Jadestone signs new $200m reserves-based facility

Asia-Pacific focussed independent oil and gas producer Jadestone Energy announced the signing of a new reserves-based lending (RBL) facility worth $200m on Friday.

The AIM-traded firm said the facility was secured with a group of four reputable international banks.

Additionally, there was an uncommitted accordion of $160m available, subject to incremental availability of bank debt.

The closure of the RBL facility was expected in the near future, pending the fulfilment of some outstanding conditions.

With a tenure of four years, Jadestone said the RBL facility would undergo bi-annual redeterminations to assess available debt capacity.

The capacity would vary over time, taking into account factors including oil prices, operating performance, hedging, future acquisitions, and abandonment estimates.

Its board said it was important to note that the borrowing capacity under the RBL facility was currently limited until the Akatara field was integrated as a producing asset, at which point it would be increased significantly.

Both Jadestone and the RBL banks had the option to initiate additional redeterminations when deemed appropriate.

The RBL facility would carry an interest rate of 450-basis points over the secured overnight financing rate, along with the applicable credit spread.

In addition, Jadestone would pay customary arrangement and commitment fees.

The terms and conditions of the facility adhered to industry standards for RBL facilities, Jadestone claimed, including a parent company financial covenant that limited the total debt to 3.5x annual EBITDAX.

It said the primary use of the facility would be to repay the $50m interim facility, which was set to be fully drawn on 22 May.

Additionally, the facility would fund Jadestone’s operations and capital investment programme, with particular emphasis on the Akatara gas project, onshore Indonesia.

It could also be used for general corporate purposes, the board confirmed.

“We are very pleased to have achieved this milestone financing with four international banks, providing a significant debt facility in support of our strategy as a responsible operator in the Asia-Pacific region,” said president and chief and executive officer Paul Blakeley.

“The banks recognise that our strategy fits well within the energy transition and have worked closely with us to ensure we deliver on environmental and operating performance objectives.

“This facility forms an important stepping stone as we focus on delivering our key growth objectives including infill drilling in Malaysia and executing the Akatara gas development project.”

Blakeley said production from Akatara would bring “significant” incremental debt capacity when integrated into the RBL facility, with the ramp-up of Akatara's cash flow also projected to drive a deleveraging of the company’s balance sheet.

“While we remain focused on operational performance and delivery of guidance from our producing portfolio, additional acquisitions of producing assets are also on our horizon, in an environment that is increasingly active, and the RBL may support this too.”

At 1505 BST, shares in Jadestone Energy were down 0.43% at 52.77p.

Reporting by Josh White for Sharecast.com.