Baron Oil PLC (AIM: BOIL) is gaining traction as Andy Butler strengthens his influence over the junior energy firm, gearing up for a promising venture in 2024.
The company is setting the stage to hit a significant value milestone by the year’s end. Currently, Baron is engaged in preliminary activities, including site surveying, rig contracting, and securing permits for the Chuditch gas discovery in Timor Leste.
Baron Oil has shifted its strategic focus entirely to its high-impact gas project in Timor-Leste, following its complete exit from UK operations. The company has officially relinquished its UK licence P2478 and also noted the unsuccessful outcome of its application in the latest North Sea licensing round, an initiative of the previous management.
Baron Oil, partnership with Timor Gap EP
As global attention turns more toward renewable energy sources, Timor-Leste stands at the cusp of a major change. In collaboration with Timor Gap EP, Baron Oil PLC is leading the evaluation of the Chuditch gas field, a project that could be pivotal for the country’s energy independence and economic future. This initiative seeks to exploit an estimated 1.2 trillion cubic feet of natural gas, which could significantly alter the energy dynamics in Southeast Asia.
The Chuditch PSC is located approximately 185km south of Timor-Leste, 100km east of the producing Bayu-Undan field, and 50km south of the Greater Sunrise potential development. It covers an area of approximately 3,571 km2, in water depths of 50-100m, and contains the Chuditch-1 gas discovery drilled by Shell in 1998 in 64m water. The well was drilled in 26 days at a cost of US$8 million and encountered a 25m gas column in the Jurassic Plover formation on the flank of a large faulted structure.
Baron owns a 60% interest in Chuditch, with TGEP holding the remaining 40%. Earlier this year, TGEP increased its stake via an ‘earn-up’ deal in February, contributing approximately $7.5 million for 2024, while Baron received $1 million for previous expenses.
Enhancing Regional Energy Stability
The economic impact of developing the Chuditch gas field is considerable. With the proven reserves now estimated at about 1.2 trillion cubic feet of gas, a significant increase from the initial 700 billion, the field’s potential to draw global investment has greatly improved. This updated assessment of the gas reserves not only establishes the project as a key driver of economic growth for Timor-Leste but also reduces the nation’s reliance on energy imports. The partnership between Baron Oil and Timor Gap EP, along with the use of advanced seismic technologies, has lessened the risks typically linked to gas extraction, making Chuditch an attractive proposition for international energy investors.
Appraisal well objectives
• Step out from discovery to confirm gas resources
• Target >100m gas column (vs. 30m at Chuditch-1)
• Perform production flow test (DST)
Well, location selection criteria:
• Distance from Chuditch-1
• Quality of seismic data at target
• Increased gas column predicted
• Low risk on presence of best reservoir
• Sufficient distance from Chuditch fault
• Low risk drilling trajectory
• Minimise faults along well path
• Water depth and slope
Following the TGEP deal in March, Butler was appointed as group chief executive, having previously led the company’s operations in Asia-Pacific.
With renewed financial support and Butler leading the charge, Baron is completing the groundwork for an appraisal program aimed at validating the size of Chuditch and providing insights for development and commercialization.
A key element in progressing the project has been the use of modern technology and analysis to refine the modelling of the discovery. Despite past challenges with seismic imaging due to shallow geology and seabed complexities, new algorithms and seismic reprocessing have enabled a clearer view of the field’s structure.
Thriving Asian gas market
The Chuditch project holds significance that reaches beyond the confines of national boundaries, providing opportunities for regional energy collaboration and security. Through the enhancement of infrastructure and utilization of strategic geographic benefits, Timor-Leste is poised to transform into a critical energy hub in Asia. This initiative is designed not only to meet domestic energy requirements but also to establish the nation as a major contributor to the thriving Asian gas market.
AI Seismic Interpretation Assisted Well Location Selection
Butler noted significant improvements, revealing that the original Shell well was located at the field’s edge and the main drilling target now shows about 150 meters of gas column compared to the initial 30 meters.
Estimates now suggest that Chuditch could contain about 1.2 trillion cubic feet of gas, marking a significant increase from earlier projections. This desktop work has transitioned Chuditch from a high-risk, vague prospect to a lower-risk, investible one, soon to be explored further through drilling.
The regional Asian gas market has also evolved since Shell’s initial drilling, offering robust opportunities for commercial delivery with minimal capital expenditure.
Planned Location of Appraisal Well: A Substantial Step-Out
Baron’s immediate focus is on finalizing the rig contract and addressing standard planning and permitting requirements.
Looking ahead, Butler emphasized the company’s plans for rapid development post-drilling, reflecting a dynamic period for Baron and its stakeholders through 2024 and early 2025, with the investment community keenly observing the project’s progression.
