With funding locked in, UK firm adds Asia Pacific drilling campaign to summer plans

UK-based and AIM-listed Sunda Energy, formerly Baron Oil, has signed multiple agreements related to the drilling campaign it intends to undertake on a gas field offshore Timor-Leste.

Under the first deal, Sunda’s wholly owned subsidiary, SundaGas Banda Unipessoal, inked a binding farm-in agreement with its government-owned joint venture partner, Timor Gap Chuditch Unipessoal, for the production sharing contract (PSC) TL-SO-19-16, known as Chuditch. The deal will increase the latter’s working interest share from 40% to 70%, with SundaGas staying on as operator of the PSC with a 30% interest.

The farm-in agreement contains several obligations, including applying for an extension of the PSC’s contract year 3, which is set to expire on June 18, 2025, for a maximum of six months to allow sufficient time for drilling the Chuditch-2 appraisal well and subsequent post-well analysis.

As reported by the UK firm, the conditions precedent for the completion include the signature of a contract for the use of a drilling rig for the drilling of the Chuditch-2 well, the passing of the resolutions to be proposed at the firm’s general meeting, and the approval of the farm-in agreement by the upstream regulator, Autoridade Nacional do Petróleo (ANP).

Dr Andy Butler, Chief Executive Officer of Sunda, expressed his gratitude for the deepening collaborative relationship with Timor Gap, whose decision to further invest in Chuditch is interpreted to signal the project’s materiality and its strategic national importance to Timor-Leste. According to Butler, the duo has an aligned vision for the accelerated early development of the Chuditch gas field.

As for the second deal, Sunda said it received letters of subscription for loan notes from three institutional investors, arranged by Marex Financial, to conditionally raise gross proceeds of up to $9 million. Together, these combined funding arrangements will enable it to execute a contract for the use of a jack-up rig to drill the Chuditch-2 appraisal well and cover related project costs.

“I am delighted to announce that funding has been confirmed for the drilling of the critical Chuditch-2 well. This funding paves the way to unlocking the value of the Chuditch gas field. We expect to sign a rig contract shortly and within a few months we expect to be drilling one of the most eagerly awaited and impactful wells in the Asia-Pacific region,” noted Butler.

A non-binding memorandum of understanding (MOU) signed by SundaGas, Timor Gap, and the Timor-Leste Ministry of Petroleum and Mineral Resources (MPMR) in December 2024 is said to form the basis for the Chuditch development plan.

The MOU sets out the framework for the joint evaluation of a development concept for gas resources on the Chuditch PSC, including pipeline export to the Bayu Undan field and on to planned liquefied natural gas (LNG) facilities on the south coast of Timor-Leste. Under the deal, MPMR and/or its affiliates would commit to buy the gas from the field to assist in the financing of its development.

SundaGas claims to be finalizing negotiations on a contract for the use of a jack-up rig to drill the Chuditch well in collaboration with Timor Gap. Additional contracts with other third-party service providers for materials, equipment, and services required for the drilling campaign are also said to be concluded or close to being finalized.

The company bumped the drilling date several times, explaining that this was the result of overrunning drilling activities of other operators using its preferred rig. In December 2024, a non-binding letter of intent (LOI) was signed with an undisclosed drilling contractor regarding commercial negotiations for a definitive deal.

Based on the operational activities of other companies using the target drilling rig and its ongoing operational performance, along with the preparations and approvals processes underway for Chuditch-2, the company expects to start drilling the well in July or early August 2025.

SundaGas said it is working through the various approval processes for drilling of the Chuditch-2 appraisal well. This includes preparing the submission of the final environmental impact statement (EIS) and environmental management plan, which are undergoing a public consultation period after a draft EIS was submitted earlier this month.

The environmental baseline survey in preparation for the drilling kicked off in late January 2025. The studies entailed sampling of the marine environment and were expected to be completed within five days. The results and analysis were to be incorporated into the EIS.