Baron Oil shares have faded a sharp rally in October as the stock consolidates ahead of what could potentially be game changing news for the junior gas explorer.
The AIM-listed firm are evaluating the Chuditch PSC located around 185km south of Timor-Leste in close proximity of the Bayu-Undan field which feeds the Darwin LNF facility in Australia. The Bay-Undan field is set to stop producing later this year.
Baron Oil are awaiting a competent persons report (CPR) on the Chuditch prospect which investors will hope supports Baron’s in-house assessment.
The company have reevaluated the prospect and found gas reserves could be significantly higher than previously thought.
Baron’s preliminary interpretation of the Chuditch PSC reprocessed 3D seismic data suggested gas reserves attributable to Baron Oil could be as high as 4,125 BCF, up from 2,924 BCF in a prior study.
However, a third party will be required to validate in-house findings and the wait for confirmation of the reserves has proved too much for some investors who have booked profits and sent shares back to 0.14p. Baron had hit closing highs of 0.29p in October.
Baron Oil CPR
Baron Oil has engaged consultancy group ERCE to complete the CPR which will include a reserve estimate. Should ERCE’s finding corroborate Baron’s own assessment, the reaction in shares could be monumental.
That said, a disappointing result will likely see the shares suffer significantly.
Baron Oil shares were trading at 0.14p at the time of writing.