Singapore-headquartered independent Jadestone Energy had a challenging 2022 with last year dominated by the problems at its Montara oilfield offshore Australia, where a host of issues conspired to keep the field offline for the latter months – and up to March this year.

“2022 was an extremely frustrating year operationally, one which largely overshadowed the underlying progress made in a number of key strategic areas. The first half of the year validated our strategy at work, as we generated significant operating cash flow, building our cash balance to a record high of US$162 million by mid-year,” commented Jadestone chief executive Paul Blakeley.

“The second half however highlighted the overreliance on Montara for operational and financial performance, highlighting that we are vulnerable to single events on this asset.”

Since taking over operatorship of Montara from Thailand’s PTTEP in 2019, Jadestone has embarked on an ongoing campaign to revitalise the asset through a systematic process of inspection, remediation and repair on its 33-year-old Montara Venture floating production, storage and offloading vessel.

“Progress has been impacted by Covid-related manning restrictions over the past 18 months that caused delays to this programme, and which frustratingly contributed to the unplanned event in July when a small hole in storage tank 2C was detected, a tank that was scheduled to be next in the inspection programme,” said Blakeley.

Jadestone subsequently undertook an extensive eight-month shutdown of the producing oilfield, which allowed it to address required regulatory actions, and carried out a detailed inspection of critical areas of the FPSO and the necessary repairs and maintenance to restart production.

“This was the right thing to do notwithstanding the major short-term impact on the business, and our clear focus from now on is to ensure to the best of our ability that there will be no further unplanned events of this nature at Montara,” he added.

Since restarting production last month, Montara has performed in line with the company’s expectations, producing from three wells at around 4700 barrels per day of oil, with additional wells becoming available for production in the coming weeks and more cargo tanks being returned to service in future.

“Over the past eight months, Montara has stress tested our resilience… however, the past eight months, although challenging, has also demonstrated that we have the right strategy, highly cash generative with quick payback, adding to our production portfolio in a disciplined way.”

Repositioning upstream portfolio

Jadestone is now repositioning its upstream portfolio to ensure that it never again finds itself in the same compromised position.

“So, while Montara was 80% of our production in mid-2021, it is expected to be 20% of our production by mid-2024,” confirmed Blakeley.

“Over the same period, we will have expanded the business from just two producing assets to seven in multiple countries and jurisdictions, providing the portfolio diversity that will insulate the company from the impact of such events in the future, a benefit usually exclusive to the majors and one that will differentiate us from our peers,” he championed.

Among those seven projects will be Jadestone’s Akatara gas field development onshore Indonesia, the company’s largest ever organic project, which is schedule for start-up in the first half next year.

“The highly cash generative nature of our portfolio, particularly after Akatara comes on stream, should see us approaching a net cash position around the end of 2024 based on expected operating performance and current oil prices,” added Blakeley.

Ahead of first gas at Akatara, Jadestone this year will embark on a four-well drilling campaign at its producing East Belamut field, offshore Peninsular Malaysia.

The company operates Block PM 323 that hosts the producing Chermingat, East Belumut and West Belumut fields. Each field is exploited via a wellhead platform, connected to a central processing platform at East Belumut.

Produced gas is reinjected to maintain pressure support, while oil is exported by pipeline to an onshore terminal. Malaysia’s national upstream company Petronas Carigali holds the remaining 40% working interest in PM 323 production sharing contract.