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Jadestone announces 2023 half-year results


19 Sep 2023

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Jadestone Energy has reported its unaudited condensed consolidated interim financial statements as at and for the six-month period ended 30 June 2023.

 Key updates: 

  • Akatara development project on track to be 65% complete by end-September and remains on budget and schedule for first gas in H1 2024.
  • The first well in the four well East Belumut infill drilling programme offshore Malaysia has been drilled successfully and was brought onstream at 2,800 bbls/d gross, significantly ahead of expectations. The second well in the programme is now underway.
  • Montara production has averaged 6,250 bbls/d since early September, benefitting from the return to service of the second production separator and additional wells on the Montara field.
  • 2023 production guidance from April to December narrowed to 13,500 – 15,000 boe/d from (13,500 – 17,000 boe/d) reflecting year-to-date production trends and the recent one month shut in at Montara.
  • 2023 underlying operating costs guidance expected to come in at lower end of US$180.0 – 210.0 million range, reflecting year-to-date trends and close monitoring of activity levels.
  • 2023 capital expenditure guidance is narrowed to US$110.0 – 125.0 million, (from US$110.0 – 140.0 million), primarily reflecting the Akatara development project and East Belumut drilling being on budget.
  • US$59.9 million loss after tax for the first half of 2023, consistent with earlier disclosures and reflective of Montara being shut in to late-March 2023 and the subsequent impact on first half liftings.
  • Net cash of US$7.8 million at 30 June 2023 reflects c.US$118.8 million of consolidated Group cash balances and US$111.0 million of debt drawn at 30 June 2023 under the Group’s reserves-based lending (“RBL”) facility.

 Paul Blakeley, President and CEO commented:

 'The first half of 2023 was impacted by the ongoing shut-in of Montara until late March, with few liftings and softer Brent pricing, coincident with a period of heavy investment at Akatara and elsewhere.  We therefore acted decisively to maintain a robust balance sheet by finalising the RBL in May and by raising an additional gross $53 million of new equity in June.  As a result of these actions, we ended the first half in a strong liquidity position which will support the business through Akatara first gas, followed by a rapid return to net cash, likely within the following 12 months period.  Notwithstanding the more recent shut in at Montara, we expect a significantly better financial performance in the second half of 2023, based on our planned lifting schedule, the benefit of recent acquisitions and improved prevailing oil prices.          

It was disappointing to see Montara shut in again in July, although we quickly identified the source of the defect in one of the FPSO’s tanks and restarted production, having implemented a key change to our inspection processes.  This was an important step forward, correcting a small gap in our procedures and giving far greater confidence in the work we are doing to restore the FPSO’s condition, resulting in higher uptime reliability at Montara.  It is also important that we take no short cuts, thereby ensuring that safety and structural risks and any potential for a hydrocarbon leak to sea are absolutely minimised.  The provision of a small storage tanker in the near-term enables us to safely continue steady production operations during a period of limited tank capacity on the Montara FPSO, thereby sustaining current production from Montara at around 6,250 bbls/d. 

I am very proud of the way in which the teams offshore and onshore have worked so tirelessly to restore the condition of the Montara Venture.  We have chosen to adopt inspection levels and processes that are far above industry standards and we will never take short cuts on maintaining asset integrity.      

The Akatara project has maintained progress to plan, with an acceleration in recent months as most civil works are now completed, storage tanks are well advanced and many of the long-lead items now arriving at site.  We are on track to be 65% complete by the end of September, for commissioning activities to begin in the first quarter next year, and first gas to be delivered in first half of 2024, as promised. 

The East Belumut infill drilling campaign commenced in August with pre-drill expectations that the four wells combined will deliver 2 – 2,500 bbls/d of gross production and an IRR of c.90%.  The results of the first well have significantly exceeded our expectations, coming on stream in recent days at c.2,800 bbls/day of dry oil.  We do expect water cut to develop soon and for rates to stabilise nearer 1,000 bbls/d of oil, but the early results are very encouraging. 

While it has been a difficult few months, we are working hard to restore confidence in our operating model at Montara as well as deliver the growth projects in our portfolio for 2024 and beyond.  The addition of new assets such as CWLH and Sinphuhorm, and new production at Akatara, will increasingly insulate us from one-off events at Montara, but I do believe we have significantly advanced the case for greater reliability across the whole portfolio into the future.  We continue to assess further acquisition opportunities that are consistent with our ambition of delivering growth, ensuring we live within our means of cash flow and debt, and believe we are at a turning point to restore reliability, growth and a strong balance sheet.'

Click here for full announcement

Source: Jadestone Energy





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