Jadestone Energy Inc., Singapore, has executed a sale and purchase agreement with OMV New Zealand Ltd. to acquire OMV’s 69% interest in Maari oil fields in the Taranaki basin offshore New Zealand’s North Island for $50 million. Jadestone will become operator.
The Maari project is a mid-life producing asset in permit PMP38160 80 km off the coast in 100 m of water. It includes Maari and Manaia oil fields that are hooked into a self-elevating jack-up wellhead platform and a floating production, storage, and offtake vessel.
The fields have been producing since 2009, achieving peak production of 16,400 b/d in 2010. Original oil in place was estimated to be 300 million bbl, but cumulative production to date has been only 38.3 million bbl, achieving a recovery rate of 13%.
Based on current reserve estimates, the company said, the fields are expected to produce commercially until 2031. The company believes there is substantial potential for reserves upside.
The cash buy has an economic effective date of Jan. 1. Upon completion the purchase price will be adjusted to reflect after-tax free cash flow from the economic effective date.
Jadestone said the project generated after-tax free cash flow of $40.1 million (on a net 69% basis) for the calendar year ending Dec. 31, 2018. Additional contingent consideration of $2.6 million is payable in the event that Brent marker crude averages above $75/bbl in 2020 and a further $1.3 million if Brent averages above $75/bbl in 2021.
The acquisition will increase Jadestone’s net production by 30% and its 2P reserves by 33%. It is expected to pay back the company’s capital outlay within 12 months.
Completion of the deal is expected in the second half of 2020, pending government and JV partner approvals. OMV New Zealand will continue as operator until then. Other interest holders in the Mari project are Horizon Oil Ltd., 26%, and Cue Taranaki Pty Ltd., 5%.
Jadestone is targeting a buildout of a portfolio with an ultimate production base of 15,000-20,000 boe/d in New Zealand as an extension of its Australia core area.