Africa Oil) to operate and fund the first exploration wells. AOI is a Lundin company and they are no fools so they created a subsidiary company Horn Petroleum to handle Puntland ( selling almost half of Horn before it even got started).
These two wells were both dusters and the Range shareprice tanked as a result.
What of "the King Solomon Mines" story about Conoco - well it remains intact as the two wells drilled in Puntland were drilled in the Dharoor valley which is nowhere near where Conocco were drilling in the Nugaal ,which by the way, is still in a disputed area and is currently undrillable.
The much touted Puntland offshore deal is still at the MOU stage and shows no sign of advancing after the latest elections ( cost to Range - $5m to tarmac a runway somewhere in Puntland!!!!)
Trinidad
This is run by a guy called Walter, the country manager, who was inherited as part of the deal. This guy holds the future of Range in the palm of his hand as the entire company is dependent on Walter getting the production figures up before Range get through the cash from their latest SEDA arrangement.
Trinidad on its own would probably succeed and become quite successful. However Landau compensates for his lack of knowledge and understanding of the companies he runs by being a hyperactive deal maker.
The latest done deal is for a Columbian asset slap bang in the middle of the previously Farc held area of Columbia. There have even been rumours of yet anyother deal with Frontera in Georgia.
He is even talking now about spinning the Puntland assets out into another company called "Rover".
Now some companies become dogs due to the actions of their managements but naming a company spun out of Range after a dog is taking the michael just a wee bit.
So the bet on Range is for Walter to get the Trinidad production up and generate cash faster than Landau can squander it on some other hair brained under-researched scheme.
How does he get away with it you may ask? Check out the corporate governance.
Range has a Chairman, NO Ceo and NO Cfo. They have no committees, audit, remuneration etc. They have a loose collection of executive directors all connected to OKAP who manage the company on their blackberries.
If there was ever a company where you had to DYOR then this is it.
If you are looking for an oil company with many, many multiples of the exploration upside of Range, with 40kbopd of production and exposure to some of the more exciting exploration frontiers you may want to take a look at AFREN. But DYOR as what it says on the tin very often bears no relation to what the tin contains
