TIDMBOIL

RNS Number : 4648K

Baron Oil PLC

02 September 2021

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Regulation Article 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310 until the release of this announcement.

2 September 2021

Baron Oil Plc

("Baron" or "the Company")

Interim Results for the six months ended 30 June 2021

Baron Oil Plc (AIM:BOIL), the AIM-quoted oil and gas exploration company focused on opportunities in SE Asia, UK and Latin America, announces its unaudited interim financial information and results for the six months ended 30 June 2021.

Key Points

   --    Consolidation of interests in Timor-Leste Chuditch PSC - Baron now has a 75% interest 
   --    Critical 3D seismic reprocessing by TGS to define Chuditch prospectivity underway 
   --    Agreed increase in interest in UK licence P2478 containing the large Dunrobin prospect 
   --    Acceleration of Dunrobin subsurface evaluation with Baron's technical oversight 
   --    First half of 2022 set to be a key period for both Chuditch and Dunrobin 

Financial

-- Available cash (excluding monies held as security for bank guarantees in Peru and Timor-Leste) as at 30 June 2021 of GBP2,515,000 (30 June 2020: GBP1,798,000; 31 December 2020: GBP1,190,000). Successful Placing and Subscription raising GBP3 million (gross) announced on 24 March 2021.

-- In April 2021, the Company increased its stake in SundaGas (Timor-Leste Sahul) Pte. Ltd ("TLS") to a controlling interest of 85% at a cash cost of US$1,243,000; and acquired the remaining 15% on 17 June 2021 in exchange for the issue of 1,157,202,885 ordinary shares in the Company. Baron was not required to make any further contribution to the bank guarantee deposit. The full value of the guarantee deposit of US$1,000,000 is now consolidated, with US$667,000 shown as a payable to SundaGas Pte. Ltd.

-- Net loss after finance costs and tax of GBP117,000 (30 June 2020: net loss of GBP703,000; year to 31 December 2020: net loss of GBP920,000), representing a loss of 0.002p per share (30 June 2020: 0.020p; year to 31 December 2020: 0.023p).

-- There is a gain of GBP359,000 arising on the deemed disposal of the interest in an associated undertaking under IFRS3 that arises on the acquisition of the remaining equity in SundaGas (Timor-Leste Sahul) Pte. Ltd (see note 7 of the Interim Financial Statements).

-- Increase in administration expenses largely arises from consolidation of TLS, which was previously accounted for as an associated undertaking, for part of the period for the first time, and a severance payment to a former director.

Andy Yeo, Chief Executive commented:

"We believe that the success in securing the significantly increased interest in the Chuditch PSC places Baron in a strong position to deliver material value for shareholders. The ongoing sophisticated technical work and the scale of the mean Prospective Resources, now independently evaluated to be an aggregate of 592MMBOE (gross), are believed to be of a sufficient level to attract the interest of major regional gas players and other potential funding partners. The Company anticipates initiating discussions with a range of such parties from September 2020 onwards. In addition, we have been able to accelerate progress in the UK on Licence P2478 as well as increasing our interest in the potentially large Dunrobin prospect.

"The first half of 2022 will be an important period for Baron for both Chuditch and P2478."

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 
 Finance) 
Kelly Gardiner (Sales and Corporate Broking) 
 
Turner Pope Investments (TPI) Limited                  +44 (0)20 3657 0050 
Joint Broker 
Andy Thacker 
 
IFC Advisory Limited                                   +44 (0)20 3934 6630 
Financial PR and IR 
Tim Metcalfe, Florence Chandler 
 

Timor-Leste: offshore Chuditch PSC, Timor Sea - Baron 75%; TIMOR GAP 25%

Corporate & PSC Developments

During the reporting period, Baron progressively increased its interest in SundaGas Timor-Leste (Sahul) Pte. Ltd. ("TLS") from 33.33% to 100%. TLS is the parent company of SundaGas Banda Unipessoal Lda. ("Banda"), the Timor-Leste registered subsidiary, which is the Operator of and 75% interest holder in the TL-SO-19-16 PSC ("Chuditch PSC", or "PSC"). The remaining 25% interest is held by TIMOR GAP Chuditch Unipessoal, Lda. ("TIMOR GAP"), a subsidiary of the Timor-Leste state oil company, which is carried for all exploration and development costs through to first production.

Through this process, which included a Placing and Subscription of GBP3 million (gross) and a Share Exchange, Baron has secured undiluted control of Banda, welcomed a significant new shareholder to Baron, and retained the Banda technical and commercial team who will continue to drive the Chuditch PSC project forward.

At the regulatory level, Banda enjoys a strong, constructive relationship with Autoridade Nacional do PetrĂ³leo e Minerais ("ANPM"), the Timor-Leste state oil and gas regulatory authority, and our partner, TIMOR GAP. This was an important consideration for ANPM when granting Banda a year's extension to Contract Year 1 of the PSC in February 2021, to enable the timely completion of the committed work programme, in particular the 3D seismic reprocessing project. The latest Management Committee Meeting with ANPM and TIMOR GAP in late June 2021 reaffirmed the significant progress being made on the PSC's work programme and ratified Banda's plans for continuing technical studies and for the expansion and training of the Timor-Leste based team.

3D Seismic Reprocessing

The licensing and reprocessing of 1,270km(2) of 3D seismic data covering the Chuditch-1 discovery and adjacent prospects commenced in April 2021 with the work being conducted by TGS-NOPEC Geophysical Company ASA ("TGS") at their UK processing centre in the United Kingdom.

The reprocessing is specifically designed to address key issues associated with sea-bed topography and shallow geological features which significantly impact the existing seismic image at the reservoir level local to the Chuditch area, where previous technologies had largely failed. Whilst necessarily computationally intensive and time-consuming, the work is expected to result in a considerably enhanced subsurface image, critical for the definition of the size and shape of the accumulation, impacting the evaluation of gas volumes in place and the location of potential future wells.

Encouraging progress is being made with the reprocessing, affirmed at a key milestone meeting held during August 2021. Initial reprocessed data are scheduled to be delivered in Q4 2021 with final data due in Q2 2022. A decision on whether to enter the drilling phase, with the potential for a high impact drilling programme in 2023, is to be taken by Q4 2022 following the interpretation of the final reprocessed data.

Geological and Geophysical Studies

In parallel with the reprocessing project, the geological and geophysical database has been expanded by accessing legacy information on seismic acquisition and drilling held on behalf of the government of Timor-Leste by Geoscience Australia. These additional data sets are being incorporated into the evaluation of the Chuditch area, including:

-- extensive seismic interpretation and mapping, now complete, based on legacy 2D seismic data, developing the understanding of the regional context of the Chuditch discovery;

-- a detailed petroleum systems modelling exercise utilising the expanded regional geological datasets and seismic mapping; and

   --    a revised petrophysical evaluation of the Chuditch discovery. 

Prospective Resources

On 17 July 2021, the Company announced the results of an independent review of Prospective Resources by THREE60 Energy Asia Sdn. Bhd. ("THREE60 Energy") for the Chuditch PSC, validated to SPE PRMS 2018 industry standards. This independent review confirmed and superseded previous non-SPE PRMS compliant gross volume potential assessments, including for the first time an assessment of the volumes of prospective condensate resources in the Chuditch-1 discovery and adjacent prospects and lead:

-- Aggregate Gross Mean Prospective Resources of 3,368 Bscf of gas and 30 MMbbl of condensate, equivalent to a total of 592 MMBOE.

-- High Estimate (3U) of gross Prospective Resources equivalent to a total of 1,156 MMBOE reflecting the potential for a single, large accumulation.

-- Subsurface risks for the prospects and lead estimated to be low since they share analogous geological characteristics to Chuditch-1 and other gas discoveries in adjacent Timor-Leste and Australian waters.

Regional Activity

We believe that recent events in the Timor Sea area illustrate the high value potential of Chuditch within this important emerging gas arena:

   --   acceleration in regional gas development following the Santos US$1.25 billion acquisition of ConocoPhillips' upstream and midstream assets in northern Australia and Timor-Leste; 

-- infill drilling results by Santos on the Bayu-Undan field in Timor-Leste waters demonstrated high initial rates of gas and condensate production from the Jurassic Plover Formation (the reservoir encountered in Chuditch-1), expected to lead to an extension of infrastructure life;

-- announcement of a Memorandum of Understanding between Santos and ENI to jointly explore synergies for the development of gas resources and infrastructure in the Timor Sea; and

-- robust demand and price growth in the SE Asia liquid natural gas ("LNG") market, where future demand is forecast to exceed supply.

UKCS: offshore Licence P2478, Inner Moray Firth - Baron 32%; Corallian 36%; Upland 32% *

Background

The P2478 Licence contains the prospective Dunrobin area consisting of large, rotated fault blocks mapped mostly on 3D seismic data with candidate direct hydrocarbon indicators. The cost of a well to test the Dunrobin prospect is expected to be modest at c. GBP7 million gross as the prospect lies in waters of less than 100 metres and the total drilling depth is prognosed to be approximately 660 metres.

Dunrobin is evaluated by Baron to be one of the few remaining targets yet to be drilled in the UK North Sea where estimated gross mean Prospective Resources are in excess of 100 MMbbl (a non-SPE PRMS compliant estimate). In addition, there is the follow up potential of the smaller Golspie prospect within the licence area. The Beatrice field c.20km north of Dunrobin produced over 140 MMbbl from the same petroleum system.

Regional Technical Studies

In Q1 2021, the joint venture received the results of regional technical studies undertaken by a large European E&P company as part of a work sharing agreement, which enhanced the partners' understanding of the petroleum geology and corroborated their view of Dunrobin as a potentially attractive and substantial target. The results have been incorporated into the ongoing work programme.

Increase in Interest

During August 2021, Baron increased its interest in P2478 and in particular in Dunrobin from 15% to 32% (* subject to the consent of the UK Oil and Gas Authority ) in exchange for paying 100% of the costs of the remaining Phase A work commitments up to a cap of GBP160,000. Corallian remains the operator of Licence P2478, with Baron assuming the role of technical overseer of the remaining Phase A work commitments.

3D Seismic Reprocessing Programme

The key component of the Phase A work is 3D seismic reprocessing which is expected to be delivered during H1 2022 and which is aimed at reducing the range of volumetric uncertainty and subsurface risk as well as providing potential drilling location candidates. The accelerated evaluation will provide time to mature the Dunrobin prospect and to engage with potential drilling partners ahead of making a "drill or drop" decision before the end of Phase A in July 2023.

Peru: onshore Block XXI, Sechura Desert of northern Peru - Baron 100%

Background

In a country where political upheaval and uncertainty continues, Peru has been hard-hit by the pandemic, recording the highest COVID-19 death toll per capita in the world. Nevertheless, there are signs that the authorities are beginning to scale back certain COVID restrictions ahead of the next review of the current national State of Emergency.

As previously noted, whilst the ongoing COVID-19 restrictions have continued to delay progress in relation to a drilling decision for the proposed El Barco-3X exploration well, there has been some progress in our application for a three-year extension option to the licence. Also, following the appointment of a new regional president and council in the Piura region which contains the licence area, our Peru based team has recently been able to visit and engage with the local communities of Belisario and El Barco.

Drilling Requirements

In order to progress the drilling project, we will require all of the following:

   --    confirmation that a three-year extension option to the licence is available; 
   --    a local farm-in operating partner; 
   --    freedom to conduct workshops with the local communities of Belisario and El Barco; and 

-- drilling authorisation at the local level from, amongst others, the regional president and council.

For now, the licence remains in Force Majeure. It remains unclear how quickly oil and gas exploration activity might recover once COVID restrictions have been lifted. Given the lengthy economic shutdown and our drilling requirements before progressing the project, we are unlikely to be able to take a decision on the drilling of the El Barco-3X exploration well until we move into 2022.

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 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' standard.

 
 GLOSSARY 
 Bscf                    Billion standard cubic feet. 
 High Estimate           Denotes the high estimate qualifying as 
  or 3U                   Prospective Resources. Reflects a volume 
                          estimate that there is a 10% probability 
                          that the quantities actually recovered 
                          will equal or exceed the estimate. 
 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. 
 MMbbl                   Million barrels (either oil or condensate 
                          liquids associated with gas, depending 
                          on context). 
 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 or condensate 
                          in millions of barrels. 
 Prospective Resources   Quantities of petroleum estimated to be 
                          potentially recoverable from undiscovered 
                          accumulations by application of future 
                          development projects. 
 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. 
 
 
 Baron Oil plc 
 
 
 Consolidated Income Statement 
 for the six months ended 30 June 2021 
                                                      6 months            6 months 
                                                            to                  to             Year to 
                                                       30 June             30 June         31 December 
                                                          2021                2020                2020 
                                      Note           Unaudited           Unaudited             Audited 
                                                       GBP'000             GBP'000             GBP'000 
 Revenue                                                     -                   -                   - 
 Cost of sales                                               -                   -                   - 
 
 Gross loss                                                  -                   -                   - 
 
 Exploration and evaluation 
  expenditure                                            (135)                (67)               (145) 
 Intangible asset impairment                                22               (120)                  59 
 Property, plant and equipment 
  depreciation                                             (6)                   -                 (2) 
 Receivables impairment                                     42                (14)                  74 
 Administration expenses               5                 (424)               (367)               (710) 
 Profit/(loss) arising on foreign 
  exchange                                                (36)                  37               (157) 
 Other operating income                                     89                   -                   - 
 
 Operating loss                                          (448)               (531)               (881) 
-----------------------------------  -----  ------------------  ------------------  ------------------ 
 
 Loss from interest in associated 
  undertaking                                             (29)                (15)                (44) 
 Impairment of investment in 
  associated undertaking                                     -               (159)                   - 
 Gain on disposal of associated 
  undertaking                          7                   359                   -                   - 
 
 Loss before interest and taxation                       (118)               (705)               (925) 
-----------------------------------  -----  ------------------  ------------------  ------------------ 
 
 Finance cost                                              (1)                   -                   - 
 Finance income                                              2                   2                   5 
 
 Loss on ordinary activities 
  before taxation                      6                 (117)               (703)               (920) 
 
 Income tax (expense)/benefit          8                     -                   -                   - 
 
 Loss on ordinary activities 
  after taxation                                         (117)               (703)               (920) 
-----------------------------------  -----  ------------------  ------------------  ------------------ 
 
 Loss on ordinary activities 
  after taxation is attributable 
  to: 
 Equity shareholders                                     (117)               (703)               (920) 
 Non-controlling interests                                   -                   -                   - 
 Loss on ordinary activities 
  after taxation                                         (117)               (703)               (920) 
-----------------------------------  -----  ------------------  ------------------  ------------------ 
 
 Earnings/(loss) per share: 
  basic                                9              (0.002)p            (0.020)p            (0.023)p 
-----------------------------------  -----  ------------------  ------------------  ------------------ 
 
 Diluted                               9              (0.002)p            (0.020)p            (0.023)p 
-----------------------------------  -----  ------------------  ------------------  ------------------ 
 
 
 
 Baron Oil plc 
 
 
 Consolidated Statement of Comprehensive Income 
 for the six months ended 30 June 2021 
                                                    6 months          6 months 
                                                          to                to       Year to 
                                                     30 June           30 June   31 December 
                                                        2021              2020          2020 
                                                   Unaudited         Unaudited       Audited 
                                                     GBP'000           GBP'000       GBP'000 
 
 Loss on ordinary activities after 
  taxation attributable to the 
  parent                                               (117)             (703)         (920) 
 
 Other comprehensive income 
 Release of option reserve                                 -                 -            41 
 Currency translation differences                       (19)                88         (115) 
 Total comprehensive income for 
  the period                                           (136)             (615)         (994) 
------------------------------------------  ----------------  ----------------  ------------ 
 
 Total comprehensive income attributable 
  to: 
 Owners of the company                                 (136)             (615)         (994) 
------------------------------------------  ----------------  ----------------  ------------ 
 
 
 
 
 Baron Oil plc 
 
 
 Consolidated Statement of Financial Position 
 at 30 June 2021 
 
                                                     30 June             30 June       31 December 
                                                        2021                2020              2020 
                                                   Unaudited           Unaudited           Audited 
                                      Note           GBP'000             GBP'000           GBP'000 
 Non-current assets 
 Property, plant and equipment                            37                   -                43 
 Intangibles                           6               2,486                  14                18 
 Goodwill                                                  -                   -                 - 
 Associated undertaking                                    -                   -               151 
 
                                                       2,523                  14               212 
-----------------------------------  -----  ----------------  ------------------  ---------------- 
 Current assets 
 Receivables                                              83                 311               376 
 Cash and cash equivalents                             2,515               1,798             1,190 
 Cash held as security for bank 
  guarantees                                             842                 134               121 
 
                                                       3,440               2,243             1,687 
-----------------------------------  -----  ----------------  ------------------  ---------------- 
 
 Total assets                                          5,963               2,257             1,899 
-----------------------------------  -----  ----------------  ------------------  ---------------- 
 
 Equity and liabilities 
 
 Capital and reserves attributable 
  to owners of the parent 
 Called up share capital               10              2,896               1,107             1,107 
 Share premium account                                34,061              32,189            32,156 
 Share option reserve                                    135                 137               135 
 Foreign exchange translation 
  reserve                                              1,509               1,731             1,528 
 Retained earnings                                  (33,247)            (32,954)          (33,130) 
 Total equity                                          5,354               2,210             1,796 
-----------------------------------  -----  ----------------  ------------------  ---------------- 
 
 Current liabilities 
 Trade and other payables                                570                  36                58 
 Taxes payable                                            15                  11                16 
 
                                                         585                  47                74 
-----------------------------------  -----  ----------------  ------------------  ---------------- 
 
 Non-current liabilities 
 Lease finance                                            24                   -                29 
 
 Total equity and liabilities                          5,963               2,257             1,899 
-----------------------------------  -----  ----------------  ------------------  ---------------- 
 
 
 
 Baron Oil plc 
 
 
 Consolidated Statement of Cash Flows 
 for the six months ended 30 June 2021 
                                                             6 months             6 months 
                                                                   to                   to            Year to 
                                                              30 June              30 June        31 December 
                                                                 2021                 2020               2020 
                                                            Unaudited            Unaudited            Audited 
                                              Note            GBP'000              GBP'000            GBP'000 
 
 Operating activities                          11                  25                (675)              (919) 
 
 
 Investing activities 
 Return from investment and servicing 
  of finance                                                        2                    2                  5 
 Repayment from/(advances to) 
  associated undertakings                                         323                    -              (323) 
 Acquisition of intangible assets                               (900)                (183)               (14) 
 Acquisition of subsidiary and 
  associated undertakings                                       (889)                    -              (195) 
 
                                                              (1,464)                (181)              (527) 
                                                     ----------------  -------------------  ----------------- 
 Financing activities 
 Proceeds from issue of share 
  capital                                                       2,768                2,307              2,295 
 Lease financing                                                  (4)                    -                (6) 
 
 Net cash (outflow)/inflow                                      1,325                1,451                843 
 Cash and cash equivalents at 
  the beginning of the period                                   1,190                  347                347 
 
 Cash and cash equivalents at 
  the end of the period                                         2,515                1,798              1,190 
                                                     ================  ===================  ================= 
 
           As at 30 June 2021, bank deposits include amounts totalling US$1,160,000 
            (30 June and 31 December 2020: US$160,000) that are being held in 
            respect of guarantees and are not available for use until the Group 
            fulfils certain licence and contractual commitments in Peru and 
            Timor-Leste. This is not considered to be liquid cash and has therefore 
            been excluded from the cash flow statement. 
 
            Should any of the Timor-Leste US $1,000,000 Bank Guarantee be released, 
            the net proceeds received shall be divided between SundaGas Pte. 
            Ltd ("SGPL") and Baron in the proportions of their Initial Interests 
            (66.67% and 33.33%). The receipt of any such funds shall satisfy 
            the Bank Guarantee Loan Account ("BGLA") which shall be considered 
            to be repaid in full. In the event that the Bank Guarantee is exercised 
            or the Bank Guarantee deposit is otherwise forfeited, SGPL and Baron 
            have agreed that the BGLA shall be written off and neither of them 
            shall have any claim against TLS in this respect. 
 
 
 
 Baron Oil plc 
 
 
 Consolidated Statement of Changes in Equity 
 for the six months ended 30 June 2021 
                                             6 months        6 months 
                                                   to              to         Year to 
                                              30 June         30 June     31 December 
                                                 2021            2020            2020 
                                            Unaudited       Unaudited         Audited 
                                              GBP'000         GBP'000         GBP'000 
 
 Opening equity                                 1,796             455             455 
 
 Shares issued net of costs                     3,694           2,307           2,295 
 
 Loss for the period attributable 
  to equity shareholders                        (117)           (703)           (920) 
 Share based payments                               -              63              81 
 Foreign exchange translation                    (19)              88           (115) 
 
 Closing equity                                 5,354           2,210           1,796 
                                     ================  ==============  ============== 
 
 
 
 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 2020. The financial statements for the half period ended 30 June 2021 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 2020, prepared under IFRS, were approved by the Board of Directors on 26 May 2021 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 2020. This interim financial information for the six months to 30 June 2021, which complies with IAS 34 'Interim Financial Reporting', was approved by the Board on 1 September 2021.

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 2020, 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.

 
 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 
  2021 
 Unaudited 
 
 Revenue 
 Sales to external customers                     -                   -                   -                   - 
                                           _______             _______             _______             _______ 
 Segment revenue                                 -                   -                   -                   - 
 
 Results 
 Segment result                              (466)                (26)                 375               (117) 
 
 
 Total net assets                            2,459                 125               2,770               5,354 
 
 
                                            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                                 -                   -                   -                   - 
 
 Results 
 Segment result                              (332)               (197)               (174)               (703) 
 
 
 Total assets                                2,067                 143                   -               2,210 
 
 
                                            United               South               South               Total 
                                           Kingdom             America                East 
                                                                                      Asia 
 Year ended 31 December                    GBP'000             GBP'000             GBP'000             GBP'000 
  2020 
 Audited 
 
 Revenue 
 Sales to external customers                     -                   -                   -                   - 
                                           _______             _______             _______             _______ 
 Segment revenue                                 -                   -                   -                   - 
 
 Results 
 Segment result                              (891)                  15                (44)               (920) 
 
 
 Total assets less liabilities               1,200                 122                 474               1,796 
 
 
 
 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 
                                                         2021                2020                2020 
                                                    Unaudited           Unaudited             Audited 
                                                      GBP'000             GBP'000             GBP'000 
 Directors' and employee benefit 
  expense                                                 220                 160                 374 
 Director's severance payment                              53                   -                   - 
 Share-based payment                                        -                  63                  81 
 Legal and professional fees                               96                 114                 198 
 Other expenses                                            55                  30                  57 
 
                                                          424                 367                 710 
                                           ==================  ==================  ================== 
 
 
 6. Loss on ordinary activities 
  before taxation 
                                                     6 months            6 months 
                                                           to                  to             Year to 
                                                      30 June             30 June         31 December 
                                                         2021                2020                2020 
                                                    Unaudited           Unaudited             Audited 
                                                      GBP'000             GBP'000             GBP'000 
 
 The loss on ordinary activities 
  before taxation includes: 
 
 Auditors' remuneration 
  Audit                                                    12                  13                  32 
  Other non-audit services                                  1                   1                   2 
 Exploration and evaluation expenditure                   135                  67                 145 
 Impairment of intangible assets                         (22)                 120                (59) 
 Depreciation of property, plant 
  and equipment                                             6                   -                   2 
 Impairment of foreign tax receivables                   (42)                  14                (74) 
 (Profit)/Loss on exchange                                 36                (37)                 157 
 
 
 
 7. Gain on disposal of associated undertaking and acquisition 
  of subsidiary undertaking 
 
 During the period, the Company increased its stake in SundaGas 
  (Timor-Leste Sahul) Limited ("TLS") from 33.33% to 100%. In accordance 
  with IFRS3, this is treated as an effective disposal of the interest 
  in the associated undertaking requiring a remeasurement of its 
  cost to fair value. This results in a gain on disposal of GBP359,000. 
 
 As a consequence of the increased holding in TLS, the company is 
  now consolidated into the Group Income Statement and Statement 
  of Financial Position. As TLS is a single asset company in pre-production 
  phase, it is included as an oil & gas asset purchase rather than 
  as a business combination, and its carrying value is included in 
  intangible assets. 
 
 
 8. Income tax expense 
 
 There was no tax expense during the period (30 June 2020: nil; 
  31 December 2020: nil). 
 
 
 Baron Oil plc 
 
 
 Notes to the Interim Financial Information 
  (continued) 
 
 9. Earnings/(loss) per Share 
 
                                                           6 months              6 months 
                                                                 to                    to               Year to 
                                                            30 June               30 June           31 December 
                                                               2021                  2020                  2020 
                                                          Unaudited             Unaudited               Audited 
                                                              Pence                 Pence                 Pence 
 Earnings/(loss) per ordinary 
  share 
 Basic                                                      (0.002)               (0.020)               (0.023) 
 Diluted                                                    (0.002)               (0.020)               (0.023) 
 
 
 The earnings/(loss) per ordinary share is based on the Group's 
  loss for the period attributable to equity shareholders of GBP117,000 
  (30 June 2020: GBP703,000; 31 December 2020: GBP920,000) and a 
  weighted average number of shares in issue of 7,302,657,312 (30 
  June 2020: 3,545,718,838; 2020: 3,988,470,466). 
 
 10. Called up Share Capital 
 
 On 26 March 2021, the Company issued 1,525,000,000 Ordinary Shares 
  of 0.025p each at 0.05p per share, plus a further 4,475,000,000 
  Ordinary Shares of 0.025p each at 0.05p per share on 12 April 2021, 
  together yielding net proceeds after costs of GBP2,768,000. 
 On 17 June 2021, the Company issued 1,157,202,885 shares in exchange 
  for the remaining 15% of the ordinary share capital of SundaGas 
  (Timor-Leste Sahul) Pty. Ltd. not already held, at a value of GBP926,000. 
 
 11. 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 
                                                               2021                  2020                  2020 
                                                          Unaudited             Unaudited               Audited 
                                                            GBP'000               GBP'000               GBP'000 
 Loss for the period                                          (117)                 (703)                 (920) 
 Depreciation and amortisation                                 (16)                   279                  (57) 
 Share based payments                                             -                    63                    81 
 Loss from interest in associated 
  undertaking                                                    29                    15                    44 
 Other operating income non-cash 
  movement                                                       89                     -                     - 
 Finance income shown as an investing 
  activity                                                      (2)                   (2)                   (5) 
 Tax Expense/(Benefit)                                            -                     -                     - 
 Foreign currency translation                                  (21)                  (41)                  (52) 
 (Increase)/decrease in receivables                              28                 (262)                   (4) 
 Tax paid                                                         -                    20                     - 
 Increase/(decrease) in payables                                 35                  (44)                   (6) 
                                                             ______                ______               _______ 
                                                                 25                 (675)                 (919) 
 
 
 
 
 
 Baron Oil plc 
 
 
 Notes to the Interim Financial Information 
  (continued) 
 
 12. Related party transactions 
 
 During the period, the Company purchased technical services 
  amounting to GBPnil (30 June 2020: GBP1.346; 31 December 2020: 
  GBP17,096) from Tedstone Oil and Gas Limited, a company controlled 
  by Mr Jon Ford, a director. 
 
 During the year, the directors subscribed for new ordinary 
  shares in the Company at a price of 0.005p per new ordinary 
  share as part of a placing of new ordinary shares that was 
  announced by the Company on 24 March 2021. The number of shares 
  subscribed for during the period, and the aggregate number 
  and percentage of shares held directly and indirectly by directors 
  are as follows. 
                                                                   Number of   Total shareholding     Percentage 
 Director                                                  shares subscribed                                held 
 Andrew Yeo                                                       62,600,000          168,850,000          1.61% 
 Jon Ford                                                         15,000,000           22,500,000          0.22% 
 John Wakefield                                                   20,000,000           20,000,000          0.19% 
 
 13. Financial Information 
 
 The unaudited interim financial information for period ended 
  30 June 2021 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 2020 
  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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