Jadestone Buys Operating Stake in Maari
Independent oil and gas producer Jadestone Energy announced it has entered a deal with OMV to acquire its 69% operational stake in the shallow water Maari project offshore New Zealand for $50 million.
The Maari Project is a mid-life producing asset located in permit PMP 38160, in the offshore Taranaki basin, in 100 meters water depth, approximately 80 kilometers 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, a floating production, storage and offloading unit (FPSO), owned by the joint venture partners 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.
Paul Blakeley, Jadestone President and CEO said, “Adding the Maari Project to our growing portfolio of high-value assets in the Asia Pacific region demonstrates our ability to bolt on new assets and provides more than a decade of additional free cashflow, even in the 2P reserves only scenario, as supported by our external reserves audit. The Maari project adds both significant additional opportunity as well as diversity to our operations.”
The deal, which increases the Jadestone’s net production by approximately 30%, and 2P reserves by 33%, includes an additional contingent consideration of $2.6 million is payable in the event that Dated Brent averages above $75/bbl in 2020, and a further $1.3 million if Dated Brent averages above $75/bbl in 2021.
“The acquisition is immediately accretive to shareholder value and will be funded entirely with cash on hand,” Blakeley said.
Jadestone said it expects to complete the transaction in the second half of 2020, and until then OMV New Zealand will continue as operator of the assets.
Asia-Pacific-focused Jadestone said it intends to establish New Zealand as an extension to its Australia core area. As another maturing hydrocarbon basin in the region, additional opportunities are likely to become available which fit the company’s strategy to acquire and reinvest into mid-life producing assets. Through a mix of capturing synergies with its existing business, optimizing reserves recovery, and additional inorganic growth, the company is targeting building a portfolio of assets with an ultimate production base of 15 to 20 mboe/d in New Zealand.
“New Zealand is a natural strategic fit for Jadestone, where we see many shared values with regards to sustainable energy investment, through maximizing recovery of existing resources and world-class expectations for health, safety and environmental stewardship,” Blakeley said.
“We are excited by the opportunity to deploy our expertise to managing this mid-life producing asset, particularly as we see significant reserves upside. The Maari Project has achieved very modest recovery factors to date, relative to the substantial estimated original oil in place, making this an ideal platform to showcase our differentiated technical capabilities. With ongoing reinvestment into the fields, we foresee many opportunities to add value without relying on further exploration or appraisal success. At the same time, our focus is on extending the life of existing infrastructure that may otherwise not realize its full potential, thereby continuing to generate income, growth, and ongoing employment for local communities and the New Zealand economy.”