Baron Oil PLC Annual Report 2023

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FY2023 Annual Report · Baron Oil PLC

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Annual Report and
Financial Statements
for the year ended 31 December 2023

Contents

Annual Report and Financial Statements 2023

Section

1. Corporate Information

2. Corporate Statement

3. Chairman’s Statement & Operations Report

4. Strategic Report

5. Report of the Directors

6. Corporate Governance Statement

7. Statement of Directors’ Responsibilities

In respect of the Strategic Report, the Report of the Directors,
and the Financial Statements

8. Report of the Independent Auditor

to the Members of Baron Oil Plc

9. Consolidated Income Statement
for the year ended 31 December 2023

10. Consolidated Statement of Comprehensive Income

for the year ended 31 December 2023

11. Consolidated Statement of Financial Position

as at 31 December 2023

12. Company Statement of Financial Position

as at 31 December 2023

13. Consolidated and Company Statement of Changes in Equity

for the year ended 31 December 2023

14. Consolidated and Company Statement of Cash Flows

for the year ended 31 December 2023

15. Notes to the Financial Statements

16. Glossary of Technical Terms

Page

1. Corporate Information

Advisers & General Information

Directors

Registered Ofﬁce

Company Secretary

Auditor

Solicitors

Nominated Adviser and Joint Broker

Joint Broker

Registrars

Communications

Gerry Aherne, Non-executive Chairman (appointed 22 April 2024)
Andrew Butler, Chief Executive Ofﬁcer
Keith Bush, Non-executive Director
John Chessher, Non-executive Director (appointed 22 April 2024)
John Wakeﬁeld (resigned 22 April 2024)
Andrew Yeo (resigned 31 March 2024)
Jonathan Ford (resigned 30 April 2024)

2 Leman Street
London E1W 9US

Geoffrey Barnes

Gravita Audit Limited
Aldgate Tower
2 Leman Street
London E1 8FA

Fieldﬁsher LLP
Riverbank House
2 Swan Lane
London EC4R 3TT

Allenby Capital Limited
5 St Helen’s Place
London EC3A 6AB

Cavendish Capital Markets Limited
One Bartholomew Close
London EC1A 7BL

Share Registrars Limited
3 The Millennium Centre
Crosby Way
Farnham
Surrey GU9 7XX

IFC Advisory Ltd
Birchin Court
20 Birchin Lane
London EC3V 9DU

Website

www.baronoilplc.com

Company number

05098776 (England and Wales)

2. Corporate Statement

Annual Report and Financial Statements 2023

Baron Oil Plc (“Baron” or “the Company”) is an independent oil and gas exploration and appraisal company based
in the UK. The Company currently holds an interest in acreage in Southeast Asia (Timor-Leste). Ordinary shares in
the Company are quoted in the UK on the AIM market of the London Stock Exchange – (BOIL.L).

The Company’s objective is to deliver shareholder value through generating substantial increases in net asset value.
We aim to achieve this by acquiring signiﬁcant equity interests in material oil and gas assets where there is the
opportunity for high impact exploration and appraisal activity at low entry costs. Historically, Baron’s focus was on
Latin America and the United Kingdom. However, with the progress made in maturing the Timor-Leste asset and
recognition of the favourable business environment and the Company’s competitive advantages in Southeast Asia,
Baron now focuses its efforts in this region.

Baron is committed to safeguarding the environment and minimising risk to its employees, contractors and the
communities in which it works. Through developing sustainable long-term relationships with its partners and the
community, Baron aims to conduct business and enhance value in a responsible manner.

The board of directors (the “Board”) is aware of its responsibilities for environmental reporting and to following
industry international best practice in carrying out its activities. The Company currently does not produce
hydrocarbons, however in H1 2024 the Company has been conducting a survey at the planned drilling location for
the Chuditch-2 appraisal well in Timor-Leste and is planning for drilling operations in Q1 2025. In preparation for
these activities, the Company is actively reviewing and upgrading its safety and environmental policies and
procedures. It is anticipated that future annual reports will contain more detailed environmental disclosures as a
result of these activities and initiatives.

Reporting of Fugitive Methane Emissions, Scope 1 and 2 emissions per barrel of oil equivalent production and Carbon
Intensity Statements are not relevant to the Company at this stage of its development.

Should the Company become involved in future developments, it intends to adopt best practice carbon intensity
reporting and prioritise those developments which are consistent with a lower carbon strategy and comply with
regulatory requirements and standards.

3. Chairman’s Statement & Operations Report

Financial Review
The net result for the year was a loss both before and after taxation of £1,712,000 (2022: loss of £1,387,000), which
is wholly attributable to Baron Oil shareholders, representing a loss of 0.009p per share (2022: loss of 0.01p).

The Group generated no revenue during the period but focused on exploring and developing assets that the Board
believes will generate revenue for the Group in the future.

Exploration and evaluation expenditure incurred included in the Income Statement amounted to £121,000
(2022: £213,000). A provision for Impairment has been made in respect of UK Offshore Licence P2478 amounting
to £187,000 as the prospect of the project being taken to a successful conclusion had signiﬁcantly diminished by
31 December 2023, and indeed the licence was relinquished by the joint venture partners in March 2024. The
Directors judged that no other exploration assets required impairment.

Administration expenses for the year were £1,455,000 (2022: £1,191,000), an overall increase on the preceding year
of £264,000. Administration costs arising in SundaGas (Timor-Leste Sahul) Pte.Ltd. (“TLS”) have increased from
£441,000 previously to £568,000 this year as the operation in Dili continues to gear up for the next phase of the
Chuditch development. Directors and UK staff salaries and related costs increased by £120,000 to £467,000 in the
year, details of which are contained in the Report of the Directors on page 17. Professional adviser fees increased from
£157,000 previously to £227,000, mainly due to higher broker costs.

At the end of the ﬁnancial year, cash reserves of the Group had decreased to £3,760,000 from a level at the preceding
year end of £5,807,000 as the Group absorbed cash in its continuing development operations. The Group’s
investment in exploration and evaluation assets in the UK and Timor-Leste amounted to £381,000 in the period, and
there was a general operating cash outﬂow amounting to £1,830,000. As a result of higher cash balances and
increased interest rates, the Company achieved interest receivable of £152,000.

There were no share issuances during 2023, other than the exercise by a former director in February 2023 of
62,500,000 options. Following the end of the reporting period, in February 2024 the Company raised £2,993,000
net of costs from the issue of new share capital by way of a placing and subscription.

The Group continues to take a conservative view of its asset impairment policy, giving it a statement of ﬁnancial
position that consists of signiﬁcant net current assets and what the Board considers to be a realistic value for its
exploration assets. The Board will continue to take a prudent approach in entering into new capital expenditures
beyond those expected to be committed to existing ventures.

Report On Operations

Southeast Asia: Timor-Leste TL-SO-19-16 PSC (“Chuditch PSC” or “PSC”) (Baron 60% interest – since
February 2024)
Background
The Chuditch PSC is located approximately 185 kilometres south of Timor-Leste, 100 kilometres east of the producing
Bayu-Undan ﬁeld, 50 kilometres south of the potential Greater Sunrise development and covers approximately
3,571 km2 in water depths of 40-120 metres. The Chuditch-1 discovery well, drilled by Shell in 1998 in 64 metres
water depth, encountered a 25 metre net gas column in Jurassic Plover Formation sandstone reservoirs at a depth
of around 2,900 metres on the ﬂank of a large faulted structure. The discovery and neighbouring prospects are
largely covered by a 3D seismic survey acquired in 2012, and subsequently reprocessed by Baron.

3. Chairman’s Statement & Operations Report (continued)

Annual Report and Financial Statements 2023

Throughout 2023, Baron held a 75% working interest and operated the PSC through its wholly owned subsidiary
SundaGas Banda Unipessoal Lda. (“SundaGas”), with the remaining 25% held by TIMOR GAP Chuditch Unipessoal
Lda. (“TIMOR GAP”), a subsidiary of the state-owned national oil company, whose share of PSC expenditure is carried
until ﬁrst production. In February 2024, the Group completed a transaction in which its working interest dropped
to 60%, following a partial transfer of its interest to TIMOR GAP. This transaction is described in further detail below.

The technical work programme obligations in the ﬁrst two years of the initial three-year term of the PSC include the
reprocessing of legacy seismic data, aimed at addressing reservoir imaging issues caused by sea-bed topography and
shallow geological features, and for which a US$1 million Bank Guarantee is in place. The commitment within the
PSC for Contract Year 3 is for the drilling of one appraisal well to the Plover Formation, subject to the seismic
reprocessing having supported the presence of a signiﬁcant structure associated with the Chuditch discovery. The
successful conclusion of the 3D seismic reprocessing project, and subsequent interpretation of those data along with
other studies, has deﬁnitively removed this subjectivity through clear imaging of the Chuditch structure.

2023 and subsequent activities
The reprocessed 3D seismic data was delivered during 2022 and its evaluation, in tandem with a number of geological
and engineering studies, was completed during 2023.

Consultancy group ERC Equipoise Ltd (“ERCE”) was engaged to prepare a Competent Person’s Report (“CPR”) to
provide an independent assessment of the Chuditch resource to a SPE PRMS compliant standard. The CPR was
released on 28 February 2023. For the Chuditch-1 discovery, ERCE assessed gross Pmean Contingent Resources of
1.16 Tcf of gas. The recognition of the resources as being Contingent, rather than Prospective, was a major milestone
and reﬂected the signiﬁcant improvement in understanding of the discovered resources through the seismic
reprocessing and other studies carried out on Chuditch. Baron believes that the Chuditch-1 Contingent Resources
are potentially sufﬁciently large to be economically viable to be developed standalone or in parallel with other
developments in the region.

In addition, aggregated gross Pmean Prospective Resources attributable to the licence according to the CPR
amounted to 1,562 Bcf gas across three prospects, Chuditch SW, Chuditch NE and Quokka. Geological Chances of
Success (“GCOS”) for these prospects range from 52% to 26%, providing substantial follow on, low risk exploration
potential to any Chuditch-1 development. It is notable that Baron’s in-house probabilistic estimates of aggregated
gross Prospective Resources for these prospects, at 2,128 Bcf of gas, are higher that ERCE’s estimates. This arises
mainly through the Company’s preferred use of the latest reprocessed seismic data velocity model to deﬁne the
extent of the prospects.

Detailed tabulations of the resources assessed within the Chuditch PSC and further commentary can be accessed
via the Company’s RNS announcement of 28 February 2023 and the full CPR document which is available on Baron’s
corporate website (www.baronoilplc.com).

There continues to be an excellent working relationship between SundaGas, the Government Ministry of Petroleum
and Mineral Resources (“MPM”), Autoridade Nacional do Petróleo (“ANP”), the Government regulatory authority for
petroleum, and TIMOR GAP. The Company meets regularly with all of these bodies and provides detailed updates
around our activities, plans and timelines on the PSC. The Company appreciates the support that it receives from
these various state entities and will continue to work on maintaining these close relationships.

On 2 June 2023 and again on 5 December 2023, the Company announced two six-month extensions to Contract
Year Two of the Chuditch PSC. These extensions were granted to provide additional time to complete detailed
further technical studies on the Chuditch ﬁeld and to have sufﬁcient time to prepare for appraisal drilling. Contract
Year 2 of the PSC now has an expiry date of 18 June 2024.

3. Chairman’s Statement & Operations Report (continued)

On entry into Contract Year 3 of the PSC, the commitment will be to drill an appraisal well within a 12-month
period. Planning for this appraisal drilling is ongoing, with a well expected to be drilled to a total depth of around
3,000 metres and to include a production test.

In anticipation of the drilling of an appraisal well on the Chuditch ﬁeld during Contract Year 3 of the PSC,
organisational and technical preparations for operational activities commenced in the second half of 2023. A highly
experienced Well Operations Manager was hired to lead this effort, subsequently joined by Well Engineering, HSE
(Health Safety & Environment), Procurement and Well Testing professionals. Detailed and regular workshops were
initiated with ANP and TIMOR GAP, and discussions commenced with providers of drilling services, including owners
of drilling rigs. These preparations have continued in earnest into 2024, including the completion of a site survey at
the planned drilling location in two phases between February and April 2024. The Company currently anticipates that
drilling operations will commence in Q1 2025.

On 18 December 2023, the Company announced that it had agreed that TIMOR GAP would increase its participation
in the PSC from a 25% to a 40% working interest. A Farm-Up Agreement to this effect was entered into on
23 January 2024 and the transaction completed on 7 February 2024 following approval by ANP. Accordingly the
SundaGas 60% share is now responsible for 80% of the costs of the Chuditch project and TIMOR GAP pays a 20%
share. TIMOR GAP subsequently paid approximately US$ 1 million to cover its share of prior costs since the signing
of the PSC.

During 2023, the Company held discussions with a number of other potential partners in the PSC that expressed
interest in participating in the Chuditch project, including the drilling of the planned appraisal well, a process that is
still ongoing.

As part of our in-country activities, including the efforts of our local Dili ofﬁces, we are also undertaking various
initiatives to develop the capabilities of the Timorese geological community, through relationships with local
universities, welcoming student interns and sponsoring and giving presentations to the Timor-Leste Student Chapter
of the Society of Petroleum Engineers.

More generally in Timor-Leste, increased E&P activity was seen both onshore and offshore. During the year Timor
Resources completed its initial onshore drilling campaign, the ﬁrst in 50 years, with a number of reported oil and gas
discoveries. In addition, the Greater Sunrise project continued to move towards development with negotiations
between its many stakeholders. In December 2023, following the Second Licencing Round that closed in 2022, a new
PSC was signed by a subsidiary of the Italian major ENI, in the area known as Block P, which sits between the Chuditch
PSC and the Greater Sunrise gas ﬁelds to the north of Chuditch. It is expected that 3D seismic acquisition will
commence over this new PSC area during late 2024.

United Kingdom Offshore Licence P2478 (relinquished 31 March 2024)
Innovate Licence P2478 was awarded in September 2019 and was held through 2023 by a joint venture comprising
Reabold North Sea Limited (“Reabold”, Licence Administrator, interest 36%), Baron (32%), and Upland Resources
(UK Onshore) Limited (32%). The licence covered blocks 12/27c, 17/5, 18/1 and 18/2 in the Inner Moray Firth area
of the North Sea, containing the Dunrobin and Golspie prospects.

The work commitments on the P2478 Licence were to undertake reprocessing of legacy 3D and 2D seismic data
and perform other studies, in order to better understand the subsurface risks, reduce the range of volumetric
uncertainty, as well as providing drilling location candidates ahead of making a decision whether to proceed beyond
the end of the Phase A evaluation stage of the licence on 14 July 2023.

The key technical work components of the Phase A commitments – those of seismic reprocessing plus geochemical
studies – were delivered during second half of 2022 on time and on budget. Detailed seismic attribute analysis
followed in early 2023 and in March 2023, the UK’s North Sea Transition Authority (“NSTA”) conﬁrmed that the
obligation work programme was fully complete.

3. Chairman’s Statement & Operations Report (continued)

Annual Report and Financial Statements 2023

Towards the end of 2022, consultancy group RPS was engaged by the joint operation to prepare a CPR to provide
an independent validation of resource estimates to a SPE PRMS compliant standard. The CPR was announced and
published on Baron’s website on 16 February 2023.

On 12 July 2023, the Company announced that the joint venture for Licence P2478 had been granted a two-year
extension to Phase A of the licence by the UK North Sea Transition Authority (“NSTA”). A ‘Drill or Drop’ decision was
required on or before 14 July 2025. The extension further required an additional commitment to acquire a minimum
of 30 square kilometres of 3D seismic data. However, following unavoidable and signiﬁcant delays to the acquisition
of 3D seismic data, Licence P2478 was surrendered to the NSTA on 31 March 2024. The delays largely result from
the continuous wind farm construction activities in the area. All Phase A commitments had been fulﬁlled and there
remain no further obligations beyond the statutory submission of a relinquishment report, which Reabold is currently
preparing. The Company had a high degree of expectation of this outcome at the end of the ﬁnancial period and
determined that the carrying value of the asset should be impaired in full in the 2023 Financial Statements.

Block XXI, Peru
In April 2022, Baron requested the relinquishment of Licence Block XXI in Peru, a legacy asset dating from an earlier,
Latin-America focused strategy. The Licence Block XXI had been largely under Force Majeure for a variety of reasons
since 2017. The Bank Guarantee of US$160,000 was released in full to Baron in June 2022. Baron continues to work
with the Peruvian authorities to establish and ﬁle an Abandonment Plan. Ongoing costs are minimal, and we expect
to complete our withdrawal from Peru during 2024.

New Ventures
In January 2023, the Company announced that, as a joint venture non-operating partner, it had submitted an
application in the UK offshore 33rd Round of licensing, conducted by the UK North Sea Transition Authority. On
3 May 2024, the Company was informed that its application, as a joint venture non-operating partner, had not been
successful for a new licence. Consequently, Baron no longer has any upstream assets in the United Kingdom. Further
potential new ventures are under consideration, with a focus on gas opportunities in SE Asia, in line with the
Company’s revised strategy.

Corporate update
Subsequent to the reporting period, in February 2024, the Company completed a Placing, Subscription and WRAP
Retail Offer of new ordinary shares at 0.05p to raise £3.26 million (gross). The monies are being applied to support
the Chuditch PSC (Timor-Leste) as it moves towards the key appraisal drilling milestone.

On 1 July 2023, Dr Andy Butler was appointed to the Board as Director Asia-Paciﬁc, bringing his knowledge and
involvement in the Timor-Leste asset directly to the Board.

Subsequent to the reporting period, on 15 March 2024, Andy Butler took on the role of Chief Executive replacing Andy
Yeo, who left the Company on 1 April 2024. On 22 April 2024, John Wakeﬁeld stepped down as Non-Executive
Chairman and Gerry Aherne was appointed in his place. In addition, on that date, it was announced that Dr John
Chessher had been appointed as an Independent Non-Executive Director and Rob Collins had been appointed as
non-Board Chief Financial Ofﬁcer. On 30 April 2024, Jon Ford stepped down from the Board, although he has been
retained by the Company in a part-time consultancy role. Information on the backgrounds of the new directors are
provided in the Report of the Directors on page 13.

3. Chairman’s Statement & Operations Report (continued)

Conclusions
I am pleased to report that Baron made signiﬁcant progress in its work on the Chuditch PSC during 2023, moving
from completion of the subsurface evaluation (and publication of a CPR) through to extensive preparations towards
the drilling of an appraisal well. This is an asset that has considerable and potentially transformative value for the
Company and its shareholders.

The recent relinquishment of UK licence P2478, together with the previously announced results of the UK
33rd Licencing Round, means that the Company has now fully withdrawn from the UK. Baron will now focus all its
attentions on its core business in SE Asia, where the Company has an exciting and valuable asset in Timor-Leste, a
highly experienced operating team and a pipeline of material new venture opportunities across the region.

The decision by TIMOR GAP to increase their participation in the Chuditch project was a particular highlight for the
year, conﬁrming the Timor-Leste government’s strong support for the Company’s efforts and their belief in the
development potential of the ﬁeld. We look forward to updating shareholders on progress regarding other potential
funding partners for the Chuditch project as soon as it is appropriate to do so.

The recent refreshment of the Board, including the appointment of Dr Andy Butler to the Chief Executive role,
highlights Baron’s strategic pivot towards SE Asia, and in particular gas projects in that region. The Company enjoys
an excellent reputation in the region, where many of our team of experts are located. New independent
non-executive director Dr John Chessher further strengthens Baron’s SE Asia capabilities, with his extensive
experience and networks in capital markets in the region.

SE Asia continues to see robust growth in energy demand and the Company recognises considerable opportunity
for value creation in this arena, commencing with the Chuditch project. Our proposed change of Company name to
Sunda Energy Plc encapsulates the change of emphasis towards the Orient.

I extend my thanks to all stakeholders of the Company, including my fellow directors, our employees and consultants,
joint venture partners and governments, for their strong support of the Company’s efforts. We are especially grateful
for the support of our investors, including through the funding event in early 2024. As a result, we have a well-funded
balance sheet covering our current activities and commitments. As at 31 December 2023 we had cash reserves of
£3.8 million (2022: £5.8 million), and the cash balance stood at £5.5 million at 22 May 2024.

Gerry Aherne
Non-executive Chairman

24 May 2024

4. Strategic Report

Annual Report and Financial Statements 2023

The Directors now present their strategic report with the ﬁnancial statements of Baron Oil Plc (“the Company”) and
its subsidiaries (collectively “the Group”) for the year ended 31 December 2023.

Principal activities
The principal activity of the Group is that of exploration for, and appraisal of, oil and gas.

Business review
A review of the Group’s business during the ﬁnancial period and its likely development is given in the Chairman’s
Statement & Operations Report.

Key Performance Indicators (KPIs) 2023
The KPIs for 2023 were to:

•

be in a fully informed position to make appropriate drilling decisions on a Chuditch-1 appraisal well and a
Dunrobin West exploration well;

continue to explore funding opportunities with a view to securing ﬁnance to advance these core projects;

support and progress the UK 33rd Round licence application and actively pursue other new ventures;

ensure that the Company remains sufﬁciently funded for current operations and thereafter has plans and
funding arrangements in place prior to making major commitments.

The Chuditch asset progressed signiﬁcantly towards drilling, with the recruitment of key drilling personnel and a
number of technical and organisational steps taken to enable the Company to execute a successful drilling campaign.
An assignment to joint venture partner TIMOR GAP of an enhanced participation in the project partially addressed
funding for drilling of the appraisal well.

The Dunrobin West drilling opportunity failed to progress through the year and, despite an extension granted by the
North Sea Transition Authority (“NSTA”), attempts to acquire additional seismic data were hindered by the inability
to operate in the area owing to windfarm construction. By end year 2023, it was evident that it would not be possible
to continue, and agreement was subsequently reached between the joint venture partners and NSTA to relinquish
the asset.

No new projects were secured during 2023. The licence application to NSTA for the 33rd Offshore Licence Round,
announced in January 2023, was still pending as at end 2023 but was learned in May 2024 to have been unsuccessful.

The Company remained well funded through the year and able to cover all current obligations.

Key Performance Indicators (KPIs) 2024
The Board has agreed the following KPIs for 2024, which are intended to be measurable and achievable, whilst
targeted at making material progress in the development of the Company and its key asset.

The KPIs for 2024 are to:

•

ensure all workplace and operational activities are conducted without harm to staff, contractors or third parties,
built around a clear set of HSE policies and procedures;

complete organisational and technical preparations, including site survey, to be ready for the drilling of the
Chuditch-2 appraisal well by Q1 2025;

4. Strategic Report (continued)

•

secure necessary ﬁnancing to drill the Chuditch-2 appraisal well by Q1 2025 subject to rig availability;

implement a business strategy focussed around existing and possible new venture assets in the SE Asia region;
and

ensure that the Company remains sufﬁciently funded for current operations.

Key risks and uncertainties
Exploration for hydrocarbons is highly speculative and involves signiﬁcant degrees of risk. The Board constantly
monitors the operational and ﬁnancial aspects of the Company’s activities and is responsible for the ongoing review
of business risks and implementation of appropriate internal controls. While risks cannot be eliminated entirely,
internal controls are implemented so as to reasonably minimise losses.

At present, the Company considers its principal risks to be the following:

Oil & gas market conditions and the availability of project ﬁnance
Our key asset requires funding from external partners and other sources to progress to the drilling stage. These
inﬂuences may be global, regional, country, or speciﬁc to individual projects which change the nature of the funding
proposition or even the availability/suitability of ﬁnance.

Impact
Without appropriate external funding to undertake drilling commitments, licences may be amended, terminated or
relinquished leading to reductions in value or under certain conditions a permanent loss of value.

Action
The Board monitors and will react to changes in market conditions where possible but is careful not to enter into
drilling commitments unless it has reasonable certainty over being able to fulﬁl its commitments.

Exchange rate ﬂuctuations
Currency risk arises because the Group has operations whose functional currency is not the same as the functional
currency that the Group operates under. It is the Group’s policy to ensure that individual Group entities enter into
local transactions in their functional currency wherever possible. The Company’s main banking arrangements
continue to be based in the UK and the Group reports in Sterling.

Impact
In 2023, around 51% of Baron’s expenditure was transacted in US Dollars, almost all of it arising from its activities
on the Chuditch Project. For the year as a whole, there was a loss on holdings of US Dollar balances of £32,000
compared to a gain of £43,000 in 2022.

Action
Corporate and capital expenditure budgets are set annually and cash called monthly with up to a two month forecast.
It is the Group’s policy to look to cover up to 12 months expenditure in any given currency at or around the level of
the agreed budget. Due to the lack of production revenues and the modest absolute amount of overall US Dollar
expenditure, the Company has not previously entered into hedging arrangements or structured products.

4. Strategic Report (continued)

Annual Report and Financial Statements 2023

Oil and gas prices
The Group’s results and activities are inﬂuenced by oil and gas prices which are dependent on a number of factors
impacting both world and regional supply and demand. Due to these factors, prices may be subject to signiﬁcant
ﬂuctuations from year to year. While we are not insulated from any particular oil price shock, it should be noted that
the Group’s assets are all upstream and in the pre-cash ﬂow exploration and appraisal phases. Since the award of the
Chuditch PSC, the Group is much more heavily weighted towards gas where regional markets play a much greater
role in pricing.

Impact
Oil and gas prices can ﬂuctuate widely and could have a material impact on the Group’s asset values, revenues,
earnings and cash ﬂows. In addition, price increases could cause supply or capacity constraints in areas such as
specialist staff or equipment.

Action
The Group keeps its sensitivity to ﬂuctuations in oil and gas prices under regular review. As we do not have any
assets in production at the current time, the Group has no need to hedge oil or gas prices. However, in the future
we may enter into a hedge programme for oil or gas where the Board determines it is in the Group’s interest to
provide greater certainty over future cash ﬂows.

Performance guarantee
The Group has given a US$1m performance guarantee in respect of its licence in Timor-Leste which is expected to
increase during 2024 subject to negotiation. In the event that work commitments under the Chuditch PSC are not
met, then this guarantee could be called in by 19 June 2025.

Impact
In the event that the Group forfeits a deposit under any guarantee, this will lead to a permanent reduction in
asset value.

Action
The Group actively manages its work programmes under the licenses to the extent that it is able, paying close
attention to milestones and expiry dates, in order to minimise the risk these licence commitments are not met.

Liquidity
The Group is exposed to liquidity risks, including the risk that ﬁnancial assets cannot readily be converted to cash
without the loss of value.

Impact
Failure to manage ﬁnancing risks could have a material impact on the Group’s cash ﬂows, earnings and ﬁnancial
position as well as reducing the funds available to the Group for working capital, capital expenditure, acquisitions,
dividends and other general corporate purposes.

Action
The Group manages liquidity risk by maintaining adequate levels of cash balances. As at the end of 2023, the Group’s
cash reserves of £3.8m were primarily spread amongst three large international banks in the UK and Singapore.

4. Strategic Report (continued)

Taxation
Tax law is evolving and is subject to different and changing interpretations, as well as inconsistent enforcement. Tax
regulation and compliance is subject to review and investigation by the authorities who may impose severe ﬁnes,
penalties and interest charges.

Impact
The uncertainty of interpretation and application, and the evolution, of tax laws in the territories in which we operate
creates a risk of additional and substantial payments of tax or other unintended consequences by the Group, which
could have a material adverse effect on the Group’s cash ﬂows, earnings and ﬁnancial position.

Action
The Group makes every effort to comply with tax legislation, takes appropriate professional tax advice and works
closely with tax authorities to ensure compliance and active management of its ﬁscal positions.

Directors’ duties – S172 Companies Act 2006 Directors’ duties to promote the
long-term success of the Company
The Directors behave and carry out their activities to promote long-term success of the Group for the beneﬁt of the
Company’s shareholders, employees, suppliers and other stakeholders. They engage with shareholders, employees,
suppliers and other stakeholders to reﬂect their insights and views when making decisions on strategy; delivering
operational effectiveness; making plans; driving initiatives; and committing to deliver outcomes that enhance social
value. The culture and values promoted by the Directors create a focus across the Group on observing and
maintaining the highest standards of business conduct whilst promoting the long-term success of the Company.

By order of the Board

Gerry Aherne
Non-executive Chairman

24 May 2024

5. Report of the Directors

Annual Report and Financial Statements 2023

The Directors submit their report together with the audited ﬁnancial statements of Baron Oil Plc (“the Company”)
and its subsidiaries (collectively “the Group”), for the year ended 31 December 2023.

Directors
The following are biographical details of the Directors of Baron Oil Plc.

Gerry Aherne, Non-executive Chairman (appointed 22 April 2024)
Gerry Aherne has a wealth of career experience in the insurance and ﬁnancial markets, having been a founding
director of PRI Group plc, a directors’ and ofﬁcers’ liability insurer, and having held non-executive directorships with
Henderson Group plc, Mecom Group plc, Omnis Investments Ltd, and Iveagh Ltd. He was Investment Director at
Schroder Investment Management for 16 years, managing pension funds and unit trusts, Chairman of Electric &
General Investment Trust plc, and Chairman of Cenkos Securities plc from 2012 to 2018. He is currently Managing
Partner of Javelin Capital Partners LLP.

Dr Andrew Butler, Chief Executive Officer (appointed 1 July 2023)
Andy Butler has over 27 years of experience in the oil and gas sector and brings relevant expertise to the Company’s
Board. Andy has had involvement with Baron Oil since 2016, when the Company entered into a joint venture
agreement with SundaGas Pte Ltd, a company he founded and which ultimately led to the signing in 2019 of the
Timor-Leste TL-SO-19-16 Production Sharing Contract. He has been a person discharging managerial responsibilities
(PDMR) of the Company since 2021 and was appointed Chief Executive Ofﬁcer on 15 March 2024, and continues to
manage the Company’s Timor Leste project. He is a director of the Company’s two subsidiaries in Asia.

Andy was formerly vice president of business development at Mitra Energy Ltd (subsequently renamed Jadestone
Energy Plc) and new ventures manager and a principal consultant geologist at BG Group. Andy is a Fellow of the
Geological Society of London and an active member of the South-East Asia Petroleum Exploration Society (SEAPEX),
the Geoscience Energy Society of Great Britain, the Society of Petroleum Engineers, the Association of International
Energy Negotiators and the Singapore Institute of Directors. He has a Ph.D. in Geology from the University of
Cambridge and a B.A. in Geology from the University of Oxford.

Keith Bush, Non-executive Director
Keith Bush 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. Previously he has
worked for Amerada Hess, Burlington Resources and E.ON Ruhrgas, before joining AIM quoted Northern Petroleum
plc, initially as COO and later as CEO. Keith is currently COO of Hartshead Resources a company listed on the ASX.
He holds a B.Sc. in Physics from the University of Manchester. He was appointed as a Non-executive Director of
Baron in 2022.

Dr John Chessher, Non-executive Director (appointed 22 April 2024)
John Chessher is a highly experienced investment industry professional who has held CEO and director-level positions
at leading asset management and investment banking ﬁrms. John has extensive knowledge and experience of
corporate research and capital raising, including as CEO of Cenkos Securities Asia and Head of Asia Paciﬁc Research
at Schroder Investment Management. He holds an MA in Engineering Science from University of Oxford and DBA,
MSc and MBA qualiﬁcations from Henley Business School. He is a member of the Society of Petroleum Engineers and
is a CFA charter-holder and currently combines non-executive and advisory roles with his position as a lecturer at
Henley Business School.

5. Report of the Directors (continued)

The following were also directors during the period but resigned after the end of the reporting period.

Andrew Yeo – resigned 31 March 2024

John Wakeﬁeld – resigned 22 April 2024

Jon Ford – resigned 30 April 2024

Proposed dividend
The Directors do not recommend the payment of a dividend in respect of the ﬁnancial year ended 31 December
2023.

Political contributions
In the year ended 31 December 2023 the Group made no political donations.

Policy and practice on payment of creditors
The Group and Company policy, in relation to all of its suppliers, is to settle the terms of payment when agreeing
the terms of the transactions and to abide by those terms. The Group and the Company do not follow any code or
statement on payment policy. The creditor days as at 31 December 2023 were 6 days (2022: 3 days).

Activities and results
A loss of £1,712,000 (2022: £1,387,000), of which £1,712,000 (2022: £1,387,000) was attributable to equity
shareholders, was recorded for the year. Net assets of the Group as at 31 December 2023 amounted to £8,255,000
(2022: £10,088,000), of which £8,255,000 (2022: £10,088,000) was attributable to equity shareholders.

Details of the Group’s affairs and the development of its various activities during the period, important events since
the period end, and details of the Company’s plans for the next year are given in the Chairman’s Statement &
Operations Report.

Issue of shares
The Company issued 62,500,000 new ordinary shares of £0.00025 each at £0.001 per share on 23 February 2023
as a result of an exercise of options by a former director, raising £62,500 gross (£50,000 net of costs).

See also Events after the Reporting Period below.

The Environment
The Company is ﬁrmly committed to protecting the environment wherever it does business. We will do our upmost
to minimise the impact of the business on the environment. Both the Company and its employees will try to be
recognised by regulatory agencies, environmental groups and governments where we do business for our efforts to
safeguard the environment.

Community
The Directors believe it is the Group’s responsibility as a good corporate citizen to improve the quality of life in the
communities in which it does business. Where possible, the Group will seek to contribute towards local cultural and
educational organisations. In Timor-Leste, Baron is actively supporting students in various educational initiatives
and is exploring new Corporate and Social Responsibility programme possibilities.

5. Report of the Directors (continued)

Annual Report and Financial Statements 2023

Future outlook
Details of the Group’s affairs and the development of its various activities during the period, important events since
the period end, and details of the Company’s plans for the next year are given in the Chairman’s Statement
& Operations Report.

Directors’ interests
The interests of the Directors who were in ofﬁce at the year end, and their families, in the issued share capital of the
Company are as follows:

A Butler*
A Yeo
J Ford
J Wakeﬁeld
K Bush

31 December 2023

31 December 2022

No. of
Ordinary
shares

628,601,442
193,000,000
22,500,000
20,000,000
–

864,101,442

%
Holding

3.3%
1.0%
0.1%
0.1%
–

4.5%

No. of
Ordinary
shares

–
193,000,000
22,500,000
20,000,000
–

235,500,000

%
Holding

–
1.0%
0.1%
0.1%
–

1.2%

Options held by the Directors are as follows:

A Yeo
J Ford

A Butler*

Total

31 December 2023
Number of
options
£0.0007(1)

31 December 2022
Number of
options
£0.0007(1)

250,000,000
140,000,000

Number of
options
£0.0006(2)

Number of
Options
£0.0006(2)

290,000,000
180,000,000

Number of
options
£0.0007(3)

175,000,000

Number of
options
£0.0007(3)

–

1,035,000,000

860,000,000

(1)

(2)

(3)

Each £0.0007 option grants the holder the right to subscribe for one Ordinary Share at £0.0007 per share and are granted under one option
contract exercisable at any time prior to 22 July 2031.

Each £0.0006 option grants the holder the right to subscribe for one Ordinary Share at £0.0006 per share and are granted under one option
contract exercisable at any time prior to 17 December 2031.

Each £0.0007 option grants the holder the right to subscribe for one Ordinary Share at £0.0007per share and are granted under one option
contract exercisable at any time prior to 14 July 2025. See note 20 on page 59 for vesting conditions.

The interests in shares and options held by Dr A Butler at 31 December 2022 are not shown as he was appointed to the Board on 1 July 2023.

5. Report of the Directors (continued)

Except as shown in note 25 to the Financial Statements (Related Party Transactions) on page 66, there have been
no contracts or arrangements of signiﬁcance during the period in which the Directors of the Company
were interested.

Currently there are Appointment Letters and Service Contracts in place with all Directors of the Company and these
contracts are available for inspection at the registered ofﬁce of the Company on request.

Remuneration policy
As an AIM quoted company, the preparation of a Remuneration Committee report is not an obligation, although the
Company includes a commentary on its remuneration policy within its annual report and ﬁnancial statements and
within its corporate governance statement. The Company seeks to provide information that is appropriate to its
size and organisation. The Remuneration Committee is comprised of three independent Non-executive Directors
with John Chessher as Chairman; Gerry Aherne and Keith Bush are the other members. The Remuneration Committee
is responsible for the development of policy on Executive, Non-executive and senior management remuneration.

Rather than having formal terms of reference the Remuneration Committee operates a Remuneration Policy which
is to provide a remuneration package which will attract and retain individuals with the ability and experience required
to manage the Company. The Remuneration Committee takes into account both Company and individual
performance, market value and sector conditions in determining remuneration. This includes benchmarking against
the Company’s key performance indicators (KPIs). The Company maintains a policy of paying fair salaries compared
with peer companies in the independent oil and gas sector. All current salaries are without pension beneﬁts. Notice
periods for Executive Directors are 12 months.

In 2020, the Remuneration Committee reviewed the incentive opportunities available for the management team.
It identiﬁed four main elements of the Remuneration Package for Executives: Base Salary, Beneﬁts, Share Options
and Discretionary Bonuses. As part of these arrangements the Company created an Enterprise Management Incentive
(EMI) share option scheme. The EMI is an HMRC approved tax efﬁcient option scheme that enables companies to
attract and retain key UK tax resident staff by rewarding them with equity participation in the business.

Base salaries are reviewed annually or when individuals change positions or responsibility, or the Company’s situation
changes. The Remuneration Committee meets as required.

John Chessher, the Remuneration Committee’s chairman is a Non-executive Director of the Company and is
considered to be independent. The Remuneration Committee’s other members are also independent Non-executive
Directors and the Company therefore fully complies with the QCA Code in this respect.

As Remuneration Committee’s chairman, Dr Chessher consults with the other directors and conducts peer group
reviews. No Director can take part in discussions or vote on matters pertaining to their individual performance or
remuneration. In the event of a tied vote, the Remuneration Committee’s independent chairman has the casting vote.
Director remuneration, contracts, grants of options and incentive arrangements for senior management are matters
that are formally reserved for the Board.

The Remuneration Committee makes recommendations which are considered and adopted by the Board as a whole.
The Board considers that its Remuneration Committee and Remuneration Policy are appropriate to the Company’s
current size, organisation and level of operations.

5. Report of the Directors (continued)

Annual Report and Financial Statements 2023

Salaries and beneﬁts
Basic salaries are reviewed annually or when individuals change positions or responsibility or the Company’s position
changes. Details of salaries plus non-cash beneﬁts paid during the year are shown below.

J Wakeﬁeld
A Butler*
A Yeo
J Ford
K Bush

Base
salary/fee
£

50,000
–
175,000
77,979
30,000

332,979

Company
car
£

–
–
11,922
–
–

11,922

Benefits-
in-kind
£

–
–
13,220
–
–

13,220

Year ended
31 December
2023
Total
£

Year ended
31 December
2022
Total
£

50,000
–
280,142
122,979
30,000

50,000
–
231,309
104,688
3,885

Bonuses
£

–
–
80,000
45,000
–

125,000

483,121

348,877

* Dr A Butler was appointed the Board on 1 July 2023. For the period he was a director, fees were paid to SundaGas Pte Ltd, a company in which
he is a signiﬁcant shareholder amounting to £128,645. Refer to note 25 on page 66 for details of related party transactions with companies
controlled by Directors.

No pension contributions were made during the period for the Directors. The Directors did not receive any other
emoluments, compensation or cash or non-cash beneﬁts other than that disclosed above.

Employees
The Group seeks to keep employees informed and involved in the operations and progress of the business by means
of regular staff meetings by country open to all employees and directors.

The Group operates an equal opportunities policy. The policy provides that full and fair consideration will be given
to disabled applications for employment and that existing employees who become disabled will have the opportunity
to retrain and continue in employment wherever possible.

Events after the Reporting Period
On 7 February 2024, the Company entered into a Farm-Up Agreement with TIMOR GAP, whereby TIMOR GAP
would increase its participation in the Chuditch PSC from a 25% to a 40% working interest. The incremental 15%
interest assigned included a share of the obligation to carry the costs of the initial TIMOR GAP 25% interest and
accordingly the Group’s 60% share is now responsible for 80% of the costs of the Chuditch project and TIMOR GAP
pays a 20% share of the costs of the Chuditch project. Shortly after completion of the transaction, TIMOR GAP paid
approximately US$1 million to cover its share of prior costs since the signing of the PSC.

On 29 February 2024, the Company issued 6,528,023,360 new ordinary shares of 0.025p each at an issue price of
0.05 pence per share, raising new capital of £3,264,000 gross, £2,993,000 net of costs.

On 15 March 2024, the Company announced that Dr Andy Butler (formally Director Asia-Paciﬁc) had taken on the
role of Chief Executive Ofﬁcer of the Company and the Board's shift of priority to progress and realise the value in
the Chuditch project in Timor-Leste.

On 31 March 2024, the joint venture for UK Offshore Licence P2478 relinquished its licence following unavoidable
and signiﬁcant delays to the acquisition of 3D seismic data outside the control of the Company. All commitments
under the licence have been fulﬁlled and there are no further ﬁnancial obligations.

On 7 May 2024, the Company conﬁrmed that its application as a joint venture non-operating partner, in the UK
offshore 33rd Round of licensing, conducted by the UK North Sea Transition Authority was unsuccessful.

5. Report of the Directors (continued)

Financial Review

Liquidity & Share Trading
The Board believes that high liquidity is important in attracting both small and institutional investors to Baron.
During the last ﬁnancial period Baron has had a high stock liquidity on the E&P sector on AIM.

Shares in Issue and Shareholders’ Profile
The number of shares in issue at 15 May 2024 was 25,510,783,788 Ordinary Shares, with each share having equal
voting rights. Baron Oil Plc has 965 registered shareholders.

The shareholding distribution at 15 May 2024 is as follows:

Range

>10%
5-10%
1-5%
0.5-1%
<0.5%

No of shares

No of shareholders

13,843,006,152
2,794,268,095
6,694,790,020
772,900,129
1,405,819,392

25,510,783,788

3
2
11
4
945

965

Significant shareholdings
The Company has been informed that, as of 15 May 2024, the following shareholders owned 3% or more of the
issued share capital of the Company:

Name

Hargreaves Lansdown (Nominees) Limited
Interactive Investor Services Nominees Limited
HSDL Nominees Limited
Vidacos Nominees Limited
Barclays Direct Investing Nominees Limited
Lawshare Nominees Limited
HSBC Client Holdings Nominee (UK) Limited

% of company

7,371,465,391
3,294,816,923
3,176,723,838
1,434,622,762
1,359,645,333
1,222,441,278
1,109,317,866

28.90
12.92
12.45
5.62
5.33
4.79
4.35

Listing
The Company’s ordinary shares have been traded on the AIM market of the London Stock Exchange since 14 July
2004. Allenby Capital Limited is the Company’s Nominated Adviser and Joint Broker, Cavendish Capital Markets
Limited is the other Joint Broker. The closing mid-market price on 15 May 2024 was 0.07p.

Financial instruments
Details of the ﬁnancial risk management objectives and policies, and details on the use of ﬁnancial instruments by
the Company and its subsidiary undertakings, are provided in note 21 to the ﬁnancial statements on page 60.

5. Report of the Directors (continued)

Annual Report and Financial Statements 2023

Going concern
The Directors have prepared a cash ﬂow forecast covering the period to 30 June 2025 which contains certain
assumptions about the development and strategy of the business. The Directors are aware of the risks and
uncertainties facing the business but the assumptions used are the Directors’ best estimate of its future development.
The Group is intending to drill the Chuditch-2 appraisal well as part of the work program for Year 3 of the PSC, which
is scheduled to expire on 18 June 2025. In the event that the entirety of drill funding is not secured in adequate time
to enable this activity to conclude in the period, then the Directors would seek an extension to Year 3, as they were
granted in Year 1 and Year 2.

After considering the forecasts and the risks, the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue
to adopt the going concern basis of accounting in preparing the annual ﬁnancial statements. The ﬁnancial statements
do not include any adjustments that would result if the Group was unable to continue as a going concern.

Publication on Company’s website
Financial statements are published on the Company’s website (www.baronoilplc.com). The maintenance and integrity
of the website are the responsibility of the Directors. The Directors’ responsibility also extends to the ﬁnancial
statements contained therein. Legislation in the United Kingdom governing the preparation and dissemination of
ﬁnancial statements may differ from legislation in other countries.

Indemnity of ofﬁcers
The Group may purchase and maintain, for any director or ofﬁcer, insurance against any liability and the Group does
maintain appropriate insurance cover against legal action bought against its directors and ofﬁcers.

Statement of disclosure to auditors
So far as the Directors are aware, there is no relevant audit information of which the Group’s auditors are unaware,
and they have taken all steps that they ought to have taken as Directors in order to make themselves aware of any
relevant audit information and to establish that the Group auditors are aware of that information.

Auditors
A resolution for the reappointment of Gravita Audit Limited as the Company’s auditor will be proposed at the
forthcoming Annual General Meeting.

By order of the Board

Geoffrey Barnes
Secretary

24 May 2024

6. Corporate Governance Statement

The Directors recognise the importance of sound corporate governance. The Company has adopted the 2018 QCA
Corporate Governance Code (“QCA Code”), which the Directors consider appropriate for a company of its size and
nature. The QCA Code takes key elements of good governance and allows companies to apply them in a manner
which is appropriate for the differing needs of small companies. The “Comply or Explain” maxim allows companies
to inform shareholders where policies differ from the norm and why. The details of the Company’s policies in this
respect are set out in its AIM Notice 26 Statement, which can be downloaded from the Company’s website at
https://baronoilplc.com/about/company-policies/.

The Board
The Board comprises one executive director and three non-executive directors, details of whom are contained in
the Report of the Directors included in this report.

The Board meets at least four times a year.

The Board is responsible for the Group's strategy, review and approval of acquisition opportunities, capital
expenditures, budgets, trading performance and all signiﬁcant ﬁnancial and operational issues.

The Audit Committee
The Audit Committee is comprised of the three independent Non-executive Directors with John Chessher as
Chairman, Gerry Aherne and Keith Bush are the other members. The Audit Committee meets at least twice a year
and the external auditors have the opportunity to meet with members of the Audit Committee without any executive
management being present. The Audit Committee’s terms of reference include the review of the Interim and Annual
Financial Statements, review of internal controls, risk management and compliance procedures, consideration of
the Company’s accounting policies and all issues with the annual audit.

The Remuneration Committee
The Remuneration Committee is comprised of the three independent Non-executive Directors with John Chessher
as Chairman, Gerry Aherne and Keith Bush are the other members. The Remuneration Committee is responsible for
the development of policy on Executive, Non-executive and senior management remuneration. Rather than having
formal terms of reference, Remuneration Committee operates a Remuneration Policy, which is to provide a
remuneration package which will attract and retain individuals with the ability and experience required to manage
the Company. The Remuneration Committee meets as required.

John Chessher, the Remuneration Committee’s chairman is one of the Company’s Non-executive Directors and is
considered to be independent. No Director can take part in discussions or vote on matters pertaining to their
individual performance or remuneration. In the event of a tied vote, the Remuneration Committee’s independent
chairman, John Chessher has the casting vote. Director remuneration, contracts, grants of options and incentive
arrangements for senior management are matters that are formally reserved for the Board.

Health, Safety and Environmental Committee
As the Company is now an active offshore operator in South East Asia, the Board has decided to constitute a Health,
Safety and Environmental Committee (“HSE Committee”) with Keith Bush as its Chairman, Gerry Aherne and John
Chessher are the other members.

The Nominations Committee
Due to the small size of the Group, it is not considered necessary to have a Nominations Committee at this time in
the Company´s development and the Board reserves to itself the process by which a new director is appointed.

6. Corporate Governance Statement (continued)

Annual Report and Financial Statements 2023

Communications
The Company, which also uses third party external communications consultants, provides information on Group
activities by way of press releases,
Interim and Annual Financial Statements and also its website
(www.baronoilplc.com). The Company’s website is updated regularly and contains all operational reports, press
releases and Interim and Annual Financial Statements.

Internal control
The Board has the overall responsibility for identifying, evaluating and taking the necessary action to manage the risks
faced by the Company and the Group. The process of internal control is not to eliminate risk, but to manage the risk
to reasonably minimise loss.

7. Statement of Directors’ Responsibilities
in respect of the Strategic Report, the Report of the Directors and the Financial Statements

Directors’ responsibilities
The Directors are responsible for preparing the annual report and the ﬁnancial statements in accordance with
applicable law and regulations.

Company law requires the Directors to prepare ﬁnancial statements for each ﬁnancial period in accordance with
applicable law and UK adopted International Accounting Standards. Under Company law the Directors must not
approve the ﬁnancial statements unless they are satisﬁed that they give a true and fair view of the state of affairs
of the Group and Company and of the proﬁt or loss of the Group for that year. The Directors are also required to
prepare the ﬁnancial statements in accordance with the rules of the London Stock Exchange for companies trading
securities on the AIM market.

In preparing those ﬁnancial statements, the Directors are required:

•

to select suitable accounting policies and then apply them consistently;

make judgements and estimates that are reasonable and prudent;

state whether ﬁnancial statements have been prepared in accordance with UK adopted International Accounting
Standards subject to any material departures disclosed and explained in the ﬁnancial statements; and

prepare the ﬁnancial statements on the going concern basis unless it is inappropriate to presume that the Group
and the Company will continue in business.

The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at
any time the ﬁnancial position of the Company and the Group and to enable them to ensure that the ﬁnancial
statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Company and the Group and to prevent and detect fraud
and other irregularities.

By order of the board

Gerry Aherne
Non-executive Chairman

24 May 2024

Annual Report and Financial Statements 2023

8. Report of the Independent Auditor
to the Members of Baron Oil Plc

Opinion
We have audited the ﬁnancial statements of Baron Oil Plc (‘the Company’) and its subsidiaries (together ‘the Group’)
for the year ended 31 December 2023 which comprise the consolidated income statement, the consolidated
statement of comprehensive income, the consolidated statement of ﬁnancial position, the company statement of
ﬁnancial position, the consolidated and company statement of changes in equity, the consolidated and company
statement of cash ﬂows and notes to the ﬁnancial statements, including a summary of signiﬁcant accounting policies.
The ﬁnancial reporting framework that has been applied in the preparation of the group ﬁnancial statements is
applicable law and UK-adopted International Accounting Standards (IFRSs). The ﬁnancial reporting framework that
has been applied in the preparation of the Company ﬁnancial statements is applicable law and UK-adopted
International Accounting Standards (IFRSs) as applied in accordance with the Companies Act 2006.

In our opinion:

•

the ﬁnancial statements give a true and fair view of the state of the Group’s and of the Company’s affairs as at
31 December 2023 and of the Group’s loss for the year then ended;

the Group ﬁnancial statements have been properly prepared in accordance with UK-adopted International
Accounting Standards (IFRS);

the Company ﬁnancial statements have been properly prepared in accordance with UK-adopted International
Accounting Standards (IFRS) as applied in accordance with the Companies Act 2006; and

the ﬁnancial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the ﬁnancial statements section of our report. We are independent of the Company in accordance with the ethical
requirements that are relevant to our audit of the ﬁnancial statements in the UK, including the FRC’s Ethical Standard
as applied to listed entities, and we have fulﬁlled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufﬁcient and appropriate to provide a basis
for our opinion.

Our approach to the audit
We tailored the scope of our audit work to ensure we obtained sufﬁcient evidence to support our opinion on the
ﬁnancial statements as a whole, taking into account the structure of the Group and the Company, the accounting
processes and controls and the industry in which the Group operates.

As Group auditor we carried out the audit of the Company ﬁnancial statements and, in accordance with ISA (UK) 600,
obtained sufﬁcient appropriate evidence regarding the audit of the Group’s Singaporean and Timorese subsidiaries
SundaGas (Timor-Leste Sahul) Pte Ltd and SundaGas Banda Unipessoal, Lda. These subsidiaries were deemed to be
signiﬁcant to the Group ﬁnancial statements due to their size. The Group audit team directed, supervised and
reviewed the work of the component auditors in Singapore who performed a full scope audit of the subsidiaries in
Singapore and Timor-Leste, which involved issuing detailed instructions, holding video calls and performing a review
of key working papers. Audit work in Singapore and Timor-Leste was performed at materiality levels of £33,333,
which was lower than Group materiality.

We also performed targeted procedures in respect of Gold Oil Peru SAC, which was not identiﬁed as a signiﬁcant
component requiring a full scope audit.

8. Report of the Independent Auditor (continued)
to the Members of Baron Oil Plc

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
ﬁnancial statements. In particular, we looked at where the Directors made subjective judgements, for example in
respect of signiﬁcant accounting estimates that involved making assumptions and considering future events that are
inherently uncertain. We also addressed the risk of management override of internal controls, including evaluating
whether there was evidence of bias by the directors that represented a risk of material misstatement.

Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most signiﬁcance in our audit of the
ﬁnancial statements of the current period and include the most signiﬁcant assessed risks of material misstatement
(whether or not due to fraud) we identiﬁed, including those which had the greatest effect on the overall audit
strategy, the allocation of resources in the audit and directing the efforts of the engagement team.

These matters were addressed in the context of our audit of the ﬁnancial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter

How our audit addressed the key audit matter

Impairment of exploration assets (Group) and
net investment in subsidiaries (Company)
At 31 December 2023 the group held exploration
assets of £3.8m (2022: £3.7m). The assets represent
costs capitalised associated with the Chuditch asset
in Timor Leste in line with the Group’s IFRS 6
accounting policy for exploration expenditure under
which costs are capitalised once the Group secures
the rights to explore and that licence remains in
good standing.

The Board perform an annual review of impairment
indicators based on the available industry, economic
and resource data available to them.

The Company’s net investment in subsidiaries at
31 December 2023 was £5.9m (2022: £5.0m). This
balance relates entirely to the Company’s
subsidiaries in Singapore and Timor Leste and
comprises both equity investments and loans.

Both entities are solely involved in progressing the
Chuditch project and therefore potential impairment
of the net investment is assessed on the same basis as
Chuditch
of
impairment
exploration asset.

associated

the

The Directors’
impairment review concluded that an
impairment was not required in respect of the Group’s
Chuditch exploration asset, or of the Company’s net
investment in subsidiaries, at the year end.

The Group’s Inner Moray Firth UK offshore IFRS 6 asset was
impaired in full due to the expectation during 2023 that
Baron would not progress with the project. The Group’s
interest was subsequently formally relinquished in March
2024.

We have assessed and understood the methodology used by
the Directors in their impairment analysis and determined it
to be reasonable.

We reviewed the underlying Production Sharing Contract and
wider available evidence to examine whether the Group had
complied with its minimum performance obligations and
therefore whether there was evidence of impairment due to
non-compliance.

We also reviewed the most recent competent persons’ report
on the Chuditch exploration assets to understand if the basis
for the Directors’ conclusions was consistent with the
information contained within that report.

In respect of the Company’s loans to subsidiaries we also
examined the basis for which the loans are presented as part
of the Company’s net investment by reference to the
underlying business model,
future expectations and
intentions of management.

We concluded that the Directors’ impairment assessment
was reasonable and that the Company’s loans to subsidiaries
were fairly presented as part of the net investment.

Annual Report and Financial Statements 2023

8. Report of the Independent Auditor (continued)
to the Members of Baron Oil Plc

Our application of materiality
The scope of our audit was inﬂuenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual ﬁnancial statement line items and disclosures and
in evaluating the effect of misstatements, both individually and in aggregate on the ﬁnancial statements as a whole.

Based on our professional judgment, we determined materiality for the ﬁnancial statements as a whole as follows:

Overall materiality

£100,000 (2022: £100,000).

£99,000 (2022: £100,000).

How we determined it

Based on 1.5% of gross assets.

Group

Company

Rationale for benchmark used

The Company principally acts as a
holding company and therefore
gross assets
is an appropriate
measure.

its

The Group’s principal activity is the
furtherance of
exploration
activities and therefore cash and
capitalised exploration assets are
the Group’s key assets. The Group
has no debt and minimal liabilities.
For
reason, a materiality
measure based on gross assets was
considered the most appropriate.

this

We agreed with the Audit Committee that we would report to them misstatements identiﬁed during our audit above
£5,000 (2022: £5,000) for both the Group and Company audits as well as misstatements below this amount that,
in our view, warranted reporting for qualitative reasons.

Conclusions relating to going concern
In auditing the ﬁnancial statements, we have concluded that the Directors’ use of the going concern basis of
accounting in the preparation of the ﬁnancial statements is appropriate. Our evaluation of the Directors’ assessment
of the entity’s ability to continue to adopt the going concern basis of accounting included a detailed review of the
Group’s forecasts in comparison to cash balances held at the date of these ﬁnancial statements and actual expenses
in the recent period to assess the reasonability of the estimates made.

We have further performed a sensitivity analysis to conclude on the degree to which current cash reserves will be
able to sustain the Group for at least a further twelve months from the date of these ﬁnancial statements. We have
also examined the projected expenditure in light of the Group’s obligations under the Chuditch Production Sharing
Contract along with management’s justiﬁcation for the timing of cash ﬂows and proposed mitigations in a downside
scenario in which funding is not secured to enable drilling to take place as planned. We have considered the
obligations on the Group in such a scenario and we have assessed the expected impact on cash balances during the
going concern review period.

Based on the work we have performed, we have not identiﬁed any material uncertainties relating to events or
conditions that, individually or collectively, may cast signiﬁcant doubt on the Group’s ability to continue as a going
concern for a period of at least twelve months from when the ﬁnancial statements were authorised for issue.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the
relevant sections of this report.

8. Report of the Independent Auditor (continued)
to the Members of Baron Oil Plc

Other information
The Directors are responsible for the other information. The other information comprises the information included
in the annual report, other than the ﬁnancial statements and our auditor’s report thereon. Our opinion on the
ﬁnancial statements does not cover the other information and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the ﬁnancial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the ﬁnancial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the ﬁnancial statements or a material misstatement of the other information. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:

•

the information given in the strategic report and the directors’ report for the ﬁnancial year for which the ﬁnancial
statements are prepared is consistent with the ﬁnancial statements; and

the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.

Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and Company and its environment obtained in the
course of the audit, we have not identiﬁed material misstatements in the strategic report or the directors’ report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires
us to report to you if, in our opinion:

•

adequate accounting records have not been kept by the Company, or returns adequate for our audit have not
been received from branches not visited by us; or

the Company ﬁnancial statements are not in agreement with the accounting records and returns; or

certain disclosures of Directors’ remuneration speciﬁed by law are not made; or

we have not received all the information and explanations we require for our audit.

Responsibilities of Directors
As explained more fully in the directors’ responsibilities statement set out on page 22, the Directors are responsible
for the preparation of the ﬁnancial statements and for being satisﬁed that they give a true and fair view, and for
such internal control as the directors determine is necessary to enable the preparation of ﬁnancial statements that
are free from material misstatement, whether due to fraud or error.

In preparing the ﬁnancial statements, the Directors are responsible for assessing the Group’s and Company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations,
or have no realistic alternative but to do so.

Annual Report and Financial Statements 2023

8. Report of the Independent Auditor (continued)
to the Members of Baron Oil Plc

Auditor’s responsibilities for the audit of the ﬁnancial statements
Our objectives are to obtain reasonable assurance about whether the ﬁnancial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to inﬂuence the
economic decisions of users taken on the basis of these ﬁnancial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

The extent to which the audit was considered capable of detecting irregularities
including fraud
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including
fraud and non-compliance with laws and regulations, was as follows:

•

the senior statutory auditor ensured the engagement team collectively had the appropriate competence,
capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;

we identiﬁed the laws and regulations applicable to the Company through discussions with directors and other
management.

we focused on speciﬁc laws and regulations which we considered may have a direct material effect on the
ﬁnancial statements or the operations of the Company including taxation legislation, anti-bribery, employment
laws and anti-money laundering regulations.

we assessed the extent of compliance with the laws and regulations identiﬁed above through making enquiries
of management and inspecting legal correspondence.

identiﬁed laws and regulations were communicated within the audit team regularly and the team remained alert
to instances of non-compliance throughout the audit; and

we assessed the susceptibility of the Group and Company ﬁnancial statements to material misstatement,
including obtaining an understanding of how fraud might occur, by:

o making enquiries of management as to where they considered there was susceptibility to fraud, their

knowledge of actual, suspected and alleged fraud;

considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and
regulations.

To address the risk of fraud through management bias and override of controls, we:

•

performed analytical procedures to identify any unusual or unexpected relationships;

tested journal entries to identify unusual transactions;

assessed whether judgements and assumptions made in determining the accounting estimates set out in the
notes to the ﬁnancial statements were indicative of potential bias;

investigated the rationale behind signiﬁcant or unusual transactions.

8. Report of the Independent Auditor (continued)
to the Members of Baron Oil Plc

•

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures
which included, but were not limited to:

agreeing ﬁnancial statement disclosures to underlying supporting documentation;

reading the minutes of meetings of those charged with governance;

enquiring of management as to actual and potential litigation and claims;

reviewing the available correspondence with HMRC and the Group’s legal advisors.

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations
are from ﬁnancial transactions, the less likely it is that we would become aware of noncompliance. Auditing standards
also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the
directors and other management and the inspection of regulatory and legal correspondence, if any.

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may
involve deliberate concealment or collusion.

A further description of our responsibilities for the audit of the ﬁnancial statements is located on the Financial
Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.

Use of this report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.

Joseph Brewer
Senior Statutory Auditor
For and on behalf of
Gravita Audit Limited (Statutory Auditors)
Aldgate Tower
2 Leman Street
London
EC1 8FA

24 May 2024

9. Consolidated Income Statement
for the year ended 31 December 2023

Revenue
Cost of sales

Gross proﬁt
Exploration and evaluation expenditure
Intangible asset impairment
Property, plant and equipment impairment and depreciation
Peru closure costs
Administration expenses
(Loss)/gain on exchange

Operating loss
Finance cost
Finance income

Loss on ordinary activities before taxation
Income tax expense

Loss for the year

Loss on ordinary activities after taxation attributable to:
Equity shareholders

Annual Report and Financial Statements 2023

Notes

3
10
9

3
3

3
6
6

2023
£’000

–
–

–
(121)
(187)
(37)
(26)
(1,455)
(32)

(1,858)
(6)
152

(1,712)
–

(1,712)

2022
£’000

–
–

–
(213)
–
(33)
–
(1,191)
43

(1,394)
(5)
12

(1,387)
–

(1,387)

Earnings per ordinary share – continuing
Basic
Diluted

(0.009p)
(0.009p)

(0.010p)
(0.010p)

10. Consolidated Statement of Comprehensive Income
for the year ended 31 December 2023

Loss on ordinary activities after taxation attributable to owners of the parent

Other comprehensive income: items which may subsequently be
reclassiﬁed to proﬁt and loss
(Loss)/gain on translating foreign operations

Total comprehensive loss for the year

Total comprehensive loss attributable to
Owners of the parent

2023
£’000

(1,712)

2022
£’000

(1,387)

(172)

(1,884)

174

(1,213)

(1,884)

(1,213)

11. Consolidated Statement of Financial Position
at 31 December 2023

Annual Report and Financial Statements 2023

Assets
Non current assets
Property plant and equipment
Intangible ﬁxed assets
Goodwill

Current assets
Trade and other receivables
Performance bond guarantee deposit
Cash and cash equivalents

Total assets

Equity and liabilities
Capital and reserves attributable to owners of the parent
Share capital
Share premium account
Share option reserve
Foreign exchange translation reserve
Retained earnings

Total equity

Current liabilities
Trade and other payables
Taxes payable

Non-current liabilities
Lease ﬁnance

Total equity and liabilities

Notes

9
10
11

13
14
15

18
19
19
19
19

16
16

16/17

2023
£’000

41
3,781
–

3,822

91
786
3,760

4,637

8,459

Restated
2022
£’000

78
3,696
–

3,774

101
827
5,807

6,735

10,509

4,746
38,881
319
715
(36,406)

4,730
38,846
332
887
(34,707)

8,255

10,088

185
15

200

377
14

391

8,459

10,509

The ﬁnancial statements were approved and authorised for issue by the Board of Directors on 24 May 2024 and
were signed on its behalf by:

G Aherne
Director

Company number: 05098776

A Butler
Director

12. Company Statement of Financial Position
at 31 December 2023

Assets
Non current assets
Property plant and equipment
Intangible ﬁxed assets
Investments

Current assets
Trade and other receivables
Cash and cash equivalents

Total assets

Equity and liabilities
Capital and reserves attributable to owners of the parent
Share capital
Share premium account
Share option reserve
Foreign exchange translation reserve
Retained earnings

Total equity

Current liabilities
Trade and other payables
Taxes payable

Non-current liabilities
Lease ﬁnance

Total equity and liabilities

Notes

9
10
12

13
15

18
19
19
19
19

16
16

16/17

2023
£’000

9
–
5,865

5,874

56
3,652

3,708

9,582

Restated
2022
£’000

21
159
5,002

5,182

61
5,625

5,686

10,868

4,746
38,881
319
–
(34,479)

4,730
38,846
332
–
(33,248)

9,467

10,660

100
15

115

–

185
14

199

9,582

10,868

As permitted by section 408 of the Companies Act 2006, the Company’s income statement has not been included
in these ﬁnancial statements. The loss of the Company for the year was £1,244,000 (2022: loss of £555,000).

The ﬁnancial statements were approved and authorised for issue by the Board of Directors on 24 May 2024 and
were signed on its behalf by:

G Aherne
Director

Company number: 05098776

A Butler
Director

13. Consolidated and Company Statement of Changes in Equity
for the year ended 31 December 2023

Annual Report and Financial Statements 2023

Share
premium
£’000

Retained
earnings
£’000

Share
option
reserve
£’000

Foreign
exchange
translation
£’000

34,061

(33,376)

388

713

GROUP
As at 1 January 2022 (restated)

Shares issued

Transactions with owners

Loss for the year attributable
to equity shareholders
Share option reserve released
Foreign exchange
translation adjustments

Total comprehensive income
for the period

Share
capital
£’000

2,896

1,834

–
–

–

4,785

–
–

–

(1,387)
56

–

(1,331)

As at 1 January 2023

4,730

38,846

(34,707)

Shares issued

Transactions with owners

Loss for the year attributable
to equity shareholders
Share option reserve released
Foreign exchange
translation adjustments

Total comprehensive income
for the period

–
–

–

–
–

–

(1,712)
13

–

(1,699)

As at 31 December 2023

4,746

38,881

(36,406)

–

–
(56)

–

(56)

332

–

–
(13)

–

(13)

319

Total
equity
£’000

4,682

6,619

(1,387)
–

174

(1,213)

10,088

(1,712)
–

–

–
–

174

887

–

–
–

(172)

715

(1,884)

8,255

13. Consolidated and Company Statement of Changes in Equity
for the year ended 31 December 2023 (continued)

Share
premium
£’000

Retained
earnings
£’000

Share
option
reserve
£’000

Foreign
exchange
translation
£’000

34,061

(32,749)

388

COMPANY
As at 1 January 2022 (restated)

Shares issued

Transactions with owners

Loss for the year
Share option reserve released

Total comprehensive income
for the period

Share
capital
£’000

2,896

1,834

–
–

–

4,785

–
–

–

(555)
56

(499)

As at 1 January 2023

4,730

38,846

(33,248)

Shares issued

Transactions with owners

Loss for the year
Share option reserve released

Total comprehensive income
for the period

–
–

–

–
–

–

(1,244)
13

(1,231)

As at 31 December 2023

4,746

38,881

(34,479)

Share capital is the amount subscribed for shares at nominal value.

–

–
(56)

(56)

332

–

–
(13)

(13)

319

Total
equity
£’000

4,596

6,619

(555)
–

(555)

10,660

(1,244)
–

(1,244)

9,467

–

–
–

–

–
–

–

Share premium represents the excess of the amount subscribed for share capital over the nominal value of those
shares net of share issue expenses.

Retained earnings represents the cumulative loss of the Group attributable to equity shareholders.

Share option reserve represents the accumulated value of share-based payments charged to the Income Statement
on outstanding share options (see note 20 on page 59).

Foreign exchange translation occurs on consolidation of the translation of the branch or subsidiaries’ balance sheets
at the closing rate of exchange and their income statements at the average rate.

14. Consolidated and Company Statement of Cash Flows
for the year ended 31 December 2023

Annual Report and Financial Statements 2023

Operating activities

Investing activities
Interest received
Advances to subsidiaries
Performance bond guarantee deposit returned
Additions to exploration and evaluation assets
Acquisition of tangible assets

Financing activities
Net proceeds from issue of share capital
Lease ﬁnancing

Net cash(outﬂow)/inﬂow
Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

Group
2023
£’000

Company
2023
£’000

Group
2022
£’000

Company
2022
£’000

(1,830)

(1,084)

(1,750)

(582)

152
–
–
(381)
(2)

(231)

51
(37)

(2,047)
5,807

3,760

149
(1,050)
–
(28)
–

(929)

51
(11)

(1,973)
5,625

3,652

12
–
128
(806)
(17)

(683)

6,619
(29)

6,590

4,157
1,650

5,807

11
(1,848)
–
(91)
–

(1,928)

6,619
(11)

6,608

4,098
1,527

5,625

14. Consolidated and Company Statement of Cash Flows
for the year ended 31 December 2023 (continued)

Note to the Consolidated and Company Statement of Cash Flow

Operating activities
Loss for the year attributable to controlling interests
Depreciation, amortisation and impairment charges
Finance income shown as an investing activity
Interest on lease liability
Foreign exchange translation

Group
2023
£’000

(1,712)
224
(152)
6
(20)

Operating cash outﬂows before movements in working capital

(1,654)

Decrease/(increase) in receivables
(Decrease)/increase in payables

10
(186)

Company
2023
£’000

Group
2022
£’000

Company
2022
£’000

(1,244)
161
(149)
1
225

(1,006)

5
(83)

(1,387)
33
(12)
4
(74)

(1,436)

(47)
(267)

(555)
55
(11)
1
(205)

(715)

22
111

Net cash outﬂows from operating activities

(1,830)

(1,084)

(1,750)

(582)

15. Notes to the Financial Statements

Annual Report and Financial Statements 2023

General Information
Baron Oil Plc is a public limited company incorporated in England and Wales and quoted on the AIM market of the
London Stock Exchange. The address of the registered ofﬁce is disclosed on page 2 of the ﬁnancial statements.
The principal activity of the Group is described in the Strategic Report in section 4 on page 9.

1. Signiﬁcant accounting policies
The principal accounting policies applied in the preparation of these consolidated ﬁnancial statements are set out
below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

Going concern basis
The Directors have prepared a cash ﬂow forecast covering the period to 30 June 2025 which contains certain
assumptions about the development and strategy of the business. The Directors are aware of the risks and
uncertainties facing the business but the assumptions used are the Directors’ best estimate of its future development.
The Group is intending to drill the Chuditch-2 appraisal well as part of the work program for Year 3 of the PSC, which
is scheduled to expire on 18 June 2025. In the event that the entirety of drill funding is not secured in adequate time
to enable this activity to conclude in the period, then the Directors would seek an extension to Year 3, as they were
granted in Year 1 and Year 2.

Basis of preparation
The ﬁnancial statements have been prepared in accordance with UK adopted International Accounting Standards and
IFRIC interpretations issued by the International Accounting Standards Board (IASB) and with those parts of the
Companies Act 2006 applicable to companies reporting under IFRS. The ﬁnancial statements have been prepared
under the historical cost convention. The principal accounting policies adopted are set out below.

Changes in accounting policies and disclosures

The impact of new IFRSs adopted during the year

Adoption of new and revised standards
a)
During the current year, the Group adopted all new and revised standards and interpretations issued by the
International Accounting Standards Board and the International Financial Reporting Interpretations Committee and
that are endorsed by the UK that are effective for annual accounting periods beginning on 1 January 2023. None of
them had a material impact on the group ﬁnancial statements.

–

Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
The amendments to IAS 1 require companies to disclose their material accounting policy information rather
than their signiﬁcant accounting policies.

–

Deﬁnition of Accounting Estimates (Amendments to IAS 8)

The amendments clarify how companies should distinguish changes in accounting policies from changes in
accounting estimates. That distinction is important because changes in accounting estimates are applied
prospectively only to future transactions and other future events, but changes in accounting policies are generally
also applied retrospectively to past transactions and other past events.

15. Notes to the Financial Statements (continued)

1. Signiﬁcant accounting policies (continued)
–

Deferred Tax Relating to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
IAS 12 speciﬁes how a company accounts for income tax, including deferred tax, which represents tax payable
or recoverable in the future. In speciﬁed circumstances, companies are exempt from recognising deferred tax
when they recognise assets or liabilities for the ﬁrst time. The amendments clarify that the exemption does not
apply and that companies are required to recognise deferred tax on such transactions.

b) New standards, interpretations and amendments not yet effective
The following IFRSs and amendments have been issued by the IASB but are not effective until a future period.

–

IFRS 16 Leases (Amendments) (Effective from the year ending 31 December 2024)
The amendments affect only the subsequent measurement of lease liabilities arising from a sale and leaseback
transaction with variable lease payments, which occurred from the date of initial application of IFRS 16 and for
which the seller-lessee’s accounting policy differs from the requirements speciﬁed in these amendments.

IAS 1 Presentation of Financial Statements (Amendments to Classiﬁcation of Liabilities as Current or Non-current)
(Effective from the year ending 31 December 2024)
The amendments clarify that liabilities are classiﬁed as either current or non-current, depending on the rights
that exist at the end of the reporting period. Classiﬁcation is unaffected by the expectations of the entity or
events after the reporting date. The amendment also clariﬁes what IAS 1 means when it refers to the ‘settlement’
of a liability.

IAS 1 Presentation of Financial Statements (Amendment to Non-current liabilities with covenants). (Effective
from the year ending 31 December 2024)
The amendments improved the information an entity provides when its right to defer settlement of a liability
for at least 12 months is subject to compliance with covenants.

The Board are currently assessing the impact of these new amendments on the group’s ﬁnancial reporting for future
periods. However, the Board does not expect any of the above to have a material impact on future reported results.

Basis of consolidation
The consolidated ﬁnancial statements include the ﬁnancial statements of the Company and its subsidiaries using the
acquisition method of accounting.

Subsidiaries
Subsidiaries are all entities over which Baron Oil Plc has the power to govern the ﬁnancial and operating policies
generally accompanying a shareholding of more than one half of the voting rights, or where Baron Oil Plc exercises
effective operational control. The existence and effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the Company. They are de-consolidated from the date
that control ceases.

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting
policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.

15. Notes to the Financial Statements (continued)

Annual Report and Financial Statements 2023

1. Signiﬁcant accounting policies (continued)

Impairment of non-financial assets
At each statement of ﬁnancial position date, the Group reviews the carrying amounts of its tangible and intangible
assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment loss (if any). Where the asset does not generate cash ﬂows that are independent from other assets, the
Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset
with an indeﬁnite useful life is tested for impairment annually and whenever there is an indication that the asset may
be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash ﬂows are discounted to their present value using a pre-tax discount rate that reﬂects current
market assessments of the time value of money and the risks speciﬁc to the asset for which the estimates of future
cash ﬂows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised as an expense immediately, unless the relevant asset is carried at a re-valued amount, in which case the
impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased
to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the
carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-
generating unit) in prior periods. A reversal of an impairment loss is recognised as income immediately, unless the
relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a
revaluation increase.

Intangible Assets
Oil and gas assets: exploration and evaluation
The Group has continued to apply the ‘successful efforts’ method of accounting for Exploration and Evaluation
(“E&E”) costs, having regard to the requirements of IFRS 6 ‘Exploration for the Evaluation of Mineral Resources’.

The successful efforts method means that only the costs which relate directly to the discovery and development of
speciﬁc oil and gas reserves are capitalised. Such costs may include costs of licence acquisition, technical services
and studies, seismic acquisition; exploration drilling and testing but do not include costs incurred prior to having
obtained the legal rights to explore the area. Under successful efforts accounting, exploration expenditure which is
general in nature is charged directly to the income statement and that which relates to unsuccessful drilling
operations, though initially capitalised pending determination, is subsequently written off. Only costs which relate
directly to the discovery and development of speciﬁc commercial oil and gas reserves will remain capitalised and to
be depreciated over the lives of these reserves. The success or failure of each exploration effort will be judged on a
well-by-well basis as each potentially hydrocarbon-bearing structure is identiﬁed and tested. Exploration and
evaluation costs are capitalised within intangible assets. Capital expenditure on producing assets is accounted for
in accordance with SORP ‘Accounting for Oil and Gas Exploration’. Costs incurred prior to obtaining legal rights to
explore are expensed immediately to the income statement.

15. Notes to the Financial Statements (continued)

1. Signiﬁcant accounting policies (continued)
All lease and licence acquisition costs, geological and geophysical costs and other direct costs of exploration,
evaluation and development are capitalised as intangible or property, plant and equipment according to their nature.
Intangible assets comprise costs relating to the exploration and evaluation of properties which the Directors consider
to be unevaluated until reserves are appraised as commercial, at which time they are transferred to tangible assets
as ‘Developed oil and gas assets’ following an impairment review and depreciated accordingly. Where properties
are appraised to have no commercial value, the associated costs are treated as an impairment loss in the period in
which the determination is made.

Costs are amortised on a ﬁeld by ﬁeld unit of production method based on commercial proven and probable reserves,
or to the expiry of the licence, whichever is earlier.

The calculation of the ‘unit of production’ amortisation takes account of the estimated future development costs
and is based on the current period and un-escalated price levels. Changes in reserves and cost estimates are
recognised prospectively.

E&E costs are not amortised prior to the conclusion of appraisal activities.

Property, plant and equipment
Non oil and gas assets
Non oil and gas assets are stated at cost of acquisition less accumulated depreciation and impairment losses.
Depreciation is provided on a straight-line basis at rates calculated to write off the cost less the estimated residual
value of each asset over its expected useful economic life. The residual value is the estimated amount that would
currently be obtained from disposal of the asset if the asset were already of the age and in the condition expected
at the end of its useful life.

Buildings, plant and equipment unrelated to production are depreciated using the straight-line method based on
estimated useful lives.

The annual rate of depreciation for each class of depreciable asset is:

Equipment and machinery 4-10 years

The carrying value of tangible ﬁxed assets is assessed annually and any impairment is charged to the
income statement.

Investments
Investments are stated at cost less provision for any impairment in value.

Financial instruments
Non-derivative ﬁnancial instruments comprise investments in equity and debt securities, trade and other receivables,
cash and cash equivalents, loans and borrowings, and trade and other payables.

Non-derivative ﬁnancial instruments are recognised initially at fair value plus, for instruments not at fair value
through proﬁt or loss, any directly attributable transactions costs, except as described below. Subsequent to initial
recognition non-derivative ﬁnancial instruments are measured as described below.

A ﬁnancial instrument is recognised when the Group becomes a party to the contractual provisions of the instrument.
Financial assets are derecognised if the Group’s contractual rights to the cash ﬂows from the ﬁnancial assets expire
or if the Group transfers the ﬁnancial assets to another party without retaining control or substantially all risks and
rewards of the asset. Regular purchases and sales of ﬁnancial assets are accounted for at trade date, i.e. the date that
the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group’s obligations
speciﬁed in the contract expire or are discharged or cancelled.

15. Notes to the Financial Statements (continued)

Annual Report and Financial Statements 2023

1. Signiﬁcant accounting policies (continued)

Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment. A provision for impairment is established when there is
objective evidence that the Group will not be able to collect all amounts due according to the original terms of the
receivables. Signiﬁcant ﬁnancial difﬁculties of the debtor, probability that the debtor will enter bankruptcy or
ﬁnancial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable
is impaired.

Cash and cash equivalents
Cash and cash equivalents in the Statement of Cash Flows (see page 35) include cash in hand, deposits held on call
with banks, other short-term highly liquid investments with original maturities of three months or less, and bank
overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of ﬁnancial position.

Taxation
Income tax
Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable proﬁt or loss for the year. Taxable proﬁt or loss differs from proﬁt or
loss as reported in the same income statement because it excludes items of income or expense that are taxable or
deductible in other periods and it further excludes items that are never taxable or deductible. The Company’s liability
for current tax is calculated using tax rates that have been enacted or substantively enacted by the statement of
ﬁnancial position date.

Deferred tax
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the ﬁnancial
statements and the corresponding tax bases used in the computation of taxable proﬁt and is accounted for using the
statement of ﬁnancial position liability method. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable proﬁts will
be available against which deductible temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the taxable proﬁt nor the
accounting proﬁt.

The carrying amount of deferred tax is reviewed at each statement of ﬁnancial position date and reduced to the
extent that it is no longer probable that sufﬁcient taxable proﬁts will be available to allow all or part of the asset to
be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the
asset realised. Deferred tax is charged or credited to income statement, except when it relates to items charged or
credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the
Company intends to settle its current tax assets and liabilities on a net basis.

Trade and other payables
Trade payables are not interest bearing and are stated at their nominal value. Trade and other payables are initially
recognised at fair value. They are subsequently measured at amortised cost using the effective interest method
unless the effect of discounting would be immaterial, in which case they are stated at cost.

15. Notes to the Financial Statements (continued)

1. Signiﬁcant accounting policies (continued)

Fair values
The carrying amounts of the ﬁnancial assets and liabilities such as cash and cash equivalents, receivables and payables
of the Group at the statement of ﬁnancial position date approximated their fair values, due to the relatively short
term nature of these ﬁnancial instruments.

Share-based compensation
The fair value of the employee and suppliers services received in exchange for the grant of the options is recognised
as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value
of the options granted, excluding the impact of any non-market vesting conditions (for example, proﬁtability and
sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that
are expected to vest. At each statement of ﬁnancial position date, the entity revises its estimates of the number of
options that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the income
statement, with a corresponding adjustment to equity.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value)
and share premium when the options are exercised.

Share based payments (Note 20)
The fair value of share-based payments recognised in the income statement is measured by use of the Black Scholes
model, which takes into account conditions attached to the vesting and exercise of the equity instruments. The
expected life used in the model is adjusted based on management’s best estimate, for the effects of non-
transferability, exercise restrictions and behavioural considerations. The share price volatility percentage factor used
in the calculation is based on management’s best estimate of future share price behaviour and is selected based on
past experience, future expectations and benchmarked against peer companies in the industry.

Equity instruments
Ordinary shares are classiﬁed as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net
of tax, from proceeds.

Lease accounting
At the commencement date, the Group measures the lease liability at the present value of the lease payments
unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the
Group’s incremental borrowing rate.

Lease payments included in the measurement of the lease liability are made up of ﬁxed payments (including in
substance ﬁxed), variable payments based on an index or rate, amounts expected to be payable under a residual value
guarantee and payments arising from options reasonably certain to be exercised.

Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is
remeasured to reﬂect any reassessment or modiﬁcation, or if there are changes in in-substance ﬁxed payments.

When the lease liability is remeasured, the corresponding adjustment is reﬂected in the right-of-use asset, or proﬁt
and loss if the right-of-use asset is already reduced to zero.

Interest payable and similar charges include interest payable, ﬁnance charges on shares classiﬁed as liabilities and
ﬁnance leases recognised in proﬁt or loss using the effective interest method, unwinding of the discount on provisions,
and net foreign exchange losses that are recognised in the proﬁt and loss account.

On the statement of ﬁnancial position, lease liabilities have been included in current and non-current liabilities.

15. Notes to the Financial Statements (continued)

Annual Report and Financial Statements 2023

1. Signiﬁcant accounting policies (continued)

Foreign currencies

Functional and presentation currency

i)
Items included in the ﬁnancial statements of the Group are measured using the currency of the primary economic
environment in which the entity operates (the functional currency), which is Pounds Sterling (£). The ﬁnancial
statements are presented in Pounds Sterling (£), which is the Group’s presentation currency.

Transactions and balances

ii)
Foreign currency transactions are translated into the presentational currency using exchange rates prevailing at the
dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement.

iii) Group companies
The results and ﬁnancial position of all Group entities (none of which has the currency of a hyper-inﬂationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:

(a) assets and liabilities for each statement of ﬁnancial position presented are translated at the closing rate at the

date of that statement of ﬁnancial position;

(b)

income and expenses for each income statement are translated at average exchange rates (unless this average
is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in
which case income and expenses are translated at the rate on the dates of the transactions); and

(c)

all resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and
of borrowings and other currency instruments designated as hedges of such investments, are taken to shareholders’
equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity
are recognised in the income statement as part of the gain or loss on sale.

Management of capital
The Group’s policy is to ensure that it will always have sufﬁcient cash to allow it to meet its liabilities when they
become due. To achieve this aim, it seeks to raise new equity ﬁnance and debt sufﬁcient to meet the next phase of
exploration and where relevant development expenditure.

The Board receives cash ﬂow projections on a regular basis as well as information on cash balances. The Board will
not commit to material expenditure in respect of its ongoing appraisal work prior to being satisﬁed that sufﬁcient
funding is available to the Group to ﬁnance the planned programmes.

Dividends cannot be issued until there are sufﬁcient reserves available.

Critical accounting judgements and key sources of estimation uncertainty
The preparation of the consolidated ﬁnancial statements requires management to make estimates and assumptions
concerning the future that affect the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the dates of the ﬁnancial statements and the reported amounts of revenues and expenses
during the reporting periods. The resulting accounting estimates will, by deﬁnition, differ from the related
actual results.

15. Notes to the Financial Statements (continued)

1. Signiﬁcant accounting policies (continued)

Carrying value of intangible exploration and evaluation assets
Valuation of oil and gas properties: judgements regarding timing of regulatory approval, the general economic
environment, and the ability to ﬁnance future activities has an impact on the impairment analysis of intangible
exploration and evaluation assets. All these factors may impact the viability of future commercial production from
unproved properties, and therefore may be a need to recognise an impairment. The timing of an impairment review
and the judgement of when there could be a signiﬁcant change affecting the carrying value of the intangible
exploration and evaluation asset is a critical accounting judgement in itself.

The Board also assesses potential impairment of the Company’s net investment in subsidiaries by reference to the
same judgements around the circumstances of the Group’s oil and gas exploration projects. At year end the Group’s
exploration assets which the board reviewed for impairment were carried at £3.7m and the Company’s net
investment in subsidiaries was held at £5.0m. Further details are given in Notes 10 and 13 respectively.

Commercial reserves estimates
Oil and gas reserve estimates: estimation of recoverable reserves include assumptions regarding commodity prices,
exchange rates, discount rates, production and transportation costs all of which impact future cashﬂows. It also
requires the interpretation of complex geological and geophysical models in order to make an assessment of the size,
shape, depth and quality of reservoirs and their anticipated recoveries. The economic, geological and technical factors
used to estimate reserves may change from period to period. Changes in estimated reserves can impact developed
and undeveloped property carrying values, asset retirement costs and the recognition of income tax assets, due to
changes in expected future cash ﬂows.

15. Notes to the Financial Statements (continued)

Annual Report and Financial Statements 2023

2. Segmental information
In the opinion of the Directors the Group has one class of business, being the exploration for, and appraisal of, oil
and gas resources that can be commercially developed and produced, and other related activities.

The Group’s primary reporting format is determined to be the geographical segment according to the location of the
oil and gas asset. There are currently three geographic reporting segments: South East Asia where production,
development and exploration activity is being assessed, South America, which has previously been involved in
production, development and exploration activity but is now being phased out, and the United Kingdom being the
head ofﬁce and where exploration activity was taking place up to and including the reporting period.

United
Kingdom
£’000

South
America
£’000

South East
Asia
£’000

Exploration and appraisal year ended 31 December 2023

Revenue
Cost of sales

Gross proﬁt
Exploration and evaluation expenditure
Intangible asset impairment
Property, plant and equipment impairment and depreciation
Peru closure costs
Administration expenses
Loss on exchange

Operating loss

Finance cost
Finance income

Loss before taxation

Income tax expense

Loss after taxation

AAsssseettss aanndd lliiaabbiilliittiieess
Segment assets
Cash and cash equivalents

Total assets

Segment liabilities
Current tax liabilities

Total liabilities

OOtthheerr sseeggmmeenntt iitteemmss
Capital expenditure
Depreciation, amortisation and impairment charges

–
–

–
(75)
(187)
(12)
–
(878)
(32)

(1,184)

(1)
149

(1,036)

–

(1,036)

65
3,652

3,717

102
15

117

28
199

–
–

–
–
–
–
(26)
(9)
–

(35)

–
3

(32)

–

(32)

–
1

–
–

–

–
–

Total
£’000

–
–

–
(121)
(187)
(37)
(26)
(1,455)
(32)

(1,858)

(6)
152

–
–

–
(46)
–
(25)
–
(568)
–

(639)

(5)
–

(644)

(1,712)

–

(644)

(1,712)

4,634
107

4,741

87
–

355
25

4,699
3,760

8,459

189
15

204

383
224

15. Notes to the Financial Statements (continued)

2. Segmental information (continued)

Exploration and appraisal year ended 31 December 2022

Revenue
Cost of sales

Gross proﬁt

Exploration and evaluation expenditure
Property, plant and equipment impairment and depreciation
Administration expenses
Gain on exchange

Operating loss

Finance costs
Finance income

Loss before taxation
Income tax expense

Loss after taxation

AAsssseettss aanndd lliiaabbiilliittiieess
Segment assets
Cash and cash equivalents

Total assets

Segment liabilities
Current tax liabilities

Total liabilities

OOtthheerr sseeggmmeenntt iitteemmss
Capital expenditure
Depreciation, amortisation and impairment charges

United
Kingdom
£’000

South
America
£’000

South East
Asia
£’000

–
–

–

(67)
(12)
(686)
43

(722)

(1)
11

(712)
–

(712)

298
5,625

5,923

194
14

208

92
12

–
–

–

(8)
–
(64)
–

(72)

–
1

(71)
–

(71)

1
5

1
–

–
–

–

(138)
(21)
(441)
–

(600)

(4)
–

(604)
–

(604)

4,403
177

4,580

212
–

212

794
213

Total
£’000

–
–

–

(213)
(33)
(1,191)
43

(1,394)

(5)
12

(1,387)
–

(1,387)

4,702
5,807

10,509

407
14

421

886
225

Annual Report and Financial Statements 2023

15. Notes to the Financial Statements (continued)

3. Operating loss

The operating loss is stated after charging:
Auditor’s remuneration

Audit of group and company ﬁnancial statements – current year
Audit of group and company ﬁnancial statements – prior year
Non-audit services: tax compliance
Non-audit services: other assurance services

Exploration and evaluation expenditure
Impairment of intangible assets
Depreciation of property, plant and equipment
Loss/(gain) on exchange

2023
£’000

2022
£’000

30
–
2
2
121
187
37
32

29
4
2
2
213
–
33
(43)

The analysis of development and administrative expenses in the consolidated income statement by nature of
expense is:

Employee beneﬁt expense
Exploration and evaluation expenditure
Depreciation, amortisation and impairment charges
Legal and professional fees
Peru closure costs
Loss/(gain) on exchange
Other expenses

2023
£’000

764
121
224
509
26
32
182

2022
£’000

632
213
33
410
–
(43)
149

1,858

1,394

15. Notes to the Financial Statements (continued)

4. Staff numbers and cost
The average number of persons employed by the Group (including directors) during the year, analysed by category,
were as follows:

2023

2022

Group
Number

Company
Number

Group
Number

Company
Number

Directors
Technical and production
Administration

Total

The aggregate payroll costs of these persons were as follows:

Wages and salaries
Directors’ fees, salaries and beneﬁts
Social security costs

5. Directors’ emoluments

Directors’ remuneration
Compensation for loss of ofﬁce
Share based payments

4
4
2

£’000

221
483
72

776

4
–
1

£’000

54
483
62

599

3
4
2

£’000

206
390
47

643

2023
£’000

483
–
–

483

Management fees paid to an entity in which a director is a shareholder are disclosed in note 25 on page 66.

No directors beneﬁtted from pension contributions in 2023 or 2022.

Highest paid director emoluments and other beneﬁts are as listed below.

Remuneration
Post termination beneﬁts
Share based payments

2023
£’000

280
–
–

280

3
–
1

£’000

49
390
47

486

2022
£’000

390
–
–

390

2022
£’000

214
17
–

231

Total remuneration in respect of key management personnel amounted to £537,000 (2022: £432,000). Key
management personnel remuneration consisted solely of short-term beneﬁts in 2022 and 2023, other than £17,000
of post termination beneﬁts recorded in 2022.

15. Notes to the Financial Statements (continued)

Annual Report and Financial Statements 2023

6. Finance income and expenses

Bank and other interest received
Interest on right of use asset ﬁnance
Other ﬁnance cost

Total

Income tax expense

The tax charge on the loss on ordinary activities was:-
UK Corporation Tax – current and deferred
Foreign taxation

The total charge for the year can be reconciled to the accounting result as follows:

Loss before tax
Tax at composite group rate of 27.9% (2022: 18.6%)

Effects of:
Losses not subject to tax
Movement on capital allowances
Increase in tax losses

Tax expense

2023
£’000

152
(6)
–

146

2022
£’000

12
(4)
(1)

2023
£’000

2022
£’000

–
–

–

2023
£’000

(1,712)
(478)

127
(91)
442

–

–
–

–

2022
£’000

(1,387)
(258)

163
(76)
171

–

At 31 December 2023, the Group had estimated tax losses of £38,022,000 (2022 – £36,011,000) to carry forward
against future proﬁts. The potential deferred tax asset on these tax losses at a composite group rate of 29.7% of
£11,279,000 (2022: at 29.5%, 10,636,000) has not been recognised due to uncertainty over the timing and existence
of future taxable proﬁts. The current tax reconciliation has been prepared using a blended rate of 27.9%
(2022: 18.6%) based on prevailing headline taxation rates as applied to the group’s taxable entities in the year. The
rate assessed for the unrecognised deferred tax asset reﬂects management’s best estimate of the applicable rates
which would apply to oil and gas revenues in the group’s respective countries of operation.

8. Earnings per share

Loss per ordinary share
– Basic
– Diluted

2023

2022

(0.009p)
(0.009p)

(0.010p)
(0.010p)

Earnings per ordinary share is based on the Group’s loss attributable to controlling interests for the year of £1,712,000
(2022: £1,387,000).

The weighted average number of shares used in the calculation is the weighted average ordinary shares in issue
during the year of 18,973,685,086 (2022: 13,784,079,264).

Due to the Group’s results, the diluted earnings per share was deemed to be the same as the basic earnings per share
for that year.

15. Notes to the Financial Statements (continued)

9. Property, plant and equipment

Group
Cost
At 1 January 2022
Foreign exchange translation adjustment
Additions
Disposals

At 1 January 2023
Foreign exchange translation adjustment
Additions

At 31 December 2023

Depreciation
At 1 January 2022
Foreign exchange translation adjustment
Charge for the period
Disposals

At 1 January 2023
Foreign exchange translation adjustment
Charge for the period

At 31 December 2023

Net book value
At 31 December 2023

At 31 December 2022

Equipment and
machinery
£’000

Right of use
assets
£’000

Total
£’000

31
4
17
(34)

18
(1)
2

29
5
5
(34)

5
–
6

45
–
62
–

107
(3)
–

104

13
1
28
–

42
(2)
31

76
4
79
(34)

125
(4)
2

123

42
6
33
(34)

47
(2)
37

Right of Use assets of £33,000 (2022: £65,000) relate to a motor vehicle and an ofﬁce lease.

Equipment and
machinery
£’000

Right of use
asset
£’000

Total
£’000

–
–

–

13
12

25
12

13
12

25
12

Company
Cost

At 1 January 2022, 31 January and 31 December 2023

Depreciation
At 1 January 2022
Charge for the period

At 1 January 2023
Charge for the period

At 31 December 2023

Net book value
At 31 December 2023

At 31 December 2022

Right of Use assets of £8,000 (2022: £20,000) relate to a motor vehicle.

15. Notes to the Financial Statements (continued)

Annual Report and Financial Statements 2023

10. Intangible ﬁxed assets

Group
Cost
At 1 January 2022
Foreign exchange translation adjustment
Additions
Consolidation of single asset company

At 1 January 2023
Foreign exchange translation adjustment
Additions

At 31 December 2023

Impairment
At 1 January 2022
Foreign exchange translation adjustment
Disposals

At 1 January 2023
Charge for the period

At 1 January and 31 December 2023

Net book value
At 31 December 2023

At 31 December 2022

Exploration
and evaluation
assets
£’000

5,054
275
806
(2,439)

3,696
(109)
381

3,968

2,318
121
(2,439)

–
187

187

Total
£’000

5,054
275
806
(2,439)

3,696
(109)
381

3,968

2,318
121
(2,439)

–
187

187

3,781

3,696

3,781

3,696

15. Notes to the Financial Statements (continued)

10. Intangible ﬁxed assets (continued)

Company
Cost
At 1 January 2022
Additions
Disposals

At 1 January 2023
Expenditure

At 31 December 2023

Impairment
At 1 January 2022
Disposals

At 1 January 2023
Charge for the year

At 31 December 2023

Net book value
At 31 December 2023

At 31 December 2022

Exploration
and evaluation
assets
£’000

703
91
(635)

159
28

187

635
(635)

–
187

187

–

159

Total
£’000

703
91
(635)

159
28

187

635
(635)

–
187

187

–

159

Exploration and evaluation assets represent amounts capitalised in progressing the group’s interest in licences for the
exploration of oil and gas in the UK and Timor-Leste.

The Directors have performed an assessment of impairment as at the balance sheet date in respect of exploration
and evaluation assets, taking account of the facts and circumstances which existed at that date. Impairment reviews
were performed at the Operating Segment level and therefore separate tests were performed for the Chuditch and
UK Offshore Licence P2478 exploration assets.

In relation to Chuditch, the Directors concluded that the facts did not give rise to an impairment and therefore no
impairment charge has been reﬂected in 2023 (2022: £nil).

In the case of the P2478 licence, the Directors concluded that, as a result of the increasing difﬁculty in pursuing the
work programme due to factors that are beyond the Company’s control, there was a strong possibility that the
Company will not be able to pursue the development of the licence and judged that whole carrying value should be
impaired. This results in an impairment charge of £187,000 (2022: nil). In the event, the Company and its joint
venture relinquished its licence on 31 March 2024. The impairment is separately presented in the income statement
and is attributed to the UK operating segment.

15. Notes to the Financial Statements (continued)

Annual Report and Financial Statements 2023

11. Goodwill

Group
Cost
At 1 January 2022
Goodwill written off

At 1 January and 31 December 2023

Impairment
At 1 January 2022
Adjustment on write off of goodwill

At 1 January and 31 December 2023

Net book value
At 31 December 2023

At 31 December 2022

Goodwill on
consolidation
of subsidiaries
£’000

81
(81)

–

81
(81)

–

The carrying value of goodwill represents the purchase of shares in Gold Oil Peru SAC. This was written off in the
preceding period as there is no prospect of recovery.

15. Notes to the Financial Statements (continued)

12. Investments

Company
Cost
At 1 January 2022
Exchange rate adjustment
Additions
Net loan movements

At 1 January 2023
Exchange rate adjustment
Net loan movements

At 31 December 2023

Impairment
At 1 January 2022
Charge/(release) for the year

At 1 January 2023
Charge/(release) for the year

At 31 December 2023

Carrying value
At 31 December 2023

At 31 December 2022

Loans to
group
undertaking
£’000

Shares in
group
undertaking
£’000

1,824
205
–
1,811

3,840
(225)
1,050

4,665

899
43

942
(38)

904

3,761

2,898

7,548
–
–
–

7,548
–
–

7,548

5,444
–

5,444

2,104

Total
£’000

9,372
205
–
1,811

11,388
(225)
1,050

12,213

6,343
43

6,386
(38)

6,348

5,865

5,002

The Company makes loans to its subsidiary operations as part of its longer term strategy of undertaking exploration
activities. Whilst the loans are made on informal terms, the Board consider that such loans form part of the
Company’s net investment in its subsidiaries and therefore are presented within investments and treated as
non-current. No interest is charged on intercompany loans.

The Company has made provision on the investment in Gold Oil Peru S.A.C. of £6,348,000 (2022: £6,386,000).

Annual Report and Financial Statements 2023

15. Notes to the Financial Statements (continued)

12. Investments (continued)
The Company’s subsidiary undertakings at the year end were as follows:

Subsidiary

SundaGas (Timor-Leste Sahul) Pte. Ltd.
8 Chang Charn Road
#02-01
Link (Thim) Building
Singapore 159637

SundaGas Banda Unipessoal, Lda*
Timor Plaza Pisso 3. #337
Av. President Nicolau Lobato
20 de Setembro, Bebonuk, Dom Aleixo
Dili, Timor-Leste

Gold Oil Peru S.A.C
Jr. General Julian Arias Araguez 250
Miraﬂores, Lima-18, Peru

Place of
incorporation
and operation

Singapore

Proportion of
ownership
interest
%

Proportion
of voting
power held
%

Nature of business

100

Exploration of oil and gas

Timor-Leste

100

Exploration of oil and gas

Peru

100

Exploration of oil and gas

All shareholdings are in ordinary, voting shares.

* A direct subsidiary of SundaGas (Timor-Leste Sahul) Pte. Ltd.

13. Trade and other receivables

Trade receivables
Other receivables
Prepayments

2023

2022

Group
£’000

Company
£’000

Group
£’000

Company
£’000

–
27
64

–
23
33

–
24
77

101

–
24
37

15. Notes to the Financial Statements (continued)

14. Bank guarantee bond

Bank guarantee bond at 31 December 2023

2023

2022

Group
£’000

786

Company
£’000

–

Group
£’000

827

Company
£’000

–

The Company’s wholly-owned subsidiary, SundaGas Banda Unipessoal, Lda (“SundaGas”), had provided a
performance guarantee to Autoridade Nacional do Petróleo (“ANP”) in respect of the offshore Timor-Leste TL-SO-
19-16 Production Sharing Contract (“PSC”). This performance guarantee was previously secured by a bank guarantee
given by United Overseas Bank Limited of Singapore (“UOB”) which required SundaGas to place a bond with UOB
of US$1 million. This arrangement was originally put in place in December 2019 triggering the effective date at the
outset of the PSC, was extended in November 2022, and expired on 1 August 2023. On expiry, a new bank guarantee
given by Australia and New Zealand Banking Group Limited (“ANZ) was established which required SundaGas to
place a new bond with ANZ for the same amount. ANZ are A-rated by all the main credit rating agencies and the
exposure to credit risk is considered low. The bank guarantee will remain in place for the current phase of the PSC.

The original bond was set up by SundaGas Pte. Ltd (“SGPL”), the former owners of SundaGas, and remained in their
name beyond the acquisition of SundaGas by the Company, so as to not disrupt the contractual position of the PSC
until the expiry of the UOB guarantee on 1 August 2023. At that time, the original bond was initially released to SGPL
who accounted for the funds to SundaGas in accordance with the Relationship Agreement that exists between
the parties.

15. Cash and cash equivalents

Bank current accounts
Bank deposit accounts

2023

2022

Group
£’000

131
3,629

3,760

Company
£’000

24
3,628

3,652

Group
£’000

837
4,970

5,807

Company
£’000

655
4,970

5,625

Bank deposit accounts comprise cash held by the Group and short-term bank deposits with an original maturity of
three months or less and earn interest at respective short-term deposit rates. The carrying amount of these assets
approximates to their fair value.

15. Notes to the Financial Statements (continued)

Annual Report and Financial Statements 2023

16. Trade and other payables

Trade payables
Accruals
Lease ﬁnance liability due within 12 months
Taxation

Non-current liabilities
Lease ﬁnance liabilities due after 12 months

2023

2022

Group
£’000

Company
£’000

Group
£’000

Company
£’000

18
136
31
15

200

18
73
9
15

115

–

67
274
36
14

391

66
109
10
14

199

17. Lease ﬁnance
Lease liabilities are presented in the statement of ﬁnancial position as follows:

2023

2022

Group
£’000

Company
£’000

Group
£’000

Company
£’000

Current
Non-current

18. Share capital

31
4

9
–

Allotted, called up and fully paid
18,982,760,428 (2022: 18,920,260,428) ordinary shares of £0.00025 each

36
30

2023
£’000

4,746

10
9

2022
£’000

4,730

The Company issued 62,500,000 new ordinary shares of £0.00025 each at £0.001 per share on 20 February 2023
for cash resulting from the exercise of share options.

Ordinary shares entitle the holder to full rights as to voting, dividends and any distribution upon winding up.

15. Notes to the Financial Statements (continued)

19. Share premium and reserves

Group
At beginning of the year
Loss for the year attributable to controlling interests
Issue of new shares
Share issue costs
Share option reserve released
Foreign exchange translation adjustments

Company
At beginning of the year
Loss for the year
Issue of new shares
Share issue costs
Share option reserve released

Share
premium
account
£’000

38,846
–
47
(12)
–
–

38,881

38,846
–
47
(12)
–

38,881

Share
option
reserve
£’000

Foreign
exchange
translation
reserve
£’000

332
–
–
–
(13)
–

319

332
–
–
–
(13)

319

887
–
–
–
–
(172)

715

–
–
–
–
–

–

Profit
and loss
account
£’000

(34,707)
(1,712)
–
–
13
–

(36,406)

(33,248)
(1,244)
–
–
13

(34,479)

Details of options and warrants issued, exercised and lapsed during the year together with options and warrants
outstanding at 31 December 2023 are as follows:

Issue date

Final exercise date

Exercise
price

1 January
2023
Number

New
Issue
Number

26 May 2020
22 July 2021
22 July 2021*
17 December 2021
14 July 2022

26 May 2030
22 July 2031
31 December 2025
17 December 2031
14 July 2025

£0.00100
125,000,000
£0.00070 440,000,000
£0.00070
150,000,000
£0.00060 530,000,000
175,000,000
£0.00070

1,420,000,000

–
–
–
–
–

–

Exercised
Number

(62,500,000)
–
–
–
–

(62,500,000)

Lapsed or
cancelled
Number

31 December
2023
Number

–
–
–
–
–

62,500,000
440,000,000
150,000,000
530,000,000
175,000,000

– 1,357,500,000

These options have been granted to two external contractors who have been engaged by SundaGas (Timor-Leste Sahul) Pte. Ltd.

15. Notes to the Financial Statements (continued)

Annual Report and Financial Statements 2023

19. Share premium and reserves (continued)
Details of options and warrants issued, exercised and lapsed during the year together with options and warrants
outstanding at 31 December 2022 are as follows:

Issue date

6 August 2019
26 March 2020
26 May 2020
10 November 2020
22 July 2021
22 July 2021
17 December 2021
14 July 2022

Final exercise date

6 August 2022
26 March 2023
26 May 2030
10 November 2030
22 July 2031
31 December 2025
17 December 2031
14 July 2025

Exercise
price

1 January
2022
Number

27,500,000
£0.00080
£0.00100
117,125,001
£0.00100 290,000,000
£0.00100
75,000,000
£0.00070 440,000,000
£0.00070
150,000,000
£0.00060 530,000,000
–
£0.00070

New
Issue
Number

–
–
–
–
–
–
–
175,000,000

Exercised
Number

–
(117,125,001)
–
–
–
–
–
–

Lapsed or
cancelled
Number

31 December
2023
Number

(27,500,000)
–
(165,000,000)
(75,000,000)
–
–
–
–

–
–
125,000,000
–
440,000,000
150,000,000
530,000,000
175,000,000

1,629,625,001

175,000,000

(117,125,001)

(267,500,000) 1,420,000,000

The number of share options which were exercisable at year end was 1,182,500,000 (2022: 1,245,000,000). The
weighted average remaining life of share options at the year end was 7 years (2022: 7 years). The weighted average
exercise price (in pence) applying to share options during the year was as follows:

Opening
Exercised
Lapsed
Cancelled
Issued
Closing

2023

0.07p
0.10p
–
–
–
0.07p

2022

0.08p
0.10p
0.08p
0.10p
0.07p
0.07p

20. Share based payments
The fair values of the options and warrants granted have been calculated using Black-Scholes model assuming the
inputs shown below:

Grant date

Number of options or warrants granted
Share price at grant date
Exercise price at grant date
Option life
Risk free rate
Expected volatility
Expected dividend yield
Fair value of option

14 July
2022

17 December
2021

22 July
2021

26 May
2020

175,000,000 530,000,000 150,000,000 440,000,000 290,000,000
0.05p
0.1p
10 years
0.86%
80%
0%
0.02p

0.07p
0.07p
10 years
0.86%
80%
0%
0.03p

0.06p
0.06p
10 years
0.86%
80%
0%
0.025p

0.07p
0.07p
3 years
0.86%
80%
0%
0.02p

0.07p
0.07p
3 years
0.86%
80%
0%
0.017p

The warrants and options will not normally be exercisable during a closed period, and furthermore can only be
exercisable if the performance conditions are satisﬁed. Warrants and options, which have vested immediately before
either the death of a participant or his ceasing to be an eligible employee by reason of injury, disability, redundancy
or dismissal (otherwise than for good cause) shall remain, exercisable (to the extent vested) for 12 months after
such cessation, and all non-vested options shall lapse.

Volatility was determined by reference to the company’s historical share price volatility over a suitable period.

15. Notes to the Financial Statements (continued)

20. Share based payments (continued)
On 14 July 2022, the company awarded 175,000,000 share options to a Dr A Butler, a director of the Company and
also a director of both SundaGas (Timor-Leste Sahul) Pte. Ltd and SundaGas Banda Unipessoal Lda, the latter being
the operator of the ‘Chuditch’ Timor-Leste TL-SO-19-16 PSC. The share options are exercisable at 0.07p, expire
three years from grant date and will only vest upon Baron Oil making an announcement that the ﬁrst appraisal well
on the Chuditch PSC has spudded, or in certain limited circumstances such as a takeover event. SundaGas
(Timor-Leste Sahul) Pte. Ltd and SundaGas Banda Unipessoal Lda are wholly owned subsidiaries of Baron Oil Plc.

Given that vesting is contingent on the spudding of a well at the Chuditch project and that the occurrence of this
event is dependent, inter alia, on events outside the control of the director, the Board considered that the current
degree of certainty over vesting was such that no share-based payment charges were recorded in respect of these
options during 2022 or 2023. A detailed summary of the current status and future plans for the Chuditch project
are given in the Chairman’s Statement & Operations Report.

21. Financial instruments

The Group’s and Company’s activities expose them to a variety of ﬁnancial risks: credit risk, cash ﬂow interest rate
risk, foreign currency risk, liquidity risk, price risk and capital risk. The Group’s and Company’s activities also expose
them to non-ﬁnancial risks: market risk. The Group’s and Company’s overall risk management programme focuses
on unpredictability and seeks to minimise the potential adverse effects on the Group’s ﬁnancial performance. The
Board, on a regular basis, reviews key risks and, where appropriate, actions are taken to mitigate the key risks
identiﬁed.

Financial instruments – Risk Management
The Group and Company are exposed through their operations to the following risks:

•

Credit risk

Cash ﬂow interest rate risk

Foreign Exchange Risk

Liquidity risk

Price risk

Capital risk

Market risk

In common with all other businesses, the Group and the Company are exposed to risks that arise from its use of
ﬁnancial instruments. This note describes the Group’s and the Company’s objectives, policies and processes for
managing those risks and the methods used to measure them. Further quantitative information in respect of these
risks is presented throughout these ﬁnancial statements.

There have been no substantive changes in the Group’s or the Company’s exposure to ﬁnancial instrument risks, its
objectives, policies and processes for managing those risks or the methods used to measure them from previous
periods unless otherwise stated in this note.

15. Notes to the Financial Statements (continued)

Annual Report and Financial Statements 2023

21. Financial instruments (continued)

Principal financial instruments
The principal ﬁnancial instruments used by the Group and the Company, from which ﬁnancial instrument risk arises
are as follows:

•

Loans and receivables

Trade and other receivables

Cash and cash equivalents

Trade and other payables

General objectives, policies and processes
The Board has overall responsibility for the determination of the Group’s and the Company’s risk management
objectives and policies and, whilst retaining responsibility for them, it has delegated the authority for designing and
operating processes that ensure the effective implementation of the objectives and policies to the Group’s ﬁnance
function. The Board receives regular updates from the Executive Directors through which it reviews the effectiveness
of the processes put in place and the appropriateness of the objectives and policies it sets. The overall objective of
the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s and the
Company’s competitiveness and ﬂexibility. Further details regarding these policies are set out below:

Credit risk
The Group’s and the Company’s principal ﬁnancial assets are bank balances and cash, the bank guarantee bond, and
other receivables. The credit risk on liquid funds is limited because the counterparties are banks with high credit
ratings assigned by international credit-rating agencies. The amounts presented in the statements of ﬁnancial position
are net of allowance for doubtful receivables. An allowance for impairment is made where there is an identiﬁed loss
event which, based on previous experiences, is evidence of a reduction in the recoverability of the cash ﬂows.

As at 31 December 2023 and 2022 there were no trade receivables.

Cash flow interest rate risk
The Group and the Company are exposed to cash ﬂow interest rate risk from its deposits of cash and cash equivalents
with banks.

The cash balances maintained by the Group and the Company are proactively managed in order to ensure that the
maximum level of interest is received for the available funds but without affecting the working capital ﬂexibility the
Group requires.

The Group and the Company are not at present exposed to cash ﬂow interest rate risk on borrowings as neither has
no signiﬁcant debt. No subsidiary company of the Group is permitted to enter into any borrowing facility or lease
agreement without the prior consent of the Company.

15. Notes to the Financial Statements (continued)

21. Financial instruments (continued)

Interest rates on financial assets
The Group’s and the Company’s ﬁnancial assets consist of cash and cash equivalents, loans, trade and other
receivables. The interest rate proﬁle at period end of these assets was as follows:

31 December 2023

Group

UK sterling
US dollar (USD)
Singapore Dollar (SGD)
Peruvian Nuevo Sol (PEN)

31 December 2022

Group

UK sterling
US dollar (USD)
Peruvian Nuevo Sol (PEN)

31 December 2023

Company

UK sterling
US dollar (USD)

31 December 2022

Company

UK sterling
US dollar (USD)

Financial assets
on which
interest earned
£’000

Financial assets
on which
interest not earned
£’000

2,509
1,120
–
–

3,629

33
906
3
–

942

Financial assets
on which
interest earned
£’000

Financial assets
on which
interest not earned
£’000

4,802
168
–

4,970

397
1,287
4

1,688

Financial assets
on which
interest earned
£’000

Financial assets
on which
interest not earned
£’000

2,509
1,120

3,629

11
13

Financial assets
on which
interest earned
£’000

Financial assets
on which
interest not earned
£’000

4,802
168

4,970

373
282

655

Total
£’000

2,542
2,026
3
–

4,571

Total
£’000

5,199
1,455
4

6,658

Total
£’000

2,520
1,133

3,653

Total
£’000

5,175
450

5,625

The Group and the Company earned interest on its interest-bearing ﬁnancial assets at rates between 2% and 5.5%
(2022 1.5% and 4%) during the period.

15. Notes to the Financial Statements (continued)

Annual Report and Financial Statements 2023

21. Financial instruments (continued)
A change in interest rates on the statement of ﬁnancial position date would increase/(decrease) the equity and the
anticipated annual income or loss by the theoretical amounts presented below. The analysis is made on the
assumption that the rest of the variables remain constant. The analysis with respect to 31 December 2022 was
prepared under the same assumptions.

Group and Company

Instruments bearing variable interest (£’000)

Change of 1.0% in the interest rate as of

31 December 2023

31 December 2022

Increase
of 1.0%

Decrease
of 1.0%

(36)

Increase
of 1.0%

Decrease
of 1.0%

(50)

It is considered that there have been no signiﬁcant changes in cash ﬂow interest rate risk at the reporting date
compared to the previous period end and that therefore this risk has had no material impact on earnings or
shareholders’ equity.

Foreign exchange risk
Foreign exchange risk arises because the Group and the Company have operations located in various parts of the
world whose functional currency is not the same as the functional currency in which other Group companies are
operating. Although its geographical spread reduces the Group’s and the Company’s operation risk, the net assets
arising from such overseas operations are exposed to currency risk resulting in gains and losses on retranslation into
Sterling. Only in exceptional circumstances will the Group or the Company consider hedging its net investments in
overseas operations, as generally it does not consider that the reduction in foreign currency exposure warrants the
cash ﬂow risk created from such hedging techniques. It is the Group’s policy to ensure that individual Group entities
enter into local transactions in their functional currency wherever possible and that only surplus funds over and
above working capital requirements should be transferred to the parent company treasury. The Group considers this
policy minimises any unnecessary foreign exchange exposure.

In order to monitor the continuing effectiveness of this policy the Board, through its approval of both corporate and
capital expenditure budgets and review of the currency proﬁle of cash balances and management accounts, considers
the effectiveness of the policy on an ongoing basis.

The following table discloses the major exchange rates of those currencies utilised by the Group:

Average for year ended 31 December 2023
At 31 December 2023

Average for year ended 31 December 2022
At 31 December 2022

USD

1.24
1.27

1.24
1.21

SGD

1.67
1.68

1.71
1.62

PEN

4.60
4.63

4.73
4.55

15. Notes to the Financial Statements (continued)

21. Financial instruments (continued)
A change in exchange rates on the statement of ﬁnancial position date would increase/(decrease) the equity and net
asset position by the theoretical amounts presented below. The analysis is made on the assumption that the rest of
the variables remain constant. The analysis with respect to 31 December 2022 was prepared under the
same assumptions.

Net assets (£’000) – Group
Net assets (£’000) – Company

Change of 10.0% in the GBP/USD rate as of

31 December 2023

31 December 2022

Increase of
10.0%

Decrease
of 10.0%

Increase
of 10.0%

Decrease
of 10.0%

(402)
(445)

492
544

(319)
(135)

390
165

It is considered that there have been no signiﬁcant changes in exchange rate risk at the reporting date compared to
the previous period end and that therefore this risk has had no material impact on earnings or shareholders’ equity.

Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the ﬁnance charges and principal
repayments on its debt instruments. It is the risk that the Group will encounter difﬁculty in meeting its ﬁnancial
obligations as they fall due.

The Group’s policy is to ensure that it will always have sufﬁcient cash to allow it to meet its liabilities when they
become due. To achieve this aim, it seeks to maintain readily available cash balances (or agreed facilities) to meet
expected requirements for a period of at least 60 days. The Group currently has no long term borrowings.

All of the Group’s and the Company’s ﬁnancial liabilities are due within one year other than undiscounted lease
liabilities due after one year of £4,000.

Price risk
Potential oil and gas sales revenue is subject to energy market price risk.

Given that the Group and the Company currently do not have production, it is not considered appropriate for the
Group or the Company to enter into any hedging activities or trade in any ﬁnancial instruments, such as derivatives.
This strategy will continue to be subject to regular review.

It is considered that price risk of the Group and the Company at the reporting date has not increased compared to
the previous period end.

15. Notes to the Financial Statements (continued)

Annual Report and Financial Statements 2023

21. Financial instruments (continued)

Volatility of oil and gas prices
A material part of the Group’s revenue will be derived from the sale of oil and gas that it expects to produce. A future
substantial or extended decline in prices for oil and gas and reﬁned products could adversely affect the Group’s
future revenues, cash ﬂows, proﬁtability and ability to ﬁnance its planned capital expenditure. The movement of
crude oil and natural gas prices is shown below:

Crude oil – WTI
Per barrel – US$
Per barrel – £

Natural gas LNG Japan/Korea Marker (Platts)
Per Million Btu – US$
Per Million Btu – £

31 December
2023

Average
price
2023

31 December
2022

$72
£57

$9
£7

$78
£63

$12
£12

$81
£67

$19
£15

Oil and gas prices are dependent on a number of factors impacting world supply and demand. Due to these factors,
prices may be subject to signiﬁcant ﬂuctuations from year to year. However, these prices had no effect on the Group’s
results for 2023, since it had no production.

Capital risk
The Group’s and the Company’s objectives when managing capital are to safeguard the ability to continue as a going
concern in order to provide returns for shareholders and beneﬁts to other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.

22. Capital commitments
As of 31 December 2023, there were no capital commitments (2022: none).

23. Contingent Liabilities
The Company considers that there are no potential decommissioning costs in respect of abandoned ﬁelds.

24. Events after the reporting period
On 7 February 2024, the Company entered into a Farm-Up Agreement with TIMOR GAP, whereby TIMOR GAP
would increase its participation in the Chuditch PSC from a 25% to a 40% working interest. The incremental 15%
interest assigned included a share of the obligation to carry the costs of the initial TIMOR GAP 25% interest and
accordingly the Group’s 60% share is now responsible for 80% of the costs of the Chuditch project and TIMOR GAP
pays a 20% share of the costs of the Chuditch project. Shortly after completion of the transaction, TIMOR GAP paid
approximately US$1 million to cover its share of prior costs since the signing of the PSC.

On 29 February 2024, the Company issued 6,528,023,360 new ordinary shares of 0.025p each at an issue price of
0.05 pence per share, raising new capital of £3,264,000 gross, £2,993,000 net of costs.

15. Notes to the Financial Statements (continued)

24. Events after the reporting period (continued)
On 31 March 2024, the joint venture for UK Offshore Licence P2478 relinquished its licence following unavoidable
and signiﬁcant delays to the acquisition of 3D seismic data outside the control of the Company. All commitments
under the licence have been fulﬁlled and there are no further ﬁnancial obligations.

25. Related party transactions

Company
During the year, the Company advanced loans to its subsidiaries. The details of the transactions and the amount owed
by the subsidiaries at the year end were.

SundaGas (Timor-Leste Sahul ) Pty. Ltd
SundaGas Banda Unipessoal, Lda
Gold Oil Peru S.A.C*

Year ended
31 December 2023

Year ended
31 December 2022

Balance
£’000

Loan advance
£’000

Balance
£’000

Loan advance
£’000

2,878
883
904

1,031
8
10

1,977
921
941

1,622
253
(64)

The company has provided for an impairment of £904,000 (2022: £941,000) on the outstanding loans.

Group and company
SundaGas (Timor-Leste Sahul) Pty. Ltd (“TLS”), a wholly-owned subsidiary paid fees amounting to US$315,000
(2022: US$285,000) to SundaGas Pte. Ltd, a company in which Dr. Andrew Butler, a director of the Company, held
a signiﬁcant interest. These fees are in respect of services to the group including management time and ﬁnance and
accounting services.

The directors’ aggregate remuneration and any associated beneﬁts in respect of qualifying services are disclosed in
note 5.

26. Restatement of comparative ﬁgures
The Directors have reviewed the constituent elements of the Foreign Exchange Translation Reserve and have
concluded that such reserves amounting to £848,000 relating to subsidiaries disposed and branches closed in prior
years should have been transferred to Retained Earnings. Therefore the comparative period has been restated to
represent this reallocation.

None of the restatements impact on the Earnings Per Share as reported in 2022 or 2023. The only affected line
items are Retained Earnings and the Foreign Exchange Translation Reserves.

16. Glossary of Technical Terms

Annual Report and Financial Statements 2023

Bcf

Billion standard cubic feet of natural gas.

Geological chance of success

Contingent Resources

The estimated probability that exploration activities will conﬁrm the
existence of a signiﬁcant accumulation of potentially recoverable
petroleum.

Those quantities of petroleum estimated, as of a given date, to be
potentially recoverable from known accumulations by application of
development projects, but which are not currently considered to be
commercially recoverable owing to one or more contingencies.

GIIP

Volume of natural gas initially in-place in a reservoir.

High or 3U Estimate

Licence Operator or Administrator

Denotes the high estimate qualifying as Prospective Resources. Reﬂects a
volume estimate that there is a 10% probability that the quantities actually
recovered will equal or exceed the estimate.

The Company nominated to carry out operational activities. In the context
of the UK jurisdiction, during the initial Phase A of a licence the nominated
Company is termed a licence administrator.

MMBBL

Million barrels of oil or condensate.

MMBOE, Oil equivalent

Prospective Resources

SPE PRMS 2018

Million barrels of oil equivalent. Volume derived by dividing the estimate
of the volume of natural gas in billion cubic feet by six in order to convert
it to an equivalent in million barrels of oil or condensate, and, where
relevant, adding this to an estimate of the volume of oil in millions of
barrels.

Quantities of petroleum that are estimated to exist originally in naturally
occurring reservoirs, as of a given date. Crude oil in-place, natural gas in-
place, and natural bitumen in-place are deﬁned in the same manner.

The Society of Petroleum Engineers’ (“SPE”) Petroleum Resources
Management System (“PRMS”) is a system developed for consistent and
reliable deﬁnition, classiﬁcation, and estimation of hydrocarbon resources
prepared by the Oil and Gas Reserves Committee of SPE and approved by
the SPE Board in June 2018 following input from six sponsoring societies:
the World Petroleum Council, the American Association of Petroleum
Geologists, the Society of Petroleum Evaluation Engineers, the Society of
Exploration Geophysicists, the European Association of Geoscientists and
Engineers, and the Society of Petrophysicists and Well Log Analysts.

SPE PRMS Unrisked Prospective
Resources

Denotes the unrisked estimate qualifying as SPE PRMS 2018 Prospective
Resources.

16. Glossary of Technical Terms (continued)

Mean

PSC

PSDM

Tcf

Reﬂects an unrisked median or best-case volume estimate of resource
derived using probabilistic methodology. This is the mean of the probability
distribution for the resource estimates and is often not the same as 2U as
the distribution can be skewed by high resource numbers with relatively
low probabilities.

Production Sharing Contract.

Pre-Stack Depth Migration version of processed seismic data.

Trillion standard cubic feet of gas.

TGS-NOPEC

TGS-NOPEC Geophysical Company.