UD At the start of the year, having secured the release of the $3.6 million guarantee in respect of Block Z-34, you were undecided about remaining in the oil and gas exploration business. By the end of February, you had decided that near-term drilling activities in areas where discoveries can easily and profitably be developed represent the best way forward. What made you reach that decision?
MB The Board took note of the fact that Baron had been set up as an oil and gas exploration company but it had really bitten off more than a small company could chew in Z-34 and had failed to get it drilled. We felt we owed it to long-term shareholders to give them exposure to near-term drilling activity in environments that would allow for easier drilling and monetisation if successful, rather than spending our funds on entering a totally new business.
UD You now have three upcoming drills: one offshore England, one offshore Scotland and one onshore Peru. In which order do you expect them to spud?
MB If all goes well, it is quite possible they will all be drilling at the same time (Q3 or 4 2018). However, El Barco is more likely to be delayed.
UD Regarding the proposed El Barco well in Peru, with prospective recoverable resources of 25 BCF, will you consider drilling this regardless of whether a new partner will farm in?
MB El Barco has the potential for 6+ BCF in a low-risk shallow objective and some 18 BCF of higher-risk potential in fractured basement. That combination is really too small to interest new entrants to Peru, so we have been concentrating on potential local partners, both oil companies and local industries that need gas. We have consistently indicated that we don’t want to drill it without financial support from a partner – and that hasn’t changed.
UD At Wick, you will be drilling close to the boundary of the licence into a structure which appears to extend outside the licence area. In the event of a commercial discovery, how do you secure the estimated 250 MMBO prospective resources of the Wick prospect?
MB Only a small proportion of the prospective resources lies outside the current licence area, so this does not concern us.
UD Colter, with prospective recoverable resources of 23 MMBO (based on your latest RNS), is a prospect in which you have a previous involvement. Would it be correct to say you have a high level of confidence in this drill?
MB I have a high level of confidence that we will find oil, well 98/11-3 encountered a 10.5 metre oil column in the Sherwood Sandstone reservoir on the flank of a structure and the reprocessed 3D seismic volumes indicate we can get significantly higher than this. However, the area is structurally complex and this creates risk on the potential size of the structure and the volumes it could contain.
UD There also is a licence application pending in SE Asia. Can you tell us anything more about this?
MB The host government continues to delay consideration of this application, which is very disappointing. It now seems unlikely that an award, if any, will be made before the fourth quarter of 2018.
UD You are a virtual company, with no fixed office costs and no staff, other than the directors and a consultant in Peru, which must be the right approach for small oil and gas companies participating in drills with third party operators. How much a year do you believe you save with this approach?
MB It’s difficult to be precise about this, but office rent, utilities, secretarial staff, etc. in the UK and Peru could easily add up to more than £300,000 per year.
UD You have previously stated that the company has sufficient funds for all drills and resources available for further ventures. Is that still correct as of today?
MB We stated in the recent results announcement that the Company remains debt-free and is fully-funded for its currently planned activities in 2018. We project a reasonable surplus at year-end but we do believe in holding funds in reserve in case of unexpected cost overruns.
UD The largest shareholder in the company is Mrs. J Parvisi. Who is she?
MB Mrs Parvisi is the former wife of Mr I Parvisi, who invested heavily in the Company in its earlier years on AIM.
UD Thank you. To finish, would you like to add any further comments which you believe might be of interest to investors?
MB We look forward to an exciting drilling campaign later this year. Success, particularly in the UK wells, is capable of adding significant value to shareholders.
Published 7 June, 2018