Baron Oil Plc (LON:BOIL), the AIM-quoted oil and gas exploration and appraisal company, has announced that a copy of a Competent Person’s Report prepared by ERC Equipoise Pte Ltd on the offshore Timor-Leste PSC TL-SO-19-16, can be viewed here: http://www.rns-pdf.londonstockexchange.com/rns/2161R_1-2023-2-27.pdf and will be published in due course on the Company’s website at: www.baronoilplc.com. Baron has a 75% operated effective interest in the Chuditch PSC, which is operated by its wholly owned subsidiary SundaGas Banda Unipessoal Lda and contains the Chuditch-1 gas discovery and offset analogous prospects.
The CPR has been prepared in accordance with the June 2018 Petroleum Resources Management System as the standard for reporting. A summary of the gross and net Prospective and Contingent Resources, prepared on a probabilistic basis, is given in the tables below.
Key Points from the CPR
· Contingent Resources assigned to Chuditch-1 discovery*
· ERCE estimates that Chuditch-1 discovery contains 1,084 Bscf gross Pmean Contingent gas Resources attributable to the licence
· Aggregated** gross Pmean Prospective gas Resources attributable to the licence of 1,562 Bscf:
o Chuditch SW prospect estimated to contain 675 Bscf gross Pmean Prospective gas Resources when aggregated** across two segments, Alpha and Beta, with respective Geological Chances of Success of 52% and 45%;
o Chuditch NE prospect estimated to contain 744 Bscf gross Pmean Prospective gas Resources with a GCOS of 30%; and
o Quokka prospect estimated to contain 143 Bscf gross Pmean Prospective gas Resources with a GCOS of 26%.
· Oil equivalent** Pmean Resources net to the Baron working interest, including the condensate yield, calculated by the Company to be:
o 140 MMboe Contingent for Chuditch-1; and
o 202 MMboe Prospective, when aggregated**
*A chance of development has not been estimated for the Chudich-1 discovery.
**The CPR reports gas and condensate Contingent and Prospective Resources separately per discovery and prospects. Aggregation and oil equivalent calculations performed by Company. See Glossary below for basis of calculation.
Management Commentary
The assignment of Contingent Resources to the Chuditch-1 discovery, built on the extensive technical studies completed by the Company, sets the foundation for the next stage of the project cycle. This phase would typically include an appraisal well, pre-feasibility studies, Environmental Impact Assessment planning, and preliminary work on gas sales arrangements. Management believes that the Chuditch-1 Pmean Contingent Resources, now independently assessed, are likely to be sufficiently large to be economically viable to be developed standalone or in parallel with other developments in the region.
Management’s probabilistic estimates of gross gas Prospective Resources for the Chuditch SW, NE, and Quokka prospects, as set out below, differ from ERCE’s estimates, mainly through the Company’s preferred use of the latest reprocessed seismic data velocity model to define the extent of the prospects. Further technical discussion regarding these differences can be found in Appendix 1 of the CPR.
Management notes that in its previous announcements the Company referred to both Chuditch NE and Quokka informally as “Leads”, due to parts falling outside of 3D seismic coverage, whereas ERCE describe them as “Prospects”, terminology which the Company has now adopted. This increase in maturity towards being drillable features is accompanied by a more conservative view on the probabilistic Prospective Resources estimation being taken by ERCE. Further, in the Company’s announcement of 24 October 2022, the basis for in house estimation was as “Deterministic Best Case”, whereas estimates presented in this announcement are “Probabilistic” which introduces ranges of uncertainty on all contributing subsurface and recovery factors, including the degree to which 3D seismic coverage is not currently available on Chuditch NE and Quokka. Deterministic Best Case and Probabilistic estimates are not therefore directly comparable.
· Baron’s own Pmean estimates of gross unrisked Prospective Resources aggregate to 2,128 Bscf***:
o Chuditch SW 855 Bscf***, with a low to high estimate range from 420 to 1,284 Bscf*** and a GCOS of 40%;
§ Baron considers that SW represents a relatively low risk follow on to a Chuditch-1 appraisal well;
o Chuditch NE 863 Bscf***, with a low to high estimate range from 311 to 1,401 Bscf*** and a GCOS of 34%; and;
o Quokka 410 Bscf***, with a low to high estimate range from 110 to 733 Bscf*** and a GCOS of 26%.
Aggregate oil equivalent Pmean Prospective Resources net to the Baron working interest, including the condensate yield, are estimated by the Company to be 366 MMboe**, representing a significant follow-on portfolio to be explored. Management estimates of the Geological Chance of Success for the prospects are in reasonable agreement with ERCE’s estimates, indicating the relatively low risk nature of the Prospective Resources assessment.
*** Not SPE PRMS compliant. However, management believes that its in-house estimates of Prospective Resources, although not independently verified to SPE PRMS, are based on best industry practice by employing the latest reprocessed seismic data velocity model.
TIMOR GAP announcement on development of the Greater Sunrise fields
Management notes that offshore Timor-Leste the Sunrise Joint Venture (TIMOR GAP 56.56%; Operator, Woodside Energy 33.44%; Osaka Gas Australia 10.0%) announced on 6 February 2023 that it will undertake a concept select program for the development of the Greater Sunrise fields, including the location of gas delivery, processing and onward LNG sales, which management believes has potential positive impacts on the export options for the development of the Chuditch-1 gas discovery (See Section 3.5 of the CPR – Development Plans – for more detail).
TIMOR GAP’s press release can be found here: https://www.timorgap.com/newsroom/press-releases/sunrise-joint-venture-to-undertake-concept-select-with-a-strong-focus-on-delivery-of-gas-to-timor-leste/.
Jon Ford, Technical Director of Baron, commented:
“The independent assessment of approximately 1.1Tscf of gross Pmean Contingent Resources for the Chuditch-1 discovery is a major milestone, underpinning the potential commercial viability of the asset and highlighting its attractions to potential future participants in the Chuditch project.
“Following the recent fund-raise we have a well-funded balance sheet for current operations, with current work commitments on both the Timor-Leste and UK P2478 assets largely complete. Our focus now is on assessing the viability of drilling for both a Chuditch appraisal well in Timor-Leste and a Dunrobin West exploration well in the UK.”
Contingent and Prospective Resources
The tables below summarise ERCE’s independent assessment of Gross Contingent and Prospective Resources as at the CPR’s effective date of 31 January 2023, from which are derived the Net Contingent and Prospective Resources attributable to Baron’s 75% net working interest, wholly within the Chuditch PSC licence area. Totals are by arithmetic summation by the Company.
Contingent Resources
ERCE attributes the Contingent Resources associated with the Chuditch-1 discovery to the sub-class Development Unclarified. The Chuditch discovery Development Unclarified Contingent Resources are contingent on the drilling and testing of an appraisal well, the Operator finalising a commercially viable development plan and the Operator being able to fund and execute this development plan, including obtaining partner and regulatory consents to the appropriate facilities.
