Jadestone Energy Inc. has executed a definitive Sale and Purchase Agreement (“SPA”) with certain subsidiaries of PTT Exploration and Production Public Company Limited (“PTTEP”), to acquire a 100% interest in the Montara oil project offshore Australia via an asset acquisition for a total cash consideration of US$195 million, to be adjusted for working capital, with additional contingent consideration amounts payable dependent on certain production, oil price and future development milestones being achieved.

Paul Blakeley, President and Chief Executive of Jadestone, commented:
“Today’s announced acquisition further strengthens our position in the Asia Pacific region and complements our existing balanced, low-risk portfolio of cash generative operated production and value-accretive development assets in the region. 

“Asia Pacific is a highly-attractive, opportunity-rich region and, in line with our strict screening criteria, we believe the Montara Assets represents the ideal opportunity to deploy Jadestone’s end-to-end technical and commercial capabilities to maximise value and returns for shareholders, as we’ve demonstrated to date with our existing, wholly owned and operated producing Stag field, offshore Australia.

“We have identified a number of material near-term opportunities to add significant value to the asset, including improved production uptime, operating cost reductions, and infill drilling, and longer-term more value creation options through future exploration, a potential gas cap blowdown and a regional hub development strategy. We expect field life to be extended by many years. 

“While our attention now turns to executing our planned work programme for the Montara Assets, our immediate priority is to deliver, in joint cooperation with the current operator, a robust plan to ensure a smooth transfer, and continued safe operation of the fields.

“This is a really exciting time for Jadestone and the financing arrangements we announce today will strengthen our balance sheet and provide us the platform and capital flexibility to continue to execute our proven strategy.  We have the right assets, right technical and commercial capabilities and right opportunities with major near-term value catalysts, to deliver significant shareholder value.”

The Acquisition is in line with Jadestone’s strategic objective to build a balanced, resilient portfolio of production and development assets with multiple reinvestment options in order to increase cash-flows, whilst maintaining a strong balance sheet.

Key Highlights

• Acquisition of 100% operated interest in the Montara Oil Project, offshore Australia covering three oil producing fields;
• 10.3 thousand barrels of oil per day (“mbbl/d”) of OECD production and 2P reserves of 28.2 million barrels of oil (“MMbbl”), more than tripling Jadestone’s production to 13.9 mbbl/d and increasing 2P reserves to 45.3 MMbbl;
• Purchase multiple of 1.6x 2017 EBITDA;
• Adds material immediate cash flow to the portfolio, significantly strengthening the Company’s balance sheet;
• Significant upside identified, with multiple opportunities to realise incremental value through the deployment of Jadestone’s second phase technical capabilities, many of which can be delivered within the first 12 months of operatorship;
• Opportunity to realise synergies with Jadestone’s existing asset base through logistics optimisation, and rationalisation of onshore support operations;
• US$120 million underwritten reserve based lending facility and proceeds from a proposed equity offering of US$95 million (the “Equity Offering”); and
• Expected payback by Q4 2019 based on price assumptions in the competent persons report by ERCE dated 15 July 2018.

Montara Oil Project

The Montara Oil Project is located in Production Licences AC/L7 and AC/L8 in the Timor Sea, approximately 690 kilometres west of Darwin, and comprises three separate fields which are Montara, Skua and Swift/Swallow, produced through a centralised FPSO, the Montara Venture, which is owned by PTTEP Australasia and will be transferred to Jadestone on Completion.

On completion of the Acquisition, including transfer of operatorship, Jadestone will hold a 100% operating interest in the Montara Assets.