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Jadestone Energy announces proposed financing


06 Jun 2023

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Jadestone Energy, an independent oil and gas production company focused on the Asia-Pacific region, has announced its intention to conduct a minimum US$85 million financing.

The Proposed Financing consists of a US$50 million equity fundraise, underwritten by a US$50 million equity underwrite facility, and a US$35 million standby working capital facility, each provided by the Company’s largest shareholder, Tyrus Capital S.A.M. and funds managed by it.

The Equity Fundraise will be structured as set out below:

  • a placing of new ordinary shares to existing and new institutional shareholders (including entities affiliated to certain directors);
  • a subscription of new ordinary shares by certain directors (and affiliated entities) and certain other parties; and
  • an incremental open offer of up to €8 million (c. US$8.6 million at today’s exchange rate), offering existing shareholders who have not participated in the Placing an ability to acquire shares at the Offer Price;

The Placing is being conducted through an accelerated bookbuild process which will be launched immediately following this Announcement and will be made available to eligible institutional investors on the terms and conditions of the Placing set out in Appendix 1 to this Announcement. The Bookbuild is expected to close at or around 6.00 p.m. on 6 June 2023. However, the Company and Stifel Nicolaus Europe Limited, acting as sole bookrunner to the Company in connection with the Placing, reserve the right to close the Bookbuild earlier or later, without further notice. Pricing for the Placing and Equity Fundraise will be decided by the Company and Stifel as part of the Bookbuild process. 

Tyrus, the Company’s largest shareholder with a shareholding of 26.45% as at 30 April 2023, is underwriting the proceeds of the Proposed Financing through the provision of debt facilities, as well as taking up its pro rata 26.45% interest in the Placing, equating to approx. US$13.2 million.

The Company is poised to deliver significant near-term production growth from existing assets and new developments, as well as additional M&A upside:

  • Montara: routine operations now restored following restart of the gas system in late April 2023, with current production(1) of approx. 7,000 bbls/d, supporting the April 2023 to December 2023 average guidance of c.6,000 bbls/d;
  • Akatara: development c.35% complete and on track for commissioning in H1 2024, prior to first gas. Akatara is estimated to be a 40% IRR project, a major contributor to the over 50% production growth in 2024 compared to implied 2023 mid-point guidance;
  • PenMal: infill drilling campaign during H2 2023 targeting 2 mmstb of gross incremental reserves, with pre-drill IRR estimates of c.90%;
  • Further infill drilling: further wells on Stag (2024), Malaysia (2025) and Montara (2026) in the planning phase; 
  • Development: PNLP2, an asset redevelopment opportunity in Malaysia, and the Vietnam gas development, provide further production growth potential from 2025 onwards;
  • M&A opportunities: the Company is currently in advanced negotiations on a further M&A opportunity with current attributable net production of approximately 2,400 bbls/d in its core region of focus and is seeing an uptick in opportunities coming to market.  Whilst discussions are advanced there can be no certainty that the acquisition will be entered into or, if entered into, will complete, as completion will be subject to usual third party consents and approvals. The Company does not anticipate this potential acquisition requiring further equity financing;
  • Based on current expectations, the Company aims to deliver a diversified production portfolio of over 20 kboe/d from seven assets across different geographies by mid-2024.

The Proposed Financing seeks to provide Jadestone with balance sheet resilience and financial flexibility, protecting it in a reasonable downside scenario as it progresses a number of catalysts to deliver significant near-term production growth from existing assets and new developments, as well as additional M&A upside.

Paul Blakeley, President and CEO commented:

'With Montara back to routine operations, development at Akatara progressing to plan, three accretive acquisitions completed, and a new RBL facility backed by four international banks, we have reached an inflection point for the business. However, given the anticipated evolution of the RBL borrowing base prior to first gas at Akatara, and the necessity of providing all stakeholders with confidence that we are funded for the next phase of growth, we believe it is prudent to secure additional financial protection, resulting in the proposed transaction announced today. Following the eight-month shut-in at Montara which eroded our balance sheet, this financing is expected to underpin our future liquidity needs and provide additional flexibility to the business.

'I understand that the need for additional funding at this point in time will come as a surprise to many of our shareholders, however it was a decision not taken lightly. We understand how frustrating this must be and we are committed to improving Jadestone’s governance and communications in the future.

'I am particularly grateful to Tyrus for its key role in the proposed financing, and to all our shareholders who have committed to participate in the equity placing. It is now time to look forward with renewed confidence to the growth and diversification of our production base to over 20 kboe/d in 2024, in turn delivering significant cash flow growth and restoring balance sheet strength.  In parallel, we continue to pursue a number of acquisition opportunities, particularly focused on those which fit well within the RBL structure, and we remain encouraged by the active M&A market in the region.'

Click here for full announcement

Source: Jadestone Energy





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