Update on Operations

RNS Number : 6617A

Baron Oil PLC

28 March 2017

 

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY BARON OIL PLC TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU) NO. 596/2014 ("MAR"). ON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE ("RIS"), THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

Baron Oil PLC

Update on Operations

Baron Oil PLC (AIM:BOIL) ("Baron" or "Company") announces the following updates to its operations.

Peru Block Z-34

Baron recently announced that Union Oil and Gas Group ("UOGG") had failed to pay the US$2 million due to its Peruvian subsidiary, Gold Oil Peru SAC ("GOP") within 5 business days of execution of the assignment of a 30% interest in Block Z-34 under the terms of the 2013 Farm-in Agreement (the "FIA")  This is still outstanding and, after consultation with its legal advisers, Baron has today served a formal notice to UOGG of a material breach of the FIA and threatened to take legal action if the amount is not paid promptly.  In addition, the material breach of the FIA has caused GOP to give 30 days' notice of termination of the agreement under which UOGG assumed day-to-day operatorship of the technical work on Block Z-34 on a contract basis.  In reality, GOP has had to remain very involved in the technical processes and if the outstanding amount is not paid, GOP will resume full control of activities and attempt to drive forward preparations for a drilling programme.

Peru Block XXI

Preparations are being made to drill a well on Block XXI in 2017, subject to success in bringing in a funding partner.  Discussions are underway with an interested party but there is no guarantee they will be successful. However, the recent devastating floods in Peru have made it impossible for us to carry out surveys on the site and we have requested Perupetro to grant a temporary period of Force Majeure to give the Company more time to make the necessary environmental, archaeological and other studies.

Southeast Asia

We are pleased to report that the joint studies with SundaGas have enabled Baron to participate in the review of a range of prospective projects with a mix of existing production, undeveloped discoveries and low-risk exploration.  Three of these have been selected to move forward to the negotiation phase, one of which has had a confidential application formally submitted. The directors are hopeful that the application will be successful and that an announcement can be made in the second quarter of this year. In the meantime, we are continuing our relationship with SundaGas by paying our pro rata share of expenditures on these selected projects.

UK - InfraStrata PLC loan

The Company has been informed that the ₤200,000 drawn down against the Loan Facility with InfraStrata PLC will be repaid on 31 March 2017.  Note that although the Loan Facility terminates on that day, under the terms of the Loan Facility Agreement, Baron will receive a £200,000 payment if the Islandmagee gas storage project is sold prior to the end of 2018 (£100,000 for a partial sale).  

Bill Colvin, Chairman of Baron, commented: "We appreciate this is a frustrating time for shareholders, given the continuing delays brought about by governmental bureaucracy and by our recalcitrant partner in Peru. We are excited by the opportunities we have seen in Southeast Asia and hope that we will be able to announce further progress soon."

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

Baron Oil plc: Malcom Butler (CEO)	Tel:  [phone]
Cantor Fitzgerald (Nominated Advisor and Joint Broker) Sarah Wharry (Corporate Finance)                                     Alex Pollen (Corporate Broking)	Tel: [phone]
SP Angel (Joint Broker)  Richard Hail / Richard Redmayne	Tel: [phone]

The person making this notification on behalf of Baron Oil plc is Geoff Barnes, the Chief Financial Officer and Director of the Company.

 

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