Finder Energy builds a clearer path to first oil

KTJ project gains reserves and regulatory backing

Finder Energy Holdings Limited (ASX:FDR) is no longer presenting Kuda Tasi and Jahal as merely an exploration story. Its 2026 annual report describes a company building towards development and production, with the initial three-well KTJ project independently classified by RISC as Reserves - Justified for Development containing 22.2 million stock tank barrels of gross 2P reserves. A further 2.2 MMstb was classified as gross 2C Contingent Resources for a potential Kuda Tasi infill well.

Those milestones arrived after the 30 June 2026 reporting date. The Autoridade Nacional do Petróleo subsequently approved the KTJ Field Development Plan, covering three subsea production wells linked to the Petrojarl I FPSO. The approval removes a major regulatory hurdle, but it is not the same as a Final Investment Decision, and Finder has not yet reached either FID or First Oil.

Funding support reduces Finder's development burden

The project’s financing structure is more substantial than Finder’s balance sheet alone. Under the expanded TIMOR GAP partnership, the Timor-Leste state company holds a 34% participating interest and will fund 50% of development capital expenditure up to a gross cap of US$338 million. Finder also secured long-lead subsea equipment and continued discussions with banks, credit funds and prospective offtake participants for debt financing.

That support sits alongside a much stronger cash position. Finder ended the year with $32.4 million in cash, compared with $4.6 million a year earlier, after a $60.3 million rights issue, partly offset by $3.4 million in transaction costs. The capital raising helped fund the shift into development, but the company still says it must finance its remaining share of project expenditure. The annual report also recognises a $3.6 million provision for a contingent FPSO payment triggered by FID.

FPSO acquisition puts $24.8 million on the balance sheet

Finder capitalised the Petrojarl I FPSO at $24.8 million, including directly attributable costs. Engineering work identified limited modification requirements and a targeted production capacity of approximately 30,000 barrels per day, while tenders had been received from international shipyards for redevelopment and life-extension work. The vessel was not yet ready for use at year end, so depreciation had not begun.

Ownership gives Finder greater control over a central part of the project and may support future tie-backs within PSC 19-11. It also concentrates execution exposure in an asset that still needs redevelopment, integration and funding before it can generate production. The company explicitly identifies FPSO integrity, project delays, cost overruns and funding availability among its key risks.

Development spending drives a $30 million loss

The financial statements show the cost of the transition. Finder reported no revenue and a $30.0 million loss after tax, reversing a $3.8 million profit in FY2025. Exploration and evaluation expenditure reached $19.6 million, while share-based payment expense rose to $9.7 million. Operating cash outflow widened to $22.0 million.

The company’s balance sheet remained positive, with $56.6 million in net assets, but the report makes clear that cash flow from operations is negative and Finder has no producing assets. Management says existing cash and joint-operation funding arrangements are expected to cover commitments for at least 12 months from the financial statements. That assessment does not remove the need to secure project financing before the development can move from engineering and procurement into full execution.

Exploration portfolio remains secondary to Timor-Leste

PSC 19-11 remains the centre of gravity, with Finder holding 66% and operating the block after TIMOR GAP’s farm-in. Reprocessed Ikan 3D seismic increased estimated Gross Rock Volume by 60% at Krill and 243% at Squilla, giving the company potential future tie-back opportunities beyond KTJ. Finder also retains UK North Sea and North West Shelf acreage, including the Boaz gas-condensate prospect and the WA-547-P Dorado play, but is managing those assets with a stated focus on partnering and capital discipline.

The immediate test is whether the company can convert regulatory approval, reserves classification and partner support into FID without exhausting its funding options. Until that decision is made, Finder remains a well-funded developer-in-waiting rather than an operating producer.