Baron Oil PLC (BOIL.L) Timor-Leste: Shareholders’ Agreement

Timor-Leste: Execution of Shareholders’ Agreement and Settlement of Carry Agreement

Baron Oil Plc (AIM:BOIL), the AIM-quoted oil and gas exploration and production company, focused on opportunities in SE Asia, Latin America and the UK is pleased to announce that it has executed a Shareholders’ Agreement (“SHA”) with SundaGas Resources Pte. Ltd (“SundaGas”) governing the operation of SundaGas (Timor-Leste Sahul) Pte.Ltd (“SundaGas TLS”), in which Baron now has a 33.33% shareholding. The sole asset of SundaGas TLS is its 100% shareholding in SundaGas Banda Unipessoal Lda., Operator of the TL-SO-19-16 Production Sharing Contract (the “Chuditch PSC”), offshore Democratic Republic of Timor-Leste, in which it holds a 75% interest.

The SHA contains provisions typical of an agreement of this nature including, but not limited to, mutual undertakings, the right to appoint one of the three directors of SundaGas TLS and certain shareholder rights protections.

Pursuant to the terms of the Carry Agreement, executed between SundaGas and Baron on 27 January 2020, Baron has paid the sum of US$521,149 to SundaGas to reimburse it for Baron’s 33.33% share of costs incurred since the Chuditch PSC was signed on 8 November 2019. This amount includes Baron’s 33.33% share of the US$1,000,000 Bank Guarantee and the subscription for 3 ,333 shares in SundaGas TLS, representing 33.33% of the issued share capital of that company. Baron now plans to maintain its interest by continuing to pay 33.33% of the costs incurred on the Chuditch PSC through additional investment into SundaGas TLS. The Company’s 33.33% interest in SundaGas TLS equates to an indirect 25% interest in the Chuditch PSC after accounting for the 25% carried interest of the Timor-Leste state company.

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SundaGas is progressing with the initial work programme commitment to reprocess existing 2D and 3D seismic data over the Chuditch PSC area. Most of this work is desk and computer-based and should not be unduly affected by current movement restrictions, although gaining access to the necessary data is being delayed. Thereafter, subject to satisfactory results from the reprocessing, the subsequent commitment is for a well to be drilled in the third year of the Initial Term of the Chuditch PSC.

Although this is not a Related Party Transaction under the AIM Rules, it is noted that a director and an ultimate beneficial owner of SundaGas (Dr Andy Butler) is the nephew of Dr Malcolm Butler, Baron’s Executive Chairman.

Dr Malcolm Butler, Executive Chairman of Baron, commented…

“Now that our shareholding in SundaGas TLS is established, we look forward to the progress of the Timor-Leste project, which has the potential to make a step-change in the value of your Company. Following the recent Placing, our proposed work programme for 2020 and into 2021 in Timor-Leste, Peru and the UK is funded. Although we are not insulated from the recent gyrations in the oil price, it should be noted that the Company’s assets are all in the pre-cashflow exploration phase and future development of the Chuditch PSC will be more dependent on increasing regional gas prices than on global oil prices as the SE Asian economies recover from the COVID-19 pandemic.”

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