Jadestone blames lack of 'clarity', backs out of Maari purchase

Asia-Pacific oil and gas producer Jadestone Energy has mutually agreed with OMV New Zealand to terminate the sale and purchase agreement to acquire an operated 69% interest in the Maari Project, offshore New Zealand, it announced on Thursday.

The AIM-traded firm had said in September that, following legislative changes to New Zealand's upstream regulatory framework at the end of last year, Jadestone had been continually engaged with OMV and the New Zealand government to seek clarity on the processes, terms and associated timeline required to complete the Maari transaction.

Due to a lack of progress on regulatory approval, and a resulting uncertainty over the timing of the approval for the transfer of interest and operatorship of the Maari project, Jadestone and OMV had now “reluctantly” reached a decision to terminate the transaction.

“Whilst disappointing, we have been signalling that the lack of progress on Maari was an increasing concern and today, almost 12 months after the new legislation came into effect, there is still little to no clarity on what is required from Jadestone to receive the necessary government approval to complete the acquisition,” said president and chief executive officer Paul Blakeley.

“Nearly three years after the acquisition was first announced, and with an upcoming licence expiry in 2027, this leaves insufficient time to confidently invest in the asset and therefore, despite our best efforts, it is now time to move on.

“When balanced against the growing number of alternative inorganic growth opportunities elsewhere in the wider Asia-Pacific region, Jadestone cannot continue to spend time and resources on the Maari process, and we are firm in the belief that this decision is in the best interests of the company.”

Blakeley said that at a time when energy security was at a premium, and with the pathway to a lower-carbon economy becoming more complex, there was a noted importance of new investment into currently producing oil and gas fields to ensure maximum recovery of discovered resources.

“The Maari Project represented an excellent example of this approach, where we had identified several significant investment opportunities as a result of large in-place reserves and a low recovery factor.

“Unfortunately, the asset is now unlikely to see the type and scale of inward investment that had been planned by Jadestone.

“Elsewhere, Jadestone is making good progress on a number of fronts with several potential near-term positive catalysts.”

The company now had a “clearer path” towards completing the repairs on the Montara Venture FPSO, Paul Blakeley said, and would provide a more detailed update on that shortly.

“The Stag infill drilling programme is progressing well, with the first well now at the completion stage and the second well soon to reach the reservoir interval.

“The Akatara gas development remains on track and the Vietnam gas sales discussions with the end-user are making progress.

“The completion of the North West Shelf oil acquisition from BP is still expected this quarter, as is the acquisition of the remaining 10% interest in the Lemang PSC.”

Finally, Blakeley said there were a number of inorganic opportunities across the Asia-Pacific region which were under evaluation.

“Overall, the outlook for Jadestone remains positive and we are excited for the future.”

At 1326 BST, shares in Jadestone Energy were down 3.79% at 67.35p.

Reporting by Josh White for Sharecast.com.