As farm-out talks continue, UK player gets short-term extension for gas asset off Timor-Leste
UK-based and AIM-listed oil and gas company Baron Oil, through its wholly-owned subsidiary SundaGas Banda Unipessoal Lda. (SundaGas), has been granted a short-term extension to take care of the required preparations prior to entering the drilling phase of a production sharing contract (PSC) for a block offshore Timor-Leste by Autoridade Nacional do Petróleo e Minerais (ANPM).
Back in November 2019, the government of Timor Leste signed a production sharing contract with Sunda Gas and Timor Gap for a block containing the Chuditch discovery. The TL-SO-19-16 license is situated in the south of the former joint petroleum development area with Australia which has transitioned to Timor-Leste exclusive jurisdiction following a maritime border treaty in August 2019.
The minimum work programme in the initial three-year period of the TL-SO-19-16 PSC, also known as the Chuditch PSC, covers the seismic reprocessing of 800 square kilometres of 3D seismic data and 2,000-line kilometres of 2D seismic data on the 3,571.49 square kilometre block.
On the other hand, the second license period entails a post-well evaluation study, drilling of one exploration well, and development scenario planning for the Chuditch discovery while the third period includes geological and geophysical studies, development scenario planning, and drilling of two exploration or appraisal wells.
Baron Oil revealed on Friday, 2 June 2023, that its subsidiary, SundaGas, as the operator of the Chuditch PSC, was granted a further six-month extension for the contract year two of the PSC by the ANPM. This will now expire on 18 December 2023, with a subsequent commitment, on entry into contract year three, for the drilling of one well to appraise the Chuditch-1 discovery.
According to the company, this extension was requested to allow additional time for the necessary preparations prior to entering the drilling phase of the PSC, including the detailed evaluation of candidate drilling locations and well trajectories for input into the final well design. In addition, Baron Oil is making arrangements to extend the existing $1 million bank guarantee from its current expiry date of 1 August 2023 to cover the extension period.
Meanwhile, the UK player confirms that there are a number of ongoing farm-out discussions with third parties regarding participation in the Chuditch appraisal well and future activities.
“Whilst there is the usual uncertainty over whether and when such discussions may come to fruition, the granting of a further six-month extension and its associated work programme maximises the chances of success,” underlined Baron Oil.
Located approximately 185 km south of Timor-Leste, 100 km east of the producing Bayu-Undan field, and 50 km south of the Greater Sunrise potential development, the Chuditch PSC covers an area of approximately 3,571 km2, in water depths of 50-100 m, and contains the Chuditch-1 gas discovery drilled by Shell in 1998.