Baron Oil agrees to help drill two Corallian wells

Baron Oil has made an amendment its farm-out agreement with Corallian Energy and will now earn an 8% working interest in UK continental shelf licence P1918, agreeing to help fund the drilling of the Wick well in the Moray Firth and the onshore Colter well in the Weald basin.

Under the amended terms of the agreement with Corallian, Baron will fund 10.67% of the costs related to the Colter well, contained within the P1918 licence, capped on a pro-rata basis at a gross cost of £8m, with any incremental costs above the cap to be funded by the company at 8%.

The Colter prospect has been scheduled for drilling during the fourth quarter of 2018, subject to regulatory approvals.

Baron has also agreed to lend a hand with the drilling of Corallian's Wick well.

The AIM-listed company will fund 20% of the costs related to the Wick well, capped on a pro-rata basis at a gross cost of £4.2m, with the incremental costs above this cap funded by the company at 15%.

Subject to final regulatory approvals, the Wick well will drill in September, with the Colter well following in Q4 this year.

Malcolm Butler, Baron's chairman and chief executive, said, "We note that costs have increased as final estimates of rig and service rates have been obtained and the joint venture will maintain pressure on the drilling management team to deliver the wells within the new budget limits."

"Both of these wells are material drill targets for Baron and we are delighted to have had the opportunity to increase our Working Interest in the Colter Well to 8%," he concluded.

As of 1000 BST, Baron Oil shares had collected 2% to 0.51p.