Baron Oil nears completion of Peru production sharing contract

Baron Oil said it was on the verge of completing a Peruvian production sharing contract after the public deed was executed by its partners, which will see it receive $2m from its project partner.

The deed, which formalises Baron's 20% carried interest in the Z-34 block PSC offshore north-west Peru, finalises the farm-in transaction between Baron subsidiary Gold Oil Peru and Uruguay's Union Oil and Gas Group, which owns the remaining 80% interest but currently pay 100% of all the costs related to the block.

The public deed will now be taken by the notary to the Central Bank of Peru for signature and the deed will be formally issued.

The $2m paid by UOGG will be subject to Peruvian tax at a 30% rate.

BOIL shares, which in recent months have been bouncing around a 0.35p low, spiked over 30% on the news to a 0.49p on the announcement.