Range Resources extends Trinidad oil and gas footprint
Range Resources (ASX: RRS, LON: RRL)
has extended its oil and gas footprint in Trinidad by 280,000 gross
acres following the execution of its farm-in with Niko Resources (TSE:
NKO) to earn a 50% interest in the Guayaguayare Block.
This gives access to onshore and offshore acreage that have excellent synergies with its existing three blocks and best case Prospective Resources of 133 million barrels of oil equivalent (MMboe).
Guayaguayare contains both shallow and deep oil‐producing horizons including the highly prospective Cretaceous section that is believed to be the source rock for Trinidad’s prolific onshore petroleum system.
This gives it shallow drilling targets with significant exploration potential and an expansive area within a highly prolific petroleum system. Several high‐impact prospects have already been identified.
Niko currently holds shallow and deep Production Sharing Contracts for 65% of the onshore portion and 80% of the offshore portion of the license area with the Guayaguayare Block comprising 280,170 shallow acres and 293,999 deep acres.
Range will fund two onshore wells – one shallow well to a maximum of 5,000 feet and one deep well to a minimum of 5,000 feet – and a potential initial appraisal well to earn its interest. The first well is expected to spud in early 2014.
The two initial wells, located near Range’s Beach Marcelle that has produced over 30 million barrels (MMbbl) of oil to date, will test about 22% of the onshore Prospective Resource estimate of 100MMboe.
In the event of a discovery from either of the two initial wells, the consortium will then look to drill an initial appraisal well.
Range and Niko will also drill a well from an onshore location to target an offshore prospect with best case Prospective Resources of 33MMboe.
Under the agreement, certain payments will be made to Niko upon achievement of commercial production from any discoveries.
The farm‐in adds highly prospective acreage on trend with Range’s existing exploration, development and secondary recovery projects, while leveraging its fleet of drilling and production rigs and operating experience within the region.
Its ongoing production operations in South Quarry, Morne Diablo, and Beach Marcelle is expected to result in appreciable synergies and lower operating costs for any future onshore or offshore discoveries.
The Guayaguayare Block surrounds Range’s Beach Marcelle Field, and extends south to the limits of Trinidad’s territorial waters.
It also surrounds several other producing fields and is on trend with the most prolific oil and gas fields in Trinidad.
Guayaguayare lies in the transition area between the transpressional Southern basin and the extensional Columbus basin.
A regional wrench fault, an extension of the Los Bajos fault, cuts through the onshore to offshore transition zone. Traps associated with this fault produce oil in Southwest Trinidad and off the East Coast from Upper Miocene / Pliocene Sands.
In addition to proven Tertiary‐age exploration targets, the block is believed to hold significant potential in the Cretaceous section, which has been successfully developed in the Eastern Venezuelan basin.
Four prospective onshore areas have been identified within the Guayaguayare Block, each considered to have significant potential for oil, whilst the offshore structural complex is believed to have significant potential for large gas discoveries with several large structures mapped.
Niko and previous operators have acquired and processed 217 square kilometres of 3D seismic on the onshore acreage as well as 277 square kilometres of 3D seismic in 2011 on the offshore acreage.
The latter has been merged with the reprocessed data from two 3D marine surveys from 1997 and 1990 to cover a total area of 836 square kilometres.
With multiple drill-ready targets within an area that is on trend with Trinidad’s most prolific oil and gas fields, the farm-in to the Guayaguayare Block gives Range Resources numerous opportunities to increase production and reserves.
That the Block surrounds its Beach Marcelle production operations means the company can leverage its fleet of drilling and production rigs as well as potentially its existing infrastructure, reducing operating costs.
Share price catalysts include:
- Results from the initial exploration well in early 2014;
- Results from the second well and potential appraisal well;
- Potential success of the offshore well; and
- Further updates from Range’s oil development program on its existing fields.
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