Baron Oil is to relinquish Block Z-34, which has been in Force Majeure since 2014, offshore Peru.
In such a situation, the Z-34 partners are entitled to exercise their right to relinquish Block Z-34 and to request that a $3.6 million work program guarantee bond be released.
Baron chairman Bill Colvin said: "The Z-34 group has been frustrated by the impediments to activity in Peru created by the lack of regulations relating to deep water drilling and the need to change existing regulations to accommodate such activities. Although new legislation is promised shortly, we are of the view that activities will continue to face unexpected delays and additional expense, creating uncertainties that impact the economic evaluation of the prospects. We have therefore taken the difficult decision to relinquish the Block."
In February, PeruPetro, the responsible government agency, gave Baron Oil permission to drill the Cuy-Z34-13-1X exploration well in Block Z-34. The well was planned to be drilled in 5764ft of water to a total depth of 12,553ft, subject to Baron's partner securing cash to cover its share of the cost.
Block Z-34 is in an undrilled deepwater basin and covers an area totaling 3713sq km. Baron’s internal estimates of gross unrisked best estimate (P50) prospective resources for the Cuy Prospect is 413 MMbbl recoverable.