27th Sep 2016 11:11
LONDON (Alliance News) - Baron Oil PLC on Tuesday said the first half of 2016 was a "frustrating period" for the company and its shareholders after failing to make an oil or gas discovery in Northern Ireland and because of the "slow pace" of progression in Peru.
The oil and gas firm said it made a small pretax loss of GBP183,000 in the first half of the year compared to the loss of GBP963,000 a year earlier.
Baron Oil booked impairments totalling GBP954,000 in the period but that was partly offset by the company's ability to reduce the impairment charge against receivables, resulting in a credit of GBP427,000 being booked.
The company also reported a foreign exchange gain of GBP460,000 versus a GBP98,000 loss the year before and other operating income of GBP355,000 versus an outflow of GBP150,000. Administrative costs also fell year-on-year to GBP528,000 from GBP600,000.
"The past six months have been a frustrating period for Baron' shareholders, with the failure of Woodburn Forest-1 and the continuing slow pace of progress in Peru, particularly on Block Z-34. The board has spent a great deal of time trying to move things forward in Peru and has succeeded in cutting the ongoing costs of operations there," said Baron Oil.
Baron Oil said it still plans to drill a well on its other asset in Peru, Block XXI, before the end of 2017 but admitted that the prospect is "relatively small", prompting it to try to find a partner to share a "major part" of the cost of drilling.
With its other assets not progressing to plan, Baron Oil has taken steps through a joint venture agreement signed in South-East Asia with SundaGas Pte Ltd.
"SundaGas has already identified a portfolio of potential opportunities, ranging from new production sharing contract applications to purchases of existing production," said Baron Oil.
"Baron will pay SundaGas a monthly fee for an initial period of six months from 1 October 2016, after which the arrangement will be reviewed. In the event that opportunities that have already been identified by SundaGas, or are identified during the initial period come to fruition, Baron will have the right to take an interest in them on the same terms as SundaGas," it added.
Notably, SundaGas was founded by Andy Butler, the nephew of Baron Chief Executive Officer Malcolm Butler, who took up his role at Baron in May.
Baron Oil shares were up 12% to 0.53 pence per share on Tuesday.
By Joshua Warner; [email protected]; @JoshAlliance
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