Baron Oil tightens grip on Chuditch PSC off Timor-Leste

UK-based and AIM-listed oil and gas company Baron Oil has bought the remaining 15 per cent stake in a SundaGas subsidiary and with that increased its interest in the Chuditch discovery and prospects.

Baron Oil said on Friday that it agreed to acquire the remaining 15 per cent of SundaGas Timor-Leste in exchange for the issuance of 1,157,202,885 new Baron ordinary shares or 9.99 per cent of the company’s enlarged share capital.

SundaGas Timor-Leste is the parent company SundaGas Banda Unipessoal which is the operator of and 75 per cent interest holder in the TL-SO-19-16 license offshore Timor-Leste, also known as the Chuditch PSC. Before this acquisition, Baron Oil held a 63.75 per cent stake in the Chuditch PSC.

Also, SundaGas is the parent company of SundaGas Resources which holds the 15 per cent interest in SundaGas Timor-Leste which Baron did not own.

As Baron now holds this stake as well and is the sole shareholder of SundaGas Timor-Leste it increased its stake in Chuditch to 75 per cent effective interest. The remaining 25 per cent interest in the PSC is held by the Timor-Leste state oil company Timor Gap.

As a result, the company has the responsibility to carry SundaGas Resources share of financial contributions until the end of the PSC’s firm commitment period in November 2022. This carry will subsequently be extinguished following the completion of the share exchange.

It is worth noting that, through the share exchange, SundaGas will become a significant shareholder in Baron and its team, currently under contract to its Timor-Leste subsidiary and operating the Chuditch PSC, will remain in place.

Baron stated that to successfully monetise this potentially significant asset, a key objective for the Chuditch PSC in 2022 will be to attract drill funding for which there are multiple options and alternatives.

The company believes that Baron’s increased net share of estimated mean non-SPE PRMS compliant prospective resources to 2,645 bcf in relation to the PSC is more than sufficient to attract attention from the major regional gas players and other potential partners.

Andy Butler, chief executive of SundaGas said: “We are delighted to become a significant Baron shareholder and to continue our strong working relationship with the Baron team. The alignment of interests further enhances our ability to achieve the common objective of delivering on the substantial prospective resources of the Chuditch PSC“.

Andy Yeo, chief executive of Baron, added: “We consider that the share exchange is value accretive and further increases our prospective resource base. We believe that our alignment with the experienced Southeast Asian based SundaGas team will improve the chances of success of attracting drill funding in 2022, which will benefit both existing and our new shareholders“.

The Chuditch PSC is located some 185 kilometres south of Timor-Leste, 100 kilometres east of the producing Bayu-Undan field, 50 kilometres south of the Greater Sunrise potential development, and covers around 3,571 square kilometres in water depths of 50-100 metres. The PSC also contains the Chuditch-1 gas discovery.

To remind, the government of Timor Leste signed a production sharing contract with Sunda Gas and Timor Gap for the block containing the Chuditch discovery back in November 2019.

The 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 program in the initial three-year period includes 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.

The second license period will include a post-well evaluation study, drilling of one exploration well, and development scenario planning for Chuditch discovery while the third period includes geological and geophysical studies, development scenario planning, and drilling of two exploration or appraisal wells.

Also, Baron Oil in November 2019 entered into a reverse takeover of SundaGas but was forced to terminate it in January 2020 due to “uncertainties around the potential capital requirements of the combined group, along with complications in relation to the required restructuring of the SundaGas subsidiaries”.

At that time, Baron Oil decided to invest in the Chuditch project via its entitlement to a one-third shareholding in a SundaGas’ Timor-Leste subsidiary. This gave Baron Oil its initial indirect 25 per cent interest in the project.