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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