UK-based oil and gas company Baron Oil has signed a memorandum of understanding (MoU) with Timor Gap for the farm-up of the Chuditch production sharing contract (PSC) offshore Timor-Leste. This agreement would allow them to work together with Timor Gap to move forward with drilling a planned Chuditch-2 appraisal well, as well as to advance financing plans.
Illustration; Source: Baron Oil
According to the proposed assignment, Baron Oil will pass on a 15% working interest in the TL-SO-19-16 PSC offshore Timor-Leste to Timor Gap Chuditch Unipessoal, a move that is estimated to be worth $8.5 million for Baron. In addition to the value of the past costs and future spend offset, Timor Gap will also assume responsibility for paying 20% of all costs, including the drilling of the planned Chuditch-2 appraisal well, which is expected to be around $7.5 million in 2024.
Once the farm-up is complete, SundaGas, a wholly owned subsidiary of Baron, will hold a 60% working interest in the Chuditch PSC, while Timor Gap will have a 40% interest. Timor Gap’s interest will include a new paying 15% interest in addition to its original 25% interest which is carried to first gas. That means Timor Gap will also be responsible for contributing to the costs and will have to make cash payments to SundaGas. The completion of the agreements will be contingent upon approval by the Board of Directors of Timor Gap E.P. and Timor-Leste’s National Petroleum Authority (Autoridade Nacional do Petróleo or ANP).
Timor Gap’s commitment is viewed as instrumental for the progress of the Chuditch-2 well plans and Baron views the government’s validation as a strong move of support. Baron’s operational plan remains to drill and flow test the Chuditch-2 appraisal well in late 2024, but a location has already been selected and progress is being made in preparation for the drilling campaign.
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Posted: 26 days ago
The cost of the Chuditch-2 appraisal well is anticipated to be approximately $32 million, including the costs of a full production flow test, which is an updated amount. The previously indicated drilling cost estimate of $24 million was prepared in late 2021,
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