RNS Number : 3128C
Baron Oil PLC
18 June 2021
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 (which forms part of domestic UK law
pursuant to the European Union (withdrawal) act 2018) until the
release of this announcement.
18 June 2021
Baron Oil Plc
("Baron" or the "Company")
Alignment of Interests for Chuditch PSC
Baron Oil Plc (AIM:BOIL), the AIM-quoted oil and gas exploration
company, is pleased to announce the alignment of interests in
relation to the Chuditch PSC, by way of a share exchange, whereby
Baron has agreed to acquire the remaining 15% of SundaGas
Timor-Leste (Sahul) Pte. Ltd. ("TLS") in exchange for the issuance
of 1,157,202,885 new Baron ordinary shares (representing 9.99% of
the Company's enlarged share capital) to SundaGas Pte. Ltd ("SGPL")
(the "Share Exchange").
TLS is the parent company of the Timor-Leste subsidiary SundaGas
Banda Unipessoal Lda. ("Banda"), which is the Operator of and 75%
interest holder in the offshore Timor-Leste TL-SO-19-16 PSC (the
"Chuditch PSC" or the "PSC"). SGPL is the parent company of
SundaGas Resources Pte. Ltd. ("SGR"), which in turn holds the 15%
interest in TLS which Baron did not own, and which was carried by
Baron under the terms of the Earn In Agreement announced on 24
March 2021. The Chuditch PSC is located approximately 185
kilometres south of Timor-Leste, 100 kilometres east of the
producing Bayu-Undan field, 50 kilometres south of the Greater
Sunrise potential development, and covers approximately 3,571km (2)
in water depths of 50-100 metres. The PSC contains the Chuditch-1
Under the terms of the Share Exchange, Baron will issue
1,157,202,885 new ordinary shares of 0.025 pence each ("Ordinary
Shares") as consideration, equivalent to 9.99% of the Company's
enlarged ordinary share capital (the "Consideration Shares"). The
Consideration Shares will be issued to SGPL, the parent company.
Under the terms of the Earn In Agreement announced in March 2021,
Baron has responsibility to carry SGR's share of financial
contributions until the end of the PSC's Firm Commitment Period in
November 2022. This carry will subsequently be extinguished
following completion of the Share Exchange.
Through the Share Exchange, Baron will become the sole
shareholder of TLS and have a 75% effective interest in the
Chuditch PSC, with the remaining 25% interest in the PSC held by a
subsidiary of the Timor-Leste state oil company Timor Gap, E.P.,
with its interest carried to development by Banda .
SGPL and its principals have entered into a relationship
agreement (the "Relationship Agreement") with Baron which contains
provisions typical of an agreement of this nature. The Relationship
Agreement includes a lock-in which prohibits the selling, disposing
of any interest or creating any charge over the Consideration
Shares, except with Baron's prior consent, until: (i) 30 June 2022,
whereupon SGPL may sell up to 50% of the Consideration Shares in an
orderly manner in liaison with the Company's brokers and (ii)
thereafter, the earlier of Banda confirming its intent to enter
Contract Year 3 of the PSC or 31 December 2022, at which point the
restrictions on disposals in relation to the Consideration Shares
shall cease (although for a period of 12 months thereafter SGPL may
only deal in the Consideration Shares in an orderly manner in
liaison with Baron's brokers). The Relationship Agreement also
provides, inter alia, that SGPL will vote the Consideration Shares
as directed by Baron in a manner that is consistent with the
recommendation of the Company's Board.
Through the Share Exchange, SGPL will become a significant
shareholder in Baron and SGPL's team, which is currently under
contract to TLS and operating the Chuditch PSC, will remain in
place. Under the terms of an Amended Services Agreement between
SGPL and TLS, SGPL will continue to be paid fees for management and
administrative services. This Agreement has been extended to the
end of December 2022. There is no right for either party to give
notice of earlier termination except with mutual written consent.
In addition, for the duration of this Agreement, the Chief
Executive of SGPL will be a Director of TLS and Banda alongside
Baron's Chief Executive and Technical Director. No material changes
to the overall PSC work programme budget are anticipated.
SGPL will assign its prior cost pool to Baron (representing
approximately US$584,000). The current US$1.0 million Bank
Guarantee arrangements (SGPL having contributed US$667,667 and
Baron US$333,333) remain unchanged.
SGPL's team members have extensive operating experience in South
East Asia, including with Hess, Conoco, Murphy, Kerr McGee and Sun
before founding Mitra Energy (now Jadestone) in 2005 and then SGPL
in 2016. The team has a significant record of achieving successful
farmouts which span multiple countries and includes transactions
with super major oil and gas companies, large and smaller regional
players and private equity.
In order to successfully monetise this potentially significant
asset, a key objective for the Chuditch PSC in 2022 will be to
attract drill funding for which there are multiple options and
alternatives. By retaining, aligning and incentivising the existing
SGPL team the Directors believe that the prospects of achieving
this goal are enhanced. The Board believes that Baron's increased
net share of estimated Mean non-SPE PRMS compliant prospective
resources to 2,645 BCF (440 MMBOE) in relation to the PSC is more
than sufficient to attract attention from the major regional gas
players and other potential partners .
For the year ended 31 March 2021, TLS's unaudited total
comprehensive loss was US$618,326 and its unaudited total assets as
at 31 March 2021 were US$1,092,548.
As SGPL through its subsidiary SGR currently holds more than 10
per cent. of TLS's ordinary shares, the Share Exchange is deemed to
be a related party transaction pursuant to rule 13 of the AIM Rules
for Companies. Accordingly, the directors of Baron consider, having
consulted with the Company's nominated adviser, Allenby Capital
Limited, that the terms of the Share Exchange are fair and
reasonable insofar as the Company's shareholders are concerned.
Application has been made for the 1,157,202,885 Consideration
Shares to be admitted to trading on AIM ("Admission") and the date
on which Admission is expected to become effective is on or around
21 June 2021. Upon Admission, the Company's issued ordinary share
capital will consist of 11,583,612,461 Ordinary Shares with one
voting right each. The Company does not hold any Ordinary Shares in
treasury. Therefore, the total number of Ordinary Shares and voting
rights in the Company will be 11,583,612,461. With effect from
Admission, this figure may be used by Shareholders in the Company
as the denominator for the calculations by which they will
determine if they are required to notify their interest in, or a
change to their interest in, the Company under the FCA's Disclosure
Guidance and Transparency Rules.
Andy Butler, Chief Executive of SundaGas Pte. Ltd
"We are delighted to become a significant Baron shareholder and
to continue our strong working relationship with the Baron team.
The alignment of interests further enhances our ability to achieve
the common objective of delivering on the substantial prospective
resources of the Chuditch PSC."
Andy Yeo, Chief Executive of Baron commented....
"We consider that the Share Exchange is value accretive and
further increases our prospective resource base. We believe that
our alignment with the experienced South East Asian based SGPL team
will improve the chances of success of attracting drill funding in
2022, which will benefit both existing and our new
Forthcoming Annual General Meeting ("AGM"), 23 June 2021
The health of our shareholders, employees and stakeholders
remains extremely important to us. As outlined previously, due to
the ongoing COVID restrictions, shareholders, advisers and other
guests will not be allowed to attend the AGM in person and anyone
seeking to attend the meeting will be refused entry. Shareholders
are therefore requested to submit their votes via a proxy form,
appointing the Chairman of the meeting as their proxy. The business
at the AGM will be confined to the formal business only and not
broadcast. If any shareholder has a question they would like to
pose to the Board, this should be submitted ahead of the AGM, to
the Chairman via the Company's central email address
firstname.lastname@example.org and where appropriate, such questions and
answers will be published on Baron's website in due course.
It is the intention of the Company to publish an AGM statement
on 23 June 2021.
Qualified Person's Statement
Pursuant to the requirements of the AIM Rules - Note for Mining
and Oil and Gas Companies, 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 39 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'
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, Nick Athanas (Corporate
Kelly Gardiner (Sales and Corporate Broking)
Turner Pope Investments (TPI) Limited +44 (0) 20 3657 0050
Andy Thacker (Joint Broker)
BCF Billion cubic feet.
Mean 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
high resource numbers with relatively low probabilities.
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
Prospective Resources Quantities of petroleum that are estimated to exist originally in naturally occurring
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
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.
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