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    REG - Jadestone Energy PLC - Acquisition of CWLH field interest

    Picture of Jadestone Energy logoJadestone EnergyAnnouncement
    14/11/2023 07:15
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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  (#_ftn1) 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  (#_ftn2) 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  (#_ftn3) )) 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  (#_ftn4)

·    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

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