Baron Oil agrees farm-out deal with Brazilian miner

Vale will transfer its entire 70% working interest in the block back to Baron, together with $3.5m, taking its interest to 100%.

The results of a survey conducted on the block in late 2012 showed a very prospective deep sedimentary basin in the central and southern part, Baron said.

"It is interesting to note that a shallow well (Minchales-1) drilled in 1954, in the most southern part of the block, encountered several gas shows," a statement read.

"The well was not completed as natural gas had no commercial value at that time."

The southern part of the block is next to a site where several commercial hydrocarbon wells were recently drilled.

Baron Oil said it remained focused on the rapid completion of the environmental impact assessment in the block's geographical area and once approved plans to shoot 400-500 kilometers of 2D seismic data and once interpreted thoroughly, drill 2-3 relatively shallow exploratory wells.

The company is now fully funded to carry out these activities in Peru.