BP concludes the sale of its interest in Australian oil-producing fields

AIM-listed and Singapore-headquartered oil and gas player Jadestone Energy has acquired BP’s stake in a Woodside Energy-operated project, encompassing oil-producing fields offshore Australia.

Back in July 2022, Jadestone disclosed a sale and purchase agreement (SPA) – inked with BP Developments Australia – for the acquisition of a non-operated 16.67 per cent working interest in the Cossack, Wanaea, Lambert, and Hermes (CWLH) oil fields development, known as the North West Shelf oil project. 

Located within four production licences – WA-3-L, WA-11-L, WA-13-L and WA-16-L – in the North Carnarvon basin offshore Australia, the project comprises 13 subsea wells producing through the FPSO Ohka, which was installed at the fields in 2011 and has 60,000 bbls/d of oil processing capacity, along with water handling and gas processing/reinjection facilities.

In an update on Tuesday, Jadestone announced the completion of the acquisition, following the satisfaction of all conditions precedent as per the terms of the sale and purchase agreement. The headline acquisition cost to Jadestone was also confirmed as being $20 million in line with the previously communicated figure.

Paul Blakeley, President and CEO of Jadestone, commented: “We are very pleased to have gained access to this material asset, particularly as we see very significant upside through further investment in the future. Our transaction is benefiting from the effective date, which was nearly two years ago, and the strengthening of the oil price in that same period.”

Furthermore, Jadestone outlines that it will receive a cash amount of $5.75 million from BP, inclusive of agreed adjustments, which result from the accumulated economic benefits of the CWLH assets for the period from the effective date of 1 January 2020 to completion. To comply with the agreed terms, Jadestone has paid an initial $41 million into the North West Shelf oil project’s abandonment trust fund.

Moreover, the Singapore-based player highlights that the acquired stake in this project includes BP’s entire 16.67 per cent working interest in the CWLH oil fields, subsea infrastructure, FPSO Okha, and full abandonment liabilities estimated at $82 million. In addition, it represents 10.4 mmbbls of acquired reserves and resources as of the effective date of 1 January 2020. Jadestone further underlines that the operator’s data shows that production from the CWLH fields averaged 14,196 bopd for the three months ended September 2022, or 2,366 bopd net to Jadestone’s acquired interest.

“We will also see a positive impact from the next equity lifting, which is likely to generate significant cash proceeds for Jadestone before the end of 2022. This transaction is typical of the natural transfer of interests in maturing assets from large IOCs, where materiality thresholds do not compete within their portfolios, to smaller companies willing to invest for incremental reserves and production,” added Blakeley.

Jadestone explains that the liftings of crude oil from the CWLH fields are implemented on an equity basis, with the next lifting attributable to the firm’s acquired interest of approximately 650,000 barrels scheduled for mid-November 2022, with receipt of the cash proceeds expected in December 2022.

The company intends to apply to the National Offshore Petroleum Titles Administrator (NOPTA) for approval of the dealing and registration on the petroleum titles regarding the acquired interest.

“We firmly believe that the CWLH fields will be a key asset and a strategic stepping-stone for Jadestone going forward. Over time we hope to work with the existing North West Shelf oil project operator and joint venture partners to add value through sharing our expertise in the management of mature oil assets,” concluded Blakeley.

When it comes to Jadestone’s other recent activities, it is worth noting that the Singapore player recently decided to terminate a deal to acquire operatorship and interest in an oil field project located offshore New Zealand.

This decision was taken as no progress was made in obtaining regulatory approval almost three years after the acquisition was disclosed.