Baron Oil gets six-month extension to Chuditch contract

18th Oct 2022 11:53

(Sharecast News) - Baron Oil announced on Tuesday that its wholly-owned subsidiary SundaGas Banda Unipessoal, which operates the Chuditch production sharing contract offshore Timor-Leste, has been granted a six-month extension to contract year two by Autoridade Nacional do Petróleo e Minerais (ANPM).

The AIM-traded firm said the practical effect was that a decision on whether to enter the drilling phase was now required to be taken at or before 18 June 2023, being the new expiry date of year two of the three-year initial licence phase.

After that, subject to satisfactory results from the 3D seismic programme, the subsequent commitment would be for a well to be drilled in the third and final year of the initial phase of the Chuditch PSC.

In addition, a deed of amendment to the Chuditch PSC had "simplified" the work obligations in the current period of the PSC.

The company said the PSC originally included an obligation to reprocess 800 square kilometres of 3D and 2,000 kilometres of 2D seismic data in the first two-year period.

However, in order to provide the best coverage of the Chuditch PSC area, it was deemed "technically necessary" to reprocess a larger volume, 1,270 square kilometres, of 3D seismic data.

In recognition of that, the amendment replaced the original 2D seismic reprocessing commitment with 200 square kilometres of additional 3D seismic reprocessing.

As a result, with the 3D pre-stack depth migration reprocessed data having been delivered, the firm said that all of the PSC's seismic reprocessing obligations had now been fully met.

The final reprocessed data was continuing to be interpreted, and the results received to date were leading to a "step-change" in confidence in the company's understanding of the structural configuration of the Chuditch reservoirs at target depths.

Baron Oil said completion of the exercise, and integration of the results into the geological and engineering studies that had been conducted in parallel with the seismic reprocessing, would provide a "comprehensive view" of the value and potential of the Chuditch PSC.

The company said it expected to be in a position to provide a "comprehensive update" on the interpretation of the 3D seismic data, along with progress being made elsewhere on the Chuditch PSC project, by 26 October.

"This extension to the PSC timeline comes alongside significant progress being made on the 3D PSDM seismic interpretation," said technical director Jon Ford.

"We have materially enhanced the subsurface image of the Chuditch-1 discovery and neighbouring analogous prospects and leads; deepened our understanding of the geology and the petroleum and reservoir systems; reviewed engineering considerations; and researched the routes to commercialisation.

"Currently we are working to integrate these strands to produce what we believe will be a compelling assessment of the asset and allow us to plan our next steps."

At 1136 BST, shares in Baron Oil were up 22.11% at 0.11p.

Reporting by Josh White at Sharecast.com.