The Baron Oil PLC (LON: BOIL) share price fell 10% after announcing that it had secured a six-month extension to its Contract Year Two of the Production Sharing Contract (PSC) by the relevant Timor-Leste national authority, Autoridade Nacional do Petróleo e Minerais (ANPM).
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The second year of the PSC contract will now expire on 18 December 2023, with the firm having agreed to enter into Contract Year Three, where it will drill at least one well to appraise the Chuditch-1 discovery. The company must now decide whether to enter the drilling phase before the extended deadline expires.
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Baron Oil requested the deadline extension via its fully-owned subsidiary SundaGas Banda Unipessoal Lda. (SundaGas), which operates the Chuditch PSC to allow for extra time for the company to make the necessary preparations before starting the drilling phase.
Some remaining activities include a detailed evaluation of the candidate drilling locations and well trajectories that will be factored into the final well design. The company is also arranging to extend the US$1 million bank guarantee from its current expiry date of 1 August 2023 to cover the extension period.
Baron Oil is also engaged in discussions about a potential farm-out deal with partners, as reported in its financial results for 2022 on 23 May 2023. In addition, the company is currently in discussions with third parties about their participation in the Chuditch appraisal well and future activities, but so far, there is no deal.
There are also no guarantees that a deal will be signed at the end of such discussions. However, the deadline extension will be critical in facilitating the continued discussions while the company completes the work programme on the well.
Baron Oil promised to issue further updates to shareholders regarding its progress in future at the appropriate times.
*This is not investment advice.
Baron Oil (BOIL) share price.
The Baron Oil (BOIL) share price fell 10% to trade at 0.09p, from Thursday’s closing price of 0.10p.
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