Baron Oil plc has entered a proposed 15% working interest farm-up for the Chuditch production sharing contract, offshore Timor Leste.
COSTS
The company’s subsidiary SundaGas Banda Unipessoal Lda signed a memorandum of understanding with the country’s national oil and gas company TIMOR GAP Chuditch Unipessoal Lda.
SundaGas will retain operatorship and hold a 60% working interest in the Chuditch PSC, while TIMOR GAP will have a 40% interest, comprising a new paying 15% interest plus its original 25% interest which is carried to first gas.
On completion, TIMOR GAP will be responsible for paying 20% of all costs, including the drilling of the planned Chuditch-2 appraisal well.
Baron Oil said that the figure in 2024 is estimated to be around US$7.5 million.
SundaGas will also receive cash payments from TIMOR GAP, estimated at approximately $1m relating to back costs from the signing of the PSC to the anticipated date of completion.
The agreement is subject to approval by TIMOR GAP E.P. and Timor-Leste’s National Petroleum Authority.
Plans remain to drill and flow test the Chuditch-2 appraisal well in late 2024, subject to rig and drilling services availability and financing of $32m.
APPRAISAL WELL
Baron said that the previous drilling estimate of $24m in late 2021 was prior to recent inflation and in a “looser” market for drilling services in the region. The sum also excluded mobilisation and certain other costs.
Chief executive Andy Yeo added: “The proposed farm-up is a major step forward, as it provides validation of the project as well as bringing in an early funding partner for the appraisal programme.
“It also reflects the Timor-Leste Government’s commitment to the development of the country’s petroleum resources and its support for our efforts.
“From here, we will advance our drilling planning for the appraisal well which will include discussions with other potential funding partners.
“With this proposed farm-up, we move a long way forward towards drilling Chuditch-2, whilst retaining operatorship and a majority interest in the PSC.”