Jadestone plans to exploit NWS Australia oil assets led by Woodside

Analysts say Jadestone Energy (LON:JSE) is aiming to acquire a larger share of the producing North West Shelf oilfields offshore Western Australia that are currently operated by Woodside Energy (ASX:WDS) . Ultimately, Singapore-based Jadestone will seek to become an operator to maximize profitability, analysts told Energy Voice.

Last week, Jadestone announced an agreement to acquire a 16.67% unoperated working interest from BP in the development of the Cossack, Wanaea, Lambert and Hermes oil fields, known as the North West Shelf oil project, for an aggregate prize of US$20 million. .

Analysts told Energy Voice that Jadestone likely has its sights set on the medium-term future when other partners in the assets, including Chevron (NYSE:CVX), may decide to divest their stakes.

“While the acquisition strengthens Jadestone’s position offshore Western Australia, the future possibilities may have been too attractive to ignore. Consider that the acquired assets are currently producing just north of 10,000 barrels per day – are these the types of assets Chevron wants to keep its footing in with 16.67% equity? Readul Islam, Asia upstream specialist at Rystad Energy, told Energy Voice.

“Even for the recently expanded Woodside, which operates here with 50% equity, these assets cannot compete with Australian gas or Gulf of Mexico oil portfolios. It is not unthinkable that these partners also throw in the towel to free up management resources for their flagship projects. This could leave Jadestone with three projects operated in Australia, as well as one in New Zealand, assuming the Maari transaction is completed,” he added.

“If Jadestone is finally able to acquire its way to exploiting the NWS oil assets, then it could target the same prices it sought with the Stag and Montara transactions – reduce decline rates, reduce expenses operational, etc. If oil prices stay high, it could be quite the price,” Islam said.

“While waiver prepayments are high, however, with an effective transaction date of January 1, 2020, at the time the sale closes, Jadestone may be entitled to proceeds from over 2 million barrels of oil sold, and primarily exposed to the price appreciation of the last 12 months. This closing adjustment is expected to largely balance the nominal sale price, as well as early abandonment payments. Additionally, with Jadestone estimating 2023 EBITDA of c.40 million US dollars from the acquired BP stake, it is starting to look attractive,” Islam added.

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