Baron Oil plc (LON:BOIL), the AIM-quoted oil and gas exploration company, has announced a retail offer via REX of up to 833,333,333 new ordinary shares of 0.025 pence each in the capital of the Company.
In addition to the REX Retail Offer, the Company is also conducting a placing and subscription of a total of 4,166,666,667 new Ordinary Shares to raise £5 million before expenses at a price of 0.12 pence per new Ordinary Share. The issue price of the REX Retail Offer Shares is equal to the Issue Price.
A separate announcement has been made earlier today by the Company regarding the Placing and Subscription and other matters. For the avoidance of doubt, the REX Retail Offer is not part of the Placing and Subscription.
Completion of the REX Retail Offer is conditional, inter alia, upon on the Placing and Subscription Shares being admitted to trading on the AIM market of the London Stock Exchange plc. It is anticipated that an application will be made to London Stock Exchange for the Placing and Subscription Shares and the REX Retail Shares (once the final number of REX Retail Shares to be issued is determined) to be admitted to trading on the AIM. It is currently anticipated that Admission will become effective, and that dealings in the Placing and Subscription Shares and Rex Retail Shares will commence on AIM, at 8.00 a.m. on 29 November 2022.
Completion of the Placing and Subscription is not conditional on the completion of the REX Retail Offer.
REX Retail Offer
The Company values its retail shareholder base and believes that it is appropriate to provide its existing retail shareholders in the United Kingdom the opportunity to participate in the REX Retail Offer.
Therefore the Company is making the REX Retail Offer open to eligible investors in the United Kingdom following release of this announcement through certain financial intermediaries.
Existing shareholders can contact their broker or wealth manager to participate in the REX Retail Offer. The following Intermediaries have already confirmed their participation in the offer:
· AJ Bell Securities Ltd
· Hargreaves Lansdown Asset Management Limited
· Interactive Investor Services Limited
· Jarvis Investment Management Ltd.
The REX Retail Offer is expected to close by 6:00 pm on 15 November 2022. Eligible shareholders should note that financial intermediaries may have earlier closing times.
Retail brokers wishing to participate in the REX Retail Offer on behalf of existing retail shareholders, should contact [email protected].
To be eligible to participate in the REX Retail Offer, applicants must be a customer of a participating intermediary and, as at the date hereof or will be, prior to placing an order for REX Retail Offer Shares, shareholders in the Company which may include individuals aged 18 years or over, companies and other bodies corporate, partnerships, trusts, associations and other unincorporated organisations.
There is a minimum subscription of £50 per investor. The terms and conditions on which investors subscribe will be provided by the relevant financial intermediaries including relevant commission or fee charges.
The Company reserves the right to scale back any order under the REX Retail Offer at its discretion. The Company reserves the right to reject any application for subscription under the REX Retail Offer without giving any reason for such rejection.
It is vital to note that once an application for REX Retail Offer Shares has been made and accepted via an intermediary, it cannot be withdrawn.
The REX Retail Offer Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with existing Ordinary Shares including the right to receive all dividends and other distributions declared, made or paid after their date of issue.
It is a term of the REX Retail Offer that the total value of the REX Retail Offer Shares available for subscription at the Issue Price does not exceed £1,000,000.
The REX Retail Offer is offered in the United Kingdom under the exemption from the requirement to publish a prospectus in section 86(1)(e) of FSMA. As such, there is no need for publication of a prospectus pursuant to the Prospectus Regulation Rules of the Financial Conduct Authority, or for approval of the same by the Financial Conduct Authority. The REX Retail Offer is not being made into any jurisdiction other than the United Kingdom.
No offering document, prospectus or admission document has been or will be prepared or submitted to be approved by the Financial Conduct Authority (or any other authority) in relation to the REX Retail Offer, and investors’ commitments will be made solely on the basis of the information contained in this announcement and information that has been published by or on behalf of the Company prior to the date of this announcement by notification to a Regulatory Information Service in accordance with the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules, the Market Abuse Regulation (EU Regulation No. 596/2014) (“MAR“) and MAR as it forms part of United Kingdom law by virtue of the European Union (Withdrawal) Act 2018 (as amended).
Investors should make their own investigations into the merits of an investment in the Company. Nothing in this announcement amounts to a recommendation to invest in the Company or amounts to investment, taxation or legal advice.
It should be noted that a subscription for REX Retail Offer Shares and investment in the Company carries a number of risks. Investors should take independent advice from a person experienced in advising on investment in securities such as the REX Retail Offer Shares if they are in any doubt.
An investment in the Company will place capital at risk. The value of investments, and any income, can go down as well as up, so investors could get back less than the amount invested.
Neither past performance nor any forecasts should be considered a reliable indicator of future results.
Baron Oil also announced that it has conditionally raised £5 million by way of a placing and subscription of a total of 4,166,666,667 new ordinary shares of 0.025p each in the Company at a price of 0.12 pence per new Ordinary Share. Allenby Capital Limited is acting as broker in connection with the Placing and Subscription, which was oversubscribed.
In addition to the Placing and Subscription, it is proposed that there will be a separate conditional retail offer to existing shareholders via REX to raise up to approximately £1 million (before expenses) at the Issue Price, to provide existing retail shareholders in the Company an opportunity to participate in the Fundraise. A separate announcement will be made shortly by the Company regarding the REX Retail Offer and its terms. Those investors who subscribe for new Ordinary Shares pursuant to the REX Retail Offer will do so pursuant to the terms and conditions of the REX Retail Offer contained in that announcement.
The Company is pleased to announce the appointment of Keith Bush, the former Chief Executive Officer of Cabot Energy Plc (previously known as Northern Petroleum Plc), as an independent non-executive director, further details of which can be found below.
Andy Yeo, CEO of Baron, commented:
“2023 will be an important year for Baron. We have two significant sized assets available for farmout – Chuditch (Mean gross Prospective Resources in excess of 500 MMboe*) and Dunrobin (of the order of 100 MMbbl oil Mean gross Prospective Resources*) – which each have similar pathways to their respective next value points. A successful appraisal well on the Chuditch-1 discovery could test approximately 1.35 TCF of Recoverable Gas Resources** which may be sufficient to determine commerciality, and a successful exploration well on Dunrobin West could test more than 100 MMbbl Mean oil gross Prospective Resources* from the primary Jurassic target and would also de-risk potential follow ups on Dunrobin Central, East and Golspie analogous prospects. Today’s oversubscribed Placing provides us with the necessary funds to maximise the chances of delivering funding partners for drilling campaigns on both of these assets.”
Background to the Fundraise and Indicative use of net proceeds
The Placing and Subscription is anticipated to raise net proceeds of approximately £4.6 million.
The Directors anticipate the following indicative use of funds over the period from 30 September 2022 until 31 December 2023, including the net proceeds of the Fundraise. As at 30 September 2022 the Company had a net cash position of approximately £1.6 million.
Chuditch PSC
On 24 October 2022, Baron provided an update on the TL-SO-19-16 Production Sharing Contract, offshore Timor-Leste in which Baron holds a 75% effective interest, including the preliminary interpretation of reprocessed 3D seismic data in relation to the PSC. The Company also announced that reservoir consultancy group ERCE had been engaged to prepare a Competent Person’s Report (“CPR”) to provide an independent validation of Baron’s internal resource estimates for the Chuditch PSC to a SPE PRMS compliant standard. The Directors anticipate that this CPR will assign Contingent Resources to the Chuditch-1 gas discovery area.
It is proposed that approximately 30% of the net proceeds of the Placing and Subscription will be applied towards activities in relation to the Chuditch PSC and will include:
· Finalising the interpretation of the reprocessed 3D seismic data;
· Reservoir Engineering and Environmental Impact Assessment studies;
· Publication of the CPR;
· Design and preparation for an appraisal well; and
· Continuing the Company’s farmout campaign.
It is proposed that approximately 15% of the net proceeds of the Placing and Subscription will be applied towards the Chuditch Bank Guarantee (as defined below). Specifically, this is the extension of the US$1 million Guarantee to 1 August 2023 with Baron providing 100% of the collateral for the Guarantee going forward, as described below.
UK P2478 licence
Baron has a 32% interest in United Kingdom Offshore Licence P2478, in the Inner Moray Firth. Baron has the role of technical overseer of the remaining Phase A work commitments for this licence. The preliminary interpretation of the reprocessed 3D and 2D seismic data is largely complete with an increased confidence in the imaging of the reservoir targets within the previously recognised prospects on the licence. In addition, geochemical studies conclude that there is potential for developable oil quality within the licence area.
Baron previously announced that its internal estimates for the Dunrobin prospective complex contained approximately 100 MMbbl of gross Mean Prospective Resources*. The preliminary interpretation indicates that the western part of the complex (the “Dunrobin West” prospect) at the primary Jurassic target alone could contain 100 MMbbl of gross Mean Prospective Resources*. The Board believes that Dunrobin West is maturing to the stage where it is potentially a drillable prospect and so a potential target for an initial exploration well on the P2478 licence.
The Directors believe that success on an exploration well on Dunrobin West would de-risk follow up prospects Dunrobin Central, East and Golspie with the possibility of establishing the upside potential of a single Dunrobin accumulation. A secondary Triassic target is also being matured, involving an unproven (and therefore likely riskier) deeper reservoir, which the Directors consider provides significant additional resource potential and which may demonstrate higher oil quality preservation.
A joint farmout campaign is underway and has been announced to the industry. The Directors consider that there is currently an improving UK farmout market, with increased industry interest, the potential availability of windfall tax breaks, the need to address energy security issues, and an improved macro-economic environment.
It is proposed that approximately 5% of the net proceeds of the Placing and Subscription will be applied towards the P2478 licence and will include:
· Finalising the interpretation of reprocessed 3D & 2D seismic data;
· Modelling the outcomes of geochemical studies;
· Evaluating a secondary deeper Triassic reservoir additional target for exploration drilling; and
· Participating in a joint venture farmout.
New ventures
The UK North Sea Transition Authority (NSTA) has announced the 33rd Offshore Licensing Round (the “33rd Round“) with a January 2023 bidding deadline and awards anticipated to be announced in H2 2023. Baron may bid for multiple licences in the 33rd Round. One joint bidding agreement has already been signed and further discussions are ongoing. The Company has technical and administrative familiarity with many of the licence areas available in the 33rd Round, and is seeking projects where it will hold significant working interests, a non-operator status, and low entry costs.
Baron has also screened other potential new ventures in the UK and elsewhere. Multiple opportunities have been reviewed and the Company may wish to proceed with these, where they are aligned with the Company’s stated corporate strategy.
It is therefore proposed that approximately 5% of the net proceeds of the Placing and Subscription will be applied towards the evaluation of potential new ventures.
Other
It is proposed that approximately 45% of the net proceeds of the Placing and Subscription will be applied towards covering the Company’s general and administrative expenses (approximately £0.9m) and other related working capital (approximately £1.3m). Depending on the outcome of the farmout discussions and potential new venture activity, the usage of other related working capital may change markedly.
It is proposed that the net proceeds of the REX Retail Offer, which will represent a maximum of an additional approximately £1 million will generally be used for the same purposes as indicated above in an approximately pro rata manner.
Director and PDMR participation and details of the Placing and Subscription
Andrew Yeo and Andrew Butler have subscribed for a total of 58,000,000 new Ordinary Shares at the Issue Price in the Placing and Subscription (the “PDMR Participation“). Details of the PDMR Participation are outlined in the table below.
| Director/PDMR | Position | new Ordinary Shares being subscribed | Shareholding following Admission | Indicative percentage of enlarged share capital following Admission1 |
| Andrew Yeo | Chief Executive Officer | 8,000,000 | 193,000,000 | 0.99% |
| Andrew Butler | Director of group subsidiaries | 50,000,000 | 628,601,442 | 3.23% |
1 Indicative enlarged share capital following Admission in this context assumes full take-up under the REX Retail Offer.
The FCA notification, made in accordance with the requirements of UK MAR is appended further below.
The Fundraise comprises a placing of 4,085,321,667 new Ordinary Shares and a subscription of 81,345,000 new Ordinary Shares and up to 833,333,333 REX Retail Shares at the Issue Price. The Fundraise Shares are to be issued pursuant to the authorities granted to the Board at the Company’s annual general meeting held on 28 June 2022 on a non-pre-emptive basis. Completion of the REX Retail Offer is conditional, inter alia, upon on completion of the Placing and Subscription. Completion of the Placing and Subscription is not conditional on the completion of the REX Retail Offer.
It is anticipated that an application will be made to London Stock Exchange plc for the Placing Shares, Subscription Shares and the REX Retail Shares (once the final number of REX Retail Shares to be issued is determined) to be admitted to trading on the AIM market of the London Stock Exchange. It is currently anticipated that Admission will become effective, and that dealings in the Placing Shares, Subscription Shares and Rex Retail Shares will commence on AIM, at 8.00 a.m. on or around 29 November 2022.
Non-Executive Director appointment
Baron is pleased to announce the appointment of Keith Bush as an independent non-executive Director, with immediate effect.
Keith is an experienced quoted company director having worked for over 30 years in the energy industry. He has a petroleum engineering background, with significant experience in the oil and gas sector, having spent six years with both Amerada Hess Limited and then five years with Burlington Resources. He then held senior management positions with E.ON Ruhrgas, the German listed energy group, before joining AIM quoted Northern Petroleum plc, initially as Chief Operating Officer and then Chief Executive. Keith is currently Chief Operating Officer at TelosNRG Limited, an advisory consultancy which he co-owns. He holds a degree in Physics from the University of Manchester.
Pursuant to the AIM Rules for Companies, the following information is disclosed in relation to Mr Bush.
Keith Richard Bush aged 52, is, or has during the last five years, been a director or partner of the following companies and partnerships:
| Current directorships or partnerships | Past directorships or partnerships during the last five years |
| · TelosNRG Ltd · Wam Advisors Ltd | · Cabot Energy Limited · High Power Petroleum (NOP) Limited · Northern Petroleum (UK) Limited · Northpet Investments Limited · NP Netherlands Limited · NP Oil & Gas Holdings Limited · NP Offshore Holdings (UK) Limited · Northern Petroleum E&P Holdings Limited · Northern Petroleum Limited |
Mr Bush does not currently hold any Ordinary Shares in the Company.
Update on Chuditch Bank Guarantee
The Company also provides an update on the performance bank guarantee arrangements connected to the Chuditch PSC.
Following the announcements of 18 October and 24 October 2022 that Baron’s wholly owned subsidiary, SundaGas Banda Unipessoal Lda., which operates the PSC in offshore Timor-Leste, has been granted a six-month extension to Contract Year Two of the PSC until 18 June 2023 by the relevant Timor-Leste national authority, Autoridade Nacional do Petróleo e Minerais (“ANPM“), the Company announces that it has agreed a revised performance guarantee arrangement in respect of the work programme for the PSC. It is proposed that the Guarantee in place for US$1 million issued by a Singaporean bank in favour of ANPM will be extended from 1 December 2022 to 1 August 2023.
The Guarantee is secured on a total deposit of US$1 million which has been held with the Bank since the end of 2019. In 2020, when Baron first invested in the Chuditch PSC, the Company provided one-third of the Deposit to SGPL representing Baron’s then share, in line with its historic interest in SundaGas Banda, a position that did not change when the Company increased its interest in SundaGas Banda to full ownership during 2021. In contemplation of the completion of the extension of the Guarantee, it is proposed that the Company will assume 100% of the collateral for the full US$1 million amount of the Deposit, by providing approximately US$667,000 to SGPL to replace the two thirds contribution (approximately US$667,000) previously made by SundaGas Pte. Ltd (“SGPL“), which was the other indirect shareholder in SundaGas Banda until 18 June 2021. This financial alignment of the Deposit is in line with Baron’s subsequent increase to 100% ownership of Banda in 2021. As set out earlier in this announcement, approximately 15% of the net proceeds of the Placing and Subscription will be used for this purpose.
It is proposed that the relationship agreement between SGPL, its principals and Baron as originally announced on 18 June 2021 will be varied so that Baron is entitled to all the benefit of and rights to the return of the Deposit should it be released or when the Guarantee expires in due course on 1 August 2023.
The changes to the provision of the funds for the Deposit and the variations to the Relationship Agreement are deemed to be related party transactions pursuant to the AIM Rules for Companies as Andy Butler is a director of SundaGas Banda, a subsidiary of the Company and is a person of significant control in SGPL. The directors of Baron consider, having consulted with the Company’s nominated adviser, Allenby Capital, that the terms of the revised Deposit arrangements and the variations to the Relationship Agreement are fair and reasonable insofar as the Company’s shareholders are concerned.
A further announcement will be made once the extension of the Guarantee and related arrangements have completed.
