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Published on December 26, 2023,
by Nadja Skopljak
Baron Oil, a UK-based oil and gas company, has recently signed a memorandum of understanding (MoU) with Timor Gap for the farm-up of the Chuditch production sharing contract (PSC) offshore Timor-Leste. This significant move will pave the way for future cooperation between the two entities in the country’s oil and gas sector.
Illustration; Source: Baron Oil
As part of the agreement, Baron Oil will assign a 15% working interest in the TL-SO-19-16 PSC offshore Timor-Leste to Timor Gap Chuditch Unipessoal, an affiliate of Timor Gap E.P., the Timor-Leste National Oil and Gas Company.
Notably, Baron’s subsidiary, SundaGas Banda Unipessoal, is set to assume the operatorship and retain a 60% working interest in the Chuditch PSC upon completion of the farm-up. In contrast, Timor Gap will have a 40% interest after acquiring a new paying 15% interest, in addition to its original 25% interest which is carried to first gas.
With the farm-up agreements on the horizon, Baron Oil envisions a value of approximately $8.5 million in reimbursement for prior costs and the offset of future spend. Furthermore, the company plans to utilize the proceeds to support the preparations for the planned Chuditch-2 appraisal well and advance financing plans.
In light of these developments, the operational plan is 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 company has already made significant progress in preparation for the drilling campaign, with a location selected for the drilling.
The news follows Baron’s recent discussions with other potential funding partners for Chuditch-2. The cost of the appraisal well is expected to be around $32 million, covering the expenses of a full production flow test.