BOIL remains one of my top picks for 2023. The catalyst is coming — but patience is required with this high-risk stock.

Baron Oil shares

Baron Oil (LON: BOIL) shares have had an interesting 2023 — starting the year out at 0.15p, hitting 0.25p in mid-February, and then falling to 0.09p today. However, the FTSE AIM share remains a top pick for this year despite the poor price performance because it has an asset which will eventually be sold for multiples of the current price.

Baron Oil Plc

As a long-term investor in high-risk small cap shares, I am only interested in multiplying my investment several times over. I could have sold at 0.25p — many did — but the problem with companies like Baron Oil is that it is impossible to predict when the catalyst will come. If you cast your eye back to mid-October 2022, BOIL was trading for roughly the same price as today, but then shot up to 0.24p overnight.

Now the question for would-be investors today is simple: Are BOIL shares fundamentally worth more today than when they were at the start of October last year?

The answer, for me, is yes.

Chuditch progress

I have gone into detail on the Competent Person’s Report for both Chuditch and Dunrobin before, but for the sake of brevity, Chuditch has been confirmed as an incredibly valuable resource.

In full-year results, the company noted that ‘both the Chuditch PSC and Dunrobin projects, were subject to intensive technical work aimed at maturing the assets to “drill ready” status.

Non-executive Chairman John Wakefield

Non-executive Chairman John Wakefield enthuses that ‘the considerable and potentially transformative value for shareholders in the Company’s assets offshore Timor-Leste and in the UK is now clearly defined and our efforts are now focused on the drilling decisions to be made in 2023 for a Chuditch-1 appraisal well…both assets continue to attract attention via our active farmout campaigns and presentations at relevant industry events. In particular, there are a number of ongoing discussions with third parties regarding participation in the Chuditch appraisal well and future activities.’

On 2 June 2023, Baron announced that it had been granted a ‘further six-month extension to Contract Year Two of the PSC by the relevant Timor-Leste national authority’ whereby ‘Contract Year Two of the PSC will now expire on 18 December 2023, with a subsequent commitment, on entry into Contract Year Three, for the drilling of one well to appraise the Chuditch-1 discovery.’

The company says it needs more time for the evaluation of drilling location candidates and well trajectories — but in reality, it’s still marketing for a JV or farm-out partner.

Australian support

There are two key factors to keep in mind regarding Chuditch. The first is the ongoing partnership between Woodside, Osaka Gas, and Timor Gap to appraise the best way forward to develop the Greater Sunrise field — which neighbors BOIL’s asset.

The partnership was announced in early February — and was at least partially responsible for Baron’s rapid share price increase at the time. The options process for the first time is factoring in what works best for East Timor, and all three partners have noted they are working ‘expeditiously’ to select where to send the potential gas for processing.

Development of the field has been frozen for decades, both because of geographical complexities associated with the Timor Trench, and because of disagreements over whether the gas should be processed for export at an LNG plant in Australia, or East Timor, or on a floating LNG platform in the Timor Sea.

This seems to be the sticking point. Previous studies had concluded that development would only be feasible if the gas were processed in Australia, and East Timor has repeatedly called for the AUS government to back a pipeline from Sunrise to East Timor — bringing in up to $100 billion in revenue and development benefits.

With Woodside seemingly hinting that it could well accept this condition, especially given the hostility the Australian population has to new gas development, today the country’s minister for Foreign Affairs Penny Wong has made a speech directly supporting the development.

Penny Wong

While it’s definitely worth reading the entire piece, notably quotes include:

  • ‘Australia is so deeply committed to working with Timor-Leste to realise the development of Greater Sunrise.’
  • ‘There have been past instances in which Australian governments have acted in ways that Timorese people – and many Australians – found disappointing.’
  • ‘The Australian Labor Government I represent has a deep appreciation of just how much your economic resilience is key to your sovereignty. And we recognise Greater Sunrise is unfinished business.’
  • ‘Australia has only one ambition for Greater Sunrise: to see the field developed as soon as feasibly possible to support Timor-Leste’s development.’
  • ‘Prime Minister Gusmao was right to say that Greater Sunrise needs to be a feasible and economically sound solution, that creates a petroleum industry that can yield direct economic dividends for your people.’
  • ‘A genuine, good faith commitment to developing Greater Sunrise.’
  • That’s why the Prime Minister appointed Steve Bracks, a longstanding friend and supporter of your nation, to be the Australian Government’s Special Representative for Greater Sunrise.’
  • ‘Australia has been listening carefully to understand your ambitions for Greater Sunrise. I can assure you that Timor-Leste’s commitment to onshore processing and to the south coast Tasi Mane project is clearly understood.’

It’s worth noting that East Timor’s Bayu-Undan field is now empty, and the country is hoping to convert the field into a commercial carbon capture and storage project with Australia’s help. This field was a major contributor to the developing country’s economic health, and it needs a new field to come online soon.


Baron Oil is gearing up for the endgame. The entire investment case rests on a major deciding to buy Chuditch, and this in turn rests on a decision to develop Greater Sunrise — which is to some extent out of its hands. However, today’s speech makes it more likely to happen than at any point so far.

Andy Butler

BOIL has appointed Cenkos Securities as its Joint Corporate Broker — and appointed Andy Butler to the board as Director of Asia Pacific (i.e., in charge of Chuditch, though really this is just a formality given his past involvement). Butler has a pedigree in oil and gas akin to a purebred German Shepherd.

Financially, BOIL notes that it has ‘a well-funded balance sheet covering our current activities and commitments.’ As of 31 December 2022, it had £5.8 million in cash reserves, having spent just £213,000 on exploration and evaluation. After admin expenses, it made a loss after tax of circa £1.4 million — and at the moment, arrangements are being made to extend the existing $1 million Bank Guarantee from its current expiry date of 1 August 2023 to cover the Chuditch extension period.

There is a solid cash runway ahead, though the company will likely need to raise more cash or get itself a partner before any drilling can commence.

Last word

CEO Andy Yeo has delivered on the CPR, the Australian government is on-side, and multiple majors are in the works. It’s not just Woodside with economic interests in the area.

Rain or shine, high-risk investors are standing their ground and waiting for Chuditch to sell.

This article has been prepared for information purposes only by Charles Archer. It does not constitute advice, and no party accepts any liability for either accuracy or for investing decisions made using the information provided.

Further, it is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

Charles Archer is an experienced financial writer specialising in monetary law. With a background in stock market and private equity analysis, he’s worked for many years as a freelance investment author,...

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