Finder Energy Secures Major Development Funding Through TIMOR GAP Partnership
Finder Energy (ASX:FDR) has struck a transformational deal with TIMOR GAP, Timor-Leste's national oil company, securing funding for up to 50% of development costs for the KTJ Project—significantly de-risking the path to first oil. This Finder Energy TIMOR GAP partnership represents a major milestone in the company's journey toward becoming a significant oil producer.
The strategic move substantially strengthens the KTJ Project's financial foundation through a binding farmin agreement with TIMOR GAP, increasing the national oil company's participating interest in PSC 19-11 from 24% to 34%.
TIMOR GAP Increases Stake, Commits Substantial Development Funding
The deal represents a major vote of confidence in the project, with TIMOR GAP committing to:
- Contribute 50% of total development capex from FID up to a gross cap of US$338 million
- Provide immediate funding support pre-FID, including 24% of costs which accelerate FID up to a gross cap of US$15 million
- Fund 12% of other joint venture expenditure retrospectively from January 2025 until FID
Finder Energy will retain a commanding 66% participating interest and maintain operatorship of PSC 19-11, ensuring control over project execution while substantially reducing its capital exposure.
"We are delighted to strengthen our partnership with TIMOR GAP through this agreement, which not only increases their participation in the KTJ Project but also demonstrates confidence in the acceleration strategy targeting FID by mid-2026. This agreement significantly de-risks the development, underpins the project's strategic importance for Timor-Leste and marks a major milestone for the KTJ Project."
This statement from Damon Neaves, CEO, highlights the significance of the enhanced Finder Energy TIMOR GAP partnership for all stakeholders.
What is "Carried Interest" and Why It Matters to Investors
Understanding Carried Interest
In oil and gas development, a "carried interest" arrangement occurs when one partner agrees to pay another partner's share of costs for a specified period or up to a certain financial threshold.
For Finder Energy investors, this means TIMOR GAP will effectively "carry" a significant portion of Finder's development costs by contributing 50% of total development capex—far exceeding its 34% ownership stake. This arrangement significantly reduces Finder's capital requirements while maintaining its majority ownership position.
Financial Benefits of the Arrangement
This type of deal is particularly valuable in the current high-cost environment as it:
- Decreases Finder's financial exposure during the capital-intensive development phase
- Increases the project's economic resilience against cost overruns
- Enhances Finder's ability to secure additional debt funding
- Accelerates the timeline to first oil and positive cash flow
For investors, the Finder Energy TIMOR GAP partnership translates to reduced financial risk while preserving substantial upside potential.
Project Status and Accelerated Timeline
The KTJ Project is progressing rapidly through Front End Engineering and Design (FEED) as part of an accelerated development strategy targeting FID by mid-2026. The joint venture has established an Integrated Project Team with TIMOR GAP seconding personnel to Finder's Perth office.
Current focus areas include:
- Detailed subsurface evaluation and reservoir modelling
- Refining Subsea Production System (SPS) components
- FPSO selection and interface engineering
- Key commercial and regulatory work
- Environmental and social impact studies
The strengthened partnership also includes practical operational support, with TIMOR GAP or its affiliates providing essential services like helicopter transport, supply boats, and other services to the KTJ Project.
Near-Term Catalysts Creating Momentum
With the financial framework now substantially secured through the Finder Energy TIMOR GAP partnership, Finder Energy is focused on executing several critical milestones on the path to FID:
- Securing an FPSO (Floating Production Storage and Offtake vessel)
- Independent resource certification for the Kuda Tasi and Jahal Oil Fields
- Updated dynamic modelling simulation and production forecasts
- Securing a drilling unit for the development drilling campaign
- Completion of FEED
- Approval of Field Development Plan (FDP)
- Debt funding
- Final Investment Decision
These catalysts represent significant potential value-creation events for investors over the coming 12-18 months as the project advances toward first oil.
The Strategic Significance for Timor-Leste
The KTJ Project represents more than just commercial opportunity—it holds substantial strategic importance as "the first 100% sovereign Timor-Leste development project" aligning with the nation's economic development goals.
For TIMOR GAP, increasing its stake demonstrates its confidence in both the project economics and its role in the nation's resource development strategy. The increased threshold for approval at the Operating Committee (from 65% to 75%) also reflects the strengthened partnership between Finder and TIMOR GAP.
This alignment of commercial and national interests creates a strong foundation for project success while potentially reducing regulatory risks.
Why Investors Should Track Finder Energy
The transformational farmin agreement within the Finder Energy TIMOR GAP partnership represents a pivotal moment in Finder Energy's journey toward becoming a significant oil producer. For investors, this development offers several compelling reasons to closely follow the company:
Improved Risk-Reward Profile
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Substantially de-risked funding path: With TIMOR GAP committing to fund 50% of development costs up to US$338 million, the project's financial foundation is significantly strengthened.
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Maintained majority control: Despite the increased TIMOR GAP participation, Finder retains 66% interest and operatorship, preserving substantial economic upside.
Clear Development Pathway
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Clear path to FID: The accelerated timeline targeting mid-2026 for FID creates a defined pathway to first oil and positive cash flows.
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Multiple near-term catalysts: The numerous project milestones over the coming 12-18 months offer multiple potential value-creation events.
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Strong government alignment: The increased participation by Timor-Leste's national oil company creates strategic alignment that may reduce regulatory risks.
As Finder Energy advances toward unlocking the cash flow potential of the KTJ Project, investors now have a clearer view of both the development pathway and the substantially improved risk-reward profile following this transformational Finder Energy TIMOR GAP partnership.
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