Baron Oil (AIM:BOIL) confirmed it had entered year-three of the TL-SO-19-16 (Chuditch) Production Sharing Contract offshore the Democratic Republic of Timor-Leste.
As a result, a bank guarantee has increased from US$1 million to US$2 million (net to Baron) with other funding initiatives progressing, said a statement.
Baron operates the Chuditch PSC in Timor-Leste through its SundaGas subsidiary, with a 60% working interest in partnership with state-owned joint venture partner TIMOR GAP.
Contract Year Three contains the commitment to drill an appraisal well on the Chuditch gas field.
The new bank guarantee has been issued by Banco Nacional de Comércio de Timor-Leste, which is wholly owned by the government of Timor-Leste
Discussions are ongoing with additional potential funding partners regarding participation in drilling the appraisal well in Contract Year Three, added the statement.
These parties include potential strategic investors for the Chuditch project and enterprises interested in developing and/or taking the gas resources to market.
Baron said it is confident of the financing being in place in time to enable the drilling of the Chuditch well as planned in early 2025.
Andy Butler, Baron’s chief executive, said: "The move into Contract Year Three is an important milestone for the Chuditch PSC.
"The company's technical and operational teams are making great progress in preparations for drilling of the Chuditch-2 appraisal well and the parallel initiatives around funding for drilling and subsequent activities are advancing at pace."