Jadestone makes progress with reorganisation, updates reserves

Asia-Pacific oil and gas producer Jadestone Energy updated the market on its structural reorganisation on Wednesday, saying it was expecting to result in annual cost savings of between $0.5m (£0.36m).

The AIM-traded firm had announced the reorganisation on 1 February, saying it would result in the ultimate parent holding company of the Jadestone group being a new company incorporated in England and Wales.

It said the reorganisation would not result in a change in control in the ultimate holding company of the group, and would also not result in a change in the ultimate shareholding in any of the company's assets, or a change in the management of any of its assets.

The reorganisation was expected to reduce regulatory compliance burdens, resulting in estimated annual cost savings of between $0.5m and $1m when taken in connection with savings from its delisting from the TSX Venture Exchange in 2020.

In addition, the board said it believed the reorganisation would further raise the company's profile and status among UK and European investors who are unable to invest in non-UK domiciled companies.

Given that its peer group of companies are primarily London-listed and UK-domiciled, the firm said the move should facilitate incremental access to equity from the international capital market.

It was also expected to allow Jadestone to further optimise its tax structure.

The company said it had filed court documents on 15 March, including a plan of arrangement, which would require court approval.

Subject to court approval, the reorganisation would be put to shareholders for voting at a special meeting on or around 20 April.

Jadestone said its two largest shareholders, as well as all of its directors, collectively representing 33.5% of its total outstanding shares, had entered into agreements indicating their voting support for the arrangement.

As part of the reorganisation, the company commissioned ERC Equipoise to produce competent person's reports over the Lemang asset acquired in December, and the Maari asset, which was set to be acquired pending the satisfaction of regulatory consents.

The company also commissioned its annual statement of reserves and resources comprising its producing Stag and Montara assets, offshore Western Australia, which was prepared under Canada's national instrument 51-101.

As at 31 December, Jadestone said it had proved plus probable, or ‘2P’ oil reserves of 37.1 million barrels, down 4.7 million barrels from the end of 2019.

The board said the decrease mainly reflected the impact of oil production during the year.

“The internal reorganisation was a logical next step for the company, and I look forward to closing this in April,” said chief executive officer Paul Blakeley.

“In keeping with our spirit of driving further efficiency across our business, the reorganisation will streamline the corporate structure, and along with our decision to delist from the TSXV early last year, will provide tangible financial benefits as we continue working to deliver enhanced returns for our shareholders.

“Following a year marked by low oil prices, and one in which we prioritised protecting the balance sheet and managing the cost base over investing into short-term growth, the results are very much in line with our expectations.”

At 0846 GMT, shares in Jadestone Energy were down 0.62% at 67.08p.