Red Emperor flotation offers strong leverage into Range Resources’ exploration portfolio

Friday, Jun 24 2011 by
7
Red Emperor flotation offers strong leverage into Range Resources exploration portfolio

Australian oil and gas company Red Emperor Resources (LON:RMP) has just kicked off trading on London’s Alternative Investment Market – offering investors interesting new leverage into the exploration assets behind one of the market’s most heavily traded stocks. Red Emperor is a pure play exploration business that holds 20 percent stakes in licenses in the former Soviet state of Georgia and the Puntland region of Somalia. For those investors that have tracked and traded AIM and ASX listed Range Resources (LON:RRL) , the flotation of Red Emperor means there are now two ways of buying into the same exploration projects – though the companies themselves have wildly different valuations. With drilling in Georgia about to get under way and a well targeted to drill in Puntland in the third quarter of this year, there will be no shortage of news from Red Emperor in the coming weeks.

In London at the time of the flotation, Red Emperor’s managing director Greg Bandy and executive consultant Tony King, are in no doubt about the high risk, high reward potential of the forthcoming drilling. With an ASX listing that values the company at around A$50 million together with US$14 million cash in the bank, the company’s comparable valuation to Range is at a significant discount. While Range’s market cap of around A$410 million includes production interests in Texas, US and Trinidad, there is a significant disparity between their respective valuations based on what could come from Georgia and Puntland. Apparently, Red Emperor’s London quotation is partly an effort to rectify that inconsistency by appealing to an investor base that already understands these projects well.

In the Republic of Georgia, Red Emperor has a 20 percent working interest in onshore blocks VIa and VIb, covering around 6,500 sq km. Its partners include Range, with a 40 percent stake, and Strait Oil and Gas Ltd, also with 40 percent. Twelve months ago Range completed a 410km 2D seismic programme with independent consultants RPS Energy identifying 68 potential structures containing an estimated 2.045 billion barrels of oil-in-place. In Puntland, Red Emperor holds a 20 percent working interest in two licences covering nearly 40,000 sq km of the highly prospective Dharoor and Nugaal valleys. Its partners are Range, with 20 percent and Africa Oil Corp (TSX-V:AOI), the operator, with 60…

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Range Resources Limited is an exploration and production company. The Company is engaged in oil and gas exploration, and development and production in Trinidad. It holds interests in non-core oil and gas projects in Georgia and Guatemala. It holds interest in three onshore production licenses: Morne Diablo, South Quarry and Beach Marcelle, as well as interests in two exploration blocks: St Mary's and Guayaguayare. The Company's waterflood programs include Beach Marcelle South East block and Morne Diablo Expansion project. The Company's Beach Marcelle field is located on the eastern side of Trinidad, where various operators have processing facilities, and oil and gas pipelines that pass through the field. The Company is focused on the acquisition of various projects. It focuses on constructing a water pipeline to connect the gathering and injection stations at the Morne Diablo field to a water treatment facility. Range Resources (Barbados) Limited is a subsidiary of the Company. more »

LSE Price
0.025p
Change
 
Mkt Cap (£m)
4.6
P/E (fwd)
n/a
Yield (fwd)
n/a

Red Emperor Resources NL is engaged in oil and gas exploration. The Company's principal activities are focused on identifying and exploring oil and gas in South East Asia and the Republic of Georgia. Its segments include Georgian Exploration & Evaluation; Philippines Exploration & Evaluation and Treasury. The Company has projects located in South East Asia and Georgia. The Company in South East Asia has entered into a Farmin Agreement with Otto Energy Philippines Inc. to farm into the prospective offshore Philippines Block, Service Contract 55 (SC55). Its SC55 is located in the southwest Palawan Basin and covers an area of approximately 9,880 square kilometers. Its Georgia project is located in the Republic of Georgia and covers an area of approximately 6,500 square kilometers. Its Philippines operations include Hawkeye-1 exploration well, which is drilled to the depth of approximately 2,920 meters with the reservoir intersected at approximately 2,710 meters. more »

LSE Price
0.65p
Change
3.6%
Mkt Cap (£m)
2.5
P/E (fwd)
n/a
Yield (fwd)
n/a



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6 Comments on this Article show/hide all

Elias Jones 24th Jun '11 1 of 6
3

Get the message, good promotion, no negatives, better than the alternative!

Now, RMP does  sound extremely good value for the high risk/high reward Georgia & Puntland play, but management may wish to concentrate on their own firm and its own SWOT as opposed to attempting to cast a shadow over another for their own benefit. A very unusual approach.

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smartbeds4me 25th Jun '11 2 of 6
2

Its a no brainer, why buy RMP when shares in RRL are 40 % cheaper!!!And offer bigger upside!

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emptyend 25th Jun '11 3 of 6
3

.....mmmm.....I'm tempted to think that Red Emperor Resources (LON:RMP) have a vowel missing from their ticker.  ;-)

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wistman 25th Jun '11 4 of 6
2

In reply to post #57682

.....mmmm.....I'm tempted to think that Red Emperor Resources (LON:RMP) have a vowel missing from their ticker. ;-)

Not only that, I suspect they chose the co name to get the ticker!

But how can one resist a company with (AHEM) prospective multi-billion barrel prospects in a dodgy place called Puntland? And now with the added bonus of that ticker! And prospects in Georgia-(remember Frontera? I certainly do! GRRRR! )

Out goes my residual holding on Range (on which I made about 60% fairly quickly) and in goes RMP, as it really is a much cheaper way to be in the Georgia and Puntland assets.

Both of course, live in the " punters corner" of the pf, which exists to stop me doing really silly things with more serious amounts of money in the main body. (Wessex is a close companion at present).

You can occasionally make money on shares like this, provided you remember that you are primarily buying and selling a story and it is vital to get in when the story is cheap, and out before reality intrudes.

(Some people must have made money on Nighthawk, for instance.)

w


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hannibal 25th Jun '11 5 of 6
1

So, emptyend, when it's a company you like its sound analysis and if you don't its ramping?

It's funny, because I remember you around this time last year waxing lyrical about Soco having the potential to be worth 2 - 3 times its Market Cap in a years time.

Of course we all know what happened with TGD and the limited success with the african wells.

Truth is all companies will attempt to present their investment in the best light, and its up to the investor to consider the counter thesis or the things the MD isn't volunteering.

Ed Story is just as guilty, though admittedly in a more reserved fashion. And, Mr Bandy, please take note it is considered poor form to sell your investment through almost complete reference to a competitor: leaves you looking quite vulgar, which is perhaps what emptyend is referring to.

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emptyend 26th Jun '11 6 of 6
2

In reply to post #57687

So, emptyend, when it's a company you like its sound analysis and if you don't its ramping?

Have you had your sense of humour removed, Hannibal?

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