Jadestone Energy Inc. to acquire the Montara Oil Project, Offshore Australia
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Jadestone Energy Inc.
Jadestone Energy Inc. to acquire the Montara Oil Project, Offshore Australia
16 July 2018—Singapore: Jadestone Energy Inc. (TSXV:“JSE”) (“Jadestone” or the “Company”), an independent oil and gas production, development and exploration company focused on the Asia Pacific region with assets in Australia, Vietnam and the Philippines is pleased to announce that it 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 (the “Montara Oil Project” or the “Montara Assets”), offshore Australia via an asset acquisition (the “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.
• 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.
(1) This is a non-GAAP financial measure which does not have a standardised measure under the Company’s GAAP and is basedon estimated Montara unaudited 2017 EBITDA of US$118.7 million. This amount reconciles to an unauditedloss before tax of US$(19.6) million, after deducting depletion, depreciation and amortisation charges of US$132.9 million and finance costs of US$5.4 million. The Company believes it is a useful metric to assess the economic value of the proposed acquisition.
Reserve numbers for the Montara Oil Project above are from a reserves and resources report dated 16 July 2018 prepared for the Company, in accordance with NI 51-101 and the COGE Handbook, by ERC Equipose Pte. Ltd. (“ERCE”), a qualified reserves evaluator, with an effective date of 31 December 2017. A copy of this report is available on the Company’s website, www.jadestone-energy.com
Overview of the Montara Oil Project
The Montara Oil Project is located in production licences AC/L7 and AC/L8 (the “Montara Titles”) 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 and will be transferred to Jadestone on completion (together the “Montara Assets”).
Overview of the Acquisition
The Acquisition will be effected via a transfer of assets in two stages. On completion of the Acquisition, PTTEP will transfer to the Company:
• a 99% legal and 100% beneficial right, title and interest in the Montara Titles; and
• a 100% legal and beneficial interest in the Montara Assets, excluding the Montara Titles.
Completion of the Acquisition is subject to regulatory approvals, including those from the TSX Venture Exchange and the National Offshore Petroleum Titles Administrator (“NOPTA”) and FIRB approval. According to the current timetable, the transaction is expected to close in September / October 2018. The Acquisition will have an effective date of the 1 January 2018.
The remaining 1% legal interest in the Montara Titles will be held on trust by PTTEP, in favour of the Company, until Australian regulatory approvals relating to the transfer of operatorship of the Montara Asset from PTTEP to the Company are obtained from The National Offshore Petroleum Safety and Environmental Management Authority (“NOPSEMA”).
As an existing NOPTA and NOPSEMA approved operator, Jadestone is committed to working closely with PTTEP and the Australian regulators to develop a robust Safety Case, Environmental Plan and Well Operations Management Plan for the Montara Assets, in order to satisfy the stringent offshore regulatory requirements and ensure the safe transfer of operations from PTTEP to the Company.
The Company has also entered into an Operator and Transitional Services Agreement (the “OTSA”) with PTTEP which will govern the operation and management of the Montara Assets and the provision of transitional services in the period from completion until the transfer of operatorship.
The Acquisition is to be financed through a US$120 million underwritten reserve based lending facility to be provided by Commonwealth Bank of Australia and Société Générale, and proceeds from a proposed equity offering of US$95 million (the “Equity Offering”).
Stifel Nicolaus Europe Limited (“Stifel”) and BMO Capital Markets Limited (“BMO”) have been appointed joint bookrunners in relation to the proposed Equity Offering, which will be completed in conjunction with an additional listing of the Company’s shares on the AIM Market of the London Stock Exchange (“AIM”).
Details of the Company’s intention to admit shares to AIM and the concurrent Equity Offering, including additional details relating to the Acquisition and the Company’s current trading and prospects, are being announced separately and can be found on the Company’s website.
Trading of the Company’s shares has been halted on the TSX Venture Exchange as the Acquisition will constitute a Fundamental Acquisition under the rules of the TSX Venture Exchange. It is anticipated that the Company’s shares will resume trading concurrent with the closing of the Equity Offering.
Jadestone Energy Inc. +65 6342 0359
Paul Blakeley, President and CEO
Dan Young, CFO
Investor Relations Enquiries +1 403 975 6752
Nomad and Joint Broker +44 (0) 20 7710 7600
Stifel Nicolaus Europe Limited:
Joint Broker +44 20 7236 1010
BMO Capital Markets Limited:
Public Relations Advisor + 44 (0) 203 757 4980
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About Jadestone Energy Inc.
Jadestone Energy Inc. is an independent oil and gas company focused on the Asia Pacific region. It has a balanced, low risk, full cycle portfolio of development, production and exploration assets in Australia, Vietnam and the Philippines.
The Company has a 100% operated working interest in Stag, offshore Australia, an oil producing field with development and exploration potential, a 100% operated working interest (subject to registration of PVEP’s withdrawal) in three gas development blocks in Southwest Vietnam and is partnered with Total in the Philippines where it holds a 25% working interest in the SC56 exploration block.
Led by an experienced management team with a track record of delivery, who were core to the successful growth of Talisman’s business in Asia, the Company is pursuing an acquisition strategy focused on growth and creating value through identifying, acquiring, developing and operating assets throughout the Asia-Pacific region.
Jadestone Energy Inc. is currently listed on the TSX-V and headquartered in Singapore. For further information on Jadestone please visit http://www.jadestone-energy.com.
This announcement is for information purposes only and is not intended to and does not constitute, or form part of, any offer or invitation to purchase, subscribe for or otherwise acquire or dispose of, or any solicitation to purchase or subscribe for or otherwise acquire or dispose of, any securities in any jurisdiction including the United States, the Republic of South Africa, Australia, Canada or Japan or any other jurisdiction in which such an offer or solicitation may lead to a breach of any applicable legal or regulatory requirements. The information contained in this announcement is not for release, publication or distribution to persons in any jurisdiction where to do so might constitute a violation of local securities laws or regulations.
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No prospectus will be made available in connection with the matters contained in this announcement and no such prospectus is required (in accordance with the Prospectus Directive) to be published. No undertaking, representation or warranty or other assurance express or implied, is or will be made as to, or in relation to, and, aside from the responsibilities and liabilities, if any, which may be imposed by FSMA or the regulatory regime established thereunder or any other applicable regulatory regime, no responsibility or liability is or will be accepted by Company, Stifel or BMO or any of their respective parent or subsidiary undertakings or the subsidiary undertakings of any such parent undertakings or any of their respective directors, proposed directors, officers, partners or employees or any other person as to or in relation to, the accuracy, completeness, sufficiency or fairness of the information or opinions contained in this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers in connection with the Acquisition, and any responsibility or liability therefore is expressly disclaimed. In addition, no duty of care or otherwise is owed by any such person to recipients of this announcement or any other person in relation to this announcement.
Stifel is authorised and regulated in the United Kingdom by the Financial Conduct Authority. Stifel is acting as nominated adviser and joint bookrunner exclusively for the Company and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Stifel or its affiliates, or for providing advice in relation to any matter referred to herein.The responsibilities of Stifel, as nominated adviser, are owed solely to the London Stock Exchange and are not owed to the Company or to any Director or any other person and accordingly no duty of care is accepted in relation to them. No representation or warranty, express or implied, is made by Stifel as to, and no liability whatsoever is accepted by Stifel in respect of, any of the contents of this announcement.
BMO is authorised and regulated in the United Kingdom by the Financial Conduct Authority. BMO is acting as joint bookrunner exclusively for the Company and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to clients of BMO or its affiliates, or for providing advice in relation to any matter referred to herein.
A barrel of oil equivalent (“boe”) is determined by converting a volume of natural gas to barrels using the ratios of six thousand cubic feet (“mcf”) to one barrel. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 boe is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilising a conversion on a 6:1 basis may be misleading as an indication of value.
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Because actual results or outcomes could differ materially from those expressed in any forward-looking statements, investors should not place undue reliance on any such forward-looking statements. By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predicted outcomes will not occur. Some of these risks, uncertainties and other factors are similar to those faced by other oil and gas companies and some are unique to the Company. The forward-looking information contained in this news release speaks only as of the date hereof. The Company does not assume any obligation to publicly update the information, except as may be required pursuant to applicable laws.
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