Baron Oil (AIM: BOIL), the AIM-quoted oil and gas exploration company, announces that, through its fully owned subsidiary, Gold Oil Peru SAC, it has requested the relinquishment of its legacy Licence Block XXI in Peru (the “Licence”).

As previously outlined, the Licence has been largely under Force Majeure (“FM”) for a variety of reasons since 2017 and Baron has been frustrated in its attempts to access the area in order to carry out operations. In our Interim Report of September 2021, we set out four requirements necessary to progress the project, which were:

·    confirmation that a three-year extension option to the Licence is available;

·    attracting a local farm-in operating partner;

·    freedom to conduct workshops with the local communities; and

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

Regrettably, none of these criteria have been met.

Under the terms of the Licence Agreement, if the Licence is currently under FM and has remained so for a continuous period of more than 12 months, as is the case, the Licence holder may ask Perupetro SA (the Peruvian national Oil & Gas Agency and Licensing Authority) to release the licensee’s Bank Guarantee, which in this case is US$160,000. Thereafter, there will be a requirement to establish and file an Abandonment Plan for approval by the relevant authorities.

Andy Yeo, CEO of Baron, commented:

“Over the last year or more we have worked hard to pivot the Company towards assets where we have significant interests in meaningful and active opportunities.

On the Chuditch TL-SO-19-16 PSC, offshore Timor-Leste, we have a 75% interest in a gas discovery and associated prospects and lead that have an aggregate gross Pmean prospective resource of over 590 MMboe independently validated to the SPE PRMS 2018 standard.

In the UK we have accelerated progress and increased our interest to 32% by executing a farm-up agreement in the P2478 licence containing the “Dunrobin” prospect with an internal, non SPE PRMS 2018 standard, estimated gross Pmean prospective resource of the order of 100 MMbbl.

In both cases, we are making good progress on the respective seismic re-processing projects and other technical studies with results to be announced later this year. In 2023 there will be the potential to be drilling at Chuditch and a drill or drop decision on Dunrobin. By contrast, Peru Block XXI has a materially smaller prospective resource with no certainty around pathways or timelines to drilling, hence the Company’s decision to relinquish the Licence and ultimately withdraw from the country.”