baron oilwhich will be renamed Sunda Energy later this month, is gaining momentum behind the scenes as Andy Butler continues to put his stamp on the junior energy company that is preparing to take advantage of an exciting opportunity.
The 2024 plan could see the company hit a major value catalyst by the end of the year.
Baron is currently carrying out preliminary work – completing site survey, rig contracting and permitting for the Chuditch gas discovery in Timor Leste.
Chuditch, first founded in 1998 by Shell, has the potential to be a significant and valuable project, particularly for the state of Timor Leste, as the project promises to be a new and important input to its economy.
Its importance to the country is underlined by the active participation of the State in the project through its national energy company Timor Gap EP (TGEP).
Project: Baron is carrying out preliminary work – completing site survey, rig contracting and permitting for the Chuditch gas discovery in Timor Leste.
Baron owns a 60 percent stake in Chuditch and TGEP owns the other 40 percent.
TGEP’s stake increased earlier this year through an “earn-out” deal in February, acquiring a 15 percent “paying interest” in addition to its original 25 percent stake. It will provide the project with around $7.5 million during 2024, while Baron received $1 million in cash to cover overdue costs.
In March, shortly after the TGEP deal, Butler was promoted to group chief executive, moving up from his previous role as the company’s Asia-Pacific leader.
With new financial backing and Butler at the helm, Baron is now laying the remaining foundations for an assessment program that aims not only to confirm the scale of opportunities in Chuditch but also to provide information that the company and Timor Leste can use to Develop and market the field.
The key to unlocking the field has been the use of contemporary technology and analysis to better model discovery.
“The problem in that area tends to be that, due to very shallow geology and some complications on the seafloor, deep seismic imaging has proven to be very challenging in the past,” Butler told Proactive.
“You can see (in the data) where Shell drilled the well when they discovered this field 25 years ago, but before you couldn’t really see the extent of the field, the parts that go from the well to the top of the field, it was just invisible in the data.
‘In the past, you would really be guessing how big (the resource) was. And of course, you can’t really invest on that basis.
“This is how we have been able to do it using modern algorithms, seismic reprocessing, and a very complex and intense process is to achieve an understanding of all the geology on the field, in great detail.”
Baron’s approach means that now, for the first time, the company can obtain proper images of the field. And the picture Baron sees is encouraging in terms of the project’s benefits.
According to Butler, the data indicates that Shell’s original well was drilled at “the same margins” of the field and that the rest of the field could be much larger.
“It’s a long, elongated feature created by a fault,” he said, talking about geology. ‘So it’s over 20 kilometers long.
“And the main place where we plan to drill will have about 150 meters of gas column, where there was only 30 meters in the original well.”
“We have what we originally thought was about 700 billion cubic feet of gas.”
‘The work we have done has shown that in our intermediate case, the discovery resource is approximately 1.2 trillion cubic feet of gas. This represents an increase of more than 50 per cent in the resources we thought were present.’
Baron, with his desk job to date, has moved Chuditch from a higher risk and largely undefined opportunity to a lower risk, investment opportunity that should be put to the test in a matter of months.
Importantly, it is not just the project that has advanced since Shell drilled in 1998.
Since then, the Asian gas market has developed significantly.
It is now a very strong market regionally and locally Chuditch is close to infrastructure meaning the project can potentially be delivered commercially without large capital costs.
But first the company will focus on the evaluation program. The next material item on Baron’s to-do list will be the signing of a rig contract, to secure the drilling schedule; All the usual planning and permitting items will also need to be ticked off.
“We are also very attentive to what happens after the well and how quickly we can move forward with future activities,” Butler added.
“We are moving forward with an accelerated development mentality.”
Clearly, 2024 and early 2025 promise to be an exciting time for Baron (currently worth £18m) and its shareholders.
Understandably, investors are closely monitoring the project’s progress.
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