Operational Update

RNS Number : 4840Y

Baron Oil PLC

27 January 2014

 

Baron Oil plc

("Baron Oil", "Baron" or the "Company")

Operational Update

Baron Oil plc, an independent oil and gas exploration and production company focused on Latin America, is pleased to announce:

·     Production update at the Nancy-Burdine Field on-shore Colombia.

·     Good progress in our discussions with Ecopetrol on Nancy-Burdine Field contract extension.

·     Environmental Impact Assessment study for offshore block Z-34 in Peru in the final phase.

·     Environmental Impact Assessment study for on-shore block XXI in Peru on track.

Colombia

Nancy-Burdine Field

Nancy Burdine Maxine Producing Fields ("NBM")

Current oil production from the NBM Field is currently on average flowing in excess of 500 bopd for the last 10 days.  The current production comes from two wells: Nancy-1 with an average oil production of 400 bopd and Burdine-5 with a steady flow of 100 bopd after an acid job has been carried out earlier this year aimed at removing wellbore damage. 

Unfortunately the Putumayo region was the scene of a series of terrorist attacks at the end of 2013.  The NBM Field was attacked by the guerrillas, causing both temporary shut down of oil production and damage to our surface equipment in the field.  Security has been increased in the immediate area to minimise the risk of further attacks in future.

Nancy Burdine Maxine Contract Renegotiation

Baron Oil formally submitted a business proposal to Ecopetrol to renew the NBM contract in late 2013.  Presently the NBM business proposal is being analysed by Ecopetrol. So far the response has been positive and the Directors are optimistic about the outcome of the proposed NBM contract extension discussions.

Rosablanca Block

Following the new partnership with PG&I, the exploration work program in Rosablanca has been formally approved. The field operations will start during the first half of this year.  Under the present PG&I agreement Baron Oil is the Operator and has a 5% carried interest in this exploration work.

Peru

Block Z-34

The Environmental Impact Assessment ("EIA") is now in the final phase, the final approval is expected by April / May of this year. 

Other Activities in the area 

The Company notes that Karoon Oil & Gas Company, the license holder of the adjoining block Z-38 immediately to the north of Z-34, is moving ahead with its already publicly announced drilling campaign later this year.  Baron Oil and itspartner are presently discussing how to move forward into the Third Phase of our exploration program commitment by either participating in the upcoming drilling campaign or acquiring additional 3D seismic data.

 Block XXI:

The EIA is in process and advancing in line with management expectations.  The Directors anticipate final approval will be granted later this year.  The Company is already in negotiations with contractors to start an extensive 2D seismic program immediately after we have all necessary permits and EIA approval.  Once the seismic survey is acquired and analysed, it is planned that 2-3 exploration wells will be drilled.  The first $10 million of exploration costs on this block are fully paid by our partner, Vale.

The Company also notes the recent announcement made by Olympic Oil & Gas regarding exploration success in Block XIII located immediately to the west of Block XXI.

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.

For further information:

Baron Oil Plc

Rudolph Berends (CEO) Tel: [phone]

Cantor Fitzgerald Europe (Nomad and Broker):

Stewart Dickson / Tom Sheldon (Corporate Finance) Tel:  [phone]

Richard Redmayne / David Banks (Corporate Broking) Tel: [phone]

 

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