REG - Baron Oil PLC - Interim Results
25/09/2023 07:00
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RNS Number : 4230N Baron Oil PLC 25 September 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF REGULATION
11 OF THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019/310
Baron Oil Plc
("Baron", or the "Company")
Interim Results for the six months ended 30 June 2023
Baron Oil Plc (AIM: BOIL), the AIM-quoted oil and gas exploration and
appraisal company focused on assets in SE Asia and the UK, is pleased to
announce its unaudited interim results for the six months ended 30 June 2023.
Chief Executive's Statement
Timor-Leste TL-SO-19-16 PSC ("Chuditch PSC" or "PSC") (Baron 75% interest)
The Company's strategic and operational priority this year continues to be to
prepare for the drilling and testing of an appraisal well on the Chuditch-1
gas discovery. Success here will prove up the commerciality of the 1,165 Bcf
of gas (194MMboe) gross Pmean Contingent Resources in the field and de-risk an
additional 1,651 Bcf (275MMboe) of gross Pmean Prospective Resources. The
granting of a further six-month PSC extension in June 2023 demonstrates the
strength of our relationships in Dili.
Our ongoing discussions with potential funding partners provide additional
affirmation that the technical case is robust and there is alignment on the
requirement for drilling an appraisal well on Chuditch, followed by additional
exploration activities to delineate the total on block gas resources for this
LNG scale project.
Technical activities during 2023 have been focused on further detailed
interrogation of our data, to identify optimal candidate locations for
Chuditch appraisal drilling, including additional geophysical work and
environmental impact studies. Based on these studies, we have selected a
preferred appraisal drilling location, which is approximately 4.8km from the
Chuditch-1 discovery well. This represents a substantial step-out,
illustrating the size of the field and our confidence in the reprocessed
seismic datasets. This location is now being input into the detailed well
planning programme. In anticipation of the proposed drilling of an appraisal
well, the Company is in discussions with various contractors and is actively
assessing the availability of suitable rigs, equipment and personnel.
Dunrobin (UKCS P2478) - Reabold (Admin.) 36%; Baron 32%; Upland Resources 32%
The publication of the CPR by RPS Group in February 2023 provided independent
confirmation of the Company's belief that the western part of the Dunrobin
complex had matured into a drillable prospect where a relatively low-cost
exploration well can target more than 100 MMbbl of gross Pmean Prospective
Resources with modest geological risk.
In July 2023, post period end, the joint venture announced that it had been
granted a two-year extension to Phase A of the licence by the UK North Sea
Transition Authority ("NSTA"). The additional commitment is to acquire a
minimum of 30 square kilometres of 3D seismic data which will complete the 3D
coverage over the Dunrobin West prospect.
Plans for execution of this new seismic programme during the first half of
next year are underway with contractors, stakeholders and the NSTA. On
completion of this work, aimed primarily at further reducing pre-drill risks
and volumetric uncertainty, the partners intend to re-engage with potentially
interested third parties in respect of the drilling of an exploration well. A
'Drill or Drop' decision on P2478 is now required on or before 14 July 2025.
New Ventures
Baron continues to pursue additional new venture opportunities, to enhance and
complement the existing portfolio. In particular, we await the outcome of the
UK 33rd Round of Licensing where we participated in a licence application as a
non-operating partner. The NSTA has recently indicated that any offer would be
made before the end of 2023.
Corporate
The net loss after finance costs and tax of £847,000 (30 June 2022: net loss
of £419,000; year to 31 December 2022: net loss of £1,387,000), represented
a loss of 0.004p per share (30 June 2022: 0.003p; year to 31 December 2022:
0.010p).
We continue to build out our operations, either in support of existing
projects or in the pursuit of new opportunities. We are able to do this as the
Company has a well-funded balance sheet which more than covers our current
activities and commitments. Available cash (excluding monies held as security
for the bank guarantee in Timor-Leste) as at 30 June 2023 was £4,619,000 (30
June 2022: £2,365,000; 31 December 2022: £5,807,000).
On 1 July 2023, Dr. Andy Butler joined the Board as Director, Asia Pacific. He
has been closely associated with Baron and Chuditch from the outset through
our initial new venture partnership to the capture and de-risking of the
TL-SO-19-16 PSC in Timor-Leste. He adds technical and commercial capacity to
the Board as well as providing access and expertise in Asia. Andy continues to
manage the Timor-Leste project.
During August 2023, we completed the switch over of the US$1m Bank Guarantee
("BG") for the Chuditch PSC from United Overseas Bank Limited of Singapore to
ANZ Banking Group Limited in Timor-Leste. In line with its full ownership of
both SundaGas (Timor-Leste Sahul) Pte. Ltd. and SundaGas Banda Unipessoal
Lda., Baron has provided 100% of the funds required for the BG.
John Wakefield, Non-Executive Chairman, commented:
"All of our efforts are currently focused on the Chuditch PSC drilling
decision to be made late in 2023 for a Chuditch-1 appraisal well. We are
making good progress and are in advanced discussions with a number of
potential funding partners. We look forward to updating shareholders as soon
as we are able."
Qualified Person's Statement
Pursuant to the requirements of the AIM Rules - Note for Mining and Oil and
Gas Companies ("AIM MOG"), the technical information and resource reporting
contained in this announcement has been reviewed by Jon Ford BSc, Fellow of
the Geological Society, Technical Director of the Company. Mr Ford has more
than 40 years' experience as a petroleum geoscientist. He has compiled, read
and approved the technical disclosure in this regulatory announcement and
indicated where it does not comply with the Society of Petroleum Engineers'
SPE PRMS standard.
For further information, please
contact:
Baron Oil
Plc
+44 (0) 20 7117 2849
Andy Yeo, Chief Executive
Allenby Capital Limited
+44 (0) 20 3328 5656
Nominated Adviser and Joint Broker
Alex Brearley, Nick Harriss, George Payne (Corporate Finance)
Kelly Gardiner (Sales and Corporate Broking)
Cavendish Securities Plc
+44 (0) 131 220 6939
Joint
Broker
+44 (0) 207 397 8900
Neil McDonald, Pearl Kellie (Corporate Finance)
Leif Powis (Sales)
IFC Advisory Limited
+44 (0) 20 3934 6630
Financial PR and
IR
baronoil@investor-focus.co.uk
Tim Metcalfe, Florence Chandler
Glossary
Bcf Billion standard cubic feet of gas.
Contingent Resources Those quantities of petroleum estimated, as of a given date, to be potentially
recoverable from known accumulations by application of development projects,
but which are not currently considered to be commercially recoverable owing
to one or more contingencies.
LNG Liquefied natural gas
Mean or Pmean Reflects a mid-case volume estimate of resource derived using probabilistic
methodology. This is the mean of the probability distribution for the resource
estimates and may be skewed by resource numbers with relatively low
probabilities.
MMbbl Million barrels of oil
MMboe Million barrels of oil equivalent. Volume derived by dividing the estimate
of the volume of natural gas in billion cubic feet by six in order to convert
it to an equivalent in million barrels of oil and, where relevant, adding this
to an estimate of the volume of oil in millions of barrels.
Prospective Resources Quantities of petroleum that are estimated to exist originally in naturally
occurring reservoirs, as of a given date. Crude oil in-place, natural gas
in-place, and natural bitumen in-place are defined in the same manner.
SPE PRMS The Society of Petroleum Engineers' ("SPE") Petroleum Resources Management
System ("PRMS"): a system developed for consistent and reliable definition,
classification, and estimation of hydrocarbon resources prepared by the Oil
and Gas Reserves Committee of SPE and approved by the SPE Board in June 2018
following input from six sponsoring societies: the World Petroleum Council,
the American Association of Petroleum Geologists, the Society of Petroleum
Evaluation Engineers, the Society of Exploration Geophysicists, the European
Association of Geoscientists and Engineers, and the Society of Petrophysicists
and Well Log Analysts.
Consolidated Income Statement
for the six months ended 30 June 2023
6 months to 6 months to Year to
30 June 30 June 31 December
2023 2022 2022
Note Unaudited Unaudited Audited
£'000 £'000 £'000
Revenue - - -
Cost of sales - - -
Gross loss - - -
Exploration and evaluation expenditure (93) (120) (213)
Property, plant and equipment depreciation (17) (8) (33)
Receivables reduction in impairment - 44 -
Administration expenses 5 (778) (497) (1,191)
Profit/(loss) arising on foreign exchange (37) 161 43
Operating loss 6 (925) (420) (1,394)
Finance cost (4) (1) (5)
Finance income 82 2 12
Loss on ordinary activities before taxation (847) (419) (1,387)
Income tax (expense)/benefit 7 - - -
Loss on ordinary activities after taxation (847) (419) (1,387)
Loss on ordinary activities after taxation attributable to owners of the (847) (419) (1,387)
parent
Earnings per share: basic 8 (0.004)p (0.003)p (0.010)p
Diluted 8 (0.004)p (0.003)p (0.010)p
Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2023
6 months to 6 months to Year to
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Loss on ordinary activities after taxation attributable to owners of the (847) (419) (1,387)
parent
Other comprehensive income: items which may subsequently be reclassified to
profit and loss
Exchange difference on translating foreign operations (144) 55 174
Total comprehensive income for the period (991) (364) (1,213)
Total comprehensive income attributable to owners of the parent (991) (364) (1,213)
Consolidated Statement of Financial Position
at 30 June 2023
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
Assets Note £'000 £'000 £'000
Non-current assets
Property, plant and equipment 58 40 78
Intangible fixed assets 3,728 3,266 3,696
3,786 3,306 3,774
Current assets
Receivables 117 119 101
Performance bond guarantee deposit 9 790 823 827
Cash and cash equivalents 4,619 2,365 5,807
5,526 3,307 6,735
Total assets 9,312 6,613 10,509
Equity and liabilities
Capital and reserves attributable to owners of the parent
Called up share capital 10 4,746 3,583 4,730
Share premium account 38,881 34,882 38,846
Share option reserve 319 332 332
Foreign exchange translation reserve 1,591 1,616 1,735
Retained earnings (36,389) (34,587) (35,555)
Total equity 9,148 5,826 10,088
Current liabilities
Trade and other payables 126 760 377
Taxes payable 14 13 14
140 773 391
Non-current liabilities
Lease finance 24 14 30
Total liabilities 164 787 421
Total equity and liabilities 9,312 6,613 10,509
Consolidated Statement of Cash Flows
for the six months ended 30 June 2023
6 months to 6 months to Year to
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
Note £'000 £'000 £'000
Operating activities 11 (1,172) (511) (1,750)
Investing activities
Return from investment and servicing of finance 82 2 12
Performance bond guarantee deposit - 119 128
Additions to exploration and evaluation assets (130) (383) (806)
Acquisition of tangible assets - (15) (17)
(48) (277) (683)
Financing activities
Proceeds from issue of share capital 51 1,508 6,619
Lease financing (19) (5) (29)
32 1,503 6,590
Net cash (outflow)/inflow (1,188) 715 4,157
Cash and cash equivalents at the beginning of the period 5,807 1,650 1,650
Cash and cash equivalents at the end of the period 4,619 2,365 5,807
Consolidated Statement of Changes in Equity
for the six months ended 30 June 2023
Share Foreign
Share Share Retained option exchange Total
capital premium earnings reserve translation equity
£'000 £'000 £'000 £'000 £'000 £'000
As at 1 January 2022 2,896 34,061 (34,224) 388 1,561 4,682
Shares issued 1,834 4,785 - - - 6,619
Transactions with owners (net of transaction costs) 1,834 4,785 - - - 6,619
Loss for the year attributable to equity shareholders - - (1,387) - - (1,387)
Share option reserve released - - 56 (56) - -
Foreign exchange translation adjustments - - - - 174 174
Total comprehensive income for the period - - (1,331) (56) 174 (1,213)
As at 1 January 2023 4,730 38,846 (35,555) 332 1,735 10,088
Shares issued 16 35 - - - 51
Transactions with owners 16 35 - - - 51
Loss for the year attributable to equity shareholders - - (847) - - (847)
Share based payments - - 13 (13) - -
Foreign exchange translation adjustments - - - - (144) (144)
Total comprehensive income for the period - - (834) (13) (144) (991)
As at 30 June 2023 4,746 38,881 (36,389) 319 1,591 9,148
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
appraisal.
This financial information is a condensed set of financial statements and is
prepared in accordance with the requirements of IAS 34 and does 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
for the year ended 31 December 2022. The financial information for the six
months to 30 June 2023 is unaudited and does 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 2022, prepared
under UK-adopted IFRS, were approved by the Board of Directors on 22 May 2023
and delivered to the Registrar of Companies.
2. Basis of Preparation
This consolidated interim financial information has been prepared in
accordance with UK adopted International Financial Reporting Standards
("IFRS") and IFRIC interpretations issued by the International Accounting
Standards Board (IASB), 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 2022. This
interim financial information for the six months to 30 June 2023, which
complies with IAS 34 'Interim Financial Reporting', was approved by the Board
on 22 September 2023.
3. Accounting Policies
The accounting policies applied for the six months to 30 June 2023 are
consistent with those of the annual financial statements for the year ended 31
December 2022, 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
information.
4. Segmental information
United Kingdom South America South East Asia Total
Six months ended 30 June 2023 £'000 £'000 £'000 £'000
Unaudited
Revenue
Sales to external customers - - - -
Segment revenue - - - -
Results
Segment result (522) (15) (310) (847)
Total assets less liabilities 3,889 2 5,257 9,148
United Kingdom South America South East Asia Total
Six months ended 30 June 2022 £'000 £'000 £'000 £'000
Unaudited
Revenue
Sales to external customers - - - -
Segment revenue - - - -
Results
Segment result (178) (6) (235) (419)
Total assets less liabilities 2,322 5 3,499 5,826
United Kingdom South America South East Asia Total
Year ended 31 December 2022 £'000 £'000 £'000 £'000
Audited
Revenue
Sales to external customers - - - -
Segment revenue - - - -
Results
Segment result (712) (71) (604) (1,387)
Total assets less liabilities 5,715 5 4,368 10,088
5. Administration expenses 6 months to 6 months to Year to
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Directors' and employee benefit expense 443 251 632
Legal and professional fees 242 91 410
Other expenses 93 155 149
778 497 1,191
6. Operating loss
6 months to 6 months to Year to
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
The loss on ordinary activities before taxation includes:
Auditors' remuneration
Audit 24 21 33
Other non-audit services 1 1 4
Exploration and evaluation expenditure 93 - 213
Depreciation of property, plant and equipment 17 8 33
Impairment reduction of foreign tax receivables - (44) -
Loss/(gain) on exchange 37 (161) (43)
7. Income tax expense
There was no tax expense during the period (30 June and 31 December 2022:
nil).
8. Earnings/(loss) per Share
6 months to 6 months to Year to
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
Pence Pence Pence
Earnings/(loss) per ordinary share
Basic (0.004) (0.003) (0.010)
Diluted (0.004) (0.003) (0.010)
The earnings/(loss) per ordinary share is based on the Group's loss for the
period of £847,000 (30 June 2022: £419,000; 31 December 2022: £1,387,000)
and a weighted average number of shares in issue of 18,964,459,323 (30 June
2022: 12,373,667,710; 31 December 2022: 13,784,079,264).
9. Performance bond guarantee deposit
The Company's wholly-owned subsidiary, SundaGas Banda Unipessoal, Lda
("Banda"), has provided a performance guarantee to Autoridade Nacional do
Petróleo ("ANP"), formerly known as Autoridade Nacional do Petróleo e
Minerais ("ANPM"), in respect of the offshore Timor-Leste TL-SO-19-16
Production Sharing Contract ("PSC"). This performance guarantee was secured by
a bank guarantee given by United Overseas Bank Limited of Singapore ("UOB")
backed by a cash deposit of US$1 million. This arrangement was originally put
in place in November 2019 at the outset of the PSC, was extended in November
2022, and expired on 1 August 2023. Banda replaced this guarantee on expiry
with a new guarantee secured by a bank deposit of the same amount given by The
Australia and New Zealand Banking Group Limited ("ANZ"), which expires on 1
February 2024. It is anticipated that the bank guarantee will be released
following the conclusion of the current phase of the PSC which is currently 18
December 2023 as the Directors consider that all work commitments to the end
of the current phase will have been met.
The original guarantee was set up by SundaGas Pte. Ltd ("SGPL"), the former
owners of Banda, and remained in their name beyond the acquisition of Banda by
the Company, so as not to disrupt the contractual position of the PSC. As a
result, on expiry the bond was initially released to SGPL which in turn
released funds to Banda on 1 August 2023.
10. Called up Share Capital
On 23 February 2023, the Company issued 62,500,000 Ordinary Shares of 0.025p
each at an issue price of 0.1p per share following the exercise of options,
yielding net proceeds after costs of £50,000.
11. Reconciliation of operating loss to net cash outflow from operating
activities
6 months to 6 months to Year to
30 June 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Loss for the period (847) (419) (1,387)
Depreciation and amortisation 17 8 33
Finance income shown as an investing activity (82) (2) (12)
Interest on lease liability 4 - 4
Foreign currency translation (6) (174) (74)
(Increase)/decrease in receivables (16) (65) (47)
(Decrease)/increase in payables (242) 141 (267)
(1,172) (511) (1,750)
12. Related party transactions
SundaGas (Timor-Leste Sahul) Pty. Ltd ("TLS"), a wholly-owned subsidiary, paid
fees amounting to US$152,000 (30 June 2022: US$138,000, 31 December 2022:
US$285,000) to SundaGas Pte. Ltd, a company in which Dr. Andrew Butler, a
director of TLS, held a significant interest
The directors' aggregate remuneration, associated benefits and share-based
payments in respect of qualifying services during the period amounted to
£308,000 (30 June 2022: £161,000, 31 December 2022: £390,000).
During the period, key management personnel did not subscribe to any shares in
the Company, nor were any options to subscribe to new shares granted. During
2022, key management personnel subscribed for new ordinary shares of £0.00025
each in the Company as part of placings and subscriptions of new ordinary
shares as follows.
Announced 29 April 2022, at a price of 0.06p per share Announced 16 November 2022, at a price of 0.12p per share
Andrew Yeo 16,150,000 shares 8,000,000 shares
Dr Andrew Butler - 50,000,000 shares
Also during 2022, key management personnel were awarded options to subscribe
to new ordinary shares of £0.00025 each in the Company as follows.
Number Exercise price Final exercise date
Dr Andrew Butler 175,000,000 0.07p 14 July 2025
The share options awarded to Dr Butler are exercisable at 0.07p, expire three
years from grant date and will only vest upon Baron Oil making an announcement
that the first appraisal well on the Chuditch PSC has spudded, or in certain
limited circumstances such as a takeover event.
On 25 November 2022, the Company assumed 100% of the collateral for a US$1
million amount (the "Deposit") in relation to the performance bank guarantee
arrangements connected to the Chuditch PSC (the "Guarantee"), by providing
approximately US$667,000 to SundaGas Pte. Ltd ("SGPL") to replace the two
thirds contribution (approximately US$667,000) previously made by SGPL, which
was the other indirect shareholder in SundaGas Banda Unipessoal Lda. until 18
June 2021. The relationship agreement between SGPL, its principals and Baron
as originally announced on 18 June 2021 (the "Relationship Agreement") was
also varied so that Baron is entitled to all the benefit of and rights to the
return of the Deposit should it be released or when the Guarantee expires in
due course on 1 August 2023. The changes to the provision of the funds for the
Deposit and the variations to the Relationship Agreement were deemed to be
related party transactions pursuant to the AIM Rules for Companies. The
Guarantee was released on expiry and the deposit was returned to Baron in full
on 1 August 2023. See also note 9 above.
13. Events after the reporting period
Following the extension to the second contract year of the TL-SO-19-16
Production Sharing Contract offshore Democratic Republic of Timor-Leste,
announced by the Company on 2 June 2023, the Company entered into a
replacement performance guarantee secured by a bank guarantee given by The
Australia and New Zealand Banking Group Limited ("ANZ") backed by a cash
deposit of US$1 million. See note 9 for further details.
On 12 July 2023, the Company announced that a two year extension to Phase A of
Licence P2478, in which the Company holds a 32% interest, was granted by the
North Sea Transition Authority. As a result, a "drill or drop" decision is now
required on or before 14 July 2025.
14. Financial Information
The unaudited interim financial information for period ended 30 June 2023 does
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 2022 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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