TIDMBOIL
RNS Number : 2463C
Baron Oil PLC
28 September 2018
28 September 2018
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
BARON OIL Plc
("Baron Oil", "Baron" or "the Company")
Unaudited Interim Results
for the six months ended 30 June 2018
Baron Oil Plc, the AIM-listed oil and gas exploration and
production company primarily focused on opportunities in the UK and
Latin America, announces its unaudited interim financial
information and results for the six months ended 30 June 2018.
Highlights
-- The Wick exploration well and Colter appraisal well rig site
surveys have been completed, the contract has been signed for the
Ensco 72 rig and the two well programme is expected to commence at
Wick during the 4(th) Quarter of 2018, subject to receipt of the
necessary regulatory approvals and consents for both wells. Follows
Farmout Agreements signed with Corallian Energy Limited in March
and June 2018 in respect of UK Offshore Licenses P2235 (Wick) and
P1918 (Colter).
-- Wick has been defined by 3D seismic mapping by Baron and
others and a recent announcement by Upland Resources Limited stated
Wick has estimated in-place P50 Prospective Resources of around 250
million barrels of oil (unrisked) in sands of Jurassic and Triassic
age in the licence area, a large part of which will be tested by
the Wick well.
-- Colter is estimated to have the potential to hold unrisked
Pmean Prospective Resources of 23 million barrels of oil equivalent
recoverable.
-- Peru Block XXI: The El Barco-3X exploration well is now
targeted for early 2019, but the drilling programme is subject to
completion of a farm out agreement with an interested third party
and removal from Force Majeure.
-- Operating loss of GBP400,000 and net loss after finance and
tax of GBP405,000 (0.07p per share) for the period, down from a net
loss of GBP916,000 in the same period in 2017, and from a net loss
of GBP1,539,000 in the year ended 31 December 2017.
-- Cash balance at 30 June 2018 was GBP3,236,000 with remaining
obligations on Wick of GBP831,300 and Colter of GBP707,700 on the
same date, based on latest AFE information.
United Kingdom offshore licence P2235 block 11/24b ("Wick"
Prospect) (Baron 15%)
Baron announced on 13 March 2018 that it had signed a definitive
Farmout Agreement with Corallian Energy Limited, ("Corallian") in
respect of UK Offshore Licence P2235 (Block 11/24b), which contains
the Wick Prospect. Under the Agreement, the Company will pay 20% of
the costs of the Wick well, up to a maximum gross cost of GBP4.2
million, and 15% of other costs on the licence and it has now been
assigned a 15% working interest in P2235. It was announced on 25
July 2018 that an Authorisation for Expenditure ("AFE") for the
Wick well had been signed in the amount of GBP5.2 million, of which
Baron's share will be GBP990,000 (GBP831,000 remaining at 30 June
2018). The Wick Prospect lies close to the shore of NE Scotland, 5
kilometres north and updip from the Lybster Field, which has been
developed from onshore facilities. The Wick prospect has been
defined by 3D seismic mapping by Baron and others and a recent
announcement by Upland Resources Limited stated Wick has estimated
in-place P50 Prospective Resources of around 250 million barrels of
oil (unrisked) in sands of Jurassic and Triassic age in the 11/24b
licence area, a large part of which will be tested by the Wick
well. The Wick well will be drilled to a total depth of 1250 metres
subsea in a water depth of 39 metres during the 4(th) Quarter of
2018, subject to receipt of the necessary approvals and consents.
Baron has now been notified by Corallian that the site survey for
the drilling location had been completed and that an agreement has
been signed with Ensco UK Limited to provide the Ensco 72 jack-up
drilling rig to drill this well.
United Kingdom offshore licence P1918 block 98/11a ("Colter"
Prospect) and onshore PEDLs 330 & 345 (Baron 8%)
Baron initially announced on 13 March 2018 that it had entered
into a Farmout Agreement with Corallian under which it would earn a
5% working interest in UK Offshore Licence P1918, which contains
the Colter Prospect, on which an appraisal well is planned to be
drilled in the 4(th) Quarter of this year, following the Wick Well,
subject to receipt of the necessary approvals and consents. By
participating in this well, Baron would also earn a 5% interest in
nearby onshore licences PEDL 330 and PEDL 345. On 25 July 2018, the
Company announced that it had agreed to increase its working
interest to 8% in this project. Under the terms of the revised
agreement with Corallian, the Company will pay 10.67% of the costs
related to this well, capped at a gross cost of GBP8.0 million.
Costs above this cap will be funded at 8%. It was also announced
that a AFE had been signed for the drilling of the Colter well at a
total cost of GBP7.6 million, including GBP0.4 million of back
costs. The total payable by the Company is currently estimated at
some GBP810,000 (GBP707,700 remaining at 30 June 2018) to earn an
8% interest in each of P1918, PEDL330 and PEDL345.
The Colter Prospect lies in Poole Bay, immediately southeast of
the Wytch Farm oilfield which has been developed from onshore
facilities. The Colter Prospect is estimated to have the potential
to hold unrisked Pmean Prospective Resources of 23 million barrels
of oil equivalent recoverable from this reservoir. The Prospect
will be appraised by a well drilled to a total depth of 1850 metres
subsea in a water depth of 16 metres. Baron has now been notified
by Corallian that the site survey for the drilling location had
been completed and that an agreement has been signed with Ensco UK
Limited to provide the Ensco 72 jack-up drilling rig to drill this
well,
Preliminary mapping of a separate area around the 98/11-1 well,
south of the Colter prospect, suggest the potential for Prospective
Resources of up to 27 million barrels of recoverable oil. Further
definition of this separate area will be possible once the results
of the Colter well are available.
Legacy Exploration Activity
Peru Onshore Block XXI (Baron 100%)
The Company owns a 100% interest in the contract for block XXI
through its 100%-owned subsidiary Gold Oil Peru SAC ("GOP"). The
block lies onshore in the Sechura Desert, close to the town of
Piura, and covers a current area of 2,425 square kilometres.
Plans are still active to drill the El Barco prospect, to a
depth of 1850 metres, most likely in early 2019, subject to the
execution of a satisfactory farmout agreement with an interested
third party. Mapping of the El Barco prospect by GOP indicates that
unrisked Prospective Resources are in the range of 6.4 billion
cubic feet of recoverable gas in a low-risk shallow sand and 7.1
million barrels of recoverable oil in a much higher risk fractured
basement play. The block XXI contract is currently in Force
Majeure, because of local opposition to the drilling at El Barco.
If the well is not drilled within 6 months of expiry of the Force
Majeure situation, the contract will terminate and the Company will
forfeit its guarantee bond of US$160,000.
Operations In Colombia
The Colombian company Inversiones Petroleras de Colombia
("Invepetrol"), in which Baron is a 50% shareholder, is now
controlled by our partner, CI International Fuels, and Baron has no
further involvement in its activities. Proceedings to liquidate
this company were entered into on 23 May 2018.
Sea Asia Study Group
There has been no further progress on the SundaGas project. A
decision by the host government continues to be delayed and it
seems unlikely that an award, if any, will be made before the
beginning of 2019.
Financial Results
In the six month period to 30 June 2018, the Company experienced
an operating loss of GBP400,000 (30 June 2017: loss of
GBP1,430,000; year to 31 December 2017: loss of GBP2,069,000).
The consolidated Income Statement includes exploration and
evaluation expenditure and impairment of GBP121,000 in respect of
block XXI Peru and GBP4,000 in respect of the the Southeast Asia
Joint Study Agreement with SundaGas and final costs on block PL1/10
Ireland.
Administration expenses, excluding exchange differences, in the
period were GBP267,000 (30 June 2017: GBP269,000; year to 31
December 2016: GBP510,000). These have now stabilised following the
the removal of Colombia administrative costs in 2017 and the
efforts to reduce Head Office costs in prior periods. The Board
does not consider that there is scope for further cost reductions
in this area. Exchange differences gave rise to a small gain of
GBP14,000 in the period (30 June 2017: loss of GBP392,000, year to
31 December 2017: loss of GBP508,000).
There was no other operating income during the period (30 June
2017: GBP12,000; year to 31 December 2017: GBP21,000).
After finance and tax, the Company shows a net loss of
GBP405,000 (June 2017: net loss of GBP916,000; 2017 year: net loss
of GBP1,539,000), representing a loss of 0.03p per share (June
2017: 0.07p; year to 31 December 2017: 0.112p).
Cash balance at 30 June 2018 was GBP3,359,330 (30 June 2017:
GBP1,671,000; 31 December 2017: GBP3,873,000).
Malcolm Butler, Chairman of Baron commented:
"The rig contract for the Wick and Colter wells has now been
signed and the wells will be drilled once the permitting process
has been completed. Encouragingly, we are now moving ahead with the
purchase of wellheads and casing and we believe the remaining
permits will be obtained shortly. We look forward to sharing with
shareholders the results of these exciting wells in due
course."
For further information on the Company, visit
www.baronoilplc.com or contact:
Baron Oil Plc:
Malcolm Butler (Chairman & CEO) Tel: +44 (0)1892 838948
SP Angel Corporate Finance LLP (Nominated Advisor and
Broker):
Lindsay Mair, Richard Redmayne, Richard Hail Tel: +44 (0)20 3470
0470
Baron Oil plc
Consolidated Income Statement
for the six months ended 30 June 2018
6 months 6 months
to to Year to
30 June 30 June 31 December
2018 2017 2017
Note Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Revenue - - -
Cost of sales - - -
Gross loss - - -
Exploration and evaluation
expenditure (4) (81) (109)
Intangible assets written
off - - (1,837)
Intangible asset impairment (121) (1,556) -
Goodwill impairment - - -
Receivables impairment (22) 25 43
Disposal of Colombia operations - 831 831
Administration expenses 5 (267) (269) (510)
Profit/(loss) arising
on foreign exchange 14 (392) (508)
Other operating income - 12 21
Operating profit/(loss) (400) (1,430) (2,069)
--------------------------------- ----- --------------------- ----------------------- -----------------------
Finance cost (7) (7) (8)
Finance income 2 2 19
Loss on ordinary activities
before taxation 6 (405) (1,435) (2,058)
Income tax (expense)/benefit 7 - 519 519
Loss on ordinary activities
after taxation (405) (916) (1,539)
--------------------------------- ----- --------------------- ----------------------- -----------------------
Loss on ordinary actvities
after taxation is attributable
to:
Equity shareholders (405) (916) (1,539)
Non-controlling interests 0 - -
Loss on ordinary activities
after taxation (405) (916) (1,539)
--------------------------------- ----- --------------------- ----------------------- -----------------------
Earnings/(loss) per share:
basic 8 (0.03)p (0.07)p (0.112)p
--------------------------------- ----- --------------------- ----------------------- -----------------------
Diluted 8 (0.03)p (0.07)p (0.112)p
--------------------------------- ----- --------------------- ----------------------- -----------------------
Baron Oil plc
Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2018
6 months 6 months
to to Year to
30 June 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Loss on ordinary activities
after taxation attributable
to the parent (405) (916) (1,539)
Other comprehensive income
Currency translation
differences (8) 97 35
Total comprehensive income
for the period (413) (819) (1,504)
------------------------------- ---------- ---------- ------------
Total comprehensive income
attributable to :
Owners of the company (413) (819) (1,504)
------------------------------- ---------- ---------- ------------
Baron Oil plc
Consolidated Statement of Financial Position
for the six months ended
30 June 2018
6 months 6 months
to to Year to
30 June 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and
equipment 1 2 -
Intangibles 1,397 1,256 1,260
Goodwill - - -
1,398 1,258 1,260
------------------------- ------ ------------------------- ------------------------- -------------------------
Current assets
Inventories - - -
Receivables 41 216 18
Cash and cash
equivalents 3,236 1,671 3,873
Cash held as security
for bank guarantees 123 2,890 119
3,400 4,777 4,010
------------------------- ------ ------------------------- ------------------------- -------------------------
Total assets 4,798 6,035 5,270
------------------------- ------ ------------------------- ------------------------- -------------------------
Equity and liabilities
Capital and reserves
attributable
to owners of the parent
Called up share capital 9 344 344 344
Share premium account 30,237 30,237 30,237
Share option reserve 122 81 122
Foreign exchange
translation
reserve 1,715 1,785 1,723
Retained earnings (28,568) (27,540) (28,163)
Total equity 3,850 4,907 4,263
------------------------- ------ ------------------------- ------------------------- -------------------------
Current liabilities
Trade and other payables 142 232 195
Taxes payable 806 896 812
948 1,128 1,007
------------------------- ------ ------------------------- ------------------------- -------------------------
Total equity and
liabilities 4,798 6,035 5,270
------------------------- ------ ------------------------- ------------------------- -------------------------
Baron Oil plc
Consolidated Statement of Cash Flows
for the six months ended 30 June 2018
6 months 6 months
to to Year to
30 June 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
Operating activities 9 (417) (361) (680)
Investing activities
Return from investment
and servicing of
finance 2 2 19
Sale of intangible
assets - - -
Cash previously not
available
now released - - 2,674
Acquisition of
intangible
assets (222) (128) (298)
Acquisition of tangible
assets - - -
(220) (126) 2,395
------------------------- ------------------------- -------------------------
Financing activities
Proceeds from issue of
share capital - - -
Net cash
(outflow)/inflow (637) (487) 1,715
Cash and cash
equivalents
at the beginning of the
period 3,873 2,158 2,158
Cash and cash
equivalents
at the end of the
period 3,236 1,671 3,873
========================= ========================= =========================
As at 30 June 2018, bank deposits include amounts totaling US$160,000
(30 June 2017: US$3.74M and 31 December 2017: US$160,000) that
are being held in respect of guarantees and are not available
for use until the Group fulfils certain licence commitment in
Peru. This is not considered to be liquid cash and has therefore
been excluded from the cash flow statement.
Baron Oil plc
Consolidated Statement of Changes in Equity
for the six months ended 30 June 2018
6 months 6 months
to to Year to
30 June 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Opening equity 4,263 6,073 6,073
Loss for the period (405) (916) (1,498)
Deconsolidation of non-controlling
interest - (347) (347)
Foreign exchange translation (8) 97 35
Closing equity 3,850 4,907 4,263
========== ========== ============
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 2017. The financial statements for the half period ended
30 June 2018 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
2017, prepared under IFRS, were approved by the Board of Directors
on 24 May 2018 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 2017. This
interim financial information for the six months to 30 June 2018,
which complies with IAS 34 'Interim Financial Reporting', was
approved by the Board on 28 September 2018.
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 2017, as described in those annual
financial statements.
The preparation of financial statements requires management to
make estimates and assumptions that affect the amounts reported for
assets and liabilities as at the balance sheet date and the amounts
reported for revenues and expenses during the period. The nature of
estimation means that actual outcomes could differ from those
estimates. Estimates and assumptions used in the preparation of the
financial statements are continually reviewed and revised as
necessary. Whilst every effort is made to ensure that such
estimates and assumptions are reasonable, by their nature they are
uncertain, and as such, changes in estimates and assumptions may
have a material impact in the financial statements.
i) Carrying value of property, plant and equipment and of
intangible exploration and evaluation fixed assets.
Valuation of petroleum and natural gas properties: consideration
of impairment includes estimates relating to oil and gas reserves,
future production rates, overall costs, oil and natural gas prices
which impact future cash flows. In addition, the timing of
regulatory approval, the general economic environment and the
ability to finance future activities through the issuance of debt
or equity also impact the impairment analysis. All these factors
may impact the viability of future commercial production from
developed and unproved properties, including major development
projects, and therefore the need to recognise impairment.
ii) Commercial reserves estimates
Oil and gas reserve estimates: estimation of recoverable
reserves include assumptions regarding commodity prices, exchange
rates, discount rates, production and transportation costs all of
which impact future cashflows. It also requires the interpretation
of complex geological and geophysical models in order to make an
assessment of the size, shape, depth and quality of reservoirs and
their anticipated recoveries. The economic, geological and
technical factors used to estimate reserves may change from period
to period. Changes in estimated reserves can impact developed and
undeveloped property carrying values, asset retirement costs and
the recognition of income tax assets, due to changes in expected
future cash flows. Reserve estimates are also integral to the
amount of depletion and depreciation charged to income.
Baron Oil plc
Notes to the Interim Financial Information
(continued)
iii) Decommissioning costs
Asset retirement obligations: the amounts recorded for asset
retirement obligations are based on each field's operator's best
estimate of future costs and the remaining time to abandonment of
oil and gas properties, which may also depend on commodity
prices.
iv) Share based payments
The fair value of share-based payments recognised in the income
statement is measured by use of the Black-Scholes model, which
takes into account conditions attached to the vesting and exercise
of the equity instruments. The expected life used in the model is
adjusted; based on management's best estimate, for the effects of
non-transferability, exercise restrictions and behavioural
considerations. The share price volatility percentage factor used
in the calculation is based on management's best estimate of future
share price behaviour and is selected based on past experience,
future expectations and benchmarked against peer companies in the
industry.
4. Segmental information
United South South Total
Kingdom America East
Asia
Six months ended 30 GBP'000 GBP'000 GBP'000 GBP'000
June 2018
Unaudited
Revenue
Sales to external customers - - - -
_______ _______ _______ _______
Segment revenue - - - -
Results
Segment result (254) (150) (1) (405)
Total net assets 3,236 614 - 3,850
United South South Total
Kingdom America East
Asia
Six months ended 30 GBP'000 GBP'000 GBP'000 GBP'000
June 2017
Unaudited
Revenue
Sales to external customers - - - -
_______ _______ _______ _______
Segment revenue - - - -
Results
Segment result (565) (270) (81) (916)
Total assets 4,266 641 - 4,907
Baron Oil plc
Notes to the Interim Financial Information
(continued)
4. Segmental information
(continued)
United South South Total
Kingdom America East Asia
Year ended 31 December GBP'000 GBP'000 GBP'000 GBP'000
2017
Audited
Revenue
Sales to external customers - - - -
_______ _______ _______ _______
Segment revenue - - - -
Results
Segment result (990) (459) (90) (1,539)
Total assets less liabilities 3,762 501 - 4,263
6 months 6 months
5. Administration expenses to to Year to
30 June 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
United Kingdom operations 267 269 510
(Profit)/loss arising on
foreign exchange (14) 392 508
253 661 1,018
========== ========== ============
Baron Oil plc
Notes to the Interim Financial Information
(continued)
6. Loss from operations
6 months 6 months
to to Year to
30 June 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
The loss on ordinary activities before
taxation includes:
Auditors' remuneration
Audit 11 15 21
Other non-audit services 2 - 5
Depreciation of oil and
gas assets - 1 -
Intangible asset writtten
off - - 1,837
Impairment of intangible
assets 121 1,556 -
Impairment of property, plant
and equipment - - -
Impairment of foreign tax
receivables 22 (25) (43)
Disposal of operations - 831 831
(Profit)/Loss on exchange (14) 392 508
7. Income tax expense
The income tax charge for the period relates to the (provision)/reduction
in provision for foreign taxation on the profit or loss.
8. Earnings/(loss) per Share
6 months
6 months to to Year to
30 June 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
Pence Pence Pence
Earnings/(loss) per ordinary
share
Basic -GBP0.03 -GBP0.07 -GBP0.112
Diluted -GBP0.03 -GBP0.07 -GBP0.112
The earnings/(loss) per ordinary share is based on the Group's
loss for the period of GBP405,000 (30 June 2017: GBP916,000; 31
December 2017: GBP1,539,000) and a weighted average number of
shares in issue of 1,433,344,040 (30 June 2017: 1,376,409,576;
31 December 2017: 1,405,269,472).
The potentially dilutive options issued were 41,000,000 (30 June
2017: 35,172,414; 31 December 2017: 76,172,414).
Baron Oil plc
Notes to the Interim Financial Information
(continued)
9. Called up Share Capital
There have been no changes to share capital in the reporting
period.
10. Reconciliation of operating loss
to net cash outflow from operating
activities
6 months 6 months
to to Year to
30 June 30 June 31 December
2018 2017 2017
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Profit/(loss) for the
period (405) (916) (1,539)
Depreciation and amortisation 121 1,557 2
Share based payments - - 41
Non-cash movement arising
on deconsolidation of
non-controlling interests - (346) (347)
Finance income shown as
an investing activity (2) (2) (19)
Tax Expense/(Benefit) - (519) (519)
Foreign currency translation (33) 458 512
(Increase)/decrease in
receivables (23) 316 2,052
Tax paid (22) (87) (4)
Increase/(decrease) in
payables (53) (822) (859)
______ ______ _______
(417) (361) (680)
11. Related party transactions
During the period, the company purchased accounting and administrative
services amounting to GBP4,500 (30 June 2017: GBP4,500; 31 December
2017: GBP8,250) from Langley Associates Limited, a company controlled
by Mr G Barnes, a director.
Baron Oil plc
Notes to the Interim Financial Information (continued)
12. Financial information
The unaudited interim financial information for period ended
30 June 2018 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 2017
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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR EAXNXAASPEFF
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