Final Results for the Year Ended 31 December 2022

Source Company Press Release
Company Baron Oil PLC
Tags Corporate: Corporate Results, Country: East Timor, United Kingdom, Financial - Costs & Metrics: Capital Expenditures, Upstream: Drilling Activity, Upstream News
Date May 23, 2023

Baron Oil (AIM: BOIL), the AIM-quoted oil and gas exploration company, is pleased to announce its audited financial results for the year ended 31 December 2022.

Operational Highlights (including post period) 

•  During the year, both the Chuditch PSC and Dunrobin projects, were subject to intensive technical work aimed at maturing the assets to "drill ready" status.  
•  Delivery of the reprocessed Chuditch 3D seismic data and its interpretation significantly improved the subsurface image, enabling for the first time, the delineation of the Chuditch discovery and its adjacent prospects.  
•  The key Dunrobin 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 budget. Detailed seismic attribute analysis, designed to investigate candidate direct hydrocarbon indicators, followed in early 2023.  
•  In early 2023 two Competent Person's Reports ("CPRs") were published which validate both projects to the industry standard SPE PRMS Contingent and/or Prospective Resource estimates.  
•  Throughout the period the Company kept updated Virtual Datarooms for the benefit of potentially interested funding partners for the next phase of both Chuditch and P2478 projects, a process which continues.  

Financial Highlights 

•  Two oversubscribed funding events in 2022, as a result we have a well-funded balance sheet covering our current activities and commitments  
•  Cash Reserves at 31 December 2021 were £5,807,000 (31 December 2021: £1,650,000). 
•  Exploration and evaluation expenditure of £213,000 (2021: £218,000).  
•  Administration expenses for the year were £1,191,000 (2021: £1,321,000), an overall reduction on the prior year of £130,000.  
•  Loss after taxation of £1,387,000 (2021: £1,127,000 loss).  

Commenting on the results, John Wakefield, Non-executive Chairman, said: "2022 was a year of considerable progress for Baron. Our overriding task was to progress our two material projects, Chuditch and Dunrobin, to their key evaluation points which was achieved with the publication of CPRs on both projects in early 2023. The considerable and potentially transformative value for shareholders in the Company's assets offshore Timor-Leste and in the UK is now clearly defined and our efforts are now focused on the drilling decisions to be made in 2023 for a Chuditch-1 appraisal well and a Dunrobin West exploration well. "

Both assets continue to attract attention via our active farmout campaigns and presentations at relevant industry events. In particular, there are a number of ongoing discussions with third parties regarding participation in the Chuditch appraisal well and future activities. We are grateful for the support of our investors through the two funding events which took place during the year and as a result, we have a well-funded balance sheet covering our current activities and commitments. "

Baron is highly encouraged by the developments being made and I look forward to reporting on our further progress in due course."   

Posting of Annual Report and Notice of AGM 

The Company's Annual Report and Financial Statements, for the year ended 31 December 2022, will be available for download from the Company's website (https://www.baronoilplc.com/) later today and will be despatched by post shortly to those shareholders that have requested a hard copy. 

The Company will hold its Annual General Meeting at 11 a.m. BST on 29 June 2022 at 38-43 Lincoln's Inn Fields, London WC2A 3PE and the Notice of Annual General Meeting to that effect will be sent to shareholders shortly and will be available on the Company's website.

Financial Review

The net result for the year was a loss before taxation of £1,387,000, which compares to a loss of £1,127,000 for the preceding financial year; the loss after taxation attributable to Baron Oil shareholders was £1,387,000, compared to a loss of £1,127,000 in the preceding year, representing a loss of 0.01p per share (2021: loss of 0.012p). It should be noted that the results for 2021 included a one-off non-cash gain on the deemed disposal of an associated undertaking amounting to £302,000.

Turnover for the year was £nil (2021: £nil), there being no sales activity during the period.

Exploration and evaluation expenditure incurred included in the Income Statement amounts to £213,000 (2021: £218,000). The Impairment provision in respect of Peru Block XXI was released and offset against the write off of the accumulated cost on the project. The Directors judged that no other exploration assets required impairment.

Administration expenses for the year were £1,191,000 (2021: £1,321,000), an overall reduction on the preceding year of £130,000. This is made up of a number of pluses and minuses. As anticipated last year, administration costs arising in SundaGas (Timor-Leste Sahul) Pte. Ltd. ("TLS") have increased from £285,000 previously to £441,000 this year as we moved to a full 12 month reporting period at the Group level and the Dili office in Timor-Leste is now fully operational. There were also non-recurring support costs of £65,000 in Peru. Directors and UK staff salaries and related costs are lower than 2021 by £37,000 with the earlier year including a severance payment to a former director. Finally, there have been no share-based payment charges this year (2021: £286,000).

Throughout 2022, the Pound Sterling weakened considerably against the US Dollar, with an opening rate of $1.35 and a closing rate of $1.21. This has given rise to a gain on holdings of US Dollar denominated balances of £43,000 (2021: gain of £22,000).

At the end of the financial year, cash reserves of the Group had increased to £5,807,000 from a level at the preceding year end of £1,650,000. The proceeds from the issue of new shares in the year amounting to £7,131,000 gross (£6,619,000 net of costs) bolstered the Company's cash reserves. The Group's investment in exploration and evaluation assets in the UK and Timor-Leste amounted to £806,000 in the period, and £602,000 was repaid to SundaGas Pte Ltd to settle the outstanding amount of the remaining share of the Timor-Leste Bank Guarantee resulting from the Company's acquisition of the remaining interest in TLS, as announced on 15 November 2022. In the case of the guarantee bond held in Peru, this was released in full on the relinquishment of the Block XXI licence resulting in a cash inflow of £128,000. After taking into account these items, operating cash outflow amounted to £1,182,000.

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

Introduction

During 2022 both projects were subject to intensive technical work aimed at maturing the assets to "drill ready" status, which culminated in early 2023 with the publication of two Competent Person's Reports ("CPRs") which validate the projects to the industry standard SPE PRMS Contingent and/or Prospective Resource estimates.

Southeast Asia: Timor-Leste TL-SO-19-16 PSC ("Chuditch PSC" or "PSC") (Baron 75% interest)

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 50-100 metres. The Chuditch-1 discovery well, drilled by Shell in 1998 in 64 metres water depth, encountered a 25 metre gas column in Jurassic Plover Formation sandstone reservoirs at a depth of around 3,000 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.

Baron holds a 75% working interest and operates the PSC through its wholly owned subsidiary company SundaGas Banda Unipessoal Lda. ("Banda"), 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.

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 seismic reprocessing supporting the presence of a significant structure associated with the Chuditch discovery.

2022 and subsequent activities

The most significant component of the technical work programme in 2022 was the delivery of the reprocessed 3D seismic data and its interpretation. The reprocessing was performed to a high standard using the most modern Pre-Stack Depth Migration ("PSDM") techniques. We have significantly improved the subsurface image, enabling for the first time, the delineation of the Chuditch discovery and its adjacent prospects. This technical evaluation was enhanced through the completion of a number of further geological and engineering studies.

In October 2022, Baron announced its preliminary evaluation arising from the reprocessed data. The resultant mapping indicated a significant increase in management's aggregate Gas-in-Place and Recoverable Gas Resource estimates for the Chuditch PSC. In particular, it indicated a greater concentration of resources into the Chuditch-1 discovery in a simplified and robust structure. The understanding of the adjacent prospectivity was also matured, with three low-risk exploration targets confirmed on the Chuditch trend.

Consultancy group ERC Equipoise Ltd" (ERCE") was engaged to prepare a 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 1.16Tcf of gas. The recognition of the resources as being Contingent, rather than Prospective, is a major milestone and sets the foundation for the next stage of the project cycle.  This phase typically includes pre-development feasibility studies and preliminary work on gas sales arrangements alongside the drilling of an appraisal well. 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 Bscf 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 gas Resources for these prospects, at 2,128 Bscf 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 (baronoilplc.com).

Also in October 2022, we announced a six-month extension to Contract Year Two of the Chuditch PSC granted by the relevant Timor-Leste national authority, Autoridade Nacional do Petróleo e Minerais ("ANPM"). The PSC Contract now has an expiry date of 18 June 2023.

On entry into Contract Year 3 of the PSC, the commitment will be to drill an appraisal well within a 12-month period. Such an appraisal well would likely be drilled to a total depth of around 3,000 metres and would include a production test. Recent geopolitical events and post-pandemic supply chain issues have led to considerable disruption in rig availability and drilling services globally such that a drill deadline of June 2024 could prove challenging.

There continues to be an excellent working relationship between the Company, the Government Ministry of Petroleum and Mineral Resources ("MPM"), Autoridade Nacional do Petróleo e Minerais ("ANPM"), the Government regulatory authority of petroleum and mining, and TIMOR GAP. We meet regularly with all of these bodies and provide detailed updates around our activities, plans and timelines on the PSC. The Company appreciates the support that we receive from these various state entities and will continue to work on maintaining these close relationships.

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 a new local chapter of the Society of Petroleum Engineers.

More generally in Timor-Leste, there was increased E&P activity during the year as Timor Resources Pty Ltd commenced an onshore drilling campaign, the first in 50 years. In addition, the Greater Sunrise development project continued to move towards development with negotiations between its many stakeholders. In April successful bidders of five blocks in the Second Licencing Round were announced by the Timor-Leste authorities, including Block P, which sits between the Chuditch PSC and Greater Sunrise, to a subsidiary of the Italian major ENI.

Throughout the period the Company hosted and kept updated a Virtual Dataroom for the benefit of potentially interested funding partners for the next phase of the Chuditch project, a process which continues.

United Kingdom Offshore Licence P2478 ("Dunrobin") (Baron 32% interest)

Background

Innovate Licence P2478, awarded in September 2019, is currently held by a joint operation comprising Reabold North Sea Limited ("Reabold", Licence Administrator, interest 36%), Baron (32%), and Upland Resources (UK Onshore) Limited (32%). The licence covers blocks 12/27c, 17/5, 18/1 and 18/2 in the Inner Moray Firth area of the North Sea and contains the Dunrobin and Golspie prospects, in a province where regional and local petroleum systems are considered by the partners to be proven. Target depths are as shallow as 660 metres subsea and water depths are less than 100 metres.

The work commitments on the Licence are 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.

2022 and subsequent activities

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 budget. Detailed seismic attribute analysis, designed to investigate candidate direct hydrocarbon indicators, followed in early 2023. A thorough revised evaluation of the prospectivity of P2478 is now finalised, with the UK's North Sea Transition Authority ("NSTA") recording that the work programme was fully complete during March 2023. Baron maintained direct technical involvement during 2022.

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.

The CPR provided independent confirmation of the Company's belief that the western part of the Dunrobin complex had matured into a drillable prospect where a relatively low-cost exploration well can target more than 100 MMbbl of gross Pmean Prospective Resources with low geological risk. The key points from the CPR can be summarised as follows:

·     201mmboe gross unrisked Pmean Prospective Resources on licence when aggregated; 
·     the Dunrobin West prospect ("Dunrobin West") estimated to contain 119mmboe gross unrisked Pmean Prospective Resources aggregated across the Jurassic and Triassic stacked targets; 
·     34% Geological Probability of Success (GPoS) at the Dunrobin West Jurassic primary target, with an estimated 71mmbbl (gross) of Pmean Prospective Resources. 

The CPR estimates indicate that Baron's farm-up arrangement of August 2021 increased the Company's share of aggregate net Pmean Prospective Resources on the Licence from 30mmboe to 64mmboe at a capped cost to Baron of £160,000.

Detailed tabulations of the resources assessed within the P2478 licence, and further commentary, can be accessed via the Company's RNS announcement of 16 February 2023, along with the full CPR document which is available on Baron's corporate website (baronoilplc.com). 

During the first quarter of 2023, the Licence Administrator, on behalf of the joint operation, hosted a Virtual Dataroom in order to attract funding for an exploration well on the Dunrobin West prospect, a process which continues.

Current gross cost estimates for an exploration well to be drilled to a total depth of approximately 700 metres are approximately US$10 million on a dry hole basis.

Block XXI, Peru

In April 2022, Baron requested the relinquishment of the legacy Licence Block XXI in Peru. The Licence had been largely under Force Majeure for a variety of reasons since 2017 and the Company had been frustrated in its attempts to access the area in order to carry out operations. The Bank Guarantee of US$160,000 was released in full to Baron in June. We continue to work with the Peruvian authorities to establish and file an Abandonment Plan. Ongoing costs are minimal and we hope to complete our withdrawal from Peru by the end of 2023.

New Ventures

In line with our strategy, the Company continued to screen early stage opportunities. In this context, in January 2023 the Company announced that, as a joint venture non-operating partner, it had submitted an application in the UK's 33rd Offshore Licensing Round.

Further potential new ventures remain under consideration in both our existing areas of activity and elsewhere.

Corporate

In April 2022, the Company completed an oversubscribed Placing and Subscription of new ordinary shares at 0.06p to raise £1.65 million (gross). The monies were to be applied to support the Chuditch PSC (Timor-Leste) and P2478 (UK) projects as they moved towards their key milestones.

In November 2022, the Company completed an oversubscribed Placing and Subscription and Rex Retail Offer of new ordinary shares at 0.12p, double the funding price achieved in April, to raise £5.36 million (gross). These monies were predominantly raised to support workstreams underpinning the ongoing farm-out discussions and to provide working capital into 2023.

The Company was pleased to announce on 15 November 2022 the appointment of Keith Bush, the former Chief Executive Officer of Cabot Energy Plc (previously known as Northern Petroleum Plc), as an independent non-executive Director. Keith has a petroleum engineering background, with significant experience in the oil and gas sector. He is a member of the Audit Committee and Chairman of the Remuneration Committee.

Conclusions

I am pleased to report that Baron's overriding task during 2022 - to progress our two material projects, Chuditch and Dunrobin, to their key evaluation points - was achieved, as signaled by the publication of CPRs on both assets in early 2023. This represents the culmination of large volumes of detailed, diligent and high quality technical work carried out by Baron's team of global consultants, employees and joint operation partners.

The considerable and potentially transformative value for shareholders in the Company's assets offshore Timor-Leste and UK is now clearly defined. We are now directing our efforts onto the drilling decisions to be made in 2023 for a Chuditch-1 appraisal well and a Dunrobin West exploration well.

In Timor-Leste, the independent assessment of approximately 1.1Tcf of gross Pmean Contingent Resources for the Chuditch-1 discovery underpins the viability of the project. We are updating the development and gas export option studies and commencing environmental baseline studies in preparation for a drilling campaign. The Board currently believes that a single appraisal well may be sufficient to determine commerciality without the need for an immediate follow-on exploration campaign.

In the UK an exploration well on Dunrobin West will be designed to test gross Pmean Prospective Resources of 71mmbbl in the primary, regionally proven, Jurassic target, and 45mmbbl in the vertically underlying secondary Triassic target. Due to the shallow target depths, gross drilling costs to test such a substantial volume are likely to be relatively modest. Success at Dunrobin West would de-risk the potential follow up targets Dunrobin Central & East plus Golspie, which are directly analogous prospects.

Both assets continue to attract attention via our active farmout campaigns and presentations at relevant industry events. In particular, there are a number of ongoing discussions with third parties regarding participation in the Chuditch appraisal well and future activities. We look forward to updating shareholders on progress as and when appropriate.

Our search for new venture opportunities to enhance and complement the existing portfolio resulted in an application as a non-operating partner for a licence in the offshore UK 33rd Round of Licensing and  we continue to actively pursue other material new business opportunities.

We are grateful for the support of our investors through the two funding events in 2022.  As a result we have a well-funded balance sheet covering our current activities and commitments. As at 31 December 2022 we had cash reserves of £5.8 million (2021: £1.65 million). The addition of Mr Keith Bush as an independent non-executive Director in 2022 also strengthens and broadens the Board's talents as we enter a decisive phase of operations.

John Wakefield

Non-executive Chairman

22 May 2023

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2022     
           
           
           
      Notes  2022  2021 
        £'000  £'000 
           
Revenue                            -                     - 
           
Cost of sales                            -                     - 
           
Gross profit                            -                     -    
           
Exploration and evaluation expenditure      (213)  (218) 
Intangible asset impairment                          -  (17) 
Property, plant and equipment impairment and depreciation  (33)  (11) 
Receivables and inventory impairment                        -  (7) 
Administration expenses        (1,191)  (1,321) 
Gain on exchange      43  22 
Other operating income                           -  89 
           
Operating loss      (1,394)  (1,463) 
           
Income from associated undertaking    11                      -  29 
Gain on disposal of associated undertaking                          -                 302 
           
Loss before interest and taxation        (1,394)  (1,132) 
           
Finance cost      (5)                 (2) 
Finance income      12 
           
Loss on ordinary activities           
    before taxation        (1,387)  (1,127) 
           
Income tax expense                           -                     - 
           
Loss on ordinary activities           
    after taxation        (1,387)  (1,127) 
           
Dividends                            -                        -    
           
Loss for the year        (1,387)  (1,127) 
           
Loss on ordinary activities           
    after taxation is attributable to:           
Equity shareholders        (1,387)  (1,127) 
Non-controlling interests                                      -                                   -    
           
        (1,387)  (1,127) 
           
Earnings per ordinary share - continuing operations       
   Basic        (0.010p)  (0.012p) 
   Diluted        (0.010p)  (0.012p) 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022     
         
           
          Restated 
        2022  2021 
        £'000  £'000 
           
Loss on ordinary activities after taxation attributable to the parent    (1,387)  (1,127) 
           
Other comprehensive income: items which may subsequently be reclassified to profit or loss:           
Exchange difference on translating foreign operations    174  33 
           
Total comprehensive loss for the year      (1,213)  (1,094) 
           
Total comprehensive loss attributable to         
 Owners of the parent        (1,213)  (1,094) 
           
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2022    Restated   
      Notes  2022  2021   
        £'000  £'000   
Assets             
Non current assets             
Property plant and equipment           
--- oil and gas assets                         -      
--- others                        78  34   
Intangible fixed assets      3,696  2,736   
Goodwill      10                      -   
Associated undertaking      11                     -                         -   
             
        3,774  2,770   
Current assets             
Trade and other receivables      13  101  54   
Performance bond guarantee deposit    14  827  859   
Cash and cash equivalents      15  5,807  1,650   
             
        6,735  2,563   
             
Total assets        10,509  5,333   
             
Equity and liabilities             
Capital and reserves attributable to owners of the parent         
Share capital      18  4,730  2,896   
Share premium account      19  38,846  34,061   
Share option reserve      19  332  388   
Foreign exchange translation reserve      19  1,735  1,561   
Retained earnings      19  (35,555)  (34,224)   
             
Total equity        10,088  4,682   
             
Current liabilities             
Trade and other payables      16  377  620   
Taxes payable      16  14  12   
             
        391  632   
             
Non-current liabilities             
Lease finance      17  30  19   
             
Total equity and liabilities        10,509  5,333   
             
The financial statements were approved and authorised for issue by the Board of Directors on 22 May 2023 and were signed on its behalf by: 
             
             
             
John Wakefield      Andrew Yeo       
Director      Director       
             
Company number: 05098776             
COMPANY STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2022 
      Notes  2022  2021 
        £'000  £'000 
Assets           
Non current assets           
Property plant and equipment         
--- oil and gas assets       
--- others      21  33 
Intangible fixed assets      159  68 
Investments      12  5,002  3,029 
           
        5,182  3,130 
Current assets           
Trade and other receivables      13  61  46 
Cash and cash equivalents      15  5,625  1,527 
           
        5,686  1,573 
           
Total assets        10,868  4,703 
           
Equity and liabilities           
Capital and reserves attributable to owners of the parent       
Share capital      18  4,730  2,896 
Share premium account      19  38,846  34,061 
Share option reserve      19  332   388 
Foreign exchange translation reserve    19  (163)  (163) 
Retained earnings      19  (33,085)  (32,586) 
           
Total equity        10,660  4,596 
           
Current liabilities           
Trade and other payables      16  185  76 
Taxes payable      16  14  12 
           
        199  88 
           
Non-current liabilities           
Lease finance      17  19 
           
Total equity and liabilities        10,868  4,703 
           
As permitted by section 408 of the Companies Act 2006, the Parent Company's income statement has not been included in these financial statements. The loss of the Parent Company for the year was £555,000 (2021: loss of £1,096,000). 
 
The financial statements were approved and authorised for issue by the Board of Directors on 22 May 2023 and were signed on its behalf by: 
           
           
           
John Wakefield      Andrew Yeo     
Director      Director     
           
Company number: 05098776           


CONSOLIDATED AND COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2022

          Foreign   
  Share  Share  Retained  Share option  exchange  Total 
  capital  premium  earnings  reserve  translation  equity 
Group      £'000  £'000  £'000  £'000  £'000  £'000 
As at 1 January 2021  1,107  32,156  (33,130)  135  1,528  1,796 
             
Shares issued (net of transaction costs)       1,789        1,905                -                      -                      -     3,694 
Transactions with owners        1,789        1,905                -                       -                      -     3,694 
Loss for the year attributable to equity shareholders                                  -                                   -     (1,127)                                -                                   -     (1,127) 
Share based payments              -                  -                  -     286                   -     286 
Share option reserve released               -                 -               33  (33)                 -                        - 
Foreign exchange translation adjustments                                  -                                   -                                   -                                   -     33  33 
Total comprehensive income  for the period                                  -                                   -                           (1,094)                             253                               33  (808) 
As at 1 January 2022  2,896  34,061  (34,224)  388  1,561  4,682 
             
Shares issued (net of transaction costs)       1,834        4,785                -                      -                     -     6,619 
Transactions with owners      1,834      4,785               -            -                     -     6,619 
(Loss) for the year attributable to equity shareholders                                  -                                   -     (1,387)                                -                                   -     (1,387) 
Share option reserve released               -                  -                56  (56)          -                       - 
Foreign exchange translation adjustments                                  -                                   -                                   -                                   -     174  174 
Total comprehensive income  for the period                                  -                                   -                           (1,331)                             (56)                             174  (1,213) 
             
As at 31 December 2022  4,730  38,846  (35,555)  332  1,735  10,088 
             



CONSOLIDATED AND COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2022 - continued 
             
  Share  Share  Retained  Share option  Foreign exchange  Total 
  capital  premium  earnings  reserve  translation  equity 
  £'000  £'000  £'000  £'000  £'000  £'000 
Company                 
As at 1 January 2021  1,107  32,156  (31,523)  135  (163)  1,712 
Shares issued (net of transaction costs)  1,789  1,905                -                  -                     -  3,694 
Transactions with owners  1,789  1,905                 -                 -                    -  3,694 
             
Profit for the year                -             -  (1,096)                   -                     -  (1,096) 
Share based payments               -              -               -     286                 -  286 
Share option reserve released         -              -  33  (33)               -                   - 
Total comprehensive income for the period                                    -                                  -  (1,063)  253                                -     (810) 
             
As at 1 January 2022  2,896  34,061  (32,586)  388  (163)  4,596 
             
Shares issued (net of transaction costs)  1,834  4,785                -               -                  -  6,619 
Transactions with owners  1,834  4,785              -               -                 -  6,619 
Loss for the year               -            -  (555)             -                 -  (555) 
Share option reserve released             -           -  56  (56)          -              - 
Total comprehensive income  for the period                                  -                                   -     (499)  (56)                                -     (555) 
             
As at 31 December 2022  4,730  38,846  (33,085)  332  (163)  10,660 
             
Share capital is the amount subscribed for shares at nominal value. 
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.   
Foreign exchange translation occurs on consolidation of the translation of the subsidiaries balance sheets at the closing rate of exchange and their income statements at the average rate. 
CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS FOR THE     
YEAR ENDED 31 DECEMBER 2022         
        Restated   
    Group  Company  Group  Company 
    2022  2022  2021  2021 
    £'000  £'000  £'000  £'000 
           
Operating activities    (1,750)  (582)  (1,179)  (681) 
           
Investing activities           
Return from investment and servicing of finance  12  11 
Advances to subsidiary and associated undertakings                     -  (1,848)  323  (707) 
Performance bond guarantee deposit returned                  128                    -                    -                       -    
Additions to exploration and evaluation assets  (806)  (91)  (1,356)  (50) 
Acquisition of tangible assets  (17)                     -  (1)  (1) 
Investment in associated undertaking                   -                    -  (93)  (1,909) 
           
    (683)  (1,928)  (1,120)  (2,660) 
           
Financing activities           
Net proceeds from issue of share capital               6,619              6,619          2,768              3,694 
Lease financing  (29)  (11)  (9)  (9) 
    6,590  6,608  2,759  3,685 
           
Net cash inflow    4,157  4,098  460  344 
           
Cash and cash equivalents at the beginning of the year  1,650  1,527  1,190  1,183 
           
Cash and cash equivalents at the end of the year  5,807  5,625  1,650  1,527 
           
     
         
Note to the Consolidated and Company Statement of Cash Flow         
      Restated   
    Group  Company  Group  Company 
    2022  2022  2021  2021 
    £'000  £'000  £'000  £'000 
Operating activities           
Loss for the year attributable to controlling interests    (1,387)  (555)  (1,127)  (1,096) 
Depreciation, amortisation and impairment charges  33  55  28  135 
Share based payments                      -                    -                286              286 
Finance income shown as an investing activity              (12)  (11)            (7)  (7) 
Interest on lease liability                   4                     1                    -                   - 
Gain on disposal of associated undertaking                 -                    -          (163)                   - 
Income from associated undertaking              -                -       (29)                - 
Foreign exchange translation    (74)  (205)  19  (19) 
           
Operating cash outflows before movements in working capital  (1,436)  (715)  (993)  (701) 
           
(Increase)/decrease in receivables  (47)  22  (743) 
(Decrease)/increase in payables  (267)  111  557  14 
           
Net cash outflows from operating activities  (1,750)  (582)  (1,179)  (681) 
           

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.

2. Segmental information            
In the opinion of the Directors the Group has one class of business, being the exploration for, and development and production of, oil and gas reserves, 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 is taking place. 
           
Exploration and production year ended 31 December 2022   
    United  South  South East   
    Kingdom  America  Asia  Total 
    £'000  £'000  £'000  £'000 
Revenue                    -                  -                      -                        - 
Cost of sales                     -                 -                       -                        - 
           
Gross profit                     -          -                    -                     - 
         
Exploration and evaluation expenditure  (67)  (8)  (138)  (213) 
Property, plant and equipment impairment and depreciation  (12)    (21)  (33) 
Administration expenses    (686)  (64)  (441)  (1,191) 
Gain on exchange    43      -                -  43 
           
Loss before interest and taxation  (722)  (72)  (600)  (1,394) 
           
Finance cost    (1)               -     (4)  (5) 
Finance income    11              1                  -  12 
           
Loss before taxation    (712)  (71)  (604)  (1,387) 
Income tax expense                                    -                                  -                                  -                                -    
           
Loss after taxation    (712)  (71)  (604)  (1,387) 
           
Assets and liabilities           
Segment assets    298  4,403           4,702 
Cash and cash equivalents    5,625              177             5,807 
           
Total assets    5,923             4,580          10,509 
           
Segment liabilities    194  212  407 
Current tax liabilities             14              -                       -                  14 
           
Total liabilities    208  212  421 
           
Other segment items           
Capital expenditure    92                        -                                794  886 
Depreciation, amortisation and impairment charges    12                                  -                               21  33 
           
         
Exploration and production year ended 31 December 2021 (restated)   
    United  South  South East   
    Kingdom  America  Asia  Total 
    £'000  £'000  £'000  £'000 
Revenue                      -          -                -                   - 
Cost of sales                    -                   -                -                 - 
           
Gross profit                     -                   -                   -                   - 
         
Exploration and evaluation expenditure  (50)  (101)           (67)  (218) 
Intangible asset impairment                 -     (17)                   -  (17) 
Property, plant and equipment impairment and depreciation  (11)   -  (11) 
Receivables and inventory impairment  (7)                  -  (7) 
Administration expenses    (1,031)  (5)             (285)  (1,321) 
Gain on exchange    22                   -                   -  22 
Other operating income                   -     -                89  89 
           
Operating (loss)/profit    (1,070)  (130)  (263)  (1,463) 
           
Income from associated undertaking           -            -     29  29 
Gain on disposal of associated undertaking    -              -     302  302 
           
Loss before interest and taxation  (1,070)  (130)  68  (1,132) 
           
Finance costs                (2)       -              -  (2) 
Finance income          -            - 
           
(Loss)/Profit before taxation    (1,065)  (130)  68  (1,127) 
Income tax expense                                    -                                  -                                  -                                -    
           
Loss/(Profit) before taxation    (1,065)  (130)  68  (1,127) 
           
Assets and liabilities           
Segment assets    2,816            863  3,683 
Cash and cash equivalents    1,527          118  1,650 
           
Total assets    4,343           981  5,333 
           
Segment liabilities    94            542  639 
Current tax liabilities     12     -             -     12 
           
Total liabilities    106              542  651 
           
Other segment items           
Capital expenditure                   50     -     1,307  1,357 
Depreciation, amortisation and impairment charges                   11  24                                -     35 
           
3. Operating loss        2022  2021 
        £'000  £'000 
The operating loss is stated after charging:         
           
Auditor' remuneration           
  Audit of group and company financial statements - current year    29  25 
  Audit of group and company financial statements - prior year   
  Non-audit services: Tax compliance     
  Non-audit services: Other assurance services     
Exploration and evaluation expenditure                 213                   218 
Impairment of intangible assets                         -  17 
Depreciation of property, plant and equipment                   33                     11 
Impairment of foreign tax receivables                       - 
Gain on exchange        (43)  (22) 
Other operating income                        -  (89) 
           
Other operating income in 2021 arose on the capitalisation into cost of investment of development costs written off in prior years in respect of Chuditch, Timor-Leste. This was due to a reconstruction of the balance sheet of SundaGas (Timor-Leste Sahul) Pty Ltd ("TLS") when the Group took majority control in TLS. 
           
           
The analysis of development and administrative expenses in the consolidated income statement by nature of expense is: 
        2022  2021 
        £'000  £'000 
Employee benefit expense        632  521 
Share based payments                         -                261 
Exploration and evaluation expenditure      213                    218 
Depreciation, amortisation and impairment charges      33  35 
Legal and professional fees        410  454 
(Gain) on exchange        (43)  (22) 
Other expenses        149  85 
           
        1,394  1,552 
           
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: 
    2022  2021 
    Group  Company  Group  Company 
    Number  Number  Number  Number 
           
Directors   
Technical and production                          -   
Administration                         2 
           
Total   
           
           
The aggregate payroll costs of these persons were as follows:  £'000  £'000  £'000  £'000 
           
Wages and salaries                     206                     49  96  80 
Directors' fees, salaries and benefits  390  390  349  349 
Share based payments                         -                   286  286 
Social security costs    47  47  51  51 
           
    643  486  782  766 
5. Finance income and expenses       2022  2021 
        £'000  £'000 
Bank and other interest received      12 
Interest on lease liability      (4)  (2) 
Other finance cost        (1)  -    
           
Total                          7                  5 
           
           
           
6. Income tax expense        2022  2021 
        £'000  £'000 
The tax charge on the loss on ordinary activities was:-       
           
UK Corporation Tax - current                          -                     - 
Foreign taxation                          -                      - 
           
                           -                        - 
           
     
The total charge for the year can be reconciled to the accounting result as follows:     
        2022  2021 
        £'000  £'000 
(Loss) before tax           
Continuing operations        (1,387)  (1,127) 
           
Tax at composite group rate of 18.6% (2021: 22.4%)    (258)  (253) 
           
Effects of:           
Losses not subject to tax        163  123 
Movement on capital allowances      (76)  (97) 
Increase in tax losses        171  227 
Foreign taxation       
           
Tax expense                           -                          - 
           
At 31 December 2022, the Group had estimated tax losses of £36,011,000 (2021 - £32,933,000) to carry forward against future profits. The potential deferred tax asset on these tax losses at a composite group rate of 29.5% of £10,636,000 (2021: at 18.1%, £5,964,000) 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 18.6% (2021: 22.4%) 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. 
7. Earnings per share             
        2022  2021   
Loss per ordinary share             
- Basic        (0.010p)  (0.012p)   
- Diluted        (0.010p)  (0.012p)   
             
             
Earnings per ordinary share is based on the Group's loss attributable to controlling interests for the year of £1,387,000 (2021: £1,127,000). 
The weighted average number of shares used in the calculation is the weighted average ordinary shares in issue during the year of 13,784,079,264 (2021: 9,460,727,853). 
             
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. 
8. Property, plant and equipment       
    Equipment and  Right of use   
    machinery  assets  Total 
    £'000  £'000  £'000 
Group         
Cost         
At 1 January 2021    29                      -     29 
Foreign exchange translation adjustment                     -    
Additions                      1  45                  46 
         
At 1 January 2022    31                      45  76 
Foreign exchange translation adjustment                     4                       -                    4 
Additions                  17                  62                  79 
Disposals    (34)                     -  (34) 
         
At 31 December 2022    18  107  125 
         
Depreciation         
At 1 January 2021    29             2  31 
Charge for the period                -                 11                11 
         
At 1 January 2022    29              13  42 
Foreign exchange translation adjustment                   5             1 
Charge for the period                   5              28  33 
Disposals    (34)              -  (34) 
         
At 31 December 2022    42  47 
         
Net book value         
At 31 December 2022    13             65                   78 
         
         
At 31 December 2021                  2                 32               34 
         
Included in the above line items are Right of Use assets of £65,000 (2021: £32,000) in respect of a motor vehicle and an office lease.  
     
    Equipment and  Right of use   
    machinery  asset  Total 
    £'000  £'000  £'000 
Company         
Cost         
At 1 January 2021                             -                         45                    45 
Additions                     1                -                      1 
         
At 1 January and 31 December 2022                         1                 45                     46 
         
Depreciation         
At 1 January 2021                        -                      2                     2 
Charge for the period                         -                      11                    11 
         
At 1 January 2022                       -     13  13 
Charge for the period                 -               12              12 
         
At 31 December 2022                   -               25                  25 
         
Net book value         
At 31 December 2022                      20               21 
         
         
At 31 December 2021                    1                   32                  33 
         
             
Included in the above line items are Right of Use assets of £20,000 (2021: £32,000) in respect of a motor vehicle.  
9. Intangible fixed assets        Exploration   
        and evaluation   
        assets  Total 
        £'000  £'000 
Group           
Cost           
At 1 January 2021        2,319  2,319 
Foreign exchange translation adjustment      17  17 
Additions        1,356  1,356 
Consolidation of single asset company      1,362  1,362 
At 1 January 2022        5,054  5,054 
Foreign exchange translation adjustment      275  275 
Additions        806  806 
Disposals        (2,439)  (2,439) 
At 31 December 2022        3,696  3,696 
           
Impairment           
At 1 January 2021        2,301  2,301 
Foreign exchange translation adjustment                                      -                                -    
Charge for the period        17  17 
At 1 January 2022        2,318  2,318 
Foreign exchange translation adjustment                                 121                             121 
Charge for the period       
Disposals        (2,439)  (2,439) 
At 31 December 2022                                        -                                  - 
           
Net book value           
At 31 December 2022        3,696  3,696 
           
           
At 31 December 2021        2,736  2,736 
           
           
      Exploration   
        and evaluation   
        assets  Total 
        £'000  £'000 
Company           
Cost           
At 1 January 2021        653  653 
Additions                               50                       50 
At 1 January 2022                             703                      703 
Additions                            91                       91 
Disposals        (635)  (635) 
At 31 December 2022                                   159                             159 
           
Impairment           
At 1 January 2021 and 2022                         635  635 
Disposals        (635)  (635) 
At 31 December 2022                                -                       - 
           
Net book value           
At 31 December 2022                             159                      159 
           
At 31 December 2021                              68                          68 
           
           
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 Inner Moray Firth P2478 exploration assets. The directors concluded that the facts did not give rise to an impairment and therefore no impairment charge has been reflected in 2022 (2021: £17,000).  
During the previous year, the Group increased its holding in SundaGas (Timor-Leste Sahul) Pty. Ltd ("TLS") from 33.33% to 100%. As a consequence of the increased holding in TLS, the Company was consolidated into the Group Income Statement and Statement of Financial Position. As TLS is a single asset company in pre-production phase, it is included as an oil and gas asset purchase rather than as a business combination, and its carrying value is included in intangible assets.  
Block XXI Peru: this licence was fully impaired in 2018 and was relinquished in April 2022. 
10. Goodwill          Goodwill on 
          consolidation 
          of subsidiaries 
          £'000 
Group           
Cost           
At 1 January 2021 and 1 January 2022        81 
Goodwill written off          (81) 
At 31 December 2022                                          - 
           
Impairment           
At 1 January 2021 and 1 January 2022        81 
Adjustment on write off of goodwill        (81) 
At 31 December 2022                                          - 
           
Net book value           
At 31 December 2022                                   - 
           
           
At 31 December 2021                                 -    
           
           
The carrying value of goodwill represents the purchase of shares in Gold Oil Peru SAC. This has been written off during the period as there is no prospect of recovery. 
           
11. Associated undertaking           
        Shares in   
        associated   
        undertaking  Total 
        £'000  £'000 
Group           
Gross investment value           
At 1 January 2021                                   151                             151 
Additions        93                               93 
Share of post acquisition net result      29  29 
Disposal        (273)  (273) 
           
At 1 January and 31 December 2022                                      -                                   -    
           
Impairment           
At 1 January 2021, 1 January and 31 December 2022                         -                           - 
           
Carrying value           
At 31 December 2022                 -            - 
           
           
At 31 December 2021                  -          - 
           
           
On 27 April 2020, the Group acquired a 33.33% interest in SundaGas (Timor-Leste Sahul) Pte. Ltd, incorporated in Singapore at a gross cost of £195,000. In accordance with IAS28, the Group accounted for its investment in this company using the equity method.  
During the preceding period, the Company increased its stake in SundaGas (Timor-Leste Sahul) Limited ("TLS") from 33.33% to 100%. In accordance with IFRS3, this is treated as an effective disposal of the interest in the associated undertaking requiring a remeasurement of its cost to fair value. This resulted in a gain on disposal of £302,000 in 2021. 
           
12. Investments           
    Loans to  Shares in  Shares in   
    group  group  associated   
    undertaking  undertaking  undertaking  Total 
    £'000  £'000  £'000  £'000 
Company           
Cost           
At 1 January 2021    775  5,444                    195  6,414 
Exchange rate adjustment    19             -                       -  19 
Additions                         -                 2,104                    93              2,197 
Net loan movements    1,030                        -                        -  1,030 
Disposals                   -                         -     (288)  (288) 
At 1 January 2022    1,824  7,548                      -     9,372 
Exchange rate adjustment    205                        -                       -  205 
Net loan movements    1,811                        -                        -                1,811 
At 31 December 2022    3,840  7,548                        -     11,388 
           
Impairment           
At 1 January 2021    775  5,444                        -  6,219 
Chargefor the year    124                       -                        -  124 
At 1 January 2022    899  5,444                    -  6,343 
Charge for the year    43                        -              -  43 
At 31 December 2022    942  5,444                       -  6,386 
           
Carrying value           
At 31 December 2022                  2,898                 2,104              -     5,002 
           
           
At 31 December 2021              925                 2,104                    -  3,029 
           
           
The Company elected to recognise the investment in associate in respect of SundaGas (Timor-Leste Sahul) Pte. Ltd. under the cost model. 
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 considers 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 £6,386,000 (2021: £6,343,000). 
           
The Company's subsidiary undertakings at the year end were as follows:     
Subsidiary    Place of incorporation and operation  Proportion of ownership interest  Proportion of voting power held  Nature of business 
       
SundaGas (Timor-Leste Sahul) Pte. Ltd.
8 Chang Charn Road 
Singapore  100  100  Exploration of oil and gas 
#02-01
Link (Thim) Building 
         
Singapore 159637           
           
SundaGas Banda Unipessoal, Lda *
Timor Plaza Pisso 3. #337 
Timor-Leste  100  100  Exploration of oil and gas 
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 
Peru  100  100  Exploration of oil and gas 
Miraflores, Lima-18, Peru                                                       
All shareholdings are in ordinary, voting shares.       
* A direct subsidiary of SundaGas (Timor-Leste Sahul) Pte. Ltd.   
13. Trade and other receivables  2022  2021 
    Group  Company  Group  Company 
    £'000  £'000  £'000  £'000 
           
Trade receivables                                    -                                -                                     -                                -    
Other receivables    24  24  12  12 
Prepayments and accrued income  77  37  42  34 
           
    101  61  54  46 
           



14. Bank guarantee bond    2022  2021 
    Group  Company  Group  Company 
    £'000  £'000  £'000  £'000 
           
Bank guarantee bond at 31 December 2022  827                    -     859                   -    
           
The Company's wholly-owned subsidiary, SundaGas Banda Unipessoal, Lda ("Banda"), has provided a performance guarantee to Autoridade Nacional do Petróleo e Minerais ("ANPM") in respect of the offshore Timor-Leste TL-SO-19-16 Production Sharing Contract ("PSC"). This performance guarantee is secured by a bank guarantee given by United Overseas Bank Limited of Singapore ("UOB") backed by a cash deposit of US$1 million. This arrangement was originally put in place in November 2019 at the outset of the PSC, was extended in November 2022, and now expires on 1 August 2023. It is anticipated that the bank guarantee will be released following the conclusion of the current phase of the PSC which is currently 18 June 2023 as the Directors consider that all work commitments to the end of the current phase will have been met. 
           
The original bond was set up by SundaGas Pte. Ltd ("SGPL"), the former owners of Banda, and has remained in their name beyond the acquisition of Banda by the Company, so as not to disrupt the contractual position of the PSC. As a result, the bond will be initially released to SGPL which is contractually bound by the Relationship Agreement that exists between the parties to account for the funds released to Banda.  
           
As the bond represents a financial asset with contractual cash flows, the Directors have had regard to the credit risk associated with the recovery of the asset. In taking account of the Group's close working relationship with both ANPM and SGPL along with the Group's history of dealings with them, the Directors consider that any credit risk associated with the bond asset is immaterial and therefore no provision for credit loss has been made.  
           
        Restated 
15. Cash and cash equivalents  2022  2021 
    Group  Company  Group  Company 
    £'000  £'000  £'000  £'000 
           
Bank current accounts    837  655  238  120 
Bank deposit accounts    4,970  4,970  1,412  1,407 
           
    5,807  5,625  1,650  1,527 
           
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. 
           
16. Trade and other payables    2022  2021 
    Group  Company  Group  Company 
    £'000  £'000  £'000  £'000 
           
Trade payables    67  66  19  18 
Other payables                      -                    -             495                       -    
Accruals    274  109  96  48 
Lease finance liabilities due within 12 months  36  10  10  10 
Taxation    14  14                12  12 
           
    391  199  632  88 
           
Non-current liabilities           
Lease finance liabilities due after 12 months  30  19  19 
17. Lease finance           
Lease liabilities are presented in the statement of financial position as follows:     
    2022  2021 
    Group  Company  Group  Company 
    £'000  £'000  £'000  £'000 
Current    36  10  10  10 
Non-current    30  19  19 
           
    66  19  29  29 
           
18. Share capital        2022  2021 
        £'000  £'000 
Allotted, called up and fully paid         
Equity:18,920,260,428 (2021: 11,583,612,461) ordinary shares of £0.00025 each  4,730  2,896 
           
        4,730  2,896 
           
The Company issued the following new shares for cash during the year. 
(i) 2,750,000,000 new ordinary shares of £0.00025 each at £0.0006 per share on 9 May 2022. 
(ii) 117,125,001 new ordinary shares of £0.00025 each at £0.0010 per share on 4 November 2022. 
(iii) 4,469,522,966 new ordinary shares of £0.00025 each at £0.0012 per share on 29 November 2022. 
           

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

19. Share premium and reserves      Foreign   
    Share  Share  exchange  Profit 
    premium  Option  translation  and loss 
    account  reserve  reserve  account 
    £'000  £'000  £'000  £'000 
Group           
At beginning of the year    34,061  388  1,561  (34,224) 
Loss for the year attributable to controlling interests                     -                       -     (1,387) 
Issue of new shares    5,296                     -                         - 
Share issue costs    (511)                    -                        -    
Share option reserve released    (56)  56 
Foreign exchange translation adjustments  174                     -    
    38,846  332  1,735  (35,555) 
           
Company           
At beginning of the year    34,061  388  (163)  (32,586) 
Loss for the year                     -                     -     (555) 
Issue of new shares               5,296                     -                        -    
Share issue costs    (511)                   -                   -    
Share option reserve released    (56)  56 
    38,846  332  (163)  (33,085) 
           
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: 
      1 January  New    Lapsed or  31 December   
    Exercise  2022  Issue  Exercised  cancelled  2022   
Issue date  Final exercise date  price  Number  Number  Number  Number  Number   
6 August 2019  6 August 2022  £0.00080      27,500,000                    -                   -      (27,500,000)                     -      
26 March 2020  26 March 2023  £0.00100   117,125,001                       -     (117,125,001)                   -                          -      
26 May 2020  26 May 2030  £0.00100  290,000,000                   -                      -     (165,000,000)  125,000,000   
10 November 2020  10 November 2030  £0.00100      75,000,000                       -                       -       (75,000,000)                  -      
22 July 2021  22 July 2031  £0.00070   440,000,000                    -                  -                  -       440,000,000   
22 July 2021  31 December 2025 *  £0.00070    150,000,000                    -                      -                   -        150,000,000   
17 December 2021  17 December 2031  £0.00060     530,000,000                    -                       -                  -     530,000,000   
14 July 2022  14 July 2025  £0.00070        -     175,000,000                -                 -        175,000,000   
      1,629,625,001  175,000,000  (117,125,001)  (267,500,000)  1,420,000,000   
* These options have been granted to two external contractors who have been engaged by SundaGas (Timor-Leste Sahul) Pte. Ltd. The final exercise dates of these options were extended during the year from 22 July 2024 to 31 December 2025. 
Details of options and warrants issued, exercised and lapsed during the year together with options and warrants outstanding at 31 December 2021 are as follows: 
      1 January  New      31 December   
    Exercise  2021  Issue  Exercised  Lapsed  2021   
Issue date  Final exercise date  price  Number  Number  Number  Number  Number   
27 November 2018  27 November 2021  £0.00435  20,000,000                 -                  -     (20,000,000)                   -      
3 December 2018  3 December 2021  £0.00440      10,000,000             -                      -     (10,000,000)                    -      
6 August 2019  6 August 2022  £0.00080  27,500,000                     -                    -                  -     27,500,000   
26 March 2020  26 March 2023  £0.00100  117,125,001                     -                      -                      -        117,125,001   
26 May 2020  26 May 2030  £0.00100    290,000,000                      -                      -                    -        290,000,000   
10 November 2020  10 November 2030  £0.00100      75,000,000                  -                       -                      -          75,000,000   
22 July 2021  22 July 2031  £0.00070            -       440,000,000          -                    -        440,000,000   
22 July 2021  22 July 2024  £0.00070                  -        150,000,000                   -                    -     150,000,000   
17 December 2021  17 December 2031  £0.00060             -       530,000,000                   -                      -      530,000,000   
      539,625,001  1,120,000,000  (30,000,000)  1,629,625,001   
The number of share options which were exercisable at year end was 1,245,000,000 (2021: 1,099,625,001).  The weighted average remaining life of share options at the year end was 7 years (2021: 8 years).  The weighted average exercise price (in pence) applying to share options during the year was as follows:   
  2022  2021           
Opening  0.08p  0.12p           
Exercised  0.10p           
Lapsed  0.08p  0.44p           
Cancelled  0.10p           
Issued  0.07p  0.07p           
Closing  0.07p  0.08p           
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    14 July 2022  17 December 2021  22 July 2021  22 July 2021  26 May 2020 
             
    Number of options or warrants granted  175,000,000    530,000,000  150,000,000  440,000,000  290,000,000 
Share price at grant date    0.07p  0.06p  0.07p  0.07p  0.05p 
Exercise price at grant date    0.07p  0.06p  0.07p  0.07p  0.1p 
Option life    3 years  10 years  3 years  10 years  10 years 
Risk free rate    0.86%  0.86%  0.86%  0.86%  0.86% 
Expected volatility    80%  80%  80%  80%  80% 
Expected dividend yield    0%  0%  0%  0%  0% 
Fair value of option    0.017p  0.025p  0.02p  0.03p  0.02p 
             
             
             
During the year, as announced on 14 July 2022, the Company awarded 175,000,000 share options to 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.  A detailed summary of the current status and future plans for the Chuditch project are given in the Chairman's Statement & Operations Report. 

Volatility was determined by reference to the Company's historical share price volatility over a suitable period.  During the year, and as announced on 12 January 2022, 240,000,000 share options were cancelled.

21. Directors' emoluments           
        2022  2021 
        £'000  £'000 
           
Directors' remuneration        390  349 
Compensation for loss of office                  -                          53 
Share based payments                                -                        256 
        390  658 
           
 
Highest paid director emoluments and other benefits are as listed below.       
        2022  2021 
        £'000  £'000 
Remuneration        214  216 
Post termination benefits        17 
Share based payments                               -                   145 
           
        231  361 
Total remuneration in respect of key management personnel amounted to £432,000 (2021: £698,000).   

22.  Financial instruments

The Group's activities expose it 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 activities also expose it to non-financial risks: market risk. The Group'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 is exposed through its operations to the following risks:

Ø   Credit risk 
Ø   Cash flow interest rate risk 
Ø   Foreign Exchange Risk 
Ø   Liquidity risk 
Ø   Price risk 
Ø   Capital risk 
Ø   Market risk 

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments.  This note describes the Group'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 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.

Principal financial instruments

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

Ø   Loans and receivables 
Ø   Trade and other receivables 
Ø   Cash and cash equivalents 
Ø   Trade and other payables 

General objectives, policies and processes

The Board has overall responsibility for the determination of the Group'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 competitiveness and flexibility.  Further details regarding these policies are set out below:

Credit risk

The Group's principal financial assets are bank balances and cash, 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 statement 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 2022 and 2021 there were no trade receivables.

Cash flow interest rate risk

The Group is exposed to cash flow interest rate risk from its deposits of cash and cash equivalents with banks. 

The cash balances maintained by the Group 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 is not at present exposed to cash flow interest rate risk on borrowings as it 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.

Interest rates on financial assets

The Group'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 2022    Financial assets on which interest earned  Financial assets on which interest not earned  Total 
    £'000  £'000  £'000 
         
UK sterling    4,802  397  5,199 
US dollar (USD)    168  1,287  1,455 
Singapore Dollar (SGD)   
Peruvian Nuevo Sol (PEN)   
    4,970  1,688  6,658 
         
31 December 2021    Financial assets on which interest earned  Financial assets on which interest not earned  Total 
    £'000  £'000  £'000 
         
UK sterling    780  123  903 
US dollar (USD)    1,486  174  1,660 
Peruvian Nuevo Sol (PEN)   
    2,266  297  2,563 

The Group earned interest on its interest bearing financial assets at rates between 1.5% and 4% (2021 0.3% and 1%) during the period.  

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 2021 was prepared under the same assumptions.

  Change of 1.0% in the interest rate as of 
  31 December 2022  31 December 2021 
  Increase of 1.0%  Decrease of 1.0%  Increase of 1.0%  Decrease of 1.0% 
Instruments bearing variable interest (£'000)  50  (50)  10  (10) 

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 has 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 operation risk, the Group's 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 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:

    USD  SGD  PEN 
Average for year ended 31 December 2022    1.24  1.71  4.73 
At 31 December 2022    1.21  1.62  4.55 
Average for year ended 31 December 2021    1.37  1.84  5.27 
At 31 December 2021    1.35  1.82  5.35 
         

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 2021 was prepared under the same assumptions.

  Change of 10.0% in the GBP/USD rate as of 
  31 December 2022  31 December 2021 
  Increase of 10.0%  Decrease of 10.0%  Increase of 10.0%  Decrease of 10.0% 
Net assets (£'000)  (279)  340  (148)  393 

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.

Price risk

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

Given that the Company currently does not have production, it is not considered appropriate for the Group 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 at the reporting date has not increased compared to the previous period end. 

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:

     
    31 December 2022  Average price 2022  31 December 2021 
Crude oil - WTI         
Per barrel - US$    $81  $92  $75 
Per barrel - £    £67  £74  £56 
    ══════  ══════  ══════ 
Natural gas LNG Japan/Korea Marker (Platts)       
Per Million Btu - US$    $19  $32  $25 
Per Million Btu - £    £15  £26  £18 
    ══════  ══════  ══════ 
         

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 2022, since it had no production.

Capital risk

The Group'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.

23.  Capital commitments

As of 31 December 2022, there were no capital commitments (2021: none).

24.   Contingent Liabilities

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

25.  Events after the reporting period

On 20 February 2023, the Company issued 62,500,000 new ordinary shares of 0.025p each following the exercise of options by a former director, raising new capital of £62,000 gross, £50,000 net of costs.

 26. Ultimate controlling party

Baron Oil Plc is listed on the AIM market operated by the London Stock Exchange. At the date of the Annual Report in the Directors' opinion there is no controlling party.

27. 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.   
  Year ended 31 December 2022  Year ended 31 December 2021 
    Balance  Loan advance  Balance  Loan advance 
    £'000  £'000  £'000  £'000 
SundaGas (Timor-Leste Sahul) Pty. Ltd  2898  1,972  926                         926 
Gold Oil Peru S.A.C *    941  42  899  124 
           
           
* The Company has provided for an impairment of £941,000 (2021: £899,000) on the outstanding loans.   
       
       
Group and company           
           
SundaGas (Timor-Leste Sahul) Pty. Ltd ("TLS"), a wholly-owned subsidiary paid fees amounting to US$285,000 (2021: US$369,000) to SundaGas Pte. Ltd, a company in which Dr. Andrew Butler, a director of TLS, held a significant interest.   
           
The Directors' aggregate remuneration and any associated benefits in respect of qualifying services are disclosed in note 21.   
           
During the year, key management personnel subscribed for new ordinary shares of £0.00025 each in the Company as part of placings and subscriptions of new ordinary shares as follows.   
           
  Announced 29 April 2022, at a price of 0.06p per share  Announced 16 November 2022, at a price of 0.12p per share     
           
Andrew Yeo  16,150,000 shares  8,000,000 shares     
Dr Andrew Butler *  50,000,000 shares     
           
During the year, key management personnel were awarded options to subscribe to new ordinary shares of £0.00025 each in the Company as follows.   
    Number  Exercise price  Final exercise date   
Dr Andrew Butler *    175,000,000  0.07p  14 July 2025   
           
* Director of SundaGas (Timor-Leste Sahul) Pty. Ltd.   

On 25 November 2022, the Company assumed 100% of the collateral for a US$1 million amount (the "Deposit") in relation to the performance bank guarantee arrangements connected to the Chuditch PSC (the "Guarantee"), by providing approximately US$667,000 to SundaGas Pte. Ltd ("SGPL") to replace the two thirds contribution (approximately US$667,000) previously made by SGPL, which was the other indirect shareholder in SundaGas Banda Unipessoal Lda. until 18 June 2021.  The relationship agreement between SGPL, its principals and Baron as originally announced on 18 June 2021 (the "Relationship Agreement") was also varied so that Baron is entitled to all the benefit of and rights to the return of the Deposit should it be released or when the Guarantee expires in due course on 1 August 2023.  The changes to the provision of the funds for the Deposit and the variations to the Relationship Agreement were deemed to be related party transactions pursuant to the AIM Rules for Companies. 

In June 2021, the Company agreed to acquire the remaining 15% of SundaGas Timor-Leste (Sahul) Pte. Ltd. ("TLS") which the Company did not own in exchange for the issuance of 1,157,202,885 new ordinary shares in the Company to SundaGas Pte. Ltd ("SGPL") (the "Share Exchange"). TLS is the parent company of the Timor-Leste subsidiary SundaGas Banda Unipessoal Lda. ("Banda"), which is the Operator of and 75% interest holder in the offshore Timor-Leste TL-SO-19-16 PSC (the "Chuditch PSC"). SGPL is the parent company of SundaGas Resources Pte. Ltd. ("SGR"), which was the holder of the 15% interest in TLS acquired by Baron pursuant to the Share Exchange.                                                                              

Through the Share Exchange, the Company became the sole shareholder of TLS, which provided a 75% effective interest in the Chuditch PSC. The Company's responsibility to carry SGR's share of financial contributions until the end of the PSC's Firm Commitment Period in November 2022 was extinguished following completion of the Share Exchange. Under the terms of an Amended Services Agreement between SGPL and TLS (which was extended to the end of December 2022), SGPL will continue to be paid fees for management and administrative services.                                                                               

As SGPL through its subsidiary SGR held more than 10% of TLS's ordinary shares immediately before the Share Exchange, the Share Exchange was deemed to be a related party transaction pursuant to rule 13 of the AIM Rules for Companies. 

28. Restatement of comparative figures

The Directors have reviewed the presentation of the performance bonds deposited with banks as part of the Group's exploration activities and have concluded that such deposits should not be considered as cash equivalents. Therefore the comparative period has been restated to represent this reallocation. Further details of the terms of the performance bonds held are given in Note 15.

In addition, the Board have reviewed the allocation of certain non-cash items within the cash flow statement have restated the comparative consolidated cash flow statement accordingly.

The comparative figures in the Statement of Other Comprehensive Income have also been restated so that movements in the share-based payment reserve following share option exercises or lapses are presented as an adjustment between reserves within equity and not within Other Comprehensive Income.

None of the restatements impact on the Earnings Per Share as reported in 2021.

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