TIDMBOIL
RNS Number : 9982K
Baron Oil PLC
08 January 2021
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
8 January 2021
Baron Oil Plc
("Baron" or the "Company")
Update on TL-SO-19-16 Production Sharing Contract ( the
"Chuditch PSC" or the "PSC"), Timor-Leste
Baron Oil Plc (AIM:BOIL), the AIM-quoted oil and gas exploration
company with opportunities in SE Asia, Latin America and the UK, is
pleased to provide shareholders with the following update on the
Chuditch PSC.
Key Points
-- Proposal presented to ANPM to allow project to progress
o Includes request for minimum 12-month extension
-- Significant upgrade in estimated resources
o Gross Mean GIIP: 4,703 BCF
o Gross Mean Prospective Resources: 3,527 BCF
o Mean Prospective Resources net to Baron interest: 882 BCF
Background
Baron has a 33.33% interest in the shares of SundaGas
(Timor-Leste Sahul) Pte. Ltd. ("SundaGas TLS"), the parent company
of the Timor-Leste subsidiary holding the Chuditch PSC interest,
with the remaining 66.67% being held by a subsidiary of SundaGas
Pte. Ltd., a private E&P company based in Singapore. The sole
asset of SundaGas TLS is its 100% shareholding in SundaGas Banda
Unipessoal Lda., which in turn operates and holds a 75% interest in
the PSC, with the remaining 25% carried interest being held by a
subsidiary of the Timor-Leste state oil company (Timor Gap, E.P.).
Baron therefore has an indirect 25% interest in the Chuditch
PSC.
The work programme for the current, initial licence phase of the
PSC includes an obligation to reprocess 800 sq. kilometres of 3D
and 2,000 kilometres of 2D seismic data in the first two-year
period, which expires on 18 December 2021. Thereafter, subject to
satisfactory results from the 3D seismic reprocessing, the
subsequent commitment is for a well to be drilled in the third and
final year of the initial phase of the Chuditch PSC.
Proposal to ANPM
As detailed in the Company's announcement of 11 September 2020,
since signing the PSC in November 2019 with Autoridade Nacional do
Petróleo e Minerais ("ANPM"), progress has been hampered by
unanticipated issues around data access, including access to the
critical Kyranis 3D seismic volume recorded in 2012 partly over the
Chuditch PSC area. Baron has supported SundaGas TLS throughout this
time in its efforts to work constructively with ANPM and others to
unlock the situation. As a result, SundaGas TLS has now been able
to present a proposal to ANPM which amongst other matters, includes
an extension request and which, if accepted, the Board believes
will resolve the key issues of access to data, ability to input
directly into the re-processing project, and satisfy the
Timor-Leste training requirements which are also part of the PSC's
work programme.
Extension Request
As a result of the time lost whilst attempting to resolve the
data access and other issues referred to above, which have been
exacerbated by the COVID-19 situation, SundaGas TLS has requested a
minimum 12-month extension to the current, initial licence phase,
from the date of grant of such an extension. The additional time is
essential in order to complete the agreed work programme, in
particular the vital 3D seismic reprocessing, to allow a timely
drilling decision to be made.
Update on Technical Evaluation
On 4 February 2020 the Company announced information on the
Chuditch PSC, specifically from publicly released reports on the
area prepared by Shell Development (Australia) Pty. Ltd. ("Shell")
in 1998 and 2001 following the drilling of the Chuditch-1 discovery
well. Shell's estimates of volumes of gas initially in place
("GIIP") were limited to the Chuditch-1 discovery and immediately
adjacent prospects and parts of prospects lying within the licence
area (the ZOCA 91-09 PSC) prevailing at the time. The aggregate
gross Mean of those volumes is 2,901 billion standard cubic feet
("BCF") of gas.
Subsequently SundaGas TLS has gathered and interpreted
subsurface information, mainly legacy 2D seismic and well data,
both regional and specific to prospects lying within the Chuditch
PSC, which incorporates areas outside the former ZOCA 91-09 PSC. As
a result, the extension of the prospect known by Shell as Bilby,
now renamed Chuditch North, is mapped to lie within the Chuditch
PSC. The gross Mean volume associated with this extension as
estimated by Shell is 258 BCF of GIIP.
Further, a significant new lead has been mapped within the
Chuditch PSC which lay in Australian waters prior to the 2018
maritime boundary treaty between Timor-Leste and Australia and was
therefore not mapped by Shell or other previous operators in the
area. This new lead, named Chuditch North East, is on trend with,
and mapped to be in the same reservoir and structural setting, as
the Chuditch-1 discovery and the other prospects identified by
Shell. This area has more limited legacy 2D seismic data coverage.
SundaGas TLS has estimated the Chuditch North East lead to contain
a gross Mean GIIP of 1,544 BCF.
The aggregate of these estimated gross Mean volumes within the
Chuditch PSC is 4,703 BCF GIIP.
Shell's expectation of gas recovery at the time of their reports
was in the range of 55% to 75%. Evaluation studies by SundaGas TLS,
incorporating the more than 20 years of technical advances in
reservoir management, indicate that the best case expectation of
gas recovery is now 75%, which computes to gross Mean recoverable
Prospective Resources of 3,527 BCF.
It is noted that the above estimates are not fully compliant
with the 2018 SPE PRMS Prospective Resources standard.
Summary of Estimated GIIP and Prospective Resources
The tables below summarise the volumetric estimates, as
described above, for the identified discovery, prospects and lead
on the Chuditch PSC, on a gross and net attributable basis. The
figures represent estimates pending reinterpretation, remapping and
volumetric re-estimation, following the planned 3D seismic
reprocessing.
As previously reported the geological chance of success ("GCOS")
for the Chuditch Discovery was considered by Shell to be 100%; the
GCOS for the prospects and lead are subject to ongoing review by
the Operator.
Summary of Gas Initially
in Place
GROSS
All figures are billion
cubic feet of petroleum
gas
Non-compliant with 2018 Status Source Low Estimate Mean High Estimate
SPE PRMS standard
Chuditch-1 Discovery Shell 1260 1830 2410
Chuditch West Prospect Shell 89 129 170
Chuditch South West
(Wombat) Prospect Shell 139 581 985
Chuditch North (Bilby)
in ZOCA 91-09 Prospect Shell 249 361 475
Chuditch North (Bilby)
in Chuditch PSC not Prospect
in ZOCA 91-09 extension Shell 178 258 340
Chuditch North East Lead SundaGas 599 1544 2782
Total Gas Initially
in Place 2513 4703 7162
Summary of Prospective
Resources*
GROSS
All figures are billion
cubic feet of petroleum
gas
Non-compliant with 2018 Status Source Low Estimate Mean High Estimate
SPE PRMS standard
Chuditch-1 Discovery Shell 945 1373 1808
Chuditch West Prospect Shell 67 97 127
Chuditch South West
(Wombat) Prospect Shell 104 436 739
Chuditch North (Bilby)
in ZOCA 91-09 Prospect Shell 186 271 356
Chuditch North (Bilby)
in Chuditch PSC not Prospect
in ZOCA 91-09 extension Shell 133 194 255
Chuditch North East Lead SundaGas 449 1158 2087
Total Prospective Resources 1885 3527 5372
------------------------------------------------------- ------------- ----- --------------
Summary of Gas Initially
in Place - Net Attributable
to Baron (25%)
All figures are billion
cubic feet of petroleum
gas
Non-compliant with Status Source Low Estimate Mean High Estimate
2018 SPE PRMS standard
Chuditch-1 Discovery Shell 315 458 603
Chuditch West Prospect Shell 22 32 42
Chuditch South West
(Wombat) Prospect Shell 35 145 246
Chuditch North (Bilby)
in ZOCA 91-09 Prospect Shell 62 90 119
Chuditch North (Bilby)
in Chuditch PSC not Prospect
in ZOCA 91-09 extension Shell 44 65 85
Chuditch North East Lead SundaGas 150 386 696
Total Gas Initially
in Place 628 1176 1791
Summary of Prospective
Resources* - Net Attributable
to Baron (25%)
All figures are billion
cubic feet of petroleum
gas
Non-compliant with Status Source Low Estimate Mean High Estimate
2018 SPE PRMS standard
Chuditch-1 Discovery Shell 236 343 452
Chuditch West Prospect Shell 17 24 32
Chuditch South West
(Wombat) Prospect Shell 26 109 185
Chuditch North (Bilby)
in ZOCA 91-09 Prospect Shell 47 68 89
Chuditch North (Bilby)
in Chuditch PSC not Prospect
in ZOCA 91-09 extension Shell 33 48 64
Chuditch North East Lead SundaGas 112 290 522
Total Prospective Resources 471 882 1344
--------------------------------- ----------------------- ------------- ------ -------------- ----------
Notes to Tables
* * computed using a 75% recovery factor
Sources:
* "Shell": publicly released reports on the area
prepared by Shell Development (Australia) Pty. Ltd.
("Shell") in 1998 and 2001 following the drilling of
the Chuditch-1 discovery well
* "SundaGas": SundaGas Banda Unipessoal Lda., Operator
of the PSC
Gross:
* 100% of the Gas Initially in Place or Prospective
Resources attributable to the licence
Net attributable:
* the Gas Initially in Place or Prospective Resources
attributable to Baron's indirect 25% interest in the
Chuditch PSC
Qualified Person's Statement
Pursuant to the requirements of the AIM Rules - Note for Mining
and Oil and Gas Companies, the technical information and resource
reporting contained in this announcement has been reviewed by Jon
Ford BSc, Fellow of the Geological Society, Technical Director of
the Company. Mr Ford has more than 39 years' experience as a
petroleum geoscientist. He has compiled, read and approved the
technical disclosure in this regulatory announcement and indicated
where it does not comply with the Society of Petroleum Engineers'
standard.
Jon Ford, Technical Director of Baron, commented:
"The results of the technical evaluation of legacy subsurface
data have both confirmed and enhanced our view of the hydrocarbon
potential in the Chuditch PSC. We look forward to refining the
technical case as new information becomes available. Specifically,
this will include the results of 3D seismic reprocessing aimed at
reducing volumetric uncertainty and increasing confidence in the
subsurface image so we may plan future drilling campaigns and
commercial exploitation. The new evaluation of the large Chuditch
North East lead close to the existing discovery and other prospects
further establishes our positive view of this underexplored
area."
Andy Yeo, Chief Executive of Baron commented:
"After much work behind the scenes, we are delighted that we
have been able to present a considered and workable proposal to
ANPM which, if accepted, will allow the project to progress.
Meanwhile, a considerable amount of technical work has already been
completed which has led to the introduction of a significant new
lead - Chuditch North East - which, along with a material upgrade
to gas recovery expectation, results in an aggregate gross Mean
recoverable prospective resource of greater than 3,500 BCF of gas
(more than 580 MMBOE).
The Chuditch PSC has the potential to be transformative for
Baron and exemplifies our strategy of targeting material interests
in high impact assets which have the ability to attract
institutional interest. "
For further information, please contact:
Baron Oil Plc +44 (0)20 7117 2849
Andy Yeo, Chief Executive
Jon Ford, Technical Director
Allenby Capital Limited +44 (0)203 328 5656
Nominated Adviser and Joint Broker
Alex Brearley, Nick Harriss, Nick Athanas
Turner Pope Investments (TPI) Limited +44 (0)20 3657 0050
Joint Broker
Andy Thacker, Zoe Alexander
Glossary
BCF Billion cubic feet.
Geological chance of success (GCOS) The estimated probability that exploration activities will confirm the existence
of a significant
accumulation of potentially recoverable petroleum.
GIIP Volume of natural gas initially in-place in a reservoir.
Mean Reflects a mid-case volume estimate of resource derived using probabilistic
methodology. This
is the mean of the probability distribution for the resource estimates and may
be skewed by
high resource numbers with relatively low probabilities.
MMBOE Million barrels of oil equivalent. Volume derived by dividing the estimate of the
volume of
natural gas in billion cubic feet by six in order to convert it to an equivalent
in million
barrels of oil and, where relevant, adding this to an estimate of the volume of
oil in millions
of barrels.
Prospective Resources Quantities of petroleum that are estimated to exist originally in naturally
occurring reservoirs,
as of a given date. Crude oil in-place, natural gas in-place, and natural bitumen
in-place
are defined in the same manner.
SPE PRMS The Society of Petroleum Engineers' ("SPE") Petroleum Resources Management System
("PRMS")
is a system developed for consistent and reliable definition, classification, and
estimation
of hydrocarbon resources prepared by the Oil and Gas Reserves Committee of SPE
and approved
by the SPE Board in June 2018 following input from six sponsoring societies: the
World Petroleum
Council, the American Association of Petroleum Geologists, the Society of
Petroleum Evaluation
Engineers, the Society of Exploration Geophysicists, the European Association of
Geoscientists
and Engineers, and the Society of Petrophysicists and Well Log Analysts.
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