SINGAPORE: Jadestone Energy has executed a sale and purchase agreement (SPA) with OMV New Zealand Limited, a subsidiary of OMV, to acquire an operated 69% interest in the Maari Project, shallow water offshore New Zealand for a total headline cash consideration of US$50 million, to be funded from the Company’s cash resources.
Jadestone Energy is an independent oil and gas production company focused on the Asia Pacific region.
The Maari Project is a mid-life producing asset located in permit PMP 38160, in the offshore Taranaki basin, in 100 metres water depth, approximately 80 kilometres southwest of New Zealand’s North Island. The project includes the Maari and Manaia oil fields, produced via a self-elevated jack-up wellhead platform, an FPSO, owned by the joint venture partners (being Horizon Oil Limited (26%) and Cue Taranaki Pty Ltd (5%)) and the associated decommissioning liability with respect to all facilities, which is shared by the partners in accordance with their respective working interests.
The fields hold 2P reserves of 13.9 mm bbls of oil, and current production is approximately 4,000 – 4,500 bbls/d, both on a net 69% basis.
The project has been producing since 2009, achieving peak production of 16,400 bbls/d in 2010. With original oil in place of close to 300 mm bbls in the producing reservoirs and cumulative production of 38.3 mm bbls, the fields have achieved only a modest recovery factor of 13% to date.
The fields, based on their current 2P reserves, are scheduled to produce until 2031, however the Jadestone management team believe there is substantial potential for reserves upside not yet captured in the 2P reserves.
The acquisition has a total headline cash consideration of US$50 million based on an economic effective date of January 1, 2019, and is structured as a purchase of an interest in the assets.
Upon completion, the purchase price will be adjusted to reflect after tax free cashflow from the economic effective date, and other customary adjustments. The Maari Project generated after tax free cashflow for the calendar year to December 31, 2018 of US$40.1 million (on a net 69% basis).
Additional contingent consideration of US$2.6 million is payable in the event that Dated Brent averages above US$75/bbl in 2020, and a further US$1.3 million if Dated Brent averages above US$75/bbl in 2021.