SundaGas Timor-Leste (Sahul) Pte. Ltd. (“TLS”), a fully owned subsidiary of Baron, is the parent company of the Timor-Leste subsidiary SundaGas Banda Unipessoal Lda. (“Banda”), which is the Operator of and 60% interest holder in the offshore Timor-Leste TL-SO-19-16 PSC. The remaining 40% interest is held by a subsidiary of the Timor-Leste state oil company Timor Gap, E.P., whose interest is carried by Banda to development.

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. 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.

Work Programme and Activities

Banda has reprocessed 3D seismic data with Spectrum Geo Australia Pty Ltd., a wholly owned subsidiary of TGS-NOPEC Geophysical Company ASA (“TGS”) to the highest modern industry standards. This major plank of the technical work programme successfully addressed issues with sea-bed topography and shallow geological features that significantly impact the seismic image at the reservoir level local to the Chuditch area, artefacts which earlier seismic processing technologies had been unable to remove. The reprocessing has resulted in a considerably enhanced subsurface image, critical for the definition of the size and shape of the Chuditch-1 gas accumulation and offset prospectivity. The interpretation of the reprocessed 3D seismic has therefore led to a revision and increase in confidence in gas volumes estimates, as well as informing the location of potential future wells.

In parallel with the 3D seismic reprocessing project, additional geological and engineering studies were completed, including:

• extensive 2D regional seismic interpretation, mapping and petroleum systems modelling exercises to provide a regional context of the Chuditch trend;
• a revised petrophysical and core evaluation of the Chuditch-1 discovery, confirming the quality of Chuditch reservoirs as potentially gas productive;
• a well engineering study to provide preliminary designs and indicative costs for a Chuditch-1 appraisal well; and
• a Chuditch Field Facilities Definition Concepts report, which identifies, assesses, and compares field development concepts. The study evaluated the layout and costs of the necessary infield facilities, the various pipeline and standalone options for gas export, and the treatment and storage of carbon dioxide.

An operational office was opened in Dili in early 2022 with a fit-for-purpose local management and technical teams.

On 24 October 2022, Baron provided In-House Deterministic Best Case Estimates resulting from its preliminary interpretation of the Chuditch PSC reprocessed 3D seismic data.

• https://polaris.brighterir.com/public/baron_oil/news/rns_news/story/xl8j0pw

An Investor Webinar took place on 26 October 2022 to provide an update on the Chuditch Project which included the in-house preliminary seismic interpretation.

• https://wp-baronoilplc-2020.s3.eu-west-2.amazonaws.com/media/2022/10/Timor-Leste-Webinar-October-2022-Final.pdf
• https://www.youtube.com/channel/UC9W0oCj3nM_0f7keYp5Eb0Q?app=desktop

On 15 November 2022, Baron announced that reservoir consultancy group ERCE had been engaged to prepare a Competent Person’s Report (CPR). The CPR was delivered in February 2023. For the Chuditch-1 discovery, ERCE assessed gross Pmean Contingent Resources of 1.16Tcf of gas. The recognition of the resources as being Contingent, rather than Prospective, is a major milestone and set the foundation for the next stage of the project cycle. This phase typically includes pre-development feasibility studies and preliminary work on gas sales arrangements alongside the drilling of an appraisal well. Baron believes that the Chuditch-1 Contingent Resources are potentially sufficiently large to be economically viable to be developed standalone or in parallel with other developments in the region.

In addition, aggregated gross Pmean Prospective Resources attributable to the licence according to the CPR amounted to 1,562 Bscf gas across three prospects, Chuditch SW, Chuditch NE and Quokka. Geological Chances of Success (“GCOS”) for these prospects range from 52% to 26%, providing substantial follow on, low risk exploration potential to any Chuditch-1 development. It is notable that Baron’s in-house probabilistic estimates of aggregated gross Prospective gas Resources for these prospects, at 2,128 Bscf of gas, are higher that ERCE’s estimates. This arises mainly through the Company’s preferred use of the latest reprocessed seismic data velocity model to define the extent of the prospects.

• Competent Person’s Report on the Contingent and Certain Prospective Resources in Timor-Leste TL-SO-19-16 (“Chuditch”) PSC prepared by ERCE, February 2023

In December 2023, Baron announced that Banda had been granted a further six-month extension to Contract Year Two of the PSC by the relevant Timor-Leste national authority, Autoridade Nacional do Petróleo (“ANP”). Contract Year Two of the PSC will now expire on 18 June 2024, with a subsequent commitment, on entry into Contract Year Three, for the drilling of one well to appraise the Chuditch-1 discovery. The practical effect is that a decision on whether to enter the drilling phase is now required to be taken at or before that date. The extension to PSC Contract Year Two was requested to allow additional time for the necessary preparations prior to entering such a drilling phase. These activities have led to the selection of a location for the “Chuditch-2” appraisal well which is illustrated in the presentation published on 11 October 2023.

• https://wp-baronoilplc-2020.s3.eu-west-2.amazonaws.com/media/2023/11/20231010-Appraisal-well-location-for-website-v7.pdf

In February 2024, it was announced that our partner in the Chuditch project, TIMOR GAP, had completed a Farm-Up such that Baron retains operatorship and a 60% working interest in the Chuditch PSC, 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. Therefore, TIMOR GAP is now 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 US$7.5 million. Baron is also to receive cash payments from TIMOR GAP which are estimated to be approximately US$1 million relating to back costs covering the period from the signing of the PSC to the date of the Farm-Up. It was further announced that a contract to conduct a Site Survey at the Chuditch-2 location had been signed at advantageous pricing, with the survey expected to take place during February and March 2024. An operational team is set up in the Dili office to oversee the survey and continue drilling preparations.

The Company hosts and keeps updated a Virtual Dataroom for the benefit of potentially interested funding partners for the next phase of the Chuditch project, an ongoing process.