Jadestone Energy plc ("Jadestone"), an independent oil and gas production company focused on the Asia-Pacific region, provides the following corporate update in advance of the Company's 2023 Annual General Meeting.
Highlights
- 2023 group production, underlying operating cost and capital expenditure guidance reaffirmed.
- The Akatara gas development project in Indonesia remains on plan, budget and schedule for first gas in H1 2024.
- The Company intends to strengthen the executive management team by creating the role of Chief Operating Officer.
- To refresh the Board of Directors (the "Board"), certain non-executive directors intend to stand down as soon as replacements have been found and following an appropriate handover period.
Operational Update
Group production has averaged c.12,300 boe/d year-to-date in 2023 and c.14,800 boe/d since 1 April 2023. Guidance for April to December 2023 is unchanged at 13,500 - 17,000 boe/d. Production during the second half of 2023 is expected to benefit from bringing the final two wells on line at the Montara field following minor gas-lift repairs, and from the East Belumut infill drilling programme on the PM323 licence offshore Malaysia.
The Akatara gas development project onshore Indonesia remains on schedule and budget for first gas in the first half of 2024, with the project work scope approximately 38% complete and 1.8 million manhours worked without a lost time incident.
Reserves-Based Loan ("RBL")
The RBL, arranged with four leading international banks, provides important liquidity during Jadestone's next growth phase, establishing an important benchmark for the quality of the Company's investments as Jadestone continues to grow and diversify its production base. Once onstream, the Akatara development is projected to add significantly to Jadestone's production and cash flow, supporting the forecast rapid de-leveraging of the Company's balance sheet.
As a condition of the RBL, the Company is required to hedge 50%, or c.5.5 mmbbls, of its forecast production over the Q4 2023 to Q3 2025 period. Currently, c.4.2 mmbbls has been hedged at a weighted average Brent price of US$70.29/bbl over the 24 month period, broadly in line with the requirements of the banking model. The remaining c.1.2 mmbbls are expected to be hedged during the third quarter of 2023.
Board and Management Changes
The Board believes that certain changes are necessary to refresh Board composition and adhere to best practice by adding new experience to bolster the overall governance framework of the Company. Two of the board's longest standing directors, Iain McLaren, Non-Executive Director and Chair of the Audit Committee (who has served since 2015) and Robert Lambert, Non-Executive Director and Chair of the Health, Safety, Environment and Climate Committee (who has served since 2011), have signalled their intention to step down before the end of 2023, once replacements have been appointed. The Board appreciates the invaluable contributions from Iain and Robert over the Company's history. As previously announced, Tyrus Capital S.A.M., Jadestone's largest shareholder, has notified the Company of its intention to appoint a director to the Board.
Furthermore, the Board and management team of Jadestone has concluded that, given the significant growth and diversification of the Company's operations in recent years, it is appropriate to strengthen the senior management team and enhance internal succession planning options by creating the role of Chief Operating Officer (COO). A search for the COO will commence imminently.
The Board is also undertaking a review of the Company's remuneration practices and intends to work with its advisers and stakeholders on an appropriate incentive scheme, which better incentivises key personnel in the business and aligns with shareholder interests.
Finally, the Board is committed to ensuring that all stakeholders are kept informed of business developments through clear and timely communication.
AGM Update - Withdrawal of AGM Resolution 16
Jadestone's Board announces that it has decided to withdraw Resolution 16 from the agenda of the AGM to be held (at the time and location detailed at the beginning of this announcement).
Resolution 16 proposed that the Company be authorised generally and unconditionally to make market purchases, in line with Investment Association guidelines, of its ordinary shares.
Since the publication of the Notice of AGM on 7 June 2023, the Company has received shareholder feedback that Resolution 16 would not receive the required support. In light of this feedback, the Board has decided to withdraw Resolution 16. The Company intends to engage with its shareholders in due course on the timing and nature of any recommencement of shareholder returns.
The withdrawal of Resolution 16 does not affect the validity of the Notice of AGM, the proxy form or any proxy votes already submitted in respect of the remaining resolutions to be proposed at the AGM. The numbering of all other proposed resolutions at the AGM remains unchanged.
Arrangements for the AGM are unchanged from those previously notified.
Dennis McShane, Chair of Jadestone's Board of Directors commented:
"Jadestone's Board recognises that the last several months have been disappointing to all our stakeholders. We aim to improve our performance through an even greater focus on operational delivery, completing the Akatara project on time and continuing to diversify and grow the business while communicating clearly and regularly to all shareholders.
As part of this plan, and in recognition of the demands of the rapid growth in operating and development assets over the recent past, we will bolster the senior management team with the creation of a Group COO role. In addition, and in keeping with best practice to periodically refresh the talent on the Board, in coming months we intend to replace two independent directors. I wish to take this opportunity to thank both Bob Lambert and Iain McLaren for their many years of dedication and invaluable advice to the Company and the Chair. These director and management changes will positively benefit our governance and operating framework in the future.
Finally, I thank all of our shareholders for their constructive feedback in recent weeks, upon which the Board has reflected carefully."
