REG - Baron Oil PLC - Placing and Subscription to raise £3 million

Baron OilAnnouncement

15/02/2024 17:00

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RNS Number : 3451D  Baron Oil PLC  15 February 2024

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15 February 2024

Baron Oil Plc

 

("Baron Oil", "Baron" or the "Company")

 

Placing and Subscription to raise £3 million

 

and

 

Proposed WRAP Retail Offer

 

 

Baron Oil (AIM: BOIL), the AIM-quoted oil and gas exploration and appraisal
company, announces that it has conditionally raised £3 million (before
expenses) by way of an oversubscribed placing and subscription (the "Placing
and Subscription") of a total of 6,000,000,000 new ordinary shares of 0.025p
each in the Company ("Ordinary Shares") at a price of 0.05 pence per new
Ordinary Share (the "Issue Price"). Allenby Capital Limited ("Allenby
Capital") and Cavendish Capital Markets Limited ("Cavendish") are acting as
joint brokers in connection with the Placing (together, the "Joint Brokers").

 

The Placing and Subscription has conditionally raised net proceeds of
approximately £2.7 million. The Directors intend for the net proceeds of the
Placing and Subscription to be used, in conjunction with Baron's existing
available cash, to support Baron's share of expenditure on the TL-SO-19-16
Production Sharing Contract ("Chuditch" or the "PSC"), offshore the Democratic
Republic of Timor-Leste in the first half of 2024.  These funds are expected
to be applied principally towards a rig deposit, the drilling project team, a
site survey, certain long lead items and a bank guarantee.

 

In addition to the Placing and Subscription, it is proposed that there will be
a separate conditional retail offer to existing shareholders via the
Winterflood Retail Access Platform ("WRAP") to raise up to approximately
£300,000 (before expenses) at the Issue Price (the "WRAP Retail Offer", and
together with the Placing and Subscription, the "Fundraise"), to provide
existing retail shareholders in the Company an opportunity to participate in
the Fundraise. A separate announcement will be made shortly by the Company
regarding the WRAP Retail Offer and its terms.

 

Those investors who subscribe for new Ordinary Shares pursuant to the WRAP
Retail Offer (the "WRAP Retail Shares") will do so pursuant to the terms and
conditions of the WRAP Retail Offer contained in that announcement.

 

 

Andy Yeo, Chief Executive Officer of Baron, commented:

 

"This funding, in conjunction with our existing available cash, will allow us
to push on with the preparations for the drilling of the Chuditch-2 appraisal
well planned for Q4 2024. These preparations will also include progressing
drill financing. In a drilling success case, we expect to be able to validate
a significant resource to create real value for shareholders.

 

As the Company values its retail shareholder base we are also pleased to be
able to announce a retail offer via the Winterflood Retail Access Platform
("WRAP") for existing shareholders."

 

 

Background to the Fundraise

 

Farm-Up with TIMOR GAP and other Farm-Out and funding discussions

 

On 8 February 2024, Baron announced the completion of the assignment of a 15%
working interest in the Chuditch PSC to TIMOR GAP Chuditch Unipessoal Lda.
("TIMOR GAP"), the existing joint venture partner on the PSC and a wholly
owned subsidiary of TIMOR GAP E.P. the Timor-Leste National Oil and Gas
Company (the "Farm-Up").

 

Following completion of the Farm-Up, Baron has retained operatorship and holds
a 60% working interest in the Chuditch PSC, while TIMOR GAP has a 40%
interest. TIMOR GAP is responsible for paying 20% of all costs of the PSC,
including the drilling of the planned Chuditch-2 appraisal well, with Baron
responsible for the remaining 80%.

 

The Directors consider that the Farm-Up by TIMOR GAP has a value to Baron of
approximately US$8.5 million made up of a reimbursement for back costs of
c.US$1 million and in the offset of future spend which in 2024 is estimated to
be around US$7.5 million.

 

The Directors consider that the Farm-Up is a significant step towards drill
funding, as it demonstrates government financial commitment to Chuditch and
provides technical and commercial validation.  The Directors also consider
that the Farm-Up allows for early engagement to secure a drilling slot and
demonstrates positive momentum with the Chuditch project.

 

Baron is currently party to other Farm-Out and funding discussions which are
ongoing and where progress continues.  In addition, the Directors believe
that it is an opportune moment to re-invigorate Baron's Chuditch Farm-Out
programme, emphasising government validation, partial funding from the Farm-Up
and operational progress, in order to add impetus to other funding
discussions. The Directors believe that Baron's large remaining interest in
the PSC is attractive to various types of potential Farm-Out and funding
partners.

 

 

Next Steps Towards Chuditch-2 appraisal and evaluation status

 

Baron is preparing for operations to drill and flow test the Chuditch-2
appraisal well in late 2024, subject to the availability of a rig, drilling
services and the completion of drill finance.  In this respect, discussions
are underway to secure a rig slot and on 12 February 2024 the Company
announced that it had entered into contracts to conduct a site survey at the
planned drilling location for the Chuditch-2 appraisal well.  Contract Year 3
of the PSC, which commences on 19 June 2024, includes a commitment to drill an
appraisal well by 18 June 2025.

 

The Chuditch-2 appraisal well location represents a significant updip
step-out, which is 4.8km from the Chuditch-1 discovery well drilled by Shell
in 1998.

 

Baron's key objectives from the Chuditch-2 appraisal well include:

 

·    prognosing a potential 133 metre gas column, versus a 30 metre column
at the original Chuditch-1 location

 

·    validating gas resource estimates

 

·    performing a production flow test (drill stem test) to enable future
field development planning

 

Advanced well planning in relation to the Chuditch-2 appraisal well is
underway. Baron is also evaluating potential gas development and export
options.

 

Baron's current activities in relation to advancing the Chuditch project
include:

 

·    Discussions with rig owners

 

·    Identifying potential logistical synergies with regional operators

 

·    Progressing the environmental approvals process

 

·    Preparing to conduct a site survey at the proposed Chuditch-2
appraisal well location

 

·    Commencing the procurement process for long lead items

 

·    Updating of the well design and costs

 

·    Recruiting for key posts, including Well Operations, Health, Safety
and Environmental and Procurement

 

·    Ongoing discussions with Farm-Out and other potential funding
partners, as part of the Farm-Out campaign

 

 

Key anticipated milestones

 

The Board anticipates the following key milestones for the Chuditch project in
2024:

 

·    Site survey at the proposed Chuditch-2 appraisal well location in the
first quarter of 2024

 

·    Completion of drill funding and securing a rig slot in the second
quarter of 2024

 

·    Obtaining the required environmental and drilling approvals in the
third quarter of 2024

 

·    Well mobilisation, well spud and drilling results in the fourth
quarter of 2024

 

 

Indicative Chuditch use of funds to the end of H1 2024

 

The Placing and Subscription is anticipated to raise net proceeds of
approximately £2.7 million.

 

The indicative use of funds for the Chuditch project to the end of the first
half of 2024, as shown below, is intended to be satisfied via the net proceeds
of the Placing and Subscription supported by the Company's existing available
cash. As at 31 December 2023 the Company had an available cash position of
approximately £3.65 million (excluding a US$1 million bank guarantee and
overseas account balances).

 

Baron's indicative use of funds for the Chuditch project to the end of the
first half of 2024 is as follows(1):

 

                                                                                     (£) million(2)
 Site Survey                                                                         0.5
 Drilling Project Team                                                               0.6
 Long Lead Items                                                                     0.4
 Estimated Initial Rig Deposit, Estimated Bank Guarantee & General Project           2.5
 Expenses
 Total (£) (3)                                                                       4.0

 

1.     Represents pre-Contract Year 3 of the PSC expenditure to the end H1
2024, which may be subject to change as a result of future events.

2.     Amounts shown are net to Baron's 80% paying interest, following
completion of the Farm-Up.

3.     All uses of funds are indicative; a Bank Guarantee of US$1m for
Contract Year 2 of the PSC is in place.

 

It is proposed that the net proceeds of the WRAP Retail Offer, which will
represent a maximum of an additional approximately £0.285 million, will be
generally applied towards Baron's indicative use of funds for the Chuditch
project to the end of the first half of 2024(1) as indicated above.

 

The gross expenditure for the Chuditch PSC in the second half of 2024,
including the planned Chuditch-2 appraisal well, is estimated to be US$31
million.

 

 

Details of the Placing and Subscription

 

The Fundraise comprises a placing (the "Placing") of 5,936,000,000 new
Ordinary Shares (the "Placing Shares") and a subscription of 64,000,000 new
Ordinary Shares (the "Subscription Shares") and up to 600,000,000 WRAP Retail
Shares (together the "Fundraise Shares") at the Issue Price. The Fundraise
Shares are to be issued pursuant to the authorities granted to the Board at
the Company's annual general meeting held on 29 June 2023 on a non-pre-emptive
basis.

 

Completion of the WRAP Retail Offer is conditional, inter alia, upon
completion of the Placing and Subscription. Completion of the Placing and
Subscription is not conditional on the completion of the WRAP Retail Offer.

 

It is anticipated that an application will be made to London Stock Exchange
plc ("London Stock Exchange") for the Placing Shares, the Subscription Shares
and the WRAP Retail Shares (once the final number of WRAP Retail Shares to be
issued is determined) to be admitted to trading on the AIM market of the
London Stock Exchange ("Admission"). It is currently anticipated that
Admission will become effective, and that dealings in the Placing Shares,
Subscription Shares and WRAP Retail Shares will commence on AIM, at 8.00 a.m.
on or around 29 February 2024.

 

 

Director and PDMR participation

Andrew Yeo and Andrew Butler have subscribed for a total of 76,000,000 new
Ordinary Shares at the Issue Price in the Placing and Subscription (the "PDMR
Participation"). Details of the PDMR Participation are outlined in the table
below.

 Director/PDMR  Position                 new Ordinary Shares being subscribed  Shareholding following Admission  Indicative percentage of enlarged share capital following Admission(1)
 Andrew Yeo     Chief Executive Officer  12,000,000                            205,000,000                       0.80%
 Andrew Butler  Director, Asia Pacific   64,000,000                            692,601,442                       2.71%

(1) Indicative enlarged share capital following Admission in this context
assumes full take-up under the WRAP Retail Offer.

The FCA notification, made in accordance with the requirements of UK MAR is
appended further below.

 

 

Other

Notice to Distributors

Solely for the purposes of the product governance requirements contained
within: (a) EU Directive 2014/65/EU on markets in financial instruments, as
amended and as this is applied in the United Kingdom ("MiFID II"); (b)
Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593
supplementing MiFID II and Regulation (EU) No 600/2014 of the European
Parliament, as they form part of UK law by virtue of the European Union
(Withdrawal) Act 2018, as amended; and (c) local implementing measures
(together, the "MiFID II Product Governance Requirements"), and disclaiming
all and any liability, whether arising in tort, contract or otherwise, which
any "manufacturer" (for the purposes of the MiFID II Product Governance
Requirements) may otherwise have with respect thereto, the Fundraise Shares
have been subject to a product approval process, which has determined that
such securities are: (i) compatible with an end target market of retail
investors who do not need a guaranteed income or capital protection and
investors who meet the criteria of professional clients and eligible
counterparties, each as defined in MiFID II; and (ii) eligible for
distribution through all distribution channels as are permitted by MiFID II
(the "Target Market Assessment"). The Fundraise Shares are not appropriate for
a target market of investors whose objectives include no capital loss.
Notwithstanding the Target Market Assessment, distributors should note that:
the price of the Fundraise Shares may decline and investors could lose all or
part of their investment; the Fundraise Shares offer no guaranteed income and
no capital protection; and an investment in the Fundraise Shares is compatible
only with investors who do not need a guaranteed income or capital projection,
who (either alone or in conjunction with an appropriate financial or other
adviser) are capable of evaluating the merits and risks of such an investment
and who have sufficient resources to be able to bear any losses that may
result therefrom. The Target Market Assessment is without prejudice to the
requirements of any contractual, legal or regulatory selling restrictions in
relation to the Fundraise. Furthermore, it is noted that, notwithstanding the
Target Market Assessment, Allenby Capital and Cavendish will only procure
investors who meet the criteria of professional clients and eligible
counterparties. For the avoidance of doubt, the Target Market Assessment does
not constitute: (a) an assessment of suitability or appropriateness for the
purposes of MiFID II; or (b) a recommendation to any investor or group of
investors to invest in, or purchase, or take any other action whatsoever with
respect to the Fundraise Shares. Each distributor is responsible for
undertaking its own target market assessment in respect of the shares and
determining appropriate distribution channels.

Forward Looking Statements

This announcement includes statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "plans", "anticipates", "targets", "aims",
"continues", "expects", "intends", "hopes", "may", "will", "would", "could" or
"should" or, in each case, their negative or other variations or comparable
terminology. These forward-looking statements include matters that are not
facts. They appear in a number of places throughout this announcement and
include statements regarding the Directors' beliefs or current expectations.
By their nature, forward-looking statements involve risk and uncertainty
because they relate to future events and circumstances. Investors should not
place undue reliance on forward-looking statements, which speak only as of the
date of this announcement.

Notice to overseas persons

This announcement does not constitute, or form part of, a prospectus relating
to the Company, nor does it constitute or contain any invitation or offer to
any person, or any public offer, to subscribe for, purchase or otherwise
acquire any shares in the Company or advise persons to do so in any
jurisdiction, nor shall it, or any part of it form the basis of or be relied
on in connection with any contract or as an inducement to enter into any
contract or commitment with the Company.

This announcement is not for release, publication or distribution, in whole or
in part, directly or indirectly, in or into Australia, Canada, Japan or the
Republic of South Africa or any jurisdiction into which the publication or
distribution would be unlawful. This announcement is for information purposes
only and does not constitute an offer to sell or issue or the solicitation of
an offer to buy or acquire shares in the capital of the Company in Australia,
Canada, Japan, New Zealand, the Republic of South Africa or any jurisdiction
in which such offer or solicitation would be unlawful or require preparation
of any prospectus or other offer documentation or would be unlawful prior to
registration, exemption from registration or qualification under the
securities laws of any such jurisdiction.  Persons into whose possession this
announcement comes are required by the Company to inform themselves about, and
to observe, such restrictions.

This announcement is not for publication or distribution, directly or
indirectly, in or into the United States of America.  This announcement is
not an offer of securities for sale into the United States.  The securities
referred to herein have not been and will not be registered under the U.S.
Securities Act of 1933, as amended, and may not be offered or sold in the
United States, except pursuant to an applicable exemption from registration.
No public offering of securities is being made in the United States.

General

Neither the content of the Company's website (or any other website) nor the
content of any website accessible from hyperlinks on the Company's website (or
any other website) or any previous announcement made by the Company is
incorporated into, or forms part of, this announcement.

Allenby Capital, which is authorised and regulated by the FCA in the United
Kingdom, is acting as nominated adviser and joint broker to the Company in
connection with the Placing. Allenby Capital will not be responsible to any
person other than the Company for providing the protections afforded to
clients of Allenby Capital or for providing advice to any other person in
connection with the Fundraise. Allenby Capital has not authorised the contents
of, or any part of, this announcement, and no liability whatsoever is accepted
by Allenby Capital for the accuracy of any information or opinions contained
in this announcement or for the omission of any material information.

Cavendish, which is authorised and regulated by the FCA in the United Kingdom,
is acting as joint broker to the Company in connection with the Placing.
Cavendish will not be responsible to any person other than the Company for
providing the protections afforded to clients of Cavendish or for providing
advice to any other person in connection with the Fundraise. Cavendish has not
authorised the contents of, or any part of, this announcement, and no
liability whatsoever is accepted by Cavendish for the accuracy of any
information or opinions contained in this announcement or for the omission of
any material information.

Qualified Person's Statement

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.

 

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, Stefano Aquilino (Sales and Corporate Broking)

 Cavendish Capital Markets Limited                               +44 (0) 131 220 6939 / +44 (0) 207 397 8900
 Joint Broker
 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

 

 

 

Notification and public disclosure of transactions by persons discharging
managerial responsibilities and persons closely associated with them

 

 1.                            Details of the person discharging managerial responsibilities/person closely
                               associated
 (a)                           Full name of person Dealing                                  Andrew Yeo
 2.                            Reason for notification
 (b)                           Position/status                                              Chief Executive Officer
 (c)                           Initial notification/ Amendment                              Initial notification
 3.                            Details of the issuer, emission allowance market participant, auction
                               platform, auctioneer or auction monitor
 (d)                           Name of entity                                               Baron Oil Plc
 (e)                           LEI                                                          213800MBSOS9UZ5SW712
 4.                            Details of the transaction(s): section to be repeated for (i) each type of
                               instrument; (ii) each type of transaction; (iii) each date; and (iv) each
                               place where transactions have been conducted
 (a)                           Description of the financial instrument, type of instrument  Ordinary shares of 0.025 pence each in the Company
 (b)                           Identification code                                          GB00B01QGH57
 (c)                           Nature of the transaction                                    Acquisition of Ordinary Shares in Placing

 (d)                           Price(s) and volume(s)                                       Prices(s)                          Volume(s)
                                                                                            0.05 pence per new Ordinary Share  12,000,000
 (e)                           Aggregated information:

                               - Aggregated volume                                          12,000,000

                               - Price                                                      0.05 pence per new Ordinary Share
 (f)                           Date of transaction                                          15 February 2024
 (g)                           Place of transaction                                         Outside a trading venue

(e)

Aggregated information:

- Aggregated volume

 

- Price

 

12,000,000

 

0.05 pence per new Ordinary Share

(f)

Date of transaction

15 February 2024

(g)

Place of transaction

Outside a trading venue

 

 1.                            Details of the person discharging managerial responsibilities/person closely
                               associated
 (a)                           Full name of person Dealing                                  Andrew Butler
 2.                            Reason for notification
 (b)                           Position/status                                              Director, Asia Pacific
 (c)                           Initial notification/ Amendment                              Initial notification
 3.                            Details of the issuer, emission allowance market participant, auction
                               platform, auctioneer or auction monitor
 (d)                           Name of entity                                               Baron Oil Plc
 (e)                           LEI                                                          213800MBSOS9UZ5SW712
 4.                            Details of the transaction(s): section to be repeated for (i) each type of
                               instrument; (ii) each type of transaction; (iii) each date; and (iv) each
                               place where transactions have been conducted
 (a)                           Description of the financial instrument, type of instrument  Ordinary shares of 0.025 pence each in the Company
 (b)                           Identification code                                          GB00B01QGH57
 (c)                           Nature of the transaction                                    Acquisition of Ordinary Shares in Subscription

 (d)                           Price(s) and volume(s)                                       Prices(s)                          Volume(s)
                                                                                            0.05 pence per new Ordinary Share  4,000,000
 (e)                           Aggregated information:

                               - Aggregated volume                                          64,000,000

                               - Price                                                      0.05 pence per new Ordinary Share
 (f)                           Date of transaction                                          15 February 2024
 (g)                           Place of transaction                                         Outside a trading venue

(e)

Aggregated information:

- Aggregated volume

 

- Price

 

64,000,000

 

0.05 pence per new Ordinary Share

(f)

Date of transaction

15 February 2024

(g)

Place of transaction

Outside a trading venue

 

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