Increase in interest in Licence P2478

RNS Number : 0218J

Baron Oil PLC

18 August 2021

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF REGULATION 11 OF THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019/310

18 August 2021

Baron Oil Plc

("Baron" or the "Company")

Increase in interest in Licence P2478

Baron Oil Plc (AIM:BOIL), the AIM-quoted oil and gas exploration company, is pleased to announce an increase in its interest in United Kingdom Offshore Licence P2478 from 15% to 32%, conditional on approval from the UK Oil and Gas Authority ("OGA").

Key Points

· More than doubling of Baron's interest, to 32%, in the prospective Dunrobin area

· Dunrobin evaluated as one of the few remaining sizeable undrilled UK North Sea targets

· Accelerated seismic reprocessing is now due for delivery in early 2022 ahead of engagement with potential drilling partners

· Builds on earlier work sharing agreement which enhanced petroleum geology understanding

Background

Innovate Licence P2478 (the "Licence") was awarded in September 2019 to Corallian Energy Limited ("Corallian"; Operator, 45%); Upland Resources (UK Onshore) Limited ("Upland"; 40%); and Baron (15%). The Licence's current phase modest work commitment is to undertake reprocessing of legacy 2D and 3D seismic data and perform other studies in order to reduce risk and refine volumetric estimates ahead of making a "drill or drop" decision before the end of Phase A of the licence in July 2023.

Covering blocks 12/27c, 17/5, 18/1 and 18/2 in the Inner Moray Firth area of the North Sea, the Licence contains the prospective Dunrobin area which consists of large shallow rotated fault blocks which are mapped mostly on 3D seismic data including candidate direct hydrocarbon indicators. Well costs are expected to be modest at c. £7 million gross as the prospect lies in shallow water of less than 100 metres and the total drilling depth of the well is prognosed to be approximately 660 metres.

Dunrobin is evaluated by Baron to be one of the few remaining targets yet to be drilled in the UK North Sea with estimated gross mean prospective resources of the order of 100 MMbbl (a non-SPE PRMS compliant estimate).

In Q1 2021, the joint venture partners received the results of technical studies from a large European E&P company under a work sharing agreement, which enhanced the partners' understanding of the petroleum geology and corroborated their view of Dunrobin as a potentially attractive and substantial target.

Farm In Agreement

In order to build on work already undertaken on the Licence and to accelerate progress, existing partners Corallian and Upland have signed an agreement whereby Baron will increase its interest in the Licence from 15% to 32% in exchange for paying 100% of the costs of the remaining Phase A work commitments up to a cap of £160,000 (the "Agreement"). Under the terms of the Agreement all other costs, including, inter alia, licence and OGA fees and the Operator's administrative expenses, will be borne by all of the partners proportionate to their revised interests. Corallian will remain the Licence's Operator with Baron assuming the role of technical overseer of the remaining Phase A work commitments. No consideration is payable to Corallian or Upland under the Agreement.

Commencement of the outstanding Phase A technical work commitments is due shortly with the key component, that of 3D seismic reprocessing, expected to be delivered early in 2022. The Board believes that this will provide the partners sufficient time to mature the Dunrobin Prospect and to engage with potential drilling partners in due course.   

On completion of the Agreement, the revised interests held in the Licence will be as follows:

· Corallian 36%;

· Upland 32%; and

· Baron 32%.

The Agreement is subject to the consent of the OGA.

Jon Ford, Technical Director of Baron commented…

"This Agreement, in keeping with our corporate strategy, more than doubles Baron's interest in the prospective Dunrobin area at a modest cost, whilst at the same time accelerating the subsurface evaluation towards a decision regarding the potential drilling of an exploration well evaluated to have a sizeable resource target. The 3D seismic reprocessing is aimed at reducing the range of volumetric uncertainty and subsurface risk, as well as providing drilling location candidates, during 2022."

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.

For further information, please contact:

Baron Oil Plc		[phone]
Andy Yeo, Chief Executive
Allenby Capital Limited		[phone]
Nominated Adviser and Joint Broker
Alex Brearley, Nick Harriss, Nick Athanas (Corporate Finance) Kelly Gardiner (Sales and Corporate Broking)
Turner Pope Investments (TPI) Limited		[phone]
Joint Broker
Andy Thacker
IFC Advisory Limited		[phone]
Financial PR and IR
Tim Metcalfe, Florence Chandler

Glossary
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.
MMbbl	Million barrels of oil.
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"): 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.

 

END

 

 

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