TIDMJSE
RNS Number : 2000X
Jadestone Energy Inc.
30 April 2021
Jadestone Energy
Acquisition of SapuraOMV's Peninsular Malaysia Assets
30 April 2021-Singapore: Jadestone Energy plc (AIM:JSE) (the
"Company" or "Jadestone" or including subsidiaries, the "Group"),
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 SapuraOMV Upstream
Sdn. Bhd. ("SapuraOMV", or the "Seller"), to acquire SapuraOMV's
interest in Peninsular Malaysia (the "Assets"), for a total initial
headline cash consideration of US$9 million, to be funded from the
Company's cash resources, and certain subsequent contingent
payments (the "Acquisition").
Highlights
-- Establishes a new operating presence for Jadestone in Malaysia;
-- Adds immediate cash flow from around 6,000 barrels oil
equivalent per day of low operating cost production, on a net
working interest basis, of which over 90% is oil;
-- Increases the Company's 2P reserves by 34%, adding 12.5
million barrels oil equivalent of net working interest 2P reserves,
based on the Company's best estimate 2P reserves production
profile;
-- Provides upside potential through reservoir optimisation
opportunities, additional infill wells and cost efficiencies, and
is thus an excellent fit with Jadestone's capabilities and field
operating philosophy;
-- Supports Jadestone's sustainability principles by creating
extended employment for local nationals and providing
locally-sourced energy without expanding the infrastructure
footprint; and
-- As per the Production Sharing Contracts (the "PSCs"), the
Company is to undertake the abandonment of facilities and wells at
the end of the contract period or production, whichever is earlier.
The abandonment of facilities is funded through a cess fund
arrangement, accumulated during the production phase, while the
abandonment of the wells will be cost recovered via petroleum
operations.
Overview of the Assets
The Company will acquire interests in four licences, two of
which will be operated by the Company. These include a 70% operated
interest in the PM329 PSC, containing the East Piatu field, and a
60% operated interest in the PM323 PSC, which contains the East
Belumut, West Belumut and Chermingat fields. Jadestone estimates
accessing 12.5 million barrels oil equivalent of net working
interest 2P reserves based on the Company's best estimate 2P
reserves profile, which includes further development activities.
All fields are in production, and have been developed by way of
fixed wellhead and central processing platforms, which deliver oil
to the onshore Terengganu Crude Oil Terminal ("TCOT"). Adding the
Assets to Jadestone's portfolio is expected to be accretive to
Group average cash costs, based on Jadestone's estimate of the
Assets' current costs.
In addition, the Assets include a 50% non-operated working
interest in the PM318 and AAKBNLP PSCs, which are operated by
PETRONAS Carigali Sdn. Bhd. ("PETRONAS Carigali").
Upside Potential
Jadestone envisages scope to add incremental value in the near
term through both reservoir optimisation and production enhancement
activities across both operated licences. Gas re-injection is
expected to be a key part of reservoir optimisation, while
production enhancement will initially be focused on restoring idle
wells to production.
There is also significant potential for further incremental
development activities on the assets. The focus will initially be
on infill drilling in the East Belumut field, where Jadestone sees
the potential for several infill campaigns over the next few years.
East Belumut has a medium heavy oil, which is similar to the Stag
field, and as we have experienced, the main driver to increase
recovery factors is through tightening of the well pattern. There
are also some targeted opportunities in East Piatu and West
Belumut, which will be evaluated in parallel with the East Belumut
potential.
In all instances, Jadestone will assess such investment
opportunities based on rigorous economic and technical evaluation,
and within the context of all other investment opportunities in its
portfolio.
Jadestone is also pleased to have an opportunity to develop a
working partnership with PETRONAS Carigali in respect of the
non-operated assets, PM318 and the AAKBNLP PSCs, and to support the
operator's ongoing pursuit of value through the blocks' various
producing fields. Jadestone recognises PETRONAS Carigali's recent
success on production enhancement and is looking forward to
continuing this effort, as well as evaluating the options for
increasing recovery factors in these reservoirs.
Paul Blakeley, President and CEO commented:
"I am delighted to add these Peninsular Malaysia assets to the
Jadestone portfolio. We have always viewed Malaysia as a highly
prospective jurisdiction for upstream investment, and have been
looking for the right entry opportunity. We see this Acquisition as
a high margin tuck-in, which meets our investment criteria, and
sets the stage for us to establish operating credentials in-country
while we continue pursuing more materiality and growth through our
acquisition and development led strategy.
"We are very pleased to work with SapuraOMV on this transaction.
Both companies are focusing their portfolios on core strengths -
SapuraOMV on discovered gas resources, and Jadestone on near-term
cash generating producing assets, such as the East Piatu, West
Belumut and East Belumut fields. They are a perfect fit with our
strategy, and further bolster our ability to generate quick cycle
returns for shareholders.
"By our estimate, the Acquisition will add 12.5 million barrels
oil equivalent of 2P reserves, increasing total Group reserves by
over 30%. Production will increase by 50% over the mid point of our
2021 guidance, and with the immediate add of cashflow from a
high-value stream of 6,000 barrels oil equivalent per day, we are
forecasting rapid payback, and therefore believe the Acquisition
will be value accretive to the business within the year.
"We are excited by the potential for follow-on investment as
well, and see significant running room, particularly in the East
Belumut field, and will explore the option to conduct further
infill drilling in the near term. As always, the potential to add
value through follow-on investment is a key part of our acquisition
criteria, and features alongside our usual priorities to drive cost
efficiency wherever possible, and strive for continuous improvement
in how we operate."
Overview of the Acquisition
The transaction is structured as a purchase of all share capital
in the Seller's indirect subsidiary company, SapuraOMV Upstream
(PM) Inc. For the year ended 31 December 2020, SapuraOMV Upstream
(PM) Inc reported profits before taxation of $12.0 million. The
Acquisition has a total initial headline cash consideration of US$9
million, based on an economic effective date of 1 January 2021,
meaning the Company will ultimately receive all economic benefits
from the Assets accruing from that date. Further consideration of
up to US$6 million is payable to the Seller upon certain upside
scenarios, which are tied to potential full year oil price outcomes
in 2021 and 2022.
The Acquisition will be funded from the Company's on-hand cash
resources, and is not expected to compromise the Company's ability
to fund the remainder of its planned capital spending in 2021,
dividends, or closing of other acquisitions, namely the New Zealand
Maari acquisition.
All offshore and supply base personnel engaged on the Assets are
expected to continue in those positions as employees of Jadestone
and the Company intends to expand its onshore team in Malaysia, in
support of the Assets, with a primary focus on building a workforce
of local Malaysian nationals.
Completion of the Acquisition is subject to customary closing
conditions, including waiver of PETRONAS Carigali's pre-emption
rights and PETRONAS approval. The Company anticipates closing the
transaction in 2021.
Malaysia
Malaysia is a prolific hydrocarbon jurisdiction in the Asia
Pacific region, and the Malay Basin is a familiar province for much
of the Jadestone team through both its ongoing development planning
for the Nam Du and U Minh gas fields in the Malay/Tho Chu basin of
Vietnam, and through past involvement in legacy assets in this
area. Jadestone already has a significant presence in Malaysia,
being home to the Company's centre of technical excellence since
inception, and home to key corporate functions supporting the
business.
Malaysia offers stable fiscal terms as part of its production
sharing contract fiscal regime, and through its upstream regulator,
PETRONAS, provides clear guidance and direction regarding upstream
activities.
Conference call
The management team will host an investor and analyst conference
call at 09:00 (UK) / 16:00 (Singapore) today, including a question
and answer session.
Dial-in details are provided below, in addition to a link to a
live webcast of the call. The Company has posted a new presentation
to its website, at
www.jadestone-energy.com/investor-relations/presentations-communication/
.
Webcast link:
https://produceredition.webcasts.com/starthere.jsp?ei=1458362&tp_key=399ef78441
Event title: Jadestone Energy Management Briefing
Start time: 09:00 (UK) / 16:00 (Singapore)
Date: 30 April 2021
Conference ID: 54669065
Dial-in number details:
Country Dial-In Numbers
Australia 1800076068
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Canada (Toronto) 416-764-8688
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Canada (Toll free) 888-390-0546
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France 0800916834
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Germany 08007240293
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Germany (Mobile) 08007240293
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Hong Kong 800962712
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Indonesia 0078030208221
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Ireland 1800939111
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Ireland (Mobile) 1800939111
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Japan 006633812569
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Malaysia 1800817426
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New Zealand 0800453421
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Singapore 8001013217
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Switzerland 0800312635
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Switzerland (Mobile) 0800312635
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United Kingdom 08006522435
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United States (Toll free) 888-390-0546
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____________________________
For further information, please contact:
Jadestone Energy plc +65 6324 0359 (Singapore)
Paul Blakeley, President and CEO +44 7392 940 495 (UK)
Dan Young, CFO ir@jadestone-energy.com
Robin Martin, Investor Relations Manager
Stifel Nicolaus Europe Limited (Nomad, +44 (0) 20 7710 7600 (UK)
Joint Broker)
Callum Stewart
Simon Mensley
Ashton Clanfield
Jefferies International Limited (Joint +44 (0) 20 7029 8000 (UK)
Broker)
Tony White
Will Soutar
Camarco (Public Relations Adviser) +44 (0) 203 757 4980 (UK)
Billy Clegg jse@camarco.co.uk
James Crothers
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, Indonesia, Vietnam and the Philippines.
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 100% operated working interest in two gas development blocks in
Southwest Vietnam, and an operated 90% interest in the Lemang PSC,
onshore Sumatra, Indonesia, which includes the Akatara gas
field.
In addition, the Company has executed a sale and purchase
agreement to acquire an operated 69% interest in the Maari Project,
shallow water offshore New Zealand, and anticipates completing the
transaction in H1 2021, upon receipt of customary approvals.
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 is listed on the AIM market of the London
Stock Exchange. The Company is headquartered in Singapore. For
further information on Jadestone 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 oil, natural gas and natural gas liquids information in this
announcement has been prepared in accordance with National
Instrument 51-101 - Standards of Disclosure for Oil and Gas
Activities and the Canadian Oil and Gas Evaluation Handbook (the
"COGE Handbook").
A barrel of oil equivalent ("boe") is determined by converting a
volume of natural gas to barrels using the ratio of six thousand
cubic feet ("mcf") to one barrel. Boes may be misleading,
particularly if used in isolation. A boe conversion ratio of 6
mcf:1 boe is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a
value equivalency at the wellhead. Given that the value ratio based
on the current price of oil as compared to natural gas is
significantly different from the energy equivalency of 6:1,
utilising a conversion on a 6:1 basis may be misleading as an
indication of value.
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.
Henning Hoeyland 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 been
involved in the energy industry for more than 19 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
2P reserves The sum of proved and probable reserves. Denotes
the best estimate scenario of reserves
bbls Barrels of oil
=================================================
boe Barrels of oil equivalent
=================================================
mm bbls Million barrels of oil
=================================================
mm boe Million barrels of oil equivalent
=================================================
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