TIDMJSE
RNS Number : 2459N
Jadestone Energy PLC
19 January 2023
Acquisition of interest in Sinphuhorm gas field onshore
Thailand
19 January 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 (the "Agreement") with
Salamander Energy (S.E. Asia) Limited (the "Seller"), an affiliate
of PT Medco Energi Internasional Tbk, to acquire the Seller's
interest in three legal entities, which collectively own a 9.52%
non-operated interest in the producing Sinphuhorm gas field and a
27.2% interest in the Dong Mun gas discovery onshore northeast
Thailand. The headline cash consideration is US$32.5 million, to be
funded from the Company's cash resources.
Highlights
-- Jadestone is acquiring 4.6 mmboe[1] of 2P Reserves as at an
effective date of 1 January 2022. Based on the headline
consideration of US$32.5 million[2], this represents an acquisition
cost of US$7.1/boe.
! It is anticipated that, due to the effective date of 1 January
2022, the cash consideration on completion will be approximately
US$26.4 million plus working capital.
! Positive cash flow generation from a well-understood
reservoir; stable and predictable gas production of approximately
1,600 boe/d net to Jadestone, based on current rates.
-- Gas is contracted under a long-term high take-or-pay gas
sales agreement with PTT as the buyer at a price linked to high
sulphur fuel oil. Recent gas nominations have consistently exceeded
the daily contract quantity.
-- A first direct step to create significant natural gas
production within Jadestone's portfolio over the medium-term.
-- Scope 1 and 2 GHG intensity of Sinphuhorm operations is
estimated at 7.5kg/boe of CO(2) e, significantly lower than the
upstream average, with the operator exploring plans to develop a
carbon, capture and storage project at the field.
-- Establishes a low-cost platform for growth in Thailand, while
re-engaging directly with PTTEP, Thailand's National Oil Company,
at the same time providing further diversification of the Company's
production base.
-- Sinphuhorm operating costs are approximately US$3/boe and
will decrease the Company's overall unit operating costs.
-- The acquired assets will be managed from Jadestone's existing
Southeast Asia offices, with no incremental G&A expense and
there are very limited abandonment obligations (currently estimated
at c.US$2 million net) associated with the assets.
-- The 9.52% interest in Sinphuhorm generated approximately
US$20 million (unaudited) of EBITDA in 2022.
-- Jadestone estimates payback on the acquisition in circa three
and a half years, with returns significantly in excess of the
Company's hurdle rates.
-- Jadestone sees potential to enhance value through further
infill drilling on the Sinphuhorm field and the potential
development of the Dong Mun discovery.
-- Management believes further equity in the Sinphuhorm gas
field could become available in the near-term.
Paul Blakeley, President and CEO, commented:
"While modest in scale, this opportunistic tuck-in acquisition
is low cost, low emissions intensity and very low decline
production from the onshore Sinphuhorm gas field. The asset is an
excellent addition to our portfolio, diversifying our existing
production base, and is a first important step towards building a
significant natural gas position within our portfolio as part of
our energy transition strategy. Furthermore, these assets carry
minimal abandonment liabilities and are administered under very
attractive Thai I PSC terms with recent extensions to both the
licence and the GSA.
The asset is highly predictable and reliable, running at close
to 100% uptime in 2022 and with a high take-or-pay to a regional
power station for electricity generation. We see upside from
further infill drilling within Sinphuhorm, with wells planned in
2023 and 2024, and the potential development of the Dong Mun gas
discovery, which is 100% owned by APICO, and which represents
upside beyond the consideration paid. Establishing a presence in
Thailand, as well as re-engaging directly with PTTEP, will also
leave us well-positioned to capitalise on further potential asset
divestments that we see coming to market in the near-term."
A short presentation on the acquisition is available on the
Company's website at
https://www.jadestone-energy.com/investor-relations/presentations-communication/
.
Overview of the acquisition
APICO LLC ("APICO"), a joint venture company, holds a 35%
interest in the Sinphuhorm gas field. Jadestone will acquire
interests in three entities (one being APICO directly) in order to
acquire a 27.2% interest in APICO, which equates to the 9.52%
interest in the Sinphuhorm gas field. APICO also owns a 100%
interest in the L27/43 concession, which contains the Dong Mun gas
discovery, and 100% of the L15/43 concession, which is due to be
relinquished.
PTTEP, the exploration and production arm of the Thailand state
oil company PTT, operates the Sinphuhorm gas field development with
an effective 80.5% interest. Exxon owns the remaining 10%
interest.
The acquisition is scheduled to close in February 2023 following
specific corporate actions of the Seller.
Overview of the acquired assets
The Sinphuhorm gas field was discovered in 1983 and commenced
production in 2006. The reservoir is the Permian age fractured
carbonate Pha Nok Khao formation, which contains dry gas with a low
gas condensate ratio of c.4 bbls/mmcf.
The field has been developed with eleven wells, of which ten are
currently producing, drilled from three surface pads in the central
and southern part of the field. Further development well locations
have also been identified. Pressure depletion trends confirm lower
connectivity between the northern and southern parts of the field,
with further development potential existing to the north as a
result. The field produced an average of 97 mmcfd in 2022. A total
of 506 bcf of gas and 2.1 mmbbls of condensate had been produced by
31 December 2021, equating to a 46% recovery factor.
The Sinphuhorm well pads are tied back to a central gas plant
with 140 mmcfd capacity and the ability to stabilise small amounts
of condensate. The plant, with its simple design, enjoys high
reliability, uptime and performance, with a 16-year track record of
safe operations. Operating costs are very low at c.US$3/boe and
decommissioning costs net to the acquired 9.52% interest are
estimated at approximately US$2 million.
Gas from Sinphuhorm is exported via a 64 kilometre pipeline to
the Nam Phong power plant, the largest in northeast Thailand.
Sinphuhorm gas is contracted under a long-term take-or-pay GSA with
PTT, as the gas buyer. The current GSA extends over the remaining
term of the concession, which expires in March 2031. Gas demand has
consistently exceeded 90 mmcfd over the last four years and is
expected to remain strong in the foreseeable future amid declining
regional supplies and high import prices. The Sinphuhorm gas price
is linked to high sulphur fuel oil. Sinphuhorm condensate is sold
to PTT under a long-term condensate sales agreement.
A project to boost compression at the field is already underway
with a gross cost estimate of US$62 million and is expected to be
onstream in Q3 2024. In addition, further infill wells are planned
in 2023 and 2024. Management estimates that at 31 December 2021,
the field contained gross 2P reserves of 288 bcf of gas and 0.82
mmbbls of condensate (27 bcf and 0.08 mmbbls net to Jadestone).
ERCE, Jadestone's reserve auditors, have reviewed management's
methodology and assessment of Sinphuhorm 2P reserves.
Sinphuhorm 2P reserves at 31 December 2021
Licences Field 2P Gross 2P Working Net 2P reserves Operator
Gas Reserves Gross interest attributable
(bcf) Condensate to Jadestone
Reserves (mmboe)
(mmbbls)
EU5
EU-1 Sinphuhorm 288 0.82 9.52% 4.6 PTTEP
------------ -------------- ------------ ---------- ---------------- ---------
Dong Mun 2C resources at 31 December 2021 (based on APICO
estimates)
Licences Field 2C Gross Gas Working Net 2C Resources Operator
Resources (bcf) interest attributable
to Jadestone
(mmboe)
L27/43 Dong Mun 56 27.2% 2.5 APICO
---------- ----------------- ---------- ----------------- ---------
Natural gas from Sinphuhorm plays a critical role in meeting the
increasing demand for cleaner-burning fuel as the Thailand energy
market and economy transitions to a lower carbon future. The
operations at Sinphuhorm have a Scope 1&2 GHG emissions
intensity of 7.5 kg CO2(e) /boe, well below the global upstream
average. The operator of the Sinphuhorm has stated publicly[3] that
it plans to explore the potential for a carbon, capture and storage
project at the field, which could reduce absolute emissions and
intensity even further.
The Dong Mun field is an undeveloped discovery in the L27/43
concession (100% APICO) approximately 80km southeast of Sinphuhorm.
Gas was tested in the PNK carbonate formation (same reservoir
setting as Sinphuhorm) with APICO estimating 56 bcf gross 2C
contingent resources for the discovery. APICO is considering
developing Dong Mun through a phased approach - initially through a
compressed natural gas scheme and then a small-scale LNG
development.
For further information, please contact:
Jadestone Energy plc
Paul Blakeley, President and CEO +65 6324 0359 (Singapore)
Bert-Jaap Dijkstra, Chief Financial Officer +44 7713 687467 (UK)
Phil Corbett, Investor Relations Manager
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)
Tony White
Will Soutar
Camarco (Public Relations Advisor) +44 (0) 203 757 4980 (UK)
Georgia Edmonds jse@camarco.co.uk
Elfie Kent
Billy Clegg
About Jadestone Energy
Jadestone Energy plc is an independent oil and gas company
focused on the Asia-Pacific region. It has a balanced, low risk,
full cycle portfolio of development, production and exploration
assets in Australia, Malaysia, Indonesia and Vietnam.
The Company has a 100% operated working interest in the Stag
oilfield and in the Montara project, both offshore Australia. Both
the Stag and Montara assets include oil producing fields, with
further development and exploration potential. The Company also has
a 16.67% non-operated interest in the North West Shelf Oil Project
offshore Western Australia, comprising four oil fields containing
significant upside potential through potential infill drilling and
life extension activities.
The Company has interests in four oil producing licences
offshore Peninsular Malaysia; two operated and two non-operated
positions, and has signed an agreement to acquire a non-operated
interest in the Sinphuhorm producing gas field onshore
Thailand.
Further, the Company has a 100% operated working interest in two
gas development blocks in Southwest Vietnam, and an operated 100%
interest in the Lemang PSC, onshore Sumatra, Indonesia, which
includes the Akatara gas field development, where first production
is expected in the first half of 2024.
Led by an experienced management team with a track record of
delivery, who were core to the successful growth of Talisman's
business in Asia, the Company is pursuing an acquisition strategy
focused on growth and creating value through identifying,
acquiring, developing and operating assets in the Asia-Pacific
region.
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
------------------------------------------------------------
bbl barrel of oil
------------------------------------------------------------
bcf billion cubic feet of gas
------------------------------------------------------------
boe barrel of oil equivalent
------------------------------------------------------------
CO(2) e carbon dioxide equivalent
------------------------------------------------------------
EBITDA earnings before interest, tax depreciation and amortisation
------------------------------------------------------------
G&A general and administrative costs
------------------------------------------------------------
GHG greenhouse gas
------------------------------------------------------------
GSA gas sales agreement
------------------------------------------------------------
mmbbls million barrels
------------------------------------------------------------
mmboe million barrels of oil equivalent
------------------------------------------------------------
mmcf million cubic feet of gas
------------------------------------------------------------
mmcfd million cubic feet per day of gas
------------------------------------------------------------
PSC production sharing contract
------------------------------------------------------------
PTTEP PTT Exploration and Production Public Company Limited
------------------------------------------------------------
[1] Management estimate reviewed by ERCE
[2] Based on an effective date of 1 January 2022
[3]
https://www.bangkokpost.com/business/2351281/pttep-allocates-300m-for-ccs-facility
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END
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