TIDMJSE
RNS Number : 3710T
Jadestone Energy PLC
14 November 2023
Acquisition of Additional Interest in the CWLH Oil Fields
14 November 2023 - Singapore: Jadestone Energy plc ("Jadestone",
or the "Company"), an independent oil and gas production company
focused on the Asia-Pacific region, is pleased to announce that it
has executed a sale and purchase agreement with Japan Australia LNG
(MIMI) Pty Ltd (the "Seller"), to acquire the Seller's non-operated
16.67% working interest in the Cossack, Wanaea, Lambert, and Hermes
("CWLH") oil fields development, offshore Western Australia, for a
total initial cash consideration of US$9 million, and certain
subsequent Abandonment Trust Payments (the "Acquisition"). The
Acquisition will increase the Company's non-operated working
interest in the CWLH fields from 16.67% currently to 33.33% on
completion.
The Company will host an investor and analyst webcast at 09:00
GMT today to discuss the Acquisition, with the webcast details at
the end of this announcement.
Paul Blakeley, President and CEO commented:
"Since acquiring our initial CWLH interest in November 2022, the
subsurface performance has exceeded expectations, validating our
work and de-risking the significant upside potential we see across
the fields. As such, we are pleased to be increasing our interest
in a very high-quality, long-life asset with low decline rates at
an attractive 2P acquisition cost of US$1.7/bbl, or less than
US$1/bbl on a 2P + 2C basis. This acquisition also provides us with
greater influence over investment decisions on an asset which is
expected to be an important part of the Jadestone investment case
for years to come.
We intend to fund the acquisition and associated abandonment
trust payments through available liquidity, including our
reserves-based lending facility, which was structured to
accommodate Jadestone's growth by supporting the acquisition of
producing reserves with significant upside potential. Our RBL banks
are supportive of this acquisition and recognise the benefits that
it will bring to our business, further diversifying our production
base and adding barrels which are accretive on all measures.
Flaring from the CWLH fields is minimised due to the export of
associated gas to the neighbouring North West Shelf Gas facilities,
reducing emissions intensity and further evidencing how our
strategy of maximising recovery from existing upstream assets is
consistent with our sustainability principles."
Acquisition Highlights
-- The Acquisition includes the Seller's entire 16.67% working
interest in the CWLH fields, subsea infrastructure, Okha FPSO, and
full abandonment liabilities. Jadestone will make payments of up to
US$111 million in connection with the Acquisition, comprising a
consideration of US$9 million and up to US$102 million into the
CWLH Abandonment Trust Fund in three instalments in 2024.
-- Jadestone is acquiring 11.8 mmbbls [1] net, comprising 0.2
mmbbls of production since the effective date, 5.1 mmbbls of 2P
Reserves and a further 6.5 mmbbls of 2C Resources (both as at 31
December 2022).
-- Based on a consideration of US$9 million, this represents a
2P acquisition cost of US$1.7/bbl and US$0.8/bbl on a 2P + 2C
basis.
-- It is anticipated that, due to an effective date of 1 July
2022, any completion adjustments will result in a payment to
Jadestone in the range of US$3-6 million [2] on closing of the
Acquisition, which is currently expected in Q1 2024. Any payment to
Jadestone due to the completion adjustments will be paid by the
Seller into the CWLH Abandonment Trust Fund, offsetting the first
US$42 million instalment by the same amount (see immediately
below).
-- Jadestone will pay US$42 million into the Abandonment Trust
Fund for the CWLH fields on completion of the Acquisition.
Jadestone will also make two further payments into the Abandonment
Trust Fund:
o A payment of US$23 million, payable on NOPTA ([3]) approval
and registration of transaction documents exchanged at completion
(currently projected for March 2024); and
o Up to US$37 million at 31 December 2024. [4]
-- Jadestone intends that the Abandonment Trust Fund payments,
which are projected to broadly coincide with receipts from liftings
attributable to the Seller's interest, are paid for through
available liquidity including corporate cash balances and, pending
lender consent, available liquidity in its reserves-based lending
("RBL") facility.
-- The CWLH fields produced c. 2,200 bbls/d during Q3 2023 and
have averaged c.1,800 bbls/d year-to-date 2023 (both figures net to
the Seller's 16.67% interest). Production has regularly exceeded
2,300 bbls/d net to Jadestone in recent months. Year-to-date
production was impacted by facilities downtime earlier in 2023,
with remediation plans to prevent similar occurrences already being
implemented.
-- Oil production from the CWLH fields is low-sulphur and
low-density. The next lifting allocated to the Seller's interest is
estimated at c.650,000 bbls and is expected to occur in Q1
2024.
-- Unit operating costs for the Seller's interest are estimated
at <US$25/bbl and will be accretive to the Company's overall
current unit operating cost. There will be no incremental overhead
to Jadestone for managing this interest.
-- Jadestone continues to believe that there is potential to add
incremental reserves through infill drilling, targeting unswept oil
across all four of the CWLH fields; and extending the asset life
beyond 2031 (the initial design life of the Okha FPSO).
The following tables set out the 2P Reserves and 2C Resources
for the Company's existing 16.67% interest in the CWLH fields, as
independently evaluated by ERCE at an effective date of 31 December
2022. The 2C Resources represent forecasted oil production achieved
by the extension of the Okha FPSO design life by 10 years to 1
October 2041, and the drilling of additional infill wells.
CWLH fields 2P reserves at 31 December 2022
Licences Fields 2P Gross Reserves Working Net 2P reserves Operator
(mmbbls) interest attributable
in the to Jadestone
CWLH fields (mmbbls)
[5]
WA-3-L Cossack
WA-9-L Wanaea Woodside
WA-11-L Lambert Energy
WA-16-L Hermes 30.3 16.67% 5.1 Group Ltd.
---------- ------------------ ------------- ---------------- ------------
CWLH fields 2C Resources at 31 December 2022
Licences Fields 2C Gross Resources Working Net 2C Resources Operator
(mmbbls) interest attributable
to Jadestone
(mmbbls)
WA-3-L Cossack
WA-9-L Wanaea Woodside
WA-11-L Lambert Energy
WA-16-L Hermes 39.0 16.67% 6.5 Group Ltd.
---------- ------------------- ---------- ----------------- ------------
The entity acquiring the Seller's working interest is an obligor
under the RBL facility agreement, which requires the RBL lenders'
consent for the acquisition of the additional working interest. The
RBL lenders have unanimously approved this acquisition and the
Company intends to seek RBL lender consent to integrate the
additional CWLH working interest into the RBL's borrowing base,
although this is not a condition for the transaction. Subject to
RBL lender consent, the additional CWLH working interest is
expected to increase the RBL borrowing base and debt
availability.
Sales from the CWLH fields are marketed individually by joint
venture partners. The next lifting allocated to the Seller's
interest is estimated at c.650,000 bbls and is expected to occur in
Q1 2024. The CWLH fields differential to Brent has fluctuated
between a premium and discount in recent years, largely driven by
the regional naphtha crack margin. Jadestone currently expects a
small discount to Brent for near-term liftings from the CWLH
fields.
The Seller's interest includes Petroleum Resource Rent Tax
("PRRT") credits. Jadestone anticipates that these credits will
offset any PRRT payable on the acquired interest through to the end
of the asset's life. Jadestone has, and will continue to pay, PRRT
and corporate income tax on its Australian operations where
applicable.
The CWLH joint venture partners have waived their pre-emption
rights and given their in-principle consent to the Acquisition
(subject to agreement of the relevant accession documentation),
thus reducing the conditionality of the transaction.
Completion of the Acquisition is subject to the satisfaction of
customary closing conditions, including regulatory approvals from
NOPTA and Australia's Foreign Investment Review Board. The Company
anticipates completion of the transaction during the first quarter
of 2024.
Webcast
The Company will host an investor and analyst presentation at
9:00 a.m. (GMT) to discuss the Acquisition, accessible through the
link below:
Webcast link: https://www.investis-live.com/jadestone-energy/654d0d6468b0a01300a107dd/hsrt
Event title: Acquisition of Additional Interest in the CWLH Oil Fields
Time: 9:00 a.m. (GMT)
Date: 14 November 2023
To join the presentation by phone, please use the below dial-in
details for the United Kingdom or the link for global dial-in
details:
United Kingdom (Local): +44 20 3936 2999
United Kingdom (Toll-Free): +44 800 358 1035
Global Dial-In Details:
https://www.netroadshow.com/events/global-numbers?confId=57933
Access Code: 751420
-ends-
For further information, please contact:
Jadestone Energy plc
Paul Blakeley, President and CEO +65 6324 0359 (Singapore)
Bert-Jaap Dijkstra, CFO
Phil Corbett, Investor Relations Manager +44 (0) 7713 687467 (UK)
ir@jadestone-energy.com
Stifel Nicolaus Europe Limited (Nomad, +44 (0) 20 7710 7600 (UK)
Joint Broker)
Callum Stewart
Jason Grossman
Ashton Clanfield
Jefferies International Limited (Joint +44 (0) 20 7029 8000 (UK)
Broker)
Will Soutar
Cameron Jones
Camarco (Public Relations Advisor) +44 (0) 203 757 4980 (UK)
Billy Clegg jse@camarco.co.uk
Andrew Turner
Elfie Kent
About Jadestone Energy
Jadestone Energy plc is an independent oil and gas company
focused on the Asia-Pacific region. It has a balanced and
increasingly diversified portfolio of production and development
assets in Australia, Malaysia, Indonesia, Thailand and Vietnam, all
stable jurisdictions with a positive upstream investment
climate.
Led by an experienced management team with a track record of
delivery, who were core to the successful growth of Talisman
Energy's business in Asia-Pacific, the Company is pursuing a
strategy to grow and diversify the Company's production base both
organically, through developments such at Akatara in Indonesia and
Nam Du/U Minh in Vietnam, as well as through acquisitions that fit
within Jadestone's financial framework and play to the Company's
strengths in managing maturing oil assets. Jadestone delivers value
in its acquisition strategy by enhancing returns through operating
efficiencies, cost reductions and increased production through
further investment.
Jadestone is a responsible operator and well positioned for the
energy transition through its increasing gas production, by
maximising recovery from existing brownfield developments and
through its Net Zero pledge on Scope 1 & 2 GHG emissions from
operated assets by 2040. This strategy is aligned with the IEA Net
Zero by 2050 scenario, which stresses the necessity of continued
investment in existing upstream assets to avoid an energy crisis
and meet demand for oil and gas through the energy transition.
Jadestone Energy plc (LEI: 21380076GWJ8XDYKVQ37) is listed on
the AIM market of the London Stock Exchange (AIM: JSE). The Company
is headquartered in Singapore. For further information on the
Company please visit www.jadestone-energy.com .
Cautionary Statements
This announcement may contain certain forward-looking statements
with respect to the Company's expectations and plans, strategy,
management's objectives, future performance, production, reserves,
costs, revenues and other trend information. These statements are
made by the Company in good faith based on the information
available at the time of this announcement, but such statements
should be treated with caution due to inherent risks and
uncertainties. These statements and forecasts involve risk and
uncertainty because they relate to events and depend upon
circumstances that may occur in the future. There are a number of
factors which could cause actual results or developments to differ
materially from those expressed or implied by these forward-looking
statements and forecasts. The statements have been made with
reference to forecast price changes, economic conditions and the
current regulatory environment. Nothing in this announcement should
be construed as a profit forecast. Past share performance cannot be
relied upon as a guide to future performance. The Company does not
assume any obligation to publicly update the information, except as
may be required pursuant to applicable laws.
The technical information contained in this announcement has
been prepared in accordance with the June 2018 guidelines endorsed
by the Society of Petroleum Engineers, World Petroleum Congress,
American Association of Petroleum Geologists and Society of
Petroleum Evaluation Engineers Petroleum Resource Management
System.
A. Shahbaz Sikandar of Jadestone Energy plc, Group Subsurface
Manager with a Masters degree in Petroleum Engineering, and who is
a member of the Society of Petroleum Engineers and has worked in
the energy industry for more than 25 years, has read and approved
the technical disclosure in this regulatory announcement.
The information contained within this announcement is considered
to be inside information prior to its release, as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 which is part
of UK law by virtue of the European Union (Withdrawal) Act
2018.
Glossary
2C Resources best estimate contingent resource, being quantities
of hydrocarbons which are estimated, on a given
date, to be potentially recoverable from known
accumulations but which are not currently considered
to be commercially recoverable
2P Reserves the sum of proved and probable reserves. Denotes
the best estimate scenario of reserves
------------------------------------------------------
Abandonment Trust the trust fund established by the operator
Fund of the CWLH fields, as trustee, to receive
abandonment contributions from joint venture
parties under the terms of the CWLH Project
Agreement
------------------------------------------------------
bbl barrel of oil
------------------------------------------------------
bbls/d barrels per day
------------------------------------------------------
CWLH Cossack, Wanaea, Lambert and Hermes oil fields
------------------------------------------------------
FPSO floating production storage and offloading
vessel
------------------------------------------------------
GHG greenhouse gas
------------------------------------------------------
mmbbl million barrels of oil
------------------------------------------------------
NOPTA National Offshore Petroleum Titles Administrator
------------------------------------------------------
PRRT Petroleum Resource Rent Tax
------------------------------------------------------
RBL reserves based lending
------------------------------------------------------
[1] Based on an independent evaluation of the CWLH fields at an
effective date of 31 December 2022 by ERC Equipoise Pte Ltd and
actual production figures for the period 1 July 2022 to 31 December
2022.
[2] The closing adjustment represents the economic benefits of
production since the effective date and completion. These primarily
reflect the proceeds of the Seller's 2023 equity lifting from CWLH
fields less operating costs since the effective date and does not
assume proceeds from the next lifting expected to occur in Q1
2024.
[3] National Offshore Petroleum Titles Administrator.
[4] Actual figure to be determined by an updated decommissioning
cost estimate for the CWLH fields, which is currently being
prepared by the operator.
[5] The production licences cover both CWLH and the North West
Shelf Gas Project. Jadestone will be acquiring an interest in the
production licences to the extent of CWLH only.
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END
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November 14, 2023 02:00 ET (07:00 GMT)
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