...T.A.I. / PERU / Z-34

Project Summary

Block Z34 is located in the offshore Talara Basin. Exploration in the basin began onshore in 1868 and the basin has since produced 1.6 billion bbl. The USGS (2004) estimated that 1.71 billion barrels recoverable remains to be discovered in the basin of which 85% is expected offshore.

Z34 is unexplored with no wells drilled in the bulk of the permit area. In 2009 Baron acquired 2,013 km of 2D seismic and in 2011 around 800 sqkm of 3D Seismic. Baron holds 20% of the permit after farm out.

Block Z34 covers 3,713 km2.

Permit history and standing

In early 2005 Baron Oil obtained a Promotion Licence from Perupetro for Block Z34. The Company then applied for an Exploration Licence. In July 2006 the Company was qualified as an Operator for Block Z34 and in March 2007 signed the licence contract with Perupetro for Block Z34, together with Plectrum Petroleum PLC, a 50% partner. In October 2007 Plectrum was purchased by Capricorn (a subsidiary of Cairn Energy) and a year later Baron purchased all of Plectrum's interest in Z34 by purchasing the Company that held the Licence interest. In April 2013 Baron Oil, farmed out 80% of its interest in the block Z-34, offshore Peru, to Union Oil & Gas Group Corp (“Union Oil & Gas”). Baron Oil will be carried in the 3 remaining Exploration phases and keep a 20% interest.

Baron Oil will receive a total of $6 million for the Farm-out of which it will receive $4 million by selling Plectrum Petroleum Limited. Plectrum is 100% owned by Baron Oil and has a 50% participation in Block Z-34. Baron Oil will receive the remaining $2 million when Union Oil & Gas has been qualified by Perupetro for the additional 30% participation interest in Z-34.

Baron acquired 2,013 km of 2D seismic data in 2009, the first significant survey in the block and about 800 sqkm of 3D seismic in 2011. At present Baron Oil is in the third exploration period and is pursuing a permit for additional seismic and well locations.

Location and infrastructure

The geographical location corresponds to the most Western area of the Peruvian coast, at the Northern boundary with Ecuador. It is bounded to the East by Block Z2B, operated by Savia Peru, which in 2010 has an average production of 12,200 bopd of crude oil and about 73 MMscfd of associated natural gas, 33 MMscfd of which is injected for pressure maintenance and secondary recovery projects. Water depths in the block range from 75m in the East to 3000m in the far West. To the North it is bounded by Block Z38 operated by Karoon, which is planning to drill 2 wells with an option of a third well in 2014t.

Exploration history

Z34 has had negligible exploration prior to the acquisition of 2D seismic by Baron in 2009, with no wells drilled in the bulk of the permit or away from the Talara oilfields to the East.

 
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