Sunda Energy has postponed drilling of its Chuditch-2 appraisal well in Timor-Leste until the first half of 2026, citing the absence of essential logistical services that meet international safety standards.
The AIM-listed exploration company had originally planned to drill the well in the second half of 2025 through its wholly owned subsidiary SundaGas. The remote location, approximately 200 nautical miles from Timor-Leste and Northern Australia, requires specialised logistical support that meets stringent industry safety and emergency response standards.
Sunda Energy shares sank 40% after the company outlined a string of knock-on effects of the failure to secure the right services to commence drilling as previously planned.
The delay has triggered the termination of a farm-in agreement signed in April with government-owned partner TIMOR GAP, as key conditions, including a definitive rig contract, could not be fulfilled. Under the original agreement, TIMOR GAP would have increased its stake in the project, but working interests now remain unchanged, with SundaGas holding 60% and TIMOR GAP retaining 40%.
The partnership structure means SundaGas remains responsible for 80% of project costs compared to TIMOR GAP’s 20% share. However, both parties have agreed to hold further discussions on potential revised partnering arrangements on substantially similar terms.
The delays may be beneficial for Sunda over the long term if they can negotiate more favourable terms. But the short-term considerations are dominating trade on Monday.
Funding arrangements will be a concern for investors. The company does not expect to draw down further tranches from convertible loan notes agreed in April, as these were conditional on the farm-in agreement and rig contract being fully effective.
Sunda now intends to pursue alternative funding sources and has indicated it will initiate discussions with potential funding parties that have previously expressed interest in the Chuditch project and its planned gas export.
As CEO, Dr Andy Butler, alluded in his comment accompanying the update, the value still within the project hasn’t changed, but the nature of some investors’ approach to early-stage natural resource companies means they may deploy capital elsewhere while Sunda pursues other avenues.
“While this temporary delay is frustrating, the significant value to Sunda and its shareholders remains,” said Dr Andy Butler, Chief Executive Officer of Sunda.
“The sole reason that the Company has not been able to sign the rig contract and progress to drill now is the absence of viable in-country logistical services that are mutually acceptable to the joint venture partners at this time.
“We are however already working to establish a plan for timely drilling in 2026, in close liaison with TIMOR GAP and ANP, building on the extensive preparations that have been carried out to date. SundaGas remains committed, along with our partner TIMOR GAP, to the early drilling and expedited development of Chuditch. I would like to thank our shareholders for their support. The Board remains confident of being able to capture the value of the project for the benefit of all stakeholders, including our partners in Timor Leste, with whom we remain closely aligned”