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LONDON (Alliance News) - Baron Oil PLC on Friday said its loss widened in 2018 due to unsuccessful exploration of the UK offshore Wick prospect and an intangible asset impairment charge.
Shares in Baron Oil were down 15% at 0.11 pence in morning trade.
Baron posted a GBP3.3 million pretax loss for 2018, substantially widened from its GBP2.1 million loss the year before.
The company wrote off GBP1.5 million of exploration and evaluation expenditure, including GBP1.3 million on unsuccessful exploration of the Wick prospect, in which Baron's interest is 15%. This compares to just GBP109,000 of exploration and evaluation expenditure in 2017.
Baron also incurred a GBP1.4 million intangible asset impairment charge on Block XXI in Peru. Baron explained that it will have less than six months remaining to drill once force majeure is lifted, and no firm proposal has been received from third party to conduct the drilling. No such impairment was reported in 2017.
However, the well location and environmental impact assessment for Block XXI are already approved. Moreover, Baron has agreed a three-year extension, which will be approved once the well is drilled. This should help in finding a partner for the block. The current period of force majeure has been agreed with PeruPetro to run from January 1 but final documentation has not yet been received.
"This has been an eventful time for the company, with participation in two wells after a long period with little activity. It is unfortunate that the Wick prospect was unsuccessful but the Colter well and its sidetrack provided encouragement that there is an oil accumulation with commercial potential in licence P1918 as well as upgrading the potential of our adjacent onshore licenses. The team is working hard to get further drilling activity in 2019 by bringing in a partner to Peru Block XXI," said Baron Executive Chair Malcolm Butler.
A 2016 block application made by SundaGas in south east Asia is still live, and Baron hopes the delay surrounding the decision to award the block might be ending. In the event the block is awarded, Baron will have the right to hold a 25% interest.
"We continue to look to south east Asia as an area for growth, and I hope we will be able to bring to fruition the existing application with SundaGas," said Butler.
