TIDMJSE
RNS Number : 7037T
Jadestone Energy Inc.
18 November 2019
Jadestone Energy Inc.
Jadestone Energy Inc. to Acquire an Operated 69% Interest in
the
Maari Project, Offshore New Zealand
November 18, 2019-Singapore: Jadestone Energy Inc. (AIM:JSE,
TSXV:JSE) ("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 ("SPA") with OMV New Zealand Limited ("OMV New Zealand"),
a subsidiary of OMV, to acquire an operated 69% interest in the
Maari Project, shallow water offshore New Zealand (the
"Acquisition"), for a total headline cash consideration of US$50
million (subject to customary closing adjustments), to be funded
from the Company's cash resources.
Overview of the Maari Project
The Maari Project is a mid-life producing asset located in
permit PMP 38160, in the offshore Taranaki basin, in 100 metres
water depth, approximately 80 kilometres southwest of New Zealand's
North Island. The project includes the Maari and Manaia oil fields,
produced via a self-elevated jack-up wellhead platform, an FPSO,
owned by the joint venture partners (being Horizon Oil Limited
(26%) and Cue Taranaki Pty Ltd (5%)) and the associated
decommissioning liability with respect to all facilities, which is
shared by the partners in accordance with their respective working
interests.
The fields hold 2P reserves of 13.9 mm bbls of oil1, and current
production is approximately 4,000 - 4,500 bbls/d, both on a net 69%
basis.
The project has been producing since 2009, achieving peak
production of 16,400 bbls/d in 2010. With original oil in place of
close to 300 mm bbls in the producing reservoirs and cumulative
production of 38.3 mm bbls, the fields have achieved only a modest
recovery factor of 13% to date.
The fields, based on their current 2P reserves, are scheduled to
produce until 2031, however the Jadestone management team believe
there is substantial potential for reserves upside not yet captured
in the 2P reserves.
Overview of the Acquisition
The Acquisition has a total headline cash consideration of US$50
million based on an economic effective date of January 1, 2019, and
is structured as a purchase of an interest in the assets.
Upon completion, the purchase price will be adjusted to reflect
after tax free cashflow from the economic effective date, and other
customary adjustments. The Maari Project generated after tax free
cashflow for the calendar year to December 31, 2018 of US$40.1
million (on a net 69% basis)(2) .
Additional contingent consideration of US$2.6 million is payable
in the event that Dated Brent averages above US$75/bbl in 2020, and
a further US$1.3 million if Dated Brent averages above US$75/bbl in
2021.
The Company believes this transaction represents exceptional
value to Jadestone shareholders. Highlights of the transaction
include:
-- An increase in the Company's net production by approximately
30%, and 2P reserves by 33%;
-- 1.2x the Maari Project's 2018 after tax free cashflow2, 0.8x
the Maari Project's 2018 EBITDAX(2) ;
-- $3.61/bbl of 2P reserves1;
-- 0.28x of 2P NAV(1,4) and 0.66x of 1P NAV(1,4) ;
-- Unlevered IRR of approximately 100%, based on the base case
2P profile, and approximately an adjusted unlevered IRR close to
50% when burdened upfront with all future estimated 2P asset
decommissioning costs(3) ;
-- Expected payback in less than 12 months from anticipated transaction closing;
-- 20% accretion on an NAV/share basis(4) ; and
-- Immediately accretive on an operating cashflow per share and
free cashflow per share basis(2) .
The purchase consideration will be funded from available cash
when accounting for existing cash on hand, ongoing cashflow
generation from the Company's producing assets and the expected
cash flows from the Maari Project between the effective date and
completion. The rest of Jadestone's portfolio remains self-funding,
including the Nam Du/U Minh gas development due for sanctioning
shortly, and for which a portion of the capital expenditure is
expected to be funded from a planned enlargement of the Company's
reserve based loan facility. The acquisition further enhances the
Company's ability to meet the funding requirements associated with
its stated dividend policy, including the maiden dividend in
2020.
Completion of the Acquisition will occur upon satisfaction of
conditions, including acceptance of Jadestone as operator by the
Maari joint venture partners, New Zealand Government approvals
relating to title transfer and change of operatorship and other
customary conditions on or before November 15, 2020. The Company
anticipates completing the transaction in H2 2020, and until then
OMV New Zealand will continue as operator of the assets.
New Zealand
New Zealand is highly regarded as a dynamic business landscape
and offers the best fiscal regime in the Asia Pacific region for
upstream oil and gas activity, comprising a relatively
uncomplicated system of royalties and taxes. The New Zealand
Government's support for the development of existing resources,
coupled with a constructive regulatory environment, makes it an
excellent fit for Jadestone.
The Company intends to establish New Zealand as an extension to
its Australia core area. As another maturing hydrocarbon basin in
the region, additional opportunities are likely to become available
which fit the Company's strategy to acquire and reinvest into
mid-life producing assets. Through a mix of capturing synergies
with its existing business, optimising reserves recovery, and
additional inorganic growth, the Company is targeting building a
portfolio of assets with an ultimate production base of 15 to 20
mboe/d in New Zealand.
Paul Blakeley, President and CEO commented:
"I'm delighted to establish a new operating presence in New
Zealand and to begin building relationships with local regulators,
communities, staff and other stakeholders. Adding the Maari Project
to our growing portfolio of high-value assets in the Asia Pacific
region demonstrates our ability to bolt on new assets and provides
more than a decade of additional free cashflow, even in the 2P
reserves only scenario, as supported by our external reserves
audit. The Maari project adds both significant additional
opportunity as well as diversity to our operations. New Zealand is
a natural strategic fit for Jadestone, where we see many shared
values with regards to sustainable energy investment, through
maximising recovery of existing resources and world-class
expectations for health, safety and environmental stewardship.
"We are excited by the opportunity to deploy our expertise to
managing this mid-life producing asset, particularly as we see
significant reserves upside. The Maari Project has achieved very
modest recovery factors to date, relative to the substantial
estimated original oil in place, making this an ideal platform to
showcase our differentiated technical capabilities. With ongoing
reinvestment into the fields, we foresee many opportunities to add
value without relying on further exploration or appraisal success.
At the same time, our focus is on extending the life of existing
infrastructure that may otherwise not realise its full potential,
thereby continuing to generate income, growth, and ongoing
employment for local communities and the New Zealand economy.
"The Acquisition is immediately accretive to shareholder value
and will be funded entirely with cash on hand. I look forward to
establishing an office in New Plymouth, and to further engaging
with regulators and local communities as we build our Jadestone
team and establish operating credentials in New Zealand."
Conference Call
The management team will host an investor and analyst conference
call at 08:30 (UK), 16:30 (Singapore), and 21:30 (New Zealand)
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://event.on24.com/wcc/r/2139173/52503F7A3893F3380DCB156847F0F0CD
Event conference title: Jadestone Energy Inc. - Management
Briefing
Start time: 08:30 (UK), 16:30 (Singapore), 21:30 (New Zealand)
Date: November 18, 2019
Conference ID: 24489651
Country Dial-In Numbers
Australia 1800076068
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Canada (Toronto) 416 764 8609
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Canada (Toll free) 888 390 0605
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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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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 0605
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Area access numbers are subject to carrier capacity and call
volumes.
1 Based on a reserves audit prepared for the Company by ERCE, an
independent qualified reserves auditor, with an effective date of
December 31, 2018 and incorporating ERCE's current oil price
assumption deck (2019 real Brent crude oil prices of US$61/bbl,
US$64/bbl, US$66/bbl, and US$67/bbl for 2019, 2020, 2021, and 2022
and beyond, respectively), and prepared in compliance with the COGE
Handbook.
2 EBITDAX, after tax operating cashflow, and after tax equity
free cashflow are non-GAAP financial measures which do not have a
standardised meaning prescribed by IFRS. These non-GAAP financial
measures are included because management uses this information to
analyse financial performance, efficiency and liquidity and it may
be useful to investors on the same basis. With the exception of
EBITDAX, there are no comparable measures to these non-GAAP
measures in accordance with IFRS. EBITDAX is a non-GAAP measure
which should not be considered an alternative to, or more
meaningful than, "net earnings (loss)" as determined in accordance
with IFRS, as an indicator of financial performance. EBITDAX equals
net earnings (loss) plus financial expenses (income), provisions
for (recovery of) income taxes, and depletion, depreciation and
amortisation and exploration expense. After tax operating and after
tax equity free cashflows are after crown royalties and corporate
taxes, and in the case of after tax free cashflow after capex. Both
measures exclude estimated depletion, depreciation and amortisation
and exploration expense. Because these non-GAAP financial measures
do not have a standardised meaning prescribed by IFRS, they are
unlikely to be comparable to similar measures presented by other
companies and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
IFRS.
3 IRRs are calculated based on ERCE 2P case including ERCE's
current oil price assumption deck and estimated future
decommissioning costs. The adjusted unlevered IRR incorporates
estimated future decommissioning costs discounted back to January
1, 2019 at a risk-free rate of return of 2.5% and included as a
cash outflow on day one, along with the purchase consideration.
4 NAV for Montara, Stag, and Maari are after tax NPV10 values as
per reserves and resources reports from ERCE, as of December 31,
2018; NAV for Nam Du/U Minh is based on management's estimated
production profiles for the fields based on ongoing negotiation
with Petrovietnam, and sum to 171.3 bcf gas and 1.6 mm bbls
condensate being the unrisked 2C resources as per ERCE. This
profile together with management estimates for Capex and Opex were
used to calculate the NPV10 value for this development; NAV
accretion includes the Nam Du/U Minh Vietnam gas development.
Excluding Nam Du/U Minh, the per share NAV accretion increases to
33%; Per share metrics are based on fully diluted shares
outstanding of 464.0 mm.
- Ends -
Enquiries
Jadestone Energy Inc. +65 6324 0359 (Singapore)
Paul Blakeley, President and CEO +1 403 975 6752 (Canada)
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
Nicholas Rhodes
Ashton Clanfield
BMO Capital Markets Limited (Joint Broker) +44 (0) 20 7236 1010 (UK)
Thomas Rider
Jeremy Low
Thomas Hughes
Camarco (Public Relations Advisor) + 44 (0) 203 757 4980 (UK)
Billy Clegg jadestone@camarco.co.uk
James Crothers
About Jadestone Energy Inc.
Jadestone Energy Inc. 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, Vietnam and the Philippines.
The Company has a 100% operated working interest in the Stag
oilfield and the Montara project, both offshore Australia. Both the
Stag and Montara assets include oil producing fields, with further
development and exploration potential. The Company has a 100%
operated working interest in two gas development blocks in
Southwest Vietnam and is partnered with Total in the Philippines
where it holds a 25% working interest in the SC56 exploration
block.
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 throughout the Asia-
Pacific region.
Jadestone Energy Inc. is currently listed on the TSXV and AIM.
The Company is headquartered in Singapore. For further information
on Jadestone please visit www.jadestone-energy.com.
Cautionary statements
Certain statements in this press release are forward-looking
statements and information (collectively "forward-looking
statements"), within the meaning of the applicable Canadian
securities legislation, as well as other applicable international
securities laws. The forward-looking statements contained in this
press release are forward-looking and not historical facts.
Some of the forward-looking statements may be identified by
statements that express, or involve discussions as to expectations,
beliefs, plans, objectives, assumptions or future events or
performance (often, but not always, through the use of phrases such
as "will likely result", "are expected to", "will continue", "is
anticipated", "is targeting", "estimated", "intend", "plan",
"guidance", "objective", "projection", "aim", "goals", "target",
"schedules", and "outlook"). In particular, forward-looking
statements in this press release include, but are not limited to
statements regarding reserves volumes, production forecasts, the
financial benefits of the Acquisition, satisfaction of conditions
under the SPA, timing of completion of the Acquisition, the
Company's operations within New Zealand, further acquisitions
within New Zealand and the payment and timing of the Company's
maiden dividend.
Because actual results or outcomes could differ materially from
those expressed in any forward-looking statements, investors should
not place undue reliance on any such forward-looking statements. By
their nature, forward-looking statements involve numerous
assumptions, inherent risks and uncertainties, both general and
specific, which contribute to the possibility that the predicted
outcomes will not occur. Some of these risks, uncertainties and
other factors are similar to those faced by other oil and gas
companies and some are unique to Jadestone. The forward-looking
information contained in this news release speaks only as of the
date hereof. 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 March 2007 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 Inc., a Subsurface Manager
with a Masters degree in Petroleum Engineering who is a member of
the Society of Petroleum Engineers and who has been involved in the
energy industry for more than 18 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, and is
disclosed in accordance with the Company's obligations under
Article 17 of those Regulations.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Glossary
2P reserves the sum of proved and probable reserves, denotes the
best estimate scenario of reserves
bbls barrels of oil
bbls/d barrels of oil per day
bcf billion cubic feet
EBITDAX earnings before interest, tax, depreciation, amortisation and exploration expenses
FPSO floating production, storage and offloading vessel
mm bbls millions of barrels of oil
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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