Jadestone updates guidance after year of resource growth

Oil and gas producer Jadestone Energy said in an update on Thursday that it expected production for the first three months of the 2023 financial year to average just over 10,000 barrels of oil equivalent per day, reflecting tank repair and scheduled maintenance activities at Montara.

The AIM-traded firm added that for the nine months ending 31 December, production was projected to average between 13,500 and 17,000 equivalent barrels per day, with an 85-15% split between oil and liquids, and natural gas, for the year.

Underlying operating costs in 2023 were expected to total between $180m and $210m.

The board said that adjusting for a full-year of operating costs associated with the CWLH acquisition, higher tanker costs at Stag, and higher logistics costs at Montara in 2023, underlying operating costs were expected to be around 6% higher year-on-year.

Capital expenditure for 2023 was expected to total $110m to $140m, making for the largest investment programme in the company's history.

It said the investment was primarily allocated to the Akatara gas development project - around 70% - which was progressing well, and remained on budget and schedule for first gas in the first half of 2024.

A further 15% would be spent on the PM323 infill drilling campaign, offshore Malaysia.

As at the end of 2022, Jadestone Energy had proved-plus-probable (2P) oil reserves of 64.8 million barrels of oil equivalent, representing a 45% increase compared with the end of 2021, and a nearly six-fold replacement of production in the year.

The board said the “significant” increase in reserves was primarily driven by the reclassification of 2C contingent resources from the Akatara gas field development in Indonesia to 2P reserves following a final investment decision in June, as well as the acquisition of the 16.67% interest in the producing CWLH fields, offshore Australia, which completed in November.

Its best-case contingent (2C) resources totalled 104.3 million equivalent barrels at year-end 2022.

“In the first quarter of 2023, production has been impacted by the tank repair and planned maintenance activities at Montara, resulting in an average of just over 10,000 barrels of oil equivalent per day in the quarter,” said president and chief executive officer Paul Blakeley.

“Our guidance for the remaining nine months of the year is 13,500 to 17,000 equivalent barrels per day, reflecting a return to routine operations at Montara and the inclusion of Sinphuhorm.

“The midpoint of guidance represents 33% growth over 2022 and 22% over 2021, the latter being the most recent year of full Montara production.”

Blakeley said the Malaysia infill well campaign in the second half, and the addition of Akatara production starting in the first half of next year, should add a further 5,000 equivalent barrels per day which, when compared to the 2023 mid-point, represented another 33% increase.

“We also anticipate adding to this growth profile through our very active pipeline of merger and acquisition opportunities.

“Jadestone achieved a 45% year-on-year increase in 2P reserves in 2022, delivering a near six-fold replacement of production during the year, demonstrating the success of our acquisition-led growth strategy and the quality of our asset base, particularly at the Akatara development, which underpins near-term production growth.”

Jadestone said it would release its financial statements for the 12 months ended 31 December on 25 April.

At 1335 BST, shares in Jadestone Energy were down 5.65% at 65.1p.

Reporting by Josh White for Sharecast.com.