Baron Oil's subsidiary SundaGas, which operates the Chuditch PSC, offshore Democratic Republic of Timor-Leste, has been granted a further six-month extension to Contract Year Two of the PSC by the relevant Timor-Leste national authority, Autoridade Nacional do Petróleo e Minerais ("ANPM").
Contract Year Two of the PSC will now expire on December 18, 2023, with a subsequent commitment, on entry into Contract Year Three, for the drilling of one well to appraise the Chuditch-1 discovery.
The practical effect of this is that a decision on whether to enter the drilling phase is now required to be taken at or before that date.
The extension to PSC Contract Year Two was requested to allow additional time for the necessary preparations prior to entering the drilling phase of the PSC. These activities include the detailed evaluation of candidate drilling locations and well trajectories for input into the final well design.
Baron Oil said the arrangements were being made to extend the existing US$1 million Bank Guarantee from its current expiry date of 1 August 2023 to cover the extension period.
"As the company indicated in its Final Results for 2022 on 23 May 2023, there are a number of ongoing discussions with third parties regarding participation in the Chuditch appraisal well and future activities. Whilst there is the usual uncertainty over whether and when such discussions may come to fruition, the granting of a further six-month extension and its associated work program maximizes the chances of success. We look forward to updating shareholders on progress as and when appropriate," Baron Oil said.
To remind, Baron Oil said in October 2022 that its Chuditch Production Sharing Contract could hold much more gas than previously estimated. Read more here.