Operational update
28/05/2024 07:01
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RNS Number : 9578P Baron Oil PLC 28 May 2024
28 May 2024
Baron Oil Plc
("Baron", or the "Company")
Operational update
Proposed change of Company name
Baron Oil Plc (AIM: BOIL) is pleased to announce a proposed change of the
Company's name to reflect its strategic focus on gas in South East Asia and an
update on operational activities on the TL-SO-19-16 Production Sharing
Contract ("Chuditch" or the "PSC"), offshore Democratic Republic of
Timor-Leste ("Timor-Leste"). This follows the announcement of the Company's
results for the year ended 31 December 2023 earlier today.
Headlines:
· Change of Company name to 'Sunda Energy plc' to be put to
shareholders at forthcoming Annual General Meeting ("AGM")
· Name change reinforces Company's strategic focus on gas in the South
East Asia region
· Chuditch PSC will enter Contract Year Three on 19 June 2024
· Significant progress in operational planning for Chuditch-2 well,
including:
o site survey completion
o negotiations on a drilling rig
o environmental approvals process
o well and production test design
o procurement of equipment and services
· Good progress in discussions with potential Chuditch drill funding
partners
· Pursuing new venture gas opportunities in SE Asia with low initial
cost of entry.
Explanation of SE Asia Focus and Proposed Name Change to 'Sunda Energy plc'
Following the relinquishment of Baron's sole remaining upstream asset in the
United Kingdom, the Company has embarked on a strategy focussed on SE Asia,
particularly the operated business in Timor-Leste. To reinforce this
strategic change in direction, the Baron board of directors (the "Board") is
seeking shareholder approval for a change of Company name at the upcoming AGM
to Sunda Energy plc, a geographically pertinent name relating to the vast
archipelago of islands in the SE Asia region.
The Board believes that the Company has significant competitive advantages
within the Sunda region, including a strong operating platform and a team with
considerable experience and an excellent reputation; strong relationships with
government and industry peers; and extensive regional knowledge that will
enable execution of a clear value orientated growth strategy.
Gas, which is naturally abundant in SE Asia, is an increasingly important part
of the energy mix, particularly as a transition fuel in a region where energy
demand leads to a heavy reliance on emissions-intensive coal. As a result,
Asia is the centre of global growth in liquefied natural gas (LNG) demand.
These factors underpin the Company's drive to focus on gas in the region.
The decision to seek shareholder approval for a change of name from Baron Oil
to Sunda Energy has been taken to reinforce the Company's unambiguous focus on
SE Asian energy markets.
Timor-Leste Chuditch PSC (Baron 60% working interest)
Commitment Status
The Chuditch PSC in Timor-Leste, which Baron operates through its SundaGas
subsidiary with a 60% working interest in partnership with TIMOR GAP, the
state-owned energy company of Timor-Leste, is currently in its second contract
year. Following several extensions, the last being announced by the Company on
5 December 2023, Contract Year Two ends on 18 June 2024 and Contract Year
Three commences on 19 June 2024.
Contract Year Three of the PSC contains a commitment to drill a well to
appraise the Chuditch gas discovery, an obligation which had previously been
subject to the reprocessing of seismic data confirming the presence of a
significant structure associated with the field. The successful conclusion
of the 3D seismic reprocessing project, and subsequent interpretation of those
data and other technical studies, has definitively removed that subjectivity.
Chuditch has been demonstrated to be a field of significant scale, interpreted
to be >20 km long and >150m in vertical relief, with a Pmean Contingent
Resource of 1.16 Tcf of gas. Hence the Company will automatically progress
into Contract Year Three on 19 June 2024, and does so with confidence around
its plans to drill a key milestone well on Chuditch, subject to securing drill
funding.
Well Planning Preparations
Site Survey and Well Location
As announced by the Company on 16 April 2024, SundaGas completed a physical
assessment (a "Site Survey") at the planned site of the Chuditch-2 appraisal
well, work which has enabled a drilling location to be confirmed that the
Company considers to be final. As described in the announcement, the well
will be situated 5.1km from the original Chuditch-1 discovery well in a water
depth of 68m. The predicted vertical column height of gas in the Jurassic
reservoirs at this location is 149m.
Well Design
SundaGas' experienced in-house drill team has conducted extensive design
studies for the Chuditch-2 well construction, enabling detailed specifications
to be fed into the ongoing procurement processes highlighted below. Analyses
of borehole trajectory, stability, drilling fluid, liner and bit requirements
are all enabling a plan to be developed for the effective, efficient and safe
drilling of the appraisal well. Design work on a planned production flow
test (DST) for Chuditch-2 gas, led by SundaGas' well test engineer, is also
advancing apace.
Workshops are continuing on a regular basis with the government regulator
Autoridade Nacional do Petróleo ("ANP") and joint venture partner TIMOR GAP,
and the Company appreciates the strong collaboration from both parties on
operational and logistical planning.
Procurement of Drilling Rig and Other Services
The Company is in detailed discussions with the operator of a rig that it
considers suitable to drill the Chuditch-2 well. These discussions are of a
technical and commercial nature. The schedule of activities planned by other
operators for the target rig means that the Company now believes the most
likely commencement date for drilling operations is Q1 2025 rather than late
2024 as previously indicated.
In addition, the Company is moving quickly to procure many of the other
materials and services required for the drilling campaign. Numerous tendering
exercises have been undertaken or are ongoing, including for borehole casing
and wellheads.
Environmental Approvals
In addition to demonstrating the physical suitability of the location for
drilling, the recent Site Survey operations also provided an opportunity to
collect environmental samples, data and images which have provided critical
information for necessary environmental approvals. The preparation of
precedent documents to support a full Environmental Impact Assessment is
ongoing with the assistance of a contracted Timor-Leste specialist agency,
including plans for public consultation exercises. The Company's Health,
Safety and Environment ("HSE") personnel are in close liaison with the HSE
team at ANP in working towards delivering comprehensive assessment of all
safety and environmental aspects of drilling operations and the Company is on
schedule to secure all necessary approvals prior to anticipated drilling
operations.
Drill Funding
The Company continues to seek additional funding partners to participate in
the drilling of the appraisal well. The recent Farm-Up by TIMOR GAP to a 40%
working interest in the PSC, including a 20% paying interest, was an important
step in a plan to bring together a strong investment partnership around the
Chuditch project, aligned on timely development of gas resources in the
interests of Timor-Leste and all other stakeholders of the Company.
Discussions with certain additional parties continue and are progressing
forward in line with the board's expectations. These parties include potential
strategic investors into the Chuditch project and enterprises with an interest
in developing and / or taking the gas resources to market. Whilst there is no
certainty of any of the discussions reaching a completed transaction, the
level of interest is encouraging, and the Board are confident that there will
be no impediment to drilling the Chuditch well on the planned schedule.
Proposed Change of Name
At the Company's 2024 AGM, a resolution will be put to shareholders to approve
the Company's proposed change of name to Sunda Energy plc. In connection with
the proposed name change, the Company's TIDM is expected to change to 'SNDA'.
The ISIN (GB00B01QGH57) and SEDOL (B01QGH5) of the Company's ordinary shares
will remain unchanged. Shareholder documents of title will be unaffected by
the proposed change of name and existing share certificates should be retained
and remain valid. Any new share certificates issued after the proposed name
change becomes effective will bear the proposed new name, Sunda Energy plc.
Investor Relations:
The Company will continue to review and seek to improve and extend its
investor relations activities. Baron CEO, Dr Andy Butler, will today give
video interviews on the Proactive and DirectorsTalk platforms following the
publication of the Company's financial statements earlier today, to cover both
the operational updates and the proposed change to the name of the Company
described herein.
In addition, an updated Company presentation will be published shortly on the
Company website www.baronoilplc.com (http://www.baronoilplc.com) . A new
improved website is planned for Sunda Energy, with additional materials to
inform shareholders of the Company's business activities and operations.
The Company continues to participate in industry events and conferences, and
presentation materials will be posted to the website at the appropriate time.
Dr Andy Butler, Chief Executive Officer, commented:
"These are very exciting times for our Company. With a recently refreshed and
energised Board, a strong pivot to SE Asia where gas is in such strong demand,
and the new proposed 'Sunda Energy' name, the Company looks forward to a
bright future. The progress of our preparations to drill the Chuditch-2 well,
both operationally and in discussions with potential drill funding partners,
is hugely encouraging and I look forward to providing regular updates as
matters progress."
For further information, please contact:
Baron Oil
Plc
+44 (0) 20 7117 2849
Dr Andy Butler, Chief Executive Officer
Allenby Capital
Limited +44 (0)
20 3328 5656
Nominated Adviser and Joint Broker
Nick Athanas, Nick Harriss, George Payne (Corporate Finance)
Kelly Gardiner, Stefano Aquilino (Sales and Corporate Broking)
Cavendish Capital Markets Limited +44 (0) 131 220 6939
/ +44 (0) 207 397 8900
Joint Broker
Neil McDonald, Pearl Kellie (Corporate Finance)
Leif Powis (Sales)
IFC Advisory
Limited
+44 (0) 20 3934 6630
Financial PR and
IR
baronoil@investor-focus.co.uk
Tim Metcalfe, Florence Chandler
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