Sunda Energy Plc, the AIM-quoted exploration and appraisal company focused on gas assets in Southeast Asia, announces that the planned Chuditch-2 appraisal well on the Chuditch field in the TL-SO-19-16 Production Sharing Contract (the "PSC"), planned for drilling by the Company's wholly owned Timor-Leste subsidiary SundaGas Banda Unipessoal, Lda. ("SundaGas") in H2 2025, is now expected to be drilled in H1 2026.
The delay is due to the absence at the present time of certain essential logistical services in Timor-Leste that are mutually acceptable to the joint venture partners, and that meet the required international operational and safety standards. Therefore, the Company has not been able to proceed with the execution of a definitive, agreed form rig contract, which is an outstanding condition to the farm-in agreement entered into on 24 April 2025 by SundaGas and government-owned joint venture partner TIMOR GAP Chuditch Unipessoal Lda ("TIMOR GAP").
The drilling of the Chuditch-2 appraisal well is highly dependent on having logistical support that meets the required industry safety and emergency responses standards, especially given the remoteness of the location, which is c.200 nautical miles from Timor-Leste and Northern Australia.
The postponement of the drilling campaign to 2026, will require several subsequent actions to be undertaken.
An application has already been submitted by the joint venture partners for a 12-month extension of the current phase of the PSC, which expires on 18 June 2025, to the upstream regulator Autoridade Nacional do Petróleo ("ANP"). The Company anticipates that this extension will be granted prior to the expiration of Contract Year 3.
SundaGas and TIMOR GAP have agreed that with the Conditions of the Farm-in Agreement having not been fulfilled and the Long Stop date detailed in the announcement of 29 May 2025 having passed, the Farm-in Agreement, signed on 24 April 2025 (the "Farm-In Agreement") will terminate. However, SundaGas and TIMOR GAP have agreed to hold further discussions on partnering arrangements including a potential revised farm-in on substantially the same terms.
Termination of the Farm-In Agreement means the working interests on the PSC remain unchanged, with SundaGas holding a 60% working interest and operatorship and TIMOR GAP having a 40% interest. SundaGas and TIMOR GAP are responsible for paying 80% and 20% of all project costs respectively.
The Convertible Loan Note Agreement signed on 24 April 2025 ("CLNs") includes several conditions, including the Farm-in Agreement and the rig contract being fully effective. As this is not the case, the Company does not currently expect to drawdown any further tranches of the funds available through the CLNs.
The postponement of the drilling campaign will provide a further opportunity for alternative funding sources to be secured. The Company intends to initiate new or revisited discussions with potential funding parties that have expressed an interest in participating in the development of the Chuditch project and the export of gas for LNG.
SundaGas and TIMOR GAP have agreed to work closely together to pursue alternative drilling rigs for the Chuditch-2 well, as the rig that had been negotiated is in the process of being sold to a third party. With a softening in the market for jack-up rigs globally, the Company expects wider availability, including a choice of modern efficient rigs and competitive daily operating rental rates.
The process for the issuance of an environmental permit ("EP") for the Chuditch-2 well will also continue. The Final Environmental Impact Statement ("EIS") and Environmental Management Plan ("EMP") documents were submitted to ANP on 30 May 2025. ANP has established the statutory Evaluation Committee ("EC"), which has completed its initial verification of the EIS and EMP and commenced its own Public Consultation process. Based on the regulatory timeline for approvals, it is expected that the final EP will be issued during Q3 2025.
Dr Andy Butler, Chief Executive Officer of Sunda, commented:
"While this temporary delay is frustrating, the significant value to Sunda and its shareholders remains. The sole reason that the Company has not been able to sign the rig contract and progress to drill now is the absence of viable in-country logistical services that are mutually acceptable to the joint venture partners at this time. We are however already working to establish a plan for timely drilling in 2026, in close liaison with TIMOR GAP and ANP, building on the extensive preparations that have been carried out to date. SundaGas remains committed, along with our partner TIMOR GAP, to the early drilling and expedited development of Chuditch. I would like to thank our shareholders for their support. The Board remains confident of being able to capture the value of the project for the benefit of all stakeholders, including our partners in Timor Leste, with whom we remain closely aligned"