LONDON, UK: Baron Oil Plc (AIM: BOIL) has announced that it will sell a 15% working interest in the Chuditch Production Sharing Contract (PSC), offshore Timor-Leste, to its existing partner TIMOR GAP, the national oil and gas company of Timor-Leste.

The deal is valued at US$8.5 million for Baron, which will receive cash payments and reduced future costs.

The sale is subject to the approval of TIMOR GAP’s board and Timor-Leste’s petroleum authority. Baron will retain a 60% interest and operatorship of the PSC, while TIMOR GAP will increase its stake to 40%, of which 25% is carried to first gas.

The transaction is expected to be completed by 31 January 2024. The partners plan to drill and test the Chuditch-2 appraisal well in late 2024, subject to rig availability and financing.

Andy Yeo, Chief Executive of Baron Oil Plc, added: “We are delighted with, and greatly appreciate, TIMOR GAP’s decision to increase its participation in the Chuditch PSC through a paying interest. The proposed Farm-Up is a major step forward, as it provides validation of the project as well as bringing in an early funding partner for the appraisal programme. It also reflects the Timor-Leste Government’s commitment to the development of the country’s petroleum resources and its support for our efforts.

“From here, we will advance our drilling planning for the appraisal well which will include discussions with other potential funding partners. With this proposed Farm-Up, we move a long way forward towards drilling Chuditch-2, whilst retaining operatorship and a majority interest in the PSC.”

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