Jadestone shelves drilling program at last minute

OPERATOR of the Montara, Skua, and Stag oil fields offshore Western Australia, Jadestone Energy, has delayed its Australian infill drilling campaign until next year.
Jadestone shelves drilling program at last minute  Jadestone shelves drilling program at last minute  Jadestone shelves drilling program at last minute  Jadestone shelves drilling program at last minute  Jadestone shelves drilling program at last minute

Paul Hunt

Senior Journalist: Oil & Gas, Policy.

Paul Hunt

 

Jadestone recently completed a seismic survey across its Montara oil field. It then planned to drill several wells across the Montara and nearby Skua oil and gas fields to increase production. 

The first well, H6, was to be drilled in the AC/L7 production permit on the Montara Field and was expected to spud this quarter. 

A second development well, Skua-12, was to be drilled in the adjacent AC/L8 license on the Skua Field.

Jadestone also planned to conduct workovers of the H3 and Skua-10 wells across the two respective Australian permits.

However, late yesterday the company told shareholders it had shelved its plans at the last minute for financial reasons. 

According to Jadestone delaying the drilling program would preserve the company's balance sheet and current cash position. It would also serve to maximise future returns once the oil price recovers. 

"We are fortunate to have this flexibility, and will therefore defer the Stag and Montara infill wells until next year, rather than investing into new wells which will deliver a high volume of production into a low oil price world," CEO Paul Blakeley said.

"Whilst we remain operating cash flow positive, we see no point in eroding value in these investments and prefer to protect our balance sheet throughout this market turmoil, and come out the other side as one of the strongest survivors." 

The decision to can its Australian drilling program comes just a month after the company hacked its capital expenditure by 50% and deferred its Nam Du and U Minh field development offshore Vietnam. 

 It expects to save a further 30% of capital expenditure by cutting its infill program. 

Jadestone currently has a total cash balance of US$109.4 million, and a net cash position of US74.1 million. 

Around one third of the company's oil production is hedged at US$68.46 per barrel through to September 30.