TIDMBOIL
RNS Number : 2815R
Baron Oil PLC
29 June 2020
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
29 June 2020
Baron Oil Plc
("Baron Oil", "Baron" or "the Company")
AGM Statement
Baron Oil Plc (AIM:BOIL), the AIM-quoted oil and gas exploration
and production company focused on opportunities in SE Asia, Latin
America and the UK, will be holding its Annual General Meeting at
1pm today. At the meeting, Dr Malcolm Butler, Executive Chairman,
will release the following statement.
Financial Position and Commitments
Following the Share Placing in Q1 2020, which significantly
strengthened the Company's financial capability, available cash at
the end of May 2020 was GBP1.872 million, excluding the Peru and
Timor-Leste performance bonds of US$160,000 and US$333,333
respectively. As a result, our proposed work programmes for 2020
and into 2021 are funded.
There is no obligation to drill before 2022 in Timor-Leste and
there are no plans to drill in the UK in the foreseeable future. In
Peru, where we have been attempting to facilitate the drilling of
the El Barco-3X well, it is now becoming clear that the impact of
COVID-19 will push any proposed drilling into 2021.
Operations
In common with most other industries, Baron faces challenges in
managing the disruption caused by COVID-19-related global
lockdowns. We have noted previously that access to the necessary
datasets to fulfil work programmes in both Timor-Leste and the UK
is being delayed and these problems continue. However, this
requirement needs to be viewed in the context of ensuring that our
efforts to progress activities do not compromise the health and
safety of those with whom we work.
TL-SO-19-16 Production Sharing Contract ("Chuditch PSC"),
offshore Timor-Leste - Indirect 25% interest
The main work obligations in the initial two-year period of the
Chuditch PSC are the reprocessing of 800 km(2) of 3D seismic data
and 2,000 line kms of 2D seismic data. Thereafter, subject to
satisfactory results from the reprocessing, the subsequent
commitment is for a well to be drilled in the third year of the
Initial Term of the Chuditch PSC. Since signing the Chuditch PSC in
November 2019, SundaGas has progressed the project as far as
possible, conducting detailed technical baseline studies and
employing a General Manager in Dili as the first step in building a
local organisation.
The initial work programme was designed to extract the maximum
information from existing seismic data, utilizing the technical
expertise of the SundaGas team and incorporating a training
programme for Timor-Leste nationals. There are issues with sea-bed
topography that impact the resolution of seismic data at the Plover
reservoir level in the Chuditch area and a pre-stack depth
migration ("PSDM") processing routine, tailored to resolve these
local issues, is necessary to define future drilling locations.
Although the work carried out by Shell determined that there was
minimal reservoir and migration risk, this specialised processing
is necessary to define the limits of the accumulation, which
impacts the volumes in place and the location of future wells.
Accessing the original raw acquisition data for the existing
seismic volumes is critical for this programme and a combination of
COVID-19 lockdowns and data retrieval issues has meant that
SundaGas has yet to receive these key data for either 3D or 2D
seismic data.
As shareholders may be aware, SundaGas is a sponsor as well as
presenting at the virtual Energy Online Series: Timor-Leste on
Thursday 9 July 2020. The SundaGas presentation will not contain
any information that has not previously been disclosed publicly.
The postponed physical conference (Second Timor-Leste Oil & Gas
Summit), where SundaGas is also a sponsor, is currently scheduled
to take place in Q4 2020.
UK - Inner Moray Firth, Offshore Licence P2478 - 15%
interest
This licence, which contains the large Dunrobin and smaller
Golspie prospects, was formally awarded to Baron Oil and its
partners in September 2019 as part of the UK 31st Offshore
Licensing Round. At the time, the Inner Moray Firth area attracted
many bids, including successful ones from major companies. Both
prospects are already defined by existing 3D seismic with
supporting 2D seismic data, but specialised reprocessing to PSDM is
planned when access to the original field data has been achieved.
Unfortunately, such access is also being delayed because of
COVID-19-related issues.
In April 2020, we announced a Work Sharing and Confidentiality
Agreement ("WSCA") with a large European Exploration and Production
Company for licence P2478. The Joint Venture partners agreed to
cease marketing a farmout until 30th September 2020, during which
period the WSCA party will complete its own regional technical work
and share its data and interpretations over the area. The
exclusivity period may be extended with this party until 31
December 2020 should it wish to negotiate farm-in terms. Whether or
not this happens, we are hopeful that these studies will improve
the chances of bringing in a partner to assist in funding, should
the group elect to drill in due course.
UK - Dorset, Offshore Licence P1918; Onshore Licences PEDL330
& PEDL345 - Baron 8% interest
Licence P1918, Colter: The initial evaluation of the drilling
results indicated that the Colter South Prospect had the potential
to contain commercial quantities of oil and the reduced licence
acreage was continued into its Second Term in February 2020.
However, re-evaluation of the geophysical information indicates
that a further appraisal well is required which, when combined with
the recent drop in oil prices, increases the likelihood that the
licence will be relinquished at or before expiry of its Second Term
on 31 January 2021.
PEDL330 & PEDL345, Purbeck: These are onshore Licences,
lying to the south of Wytch Farm oilfield. PEDL345 includes a major
part of the Purbeck Prospect, which is being evaluated. However,
lower oil prices and more stringent environmental issues associated
with drilling in this coastal area of Dorset means it is unlikely
that drilling will be able to take place before these licences
expire on 20 July 2021.
Peru - Block XXI, Onshore Licence - 100% interest
Despite announcing a military enforced lockdown in mid-March,
Peru continues to struggle to contain the COVID-19 outbreak. The
country currently ranks second only to Brazil in Latin America in
confirmed cases and the Piura region, where Block XXI is situated,
is the third most affected region in Peru. We continue to pursue
efforts to drill the El Barco-3X well, including bringing in a
farm-in partner, but progress has been halted by the COVID-19
measures, which include strict movement restrictions and
curfews.
The Block is in its fifth and last exploration phase but remains
in Force Majeure, with approximately 6 months left in which to
drill when it is lifted. Once the well is drilled, the Company has
an agreement in principle with PeruPetro to have the option of a
three-year extension. We will also be entitled to the return of our
US$160,000 government performance bond if the well is drilled. The
most recent estimate for site preparation and drilling of El
Barco-3X is US$1.2 million.
It is unclear when access to Block XXI operations will be
restored and what long-term effect the COVID-19 disruptions will
have on the area. However, it is becoming clear that activities
that had been planned for 2020 will now be pushed into 2021.
Comment
Once the impact of the pandemic recedes and the global economic
outlook and industry activity levels begin to recover, we will seek
to accelerate activity across our existing portfolio. Meanwhile,
our work programmes for 2020 and into 2021 are funded and we have
minimised capital commitments in the short term. The current delays
are frustrating for all of us. We will keep shareholders informed
as progress resumes.
For further information, please contact:
Baron Oil Plc +44 (0)20 7117 2849
Dr Malcolm Butler, Executive Chairman
Andy Yeo, Managing Director
SP Angel Corporate Finance LLP +44 (0)20 3470 0470
Nominated Adviser and Joint Broker
Stuart Gledhill, Caroline Rowe
Turner Pope Investments (TPI) Limited +44 (0)20 3657 0050
Joint Broker
Andy Thacker, Zoe Alexander
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END
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