Sunda Energy provides update on oil and gas operations in SE Asia

(WO) — Sunda Energy Plc, the AIM-quoted exploration and appraisal company focused on gas assets in Southeast Asia, has provided an update on its operational and funding planning with respect to the TL-SO-19-16 Production Sharing Contract (Chuditch PSC) in Timor-Leste as well as an update on its new business ventures.

Highlights

• Process continues to advance with Pacific LNG for funding Chuditch PSC appraisal and development.
• Drilling rig negotiations reaching an advanced stage against a backdrop of falling prices and greater rig availability, with estimated spud date for the Chuditch-2 appraisal well now expected in Q2 2025.
• Philippines license awards anticipated during Q4 2024, with other proposed new ventures under evaluation.

Chuditch PSC updates

Following both parties’ entering into an exclusivity agreement, as announced on 12 August 2024, Sunda and Pacific LNG Operations Pte Ltd (Pacific LNG) have continued to make progress in the investment process through which Pacific LNG intends to provide funding for the Chuditch PSC project. The proposed funds to be raised from Pacific LNG’s investment, which is anticipated to be through an equity issuance in a Sunda subsidiary company and not at the Sunda Energy Plc level, would be deployed towards appraisal drilling on the Chuditch field and anticipated subsequent development of the Chuditch PSC project.

While an agreement cannot be guaranteed at this time, Sunda looks forward to providing further updates regarding the terms of a funding agreement with Pacific LNG in due course.

As appraisal drilling on the Chuditch field approaches, Sunda is actively engaged with the government of Timor-Leste with regards to the potential future development and export of Chuditch PSC gas. Sunda looks forward to continuing to work closely with the Timorese government throughout Chuditch PSC’s development process.

Operational update

The global market for jack-up drilling rigs has started to ease, with some downward pressure on pricing and more rigs expected to shortly become available. Against this background, Sunda continues to seek to achieve the best deal for the procurement of the drilling rig.  Significant progress has been made in the negotiations for Sunda’s preferred drilling rig, with contract discussions having now reached an advanced stage.  In addition, contracts are near complete for all key long-lead drilling equipment items. Sunda remains focused on a drill date for the Chuditch-2 appraisal well at the earliest opportunity in 2025.  Drilling is now expected to commence in Q2 2025, with slippage in the schedule principally resulting from overrunning drilling activities of other operators using the preferred rig.

Extensive geological and engineering studies in support of drilling operations are ongoing, addressing all aspects required to achieve operational objectives including well testing, while avoiding geological hazards and focusing throughout on health, safety and environmental protection. As part of preparations for the Chuditch-2 appraisal well, Sunda is preparing to acquire an Environmental Baseline Survey. This forms a key part of the ongoing process of environmental licensing to ensure operations at the Chuditch PSC project comply with the applicable law in Timor-Leste. Subject to vessel availability, this survey is scheduled to take place during Q4 2024. Key next stage drilling workshops are being held shortly with ANP (Timor-Leste's National Petroleum Authority) and Sunda’s joint venture partner, state-owned TIMOR GAP.

New ventures

Further to the announcement on 28 August 2024, Sunda is awaiting news of the two licenses it applied for in the Philippines. All current indications suggest that the relevant authorities’ review processes are on schedule for the awards of licenses to take place during Q4 2024. The application areas are offshore in the Sulu Sea and are known as PDA-BP-2 and PDA-BP-3. One of these blocks contains several material gas discoveries while the overall fairway holds exciting upside potential. The applications were made as part of a joint venture consortium in which Sunda has a 37.5% non-operated interest. This joint venture was the sole bidder for these application blocks and the Company is therefore confident of award. However, there is no guarantee that the applications made will result in award of new assets to Sunda Energy, nor is there certainty of the timing of any potential awards. Further information will be announced as appropriate and when available.

Dr Andy Butler, Chief Executive Officer, commented: “We are pleased with the continued progress being made at our Chuditch PSC project as we move towards drilling Chuditch-2. We remain confident that our ongoing discussions with Pacific LNG, combined with our strong government relationships in Timor-Leste, will enable us to deliver on the project’s significant potential. We thank our government partners in Timor-Leste for their continued co-operation and support. I look forward to providing investors with further updates as we continue to progress Sunda’s development of the Chuditch PSC.”

“Beyond Timor-Leste, we look forward to receiving news on the awards of licenses we applied for in the Philippines. As ever, we will continue to explore new venture initiatives in the wider Southeast Asian region as we look to grow an exciting portfolio of high-quality gas assets.”