Post by RIG Admin on Oct 3, 2014 7:19:53 GMT
All,
Please find attached a response to our letter from Rory Scott Russell. We are pleased that Rory has taken the time to address us personally but believe there are some things we would like further answers and assurances on. We will await your feedback before responding to Rory.
The unformatted text of the email is below for those unable to download. Please discuss this response on the following thread: rangeig.boards.net/thread/316/discussion-scott-russells-reply-october
Regards,
The RIG Representatives
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
From: Rory Scott Russell
To: Range Investor Group
CC: Evgenia Bezruchko; Ben Romney; Helen Chan
Subject: RIG
Date: Fri, 3 Oct 2014 00:13:40 +0000
Dear RIG
Firstly, many thanks for your letter, I have received every one and have gone through all responses of the past and tried to be as transparent as possible in replying, with the help of our advisors.
I really do appreciate and understand your views and comments regarding shareholder sentiment and also understand why our shareholders are so disappointed following the announcement and our annual report. I am of course extremely disappointed with both the share price and the operational performance to date. As I am sure you can appreciate, it has been a very challenging period for all of our people as we overcome the underlying difficulties in the business.
It is not easy at all to announce substantial write downs and we didn't do this without necessity - we very much had to reset and clean up the balance sheet. Although I do want to point out that the valuation of our core asset in Trinidad remains unchanged. We have also had to do this while we continue to wait for our operations to perform as they should. We all hoped to be much further along than where we are today, however, it will take us some more time to get our results to where they should be.
The news vacuum you refer to was driven by this relative lack of operational activity as we worked on financing to get the necessary investment together to show operational improvements. At the time of reporting production targets we were confident that we would be able to obtain the necessary funding in time to deliver 1,000 bopd target by the end of 2014. We have already made some significant improvements to our operations in Trinidad with new experienced staff, rigs running and well repair operations underway. Although having not delivered tangible operational progress to date this will become evident as we move forward.
The reality is that the company was in a more challenging place than I think any of us originally thought and the team has spent the past months working to stabilise and clear up the situation and enable it to get to a position where it can demonstrate sustained and long term growth.
Please be assured we are aligned with our shareholders and we are 100% committed to generating value for all involved with Range.
Please see below answers to your queries received yesterday:
Q: Why has Land Ocean funding not been used to improve operational performance over recent months? Explain the benefits of the funding with Lind Asset Management against the existing opportunity with Land Ocean.
A: As we said in the announcement of 2 June 2014, the option to take up the financing provided by LandOcean is “primarily to pay for LandOcean’s services”. LandOcean do not provide drilling services or rig maintenance themselves. However, we have been using LandOcean’s services successfully with regards to preparation of the waterflooding project and they remain an excellent service provider and technical partner.
The Lind arrangement has benefits for the company, namely:
• This facility provides Range with a flexible source of funding which can be used to grow production in Trinidad to levels while we work on longer-term debt on more attractive terms which will be more readily available as we – and our new ops team - increase operational efficiency.
• The medium-term facility has been designed to maximise flexibility in terms of repayments including the ability to repay early.
• The facility has very limited security (with our core assets in Trinidad remaining unencumbered)
• Previous ‘toxic’ financings (that were repaid) were with numerous parties, on different terms, with many of them converting simultaneously, which resulted in rapid share decline at the time.
Q: Why have you not been providing regular and accurate operational data from Trinidad; do you intend to redress this?
A: As a result of delays in obtaining funding, we have not been able to show the operational progress in Trinidad that we had all anticipated. The company and its advisors are fully aware of the need for regular newsflow in order to maintain sentiment and momentum on the markets and we intend to demonstrate this as we deliver operational progress. That said, our communications strategy will remain consistent in that we will provide the market with updates that are both material and necessary. We had agreed to quarterly operational updates which we have delivered but we understand the need for more transparency into the market – as we increase our operations so we should see more newsworthy events.
Q: Please explain the disparity between well completions and workovers, and a static production?
A: Production from our existing wells naturally decline as oil is produced from the reservoir and pressures reduce. We need to perform work overs (repairs and upgrades) to existing wells in order to reduce declines or improve production rates from these older wells, while at the same time we continue to drill new development wells as part of our new production program, the more wells we drill the more production we will achieve, this requires funding if we are to substantially increase production.
Q: Why do you continue to ignore a body representing 19% ownership of the company?
A: The team has attempted to respond to all letters and queries with as much transparency and efficiency as possible - while abiding by our regulatory obligations – during what has been an extremely challenging period for all of us. I fully appreciate RIG’s level of knowledge as well as its support in providing a bridge to our shareholder community, however, we can not favour one shareholder over another. So, although we do try to be as transparent as possible we can not always give out the information requested, however, we do try to answer every question as fully as we can.
I believe that the Annual Report published on Tuesday 30 September represents a watershed moment for Range as it is only now that we can reset the clock and draw a line under the challenges we inherited and move forwards. I completely understand all of the frustration and although it is maybe of little comfort I - and all of us here - share all your frustration, and we are working harder than ever to turn around the business into what it should be, a business with cash flows, reserves and production, onshore, in a stable and supportive country, with exploration upsides to chase. The share price performance has been volatile and below the expectation we were hoping to deliver, but we are confident that we have taken all the steps to secure the long term future of the company and we will begin to see the benefits of these efforts as we move forward.
With Regards,
Rory
Please find attached a response to our letter from Rory Scott Russell. We are pleased that Rory has taken the time to address us personally but believe there are some things we would like further answers and assurances on. We will await your feedback before responding to Rory.
The unformatted text of the email is below for those unable to download. Please discuss this response on the following thread: rangeig.boards.net/thread/316/discussion-scott-russells-reply-october
Regards,
The RIG Representatives
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
From: Rory Scott Russell
To: Range Investor Group
CC: Evgenia Bezruchko; Ben Romney; Helen Chan
Subject: RIG
Date: Fri, 3 Oct 2014 00:13:40 +0000
Dear RIG
Firstly, many thanks for your letter, I have received every one and have gone through all responses of the past and tried to be as transparent as possible in replying, with the help of our advisors.
I really do appreciate and understand your views and comments regarding shareholder sentiment and also understand why our shareholders are so disappointed following the announcement and our annual report. I am of course extremely disappointed with both the share price and the operational performance to date. As I am sure you can appreciate, it has been a very challenging period for all of our people as we overcome the underlying difficulties in the business.
It is not easy at all to announce substantial write downs and we didn't do this without necessity - we very much had to reset and clean up the balance sheet. Although I do want to point out that the valuation of our core asset in Trinidad remains unchanged. We have also had to do this while we continue to wait for our operations to perform as they should. We all hoped to be much further along than where we are today, however, it will take us some more time to get our results to where they should be.
The news vacuum you refer to was driven by this relative lack of operational activity as we worked on financing to get the necessary investment together to show operational improvements. At the time of reporting production targets we were confident that we would be able to obtain the necessary funding in time to deliver 1,000 bopd target by the end of 2014. We have already made some significant improvements to our operations in Trinidad with new experienced staff, rigs running and well repair operations underway. Although having not delivered tangible operational progress to date this will become evident as we move forward.
The reality is that the company was in a more challenging place than I think any of us originally thought and the team has spent the past months working to stabilise and clear up the situation and enable it to get to a position where it can demonstrate sustained and long term growth.
Please be assured we are aligned with our shareholders and we are 100% committed to generating value for all involved with Range.
Please see below answers to your queries received yesterday:
Q: Why has Land Ocean funding not been used to improve operational performance over recent months? Explain the benefits of the funding with Lind Asset Management against the existing opportunity with Land Ocean.
A: As we said in the announcement of 2 June 2014, the option to take up the financing provided by LandOcean is “primarily to pay for LandOcean’s services”. LandOcean do not provide drilling services or rig maintenance themselves. However, we have been using LandOcean’s services successfully with regards to preparation of the waterflooding project and they remain an excellent service provider and technical partner.
The Lind arrangement has benefits for the company, namely:
• This facility provides Range with a flexible source of funding which can be used to grow production in Trinidad to levels while we work on longer-term debt on more attractive terms which will be more readily available as we – and our new ops team - increase operational efficiency.
• The medium-term facility has been designed to maximise flexibility in terms of repayments including the ability to repay early.
• The facility has very limited security (with our core assets in Trinidad remaining unencumbered)
• Previous ‘toxic’ financings (that were repaid) were with numerous parties, on different terms, with many of them converting simultaneously, which resulted in rapid share decline at the time.
Q: Why have you not been providing regular and accurate operational data from Trinidad; do you intend to redress this?
A: As a result of delays in obtaining funding, we have not been able to show the operational progress in Trinidad that we had all anticipated. The company and its advisors are fully aware of the need for regular newsflow in order to maintain sentiment and momentum on the markets and we intend to demonstrate this as we deliver operational progress. That said, our communications strategy will remain consistent in that we will provide the market with updates that are both material and necessary. We had agreed to quarterly operational updates which we have delivered but we understand the need for more transparency into the market – as we increase our operations so we should see more newsworthy events.
Q: Please explain the disparity between well completions and workovers, and a static production?
A: Production from our existing wells naturally decline as oil is produced from the reservoir and pressures reduce. We need to perform work overs (repairs and upgrades) to existing wells in order to reduce declines or improve production rates from these older wells, while at the same time we continue to drill new development wells as part of our new production program, the more wells we drill the more production we will achieve, this requires funding if we are to substantially increase production.
Q: Why do you continue to ignore a body representing 19% ownership of the company?
A: The team has attempted to respond to all letters and queries with as much transparency and efficiency as possible - while abiding by our regulatory obligations – during what has been an extremely challenging period for all of us. I fully appreciate RIG’s level of knowledge as well as its support in providing a bridge to our shareholder community, however, we can not favour one shareholder over another. So, although we do try to be as transparent as possible we can not always give out the information requested, however, we do try to answer every question as fully as we can.
I believe that the Annual Report published on Tuesday 30 September represents a watershed moment for Range as it is only now that we can reset the clock and draw a line under the challenges we inherited and move forwards. I completely understand all of the frustration and although it is maybe of little comfort I - and all of us here - share all your frustration, and we are working harder than ever to turn around the business into what it should be, a business with cash flows, reserves and production, onshore, in a stable and supportive country, with exploration upsides to chase. The share price performance has been volatile and below the expectation we were hoping to deliver, but we are confident that we have taken all the steps to secure the long term future of the company and we will begin to see the benefits of these efforts as we move forward.
With Regards,
Rory