Baron Oil Plc (LON:BOIL), the AIM-quoted oil and gas exploration company with projects in SE Asia and the UK, has announced that at the Annual General Meeting of the Company to be held later today, the Company’s Non- Executive Chairman, John Wakefield, will make the following statement:
SE Asia: Timor-Leste, offshore TL-SO-19-16 PSC (“Chuditch“) – Baron 75%; Timor Gap 25%
The significant progress made since the beginning of the year in relation to Chuditch has largely been in the technical sphere. The main element of the work programme has been the reprocessing of the 3D seismic covering the Chuditch discovery and adjacent analogous prospects and lead. The work by the seismic processing contractor, TGS-NOPEC Geophysical Company ASA (“TGS“), carried out under our close supervision, is to a high standard and uses the most modern and demanding techniques. TGS has recently been delivering the new, high-fidelity image of the reservoir structure to our geoscience team and the interpretation of the data has begun.
In addition, we have now received a report from Elite Offshore Timor Lda on ‘Chuditch Field Facilities Definition Concepts‘, which was commissioned to identify, assess, and compare field development concepts. The study evaluated the layout and costs of the necessary infield facilities, the various pipeline and standalone options for gas export, and the treatment and storage of carbon dioxide.
We continue to engage with multiple potential farm-in partners by hosting a continuously updated dataroom, not only with ‘traditional’ exploration and production industry players, but also with companies seeking security of gas supply and infrastructure providers. As previously announced, we have begun a programme of showcasing the Chuditch asset at the most relevant international industry forums to promote and publicise its value.
Alongside this, the office in Dili (Timor-Leste), is now fully staffed and operational, thereby reinforcing our already strong and constructive relationships with in-country authorities, partners and industry peers.
Based on the success of our first live investor presentation in late January 2022, which was attended by more than 100 participants, we anticipate holding a second similar Chuditch focused event at an appropriate juncture later in 2022.
United Kingdom Offshore Licence P2478 – Corallian 36%; Upland Resources 32%; Baron 32%
We continue to be directly involved in the technical work which will complete the outstanding Phase A work commitments on this licence situated in the Inner Moray Firth part of the North Sea. The primary aim is to mature our subsurface understanding of the potentially large Dunrobin prospect. The key components, that of 3D and 2D seismic reprocessing plus geochemical studies, are being delivered with interpretation on schedule to begin in July 2022. We believe we have achieved a significant uplift in data quality. An updated evaluation of Dunrobin is anticipated to be available during Q4 2022, which will provide sufficient time for us to consider our strategy with our partners, potentially including engaging with prospective drilling and funding partners, ahead of the July 2023 ‘drill or drop’ decision.
We are encouraged by the UK Government’s recent updated policy paper (British Energy Security Strategy, 7 April 2022) which has the potential to revive the business and regulatory hydrocarbon exploration environment in the UK North Sea. In addition, an initial understanding of the UK Government’s proposed “windfall” tax (the Energy Profits Levy) is that it may lead to producing oil and gas companies re-engaging in exploration drilling. Both aspects could have a positive impact on the chances of the Dunrobin prospect, with its relatively large size and ease of drilling, being tested.
Conclusions
The oil and gas industry tailwinds remain highly favourable and seem likely to be sustained across the medium term. Chuditch, where we have a 75% interest in a significant discovery, is potentially a low risk, low cost, shallow water development of significant volumes of gas. Currently, we are targeting a decision in Q4 2022 on whether to enter an appraisal and step-out drilling phase in 2023.
In parallel with Chuditch, the outlook for the Dunrobin prospect in UK Licence P2478 has been transformed by rising oil prices and the publication of the UK government’s revised energy security strategy. An updated evaluation of Dunrobin is anticipated to be available during Q4 2022. Combined, we see considerable potential to generate significant shareholder value from these key assets which Baron Oil is focussed on delivering.
