TIDMBOIL
RNS Number : 6796Y
Baron Oil PLC
11 September 2020
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
11 September 2020
Baron Oil Plc
("Baron" or "the Company")
Interim Results for the six months ended 30 June 2020
Baron Oil Plc (AIM:BOIL), the AIM-quoted oil and gas exploration
company focused on opportunities in SE Asia, Latin America and the
UK, announces its unaudited interim financial information and
results for the six months ended 30 June 2020.
Operations
Timor-Leste
-- Work on the Chuditch PSC has been progressed as far as
possible in the absence of the original raw seismic data. SundaGas
has written to ANPM requesting a satisfactory response and remedy
of the situation.
Peru
-- As soon as free movement in Peru is restored the Company
intends to push on with the drilling of the El-Barco-3X well.
Assuming that COVID restrictions are lifted by the end of the
calendar year, between May and August 2021 is a realistic
target.
UK
-- Inner Moray Firth - On licence P2478 (the Dunrobin Prospect),
the original seismic field data has been located, copied and is
being validated. We look forward to receiving the results of the
studies being carried out by the large European exploration and
production company in due course.
-- Dorset - The Joint Venture has agreed to relinquish Licence
P1918 (the Colter Prospect); work on PEDL330 & PEDL 345
continues.
Financial
-- GBP2,500,000 (gross) Placing and Subscription at 0.1p per
share was announced on 14 February 2020.
-- Available cash balance (excluding monies held as security for
bank guarantees in Peru and Timor-Leste) at 30 June 2020 of
GBP1,798,000 (30 June 2019: GBP605,000; 31 December 2019:
GBP347,000).
-- Net loss after finance costs and tax of GBP703,000 (June
2019: net loss of GBP307,000; 2019 year: net loss of GBP1,674,000),
representing a loss of 0.02p per share (June 2019: 0.02p; year to
31 December 2019: 0.01p).
-- On 22 April 2020, the Company acquired a 33.33% interest in
SundaGas (Timor-Leste Sahul) Pte. Ltd at a cost of US$188,000,
which is fully impaired under associated company accounting rules.
Baron also paid a further US$333,000 in respect of a guarantee bond
deposit which is included in receivables.
-- The increase in administration expenses is largely accounted
for by higher professional fees related to fund raising activities
which includes legal, registrar and corporate advisory costs. In
addition, there is a non-cash charge of GBP63,000 in respect of
share-based payments arising on the issue of Placing warrants and
options.
Malcolm Butler, Executive Chairman commented...
"There are encouraging signs that industry activity is beginning
to move again, although oil and gas prices remain depressed. We are
pleased that the seismic data on the Dunrobin area has finally been
located, enabling reprocessing work to take place. Once the COVID
issues have been resolved, we believe the drilling of El Barco-3X
should be able to move forward. The situation in Timor-Leste is
very frustrating but we will keep shareholders informed of
progress."
For further information, please contact:
Baron Oil Plc +44 (0)20 7117 2849
Dr Malcolm Butler, Executive Chairman
Andy Yeo, Managing Director
Allenby Capital Limited +44 (0)203 328 5656
Nominated Adviser and Joint Broker
Alex Brearley, Nick Harriss, Nick Athanas
Turner Pope Investments (TPI) Limited +44 (0)20 3657 0050
Joint Broker
Andy Thacker, Zoe Alexander
TL-SO-19-16 Production Sharing Contract ("Chuditch PSC"),
offshore Timor-Leste - Indirect 25% interest
As outlined in Baron's AGM statement in June, since signing the
Chuditch PSC in November 2019, SundaGas has progressed the project
as far as possible in the absence of the original raw seismic
acquisition data to which it is entitled under the terms of the
Chuditch PSC. SundaGas has still not received these data.
The Board believes that the failure of Timor-Leste's public
institution responsible for managing and regulating petroleum and
mining activities, Autoridade Nacional do Petróleo e Minerais
("ANPM"), to provide these data is the result of a conflicting
seismic licensing and revenue sharing agreement, including the
Kyranis 3D volume recorded in 2012 over the Chuditch area,
understood to have been signed between ANPM and TGS, a provider of
multi-client seismic data, an agreement of which SundaGas had no
knowledge at the time of the signing of the Chuditch PSC.
Baron supports SundaGas in its efforts to work constructively
with ANPM and others to make progress with the Chuditch PSC.
However, in order to fulfil the agreed specific technical aims of
the data reprocessing and its national training commitment, which
were previously agreed to by all parties, it is crucial for
SundaGas to access the original raw seismic data and be able to
closely direct the reprocessing work. Various seismic products
within Timor-Leste offshore now being marketed by TGS to third
parties will neither satisfy the Chuditch PSC obligations nor
provide the detailed local analyses required.
It should be noted that ANPM has also failed to take steps to
provide other necessary data required to fulfil the Chuditch PSC
obligations, such as raw 2D seismic data, that do not fall within
their agreement with TGS. This means that SundaGas has been unable
to make further progress in relation to the Chuditch PSC's 2020
work programme. SundaGas considers that these issues indicate that
ANPM is in breach of contract of the Chuditch PSC and is failing to
fulfil its obligations under Timor-Leste Petroleum Law.
Accordingly, SundaGas has also informed its partner in the Chuditch
PSC, TIMOR GAP, that it is unable to submit a 2021 work programme
and budget at this time.
During the first two years of the initial three-year term of the
Chuditch PSC, there is an obligation to reprocess 800 sq.
kilometres of 3D seismic and 2,000 line kilometres of 2D seismic
data and, if justified by the results of the reprocessing, drill a
well during the third year. The Board believes that, with ten
months having already elapsed since signing the Chuditch PSC, it
will be difficult, once the data access issues referred to above
have been satisfactorily resolved, to complete the required work
programme on the Chuditch PSC in sufficient time for a drilling
decision to be made.
Since June 2020, SundaGas has received no response or feedback
from ANPM on these specific matters. In seeking to expedite a
resolution to the situation, SundaGas has written to ANPM
requesting a satisfactory response and remedy of the data access
issues, the absence of which would mean that the project could not
move forward.
Peru - Block XXI, Onshore Licence - 100% interest
We continue to pursue efforts to drill the proposed 1,850 metre
El Barco-3X well to test for low-risk gas in the Mancora Sands and
higher-risk oil and gas in fractured basement, but progress has
been severely hampered by the ongoing COVID-19 issues. The Piura
region is one of the most infected areas in Peru and current
restrictions suggest that it will not open up for meetings until
early 2021. The local settlements of El Barco and Belisario remain
COVID free, since they have closed access to both villages. The
Company is required to hold three workshops to present its drilling
and environmental plans in Piura and in the villages and has to
complete negotiations to gain access to the site with the local
community President. None of this can take place until free
movement is allowed. Taking into account these issues, our current
indicative target for drilling El Barco-3X is between May and
August 2021.
Block XXI will remain in Force Majeure until the Company is able
to conclude the workshops and reach agreement regarding access to
the site with the local community. Baron will have approximately
six months left in which to drill when Force Majeure is lifted. The
pre-COVID estimate for site preparation and drilling of El Barco-3X
was US$1.2 million and updated estimates have been requested from
four drilling companies. The Company's aim continues to be to bring
in a new drilling and equity partner, but the previous negotiations
with an interested company based in Piura have been interrupted by
the COVID situation and have not yet been able to be resumed.
Meanwhile, the continuing focus is on ensuring that the licence
remains in good order and working with Perupetro to confirm the
three-year extension option for Block XXI, contingent on the
drilling of El-Barco-3X.
UK - Inner Moray Firth, Offshore Licence P2478 - Baron 15%
interest
Further to the update made in our 2020 AGM statement, Corallian
Energy Limited, the Operator of Licence P2478 which contains the
large Dunrobin and smaller Golspie prospects, has informed the
Joint Venture that the original seismic field data necessary to
perform specialised reprocessing has recently been located and
copied and is now being validated. Once this has been checked and
loaded, reprocessing work will be able to take place. The initial
Exclusivity period of the Work Sharing and Confidentiality
Agreement, which was signed with a large European exploration and
production company in April 2020, currently expires at the end of
September 2020 and we look forward to receiving the results of the
studies undertaken in due course.
UK - Dorset, Offshore Licence P1918; Onshore Licences PEDL330
& PEDL345 - Baron 8% interest
Licence P1918: The Joint Venture has agreed that in the present
oil price environment any development of the Colter South discovery
is sub-commercial and it has therefore been decided to give notice
to the UK Oil & Gas Authority to relinquish the licence at the
expiry date of the second term on 31 January 2021.
PEDL330 & PEDL345: The prospectivity of these onshore
Licences, to the south of Wytch Farm oilfield, remains under
evaluation in order to inform a decision on whether to request an
extension of the licences beyond the current term expiry date of 20
July 2021.
Baron Oil plc
Consolidated Income Statement
for the six months ended 30 June 2020
6 months 6 months
to to Year to
30 June 30 June 31 December
2020 2019 2019
Note Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Revenue - - -
Cost of sales - - -
Gross loss - - -
Exploration and
evaluation
expenditure (67) (53) (160)
Intangible asset
impairment (120) (6) (1,047)
Receivables impairment (14) (8) 16
Administration expenses 5 (367) (227) (442)
Profit/(loss) arising on
foreign exchange 37 (13) (41)
Operating loss (531) (307) (1,674)
------------------------- ----- ---------------------- ---------------------- ------------------------
Income from interest in
associated
undertaking (15) - -
Impairment of investment
in associated
undertaking (159) - -
Loss before interest and
taxation (705) (307) (1,674)
------------------------- ----- ---------------------- ---------------------- ------------------------
Finance cost - (1) (1)
Finance income 2 1 1
Loss on ordinary
activities
before taxation 6 (703) (307) (1,674)
Income tax
(expense)/benefit 7 - - -
Loss on ordinary
activities
after taxation (703) (307) (1,674)
------------------------- ----- ---------------------- ---------------------- ------------------------
Loss on ordinary
activities
after taxation is
attributable
to:
Equity shareholders (703) (307) (1,674)
Non-controlling
interests - - -
Loss on ordinary
activities
after taxation (703) (307) (1,674)
------------------------- ----- ---------------------- ---------------------- ------------------------
Earnings/(loss) per
share:
basic 8 (0.02)p (0.02)p (0.01)p
------------------------- ----- ---------------------- ---------------------- ------------------------
Diluted 8 (0.02)p (0.02)p (0.01)p
------------------------- ----- ---------------------- ---------------------- ------------------------
Baron Oil plc
Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2020
6 months 6 months
to to Year to
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Loss on ordinary activities
after
taxation attributable to the
parent (703) (307) (1,674)
Other comprehensive income
Currency translation
differences 88 6 (69)
Total comprehensive income for
the period (615) (301) (1,743)
-------------------------------- ---------------------- ---------------------- --------------------------
Total comprehensive income
attributable
to :
Owners of the company (615) (301) (1,743)
-------------------------------- ---------------------- ---------------------- --------------------------
Baron Oil plc
Consolidated Statement of Financial Position
at 30 June 2020
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment - - -
Intangibles 14 1,101 5
Goodwill - - -
Investment in associated
company - - -
14 1,101 5
----------------------------------- ----- ---------------------- ---------------------- ----------------------
Current assets
Receivables 311 139 49
Cash and cash equivalents 1,798 605 347
Cash held as security for
bank guarantees 134 130 125
2,243 874 521
----------------------------------- ----- ---------------------- ---------------------- ----------------------
Total assets 2,257 1,975 526
----------------------------------- ----- ---------------------- ---------------------- ----------------------
Equity and liabilities
Capital and reserves attributable
to owners of the parent
Called up share capital 9 1,107 482 482
Share premium account 32,189 30,507 30,507
Share option reserve 137 74 74
Foreign exchange translation
reserve 1,731 1,718 1,643
Retained earnings (32,954) (30,884) (32,251)
Total equity 2,210 1,897 455
----------------------------------- ----- ---------------------- ---------------------- ----------------------
Current liabilities
Trade and other payables 36 73 64
Taxes payable 11 5 7
47 78 71
----------------------------------- ----- ---------------------- ---------------------- ----------------------
Total equity and liabilities 2,257 1,975 526
----------------------------------- ----- ---------------------- ---------------------- ----------------------
Baron Oil plc
Consolidated Statement of Cash Flows
for the six months ended 30 June 2020
6 months 6 months
to to Year to
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
Operating activities 10 (675) (478) (724)
Investing activities
Return from investment and
servicing of finance 2 1 1
Acquisition of intangible
assets (183) (1,035) (1,047)
(181) (1,034) (1,046)
------------------- -------------------------- --------------------------
Financing activities
Proceeds from issue of share
capital 2,307 408 408
Net cash (outflow)/inflow 1,451 (1,104) (1,362)
Cash and cash equivalents
at the beginning of the
period 347 1,709 1,709
Cash and cash equivalents
at the end of the period 1,798 605 347
=================== ========================== ==========================
As at 30 June 2020, bank deposits include amounts totalling US$160,000
(30 June and 31 December 2019: US$160,000) that are being held
in respect of guarantees and are not available for use until the
Group fulfils certain licence commitments in Peru. This is not
considered to be available cash and has therefore been excluded
from the cash flow statement.
Baron Oil plc
Consolidated Statement of Changes in Equity
for the six months ended 30 June 2020
6 months 6 months
to to Year to
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Opening equity 455 1,790 1,790
Shares issued net of costs 2,307 408 408
Loss for the period (703) (307) (1,674)
Share based payments 63 - -
Foreign exchange translation 88 6 (69)
Closing equity 2,210 1,897 455
========== ====================== ======================
Baron Oil plc
Notes to the Interim Financial Information
1. General Information
Baron Oil Plc is a company incorporated in England and Wales and
quoted on the AIM Market of the London Stock Exchange. The
registered office address is Finsgate, 5-7 Cranwood Street, London
EC1V 9EE.
The principal activity of the Group is that of oil and gas
exploration and production.
These financial statements are a condensed set of financial
statements and are prepared in accordance with the requirements of
IAS 34 and do not include all the information and disclosures
required in annual financial statements and should be read in
conjunction with the Group's annual financial statements as at 31
December 2019. The financial statements for the half period ended
30 June 2020 are unaudited and do not comprise statutory financial
statements within the meaning of Section 435 of the Companies Act
2006.
Statutory financial statements for the year ended 31 December
2019, prepared under IFRS, were approved by the Board of Directors
on 28 April 2020 and delivered to the Registrar of Companies.
2. Basis of Preparation
This consolidated interim financial information have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the European Union and on the
historical cost basis, using the accounting policies which are
consistent with those set out in the Company's Annual Report and
Financial Statements for the year ended 31 December 2019. This
interim financial information for the six months to 30 June 2020,
which complies with IAS 34 'Interim Financial Reporting', was
approved by the Board on 10 September 2020.
3. Accounting Policies
Except as described below, the accounting policies applied are
consistent with those of the annual financial statements for the
period ended 31 December 2019, as described in those annual
financial statements.
The preparation of financial statements requires management to
make estimates and assumptions that affect the amounts reported for
assets and liabilities as at the balance sheet date and the amounts
reported for revenues and expenses during the period. The nature of
estimation means that actual outcomes could differ from those
estimates. Estimates and assumptions used in the preparation of the
financial statements are continually reviewed and revised as
necessary. Whilst every effort is made to ensure that such
estimates and assumptions are reasonable, by their nature they are
uncertain, and as such, changes in estimates and assumptions may
have a material impact in the financial statements.
i) Carrying value of property, plant and equipment and of
intangible exploration and evaluation fixed assets.
Valuation of petroleum and natural gas properties: consideration
of impairment includes estimates relating to oil and gas reserves,
future production rates, overall costs, oil and natural gas prices
which impact future cash flows. In addition, the timing of
regulatory approval, the general economic environment and the
ability to finance future activities through the issuance of debt
or equity also impact the impairment analysis. All these factors
may impact the viability of future commercial production from
developed and unproved properties, including major development
projects, and therefore the need to recognise impairment.
ii) Commercial reserves estimates
Oil and gas reserve estimates: estimation of recoverable
reserves include assumptions regarding commodity prices, exchange
rates, discount rates, production and transportation costs all of
which impact future cashflows. It also requires the interpretation
of complex geological and geophysical models in order to make an
assessment of the size, shape, depth and quality of reservoirs and
their anticipated recoveries. The economic, geological and
technical factors used to estimate reserves may change from period
to period. Changes in estimated reserves can impact developed and
undeveloped property carrying values, asset retirement costs and
the recognition of income tax assets, due to changes in expected
future cash flows. Reserve estimates are also integral to the
amount of depletion and depreciation charged to income.
Baron Oil plc
Notes to the Interim Financial Information
4. Segmental information
United South South Total
Kingdom America East
Asia
Six months ended 30 June GBP'000 GBP'000 GBP'000 GBP'000
2020
Unaudited
Revenue
Sales to external customers - - - -
_______ _______ _______ _______
Segment revenue - - - -
Segment result (332) (197) (174) (703)
Total net assets 2,067 143 - 2,210
United South South Total
Kingdom America East
Asia
Six months ended 30 June GBP'000 GBP'000 GBP'000 GBP'000
2019
Unaudited
Revenue
Sales to external customers - - - -
_______ _______ _______ _______
Segment revenue - - - -
Segment result (217) (82) (8) (307)
Total assets 1,762 135 - 1,897
United South South Total
Kingdom America East
Asia
Year ended 31 December 2019 GBP'000 GBP'000 GBP'000 GBP'000
Audited
Revenue
Sales to external customers - - - -
_______ _______ _______ _______
Segment revenue - - - -
Segment result (1,575) (57) (42) (1,674)
Total assets less liabilities 320 135 - 455
Baron Oil plc
Notes to the Interim Financial Information
(continued)
6 months 6 months
5. Administration expenses to to Year to
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Directors' and employee benefit
expense 160 141 258
Share-based payment 63 - -
Legal and professional fees 114 56 133
Other expenses 30 30 51
367 227 442
====================== ====================== ======================
6. Loss from operations
6 months 6 months
to to Year to
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
The loss on ordinary activities
before taxation includes:
Auditors' remuneration
Audit 13 11 21
Other non-audit services 1 1 5
Exploration and evaluation
expenditure - - 160
Impairment of intangible
assets 120 6 1,047
Impairment of foreign tax
receivables 14 8 (16)
(Profit)/Loss on exchange (37) 13 41
7. Income tax expense
There was no tax expense during the period (30 June 2019: nil;
31 December 2019: nil).
Baron Oil plc
Notes to the Interim Financial Information
(continued)
8. Earnings/(loss) per Share
6 months 6 months
to to Year to
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
Pence Pence Pence
Earnings/(loss) per ordinary
share
Basic (0.02) (0.02) (0.01)
Diluted (0.02) (0.02) (0.01)
The earnings/(loss) per ordinary share is based on the Group's
loss for the period of GBP703,000 (30 June 2019: GBP307,000; 31
December 2019: GBP1,674,000) and a weighted average number of
shares in issue of 3,545,718,838 (30 June 2019: 1,440,221,731;
2019: 1,685,313,686).
9. Called up Share Capital
On 20 February 2020, the Company issued 735,714,280 Ordinary Shares
of 0.025p each at 0.1p per share, plus a further 1,764,285,720
Ordinary Shares of 0.025p each at 0.1p per share on 11 March 2020,
together yielding net proceeds after costs of GBP2,307,000.
10. Reconciliation of operating loss
to net cash outflow from operating activities
6 months 6 months
to to Year to
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Profit/(loss) for the period (703) (307) (1,674)
Depreciation and amortisation 279 6 1,047
Share based payments 63 - -
Income from interest in associated
undertaking 15 - -
Finance income shown as an
investing activity (2) (1) (1)
Foreign currency translation (41) 50 (4)
(Increase)/decrease in receivables (262) 364 454
Tax paid 20 (70) -
Increase/(decrease) in payables (44) (520) (546)
______ ______ _______
(675) (478) (724)
Baron Oil plc
Notes to the Interim Financial Information
(continued)
11. Related party transactions
During the period, the Company purchased technical services amounting
to GBP1,346 (30 June 2019: GBP3,523; 31 December 2019: GBP9,915)
from Tedstone Oil and Gas Limited, a company controlled by Mr
Jon Ford, a director.
During the preceding year to 31 December 2019, the Company purchased
administrative services amounting to GBP2,500 (30 June 2019: GBP2,500)
from Langley Associates Limited, a company controlled by Mr Geoff
Barnes, who was previously a director. There were no such payments
in the six month period ended 30 June 2020.
12. Financial Information
The unaudited interim financial information for period ended 30
June 2020 do not constitute statutory financial statements within
the meaning of Section 435 of the Companies Act 2006. The comparative
figures for the year ended 31 December 2019 are extracted from
the statutory financial statements which have been filed with
the Registrar of Companies and which contain an unqualified audit
report and did not contain statements under Section 498 to 502
of the Companies Act 2006.
Copies of this interim financial information document are available
from the Company at its registered office at Finsgate, 5-7 Cranwood
Street, London EC1V 9EE. The interim financial information document
will also be available on the Company's website www.baronoilplc.com.
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