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(Alliance News) - Baron Oil PLC on Monday said it has signed a memorandum of understanding with Timor Gap Chuditch Unipessoal Lda for the farm-up of the Chuditch production sharing contract, offshore Timor Leste.
Baron Oil shares up 1.0% to 0.083 pence on Monday afternoon in London. The stock is down 40% over the past year.
Baron Oil is a London-based oil and gas exploration and appraisal company, while Timor Gap is the existing joint venture partner on the sharing contract and a wholly-owned subsidiary of Timor Gap EP, the Timor-Leste national oil and gas company.
SundaGas Banda Unipessoal Lda, Baron's wholly owned subsidiary, has entered into a memorandum with Timor Gap. This includes an obligation to enter a farm-up, which is expected to have a value to Baron of USD8.5 million.
Once the farm-up is complete, SundaGas will retain operatorship and hold a 60% working interest in the Chuditch contract, while Timor Gap will have a 40% interest, made up of a new paying 15% interest, plus its original 25% interest which is carried to first gas.
From completion, Timor Gap will be responsible for paying 20% of all costs, including the drilling of the planned Chuditch-2 appraisal well. In 2024, this contribution is estimated to be around USD7.5 million.
SundaGas also will receive cash payments from Timor Gap, which are estimated to be USD1 million relating to back costs covering the period from the signing of the contract to the anticipated date of completion.
By Holly Beveridge, Alliance News reporter
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