Jadestone Energy: Anticipated Growth in Production for 2024

Jadestone Energy, a London-listed oil-and-gas company, is expecting a significant increase in its output for 2024, while keeping operating costs similar to those of 2023. The company provided some key insights into its performance.

Production in 2023

In 2023, Jadestone Energy's production is estimated to have averaged around 13,800 barrels of oil per day, surpassing the higher end of the annual guidance range of 12,600-13,700 BOE (Barrels of Oil Equivalent) per day. This achievement can be attributed to the strong performance of the PM323 in Malaysia and Montara, located offshore Western Australia.

Production Outlook for 2024

Jadestone Energy expects its production for 2024 to range between 20,000 and 23,000 BOE per day, representing a substantial increase of approximately 55% compared to 2023 at the midpoint. The company has already made a promising start to 2024, with average production over the past four weeks nearing 20,000 BOE per day.

Factors Driving Growth

The anticipated growth in production for 2024 can be attributed to several factors. Firstly, the upcoming production at Akatara in onshore Sumatra, Indonesia, combined with the successful Malaysia infill drilling campaign towards the end of last year, will contribute to the company's growth. Additionally, stabilized production at Montara and the recent acquisition of CWLH (Cossack, Wanaea, Lambert, and Hermes) offshore Western Australia are expected to further enhance Jadestone Energy's scale, diversification, and resilience.

Operating Costs

Jadestone Energy projects a total of $240 million to $290 million in group operating costs for 2024 (excluding forecast royalties and carbon taxes totaling approximately $30 million). These costs are expected to remain relatively unchanged compared to the previous year. However, the company anticipates a significant reduction of around 30% in unit costs due to the increased production of lower cost barrels.

Update on Operations

Jadestone Energy's Akatara development project remains on track, with the gas processing plant approximately 92% complete and construction of the sales gas pipeline around 91% complete.

Jadestone Energy is well-positioned for growth in 2024, with expected increases in production and cost efficiency. The company's commitment to expanding its operations and optimizing existing assets will contribute to the continued success and resilience of its business.

Akatara Gas Processing Facility

Commissioning activities at the Akatara gas processing facility have commenced and are scheduled to continue throughout the first quarter of 2024. The facility is expected to achieve first gas and final acceptance by the second quarter of 2024.

PM323 Infill Drilling Campaign

The PM323 infill drilling campaign in Malaysia during 2023 has yielded excellent results, surpassing expectations. As a result, production growth and reserve additions are anticipated to be significantly higher than initially projected. Currently, the four wells drilled in 2023 have a combined gross production rate of approximately 7,000 barrels per day.

Acquisition of CWLH Oil Fields Development

The acquisition of an additional 16.67% stake in the CWLH oil fields development offshore Australia is progressing on schedule and is set to close during the first quarter of 2024. The performance of the CWLH fields remains robust, with an average daily production of around 2,200 barrels during the fourth quarter of 2023.

Montara and Stag Offshore Western Australia

Recent assessments indicate that the anticipated life-of-field costs at Montara and Stag offshore Western Australia will exceed previous estimates. This is primarily attributed to the rise in repair and maintenance expenses required to ensure the proper upkeep of both facilities.

Enhancing Reliability and Future Deliverables

The reliability of the Montara venture, which includes floating production storage and offloading operations, has been consistently underwhelming in recent years. This discrepancy has not gone unnoticed by market observers. Consequently, efforts are being made to address the shortcomings and improve reliability moving forward.

Business Growth and Diversification

Through strategic initiatives, we have successfully expanded our business beyond Montara and diversified our portfolio with higher quality assets. These endeavors have been positively reflected in this year's guidance.