SundaGas Banda Unipessoal, a wholly owned subsidiary of the UK-based and AIM-listed Baron Oil, has inked an agreement for the transfer of a partial stake in a gas field offshore Timor-Leste to Timor Gap Chuditch Unipessoal, its existing joint venture partner and a wholly owned subsidiary of Timor Gap, the Timor-Leste national oil and gas player.
The signing of the agreement comes a month after the two players entered into a memorandum of understanding (MoU) concerning the assignment of an additional 15% working interest to Timor Gap in the Chuditch production sharing contract (PSC), also known as TL-SO-19-16 PSC and Chuditch PSC, offshore Timor-Leste. The completion of this deal is subject to the receipt of approval from Timor-Leste’s National Petroleum Authority (ANP).
Andy Yeo , Chief Executive of Baron Oil Plc, commented: “We’re delighted to have now signed the documents to increase Timor Gap’s participation in the Chuditch PSC through the assignment of a paying interest. The expedited preparation and execution of these agreements demonstrates our excellent working relationship, and we thank Timor Gap for their engagement in our overall combined efforts to progress the Chuditch PSC.”
Upon completion, SundaGas will retain operatorship and hold a 60% working interest in the Chuditch PSC, while Timor Gap will have a 40% interest, made up of a new paying 15% interest, plus its original 25% interest which is carried to first gas. The company explains that Timor Gap will be responsible for paying 20% of all costs, including the drilling of the planned Chuditch-2 appraisal well, following the transfer of the 15% working interest.
According to Baron directors, the agreement with Timor Gap has a value of approximately $8.5 million, made up of reimbursement for back costs of around $1 million and the offset of future spend, which is estimated to be around $7.5 million in 2024. Timor Gap’s cash payments related to back costs are expected to be finalized upon completion and paid to Baron within 30 days of the completion date.
The AIM-listed player confirms that its operational plan remains to drill and flow test the Chuditch-2 appraisal well in late 2024, subject to rig and drilling services availability and the completion of drill financing. The TL-SO-19-16 license is situated in the south of the former joint petroleum development area with Australia which transitioned to Timor-Leste exclusive jurisdiction following a maritime border treaty in August 2019.
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.