October 23, 2014
Baron Oil plc
("Baron Oil", "Baron" or the "Company")
Update on Peru Exploration
Baron Oil plc, the independent oil and gas exploration and production company focused on Latin America, is pleased to make the following announcements.
Block Z-34
Baron Oil Plc (formerly Gold Oil), along with partner Union Oil and Gas Group Corporation ("Union"), has obtained approval from Perupetro to convert the Third Work Phase from a seismic obligation into a drilling obligation.
Perupetro also approved a Force Majeure ("FM") clause to be invoked on Block Z-34, this has the effect of extending the time limit for the well to be drilled to enable a suitable deepwater drillship to be identified and contracted.
It is the intention of the Z-34 partners to form a joint drilling team with Karoon Gas, operator of adjoining Block Z-38, to minimize total drilling costs. Baron Oil and Union are also planning to form a joint Z-34 technical team into which each company can place the most suitably qualified people.
In 2012, Baron Oil completed the processing and interpretation of the 3D marine seismic Erika North and South surveys. An independent Competent Person's Report ("CPR") was received from DeGolyer and MacNaughton ("D&M") which provides volume and valuation estimates for twelve prospects identified by Baron Oil on the block. The mean prospective resources certified by D&M total a combined 2.02 billion barrels of oil with a mean potential net present value of US$ 2.6 billion.
Block XXI
Baron Oil has finalized an extensive regional technical review of the available seismic data in the area around this large onshore block. This study reviewed existing geological and geophysical data including regional geology and aero-gravimetric modelling and the results of adjacent exploration drilling reports. The study highlights the southern portion of this block as a significantly higher potential hydrocarbon area than previously understood. In particular the Minchales-x1 stratigraphic well (drilled in 1954), located in the southernmost part of the block, encountered several zones with oil and gas shows. After this encouraging observation, Baron Oil called for a third party independent assessment of the well by NUTECH (nutechenergy.com), an oil and gas analytics company based in the US, to carry out a complete petrophysical interpretation. The new analysis by NUTECH has confirmed the hydrocarbon presence in several parts of the well at various depth intervals between 5,320 feet to 5,710 feet (1,620 m to 1,740 m).
Based on these promising technical results, Baron Oil's next step in early 2015 is to acquire 600 km of 2D seismic in the southern area of the block. This is aimed at identifying potential hydrocarbon accumulations surrounding the Minchales well. This will be followed by the drilling of two exploration wells during the second half of 2015 both drilled down to an anticipated total depth of 6,500 feet (1,980 m).
Hydrocarbon potential within Block XX1 has significantly improved due to the results of the technical review. In addition, the NorPeruano Oil trunk pipeline crosses our Block just 2.5 miles (4 km) south of the original Minchales-x1 well site and this may help to facilitate access to the local market for the sale of any commercial hydrocarbons discovered.
RUDOLPH BERENDS, CEO/CHAIRMAN commented:
"Obtaining approval from Perupetro for a well to be drilled on Block Z-34 is a major breakthrough for the Company and we are looking forward to making more progress in 2015 to exploit the vast potential of our assets both onshore and offshore Peru". The presence of a live petroleum system in the southern block of Block XXI is a very welcome surprise and substantially increases the outlook of finding commercial accumulations in this area."
For further information on the Company, visit www.baronoilplc.com or contact:
Baron Oil Plc: Tel: +44 (0)203 427 5089
Rudolph Berends (CEO)
Cantor Fitzgerald (Nominated Advisor and Broker): Tel: +44 (0)207 894 7649
Sarah Wharry (Corporate Finance)
Richard Redmayne (Corporate Broking)
Forward Looking Statements
Statements relating to the estimated or expected future production, operating results, cash flows and costs and financial condition of Baron Oil, planned work at the Company's projects and the expected results of such work are forward-looking statements. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by words such as the following: expects, plans, anticipates, forecasts, believes, intends, estimates, projects, assumes, potential and similar expressions. Forward-looking statements also include reference to events or conditions that will, would, may, could or should occur. Information concerning exploration results and reserve and resource estimates may also be deemed to be forward-looking statements, as it constitutes a prediction of what might be found to be present when and if a project is actually developed.
These forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable at the time they are made, are inherently subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward-looking statements, including, without limitation: uncertainties related to raising sufficient financing to fund the planned work in a timely manner and on acceptable terms; changes in planned work resulting from logistical, technical or other factors; the possibility that results of work will not fulfil projections/expectations and realize the perceived potential of the Company's projects; uncertainties involved in the interpretation of drilling results and other tests and the estimation of reserves and resources; risk of accidents, equipment breakdowns and labour disputes or other unanticipated difficulties or interruptions; the possibility of environmental issues at the Company's projects; the possibility of cost overruns or unanticipated expenses in work programs; the need to obtain permits and comply with environmental laws and regulations and other government requirements; fluctuations in the price of oil and gas and other risks and uncertainties.
