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Total, Jadestone quit

deepwater block in Philippines

PROJECTS & ASIA-PACIFIC focused independent Jade- Jadestone launched an arbitration action
COMPANIES stone Energy revealed this week that both it and against Total over what it described as a breach
French major Total have walked away from their of their 2012 farm-out agreement, noting that
deepwater block in the Philippines. Total had failed to drill an exploration well
The company said on November 18 that the on the deepwater Halcon prospect. The tri-
two partners had notified the Philippine Depart- bunal found in Jadestone’s favour in its Janu-
ment of Energy (DOE) of their voluntary surren- ary judgement and awarded the independent
der of their entire interest in, and termination of, $11.1mn, less specific expenditures incurred
service contract 56 (SC56) in the Sulu Sea. prior to the breach, as well as around $4.3mn
Total operated the block, which contains the in legal costs.
Dabakan and Palendag discoveries and is located Jadestone said this week that some of
in around 1,800 metres of water, with a 75% these funds would be diverted towards
stake, while Jadestone held the remaining 25%. covering its costs arising from unfulfilled
The move reflects Jadestone’s shift in focus work commitments at SC56. The company
this year away from exploration and towards added that it also expected a one-time
developing producing assets. impairment charge of $50.5mn relating to
The company deferred its Nam Du and U historical capitalised exploration expendi-
Minh development project in Vietnam’s offshore tures at the licence.
Block 51 in March, before announcing in April Jadestone has been able to ride out much of
that it would also delay its Australian infill drill- the worst of this year’s oil and gas downturn by
ing campaign until 2021. focusing on reducing production costs while
Jadestone president and CEO Paul Blake- maximising yields from existing oil and gas.
ley said: “We remain focused on our strategy Moreover, as the number of distressed assets
of delivering value from producing fields and grows the company sees new inorganic growth
near-term developments in the Asia-Pacific opportunities.
region, while avoiding early-phase greenfield “It won’t be a Shell or BP that will be the last
exploration plays such as SC56, requiring mul- man standing in the oil and gas space,” Blakeley
ti-year capital programmes prior to production told the UK’s Financial Times this week. “It will
and cash flow.” be the small independents.”
He flagged up “major” infrastructure invest- He said smaller producers had an opportu-
ment requirements at SC56, such as the con- nity to acquire assets from the oil and gas majors
struction of new pipelines the field, and said who were shifting their focus towards the renew-
this went against the company’s current ethos of ables space.
maximising existing facilities. “Too many [upstream players] have relied on
Blakeley said: “SC56 was a legacy asset inher- the exploration drill bit and many have failed on
ited from the previous management and only that basis,” Blakeley said. “What we’re doing is
had option value through a carried well. The really mopping up after the majors.”
decision not to drill the well now removes any Blakeley said the company was pursuing
interest for Jadestone to continue further, requir- growth acquisitions within the Asia-Pacific,
ing, as it would, new deepwater frontier explo- with these including stranded discoveries. He
ration commitments. It would also not compete added: “I don’t see any reason why we shouldn’t
with existing portfolio investment options, nor be thinking 50,000-75,000 [barrels of oil equiva-
potentially some of the more interesting inor- lent per day] over the next 5-10 years. What isn’t
ganic opportunities moving into the market in material for the majors can be hugely material
the coming 12-18 months.” for us.”™

Week 46 19•November•2020 www. NEWSBASE .com P11