LONDON (ShareCast) - (Sharecast News) - Asia-Pacific focussed oil and gas production company Jadestone Energy announced the acquisition of a 10% interest in the Lemang production sharing contract (PSC) on Wednesday.
The AIM-traded firm said that as a result, its interest in Lemang, before local government back-in rights, would increase to 100%.

It said the 10% interest was being acquired through the execution of a settlement and transfer agreement between Jadestone and Hexindo.

In return for the transfer of Hexindo's 10% stake, Jadestone would waive unpaid amounts relating to Hexindo's interest in the Lemang PSC, and pay consideration of $0.5m including transfer taxes, which Jadestone would remit directly to the Indonesian government.

The transaction remained subject to the approval of the Indonesian government, the shareholders of Hexindo, and the shareholders of Hexindo's parent Eneco Energy.

Jadestone said the Lemang PSC contained the fully-appraised Akatara gas field, the development of which would substitute coal for locally-produced gas in power generation, as well as condensate sales and liquefied petroleum gas (LPG) for local residential and domestic use.

Once onstream, Akatara would broaden Jadestone's production base, as well as increase the proportion of gas in the production mix, thus reducing its greenhouse gas emission intensity.

The field had been independently estimated to contain a 2C gross resource of 63.74 billion standard cubic feet of natural gas, 2.45 million barrels of condensate, and 5.64 million barrels of oil equivalent of LPG, equating to a combined 18.7 million barrels of oil equivalent of resource.

Jadestone said the acquisition of the Hexindo interest would add around 1.9 million barrels of oil equivalent of resource, for an acquisition cost of 26 US cents per barrel of 2C resource based on the consideration paid.

That compared to the 70 cents per barrel of oil equivalent acquisition cost Jadestone paid for its original 90% interest in the project in 2020.

"We are pleased to announce this acquisition, which adds resource to the company at minimal cost and has the added benefit of removing a defaulting partner," said president and chief executive officer Paul Blakeley.

"The Lemang PSC is a key organic growth project for Jadestone and will provide meaningful gas production to the local market - displacing coal-fired power generation."

Blakeley said the company was making "significant progress" on commercial terms, with negotiations over a fully-termed gas sales agreement at an advanced stage.

"A final investment decision is still expected in the first half of 2022, with first gas also still on track for the first half of 2024."

At 1137 GMT, shares in Jadestone Energy were down 1.06% at 82.12p.

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