Union Oil & Gas misses payment deadline for Peruvian block farm-in

Baron Oil’s Peruvian subsidiary, Gold Oil Peru, has not received the cash amount due by its Latin American partner Union Oil & Gas Group (UOGG) for the transfer of 30 percent interest in Block Z-34 offshore Peru.

Baron signed the original farm-in transaction with UOGG in April 2013 and received approval in July 2016. Under the terms of the agreement, UOGG was supposed to pay Gold Oil Peru $2 million as a result of the completed public deed which finalizes the farming transaction.

At the beginning of February 2017, the public deed transferring the interest from Gold Oil to UOGG was executed by the companies and the Peruvian oil and gas regulator PeruPetro.

After the Central Bank of Peru also signed the public deed on February 24 confirming the deal, UOGG became liable to pay the agreed $2 million sum to Baron Oil.

On Friday, March 17, Baron stated that the required sum was not paid by UOGG by the date specified in the farm-in agreement. The company added that discussions with UOGG were underway in an attempt to resolve this issue.

To remind, PeruPetro has already accepted a drilling plan and location for the Cuy offshore exploration well in the Z-34 block which is located in the Talara Basin. Under the farm-in agreement, UOGG is paying 100 percent of all the costs related to the block including the planned drilling of the exploration well.

According to Baron’s estimates, the block holds a total of 885 million barrels of oil recoverable, 413 of which are estimated to be in the Cuy prospect.

Offshore Energy Today Staff