10th Sep 2014 09:22
LONDON (Alliance News) - Baron Oil PLC Wednesday said it has signed a farm-out agreement with Vale Oil and Gas, Peru, in a deal that means it now owns the entirety of Block XXI onshore northwest Peru.
According to a Baron Oil statement, Vale, part of major Brazilian mining company Vale SA, has agreed to transfer its 70% working interest in Block XXI and make a payment of USD3.5 million to Baron Oil. The company said the transfer was made under the mining company's divestment programme of its oil and gas interests begun in 2012. Baron Oil said that Block XXI was one of the last remaining upstream oil and gas licenses that Vale retained.
Baron Oil said it remains focused on quickly completing the environmental impact assessment in the Block XXI geographical area. It intends to shoot 400-500 kilometers of 2D seismic data following approval. Once interpreted thoroughly, Baron Oil said it wants to drill two to three relatively shallow exploratory wells.
The company said it is now fully funded to carry out those activities.
Baron Oil said the results of a gravimetric survey totalling 8,000 kilometres showed a very prospective deep sedimentary basin in the central and southern part of Block XXI. It said no seismic coverage currently exists in that part of the basin.
"It is interesting to note that a shallow well (Minchales-1) drilled in 1954, in the most southern part of the block, encountered several gas shows. The well was not completed as natural gas had no commercial value at that time. The southern part of Block XXI is adjacent to the Olympic operated Block XIII where several commercial hydrocarbon wells were recently drilled. Block XXI is also located near several large industrial plants creating a very attractive local gas market requiring little infrastructure investment," Baron Oil said in a statement.
The survey was obtained for the company by Geotechnical Co Fugro in December 2012.
Baron Oil shares were Wednesday quoted up 12% at 1.97 pence.
By Samuel Agini; [email protected]; @samuelagini
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
BOIL.L