FPSO Montara Venture working at Montara field; Source: Jadestone Energy

Boost in borrowing capacity, enables ‘significant’ liquidity for Jadestone ahead of gas project start-up

AIM-listed and Singapore-headquartered oil and gas player Jadestone Energy has confirmed the end of a bi-annual redetermination process for its $200 million reserve-based lending (RBL) facility, leading to increases in borrowing capacity over the next 12 months.

FPSO Montara Venture working at Montara field; Source: Jadestone Energy

According to Jadestone Energy, the borrowing capacity exceeds the maximum facility amount effective from October 1, 2023, to the next redetermination date on March 31, 2024. Therefore, the borrowing capacity for the upcoming six-month period will be $200 million while it was previously forecasted at around $190 million.

For the subsequent six-month period covering 2Q – 3Q 2024, the borrowing capacity will be the lower of the approved banking model as of March 31, 2024, or $150 million. This was previously forecasted at $99 million. The current model projects a borrowing capacity for this period of about $150 million, excluding capex add-back, and is subject to changes in model assumptions.

The company explains that the increases in borrowing capacity result from the approval of the firm’s waiver request to raise the Akatara development cap from 40% to 60%, effective from October 1, 2023, to the September 2024 redetermination date. The development cap represents Akatara’s maximum percentage contribution to the total borrowing base before the asset’s completion test, after which Jadestone’s borrowing base is expected to return to $200 million.

Furthermore, the increase in borrowing capacity over the 2Q – 3Q 2024 period means that the firm’s liquidity position during the period is currently projected to be more than approximately $100 million, which includes the company’s undrawn $31.9 million working capital facility.

Paul Blakeley, Jadestone’s President and CEO, commented: “We always believed that, with time, we could resolve the temporary dip in the RBL borrowing base availability in mid-2024. The waiver approval shows the constructive working relationship we have with our RBL banks and demonstrates the banks’ confidence in Jadestone’s ability to deliver.

“I would like to thank the RBL banks and the wider Jadestone team for working together to deliver this successful outcome. As a result, Jadestone is projected to have significant liquidity prior to the Akatara field commencing production, after which our borrowing base availability is expected to increase further, as we move into a period of high cash generation, in turn supporting our growth ambitions.

What’s happening with Jadestone’s oil & gas projects?

Since resuming production on September 2, 2023, Jadestone’s Montara project has averaged around 7,000 bbls/d, benefitting from some ongoing flush production and active management of the Montara H2, H3, and H4 wells to optimize the oil-to-gas ratio. The company expects average oil production rates to normalize back towards previous guidance in the 6,000 – 6,500 bbls/d range over time. On the other hand, the first well in the East Belumut infill campaign is maintaining higher-than-expected production levels as the drilling campaign continues.

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Moreover, the Singapore player highlights that the Akatara development project is now about 70% complete, delivering on the end-September 2023 progress target of 65%. Long-lead time items continue to arrive at the site on schedule and the project remains on track for commissioning in the first quarter of 2024 and the first gas before mid-2024.

“Recent operational performance across the business has been encouraging, with total production averaging c.17,000 boe/d during the month of September, and also continued progress at Akatara, where we remain on budget and schedule while meeting all key milestones. We are focused on sustaining this momentum over the remainder of 2023 and into 2024, underpinning our aim of significant production and cash flow growth in the near term,” added Blakeley.

Jadestone has an operated 90% interest in the Lemang PSC onshore Sumatra, which includes the undeveloped but fully appraised, Akatara gas field. The main gas-bearing reservoirs in the field are the UTAF-B formations, which were deposited in shoreface to foreshore marine environments and are expected to be laterally continuous across the field. The range of porosity and permeability in the UTAF reservoirs is 17-28% and about 120-9,610 mD respectively.

The company anticipates that the Akatara gas field will deliver a gross plateau production of approximately 6.1 kboe/d, based on an estimated gas production rate of 18.8 mmscf/d gas (gross), plus associated condensate and LPG, for seven years.

Jadestone intends to pursue a low-cost development of the field, including efficient reuse of existing wells and infrastructure, thereby minimizing the incremental impact on the local environment. Several further initiatives to reduce GHG emissions and enhance the environmental performance of the Akatara development were also considered as part of the detailed engineering and development optimization studies.