Farm-out Agreement with Vale

RNS Number : 2424R

Baron Oil PLC

10 September 2014

 

September 10^th, 2014

Baron Oil plc
("Baron Oil", "Baron" or the "Company")
Peru, Block XXI

Baron Oil plc, the independent oil and gas exploration and production company focused on Latin America, is pleased to make the following announcement.

Peru - Block XXI

Farm-out Agreement with Vale.

Baron Oil is pleased to announce that a Farm-out Agreement (FOA) has been signed with Vale Oil and Gas, Peru.

In 2012 Vale the large Brazilian mining company began a divestment program of its oil and gas interests worldwide. The Vale interest in Block XXI located onshore northwest Peru was one of the last remaining upstream oil and gas licenses that they retained. However Vale has now signed an agreement to transfer back to Baron Oil (Gold Oil Peru SAC) their entire 70% working interest in Block XXI plus pay Baron Oil US$3.5 million.

Baron Oil is now the owner of a 100% working interest in Block XXI.

A large gravimetric survey (totaling 8,000 kilometers) was acquired for the company by the Geotechnical Company Fugro in December 2012. The results of this survey show a very prospective deep sedimentary basin in the central and southern part of this large block. No seismic coverage currently exists in this part of the basin.  It is interesting to note that a shallow well (Minchales-1) drilled in 1954, in the most southern part of the block, encountered several gas shows. The well was not completed as natural gas had no commercial value at that time. The southern part of Block XXI is adjacent to the Olympic operated Block XIII where several commercial hydrocarbon wells were recently drilled. Block XXI is also located near several large industrial plants creating a very attractive local gas market requiring little infrastructure investment.

Baron Oil remains focused on the rapid completion of the EIA (Environmental Impact Assessment) in the Block XXI geographical area. Once EIA approval is received Baron plans to shoot 400-500 kilometers of 2D seismic data and once interpreted thoroughly, drill 2-3 relatively shallow exploratory wells.

The Company is now fully funded to carry out these activities in Peru.

 For further information on the Company, visit www.baronoilplc.com or contact:

Baron Oil Plc:                                                                                    Tel: [phone]

Rudolph Berends (CEO)                                                                

Cantor Fitzgerald (Nominated Advisor and Broker):               Tel.: [phone]

Sarah Wharry  (Corporate Finance)

Richard Redmayne (Corporate Broking)

Forward Looking Statements

Statements relating to the estimated or expected future production, operating results, cash flows and costs and financial condition of Baron Oil, planned work at the Company's projects and the expected results of such work are forward-looking statements. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by words such as the following: expects, plans, anticipates, forecasts, believes, intends, estimates, projects, assumes, potential and similar expressions. Forward-looking statements also include reference to events or conditions that will, would, may, could or should occur. Information concerning exploration results and reserve and resource estimates may also be deemed to be forward-looking statements, as it constitutes a prediction of what might be found to be present when and if a project is actually developed.

These forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable at the time they are made, are inherently subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward-looking statements, including, without limitation: uncertainties related to raising sufficient financing to fund the planned work in a timely manner and on acceptable terms; changes in planned work resulting from logistical, technical or other factors; the possibility that results of work will not fulfil projections/expectations and realize the perceived potential of the Company's projects; uncertainties involved in the interpretation of drilling results and other tests and the estimation of reserves and resources; risk of accidents, equipment breakdowns and labour disputes or other unanticipated difficulties or interruptions; the possibility of environmental issues at the Company's projects; the possibility of cost overruns or unanticipated expenses in work programs; the need to obtain permits and comply with environmental laws and regulations and other government requirements; fluctuations in the price of oil and gas and other risks and uncertainties.

 

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