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. 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."