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Baron Oil PLC on Monday saw shares plummet despite promising results from testing at the Chuditch discovery, as it attempts to make progress on a drilling decision before its contract extension from the Timor-Leste government runs out.
Baron Oil is a London-based oil and gas exploration company with assets in the UK, Peru and Timor-Leste. It holds a 75% working interest in, and also operates, the offshore Chuditch production sharing contract, through its subsidiary SundaGas Banda Unipessoal Lda.
Baron Oil shares were trading 23% lower at 0.19 pence each in London on Monday morning.
Last week, Baron Oil said its contract year two for Chuditch had been granted a six-month extension by the National Petroleum and Minerals Authority of Timor-Leste, meaning it would have until June 18 next year to make a decision on whether to start drilling.
On Monday, Baron Oil said preliminary interpretation of reprocessed 3D seismic data showed significant increases from management's previous estimates regarding potential recoverable resources from the site.
Its gas-in-place estimate is now 5,500 billion cubic feet, compared to an equivalent estimate of 3,889 billion prior to 3D seismic data processing.
Similarly, its best-case recoverable resource estimate has increased to 3,625 billion cubic feet, versus an equivalent estimate of 2,924 billion prior to testing.
Baron Oil also said that the Chuditch-1 discovery had the potential to become a liquefied natural gas scale resource, after mapping produced a "materially larger" recoverable resource estimate for the site of 1,350 billion cubic feet.
Following these results, the company expects relatively high gas recovery from Chuditch-1, and said there was potential for allocating contingent resources to the discovery.
Baron Oil has now begun a revision of the Chuditch engineering concept study as it looks to identify export solutions for gas.
It said this work will illustrate and quantify a fast-track development pathway targeting first production in 2028.
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