Jadestone acquires BP’s North West Shelf oil project interests

Jadestone Energy plc, Singapore, has acquired BP Developments Australia Pty Ltd.’s 16.67% interest in Cossack-Wanaea-Lambert-Hermes (CWLH) oil fields development on the North West Shelf off Western Australia for $24 million.

The price consists of $20 million cash and $4 million in subsequent contingent considerations payable on certain upside scenarios tied to potential full-year oil price outcomes in 2022 and 2023, the company said.

BP has a non-operated interest in the Woodside Energy Ltd.-operated project, its stake equivalent to 10.4 million bbl of oil reserves.

The acquisition comprises 1.5 million bbl of production since the effective date of Jan. 1, 2020, plus 5.1 million bbl of 2P reserves and a further 3.9 million bbl of 2C resource.

The deal includes BP’s entire working interest in the CWLH fields, subsea infrastructure, and the Ohka floating, production, storage, and offtake vessel, but also includes BP’s full abandonment liabilities estimated at $82 million.

Abandonment liabilities will be paid in three transactions. The first is payable on deal close to a decommissioning trust fund, with further payments to fund via equal instalments of in December 2022 and December 2023.

Jadestone said the assets generated earnings before interest, taxes, earnings, depreciation and amortization (EBITEDA) of $20 million in the year ended December 2021 on a realized oil price of $56.28/bbl and are expected to generate EBITDA of $40 million in 2023 based on a realized oil price of $100/bbl.

Oil is sold from the North West Shelf oil project on an equity basis with a typical parcel size of 650,000 bbl.

Jadestone said the oil project joint venture partners have waived their pre-emption rights and given their in-principal consent to the acquisition, thus reducing the conditionality of the transaction.

Completion is subject to conditions, including regulatory approvals from the National Offshore Petroleum Titles Administrator and the Foreign Investment Review Board. Completion is expected in fourth-quarter 2022.

The CWLH project comprises 13 subsea wells connected to the 60,000 b/d Ohka FPSO which was installed in 2011.

The fields also produce associated gas. Some is used to fuel the FPSO and the remainder is injected into the North West Shelf gas project and piped to shore.

The fields lie within four production licenses (WA-3-L, WA-11-L, WA-13-L, WA-16-L) in the north Carnarvon basin.

Jadestone president and chief executive officer, Paul Blakeley, said the company sees material upside through infill drilling into reservoirs with significant oil-in-place and believes the life of the producing fields can be extended for several years.

Further interests in CWLH may become available in the near-term or mid-term, over which Jadestone would have pre-emption rights, he said.