Baron Oil : Annual Report and Financial Statements for the year ended 31 December 2022

Annual Report and

Financial Statements

for the year ended 31 December 2022

Annual Report and Financial Statements 2022

Contents

Section	Page
1.	Corporate Information	2
2.	Corporate Statement	3
3.	Chairman's Statement & Operations Report	4
4.	Strategic Report	9
5.	Report of the Directors	13
6.	Corporate Governance Statement	20
7.	Statement of Directors' Responsibilities
	In respect of the Strategic Report, the Report of the Directors,
	and the Financial Statements	21
8.	Report of the Independent Auditor
	to the Members of Baron Oil Plc	22
9.	Consolidated Income Statement
	for the year ended 31 December 2022	29
10.	Consolidated Statement of Comprehensive Income
	for the year ended 31 December 2022	30
11.	Consolidated Statement of Financial Position
	as at 31 December 2022	31
12.	Company Statement of Financial Position
	as at 31 December 2022	32
13.	Consolidatedand CompanyStatement of Changesin Equity
	for the year ended 31 December 2022	33
14.	Consolidatedand CompanyStatement of CashFlows
	for the year ended 31 December 2022	35
15.	Notes to the Financial Statements	37
16.	Glossary of Technical Terms	69

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1. Corporate Information

Advisers & General Information

Directors	John Wakefield, Non-executive Chairman
	Andrew Yeo, Chief Executive Officer
	Jonathan Ford, Technical Director
	Keith Bush, Non-executive Director
Registered Office	Finsgate
	5-7 Cranwood Street
	London EC1V 9EE
Company Secretary	Geoffrey Barnes
Auditor	Jeffreys Henry LLP
	Finsgate
	5-7 Cranwood Street
	London EC1V 9EE
Solicitors	Armstrong Teasdale Limited
	38-43 Lincoln's Inn Fields
	London WC2A 3PE
Nominated advisor and broker	Allenby Capital Limited
	5 St Helen's Place
	London EC3A 6AB
Registrars	Share Registrars Limited
	3 The Millennium Centre
	Crosby Way
	Farnham
	Surrey GU9 7XX
Communications	IFC Advisory Ltd
	Birchin Court
	20 Birchin Lane
	London EC3V 9DU
Website	www.baronoilplc.com
Company number	05098776 (England and Wales)

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Annual Report and Financial Statements 2022

2. Corporate Statement

Baron Oil Plc ("Baron" or "the Company") is an independent oil and gas exploration and appraisal company based in the UK. The Company currently holds interests in acreage in SE Asia (Timor-Leste) and the UK. Shares in the Company are quoted in the UK on the AIM market of the London Stock Exchange - (BOIL.L).

The Company's objective is to deliver shareholder value through generating substantial increases in net asset value. We aim to achieve this by acquiring significant equity interests in potentially large oil & gas prospects where there is the opportunity for high impact exploration and appraisal activity at low entry costs.

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

The Board is aware of its burgeoning responsibilities for environmental reporting and has taken steps to inform itself of best practice such as following guidance from the UK's North Sea Transition Authority ("NSTA", formerly the Oil and Gas Authority). The Company currently does not produce oil or gas, and its exploration operations are largely limited to desk-top studies, therefore there is minimal quantitative climate or related data of substance to report.

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

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

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3. Chairman's Statement & Operations Report

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-offnon-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 £128,000. 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 relatedcosts are lower than 2021 by £37,000 with the earlier year includinga 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 reservesof the Group had increasedto £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) bolsteredthe Company'scash reserves.The Group's investmentin exploration and evaluation assets in the UK and Timor-Lesteamounted to £806,000 in the period, and £602,000was repaid to SundaGas Pte Ltd to settle the outstanding amount of the remainingshareof the Timor-Leste Bank Guarantee deposit 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-LesteTL-SO-19-16 PSC ("Chuditch PSC" or "PSC") (Baron 75% interest)

Background

The ChuditchPSC is located approximately185 kilometressouth 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.

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