Jadestone completes Montara acquisition
Independent oil and gas production company Jadestone Energy has completed its acquisition of the Montara oil project offshore Australia from Thailand’s PTTEP.
Jadestone entered into a deal to take over a 100% stake in the Montara field from PTTEP back in July and satisfied all conditions precedent to the proposed acquisition of the Montara oil project earlier in September.
Jadestone informed on Friday that the two companies completed the transaction, including payment of the purchase price. With completion, PTTEP has transferred a 100% legal and beneficial interest in the Montara assets and a 99% legal and 100% beneficial right, title, and interest in the associated production licenses AC/L7 and AC/L8.
The remaining 1% legal interest in the Montara Titles will be held on trust by PTTEP, in favor of the company, until Australian regulatory approvals relating to the transfer of operatorship of the Montara assets from PTTEP to the company, are obtained from The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA).
Jadestone has entered into an operator and transitional services agreement with PTTEP which will govern the operation and management of the Montara assets and the provision of transitional services in the period from completion until the transfer of operatorship.
Paul Blakeley, President and CEO commented: “I’m delighted to have completed the Montara acquisition in just two-and-a-half months after announcing the deal. This reflects our deep in-region commercial expertise, nimble approach to decision-making and close working relationship with PTTEP.”
He added: “I’m also pleased with the purchase price we have paid for Montara, which allows us the opportunity to add significant value by reducing costs and adding reserves through further activity. The acquisition is highly accretive from day one, with metrics further enhanced by the cash coming with the asset as a result of the effective date of the transaction being January 1, 2018.”
$195M price tag
Upon completion, Jadestone paid to PTTEP the purchase price of $195 million and certain customary closing adjustments.
In addition to acquiring the Montara assets, upon completion, cash and inventory totaling $92 million was transferred to Jadestone as a result of the accumulated economic benefits of the Montara assets for the period from the effective date of January 1, 2018 to completion.
In connection with the acquisition, Jadestone has now fully drawn its $120 million senior secured RBL debt facility provided by Commonwealth Bank of Australia and Société Générale. Funds from the debt facility part-funded the acquisition, in addition to fulfilling requirements for a debt service reserve account and providing for working capital requirements as well as certain fees and expenses.
Additionally, Jadestone has initiated a capped swap oil hedging program designed to mitigate the potential impact of lower oil prices on its ability to service debt and ensure liquidity. The company retains the ability to fully participate in price upside beyond $80/bbl for the great majority of its hedged barrels.
The Montara field is located in the Timor Sea off Australia approximately 690 kilometers west of Darwin. It comprises three separate fields which are Montara, Skua and Swift/Swallow, produced through a centralized FPSO, the Montara Venture, which will be transferred to Jadestone on completion of the acquisition.
The average production volume from the field in the first half of this year was about 7,694 barrels per day.