UK firm’s Southeast Asia drilling ops get bumped to next year

UK-based and AIM-listed Sunda Energy, formerly Baron Oil, has confirmed a delay for its drilling campaign on a gas field off the coast of Timor-Leste, Southeast Asia.

After changing the drilling date several times due to the overrun in drilling activities of other operators using its preferred rig, a non-binding letter of intent (LOI) was signed in December 2024 with an undisclosed drilling contractor for commercial negotiations of a definitive deal.

However, Sunda Energy has now revealed that the planned Chuditch-2 appraisal well on the Chuditch field in the TL-SO-19-16 production sharing contract (PSC), put on the drilling agenda by the company’s wholly owned Timor-Leste subsidiary, SundaGas Banda Unipessoal, in H2 2025, is now expected to be drilled in H1 2026.

“The delay is due to the absence at the present time of certain essential logistical services in Timor-Leste that are mutually acceptable to the joint venture partners, and that meet the required international operational and safety standard,” underlined the UK player.

As a result, the company could not proceed with the execution of a definitive agreement for a rig contract, which is an outstanding condition to the farm-in agreement entered into in April 2025 by SundaGas and government-owned joint venture partner, Timor Gap.

Moreover, the drilling of the Chuditch-2 appraisal well is perceived to be highly dependent on having logistical support that meets the required industry safety and emergency response standards, especially given the remoteness of the location, which is 200 nautical miles from Timor-Leste and Northern Australia.

According to the UK player, the postponement of the drilling campaign to 2026 will require several subsequent actions to be undertaken. To this end, an application has already been submitted by the joint venture partners for a 12-month extension of the current phase of the PSC, which expires in June 2025, to the upstream regulator Autoridade Nacional do Petróleo (ANP).

Furthermore, Sunda anticipates that this extension will be granted prior to the expiration of the third contract year. Together with its partner, Timor Gap, the firm agreed to the termination of the farm-in agreement, as the conditions were not fulfilled and the long stop date had passed.

The duo also decided to hold further discussions on partnering arrangements, including a potential revised farm-in on substantially the same terms. Currently, the working interests on the PSC remain unchanged, with SundaGas holding a 60% working interest and operatorship and Timor Gap having a 40% stake. The two companies are responsible for paying 80% and 20% of all project costs, respectively.

Dr Andy Butler, Chief Executive Officer of Sunda, commented: “While this temporary delay is frustrating, the significant value to Sunda and its shareholders remains. The sole reason that the company has not been able to sign the rig contract and progress to drill now is the absence of viable in-country logistical services that are mutually acceptable to the joint venture partners at this time.

“We are however already working to establish a plan for timely drilling in 2026, in close liaison with Timor Gap and ANP, building on the extensive preparations that have been carried out to date. SundaGas remains committed, along with our partner Timor Gap, to the early drilling and expedited development of Chuditch.”

Since the postponement of the drilling campaign will provide a further opportunity for alternative funding sources to be secured, the company intends to initiate new or revisited discussions with potential funding parties that have expressed an interest in participating in the development of the Chuditch project and the export of gas for LNG.

In addition, SundaGas and Timor Gap have agreed to work closely together to pursue alternative drilling rigs for the Chuditch-2 well, as the rig that had been negotiated is in the process of being sold to a third party. With a softening in the market for jack-up rigs globally, the UK player expects wider availability, including a choice of modern, efficient rigs and competitive daily operating rental rates.

The company confirms that the process for the issuance of an environmental permit (EP) for the Chuditch-2 well will also continue, as the final environmental impact statement (EIS) and environmental management plan (EMP) documents were submitted to ANP on May 30, 2025.

Sunda elaborates that ANP has established the statutory evaluation committee (EC), which has completed its initial verification of the EIS and EMP and begun its own public consultation process. The regulatory timeline for approvals indicates that the final EP will be issued during Q3 2025.