Baron Oil : Annual Report and Financial Statements for the year ended 31 December 2023

Annual Report and

Financial Statements

for the year ended 31 December 2023

Annual Report and Financial Statements 2023

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	22
8.	Report of the Independent Auditor
	to the Members of Baron Oil Plc	23
9.	Consolidated Income Statement
	for the year ended 31 December 2023	29
10.	Consolidated Statement of Comprehensive Income
	for the year ended 31 December 2023	30
11.	Consolidated Statement of Financial Position
	as at 31 December 2023	31
12.	Company Statement of Financial Position
	as at 31 December 2023	32
13.	Consolidatedand CompanyStatement of Changesin Equity
	for the year ended 31 December 2023	33
14.	Consolidatedand CompanyStatement of CashFlows
	for the year ended 31 December 2023	35
15.	Notes to the Financial Statements	37
16.	Glossary of Technical Terms	67

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1. Corporate Information

Advisers & General Information

Directors	Gerry Aherne, Non-executive Chairman (appointed 22 April 2024)
	Andrew Butler, Chief Executive Officer
	Keith Bush, Non-executive Director
	John Chessher, Non-executive Director (appointed 22 April 2024)
	John Wakefield (resigned 22 April 2024)
	Andrew Yeo (resigned 31 March 2024)
	Jonathan Ford (resigned 30 April 2024)
Registered Office	2 Leman Street
	London E1W 9US
Company Secretary	Geoffrey Barnes
Auditor	Gravita Audit Limited
	Aldgate Tower
	2 Leman Street
	London E1 8FA
Solicitors	Fieldfisher LLP
	Riverbank House
	2 Swan Lane
	London EC4R 3TT
Nominated Adviser and Joint Broker	Allenby Capital Limited
	5 St Helen's Place
	London EC3A 6AB
Joint Broker	Cavendish Capital Markets Limited
	One Bartholomew Close
	London EC1A 7BL
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 2023

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 an interest in acreage in Southeast Asia (Timor-Leste). Ordinary 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 material oil and gas assets where there is the opportunity for high impact exploration and appraisal activity at low entry costs. Historically, Baron's focus was on Latin America and the United Kingdom. However, with the progress made in maturing the Timor-Leste asset and recognition of the favourable business environment and the Company's competitive advantages in Southeast Asia, Baron now focuses its efforts in this region.

Baron 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 of directors (the "Board") is aware of its responsibilities for environmental reporting and to following industry international best practice in carrying out its activities. The Company currently does not produce hydrocarbons, however in H1 2024 the Company has been conducting a survey at the planned drilling location for the Chuditch-2 appraisal well in Timor-Leste and is planning for drilling operations in Q1 2025. In preparation for these activities, the Company is actively reviewing and upgrading its safety and environmental policies and procedures. It is anticipated that future annual reports will contain more detailed environmental disclosures as a result of these activities and initiatives.

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 future developments, it intends to adopt best practice carbon intensity reporting and prioritise those developments which are consistent with a lower carbon strategy and comply 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 both before and after taxation of £1,712,000 (2022: loss of £1,387,000), which

is wholly attributable to Baron Oil shareholders, representing a loss of 0.009p per share (2022: loss of 0.01p).

The Group generated no revenue during the period but focused on exploring and developing assets that the Board believes will generate revenue for the Group in the future.

Exploration and evaluation expenditure incurred included in the Income Statement amounted to £121,000 (2022: £213,000). A provision for Impairment has been made in respect of UK Offshore Licence P2478 amounting to £187,000 as the prospect of the project being taken to a successful conclusion had significantly diminished by 31 December 2023, and indeed the licence was relinquished by the joint venture partners in March 2024. The Directors judged that no other exploration assets required impairment.

Administration expenses for the year were £1,455,000 (2022: £1,191,000), an overall increase on the preceding year of £264,000. Administration costs arising in SundaGas (Timor-Leste Sahul) Pte.Ltd. ("TLS") have increased from £441,000 previously to £568,000 this year as the operation in Dili continues to gear up for the next phase of the Chuditch development. Directors and UK staff salaries and related costs increased by £120,000 to £467,000 in the year, details of which are contained in the Report of the Directorson page 17. Professional adviser fees increased from £157,000 previously to £227,000, mainly due to higher broker costs.

At the end of the financial year,cash reservesof the Group had decreased to £3,760,000from a level at the preceding year end of £5,807,000 as the Group absorbe d cash in its continuing development operations. The Group's investment in exploration and evaluation assets in the UK and Timor-Leste amounted to £381,000 in the period, and there was a general operating cash outflow amounting to £1,830,000. As a result of higher cash balances and increased interest rates, the Company achieved interest receivable of £152,000.

There were no share issuances during 2023, other than the exercise by a former director in February 2023 of 62,500,000 options. Following the end of the reporting period, in February 2024 the Company raised £2,993,000 net of costs from the issue of new share capital by way of a placing and subscription.

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

Southeast Asia: Timor-LesteTL-SO-19-16 PSC ("Chuditch PSC" or "PSC") (Baron 60% interest - since February 2024)

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 40-120 metres. The Chuditch-1 discovery well, drilled by Shell in 1998 in 64 metres water depth, encountered a 25 metre net gas column in Jurassic Plover Formation sandstone reservoirs at a depth of around 2,900 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, and subsequently reprocessed by Baron.

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Annual Report and Financial Statements 2023

3. Chairman's Statement & Operations Report (continued)

Throughout 2023, Baron held a 75% working interest and operated the PSC through its wholly owned subsidiary SundaGas Banda Unipessoal Lda. ("SundaGas"), with the remaining 25% held by TIMOR GAP Chuditch Unipessoal Lda. ("TIMOR GAP"), a subsidiary of the state-owned national oil company,whose share of PSC expenditure is carried until first production. In February 2024, the Group completed a transaction in which its working interest dropped to 60%, following a partial transfer of its interest to TIMOR GAP. This transaction is described in further detail below.

The technical work programme obligations in the first two years of the initial three-year term of the PSC include the reprocessing of legacy seismic data, aimed at addressing reservoir imaging issues caused by sea-bed topography and shallow geological features, and for which a US$1 million Bank Guarantee is in place. The commitment within the PSC for Contract Year 3 is for the drilling of one appraisal well to the Plover Formation, subject to the seismic reprocessing having supported the presence of a significant structure associated with the Chuditch discovery. The successful conclusion of the 3D seismic reprocessing project, and subsequent interpretation of those data along with other studies, has definitively removed this subjectivity through clear imaging of the Chuditch structure.

2023 and subsequent activities

The reprocessed 3D seismic data was delivered during 2022 and its evaluation,in tandem with a number of geological and engineering studies, was completed during 2023.

Consultancy group ERC Equipoise Ltd ("ERCE") was engaged to prepare a Competent Person's Report ("CPR") to provide an independent assessment of the Chuditch resource to a SPE PRMS compliant standard. The CPR was released on 28 February 2023. For the Chuditch-1 discovery, ERCE assessed gross Pmean Contingent Resources of

1.16 Tcf of gas. The recognition of the resources as being Contingent, rather than Prospective, was a major milestone and reflected the significant improvement in understand ing of the discovered resources through the seismic reprocessing and other studies carried out on Chuditch. Baron believes that the Chuditch-1 Contingent Resources are potentially sufficiently large to be economically viable to be developed standalone or in parallel with other developments in the region.

In addition, aggregated gross Pmean Prospective Resources attributable to the licence according to the CPR amounted to 1,562 Bcf gas across three prospects, Chuditch SW, Chuditch NE and Quokka. Geological Chances of Success ("GCOS") for these prospects range from 52% to 26%, providing substantial follow on, low risk exploration potential to any Chuditch-1 development. It is notable that Baron's in-house probabilistic estimates of aggregated gross Prospective Resources for these prospects, at 2,128 Bcf of gas, are higher that ERCE's estimates. This arises mainly through the Company's preferred use of the latest reprocessed seismic data velocity model to define the extent of the prospects.

Detailed tabulations of the resources assessed within the Chuditch PSC and further commentary can be accessed via the Company's RNS announcement of 28 February 2023 and the full CPR document which is available on Baron's corporate website (www.baronoilplc.com).

There continues to be an excellent working relationship between SundaGas, the Government Ministry of Petroleum and Mineral Resources ("MPM"), Autoridade Nacional do Petróleo ("ANP"), the Government regulatory authority for petroleum, and TIMOR GAP. The Company meets regularly with all of these bodies and provides detailed updates around our activities, plans and timelines on the PSC. The Company appreciates the support that it receives from these various state entities and will continue to work on maintaining these close relationships.

On 2 June 2023 and again on 5 December 2023, the Company announced two six-month extensions to Contract Year Two of the Chuditch PSC. These extensions were granted to provide additional time to complete detailed further technical studies on the Chuditch field and to have sufficient time to prepare for appraisal drilling. Contract Year 2 of the PSC now has an expiry date of 18 June 2024.

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3. Chairman's Statement & Operations Report (continued)

On entry into Contract Year 3 of the PSC, the commitment will be to drill an appraisal well within a 12-month period. Planning for this appraisal drilling is ongoing, with a well expected to be drilled to a total depth of around 3,000 metres and to include a production test.

In anticipation of the drilling of an appraisal well on the Chuditch field during Contract Year 3 of the PSC, organisational and technical preparations for operational activities commenced in the second half of 2023. A highly experienced Well Operations Manager was hired to lead this effort, subsequently joined by Well Engineering, HSE (Health Safety & Environment), Procurement and Well Testing professionals. Detailed and regular workshops were initiated with ANP and TIMOR GAP, and discussions commenced with providers of drilling services, including owners of drilling rigs. These preparations have continued in earnest into 2024, including the completion of a site survey at the planned drilling location in two phases between February and April 2024. The Company currently anticipates that drilling operations will commence in Q1 2025.

On 18 December 2023, the Company announced that it had agreed that TIMOR GAP would increase its participation in the PSC from a 25% to a 40% working interest. A Farm-Up Agreement to this effect was entered into on 23 January 2024 and the transaction completed on 7 February 2024 following approval by ANP. Accordingly the SundaGas 60% share is now responsible for 80% of the costs of the Chuditch project and TIMOR GAP pays a 20% share. TIMOR GAP subsequently paid approximately US$ 1 million to cover its share of prior costs since the signing of the PSC.

During 2023, the Company held discussions with a number of other potential partners in the PSC that expressed interest in participating in the Chuditch project, including the drilling of the planned appraisal well, a process that is still ongoing.

As part of our in-country activities, including the efforts of our local Dili offices, we are also undertaking various initiatives to develop the capabilities of the Timorese geological community, through relationships with local universities,welcoming student interns and sponsoring and giving presentations to the Timor-Leste Student Chapter of the Society of Petroleum Engineers.

More generally in Timor-Leste, increased E&P activity was seen both onshore and offshore. During the year Timor Resources completed its initial onshore drilling campaign, the first in 50 years, with a number of reported oil and gas discoveries. In addition, the Greater Sunrise project continued to move towards development with negotiations between its many stakeholders. In December 2023, following the Second Licencing Round that closed in 2022, a new PSC was signed by a subsidiaryof the Italian major ENI, in the area known as Block P, which sits between the Chuditch PSC and the Greater Sunrise gas fields to the north of Chuditch. It is expected that 3D seismic acquisition will commence over this new PSC area during late 2024.

United Kingdom Offshore Licence P2478 (relinquished 31 March 2024)

Innovate Licence P2478 was awarded in September 2019 and was held through 2023 by a joint venture comprising Reabold North Sea Limited ("Reabold", Licence Administrator, interest 36%), Baron (32%), and Upland Resources (UK Onshore) Limited (32%). The licence covered blocks 12/27c, 17/5, 18/1 and 18/2 in the Inner Moray Firth area of the North Sea, containing the Dunrobin and Golspie prospects.

The work commitments on the P2478 Licence were to undertake reprocessing of legacy 3D and 2D seismic data and perform other stud ies, in order to better understand the subsurface risks, reduce the range of volumetric uncertainty, as well as providing drilling location candidates ahead of making a decision whether to proceed beyond the end of the Phase A evaluation stage of the licence on 14 July 2023.

The key technical work components of the Phase A commitments - those of seismic reprocessing plus geochemical studie s - were delivered during second half of 2022 on time and on budget. Detailed seismic attribute analysis followed in early 2023 and in March 2023, the UK's North Sea Transition Authority ("NSTA") confirmed that the obligation work programme was fully complete.

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Annual Report and Financial Statements 2023

3. Chairman's Statement & Operations Report (continued)

Towards the end of 2022, consultancy group RPS was engaged by the joint operation to prepare a CPR to provide an independent validation of resource estimates to a SPE PRMS compliant standard. The CPR was announced and published on Baron's website on 16 February 2023.

On 12 July 2023, the Company announced that the joint venture for Licence P2478 had been granted a two-year extension to Phase A of the licence by the UK North Sea Transition Authority ("NSTA"). A 'Drill or Drop' decision was required on or before 14 July 2025. The extension further required an additional commitment to acquire a minimum of 30 square kilometres of 3D seismic data. However, following unavoidable and significant delays to the acquisition of 3D seismic data, Licence P2478 was surrendered to the NSTA on 31 March 2024. The delays largely result from the continuous wind farm construction activities in the area. All Phase A commitments had been fulfilled and there remain no further obligations beyond the statutory submissionof a relinquishmentreport, which Reabold is currently preparing. The Company had a high degree of expectation of this outcome at the end of the financial period and determined that the carrying value of the asset should be impaired in full in the 2023 Financial Statements.

Block XXI, Peru

In April 2022, Baron requested the relinquishment of Licence Block XXI in Peru, a legacy asset dating from an earlier, Latin-America focused strategy. The Licence Block XXI had been largely under Force Majeure for a variety of reasons since 2017. The Bank Guarantee of US$160,000 was released in full to Baron in June 2022. Baron continues to work with the Peruvian authorities to establish and file an Abandonment Plan. Ongoing costs are minimal, and we expect to complete our withdrawal from Peru during 2024.

New Ventures

In January 2023, the Company announced that, as a joint venture non-operating partner, it had submitted an application in the UK offshore 33rd Round of licensing, conducted by the UK North Sea Transition Authority. On 3 May 2024, the Company was informed that its application, as a joint venture non-operating partner, had not been successful for a new licence. Consequently, Baron no longer has any upstream assets in the United Kingdom. Further potential new ventures are under consideration, with a focus on gas opportunit ies in SE Asia, in line with the Company's revised strategy.

Corporate update

Subsequent to the reporting period, in February 2024, the Company completed a Placing, Subscription and WRAP Retail Offer of new ordinary shares at 0.05p to raise £3.26 million (gross). The monies are being applied to support the Chuditch PSC (Timor-Leste) as it moves towards the key appraisal drilling milestone.

On 1 July 2023, Dr Andy Butler was appointed to the Board as Director Asia-Pacific, bringing his knowledge and involvement in the Timor-Leste asset directly to the Board.

Subsequent to the reporting period, on 15 March 2024, Andy Butler took on the role of Chief ExecutivereplacingAndy Yeo, who left the Company on 1 April 2024. On 22 April 2024, John Wakefield stepped down as Non-Executive Chairman and Gerry Aherne was appointed in his place. In addition, on that date, it was announced that Dr John Chessher had been appointed as an Independent Non-Executive Director and Rob Collins had been appointed as non-Board Chief Financial Officer. On 30 April 2024, Jon Ford stepped down from the Board, although he has been retained by the Company in a part-time consultancy role. Information on the backgrounds of the new directors are provided in the Report of the Directors on page 13.

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3. Chairman's Statement & Operations Report (continued)

Conclusions

I am pleased to report that Baron made significant progress in its work on the Chuditch PSC during 2023, moving from completion of the subsurface evaluation (and publication of a CPR) through to extensive preparations towards the drilling of an appraisal well. This is an asset that has considerable and potentially transformative value for the Company and its shareholders.

The recent relinquishment of UK licence P2478, together with the previously announced results of the UK 33rd Licencing Round, means that the Company has now fully withdrawn from the UK. Baron will now focus all its attentions on its core business in SE Asia, where the Company has an exciting and valuable asset in Timor-Leste, a highly experienced operating team and a pipeline of material new venture opportunities across the region.

The decision by TIMOR GAP to increase their participation in the Chuditch project was a particular highligh t for the year, confirming the Timor-Leste government's strong support for the Company's efforts and their belief in the development potential of the field. We look forward to updating shareholders on progress regarding other potential funding partners for the Chuditch project as soon as it is appropriate to do so.

The recent refreshment of the Board, including the appointment of Dr Andy Butler to the Chief Executive role, highlights Baron's strategic pivot towards SE Asia, and in particular gas projects in that region. The Company enjoys an excellent reputation in the region, where many of our team of experts are located. New independent non-executive director Dr John Chessher further strengthens Baron's SE Asia capabilities, with his extensive experience and networks in capital markets in the region.

SE Asia continues to see robust growth in energy demand and the Company recognises considerable opportunity for value creation in this arena, commencing with the Chuditch project. Our proposed change of Company name to Sunda Energy Plc encapsulates the change of emphasis towards the Orient.

I extend my thanks to all stakeholders of the Company,includingmy fellow directors, our employees and consultants, joint venture partners and governments, for their strong support of the Company's efforts. We are especially grateful for the support of our investors, including through the funding event in early 2024. As a result, we have a well-funded balance sheet covering our current activities and commitments. As at 31 December 2023 we had cash reserves of £3.8 million (2022: £5.8 million), and the cash balance stood at £5.5 million at 22 May 2024.

Gerry Aherne

Non-executive Chairman

24 May 2024

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Annual Report and Financial Statements 2023

4. Strategic Report

The Directors now present their strategic report with the financial statements of Baron Oil Plc ("the Company") and its subsidiaries (collectively "the Group") for the year ended 31 December 2023.

Principal activities

The principal activity of the Group is that of exploration for, and appraisal of, oil and gas.

Business review

A review of the Group's business during the financial period and its likely development is given in the Chairman's Statement & Operations Report.

Key Performance Indicators (KPIs) 2023

The KPIs for 2023 were to:

• be in a fully informed position to make appropriate drilling decisions on a Chuditch-1 appraisal well and a Dunrobin West exploration well;
• continue to explore funding opportunities with a view to securing finance to advance these core projects;
• support and progress the UK 33rd Round licence application and actively pursue other new ventures;
• ensure that the Company remains sufficiently funded for current operations and thereafter has plans and funding arrangements in place prior to making major commitments.

The Chuditch asset progressed significantly towards drilling, with the recruitment of key drilling personnel and a number of technical and organisational steps taken to enable the Company to execute a successful drilling campaign. An assignment to joint venture partner TIMOR GAP of an enhanced participation in the project partially addressed funding for drilling of the appraisal well.

The Dunrobin West drilling opportunity failed to progress through the year and, despite an extension granted by the North Sea Transition Authority ("NSTA"), attempts to acquire additional seismic data were hindered by the inability to operate in the area owing to windfarmconstruction. By end year 2023, it was evident that it would not be possible to continue, and agreement was subsequently reached between the joint venture partners and NSTA to relinquish the asset.

No new projects were secured during 2023. The licence application to NSTA for the 33rd Offshore Licence Round, announced in January 2023, was still pending as at end 2023 but was learned in May 2024 to have been unsuccessful.

The Company remained well funded through the year and able to cover all current obligations.

Key Performance Indicators (KPIs) 2024

The Board has agreed the following KPIs for 2024, which are intended to be measurable and achievable, whilst targeted at making material progress in the development of the Company and its key asset.

The KPIs for 2024 are to:

• ensure all workplace and operational activities are conducted without harm to staff, contractors or third parties, built around a clear set of HSE policies and procedures;
• complete organisational and technical preparations, including site survey, to be ready for the drilling of the Chuditch-2 appraisal well by Q1 2025;

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