RANGE RESOURCES has a particularly apt corporate motto: "If you can find a path with no obstacles, it probably doesn't lead anywhere."

Yesterday a potentially large obstacle was placed in front of the oil and gas explorer, which holds the oil and mineral rights to Somalia's semi-autonomous state of Puntland.

The company's close ally, the President, Mohamud Musse Hersi, lost an election for a second four-year term and has since been replaced by the former opposition leader, Abdirahman Mohamed Farole.

Mr Farole returned to Puntland in November after spending two years studying at LaTrobe University in Melbourne.

He had been expelled from Mr Hersi's cabinet in 2006 after expressing strong opposition to the agreement signed with Range, having reportedly preferred to conduct an international tender process for exploration rights rather than award them to the tiny Australian company.

Before the election, Range had been hopeful Mr Hersi would be returned to office.

"From our perspective, Hersi getting back in is very important," Range director, Peter Landau, told the Herald on Tuesday.

Yesterday Range entered a trading halt after the election results were published. Mr Landau said Range representatives had arranged to meet Mr Hersi at the weekend to discuss the future of the company and its Canadian joint venture partner, Africa Oil, in the country.

Africa Oil recently completed seismic surveys over areas prospective for oil and had been expected to drill two wells later this year.

Mr Landau said he was hopeful Range would keep its exploration rights under Mr Farole's administration, since a royalty and profit-sharing agreement meant Puntland's economy would be boosted if oil was found.

Mr Landau added it would take 18 to 24 months for another oil explorer to replicate the work Range had undertaken in the region, so it was likely to be able to develop oilfields more quickly than rivals.

But he admitted it was possible Range might have to cede significant portions of its ground, and potentially its all-encompassing right to minerals such as zinc and uranium, as part of a compromise that would allow it to keep the main areas it has marked as prospective for oil.

"We're realists," Mr Landau said. "There is no doubt [Farole] might want to put a compromise deal in."

Range on Monday revealed plans to raise about $3 million through a rights issue, but Mr Landau said it was possible the proposed timeframe could be extended.

IT IS typical for a rights issue prospectus to be accompanied by a long list of potential risk factors for investors to consider.

But those factors usually involve issues such as timing and future financing rather than "acts of piracy" and "a high risk the company would not be able to effectively and legally enforce any of its rights under its agreement".

Unless, of course, the company is Range Resources, an oil and gas explorer in Somalia's semi-autonomous state of Puntland.

Range is seeking to raise about $3 million through a rights issue of options to help cover ongoing exploration costs and working capital, amid the expectation its Canadian joint venture partner, Africa Oil, will drill two wells this year following delays last year.

The plans are not set in stone. Range does not plan to mail its prospectus to shareholders until January 20, as it is awaiting the outcome of Puntland's presidential election this weekend.

The company claimed it was "confident of the re-election of current President [Mohamud Musse] Hersi" who signed the initial agreement giving Range exclusive mineral and oil rights to Puntland in 2005.

The presidential race initially drew about 35 candidates, but the two main challengers to Mr Hersi's rule appear to be General Abdullahi Ahmed Ilkajir, and the opposition leader, Abdirahman Mohamed Farole. Mr Farole, a doctoral candidate in the history department at La Trobe University, returned to Puntland in November after two years in Melbourne. He has been an outspoken critic of Range's rights to Puntland's resources since the initial agreement was signed.

In contrast, Mr Hersi's government has in the past received funding from Range and provides the company with armed security guards when its executives visit the region, which is often a staging ground for offshore pirates and onshore kidnappings of Westerners. Range will require extra protection for a planned offshore seismic survey that has already been delayed. "We don't deal with any of the opposition leaders," said Range's executive director, Peter Landau. "From our perspective, Hersi getting back in is very important."

Also important is Africa Oil's ability to fund the joint venture's ongoing exploration efforts. Africa Oil is spending $US45.5 million ($64 million) on exploration of two onshore blocks to earn an 80 per cent interest in those areas. The Canadian company completed an onshore seismic program last year, but as of the end of September it had only $US2.25 million cash on hand and had received $C6 million ($7 million) in loans from its major shareholder, Sweden's Lundin family.

Mr Landau said he was confident the Lundins would continue to support Africa Oil, particularly since it recently received almost $C300 million from selling a major stake in Syrian oil producer Tanganyika Oil to China's Sinopec.

Reuters this week reported that Africa Oil had stopped exploration in Puntland and had not paid staff for three months. Mr Landau claimed the report was inaccurate and was instead a typical dispute with a contractor.

A representative of Africa Oil, based in Vancouver, did not respond to the Herald's request for comment.