TIDMBOIL
RNS Number : 3480T
Baron Oil PLC
14 November 2019
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.
14 November 2019
Baron Oil Plc
("Baron" or "the Company")
Proposed Reverse Takeover Transaction with SundaGas
&
Suspension of Trading
Baron Oil Plc (AIM:BOIL), the AIM-listed oil and gas exploration
and production company focused on opportunities in the UK, Latin
America and South East Asia, is pleased to announce that it has
entered into a non-binding Heads of Agreement ("HOA") with SundaGas
Pte. Ltd. ("SundaGas"), as a result of which, subject to, among
other matters, the execution of a Sale and Purchase Agreement (the
"SPA"), Baron would acquire the entire issued share capital of
SundaGas (Holdings) Pte. Ltd. (the "Target") (the "Proposed
Transaction").
SundaGas is a Singapore based private E&P company with a
portfolio of operated gas and oil projects in SE Asia, with offices
in Singapore and Jakarta and a new office about to open in Dili,
Timor-Leste.
The Proposed Transaction will be classified as a reverse
takeover pursuant to the AIM Rules and accordingly the Company's
shares will be temporarily suspended from trading on AIM as of
07:30 a.m. today. Completion of the Proposed Transaction is
therefore subject to certain matters including the completion of an
appropriate SPA, approval by Baron's shareholders at a general
meeting to be convened in due course ("General Meeting"), the
raising of an appropriate level of equity (the "Fundraising"), the
grant of a Rule 9 waiver by the UK Takeover Panel ("Rule 9 Waiver")
in respect of the proposed issue of new shares to SundaGas and the
admission of the enlarged group to trading on AIM. In order to
convene the General Meeting, the Company is required to publish an
AIM Admission Document which details, inter alia, the terms of the
Proposed Transaction. It is currently expected that should the
Proposed Transaction proceed, the AIM Admission Document will be
published during Q1 2020.
The principal terms of the Heads of Agreement are summarised
below.
Assets to be acquired:
1. Chuditch Block, offshore Timor-Leste
On 08 November 2019, SundaGas Banda Unipessoal, Lda ("SGB"),
currently a wholly-owned subsidiary of SundaGas, executed the
TL-SO-19-16 Production Sharing Contract covering the Chuditch
offshore block in the Democratic Republic of Timor-Leste (the
"Chuditch PSC"). SGB holds a 75% operated working interest in the
Chuditch PSC, in partnership with TIMOR GAP Chuditch Unipessoal,
Lda, a subsidiary of the national oil company of the Democratic
Republic of Timor-Leste. Under the terms of an agreement entered
into between Baron and SundaGas on 23 September 2016, Baron is
entitled to be issued shares for a 33.33% interest in SundaGas
(Timor-Leste Sahul) Pte. Ltd. ("SGTL"), the holding company of SGB.
Such entitlement has been factored into the terms of the Proposed
Transaction.
The Chuditch PSC is located approximately 185 kilometres south
of Timor-Leste, 100 kilometres east of the producing Bayu-Undan
field and 50 km south of the planned Greater Sunrise development.
The Chuditch PSC covers approximately 3,571 km(2) , in water depths
of 50-100 metres. It contains the Chuditch-1 gas discovery, which
was drilled by Shell in 1998 and encountered a 25m gas column in
the Jurassic Plover formation on the flank of a faulted structure.
SundaGas consider that the Chuditch field contains material volumes
of sales gas, with significant upside within and adjacent to the
discovery itself, and in multiple exploration prospects and leads
that have been identified along trend.
During the initial three-year term of the Chuditch PSC, SGB has
an obligation to reprocess 800 km(2) of 3D seismic to a pre-stack
depth migration ("PSDM") and, if justified by the results of the
PSDM, drill a well during the third year. SGB also has an
obligation to post a bank guarantee of US$ 1 million ("Bank
Guarantee") to guarantee the work obligations to be carried out up
to the decision to drill a well in the third year.
It is proposed that SundaGas will carry all costs incurred on
the Chuditch PSC, including the Bank Guarantee, which will be
repaid from the proceeds of the Fundraising. Should the Proposed
Transaction not complete, Baron will have 90 days from the date of
termination to repay the 33.33% share of such carried costs
attributable to its beneficial interest in SGB held through
SGTL.
2. Telen Block, offshore Indonesia
SundaGas Indonesia Telen B.V. (a wholly-owned subsidiary of
Target) operates with a 100% working interest the Telen Production
Sharing Contract (the "Telen PSC"), offshore Indonesia, containing
the Hiu Marah drill-ready prospect, which has independently audited
best estimate prospective resources of 126 million barrels of oil
and 208 billion cubic feet of gas. The Telen PSC was acquired from
TOTAL in March 2018. SundaGas is currently running a process to
farm out the drilling of the proposed Hiu Marah well which is
currently required to be drilled by 8 October 2020. The exploration
phase of the Telen PSC runs until 8 October 2022.
A performance bond of US $ 4.45 million has been previously
provided by SundaGas in respect of the Telen PSC and it will remain
in place following completion of the Proposed Transaction.
In addition to these assets, Target will come with an
experienced technical team and operating capability and will
continue to pursue new venture activities, concentrating on
securing additional material assets in the SE Asia region.
Proposed Transaction
As consideration for the Proposed Transaction, SundaGas will be
issued pro-rata 2 new ordinary shares in Baron for every 1 ordinary
share currently in issue. The total number of ordinary shares
expected to be held and the percentage of ownership before the
Fundraising, will be SundaGas: 3,852,819,512 (66.67%) and Baron
existing shareholders: 1,926,409,576 (33.33%). In addition to the
Fundraising, it is intended that the Company will carry out an
appropriate share consolidation and that Baron will change its name
to SundaGas Plc.
Completion of the Proposed Transaction would be subject to a
number of conditions including but not limited to the execution of
a detailed legally binding SPA, the completion of satisfactory due
diligence, the grant of a Rule 9 Waiver, the publication of an AIM
Admission Document by Baron, the Fundraising and shareholder
approval at the General Meeting.
In addition, SundaGas will provide an unsecured loan facility to
Baron of up to GBP200,000 to cover certain costs related to the
Proposed Transaction at a nominal interest rate of one (1) per
cent. per annum and repayable within 90 days in the event that
Proposed Transaction does not proceed.
Board Composition
The HOA provides that, on completion of the Proposed
Transaction, Dr Andy Butler and Paul Ebdale, each an existing
director and a 50% shareholder of SundaGas, will join the board of
Baron.
Although this is not a Related Party Transaction under the AIM
Rules, it is noted that a director and an ultimate beneficial owner
of SundaGas (Dr Andy Butler) is the nephew of Dr Malcolm Butler,
Baron's Executive Chairman.
Temporary Suspension of Trading
By virtue of its size, and as mentioned above, the Proposed
Transaction constitutes a reverse takeover in accordance with Rule
14 of the AIM Rules for Companies. Accordingly, at the request of
the Company, the Company's ordinary shares will be suspended from
trading on AIM with effect from 07:30 a.m. today and will remain so
until either the publication of an AIM Admission Document setting
out, inter alia, details of the Proposed Transaction or until
confirmation is given that the Proposed Transaction has been
terminated.
As part of the AIM Admission Document, a competent persons
report will be prepared in respect of assets of Target.
Dr Malcolm Butler, Executive Chairman of Baron, commented...
"The SundaGas team brings impressive management and technical
expertise in South East Asia and it makes sense for us to combine
forces with them. The Chuditch PSC has the potential to contain a
substantial gas accumulation and is an asset of significant value.
This Proposed Transaction will be transformational for our
shareholders and we look forward to reporting back on progress in
due course."
Competent 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 Dr
Malcolm Butler BSc, PhD, FGS, Executive Chairman of the Company. Dr
Butler has more than 45 years' experience as a petroleum geologist.
He has compiled, read and approved the technical disclosure in this
regulatory announcement, which complies with the Society of
Petroleum Engineers' standard.
For further information, please contact:
Baron Oil Plc +44 (0)20 7117 2849
Dr Malcolm Butler, Executive Chairman
Andy Yeo, Managing Director
SundaGas Pte. Ltd.
Dr Andy Butler, Chief Executive Officer
SP Angel Corporate Finance LLP +44 (0)20 3470 0470
Nominated Adviser and Joint Broker
Stuart Gledhill, Stephen Wong
Turner Pope Investments (TPI) Limited +44 (0)20 3621 4120
Joint Broker
Andy Thacker
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END
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