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Jadestone Energy provides Montara production update

Published by , Editorial Assistant
Oilfield Technology,

  • Strong performance at Montara since production restart, with a period of flush production following the asset shutdown.
  • Near-term production anticipated to stabilise at approximately 10 000 bpd, compared to 2018 average production of 7615 bpd.
  • Swaps in place covering approximately 2 million bbls of Montara production in 2019, with an average price of US$73.49/bbl for Q1 2019, a gain of approximately US$12/bbl on current Brent spot prices.
  • Asset inspections and maintenance now fully up to date and an increase in uptime and average production rates are expected during 2019.
Montara production

Since the Montara asset came back on stream on January 11, 2019 the asset has performed well, with a period of elevated rates, caused by significant flush production following the asset shutdown.

Jadestone anticipates that flush production will continue for a period of time but will decline to an anticipated average daily rate of approximately 10 000 bpd in the near-term. This compares to average 2018 Montara production of 7615 bpd (excluding downtime for the recent inspection and maintenance work).

The recent shutdown rectified a significant inspection backlog and a number of notices of improvement issued to the current operator, by the offshore regulator. The Company anticipates that as a result of works completed during the shutdown, there will be no major planned shutdowns until at least H2 2020.

As previously disclosed, Jadestone has submitted its Montara safety case and environment plan, which are under review by the regulator. Upon acceptance, the regulator will permit the transfer of operatorship to Jadestone.

Montara hedging

Jadestone has swaps in place covering approximately 2 million bbls of Montara production in 2019, with an average price of US$73.49/bbl for Q1 2019. At current spot Brent crude oil prices, these hedges represent a gain of approximately US$12/bbl. In addition, the Company’s hedging arrangements also provide call options on 76% of the 2019 swapped volumes, at a strike price of US$80/bbl, meaning the Company has access to upside prices, should benchmarks increase.

At current prices, the forecast payback of the net cash consideration for Montara, inclusive of the US$22 million adjustment provided to Jadestone in respect of the inspection and maintenance shutdown, is less than two years, despite lower prevailing benchmark prices. The Company will provide additional corporate guidance, covering its intended work programme and value delivery across the business for 2019, later this quarter.

Paul Blakeley, President and CEO commented:

“Since restarting production at Montara, we have seen a strong response from the reservoirs with production rates higher than anticipated. We expect this to continue for a short period and then start to stabilise at our planned rates for the year. With inspections and maintenance now fully up to date, the facility is running smoothly, and I expect we will see a significant improvement in uptime and an increase in average production rates accordingly.

“In addition, our hedging position, covering approximately 50% of our anticipated production, will help underpin strong cash flow for the year and maintain our early payback from Montara.”

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