Sunda Energy shares tumbled on Friday after it announced it had been served with a notice of intention to terminate its key Production Sharing Contract in Timor-Leste for failing to drill an appraisal well on schedule.
The Company’s wholly owned subsidiary SundaGas received the letter from Timor-Leste’s upstream regulator, the Autoridade Nacional do Petróleo (ANP), relating to the PSC covering the Chuditch gas field, its flagship asset.
It is supposed that the firm missed a key deadline for an activity required under the license. SundaGas was required to drill the Chuditch-2 appraisal well by 18 June 2026 to meet its minimum work commitment for contract year three, and that well has not been drilled.
The regulator didn’t hang around in issuing a termination notice, and shares sank by more than a third on Friday.
The notice does not, however, end the contract outright. SundaGas has 120 days, until 16 October 2026, to submit written representations before the ANP reaches a final decision, which remains at the regulator’s sole discretion.
There is also a route to an extension. The regulator has indicated it may grant more time, provided SundaGas can show a binding, signed rig contract to drill Chuditch-2 during 2027. This will all cost money.
The board disputes the basis of the notice and is taking advice from its regulatory and legal advisers, while SundaGas has requested an urgent meeting with the ANP to seek clarification. Some investors, however, are not hanging around to see what happens.