Jadestone Energy plc (“Jadestone”, or the “Company”) an independent oil and gas production company focused on the Asia-Pacific region, provides the following update on Montara operations as well as a general corporate overview ahead of its H1 2022 results, which will be released on 20 September 2022.
Montara Operations Update
Further to the announcement in June 2022 reporting a small leak of oil from a crude oil tank on the Montara Venture FPSO, followed by an interim repair and subsequent restart of production from Montara, the Company has been working to complete a permanent repair to tank 2C.
During preparations for this repair, an additional internal defect in water ballast tank 4S was detected and this will also be included in the workscope of repairs. There has also been a focus on the remaining scheduled inspection and repair activities to the FPSO crude oil tanks and production facilities which, as previously announced, have been delayed by limitations on available personnel during the COVID-19 pandemic.
Over the past several weeks, the permanent repair to tank 2C has been developed, though delayed due to weather, manpower and logistics issues, further complicated while the facility remains in production operations. This has resulted in an inability to simultaneously accommodate the increased number of inspection and repair crews alongside production operations.
As a result, the Company has taken the decision to temporarily shut-in production from Montara and reorganise offshore manpower on the FPSO enabling priority and focus on maintenance and inspection crews. This is the most practical and efficient way to complete tank repairs whilst progressing ongoing inspection and remediation to other tanks in the FPSO and to complete key remaining scheduled inspection and repair activities planned for this year.
It is currently anticipated that these inspection and repair activities will result in production being shut-in during the remainder of August and potentially through September 2022. It is currently anticipated that prioritising the activity referenced above will result in incremental costs of US$2-4 million.
Production Guidance and Share Buyback Programme
As a result of the Montara shut-in referred to above, and the performance of the wider production portfolio year-to-date, the Company now expects that 2022 production will average between 13,000 and 14,000 boe/d. This compares to the announcement on 20 June 2022, which signalled that 2022 production would likely be around 15,500 boe/d, being the lower end of the previous guidance range. The revised 2022 production guidance reflects the Company’s assumption that production from its non-operated assets offshore Peninsular Malaysia will now remain shut in for the remainder of 2022, due to ongoing delays in reinstating operations.
The Company is confident that by taking this approach at Montara, the necessary work required to deliver long-term asset integrity can be safely and efficiently completed. The impact is short-term and there is no reduction in reserves. As a result, and given its strong balance sheet, the Company intends to continue the share buy-back programme announced on 2 August 2022.
H1 2022 Trading Update
The Company provides the following operational and financial metrics ahead of its first-half 2022 results, which are scheduled for release on 20 September 2022. This information has not been audited and may be subject to further review.
• H1 2022 production of 15,008 boe/d, with a preliminary breakdown as follows
o Australia: 9,565 bbls/d
o Peninsular Malaysia: 5,443 boe/d
• Liftings: 2.0 mmbbl of oil and 0.9 bcf of gas
• Realised prices:
o Oil: US$109.52/bbl
o Gas: US$2.17/mscf
• Total H1 2022 revenues: US$225.6 million
• End H1 2022 cash balance: US$161.1 million
Paul Blakeley, President and CEO commented:
“Safety to personnel and facility integrity are key foundational principles at the heart of our operating philosophy, and after experiencing ongoing delays to the permanent repair on tank 2C, and to the wider inspection and repair programme on the Montara Venture FPSO, we believe we had to approach this work scope in a different way.
A temporary shut-in of Montara production, in order to replace production crews with maintenance and inspection teams, is the most practical solution which will allow us to apply the necessary additional manpower to accelerate key maintenance and repair activities and restore facility integrity. There can be no short cuts, and while we have made very significant progress in restoring the FPSO to the standard which we expect, the limited FPSO accommodation, as well as other factors such as COVID-19, have been impeding our progress. Our decision will reverse this trend. This represents production deferred, rather than barrels lost, and we are working hard to restore Montara production as soon as possible.”