Jadestone Energy
Annual Report 2020

Plain-text annual report

Production Focus, Sustainable Returns 2020 Annual Report 2 3 Jadestone is a leading independent upstream oil and gas company focused on the Asia Pacific region. Its strategy is to acquire production and near-term development assets, create value through smart reinvestment and generate increasing cash flow from an expanding portfolio of balanced, low risk assets across the region. Cover Photo: Well pressure monitoring at the Akatara Field – Lemang PSC, Sumatra, Indonesia STRATEGIC REPORT 2020 Highlights Foreword from Jadestone’s Chairman Chief Executive Officer’s Review Market Overview Jadestone’s Strategy Operational Review Project Clover Financial Review Sustainability Report CORPORATE GOVERNANCE Statement on Corporate Governance Approach Board Chair’s Corporate Governance Statement Compliance Statement to QCA Principles Directors’ Report Board of Directors Biographies Senior Management Biographies Committee Reports – Audit Committee Report – Compensation and Nominating Committee Report – Disclosure Committee Report – HSE Committee Report 4 6 8 12 14 16 22 24 36 84 86 88 90 94 96 98 100 108 110 CONSOLIDATED FINANCIAL STATEMENTS Management’s Report Independent Auditor’s Report Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Significant Accounting Policies and Explanation Notes 114 115 120 121 122 123 124 ADDITIONAL INFORMATION Oil and Gas Reserves Reserves Outlook Licence Interests Glossary Shareholder Information 174 176 176 177 180 T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 4 2020 HIGHLIGHTS STRATEGIC REPORT 5 OH&S - Occupational Health & Safety Environmental Management 0 Zero total recordable injury frequency rate 0 Zero reportable environmental incidents Sales Price Premiums Revenue 5 – 4 – 3 – 2 – 1 – 4.5 4.2 1.7 0 – mm bbls 2018 2019 2020 4.2 mm bbls Operating Costs 28.72 22.85 23.10 2018 2019 2020 23.10 /bbl 5 – 4 – 3 – 2 – 1 – 0 – $/bbl $ 4.97 4.17 1.63 2018 2019 2020 500 – 400 – 300 – 200 – 100 – 0 – $ million $ 4.17 /bbl 218 million 325 218 113 2018 2019 2020 2020 Highlights Operating Cash Flow 1 Net Cash Dividend 2 177 87 –0.3 2018 2019 2020 100 – 80 – 60 – 40 – 20 – 0 – –20 – –40 – $ million $ 82 39 –30 2018 2019 2020 100 – 7.5 – 5.0 – 2.5 – 0 – $ million $ 7.5 Nil 2018 Nil 2019 2020 87 million 82 million 7.5 million 40 – 30 – 20 – 10 – 0 – $/bbl $ 2.0 – 1.5 – 1.0 – 0.5 – 0 – –0.5 – $ million $ Focusing on deeper efficiency Jadestone achieved its revised production target for 2020, producing an average of 11,438 bbls/d, lifting 4.2 million bbls. While revenue was affected by lower benchmark prices, pricing premiums remained strong. The Company focused on driving deeper efficiency across the entire business, resulting in operating costs being driven down approximately 12% on an absolute basis and within the original guidance range, and broadly flat on a per unit of production basis compared with the prior year. Approximately 25% of the savings identified through the Company's Group-wide efficiency and cashflow savings programme, project Clover, have been locked in as permanent changes in the operating cost base. The Company generated positive operating cash flow of $87 million, which contributed to a reduction of substantially all of its debt, and a more than doubling of its net cash position to $82 million at 31 December 2020. Jadestone made no compromises to safety or integrity, and adhered to strict COVID-19-related protocols throughout the year. The Company recorded no serious incidents and experienced no reportable environmental incidents, which demonstrates the Company’s commitment to its people and the environment in which it operates. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A 1 2 Before movements in working capital. The second 2020 dividend of US$5.0 million to be declared by the directors following completion of the capital reduction and filing of audited initial accounts. Well pressure monitoring at the Akatara Field – Lemang PSC, Sumatra, Indonesia JADESTONE ENERGY 2020 ANNUAL REPORT 6 FOREWORD FROM JADESTONE’S CHAIRMAN STRATEGIC REPORT 7 Foreword from Jadestone’s Chairman Dear fellow shareholders On behalf of the Board of Directors of your Company, I am pleased to present the 2020 Jadestone Energy Annual Report and Sustainability Report. Your Company delivered exceptional results, against the backdrop of an exceptionally challenging year. Management was able to rapidly adapt their efforts toward protecting the Company’s balance sheet and, with the full support of the Board, took difficult decisions to defer near-term investments. We believed that spending should be rephased to resume under the much more favourable environment we see today, thereby maximising investment returns. At the same time, the team did not compromise on its steadfast commitment to world class health, safety, and environmental protection, all which took on new meaning as the world grappled with the challenges cascaded by the COVID-19 pandemic. Akatara Field – Lemang PSC, Sumatra, Indonesia The Company also demonstrated its ongoing commitment to its growth strategy, including pursuing inorganic transactions where there is a strong value add proposition. During the year, Jadestone negotiated, announced, and completed the acquisition of the Lemang asset, onshore Indonesia, which added important diversity to the portfolio, particularly through its future gas development, which will serve as a natural pricing hedge against the currently oil-weighted production base. At the same time, the Company continues to press toward completion of its acquisition of a 69% operated interest in the Maari asset, offshore New Zealand. These acquisitions, once bedded into the portfolio, add to the existing organic growth profile, which also includes the Nam Du and U Minh gas development offshore Vietnam, as well as continuing high- value re-investment into the producing assets at Montara and Stag. More recently, Jadestone has also announced the acquisition of several assets offshore Peninsular Malaysia. In addition to an immediate and significant increase in both production and reserves, this transaction is important from a strategic perspective as it sets the stage for the Company to prove its operating credentials in Malaysia, elevates the Jadestone profile in the region, and will hopefully pave the way for access to more material opportunities to continue pursuing our high value strategy. Outlook Despite all the challenges our industry faced in 2020, from a collapse in benchmark oil prices, a loss of demand for equity investment in the sector, and the many challenges posed by the COVID-19 pandemic, including global lockdowns and travel restrictions, Jadestone not only delivered a sound performance, but also gathered new insight into how to further reduce waste and ensure our operations are as efficient as possible. Through a tough interrogation of our cost base, we have identified savings across the business, many which have been locked in as structural changes in the way the Company operates, and will serve to benefit all shareholders in 2021 and beyond. At the same time, I am excited by the return to active reinvestment into our portfolio, at a time when global benchmark oil prices are recovering. While the Company will always be highly discerning in where resources are deployed, we are moving ahead with growth plans that will generate strong investor returns across the business. Finally, I want to thank the Board for their advice, expertise and support during this past year. I especially wish to thank the executive team and all Jadestone staff for their sacrifices and contributions to our success, and I am confident we are well positioned for future successes too. Thank you for your continued support. Dennis McShane NON-EXECUTIVE CHAIRMAN ESG Progress Today, the Company has published its second annual Sustainability Report. From the early formation of the current management team, we recognised the importance of transparency and open communication with regard to our environmental, social, and governance responsibilities. Moreover, as we increase the depth of our sustainability reporting, we are beginning to recognise the many competitive advantages that come with being a strong performer in this regard. I am pleased to report that the Company is making ongoing progress in formalising its approach to environmental stewardship. With increased alignment to the Taskforce on Climate Related Financial Disclosure principles, and ongoing commitment to the UN Sustainable Development Goals, the Company is deepening what it means to be a responsible environmental citizen. We are committed to reporting on both key emissions metrics and carbon intensity of operations and seeking to reduce our environmental impact through continuous improvement. Once again, the Company has delivered an excellent performance from a health and safety perspective, with zero lost time incidents and zero serious injuries. The Board takes an uncompromising approach to HSE as we strongly see world class HSE performance as a prerequisite to operational performance. Protecting and nurturing our workforce during the spread of the pandemic in 2020 has brought new challenges, affecting Jadestone as much as anyone, and yet we maintained safe operations without interruption. Jadestone's governance practices continue to evolve and mature as well, while at the same time, shifting toward UK-style norms and practices. As a precursor to relocating the corporate residence to the UK (a process that is now complete), the Company adopted the Quoted Companies Alliance governance code, which is typical of our AIM-listed peers, and provides the Board with a solid governance framework to ensure ongoing protection of value and adherence to best practices. Shareholder Returns 2020 saw Jadestone deliver its maiden dividend, a significant milestone, and one we had always envisaged for the type of Company we are building. Our business remains strongly cash generative, and the portfolio has been crafted to generate direct returns for shareholders, while maintaining a strong balance sheet and without compromising our ability to continue to grow. With our continuing focus on balance sheet strength and increasing cash flow generation in the years ahead, we expect dividends to increase too, but it will always be balanced by our primary focus of investment into the business. “Once again, the Company has delivered an excellent performance from a health and safety perspective, with zero lost time incidents and zero serious injuries.” Dennis McShane NON-EXECUTIVE CHAIRMAN T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 8 CHIEF EXECUTIVE OFFICER’S REVIEW STRATEGIC REPORT 9 Chief Executive Officer’s Review Our performance in 2020 underscores the resilience of the Jadestone work culture and portfolio. We have demonstrated what it is to be nimble and flexible, while maintaining a steadfast commitment to efficiency and shareholder returns, and without compromising on our commitment to health, safety, and environmental protection. Drilling offshore western Australia Stronger and more resilient 2020 was an extraordinary year, and by March and April, against the backdrop of collapsing oil prices and the global pandemic, we shifted our short-term strategy to protect our balance sheet. We cut near term capital investment into our assets by nearly 90% versus the original plan, and at the same time set out to cut costs, setting the stage to generate stronger returns than would otherwise have been possible. We made it clear that adding production while Brent was at record lows made no sense, and we therefore pulled back on activity and reduced our production guidance accordingly. Throughout the year, our personnel have remained healthy, and operations uninterrupted, recording only one COVID-19 case within the Jadestone organisation, one of our leadership team in Jakarta who has since fully recovered. We instigated project Clover, which delivered $33 million in cashflow savings versus 2020 plan, across the business, and as a result were able to meet our original operating cost target on a per unit basis. A great illustration of the Jadestone culture at work was the team effort in delivering these savings, from every part of the business, while locking in over 25% of these savings as structural changes for the future. We’re not here for the short-term, and so these decisions which constantly drive us to be more efficient, minimising waste, can add value for shareholders year after year. We also maintained our commitment to our core principles towards environmental stewardship, social responsibility, and high governance standards, and have recorded no major incidents on any of these fronts, in keeping with our pursuit toward Target Zero. Paul Blakeley EXECUTIVE DIRECTOR, PRESIDENT AND CHIEF EXECUTIVE OFFICER Nimble Capital Investment $ 90 Reduction in spending vs original plan % Project Clover + $ $ 33 Million in cash savings versus plan Target Zero 0 No reportable environmental incidents or injuries T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 10 CHIEF EXECUTIVE OFFICER’S REVIEW STRATEGIC REPORT 11 Asset Review At Montara, we implemented a new and innovative offshore roster to maintain asset efficiency while meeting COVID-19 protocols, including some temporary reduced manning and longer shift patterns. This commitment from the offshore teams, along with some shared logistics arrangements in conjunction with neighbouring operators, resulted in uninterrupted production operations throughout the year. The pursuit toward Target Zero continued, with no lost-time injuries, reportable environment incidents or significant non-compliances recorded during the year. From a production perspective, we deferred the drilling of an infill well at the Montara field and also identified problems within the well bores of two Skua field subsea wells during the year. These two wells are temporarily offline while we prepare for a workover and repairs to be implemented as part of the 2021 work programme which will also drill the Montara H6 infill well. Despite the deferral of production from the Skua field wells, revised production guidance was met, largely by way of increases from the Swift/Swallow fields and improved uptime performance in the latter part of the year. Importantly, the production outage at Skua has no reserves-related impact, meaning production was deferred, not lost, and we will benefit from production being restored in a much higher priced oil market. At Stag, we realised meaningful improvements in efficiency too, led by an innovative new offload tanker arrangement. By offloading production directly into shuttle tankers, without a Floating Storage and Offloading vessel as an intermediary, we now have one less vessel in the field, and an overall lower cost base. This also has a safety and environmental benefit with no ship-to-ship transfer now occurring at Stag. As with all operations, we constantly focus on maintaining best-in-class health and safety performance, and have experienced no reportable incidents during the year. Production met revised guidance in 2020 as we once again elected not to drill a new infill well and purposely slowed workover activity during the worst of the COVID-19 restrictions, with logistics challenges for both workover crews and equipment. Despite reduced global consumption of crude oil during 2020, cleaner-burning fuels have remained in demand. Stag’s low sulphur medium-heavy crude oil, helping to meet ever more stringent fuel oil requirements, has continued to attract strong premiums, averaging between $5.50/bbl to $21.00/bbl above Brent through the price cycle during the year. Our planned Nam Du/U Minh gas development was deferred as part of the measures taken early in the year to protect the balance sheet. This was also consistent with slow progress on agreeing gas sales, and subsequently Vietnam has secured some additional gas volumes from the PM3 CAA licence in Malaysia and Vietnam to fill near term supply shortfall. Nonetheless, the demand for Nam Du and U Minh gas remains on the near term horizon, and the commercial drive to develop this resource is recognised by both Jadestone and Vietnam. Cooperation with Petrovietnam remains strong and discussions are ongoing regarding a first gas date and production profile, as a precursor to a gas sales contract and government sanction for the field development. Akatara Field – Lemang PSC, Sumatra, Indonesia Our planned acquisition of a 69% operated interest in New Zealand’s Maari project achieved several key milestones over the course of the year, albeit with delays in progress caused by both the COVID-19 pandemic, and New Zealand’s general election in the fourth quarter. One final government regulatory approval is required to complete the transaction, and both Jadestone and the seller remain committed to the deal. In Indonesia, we acquired a 90% interest in the Lemang PSC, onshore Sumatra, containing the fully appraised undeveloped Akatara gas field. The transaction was finalised, signed, approved and closed within the year, and the next steps will be to agree a gas sales agreement and move the project forward to sanction. Adding Lemang to the Jadestone portfolio introduces a mix of gas, condensate and NGLs, in an onshore setting with low cost development and a PSC regime, bringing diversity as well as fixed price gas to naturally balance oil price volatility. Importantly, it also re-establishes our operating presence in Indonesia as an important step to accessing further opportunity and deepening working relationships with government and regulators. Looking forward, having successfully navigated one of the toughest years our industry has ever experienced, we are now very well positioned to re-instate growth through capital deployed into our current assets, drilling in Australia and moving the gas developments forwards, as well as the potential to add more assets to our portfolio through inorganic opportunities. This is reinforced by the 2021 guidance which shows strong growth in the second half, and the recent announcement of the acquisition of a collection of assets offshore Peninsular Malaysia. The acquisition is an excellent fit with our capabilities and our strategy, and provides a material and immediate uplift in both production and reserves, together with a strong platform to grow further in Malaysia. With our strong balance sheet and our reputation as a quality counterparty of choice, we are more upbeat than ever on the potential to continue adding value through acquisitions. Results Review In 2020, the business generated $218 million in net revenue, down by approximately 33% from the previous year, reflecting the combined impact of the collapse in oil prices and slightly lower liftings. We sold 4.2 mm bbls of crude oil and generated $86.9 million in cash flow from operations before working capital changes, with adjusted EBITDAX of $62.6 million. Following the non-cash impairment of the legacy Mitra SC56 exploration licence, the business reported a net post tax loss of $60.2 million on a unadjusted basis. While 2020 was a year that presented challenges to business performance across the upstream sector, Jadestone’s approach has been to leverage teamwork, engage the whole organisation in finding better ways of working and continuously improve our performance. We reduced headline production costs, down to $106 million, versus $120 million in the previous year and, when adjusting for the impact of well workovers as we usually do, held unit cash operating expense almost flat at $23.10/bbl compared to $22.85/bbl in the prior year, despite lower production. Our end 2020 reserves position primarily reflects the end 2019 position, adjusted for the impact of production during the year. As of 31 December 2020, Jadestone had total 1P reserves of 23.2 mm bbls, and 2P reserves of 37.1 mm bbls. Reservoir performance at both producing assets remains very much as expected, but our reserves for end 2020 reflects the fact that volume additions which had previously been envisaged for 2020 have been deferred as a result of rephasing investment activities to coincide with a stronger price environment. Instead, we deployed our cash flow to paying down debt, which was reduced by $42.8 million to just $7.3 million by the end of the year, and to providing direct returns to shareholders with a maiden dividend, paying the interim one third portion in October. We also closed and paid for the Lemang acquisition in Indonesia and, in a commitment to shareholders to maintain our balance sheet strength, we more than doubled our net cash position to $82 million, and have done so without any compromise to health, safety, and environmental responsibility. This is a performance our team can be proud of, and I’m grateful for the contribution and commitment of the team. Paul Blakeley EXECUTIVE DIRECTOR, PRESIDENT AND CHIEF EXECUTIVE OFFICER “Even in the face of substantial challenges, we have almost eliminated our debt and more than doubled our net cash position to $82 million, while also building out the portfolio with another acquisition.” T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A Emergency evacuation drill at Montara Crude oil offload by shuttle tanker at Stag JADESTONE ENERGY 2020 ANNUAL REPORT 12 MARKET OVERVIEW STRATEGIC REPORT 13 Market Overview Agility in a changing world Brent oil, in $/bbl, quarterly 63.13 Q1 2019 68.86 Q2 2019 62.00 Q3 2019 62.08 Q4 2019 50.10 Q1 2020 29.56 Q2 2020 42.94 Q3 2020 44.16 Q4 2020 61.12 Q1 2021 COVID-19 and the Economy Upswing Market Comment In Q1 2020, the world began to appreciate the wide-reaching impacts of the COVID-19 pandemic on the health and well-being of the global population. Keeping people healthy became such a challenge that all public institutions, not just those directly linked to medical care, were pushed to their limits, while industrial activity fell dramatically. The result was a swift and sharp retraction in global economic activity. Upstream Oil & Gas Challenges At the same time, the upstream oil and gas sector grappled with the predicament of a reduction in demand for hydrocarbons driven by reduced mobility and lower industrial output. To exacerbate matters, the usual global mechanisms to offset shocks in the demand for hydrocarbons also faltered, at least initially, with the major hydrocarbon producing countries of OPEC+ failing to reach an agreement to reduce oil supplies. This drove a precipitous fall in global oil benchmark prices through the first four months of the year, with Brent crude dropping below the $20/bbl mark just over one year ago, in April. For those companies who produce oil price linked hydrocarbon or those individuals whose livelihood depends in some way on ongoing production and investment into the sector, survival mode was the order of the day. Survival Mode Jadestone recognised the severity of the situation and undertook a methodical assessment of both operational and financial risks for its ongoing business. The result was a suite of actions aimed at protecting our people, ensuring critical supply chains continued working so as to continue safe ongoing operations, and adjusting spending plans to preserve the financial strength of the business. With a highly flexible and discretionary investment programme initially planned for the year, the Company was able to be proactive, and to adjust plans to both weather the worst of the impact and set the stage to maximise value creation thereafter. Along with the fall in activity, drop in cash flow, and slower deal completion activity, investment into the sector dropped off as well. Those that have endured have done so because of strong balance sheets, ongoing cash generation through the low price cycle, and demonstrated sustainable behaviour on the environment, social and governance agenda. We are optimistic that capital markets will be supportive of value accretive organic and inorganic growth. Dampier Spirit FSO departing Stag Cautious optimism began to appear mid-way through 2020, fuelled primarily by medical science breakthroughs in COVID-19. And while the implementation of developments like new vaccines is bound to be slow and non-linear in nature, the direction of travel was positive throughout the second half of the year. Our industry too, saw positive steps to rebalance the global supply- demand picture, with OPEC+ ultimately agreeing to restrict supplies to the market, while the world demonstrated that the demand for hydrocarbons remains, even under lock-down conditions. This trend has continued through the first part of 2021 as economies have begun to rebound, and benchmark prices have briefly climbed as high as the $70/bbl mark, a level that seemed almost inconceivable a year ago. M&A Overview With 2020 bringing changes in how we work, where we work, and what we prioritise, global M&A activity fell to the lowest level seen in recent history. But even against that backdrop, transactions that had been planned as part of a long-term strategy continued to progress. Jadestone completed its Indonesia Lemang acquisition, made progress on its New Zealand Maari acquisition, and began evaluation work on several other opportunities. Competition for assets remains low in the Asia Pacific region, and with a financial position bolstered by tough action in 2020, Jadestone is poised to continue pursuing its inorganic growth agenda. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A Montara Venture FPSO JADESTONE ENERGY 2020 ANNUAL REPORT 14 JADESTONE’S STRATEGY STRATEGIC REPORT Jadestone’s Strategy Fit for growth Jadestone Energy aspires to be a leading oil and gas development and production company in the Asia Pacific region, and is pursuing a strategy led by the acquisition and development of producing fields and discovered resource that can be quickly brought to production. The Company is building a balanced portfolio of production and development assets with additional growth from low-risk exploration. The Company is exclusively focussed on the Asia Pacific region, and prefers select core areas in the region where the team has pre- existing expertise. The Company believes the Asia Pacific region presents a compelling proposition, with growing energy demand, industry leading margins and returns, and the potential for resilient cash flow generation. Jadestone’s strategic decisions are tailored to prioritise margin improvement and identify accretive growth which delivers exceptional value and leverages the team’s expertise in second phase operating capabilities. In a short period of time, Jadestone has built a business that delivers a solid free cash flow stream which is being actively redeployed into value accretive investments in the business and into inorganic opportunities, while at the same time, providing direct returns to shareholders in the form of dividends. The Company adheres to stringent screening criteria in all its investments, and is confident that the current market environment creates an opportunity set that meshes well with the strategy, and provides a platform to continue generating incremental value for shareholders. View from the Montara Venture FPSO NETTS apprentices Jadestone’s strategic decisions are tailored to prioritise margin improvement and identify accretive growth which delivers exceptional value 15 T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 16 OPERATIONAL REVIEW STRATEGIC REPORT 1 7 Operational Review Vietnam Block SC 57 HO CHI MINH CITY Block 51 PSC Block 46/07 PSC KUALA LUMPUR SINGAPORE Lemang Ogan Komering Indonesia JAKARTA Philippines Montara Australia Stag PERTH Producing Assets Montara Timor Sea Montara Western Australia 0 25 50 75 100kms Montara Project Australia WORKING INTEREST: 100% GROSS ACREAGE: 672km2 LOCATION: Offshore Western Australia WATER DEPTH: 77m The Montara Project is located in production licenses AC/L7 and AC/ L8, offshore Western Australia, in a water depth of approximately 77 meters. The Montara assets, comprising the three separate fields being Montara, Skua and Swift/Swallow, are produced through an owned floating production storage and offloading vessel, the Montara Venture. As at 31 December 2020, the Montara assets had proven plus probable reserves of 23.4mm barrels of oil, 100% net to Jadestone. The fields produce light sweet crude (42º API, 0.067% mass sulphur), which typically sells at a premium to Dated Brent. The premium in 2020 ranged between a discount of US$2.19/ bbl to a premium of US$7.54/bbl due to the impacts on demand of COVID-19. The most recent lifting was agreed at a premium of US$0.66/bbl. During the year, the Group completed a 3D seismic acquisition programme covering the AC/L7 and AC/L8 licences, to improve reservoir imaging for future infill wells and to assess prospects for future exploration targets. Interpretation work on the seismic data is being carried out by licence area and is expected to be completed by 2023. Production averaged 9,045 bbls/d in 2020 (2019: 10,483 bbls/d). Lower production was primarily the result of natural field production decline, and identified problems within the well bores of the two Skua field wells, which were taken offline while workovers are planned. During 2021, the Group plans to drill the H6 well, which was deferred from 2020 in response to COVID-19 and to perform the two Skua workovers. In the meantime, production volumes deferred from the Skua satellite field are being substantially offset by increased rates from the Swift and Swallow fields. There were six liftings in 2020, resulting in total sales of 3,221,258 bbls, compared to 3,577,199 bbls in 2019 from the same number of liftings. NEW PLYMOUTH Maari New Zealand Montara Venture FPSO T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 18 OPERATIONAL REVIEW STRATEGIC REPORT 19 Producing Assets Continued Indian Ocean Stag Western Australia Stag 0 25 50 75 100kms Drilling rig and work boat on location at Stag Stag Oilfield Australia WORKING INTEREST: 100% GROSS ACREAGE: 160km2 LOCATION: Offshore Western Australia WATER DEPTH: 47m The Stag Oilfield, in block WA-15-L, is located 60km offshore Western Australia in a water depth of approximately 47 meters. As at 31 December 2020, the field contained total proved plus probable reserves of 13.7mm barrels of oil, 100% net to Jadestone. The Stag oilfield produces heavier sweet crude (18º API, 0.14% mass sulphur), which historically sells at a premium to Dated Brent. The premium in 2020 ranged between US$5.50/bbl to US$21.00/bbl, due to the impacts on demand from COVID-19. The most recent lifting was agreed at a premium of US$13.88/bbl. In May 2020, the owners of the Dampier Spirit floating storage and offloading vessel (“FSO”) advised the Group of their intention to retire the vessel. In response, the Group adopted a tanker shuttle operating model, whereby modern double hulled tankers are loaded directly, on a rotational basis, thus eliminating the need for ship to ship oil transfers in field. The new model commenced in September 2020, immediately following the departure of the Dampier Spirit. The tanker shuttle operating model offers environmental benefits relative to the permanently moored Dampier Spirit, as well as cost savings of approximately 20% per annum. Reduced manning on the facility, due to restrictions arising from COVID-19, impacted upon the ability to conduct major activities, other than mandatory and core maintenance requirements. To work within these restrictions and in view of the lower oil price during the year, workover activity was reduced in the second and third quarters, before picking up again in the last quarter of 2020. Production was 2,394 bbls/d in 2020, compared to 3,049 bbls/d in 2019. Lower production was primarily the result of the pull-back on well workovers during a period of prolonged lower oil prices and amidst heightened COVID-19 restrictions and costs on moving people and equipment. There were four liftings in 2020, for total sales of 944,354 bbls, compared to 918,961 bbls in 2019 from the same number of liftings. During 2021, the Group will continue the well workover programme, primarily as a result of the need to replace electronic submersible pumps at the end of their useful lives, and will conduct well planning work, in preparation for future drilling activities. Tasman Sea Maari Maari New Zealand Cook Strait 0 25 50 75kms Maari Oilfield New Zealand WORKING INTEREST: 69% GROSS ACREAGE: 34km2 LOCATION: Offshore Taranaki Basin WATER DEPTH: 100m On 16 November 2019, the Group executed a sale and purchase agreement (“SPA”) with OMV New Zealand Limited (“OMV New Zealand”), to acquire an operated 69% interest in the Maari project, shallow water offshore New Zealand, for a total cash consideration of US$50.0 million, and subject to customary closing adjustments. The transaction has achieved several key milestones with regard to regulatory approvals, and the Group continues to focus on securing Ministerial consent. Jadestone and OMV New Zealand continue to work towards completion of the transaction. The SPA long stop date has been revised to 30 June 2021. The Group will assume the operatorship upon completion of the transaction. The economic benefits from 1 January 2019 until the closing date will be adjusted in the final consideration price. This is now anticipated to be a net receipt to the Group. As at 31 December 2020, the field holds 2P audited reserves of 10.6mm barrels of oil, net to Jadestone’s 69% interest. Raroa FPSO on location at Maari T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 20 OPERATIONAL REVIEW STRATEGIC REPORT 21 Pre-Production Assets Cambodia Phnom Penh Ho Chi Minh Vietnam Vietnam Thailand Cambodia Block 51 Block 46/07 Malaysia Singapore Indonesia Indonesia East Jabung Gulf of Thailand Ca Mau Block 51 Gas Pipeline Block 46/07 Lemang Lemang Indonesia 0 25 50 75 100kms 0 15 30kms Block 51 PSC and Block 46/07 PSC Vietnam WORKING INTEREST: 100% GROSS ACREAGE: Block 46/07 – 2,622km2, Block 51 – 887km2 LOCATION: Malay-Tho Chu Basin WATER DEPTH: Block 46/07 – 48m, Block 51 – 64m Jadestone holds a 100% operated working interest in the Block 46/07 PSC and Block 51 PSC, both in shallow waters in the Malay Basin, offshore Southwest Vietnam. The two contiguous blocks hold three discoveries: the Nam Du gas field in Block 46/07 and the U Minh and Tho Chu gas/condensate fields in Block 51. The formal field development plan (“FDP”) in respect of the Nam Du/U Minh development was submitted to the Vietnam regulatory authorities in late 2019. In mid-March 2020, amid delays in Vietnamese Government approvals and the drop in global oil prices related to COVID-19, the Group opted to delay the project, as part of a review of its 2020 capital programme. Discussions are continuing with Petrovietnam to agree a gas production profile for the development, as a precursor to a gas sales contract, and ultimately attaining government sanction for the field development. Lemang PSC Indonesia WORKING INTEREST: 90% GROSS ACREAGE: 743km2 LOCATION: Onshore South Sumatra Basin PSC On 29 June 2020, the Group executed an acquisition agreement with Mandala Energy Lemang Pte Ltd, to acquire an operated 90% interest in the Lemang PSC, onshore Indonesia, for an acquisition price of US$16.5 million, comprising cash consideration of US$12.1 million after closing statement adjustments and future estimated fair value potential contingent payments of US$4.4 million. The Lemang PSC is located onshore Sumatra, Indonesia. The block includes the Akatara gas field, with a net to Jadestone 2C resource of 15.2 mm boe. The asset has been substantially de-risked with 11 wells drilled into the structure, plus three years of oil production history, up until the field ceased production in December 2019. The acquisition closed on 11 December 2020, following the receipt of governmental approval of the assignment of the interest and of the Group’s appointment as operator. The Group intends to commence a gas development project on the Lemang PSC and current efforts are focused on finalising a heads of agreement on gas sales, to be followed by a gas sales agreement with a buyer before seeking formal field development sanction. The timeline for the Lemang development is highly flexible, and at Jadestone’s discretion. Exploration Assets Service Contract 56 (“SC56”) Philippines Jadestone held a 25% interest in SC56 in partnership with operator Total E&P Philippines B.V. (“Total”). The exploration period on the block expired on 1 September 2020. During the year, Total was granted a 12-month extension on the exploration period until 1 September 2021, with the COVID-19 pandemic representing a force majeure event under the service contract. Following management’s strategic review of available options for the asset, a mutual agreement was reached in mid-November between Jadestone and Total regarding the voluntary relinquishment of SC56. On 18 November 2020, Total and Jadestone expressed their intention to the Philippines Department of Energy (“DOE”) to voluntarily surrender the entire interest in SC56 and accordingly, to terminate the contract. The effective date of termination is 21 December 2020. SC56 was inherited from the former Mitra Energy management team and was not an asset consistent with Jadestone’s strategy. It remained in the Jadestone portfolio due to the carried well commitment, which was intended to provide a cost-free option to further test this frontier basin/new basin entry opportunity. It was important for the Group and our shareholders to pursue this potential to its ultimate conclusion. The Mitra Energy management team had incurred an accumulated US$49.4 million of costs in capitalised exploration value by 30 June 2016. Jadestone spent a further US$1.1 million over the last four-and-a-half years. The relinquishment decision has resulted in the recognition of an impairment in Q4 2020 in relation to the capitalised intangible exploration value of US$50.5 million. Following the termination, the Group is liable for 25% of the unfulfilled minimum work programme as at the termination date. The total unfulfilled minimum work programme amount has been submitted by Total to the DOE and is currently under review. The Group’s share of the unfulfilled minimum work programme will be funded from the net arbitration proceeds of US$2.2 million received from Total in Q1 2020. Service Contract 57 (“SC57”) Philippines The Group holds a 21% working interest in SC57, which has been under force majeure since 2011, and these conditions are not expected to change in the foreseeable future. Akatara Field – Lemang PSC, Sumatra, Indonesia T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 22 PROJECT CLOVER STRATEGIC REPORT 23 Project Clover Project Clover, an initiative that commenced in early Q2 2020, was one of the key steps taken by the Company in response to COVID-19 and the related oil price collapse. Jadestone embraced the principle that its focus should be on cash flow, and not just capital spending or opex, but rather all aspects of its business that drive financial performance. In keeping with its pursuit of continuous improvement, the initiative was also guided by the notion that savings should come from across the entire business. The results surpassed expectations, and achieved savings of US$33.0 million relative to the plan, and unlocked a number of sustainable changes to the Group's cost base. Jadestone's Project Clover achievements represent some of the very best of what the team is capable of. While a portion of the savings that were implemented came in the form of cashflow deferrals, a meaningful contribution also came from innovative solutions sourced directly from the business itself. This included optimising commercial terms with vendors, adjusting our organisation to make it fit for purpose, and stamping out inefficiency across all operations including new and clever logistics arrangements in collaboration with adjacent operators. Cash Flow Savings AUD/USD FX Contract The team also took a decisive approach to tackling G&A, with the senior management team agreeing to a 25% reduction to base salary and a 20% reduction to allowances for six months of 2020. Overseas assignment allowances remained at 80% for the full calendar year 2020. The Board also agreed to a 25% reduction in fees. These changes set the scene for reductions in G&A across the business, with most employees accepting salary reductions as well. Having locked in 25% of the total Project Clover savings as structural changes in our cost base sets the organisation to be more efficient than ever in 2021 and beyond. Taxation and COVID-19 Assistance Capital Expenditure Project Clover Akatara Field – Lemang PSC, Sumatra, Indonesia Cash flow savings by category in percentage of overall saving General and Administration Operating Expenditure T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 24 FINANCIAL REVIEW STRATEGIC REPORT 25 Financial Review The following table provides select financial information of the Group, which was derived from, and should be read in conjunction with, the audited consolidated financial statements for the year ended 31 December 2020. USD’000 except where indicated Sales volume, barrels (bbls) Production, bbls/day Realised oil price, $/bbl1 Revenue Production costs Operating costs/bbl ($/bbl)2 Adjusted EBITDAX2 Depletion, depreciation & amortisation costs/bbl ($/bbl) Impairment (Loss)/Profit before tax (Loss)/Profit after tax (Loss)/Earnings per ordinary share: basic & diluted Operating cash flows before movement in working capital Capital expenditure Outstanding debt2 Net cash2 2020 4,165,612 11,438 44.79 217,938 (105,338) 23.10 62,582 16.24 50,455 (57,238) (60,178) (0.13) 86,883 24,065 7,386 82,055 2019 4,496,164 13,531 69.07 325,406 (119,898) 22.85 187,505 16.94 - 73,281 40,505 0.09 176,908 77,240 50,144 39,275 1 Realised oil price represents the actual selling price, net of marketing fees, and before net impact from commodity hedging instruments. Inclusive of hedges, the average realised price was US$52.32/bbl (2019: US$72.39/bbl), compared to average annual Dated Brent of US$41.84/bbl (2019: US$64.21/bbl). 2 Operating cost per bbl, adjusted EBITDAX, outstanding debt and net cash are non-IFRS measures and are explained on pages 29-31. “During one of the most challenging years our sector has seen, we doubled net cash, substantially paid off debt, and provided direct shareholder returns by way of our maiden dividend.” Dan Young EXECUTIVE DIRECTOR, CHIEF FINANCE OFFICER T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A Jadestone’s Kuala Lumpur office JADESTONE ENERGY 2020 ANNUAL REPORT 26 FINANCIAL REVIEW STRATEGIC REPORT Benchmark Commodity Price And Realised Price The annual average benchmark Brent crude decreased 35% to US$41.84/bbl, compared to US$64.21/bbl. The average benchmark price based on liftings was US$40.61/bbl in 2020, compared to 2019 at US$64.13/bbl. The actual average realised price in 2020 decreased in line with the benchmark price, by 35% to US$44.79/bbl, compared to US$69.07/ bbl in 2019. The average annual premium in the year was US$4.17/ bbl, compared to 2019 at US$4.97/bbl. The premiums have gradually improved from the oil price trough in Q2 2020, with the Group achieving US$13.88/bbl and US$0.66/bbl from its latest liftings of Stag and Montara crude oil, respectively. Amidst an uncertain global outlook, including second and third waves of COVID-19 infection, the Group has entered into Dated Brent swaps covering 30% of planned H1 2020 production at an average swap price of U$55.16/bbl, to support the 2020 planned organic growth programme. Production and Liftings The Group generated average production in 2020 of 11,438 bbls/d, compared to 13,531 bbls/d in 2019. Production at both Montara and Stag was lower compared to 2019, primarily the result of natural field production decline in addition to deferred production due to an intentional pull-back on well workovers during a period of prolonged lower oil prices and amidst heightened COVID-19 restrictions and costs on moving people and equipment. The Group had 10 liftings during the year (2019: 10), resulting in sales of 4,165,612 bbls (2019: 4,496,164 bbls), reflecting the lower production compared to 2019. Revenue The Group generated US$217.9 million of revenues in 2020, compared to US$325.4 million from 2019, or a drop of 33%. Revenue derived from the sale of crude oil declined by US$124.0 million or 40%, from US$310.5 million in 2019 to US$186.6 million in 2020, due to: • Lower average realised prices in 2020, compared to 2019 (US$44.79/bbl vs US$69.07/bbl), giving rise to a decline of US$101.2 million; and • Lower lifted volumes in 2020 at 4.2mm bbls, compared to 4.5mm bbls in 2019, generating an additional decline of US$22.8 million. This was partly offset by an increase in hedging income of US$31.4 million, more than double 2019’s hedging income of US$14.9 million. Production Costs Other Income Taxation Production costs declined 12% in 2020 to US$105.3 million, from US$119.9 million in 2019, predominately due to: Other income was US$26.4 million (2019: US$3.0 million). The variance of US$23.4 million was predominately due to: Taxation charges declined 91% to US$2.9 million from US$32.8 million in 2019. 2 7 • Monetary damages awarded of US$11.1 million, for the breach of the SC56 farm out agreement by Total; • Release of the provision made in relation to the Stag FSO of US$5.0 million, payable to the crew at the expiration of the Dampier Spirit FSO lease. Following the termination of the lease, the Group was no longer required to make this payment, and the provision reversed; • Rebate income of US$3.6 million from the Group’s helicopter lease contract, arising from the sublease of the right-of-use assets to a third party; • Gain of US$1.4 million from the termination of the Dampier Spirit FSO lease in September 2020; and • Settlement sum of US$1.0 million received from Inpex to resolve the dispute over the Block 05-1 PSC. Impairment The Group recorded an impairment of US$50.5 million associated with the capitalised intangible exploration costs at SC56 as the costs are no longer deemed recoverable. In Q4 2020, the Group and Total decided to voluntarily relinquish their interests in the block. US$49.4 million of the impaired amount was incurred by the previous Mitra Energy management team up to 30 June 2016. The current tax charge was US$11.7 million, which consists of US$10.0 million of corporate tax expense and net PRRT paid of US$1.7 million, which is lower, compared to corporate tax expense of US$43.4 million and net PRRT refunded of US$1.9 million in 2019. This was due to: • Lower corporate tax expense by US$33.4 million due to the significant decrease in realised average lifting price reductions and slightly lower lifted volumes. The Group was in a taxable position, despite the loss before tax position as presented in the consolidated statement of profit or loss, which was mainly the result of non-deductible expenses and DD&A recognised for oil and gas properties; and • Net PRRT paid of US$1.7 million, compared to net PRRT refunded of US$1.9 million in 2019, which was predominately due to the liftings made in the first half of the year, prior to the significant decline in commodity prices, and the Group has spent less on its capital expenditure, resulting in lower PRRT deductibles generated, compared to 2019, when the 49H infill well was drilled. The corporate tax expense was partly offset by a deferred tax credit of US$8.7 million, which consists of US$4.0 million (2019: US$20.3 million) for the unwinding of deferred tax liabilities and US$4.7 million of deferred PRRT credit (2019: expense of US$6.3 million). The smaller unwinding of deferred tax liabilities in 2020 versus 2019 was due to the lower production and depletion charges in 2020, and hence a smaller gap between the book depletion charge and the tax charge. The deferred PRRT credit of US$4.7 million in 2020 was due to the reduction of deferred tax liabilities associated with Stag PRRT, mostly attributable to the lower realised prices and the lower capital expenditure in 2020. Impact of COVID-19 In view of the low crude oil price environment arising from the impacts of the COVID-19 pandemic, the Group has undertaken an impairment review on its non-financial assets, as at 31 December 2020, reflecting, among other factors, the then spot price for Dated Brent of US$50.48/bbl and the outlook for crude oil prices. Following this review, no impairment is required with respect to the Group’s producing assets in Australia (Stag and Montara) and the exploration assets in Montara and Vietnam. • Logistics costs were lower by US$6.3 million compared to 2019, as a result of the reduction in the usage of transportation facilities in the production process, in line with the decreased production in 2020; • Workover costs were US$8.6 million lower compared to 2019, due to the decision to defer several well interventions amid the costs and logistics challenges posed by COVID-19. In addition, high workover costs in 2019 were unusually high due to the non- routine replacement work associated with the riserless light well intervention; • Operating staff costs were lower by US$2.9 million, as part of the Project Clover cost savings initiatives implemented by the Group in response to COVID-19; and • A positive variance of US$4.5 million in movement of crude inventories, reflecting the year-on-year differential of the Group’s inventories on hand at year end. There were 601,999 bbls in inventory as at 31 December 2020, compared to 581,133 bbls as at 31 December 2019. Unit operating costs per barrel were US$23.10/bbl (2019: US$22.85/ bbl), before workovers and movement in inventories, but including net lease payments and certain other adjustments (see non IFRS measures below), with the variance a result of lower production rates during the year. DD&A DD&A charges were US$84.6 million in 2020, compared to US$90.7 million in 2019, reflecting lower production during the year. The depletion cost on a unit basis was US$16.24/bbl in 2020 (2019: US$16.94/bbl), predominately due to a technical adjustment on Montara reserves at December 2019 vs December 2018. Other Expenses Other expenses in 2020 totalled US$26.9 million (2019: US$9.4 million). The variance of US$17.5 million was predominately due to: • One-off litigation costs related to the settlement of SC56 of US$8.8 million and 05-1 PSC of US$0.3 million (see also other income, with respect to the arbitration awards to Jadestone that more than offset these costs); • Rig contract deferral costs in Australia of US$3.0 million, following the decision to defer the Australian 2020 drilling campaign in response to the impact of COVID-19; • Unrealised foreign exchange loss of US$2.6 million (2019: US$0.2 million), due to the depreciation of the United States Dollar against the Australian Dollar; and • Professional and consultancy charges of US$1.3 million, in support of several business development projects in 2020, including the acquisition of the Lemang PSC. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 28 FINANCIAL REVIEW STRATEGIC REPORT 29 2020 Reconciliation of Net Cash Non-IFRS Measures US$’000 US$’000 The Group uses certain performance measures that are not specifically defined under IFRS, or other generally accepted accounting principles. These non-IFRS measures comprise operating cost per barrel (opex/bbl), adjusted EBITDAX, outstanding debt, and net cash. Cash and cash equivalents, 31 December 2019 Restricted cash1, 31 December 2019 Total cash and cash equivalent, 31 December 2019 Revenue Other operating income Operating costs Staff costs General and administrative expenses Cash flows from operations Movement in working capital Tax paid Interest paid Purchases of intangible exploration assets, oil and gas properties, and plant and equipment2 Net cash outflows on acquisition of Lemang PSC Other investing activities Financing activities Total cash and cash equivalent, 31 December 2020 Outstanding debt, 31 December 2020 Net cash3, 31 December 2020 217,938 19,690 (105,338) (20,775) (24,632) 75,934 13,485 89,419 86,883 25,225 (25,969) (1,542) (19,458) (11,959) 257 (53,415) 89,441 (7,386) 82,055 Despite the dramatic fall in average realised prices in 2020, and the Group’s reduced production and hence liftings amidst the pullback in workovers due to COVID-19 restrictions and the lower oil price environment, the business still generated positive operating cash flow. Additionally, after financing activities including US$42.8 million of debt principal repayments and interest payments on the Group’s RBL, the Group also generated positive organic equity free cashflow during the year (before the acquisition cost of the Lemang PSC). The following notes describe why the Group has selected these non-IFRS measures, and reconciles amounts to the nearest equivalent IFRS measure. Operating costs per barrel (Opex/bbl) Opex/bbl is a non-IFRS measure used to monitor the Group’s operating cost efficiency as it measures operating costs to extract oil from the Group’s producing reservoirs on a unit basis. Opex/bbl is defined as total production costs excluding oil inventories movement, write down of inventories, workovers (to facilitate better comparability period to period) and non-recurring repair and maintenance. It also includes lease payments related to operational activities, net of any income earned from right-of-use assets involved in production, and foreign exchange gains arising from foreign exchange forwards in respect of local currency operating expenditure, and excludes depletion, depreciation and amortisation and short term COVID-19 subsidies. Adjusted aggregate production cost is then divided by total produced barrels for the prevailing period, to determine the unit cost per barrel. USD’000 except where indicated Production costs (reported) Adjustments Lease payments related to operating activity1 Movement in oil inventories2 Workover costs3 Impact from foreign exchange derivatives apportioned to production costs4 Other income5 Non-recurring repair and maintenance6 Australian Government JobKeeper scheme Adjusted production costs Total production, barrels Operating costs per barrel 2020 105,338 17,548 2,806 (21,686) (2,649) (3,634) (1,619) 600 96,704 4,186,478 23.107 2019 119,898 15,947 7,337 (30,331) - - - - 112,851 4,938,867 22.85 Restricted cash in 2019 excludes US$10.0 million in support of a bank guarantee to a key supplier in respect of Stag’s FSO vessel. 5 Other income represents the rental income from a helicopter rental contract (a right-of-use asset) to a third party. 1 Lease payments related to operating activity are lease payments considered to be operating costs in nature, including leased helicopters for transporting offshore crews, and FSO rental fees. The lease payments are added back to reflect the true cost of production. 2 Movement in oil inventories are added back to the calculation to match the full cost of production with the associated production volumes. 3 Workover costs are excluded to normalise the opex/bbl so as to enhance comparability. The frequency of workovers can vary significantly, across periods, particularly at Stag. 4 A portion of the net impact from foreign exchange hedging instruments was apportioned to production costs, based on the Group’s actual local currency expenditure during the hedging period. Total capital expenditure was US$24.1 million (2019: US$77.2 million), comprising total capital expenditure paid of US$17.9 million (2019: US$68.3 million), plus accrued capital expenditure of US$6.1 million (2019: US$8.9 million). 3 Net cash is a non-IFRS measure and is explained on page 31. 6 Non-recurring repair and maintenance costs relates to costs associated with Cyclone Damien. 7 The Company previously announced unaudited estimate 2020 opex/bbl of US$23.24/bbl. This estimate was before removing the Australian Government JobKeeper scheme of US$0.6 million and upward revision of US$0.6 million to the Cyclone Damien costs noted in footnote 6, following finalisation of works. 1 2 T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 30 FINANCIAL REVIEW STRATEGIC REPORT 31 Adjusted EBITDAX Adjusted EBITDAX is a non-IFRS measure which does not have a standardised meaning prescribed by IFRS. This non-IFRS measure is included because management uses the information to analyse cash generation and financial performance of the Group. Outstanding debt Total borrowings, as recorded in the Group’s consolidated statement of financial position, represents the carrying amount of interest bearing debt, measured at amortised cost pursuant to IFRS 9 Financial Instruments. Adjusted EBITDAX is defined as profit from continuing activities before income tax, finance costs, interest income, DD&A, other financial gains and exploration. The calculation of adjusted EBITDAX is as follow: Outstanding debt is a non-IFRS measure which does not have a standardised meaning prescribed by IFRS. Management uses this measure to manage the capital structure, and make adjustments to it, based on the funds available to the Group. Outstanding debt is defined as long and short-term interest bearing debt, with effective interest method financing costs added back (i.e. excluded), and excluding derivatives. As at 31 December 2020, the Group had outstanding debt of US$7.4 million, which was fully repaid at the end of the first quarter of 2021. USD’000 Revenue Production cost Staff cost Impairment of assets Other expenses Other income, excluding interest income Other financial gains Unadjusted EBITDAX Non-recurring Net gain from oil price derivatives Impairment of assets Non-recurring opex1 Net litigation income Rig contract deferral costs Gain on contingent considerations Gain from termination of FSO lease Others2 Adjusted EBITDAX 2020 217,938 (105,338) (21,903) (50,455) (26,918) 26,119 359 39,802 (30,889) 50,455 8,270 (3,005) 3,000 (359) (6,429) 1,737 22,780 62,582 2019 325,406 (119,898) (22,027) - (9,379) - 3,389 177,491 (14,242) - 23,785 - - (3,389) - 3,860 10,014 187,505 USD’000 Long term borrowing Short term borrowing Add back: effective interest method financing costs Outstanding debt 2020 - 7,296 90 7,386 2019 7,328 41,795 1,021 50,144 Net cash Net cash is a non-IFRS measure which does not have a standardised meaning prescribed by IFRS. Management uses this measure to analyse the financial strength of the Group. The measure is used to ensure capital is managed effectively in order to support its ongoing operations, and to raise additional funds, if required. USD’000 Outstanding debt Cash and cash equivalents Restricted cash Net cash 2020 (7,386) 81,996 7,445 82,055 2019 (50,144) 75,934 13,485 39,275 Net cash is defined as the sum of cash and cash equivalents, which included the minimum working capital balance of US$15.0 million required under the Group’s RBL, and restricted cash of US$7.4 million in the RBL debt service reserve account (2019: US$13.5 million), less outstanding debt. The restricted cash in 2020, as shown here, excludes the US$1.0 million cash collateralised bank guarantee placed with the Indonesian regulator with respect to a joint study agreement entered into by the Group in Indonesia. The restricted cash in 2019 excludes the US$10.0 million deposited in support of a bank guarantee to a key supplier in respect of the Stag FSO. This guarantee was wound-up by the Group during the year as part of the move to the shuttle tanker model. 1 2 Includes one-off major maintenance/well intervention activities, in particular the workover campaigns at Skua 10 and H3 in 2020, and the riserless light well intervention in 2019, as well as other non-recurring production expenditures such as the repair and maintenance costs associated with weather downtime. 2020 includes Montara seismic acquisition costs associated with areas outside the current license, Maari transition team costs, Australian Government JobKeeper scheme and gain on contingent considerations, while 2019 includes Montara transition team costs and gain on contingent considerations. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 32 2020 PRINCIPAL FINANCIAL RISKS AND UNCERTAINTIES STRATEGIC REPORT 33 2020 Principal Financial Risks and Uncertainties The Group manages its principal risks and uncertainties via its risk management framework. The Group is exposed to a variety of political, environmental, commercial, operational, and financial risks, which are mitigated and monitored to acceptable levels. The risk management framework provides a systematic process for the identification of principle risks which have the possibility of impacting the Group’s strategic objectives. The Board regularly reviews the principle risks and defines the key performance indicators (“KPIs”) based on acceptable risk levels. The Board assesses material risks quarterly with a full review of the risk matrix at least twice per year. The principal risks which are currently recognised and their mitigating actions are detailed below. Risk group Risk Select mitigations Business development opportunities Capital funding The Group is in a growth phase. If there is a lack of high-quality opportunities, the anticipated growth of the business may not be achieved. Poor due diligence or unfavorable transaction terms may add low quality assets or unexpected material liabilities to the Group. The Group will at times require external funding to finance organic growth and/or M&A opportunities. A change in investor sentiment towards funding of upstream oil & gas production and development could impact access to funds and increase debt margins. Climate change risks In the face of growing societal expectations and emerging policies including a tax or taxes on carbon, there are risks arising from the Group’s failure to manage the impact of climate change and to demonstrate climate action. The potential impacts from emerging policy, regulation and a shift to renewable energy could impact the performance of the business and may increase costs, reduce value and restrict future opportunities. Commodity price risk The Group’s earnings are dependent on commodity prices which are influenced by global events. A prolonged decline in oil prices will have a negative impact on revenues, margins, profitability and cashflows. Opportunities are assessed against a set of strict evaluation criteria. Thorough and detailed due diligence analysis is performed, including the use of third-party experts wherever applicable. Detailed transition plans are prepared to ensure a seamless and successful asset transition. The Group maintains a strong balance sheet by maximising net cash to ensure sufficient liquidity within the business, and minimising interest bearing debt. Cash forecasts are continually monitored including considering multiple scenarios for base case, and low cases with mitigations. Disciplined allocation of capital across the portfolio. Strong long-term relationships are sought and maintained with major international financial institutions. The Group has a dedicated Climate Change Working Group to drive Jadestone’s climate action agenda. Climate action priority areas include: 1 Reducing GHG 2 3 Supplying cleaner energy alternatives Increasing climate resiliency Sustainability measures are to be disclosed and in alignment with climate related financial disclosure recommendations. ESG performance is reflected in executive KPIs and cascaded throughout business. The Group targets top- quartile ESG performance among its peer group. The Group maintains a continual focus on its cost structure and continually seeks cost efficiency initiatives to embed further cashflow resiliency. The Company will use commodity price hedging to mitigate the exposure to fluctuations in oil prices during periods of elevated capital expenditure and/or debt incurrence. The Company seeks to diversify its asset portfolio and reduce exposure to commodity price fluctuation through fixed price gas contracts, including the Nam Du/U Minh gas development in Vietnam and the Lemang gas and liquids project in Indonesia. Risk group Risk Select mitigations Health, safety, and environment (“HSE”) risks HSE is a key priority for the Board and senior management team. The Group operates in challenging locations and conditions both off and onshore. An unsafe working environment and failure of HSE standards could result in personal injury, fatality and/ or reputational damage. The consequence of a failure to manage HSE risk could result in penalties, increased costs and a potential loss of a licence to operate. IT resiliency & continuity The reliance on IT systems, networks and processes continues to evolve, and as the Group grows and develops, the connectivity of networks and systems becomes more complex. The risk from cyber threats continues to escalate. Operating performance The Group is focused on producing assets and discovered resource able to be brought to production rapidly. In the case of mid-life and/or mature producing assets there is a risk that operational performance will decline through lower production and increased costs. Pandemic impacts During 2020, the Group has changed its working practices as offices adapted to working from home and offshore workers had to quarantine between shifts. While the disruptions have been managed in the short term, any prolonged pandemic related restrictions could impact business performance through a decline in commodity prices and additional expenditure to meet the new working arrangements. Project execution & economics As part of the growth strategy, the Group is dependent on the successful execution of strategic projects in Australia, New Zealand, Vietnam and Indonesia. Project failures could negatively impact operational performance and economic outcomes. Regulatory infringement The regulatory frameworks across the region within which the Group operates are diverse and complex and include emission controls, operational efficiency, legal and tax regulations, among others. A breach of any aspect could result in loss of production, revenues, increased costs, and/ or reputational damage. The Board, through the HSE committee, oversees and sets standards for the Group. HSE performance target of zero lost time incidents. Any lost time or near miss incidents are investigated and lessons learnt implemented promptly, alongside active monitoring of HSE standards leading and lagging indicators. The Group is committed to maintaining robust health and safety procedures including procedures in place to respond to unexpected operational incidents. The HSE management system includes environmental impact statements, environmental plans, oil spill response and other emergency plans and operational safety cases. Extensive data and server backups are performed regularly. The Group’s redundancy strategy is applied to critical systems and network. The most up to date security software is maintained, and support and training is provided to all staff to minimise the exposure of security threats. Network and critical system penetration tests are also performed to measure and assure our level of protection. The Group deploys a midlife field operating philosophy, which closely monitors reservoir, well and plant performance while continuously seeking out operating efficiencies and reinvestment opportunities to increase recovery rates and the production life of each field. In 2020 Jadestone has implemented a cost saving and efficiency project, Project Clover, to further lower the cost base across all operations and offices. The Group has assessed the financial and operational risks to the business and implemented multiple policies in response to the COVID-19 pandemic. The Group implemented new procedures covering IT, travel, supply chain and operations. The Group also implemented recommended safe practices across its operations and offices including remote working guidelines and established pandemic response committees at each location to manage local best practice. Regular liaison with national oil companies, regulators, and other government bodies to ensure acceptance and approvals are obtained as soon as possible. Projects are tailored to the local market conditions, including with regard to supply and price. Project economics are assessed with multiple sensitives to identify critical challenges, including contingency planning for potential project failures. Policy and procedures are regularly updated to reflect changes in each of the regulatory environments in which the Group operates. Government relations officers are employed in-country, where it is deemed appropriate, to liaise with government bodies to understand the potential impacts of likely regulatory changes on the business. Regular communications occur with government and trade bodies to understand potential looming and actual changes in the regulatory environment. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 34 2020 PRINCIPAL FINANCIAL RISKS AND UNCERTAINTIES STRATEGIC REPORT 35 Risk group Risk Select mitigations Reserve write-downs The Group is currently dependent on two producing assets and a reserve write down may impact long term business performance and corporate reputation. The majority of the Group’s reserves are in production. Estimation is done based on actual performance data, reducing the uncertainty range and risk of a write down. Internal technical reserves reviews ensure a high quality submission. All assets are either audited or reviewed on an annual basis pursuant to the Group’s 51-101 filing requirements. Sovereign / political risk The Group’s key assets are located in politically stable countries, but there is always the possibility of governmental or regulatory changes which could negatively impact the business. The Group maintains positive relationships with governments and key stakeholders, and actively monitors the political and regulatory environment within each of the countries and regions in which it operates. Jadestone operates as a good corporate citizen, including in accordance with PSC and tax regulations. New assets are assessed for political risk, and the potential negative impacts that could arise on the Group. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A Management team visit to Montara JADESTONE ENERGY 2020 ANNUAL REPORT 36 SUSTAINABILITY REPORT STRATEGIC REPORT 37 2 0 2 0 R e p o r t S u s t a i n a b i l i t y Marine growth at Stag well conductors T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A OverviewAbout Jadestone 38About this Report 392020 Jadestone Highlights 40Message from the CEO 412020 ESG Performance Overview 42Sustainability at Jadestone 43The UN Sustainable Development Goals 44Material Matters 45 Environment 46Environmental Management 48Discharges and Emissions 51Climate Change and Greenhouse Gas Emissions 54TCFD Disclosures 57Social & Human Capital 58Occupational Health and Safety 60Stakeholder Management 63Community Engagement 65Workforce Management and Diversity 68 Governance & Leadership 72Governance, Business Ethics and Compliance 74Asset Integrity and Process Safety 76Critical Incident Risk Management 78 GRI Index 80JADESTONE ENERGY 2020 ANNUAL REPORT 38 SUSTAINABILITY REPORT STRATEGIC REPORT 39 Vietnam Block SC 57 HO CHI MINH CITY Block 51 PSC Block 46/07 PSC KUALA LUMPUR SINGAPORE Lemang Ogan Komering Indonesia JAKARTA Philippines Montara Australia Stag PERTH About Jadestone NEW PLYMOUTH Maari New Zealand Jadestone Energy is an independent oil and gas company listed on the AIM market of the London Stock Exchange. Jadestone’s business model focuses on acquiring mid-life producing assets and stranded discoveries in the Asia Pacific region and, through significant additional capital investment, maximising reserves recovery and improving operating performance, thereby extending field life beyond any previous expectations and creating significant shareholder value. Jadestone's Mission To continue to grow as a leading independent oil and gas development and production company in Asia Pacific respected as an operator, partner and employer of choice. Operational Footprint Jadestone is focused solely on the Asia Pacific region, headquartered in Singapore, with its principal technical team in Kuala Lumpur and country operations based in Perth, Jakarta, Ho Chi Minh City and in New Plymouth. The Company’s asset portfolio includes: • • • 100%-owned producing Montara oilfield, offshore Australia (Timor Sea) 100%-owned producing Stag oilfield, offshore Australia (North-West Shelf) 100% interest in the pre-development Nam Du and U Minh gas fields, offshore southern Vietnam • 90% interest in the pre-development Akatara gas field on the Lemang PSC onshore South Sumatra, Indonesia Jadestone is also expanding into New Zealand, by acquiring a 69% operated interest in the Maari asset, offshore New Zealand. This transaction is subject to regulatory approvals and joint venture partners’ acceptance. Following these approvals, the transaction will close and control of the Maari project will transfer to the Group. Jadestone’s full Mission & Values can be found on Jadestone’s website. About this Report This Sustainability Report provides an overview of Jadestone’s sustainability approach and performance for the 12-month period from 1 January to 31 December 2020. It is part of Jadestone’s 2020 corporate reporting, along with the Annual Report 2020, and provides further insight into how the Company manages its material sustainability risks, issues and opportunities, to create social, economic and environmental value. This Sustainability Report was approved by Jadestone’s Board of Directors. Frameworks and Standards This report has been prepared in accordance with the Global Reporting Initiative (“GRI”) Standards: Core option. Sector- specific sustainability reporting guidance from IPIECA, the global, not-for-profit upstream and downstream oil and gas industry association, as well as London Stock Exchange ESG Reporting Guidance have been consulted in the preparation of this report. Finally, we have built further alignment with the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”) as well as the UN Sustainable Development Goals (the “UN SDGs”). Reporting Scope and Boundaries Jadestone is committed to being transparent about sustainability reporting boundaries and the effect of any changes in future reporting years. Jadestone primarily reports on an ‘operational control’ basis. This means that, in principle, this report focuses on those assets, offices and activities where Jadestone is the operator and over which it has control, in terms of policies and practices during 2020, irrespective of the licensed operating party. In the future, this may change to include other activities where participation without full control is included, and will reflect Jadestone’s influence wherever possible. Memberships • Platinum Sponsor Member of the Energy Club NT • Australian Petroleum Production & Exploration Association • Indonesian Petroleum Association • Energy Resources Aotearoa (previously the Petroleum Exploration and Production Association of NZ) As a result, the Stag and the Montara assets and operations in Australia are a primary focus for many of the environment, health and safety disclosures in this report. Where Jadestone is to assume operational control in the near future (as is in particular the case with the Maari asset in New Zealand), associated regulatory and transitional activities and their impacts have been disclosed. At the beginning of 2020, in response to the challenges of the COVID-19 global pandemic and approval delays, Jadestone made the decision to defer its Vietnamese operations. Therefore, in contrast to 2019, disclosures on Vietnam have been scaled back accordingly in 2020. Sustainability Data and Disclosures Jadestone calculates its greenhouse gas (“GHG”) emissions in accordance with the Australian National Greenhouse and Energy Reporting (Measurement) Determination 2008. In 2020, GHG emissions data includes relevant Australian subsidiaries as set out in the National Greenhouse and Energy Reporting Act 2007, which is also in line with Jadestone’s operational footprint. This Sustainability Report has not been subject to external third- party assurance. However, to ensure stakeholder’s confidence in environmental management and performance, Jadestone has engaged an independent third-party environmental accounting firm to prepare its 2020 Energy Use and GHG emissions data. Jadestone has also sought support from MCC Environment & Sustainability, an environment and sustainability consultancy in developing its Environmental, Social and Governance (“ESG”) agenda and disclosures further. These steps are a further testimony to credibility and reasonable external assurance over this report. Report feedback: Jadestone welcomes your feedback on this report via esg@jadestone-energy.com T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 40 SUSTAINABILITY REPORT STRATEGIC REPORT 41 2020 Jadestone Highlights 0 ‘Reportable’ environmental incidents 90,000 t Reduction of CO2-e due to significant reduction in flaring Effective stakeholder consultation across regions NETTS Apprentice programme participation ESG Metrics incorporated into executive KPI’s 14 mg/L Average OIW concentration TCFD Alignment across risk and governance 88 % Nationals directly employed by Jadestone 0 Incidents of non-compliance in business ethics COVID-19 Workforce kept safe in COVID-19 15 % Reduction of overall GHGs 0 Lost Time Injuries (LTIs) at operating assets $28.7mm Paid in local taxes and fees in Asia Pacific QCA Corporate governance code adoption 0 Critical risk incidents “Reportable” refers to there being no breach of the Environmental Performance Outcomes as defined in the Environment Plan for the asset in alignment with NOPSEMA's definition Message from the CEO I am pleased to present Jadestone’s Sustainability Report for 2020, which provides details on our progress against a wide range of environmental, social, and governance priorities, while also demonstrating our ongoing commitment to enhanced transparency. In this second Sustainability Report, we have progressed our alignment with the recommendations of the Task Force on Climate- related Financial Disclosures. Jadestone is committed to further investigate the material implications of climate-related risks on its business. This analysis will inform our climate change strategy which will be developed in 2021, setting a more strategic direction for navigating the energy transition, and mapping out a route to developing targets towards net zero carbon emissions, in line with the Paris Agreement. We have continued integrating ESG considerations across our business and have taken steps to further align our framework with the UN Sustainable Development Goals in order to better demonstrate Jadestone’s commitment and to measure our progress. We have increased our engagement with local communities, we are encouraging employment of local nationals (with 88% representation so far) and, through targeted community programmes, we are working to help address local needs. Jadestone remains committed to creating job opportunities for those entering the workforce for the first time, participating in the NETTS programme in Australia, and in graduate recruitment and internship opportunities throughout Asia Pacific. Finally, we have also continued to strengthen our Governance systems through the recent adoption of the QCA Code and by specifically formalising Board-level oversight over ESG matters. These are only some of the highlights from 2020. I invite you to read full details in the report. Paul Blakeley EXECUTIVE DIRECTOR, PRESIDENT AND CHIEF EXECUTIVE OFFICER 2020 was a year like no other, with the COVID-19 pandemic taking hold of our globalised economy and bringing with it health risk and socioeconomic disruption. In response, Jadestone acted decisively to the challenges imposed on our business, with both a significant reduction in near-term capital investment, and an extensive review of our operating cost base across the board, to remove or defer non- essential activity and costs, preserving the strength of our balance sheet and protecting longer-term project returns. We also introduced measures to ensure the safety of our employees, as well as processes to minimise disruption to our business activities. Looking back and reflecting on this toughest of years, it is clear that Jadestone, and everyone who works within the business have navigated the challenges with perseverance and commitment, ensuring we retained financial resilience while continuing production operations without compromising our environmental and safety record. Despite such difficult conditions, we achieved the majority of our 2020 sustainability targets and I am delighted to detail our performance and future outlook in this report. Some of the highlights include areas where we have exceeded our operational targets such as flaring volumes, with a reduction of 40% compared to the 2019 baseline for the recently acquired Montara asset. This translates into a substantial GHG reduction, which reinforces our strategy of investing in operational efficiencies for business improvement with an equal benefit in environmental performance. There are a number of recent examples, such as investments in new control systems, in produced water handling equipment and in the re-injection compressor, all on Montara, as well as the replacement of the ageing floating storage vessel at Stag. We will work on continuously improving our performance in all key areas and have committed to a further reduction in overall GHG emissions and improvement of water quality discharges in 2021, as an example. Jadestone is also diversifying its production mix with the pursuit of natural gas development projects in both Vietnam and Indonesia. These developments will result in the supply of low-cost energy to key domestic markets within Southeast Asia, most likely replacing coal alternatives. This is energy to local communities who might otherwise not see the benefits that affordable energy can bring. We also understand the advantage of gas over coal, from an environmental perspective, is realised when fugitive emissions are measured and minimised, and this will be a focus for these developments. “Despite the challenges brought about by the pandemic, we achieved the majority of our 2020 sustainability targets, working hard to prioritise the health and wellbeing of our people, stepping up our climate change agenda and maintaining our community engagement commitments, all with no detriment to operational excellence.” T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 42 SUSTAINABILITY REPORT STRATEGIC REPORT 4 3 2020 ESG Performance Overview The Company’s ESG targets are an expression of Jadestone’s commitment to continuous improvement and full transparency. They form part of the annual Executive KPIs, linking sustainability performance with pay, which enable Jadestone to incentivise and measure progress against its strategic objectives. Aspiration 2020 Target 2020 Performance • Not Achieved • Ongoing • Achieved More Info l Reducing our Energy a & GHG Emissions t n e m n o r i v n E Excellence in Environmental Management Reduce gas flaring at Montara (GHG emissions) by 10% Target exceeded with flaring reduced by 40% compared to 2019, equivalent to 90,000 t of CO2-e saved Reduce diesel usage at Montara by 10% Target exceeded with diesel use reduced by 33% Ensure zero Loss of Primary Containment (LOPC) -Tier 1 1 LOPC - Tier 1 event Improve overall oil-in-water (OIW) discharge performance at both facilities by 10% < 30mg/L Target exceeded with average oil-in-water discharge around 14mg/L Exceptional Regulatory Management Target Zero regulatory enforcement notices and zero fines for regulatory breaches 1 enforcement notice issued to the Stag asset l a t i p a C n a m u H & l a i c o S Exceptional Occupational Health and Safety Culture Target Zero Recordable Incidents, with continuous improvement year on year (<2) 0 Recordable incidents Reduce Medical Treatment Cases by 10% through leadership and culture 0 Medical treatment cases Provide full time medic to indigenous communities at Truscott during the COVID-19 pandemic Recruit and train local nationals where possible, and to the highest standards Medic currently stationed at Truscott Breakdown of local nationals and Jadestone’s internship and apprenticeship programme are detailed in Section “Workforce Management and Diversity” Engaged, supported and diverse workforce Provide training programmes for 4 Interns, and recruit 2 new graduates in 2020 9 internship and apprentice placements in Australia and Malaysia Ensure robust succession plan in place & high retention of 92% with positive feedback Leadership team and key roles succession plans in place; high retention of 96% reflective of positive sentiment amongst employees Build open relationships with key local stakeholders and communities Jadestone’s approach is discussed in Sections “Stakeholder Management” and “Community Engagement” Growing engagement and investment in local communities Develop increasing effort and investment into local social support. Target 10% increase year- on-year Investment target exceeded, with Community Engagement and volunteering funded and delivered Develop a local stakeholder consultation strategy Corporate Stakeholder Engagement Strategy approved ethics and transparency Critical Incident Risk Management Excellence in business e c n a n r e v o G & p h s r e d a e L Providing energy to meet global demand in the most efficient and sustainable way i Target Zero fines for any regulatory breaches for non-compliance 0 fines or sanctions for non-compliance with laws and regulations Maintain top Quartile Governance Standards QCA Corporate Governance Code adoption Perform 1 full emergency exercise and minimum 2 desktop exercises to test preparedness Target exceeded, with 1 full and 4 IMT drills conducted Deliver production at the improved unit cost as agreed in performance targets • Delivered unit opex in line with original guidance; • Delivered revised production target, reduced in step with deferred capital investment Deliver capital investment programmes, adding reserves and extending facility life as agreed in performance targets Jadestone reduced 2020 activity and investment levels to maintain balance sheet strength with revised short-term production guidance in the face of the pandemic Page 56 Page 56 Page 76-77 Page 53 Page 49-50 Page 62 Page 62 Page 62 Page 68-70 Page 68-70 Page 68-70 Page 63-67 Page 65-67 Page 63 Page 74-75 Page 74-75 Page 78-79 Page 5 Page 5 • • • • • • • • • • • • • • • • • • • Sustainability at Jadestone As a leading oil and gas development and production company in the Asia Pacific region, Jadestone strives to deliver sustainable value for all of its stakeholders in a safe, secure, environmentally and socially responsible manner. It achieves this by ensuring it reduces its environmental footprint through the life cycle of developments and by bringing social and economic benefits for people associated with its operations, in alignment with Jadestone's Shared Values. Jadestone’s Shared Values Respect Integrity Safety Sustainability Passion Results-Orientated Jadestone’s key policies can be found on Jadestone’s website Jadestone’s ESG Framework Sustainability Ensuring Jadestone reduces its environmental footprint through the life cycle of developments and brings social and economic benefits for people associated with its operations Strategic Pillar Environmental Human & Social Capital Leadership & Governance ESG Aspiration • Excellence in Environmental Management • Reducing our Energy & GHG Emissions • Exceptional Regulatory Management • Exceptional Occupational Health & Safety (“OHS”) culture • Engaged, supported and diverse workforce • Growing engagement and investment • Exceptional Incident Preparedness • Excellence in business ethics, transparency & governance • Meet global energy demand in the most efficient and sustainable way in our communities Material Matters • Environmental Management • Emissions and Discharges • Climate Change - GHG • OHS • Workforce Management & Diversity • Stakeholder Management • Leadership & Governance • Critical Incident Risk Management • Business Ethics & Transparency • Economic Performance • Asset Integrity & Process Safety • Regulatory Management SDG Alignment 7 RENEWABLE ENERGY 14 LIFE BELOW WATER 13 CLIMATE ACTION 3 GOOD HEALTH 8 GOOD JOBS AND ECONOMIC GROWTH 8 GOOD JOBS AND ECONOMIC GROWTH 7 RENEWABLE ENERGY 14 LIFE BELOW WATER “Jadestone’s ESG Framework has evolved over the course of 2020 to depict its continued alignment with wider societal challenges addressed by the Sustainable Development Goals.” Paulina Poray ESG LEAD MCC ENVIRONMENT & SUSTAINABILITY T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 44 SUSTAINABILITY REPORT STRATEGIC REPORT 45 The United Nations Sustainable Development Goals The UN SDGs were developed and adopted by all United Nations Member States in 2015 to achieve a more sustainable future for all by 2030. The UN SDGs represent an opportunity for organisations to identify the major global challenges on which they can create the most impact. Jadestone believes it can support a number of UN SDGs, either through positive contributions or by preventing or by mitigating negative impacts. Whilst its business activities touch directly or indirectly on many of the goals, Jadestone has selected the goals that most closely align with its current business strategy, activities and purpose. It has also considered how these specific goals relate to the material matters, orientating its 2021 strategic corporate goals around them. Jadestone will continue to align its ESG framework and programmes with the UN SDGs in the years to come. 3 GOOD HEALTH AND WELL-BEING 7 AFFORDABLE AND CLEAN ENERGY 8 DECENT WORK AND ECONOMIC GROWTH 13 CLIMATE ACTION 14 LIFE BELOW WATER Ensure healthy lives and promote well-being for all at all ages Ensure access to affordable, reliable, sustainable and modern energy for all Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all Take urgent action to combat climate change and its impacts Conserve and sustainably use the oceans, seas and marine resources for sustainable development • OHS • Workforce Management • Climate Change and GHG • Economic Performance • Economic Performance • Workforce Management • Climate Change and GHG Related Material Matters & Diversity Through strong efforts to protect its workforce from the on-the-job risks and hazards as well as employee assistance programmes, Jadestone ensures that its workforce is supported and can sustain healthy livelihoods. Jadestone also recognised the need to support the wider community in the face of the global pandemic by: • Provision of a full-time medic to the indigenous community of a remote part of Western Australia • Supporting a local orphanage in Malaysia For more details refer to Sections “Occupational Health & Safety”, “Workforce Management & Diversity” and “Community Engagement” & Diversity • Stakeholder Management Jadestone’s Contribution Jadestone will play a vital role in providing access to affordable, and reliable energy by the supply of gas to local Southeast Asian communities and industries; a region experiencing energy supply shortage in the midst of rapid growth. Jadestone is committed to sustainable extraction from existing infrastructure, thereby reducing the need for greenfield development, whilst setting emission reduction targets to lower its operational carbon footprint. For more details refer to Section “Climate Change and Greenhouse Gases” Jadestone recognises that it can create sustainable value for local communities and maximise positive contribution by: • Creating local employment • Paying local taxes • Supporting local business as part of its supply chain • Community support programmes based on community needs For more details refer to Sections “Community Engagement” and “Workforce Management & Diversity” As society responds and transitions to a low-carbon economy, Jadestone’s contribution in the mid- term is to ensure the most efficient use of existing facilities and maximising reserves recovery from already discovered reservoirs and existing infrastructure. Jadestone is committed to reducing its energy use and GHG emissions from operations by identifying further emission reduction opportunities and making deliberate investments towards improved emissions outcomes. The Company is currently reviewing the material implications of climate- related risks on its business, and this analysis will further inform its climate change strategy to be developed in the course of 2021. For more details refer to Section “Climate Change and Greenhouse Gases” • Environmental Management • Emissions & Discharges • Critical Incident Response Jadestone recognises that its offshore operations carry a risk of impacting the aquatic systems and it takes great care in minimising any negative impacts by investing into its assets and raising their environmental performance. For more details refer to Section “Emissions and Discharges” Material Matters The annual materiality assessment helps to identify and prioritise the most significant sustainability issues to Jadestone’s business and its stakeholders. Materiality Map H G I H Y R E V H G I H M U I D E M W O L s r e d l o h e k a t s s ’ e n o t s e d a J o t e c n a t r o p m I Local Community Impacts Human Rights & Modern Slavery Energy Consumption Waste Fossil Fuel substitutes Indigenous Peoples Stakeholder Management Asset Integrity & Process Safety Business Ethics & Transparency Economic Performance Leadership & Governance OHS Emissions & Discharges Climate Change – GHG Regulatory Management Workforce Management & Diversity Critical Incident Risk Mgt. Environmental Management (incl. Unplanned Hydrocarbon Releases) Innovation & Technology Cyber Security LOW MEDIUM HIGH VERY HIGH Importance to Jadestone and its business Environment Human & Social Capital Leadership & Governance Materiality Assessment In 2020 Jadestone conducted its second materiality assessment. This assessment is important to the Company as it ensures that it is responding to the ESG issues, risks and opportunities, seen in the context of emerging global and local trends, key stakeholder interests, industry best-practice and Jadestone’s overall corporate context. In line with the GRI standards and IPIECA Guidelines, Jadestone has sought input from a range of internal and external stakeholders to help establish ESG materiality. It regularly engages the investment community in gauging feedback on what ESG topics it should prioritise and, for the purpose of this assessment, targeted interviews have been conducted to inform this round of disclosures. Internally, an extensive review of potential topics of high materiality was reviewed by Jadestone leadership from across functional areas and geographies. The Company also reached out to its employees through a survey, asking which ESG topics they identified as most important, resulting in a balanced internal and external perspective. Material Matters The outcomes of this assessment are displayed in the sustainability map above, with 12 Material Matters identified across the Environment, Human & Social Capital as well as Leadership & Governance pillars. In addition to those matters listed as highly material, Jadestone also recognises matters that are the ones ‘of very high importance’ to stakeholders demand respect and attention. These are also referenced in this report. Principle Changes in Materiality Jadestone’s Material Matters have largely remained unchanged from 2019. However, some matters increase in their importance to the business as summarised below: • Climate Change – GHG emissions now has elevated importance to the Jadestone business, reflecting a growing recognition of the role Jadestone can play in the energy transition. • Workforce Management has an expanded scope to include Diversity, reflecting an area that is increasingly recognised as requiring more management attention and focus. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 46 SUSTAINABILITY REPORT STRATEGIC REPORT 4 7 Environment 2020 Highlights 0 ‘Reportable’ environmental incidents 90,000 t Reduction of CO2-e due to significant reduction in flaring 2021 Outlook 14 mg/L Average OIW concentration TCFD Alignment across risk and governance 15 % Reduction of overall GHGs 8 % OIW Reduction at the Montara asset • Target Zero regulatory enforcement notices • Seek opportunities for continuous • Target Zero ‘reportable’ incidents • Target Zero environmental HiPOs • Target Oil-in-Water concentration in produced water <15mg/L • Meet the Asset Safeguard limits for air emissions at operating assets improvement in emissions and discharges • 5% reduction of flaring and diesel use • Continued alignment with the TCFD recommendations and commitment to transparent disclosures “Jadestone takes a precautionary approach to managing its environmental impacts through robust environmental management that focuses on minimising pollution, reducing carbon footprint and commitment to safety.” Helen Astill HSE MANAGER Produced water sampling T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 48 SUSTAINABILITY REPORT STRATEGIC REPORT 49 MATERIAL MATTER Environmental Management Strong environmental performance is essential to Jadestone's success and continued growth. 2020 HIGHLIGHTS • Zero ‘reportable’ incidents • Zero environmental HiPOs Jadestone’s HSE Management System (Australia) Corporate level Corporate HSE Plan HSE Policy Legal Obligations Asset level Environmental Impact Statements Environmental Plans Oil Pollution Emergency Plans Safety Cases Why it Matters Jadestone recognises the environmental risks associated with the operations of its facilities and offshore installations. Effective Environmental Management is central to its operations to ensure best-practice environmental stewardship through efficient resource use, reducing emissions and discharges, preventing pollution and spills, managing waste and protecting biodiversity. Retrieving the Stag marine breakaway coupling Management Approach Jadestone applies the precautionary principle when undertaking activities across the whole life cycle of operating assets in all countries where it has operations. For its operations in Australia the approach to managing environmental risks is closely integrated with health and safety considerations, addressed through an overarching HSE Management System (“HSE MS”). The system is aligned to the principles of the ISO14001 standard, ensuring that there are processes and practices in place to manage environmental impacts, risks and performance whilst meeting legislative and corporate requirements. Robust impact and risk assessment form a cornerstone of Jadestone’s management framework, along with a strong focus on prevention of spills, effective and reliable emergency response and preparedness systems, including hydrocarbon spill response capability. For the assets Jadestone operates in Australia, bespoke Environment Plans have been developed. These Plans establish the regulatory context and legal requirements, identify key areas of impact and risk, define the most appropriate management practices and performance outcomes whilst embedding a principle of continued review, consultation and improvement. In addition, Jadestone applies a comprehensive compliance assurance programme to demonstrate its environmental performance is as intended. This programme includes monthly checks of conformance with the environment plans, quarterly planned audits at operating facilities, six-monthly checks for currency in the legislative framework, and annual performance reporting to national Regulators. These activities then contribute to identifying lessons learnt and ensuring a continuous improvement in environmental performance. As an expanding business, environmental standards, policies and practices are established for acquired assets that align with the standards in their local jurisdictions. Regulatory Management Jadestone is committed at a minimum, to comply with applicable national and international regulatory requirements at all levels in its operating regions. Regulatory Management pertaining to environment, health and safety is integral to Jadestone’s HSE Management System. This starts with proactive dialogue with relevant regulatory bodies in the countries of operation. Below is a summary of key 2020 regulatory activities across the regions: • Australia In addition to routine environmental performance reporting submitted to the regulator on an annual basis to demonstrate compliance with regulatory approval commitments: – Revised Environment Plan for the Stag asset prepared to reflect the change to tanker operations in the field. – New Environment Plan prepared for the Montara asset in relation to drilling campaigns. – Enforcement notice issued by the regulator for the Stag asset (discussed in detail in Case Study: Stag). • Indonesia – Applications for Environment and Forestry Permits for the Company’s Akatara gas development project in Sumatra prepared; the Environment permit obtained in August 2020. – An Environmental Impact Analysis as required by the Indonesian regulator prepared. – Environmental licence for field development and production obtained, a significant milestone for the Company. • New Zealand – Regulatory approval obtained for a suite of documents pertaining to the Maari permit, as part of approval process for the transfer of interest and operatorship (e.g. Oil Spill Contingency and Emergency Spill Response Plans, Ecological Effects Management Plan) CASE STUDY: STAG Ensuring safe and sustainable offtake arrangements at Stag In September 2020 Jadestone changed its offtake arrangements at the Stag oilfield, substituting an old FSO with a direct offtake tanker. Jadestone awarded this contract to a respected international tanker provider. During the first crude loading under new offtake procedures, traces of oil were spotted around the offtake tanker and as a result, the transfer was immediately stopped. It was later confirmed that the marine breakaway coupling (“MBC”) in the import floating hose connected to the tanker had activated due to impact by the bulbous bow of the tanker with the MBC. The valve of the MBC (as shown in the photo above) closed in accordance with its design and shut off the hose line, thereby preventing any significant leakage of oil into the marine environment. A nominal amount of oil was released from the hose connected to the MBC, again as per equipment design, causing the oil sheen observed. Based on characteristics of the sheen, equipment design and historical events, it was estimated that 68.5 litres of oil was released; an amount below the required regulatory reporting limits. Regardless, Jadestone reported the release to NOPSEMA, the Australian regulator. Spill management Jadestone’s HSE framework examines the risk and potential consequences of incidents and accidents. This includes oil spills, chemical spills and the release of other hazardous substances. Jadestone has developed contingency plans and spill management and emergency response practices. Jadestone’s HSE Policy can be found on Jadestone’s website. Inspecting the Stag marine breakaway coupling Following the incident, Jadestone conducted an internal investigation into the root cause and contributing factors of the MBC activation. The Australian regulator NOPSEMA issued Jadestone with a direction notice containing a number of actions, including a direction to identify and implement interim control measures to prevent recurrence. Jadestone management worked through the directions in close consultation with NOPSEMA, implementing and evidencing amendments to its practices. A key lesson from the event is for a comprehensive handover to be undertaken for new tanker crews to ensure MBC related risks and safe operations are fully understood. Notwithstanding this event, Jadestone remains confident that it has implemented a new operating model that will be a significant improvement compared with the previous offloading model, which relied on an ageing vessel on location, inherited as part of the acquisition of the Stag asset. The new model provides environmental risk mitigants by eliminating one vessel in the field, removing the need for ship-to-ship oil transfers at sea, and providing modern double-hulled tankers. At the same time, this innovative offloading model results in substantial cost savings for the business. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 50 SUSTAINABILITY REPORT STRATEGIC REPORT 51 2020 Performance Jadestone remained a strong and resilient operator, maintaining operations despite tough logistical challenges amidst the global pandemic. This was achieved without compromising operational excellence in environmental management: • Zero ‘reportable’1 environmental incidents at its operating facilities • Zero environmental high potential incidents recorded during the reporting period • One enforcement notice issued in relation to an incident at the Stag oilfield (see Case Study: Stag) which has been satisfactorily closed with the Regulator. Environmental management metrics 2020 2019 ‘Reportable’1 environmental incidents Loss of Primary containment - Tier 1 Environmental High Potential Incident (“HiPO”) Regulatory enforcements Regulatory fines 0 1 0 1 Nil 0 0 0 0 Nil Future Outlook Jadestone is committed to maintaining the highest environmental standards and will foster a culture of continuous improvement by aspiring to achieve in 2021 the following goals: 2021 ESG STRATEGIC CORPORATE GOALS • Target Zero regulatory enforcement notices • Target Zero ‘reportable’1 incidents • Target Zero environmental HiPOs Jadestone will also continue integrating its new assets into its HSE Management Systems. 1 ‘Reportable’ refers to there being no breach of the Environmental Performance Outcomes as defined in the Environment Plan for the asset in alignment with NOPSEMA’s definition View from Montara MATERIAL MATTER Discharges and Emissions Jadestone carefully manages discharges and emissions and is committed to continuous improvement. 2020 HIGHLIGHTS • 6ppm OIW concentrations at Stag • 8% reduction in OIW concentration at Montara Why it Matters A range of pollution impacts and risks to air and water are associated with offshore oil and gas production activities. Jadestone monitors and manages its emissions very closely across a range of parameters including nitrogen oxides (“NOx”), sulphur dioxide (“SO2”), total volatile organic compounds (“TVOC”), particulate matter and GHGs. As an offshore oil and gas operator, Jadestone understands that its business operations impact and depend on water resources. Jadestone is committed to minimising impacts of its discharges to water by managing produced water and process wastewater in line with national management framework recommendations and industry best practice. Montara Venture FPSO Management Approach Air emissions The main sources of atmospheric emissions during operations include the use of fuel to power generators and mobile and fixed plant, flaring of gases encountered from the oil extraction process, venting from storage infrastructure as well as fugitive emissions. Jadestone implements management measures that include scheduled maintenance of equipment and availability of critical equipment spares, to keep air pollutant emissions from Jadestone operations as low as possible. In Australia, Jadestone reports a range of its pollution emissions to the National Pollutant Inventory and GHG emissions to the Clean Energy Regulator. NOx and SO2 emissions released from Jadestone's operations in Australia have increased in 2020 due to full year of Montara operations (acquired in August 2019). GHG emissions are discussed at length in the section Climate Change and GHG emissions. Air Emissions: NOx, SO2, TVOC 1,000 800 600 400 200 0 tonnes/year NOx SO2 TVOC 2019 2020 T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 52 SUSTAINABILITY REPORT STRATEGIC REPORT Discharges and Emissions (continued) Discharges to water A key focus for Jadestone in managing impacts to the marine environment from its offshore facilities, relates to the treatment and discharge of operational waste streams, including produced water. Produced water is formed as a by-product of extracting oil from Jadestone’s offshore operations. Production from the subsurface reservoirs is typically processed in an on-site processing plant through a separation system into oil, gas, and water streams. The latter stream is either re-injected into the reservoir to maintain underground reservoir pressure, or it is cleaned, filtered, monitored for contaminants such as residual Oil-in-Water (“OIW”), and then discharged into the sea, should discharge quality be satisfactory. Jadestone’s approach to managing produced water is to reduce the OIW content to threshold concentrations which are below that considered appropriate under the National Water Quality Management Framework (ANZECC/ARMCANZ 2000). Whilst other routine operational liquid discharges (e.g. flame retardants, cooling water, treated sewage) may be introduced to the environment from Jadestone’s operations, the potential impact is minimised through the use of a risk assessment process for chemicals, onsite wastewater treatment and other specific management controls as appropriate. Waste management Jadestone waste streams on its offshore facilities typically include putrescible waste and non-hazardous materials resulting from day- to-day operations. Hazardous waste associated with the facilities may include fuel and lubricating oils, and chemicals associated with operations. Jadestone’s approach to hazardous waste starts with effective materials management. Storage and handling of mixed classes of dangerous goods follows the guidelines set in Australian and New Zealand best practice standards. The transport of hazardous wastes is managed in accordance with respective MARPOL Regulations and relevant legislative requirements. Solid waste produced at the sites in Australia are logged and reported in monthly waste reports by Jadestones’s waste management contractor. Solid wastes are segregated and transferred to a licensed waste facility as per Waste Management Plans and the assets’ Environmental Plans. Stag crude oil offtake using the Maersk Tacoma 53 2020 Performance Through its focus on OIW performance, Jadestone has continued to reduce the concentration levels at the Montara oilfield, achieving an 8% reduction in average concentrations when compared to 2019 levels. The Company continues to investigate further improvement options for produced water streams. The Stag asset, with concentrations around 6 ppm, is considered to be best-in-class with very low OIW discharge performance, and with little room for further optimisation. Jadestone monitors OIW concentrations daily ensuring that it maintains this high performance. Through the application of best practice topside management, regular maintenance of oil removal equipment and investment in upgrading equipment from time to time, improvement of combined OIW concentration in 2020 to a daily average of 14mg/L was achieved. This is well below the upper limit of 30mg/L required by the operational Environment Plans. Emissions & Discharges Metrics Unit 2020 2019 Oil in Water Concentrations Air emissions NOx Air emissions SO2 Air emissions TVOC ppm /mg/L tonnes tonnes tonnes 14.42 422 9 776 14.7 222 9 448 Future Outlook Jadestone is focused on meeting performance pertaining to the quality of produced water discharges. It continues to commit to achieving the following environmental performance outcomes for produced water discharges, which is satisfied through rigorous and impartial laboratory testing. Achieve the national marine water quality guidelines for protection of 99% of species as defined by the National Water Quality Management Framework (ANZECC/ ARMCANZ (2000)) at the boundary of the area of impact. Jadestone has the following performance outcome targets for produced water quality and air emissions in 2021: 2021 ESG STRATEGIC CORPORATE GOALS • Target Oil-in-Water concentration in produced water <14mg/L • Meet the Asset Safeguard limits for air emissions at our operating assets • Seek opportunities for continuous improvement in emissions and discharges T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A Decommissioning Decommissioning is the process of removing or applying to leave in-situ production-related assets, including platform installations, equipment, pipelines and other subsea infrastructure, in a safe and environmentally responsible manner, at the end of their useful life. This includes plugging and abandoning wells, removal of unused equipment and carrying out any necessary post-decommissioning monitoring. When managing unused equipment in its petroleum titles, Jadestone considers a range of priorities including maintenance and integrity requirements of the equipment while in-situ, needs of other marine users in the area, and environmental impacts and risks associated with the equipment whilst both in-situ and during removal, once this has been determined to be the best course of action. Jadestone recognises that titleholders are required by law to dismantle and remove, reuse equipment or seek exemption to allow the equipment to be left in place. Jadestone takes a cradle- to-grave approach to its operations and sees decommissioning at the end of life of its assets as a phase in the overall value chain, for which it takes full responsibility. With all Jadestone’s assets’ lives being extended through investment by at least another decade or so, decommissioning of assets is not yet a material matter for Jadestone, although disused equipment is actively managed. Jadestone’s insurance and financial positions guarantee that the Company will be ready to take on decommissioning activities when required. Whales with calf, offshore western Australia CASE STUDY: Plastics Free July campaigns Waste streams generated in Jadestone's offices are typically separated into recyclables and landfill, with increasing efforts to minimise the latter. In 2020, Jadestone’s regional offices participated in the Plastic Free July campaign for the second year running. Due to restrictions related to the global pandemic, not all offices were able to run office-based initiatives and instead expanded the campaign, encouraging minimising plastics from day-to-day household use. The Perth office, not subject to COVID restrictions, ran in July 2020 an office-based Plastics Free campaign which focused on collecting soft plastics for disposal the REDcycle programme. Due to the commitment of the Perth employees, over 4kg of soft plastics had been diverted away from landfill and the effort of Perth employees has continued beyond the campaign. Through supporting participation the Plastic Free July campaign, the Company is encouraging employees to consider waste management and efficient disposal solutions both as part of their daily lives, and as part of Jadestone’s corporate culture. Minimising waste is a key part of driving efficiency throughout everything Jadestone does. JADESTONE ENERGY 2020 ANNUAL REPORT 54 SUSTAINABILITY REPORT STRATEGIC REPORT 55 MATERIAL MATTERS Climate Change and Greenhouse Gas Emissions Jadestone is ensuring it is well positioned to navigate the energy transition through its focus on efficient, lower-carbon and lean operations. 2020 HIGHLIGHTS • 90,000 t of CO2-e avoided as a result of significant reduction in flaring • 15% reduction of GHGs • TCFD alignment across governance and risk Why it Matters The oil and gas industry is directly responsible for 9% of the global GHG emissions causing climate change. Furthermore, 33% of global emissions stem from downstream combustion of fossil fuels1. At the same time, oil and natural gas play critical roles in today’s energy and economic systems, with low carbon alternatives not yet able to fully satisfy the world’s energy needs. The energy system will need to undergo a carefully orchestrated transition to meet this dual challenge, and it is Jadestone’s view that the oil and gas industry plays a vital role in providing responsible solutions during this transition. Climate change presents a pressing societal challenge of our times: to decarbonise the economy and limit global warming, whilst continuing to provide affordable, reliable and abundant energy which is essential for economic development and sustained improvements in the quality of life and the eradication of poverty. Management Approach Even as society transitions to a low-carbon economy, Jadestone believes that the ongoing need for energy will continue to increase, with more efficient extraction and use of hydrocarbon fuels being an indispensable part of energy supply for some time to come. According to the International Energy Agency, in the Sustainable Development Scenario, that charts a path consistent with the Paris Agreement, oil and gas are still expected to account for 46% of the world’s energy mix in 20402. Despite the circa 6% energy demand decline experienced in 2020 due to COVID-19, the most recent forecasts suggest that global energy demand will still grow as a result of population growth and further progress within developing economies. The demand for reliable and affordable energy is particularly strong in Southeast Asia, with some populations not yet having any access to modern energy. A clear focus on minimising GHG emissions, whilst maintaining a low-cost structure ensuring profitability even in a low oil price environment is critical. As the industry is learning how to navigate this new landscape, Jadestone continues to develop its approach to climate change focusing its climate action across three main pillars. Energy use Direct energy use on Jadestone’s facilities arises from combustion of such fuels as produced gas, and diesel that support day to day operations. In August 2019 Jadestone acquired the Montara asset, including a warehouse in Darwin, which resulted in the Company’s energy consumption almost doubling in 2020. Given that Jadestone is currently in a growth phase, with more new assets to be added to the portfolio, its overall energy use is expected to increase in the coming years. Additional maintenance activities and drilling campaigns may see energy use fluctuate annually. Jadestone is committed to being fully transparent about such activities. Simultaneously, when taking on mid-life assets, Jadestone continuously looks for ways to optimise operations opportunities as well as investing in equipment which reduces emissions and discharges. Whilst electricity used in Jadestone's offices is low when compared to use in operations, it did increase by 30% in 2020, with the variation attributable to the addition of an office in New Zealand and a warehouse in Australia. GHG emissions Jadestone’s scope 1 GHG emissions typically arise from the combustion of fuel gas, diesel and flaring of unprocessed natural gas, a by-product of the production process. In 2020 the Company experienced a considerable increase in its overall GHG emissions due to the acquisition and operatorship transfer of Montara in 2019. As per Jadestone's business strategy of acquiring mature, mid-life assets and transforming them into more sustainable, productive and efficient entities, the Company has invested in efficiency measures and introduced improvements to Montara’s operational practices. Through an increase of unprocessed gas reinjection at the site, an estimated 90,000 t of CO2-e of emissions was eliminated (see Case Study: Montara). Had Jadestone continued to operate the site in the same way as the previous operator, Jadestone’s Scope 1 emissions in 2020 would have been 36% higher. To illustrate this positive improvement, Jadestone has charted a full 2019 emissions data set for Montara as a baseline, on the principle that Jadestone’s operational control and thus GHG responsibility begins at the point of operator transfer in August, 2019. Total Energy Use: Operations and Office Electricity 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 GJ 1,092 4,234,802 838 2,203,587 2019 2020 Direct Energy – Operations Electricity – Offices Total GHG Emissions: Scopes 1* and 2 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 t CO2-e 15% 223 253,366 164,529 205 134,382 2019 2020 Scope 1 Scope 2 Scope 1 – under former operator * A full 2019 emissions data set for Montara had been plotted, designating the portion of emissions that Jadestone has no operational control over as it covers the emissions for period January - July 2019, under former operator Jadestone's Climate Action Priority Areas JADESTONE'S CLIMATE CHANGE ACTION: Supplying cleaner energy alternatives to Southeast Asia 1. Reducing GHG emissions in operations 2. Increasing climate-resiliency of the business 3. Supplying cleaner energy alternatives Continued focus on efficient energy use and minimising GHG emissions Ensuring business model and strategy is resilient in the face of the energy transition Increasing gas ratio in the product mix3 and continued supply of high-quality low- sulphur crude oil 1 McKinsey & Company, “The future is now: How oil and gas companies can decarbonise”, January 2020 2 International Energy Agency, “Total energy supply outlook by fuel and scenario, 2000-2040”, September 2020 3 Over the past decade, switching from coal to gas has proven to be a highly effective way to reduce power generation emissions while minimising costs and preserving grid stability. Such a switch can reduce emissions by 33% when applied to heating, and up to 50% in electricity generation with the caveat that fugitive emissions are managed responsibly (EIA, 2019, The role of gas in Today’s energy transition). Jadestone plays a vital role in providing access to affordable, and reliable energy by the supply of gas to local Southeast Asian communities and industries, in a region experiencing energy supply shortage in the midst of rapid growth. environmental impact. This will reduce dependence on imported thermal coal given the operational constraints imposed by the national electricity grid and the regionalised nature of the Vietnam gas pipeline network. Jadestone has plans to develop two fully appraised gas fields in Vietnam, which will see this lower carbon fuel, brought to the market, potentially replacing coal, and backfilling existing but declining sources of energy. The Nam Du and U Minh gas fields in offshore southern Vietnam, when developed, will supply domestic gas to the Ca Mau power and industrial complex and feedstock to a fertiliser plant supporting farmers in the Mekong Delta. The development will use existing pipeline infrastructure to reduce In Indonesia, Jadestone is supporting the Government’s efforts to meet local energy needs and domestic liquefied petroleum gas (“LPG”) demand for residential and cooking purposes through the development of Jadestone’s Akatara gas field in Sumatra. When operations commence, the Akatara field is expected to produce around 200 metric tonnes of LPG per day targeting the total LPG demand of the whole local province. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 56 SUSTAINABILITY REPORT STRATEGIC REPORT 5 7 Future Outlook Jadestone is committed to ensuring that the carbon footprint of its assets is reduced to as low as reasonably practicable. Throughout 2021 Jadestone will continue looking for emissions reduction opportunities across existing and newly added assets. Furthermore, Jadestone recognises that it will continue to evolve its strategy to demonstrate to its stakeholders a compelling business case and a relevance in the face of the energy transition as demonstrated by priority 2. Jadestone’s climate change strategy will identify priority areas for action, setting a more strategic direction for navigating the energy transition and inevitably, mapping out a route towards net zero carbon emissions, in line with the Paris agreement. 2021 ESG STRATEGIC CORPORATE GOALS CLIMATE CHANGE AND GHG COMMITMENTS Energy & GHG Emissions Metrics Unit 2020 2019 Hydrocarbon production Energy use - Operations Electricity Use - Offices Total Flaring mm bbls GJ GJ m3 4,2 4,234,802 1,092 62,123,031 Diesel Use kL 1,326 Total GHG Scope 1 tCO2-e 253,366 GHG – crude oil GHG – produced gas GHG – flaring tCO2-e tCO2-e tCO2-e 13,066 73,609 161,953 GHG – diesel tCO2-e 3,592 Total GHG Scope 2 tCO2-e 223 4,5 2,178,652 838 35,551,790 (91,764,2901) 942 (1,8791) 134,382 (298,9111) 13,284 25,229 92,683 (239,2271) 2,551 (5,0901) 180 1 To ascertain the magnitude of GHG reduction, 2019 performance in brackets also includes Montara performance data covering the period under the previous operator Task Force on Climate-related Financial Disclosures In 2020 Jadestone developed its alignment with the recommendations outlined in the G20’s Financial Stability Board Task Force on Climate-related Financial Disclosures, utilising it as a practical tool for navigating the transition to a low-carbon economy and increasing our understanding of the resilience of our business strategy. Jadestone introduced improvements across the Governance and Risk Management areas. Governance Disclose the organisation’s governance around climate-related risks and opportunities Board oversight of climate-related risks and opportunities Jadestone recognises that climate change is a potential strategic risk to companies and society at large, and it is therefore the duty of the Board to manage it in the same way as any other strategic risk. The Board reviews Jadestone’s Corporate Risk Matrix biannually, which as of 2020, also includes the transitional risk of climate change. In addition, the Board receives monthly ESG briefings from the Leadership Team, which report on progress of climate-related programmes where appropriate. The Board’s HSE, Remuneration and Disclosure Committee are jointly responsible for overseeing Jadestone’s strategies, programmes, performance and disclosures relating to ESG, which includes climate change. Management role in assessing and managing climate-related risks and opportunities In 2020, the Climate Change Working Group (“CCWG”) was formed, which included senior leaders from Finance, Risk & Strategy, HR, Investor Relations and Environment. The CCWG is tasked with developing climate-related strategies and programmes in line with the TCFD recommendations and its work is supported by energy and emissions reporting from key functional areas such as HSE and Operations. 1. Reducing GHG emissions in operations by… 2. Increasing climate-resiliency of the business by … Strategy A further 5% reduction of flaring and diesel use • • Emissions Reduction options prioritised and deployed across existing assets Increased internal GHG reporting to support performance tracking and decision-making • GHG Emission review conducted on the New Zealand asset • Survey of actual fugitive emissions conducted in a pilot project at Stag Continued alignment with the TCFD recommendations and commitment to transparent disclosures • Develop a Climate Change Strategy in alignment with TCFD • requirements Further integration of climate risk into the Corporate Risk Framework and business processes • Define most suitable metrics for assessing climate related risks and opportunities • Develop Scenario Analysis methodology CASE STUDY: MONTARA Reduction of flaring and diesel use 2020 performance: 40% reduction in flaring, 10% target exceeded 33% reduction in diesel use 90,000t of CO2-e avoided Upon taking over operatorship of the Montara asset, Jadestone’s Operations team identified an opportunity to increase the uptime of the reinjection compressor and therefore enable increased reinjection of produced gas. This presented an opportunity of great environmental value whilst also maintaining reservoir pressure support. At acquisition, the average daily flaring volume was approximately 10mm scf/d, with the majority of produced gas being flared. The Company has made a substantial investment into the gas reinjection system and has adopted improved operating practices. This is reflective of the strong management focus on flaring volumes, a key metric monitored and reviewed daily at Jadestone. * 2019 levels include data from previous operator to arrive at the full calendar year performance Montara Venture FPSO A reduction target was set at 10% for Montara, however through this project, Jadestone has managed to increase equipment reliability more than expected, achieving 40% reduction in flaring during 2020, compared to 2019 levels*. A further 5% reduction has been targeted for 2021. Jadestone will continue to seek ways of further driving down flaring volumes, whilst acknowledging that some level of residual gas flaring is necessary to maintain safe oil and gas operations. Diesel consumption at Montara was also reduced by 33%, exceeding the 10% target set, due to an increased availability of reinjection gas to kick off wells instead of using diesel. This is both an environmental and economical improvement to the business. Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s business, strategy and financial planning where such information is material Climate-related risks and opportunities identified over short, medium and long term Throughout 2020, Jadestone made considerable progress in understanding its climate-related risks. Through a series of risk workshops the Company identified and assessed the following climate-related risks: - Key physical risks include increase of extreme/adverse weather events, change in metocean conditions and an increase in high heat days. Transitional risks include changes in government legislation, shareholder divestment and public expectation around emissions management and decarbonisation. - Impacts of climate-related risks and opportunities on organisation’s businesses, strategy and financial planning Jadestone is currently reviewing the material implications of climate-related risks on its business. This analysis will inform Climate Change Strategy to be developed in the course of 2021. These risks were assessed considering short (<2 years) and medium (3-5 years) and long (>5 years) timeframes. Resilience of organisation’s strategy taking into account different climate scenarios, including a 2°C scenario as above Risk Management Disclose how the organisation identifies, assesses and manages climate-related risks Processes for identifying and assessing climate-related risks Climate change considerations are aligned with Jadestone’s formal Risk Management Framework and follow the same process as the identification and management of risk in other parts of the business. Climate-related risks, that are of strategic importance, have been incorporated into the Corporate Risk Register in 2020 after a series of risk workshops facilitated by the newly formed CCWG. Further integration of climate risk into Corporate Risk Framework is planned in 2021. Processes for managing climate-related risks as above How processes for identifying, assessing, and managing climate-related risks are integrated into the organisation’s overall risk management as above Metrics and Targets Disclose the metrics and targets used to assess and manage the relevant climate related risks and opportunities where such information is material Metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process For the purposes of internal performance review, Jadestone monitors metrics such as flaring, diesel consumption and absolute GHG emissions as well as emission intensity of its assets by unit of production. Jadestone is currently reviewing the implications of the climate-related risks on its business which includes consideration of the most suitable metrics for assessing climate related risks and opportunities. Scope 1, Scope 2, and, if appropriate, Scope 3 GHG emissions, and the related risks Jadestone collects and manages the emission and energy consumption data for its operated assets and continuously looks for ways to improve the efficiency of operations. Jadestone currently reports Scope 1 and 2 emissions, as per Section "Climate Change - GHG" of this report. Targets used by the organisation to manage climate-related risks and opportunities and performance against targets In 2021, Jadestone commits to reducing flaring and diesel use by 5% compared to 2020 levels at its Australian assets. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 58 SUSTAINABILITY REPORT STRATEGIC REPORT 59 Social and Human Capital 2020 Highlights 0 Lost Time Injuries (LTIs) at operating assets 88 % Nationals directly employed by Jadestone NETTS Apprentice programme participation 2021 Outlook • Target Zero recordable incidents, (<2) • Conduct an Employee Engagement Survey, • Undertake Company-wide HSE Culture Survey • Complete 8 OHS & Environment audits • • Implement a community activity in all countries of operation, target 10% increase in spending year-on-year Improve the measurement of community investment impact as well as employee participation in community programmes • Retain local national talent, targeting 90% representation targeting for 80% participation rate • Sponsor 2 more apprentices as part of NETTS programme, and provide student internships for at least 5 new graduates • Ensure all employees have completed a Performance Review under a range of KPIs • Ensure the offshore workforce achieves training and competency levels as defined in the Offshore training matrix, targeting at least 90% completion “At Jadestone we strive to create a safe and rewarding working environment for our workforce, and go beyond this to recognise the positive impacts we can make on wider society.” Lucy Dean GROUP HR MANAGER T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A Mark Pearce, a mechanical technician on the Montara Venture FPSO JADESTONE ENERGY 2020 ANNUAL REPORT 60 SUSTAINABILITY REPORT STRATEGIC REPORT 61 MATERIAL MATTER Occupational Health and Safety Providing a safe working environment and maintaining people’s health and well-being is of paramount importance to Jadestone. 2020 HIGHLIGHTS • Zero LTIs at operating assets • Healthy and safe workforce during COVID-19 pandemic • HSE Culture Survey launched CASE STUDY: Exceptional safety record in Australia: 1 and 8 years LTI free 2020 was a year of important safety milestones for the Company’s Australian operations. In August 2020, Montara achieved 1-year LTI free (representing the time under Jadestone operating control), whilst Stag celebrated 8 years LTI free. These milestones are particularly meaningful in the context of the pandemic and the level of activity on both assets. A safety performance like this is a huge credit to the safe and professional behaviour of the offshore team involving both core crew and contract partners, onshore support functions, the safety leadership and the commitment to safety shown throughout the business right to the top. Why it Matters Health and safety considerations remain a central focus for Jadestone. The Company is committed to providing a safe and rewarding work environment, and to maintain an exceptional health and safety performance wherever it operates. As safety starts with the individual, all individuals who work for Jadestone are expected to demonstrate a commitment to their own health, safety and wellbeing. Jadestone is committed to supporting its workforce with the necessary training, systems, procedures, personal preventative equipment and tools. Management Approach Jadestone’s Board-approved HSE Policy and Corporate HSE Plan lay out Jadestone’s philosophy and approach to health and safety. This is further supported by the shared value of “Safety”. Safety takes precedence in everything Jadestone does and is a key element identified in Management and employee performance pay. Electrical maintenance and testing at Lemang Jadestone's Shared Value Putting safety first at all times, aligning standards across assets, geographies and cultures Jadestone’s HSE Policy can be found on Jadestone’s website. Regulatory management Jadestone recognises its duty of care to protect the health, safety and welfare of its workforce and other stakeholders who might be impacted by the business. Jadestone abides by the legal requirements in the countries within which it operates as a minimum. In Australia, the OHS regulatory regime for offshore oil and gas operators uses a safety case approach, as underpinned by the Offshore Petroleum and Greenhouse Gas Storage (Safety) Regulations 2009. In this regime an operations-specific Safety Case document is developed, which identifies the hazards and risks, describes how the risks are controlled as well as the safety management system in place to ensure the controls are effectively and consistently applied. In 2020, Jadestone engaged in the following OHS regulatory activities: • Australia: In regard to the new offtake model at Stag (refer to Case Study: Stag, pg 49), the revision to operations necessitated a change to the regulatory management framework that had been in place for the prior floating, storage and offloading arrangement. Jadestone worked with Australian regulators to ensure the new operating model complied with all relevant laws and regulations and to obtain their acceptance. As part of that effort, the Company’s Safety Case for the Stag asset was updated. • New Zealand: Jadestone has engaged New Zealand’s Health and Safety regulator, Worksafe NZ, in respect of the Maari Safety Case and has received consent for its Maari Field Bridging Document. This document will be replaced in due course following the transfer of interest and commencement of operatorship by Jadestone. (For more details please refer to Section: Environment Management, pg. 48 for more details.) Pictured above is Australia’s Operations Manager Tom Coolican presenting the award of safety excellence to Montara and Stag OIMs. Emergency Response Training Hours* HSE Management System In order to satisfy its commitments to proper control of risk at the facility, as well as to protection of workers, environment and communities, Jadestone relies on its HSE MS, as per Section: Environmental Management, pg. 48. The HSE MS describes the standards, procedures and behaviours necessary to achieve the desired HSE performance and outcomes when it comes to the assets in Australia. 2020 2019 2018 To drive continuous improvement, Jadestone regularly reviews and updates the HSE MS system in line with its operational requirements and the findings from the activity risk assessments and internal audits. As Jadestone continues to grow and expand its geographical footprint as a business, it recognises the importance of aligning its HSE standards across regional assets, whilst ensuring local requirements are well understood and addressed as a minimum. The Company monitors its OHS performance closely through a combination of leading and lagging KPIs and reports this information on an ongoing basis to the Leadership Team and to the Board. Jadestone’s Leadership Team is responsible for the implementation of the HSE MS, which is supported by executive performance KPIs. In Australia, a Regional HSE Committee, which includes representatives from onshore, offshore and senior management, meets quarterly to review HSE performance and to identify opportunities for improvement. Furthermore, the Health, Safety and Environment Board Sub- Committee meets at least three times a year and assists the Board in obtaining assurance that appropriate policies and systems are in place to effectively manage the health, safety and environmental as well as ESG risks in relation to the Group’s operations and ensure that the Group’s activities are planned and executed in a safe and responsible manner. 0 500 1,000 1,500 2,000 * applies to workforce in Australia and NZ Culture of safety To ensure a culture of safety is maintained throughout its operations, Jadestone regularly conducts safety briefings, toolbox talks and emergency drills. These activities are underpinned by workplace risk assessments and audits to identify unsafe practices or conditions. Other mitigations include engineering controls, permit to work controls and safe work procedures. Jadestone maintains an onsite emergency response capability and mandates that all incidents, including accidents and spills are reported and recorded in an electronic incident management and hazard reporting tool. Any actions which may arise from incident investigations are assigned and tracked. HSE KPIs are set for each facility and reviewed by management on a monthly basis. Jadestone ensures that all individuals have the correct competencies to achieve its HSE targets. In Australia, anyone visiting sites must complete Jadestone’s formal online HSE required inductions prior to their arrival on site. The completion of Safety Case Awareness training for offshore personnel is mandatory for employees and contractors, as is a site-specific induction, and formal helicopter and sea survival training. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 62 SUSTAINABILITY REPORT STRATEGIC REPORT 63 COVID-19 Response to Health and Wellbeing Jadestone developed and implemented management frameworks to manage the COVID-19 pandemic and potential exposure for all individuals. Jadestone offices took steps to strengthen the working- from-home arrangements, while rostering and travel arrangements for offshore personnel in Australia were modified to accommodate quarantine and isolation requirements, as well as reducing exposure risks wherever possible. Jadestone recognises that the mental health and wellbeing of its workforce is of paramount importance to its business with the issue becoming more critical during the COVID-19 pandemic. Recognising this increasing need for workforce support, Jadestone introduced the following measures: • Mental health programme for offshore employees (e.g. mental health check ins, on-call support during the time working offshore); and • Fatigue risk assessment to support the temporary need for longer offshore work cycles. HSE Culture Survey Jadestone launched its first HSE Culture survey in 2020, to further assess Jadestone’s safety culture and improve the understanding of HSE Performance. The survey was based on the industry-wide ‘Safer Together’ HSE Culture survey. The 2020 results instigated the following Company-wide focus areas: • The provision of mental health first aid training for employees; • Leadership training for supervisory and management roles; and • Delivering information sessions on Jadestone’s behavioural based safety programme. It is Jadestone’s intention to undertake the HSE Cultural survey on an annual basis and to conduct peer benchmarking to ensure the continued improvement of its practices. Stephen Porter on Montara Occupational H&S Metrics Unit 2020 2019 Manhours worked Recordable Incidents Total Recordable Injury Rate Medical Treatment Cases High Potential Incident Lost Time Injury Loss of Primary containment - Tier 1 HSE Audits Full emergency exercises Desktop Emergency exercises mm hours # per year rate # per year # per year # per year # per year # per year # per year # per year 3.2 0 3.15 0 2 0 1 7 1 4 * Jadestone commenced operation of Montara facilities August 2019 0.21 * 1 12.32 0 0 0 0 8 1 3 2020 Performance Despite the recognised impacts of the COVID-19 pandemic, Jadestone’s performance across key OHS indicators has remained strong. Future Outlook Robust health and safety management systems rely on a cycle of continuous improvement. In 2021 Jadestone has committed to improving its HSE performance through the following targets: • Improvement of Recordable Incidents, achieving target of < 2 • Zero LTIs at our Stag facility offshore Australia for 8 consecutive years and 1 year at Montara • Combined Total Recordable Injury Rate (“TRIR”) significantly reduced Despite these positive developments reflected in lagging statistics, Jadestone experienced an increasing number of HiPOs. Transparent reporting of incidents including HiPOs is important and actively supported at Jadestone to allow for continuous improvement. Jadestone carefully investigates each HiPO with a view to ensure learnings are cascaded widely and aimed to prevent re-occurrence and further improve safety performance. 2021 ESG STRATEGIC CORPORATE GOALS • Target Zero Recordable Incidents, with continuous improvement year on year (<2) • Undertake a further company-wide HSE Culture Survey • Complete 8 OHS & Environment Audits as per HSE Audit Plan 2021 • Continue the provision of full-time medic to indigenous communities at Truscott during the COVID-19 pandemic emergency MATERIAL MATTER Stakeholder Management Jadestone is committed to engaging with its stakeholders in a transparent and meaningful way, ensuring they are considered in the Company’s processes and operations. Why it Matters Inclusive and tailored stakeholder management is key to successful operations across geographies, jurisdictions and cultures. With an expanding operating footprint in the Asia Pacific region, Jadestone recognises the importance of a comprehensive stakeholder management strategy to successfully and considerately operate in this diverse range of countries. Management Approach Jadestone’s commitment to understanding stakeholders’ feedback and views is fundamental to achieving balanced outcomes for the community, workforce and shareholders. Jadestone strives to facilitate open communication in order to build and maintain relationships with both internal and external stakeholders and dedicates a significant amount of time and effort to engage with stakeholders all year-round. In 2020, Jadestone developed a Corporate Stakeholder Engagement Strategy. This strategy was implemented to determine a more strategic and cohesive approach, and an overall engagement framework as to how Jadestone engages with its stakeholders across Asia Pacific. The table below lists its key stakeholders and methods of engagement. Jadestone Stakeholders How we Engage 2020 HIGHLIGHTS • Relationship Agreement with the Iwi communities in New Zealand • Stakeholder programmes successfully undertaken in Australia • Corporate Stakeholder Engagement Strategy developed Paul Blakeley and Owen Hobbs at Montara Employees and contractors Holding regular staff and contractor meetings, internal news updates and newsletters, tailored surveys, townhalls, apprenticeship and internship shows Communities and Indigenous groups Country specific stakeholder mapping and consultation, interviews and surveys, support through community programmes and events Regulators Regular meetings and correspondence, representation on industry associations, site visits, ongoing information sharing Shareholders and investment community Annual General Meeting, Capital Markets Events, roadshows, webcasts, investor presentations, correspondence and direct contact through dedicated investor relations function, social media engagement, ESG questionnaires and surveys, website Business partners and suppliers Regular meetings, active management of key projects and assets, contracts and tenure Non-government organisations Collaboration on social investments, representations through industry associations, media monitoring Media Industry peers Media releases, interviews, contact through dedicated media liaison function, website Industry conferences and presentations, representation on industry associations T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 64 SUSTAINABILITY REPORT STRATEGIC REPORT 65 2020 Overview In 2020 Jadestone initiated its first ESG survey. The intent of this survey was to seek feedback from its workforce on ESG topics that matter to them the most, and what more the Company should be doing in the context of the ESG agenda. Future Outlook Jadestone is committed to developing tailored Stakeholder Management Plans for each location in which it operates, with early engagement expected to take place prior to transfer of operatorship. The key stakeholder engagement activities undertaken across regions in 2020 are summarised below: Jadestone will continue to engage with internal and external stakeholders in a transparent manner. Jadestone’s country-specific engagements will help it to understand the local communities and will help shape Jadestone’s community development programmes. View from the Montara FPSO Maari (New Zealand) Key Stakeholders: Local Iwi communities, neighbours and NZ Regulators Context: Ahead of assuming operatorship over the Maari asset, Jadestone confirmed and prioritised key stakeholders that may be affected by its operations. Jadestone has also initiated a dialog with the Iwi representatives, entering into a Relationship Agreement Through the agreement Jadestone committed to working together with Iwi representatives, Te Kāhui, “to enable on-going information sharing and mutual education on matters relating to Jadestone’s activities and Te Kāhui’s interests ...”. Key stakeholder topics: Environmental impacts that may affect the Iwi ability to use, protect and enhance the land and sea that is of cultural, historical and environmental significance to them. Outcome: • Stakeholder Engagement Plan developed • Jointly signed Relationship Agreement with the Iwi community Stag and Montara (Australia) Key Stakeholders: Local communities and Australian Regulators Context: Key stakeholder topics: Outcome: In relation to a planned drilling campaign on the Montara asset, Jadestone developed a specific Environment Plan for this discrete activity, which was accompanied by a stakeholder consultation exercise. All relevant persons to the operations received information sheets detailing the scope and timing of the activities, with an opportunity to ask questions and raise concerns. Jadestone liaised with the West Australian Fishing Industry Council to consult relevant fishing licence holders. Environmental and other impacts and risks posed by the drilling activities and the effect they have on the stakeholders. • Relevant stakeholder informed on the planned activities • Successful Environmental Plan approval Lemang (Indonesia) Key Stakeholders: Local communities, local and Indonesia central Government bodies Context: In line with the acquisition of Lemang assets during 2020, a smooth transition process was achieved from the previous operator. Transition was facilitated by the Jadestone Indonesia team liaising with the Government in relation to the work programme and budget commitments to meet the regulatory compliance obligations. Early engagement with local communities to introduce Jadestone was carried out successfully. Key stakeholder topics: Impact of development activities during the future construction work and operations of the Akatara gas plant and sales gas pipeline; employment and economic growth opportunities. Outcome: • An Engagement Plan developed • Smooth transition that takes into account stakeholder expectations Community Engagement Jadestone strives to deliver positive socioeconomic outcomes for the local communities in the countries where it operates. Management Approach Jadestone recognises that it can create sustainable value for the local communities and maximise positive contribution by: • Creating local employment • Paying local taxes • Supporting local business as part of its supply chain • Community support programmes based on community needs Through its targeted business strategy of taking over mid-life assets in Asia Pacific that otherwise might have been retired, Jadestone extends employment opportunities to local communities. In doing so, it actively seeks to employ the national workforce. This is demonstrated by 88% representation across the organisation. Jadestone’s contribution goes beyond job creation. Jadestone endeavours to utilise local supply chains by engaging local contractors. Jadestone makes a positive contribution to local economies in 2020 by paying local taxes and fees amounting to $28.7 million. 2020 HIGHLIGHTS • 88% Nationals directly employed in Company operations in Asia Pacific • $28.7mm paid in local taxes and fees in Asia Pacific • 3 Community programmes in Southeast Asia Community Engagement Programmes Jadestone is focused on forming long term partnerships in communities where it operates. It is involved in local community projects that contribute to a more sustainable future. When investigating the most suitable options to support, Jadestone’s sustainability material matters are taken into consideration, amongst other parameters. As per Jadestone Social Investment Guidelines, the potential programmes are screened according to their ability to contribute in two focus areas: Education: Jadestone is committed to finding opportunities to support education and training in local communities, through corporate sponsorship, training and volunteer time. Health & Wellness: Jadestone looks for ways in which it can contribute to improving the health and wellness of partner communities. CASE STUDY: Continued partnership with local NGO in Vietnam In Vietnam, Jadestone has continued to collaborate with a local NGO supporting two initiatives that delivered positive education and health outcomes for disadvantaged local communities. Supporting early education Jadestone identified an opportunity to support early education in one of the poorest remote areas of Vietnam. It supported the development of three public school libraries in the central highlands of Vietnam: Kroongpa – Gia Lai, Phu Mo – Phu Yen, and Phu Hai – Binh Thuan province, through purchase of children’s books and necessary equipment. The desired outcome of the initiative is improvement in the quality of local primary education. Public school library at Kroongpa - Gia Lai province, Vietnam Clean water access As part of Jadestone’s ongoing engagement with communities in the U Minh district in the Ca Mau province of Vietnam, a coastal area close to Jadestone’s development project, Jadestone’s team identified challenges for local families accessing consistent supplies of clean, fresh water. Water provision can be sporadic in the region, especially during the dry season, with saltwater intrusion impacting large parts of the Mekong Delta in southwestern Vietnam. Jadestone has provided high quality water storage tanks to over 50 families in the region. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 66 SUSTAINABILITY REPORT STRATEGIC REPORT 67 Volunteering Jadestone’s direct investment initiatives are complemented by employee volunteering within the organisation. • Indonesia Jadestone’s Indonesia team have a long-standing relationship with a Jakarta-based soccer club, Kemang FC. The club aims to promote the sport and provide positive activities for children and teenagers. Jadestone employees are passionate about playing alongside the local community members as well as training the members of the club and advancing their skills. • Singapore Willing Hearts was selected as an organisation of choice for volunteering in 2020. Willing Hearts is a secular, non-affiliated charity, that operates a soup kitchen. Beneficiaries include the elderly, the disabled, low-income families, children from single parent families or otherwise poverty-stricken families, and migrant workers in Singapore. Jadestone Singapore staff were able to take part in the food preparation process that contributed to the daily effort of very many volunteers resulting in about 5,000 meals daily. • Australia The Montara facility has been involved in the ‘Cash for Containers’ programme since 2015. In this scheme, Jadestone’s personnel collect water bottles, aluminium cans and soft drink bottles used on the facility and donate them to the Down Syndrome Association of Northern Territory (Australia). Association workers remove and count the lids and receive Cash for Containers donations, which in 2020 amounted to over $10,000 (60% increase from 2019). Future Outlook Throughout 2020 Jadestone has increased its focus on supporting targeted community programmes. This commitment will extend into 2021 and beyond. 2021 ESG STRATEGIC CORPORATE GOALS • • Implement a community activity in all countries of operations, target 10% increase in spending year-on-year Improve the measurement of community investment impact as well as employee participation in community programmes COVID-19 SUPPORT Supporting an orphanage in Malaysia Jadestone identified an opportunity to support an orphanage in Kuala Lumpur, that was struggling financially throughout the enforced lockdown during the pandemic. Housing 55 children ranging from 8 months to 19 years old, the centre was having difficulties paying rent and providing for utilities, school supplies and groceries. Jadestone Malaysia staff visited the center a number of times throughout 2020 and were able to assist with the outstanding bills as well as the purchase of new household appliances. Company donations were supplemented by generous direct contributions from the employees. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A Setting up a school library in rural Vietnam Jadestone Indonesia team supporting a local soccer club Volunteering at Willing Hearts in Singapore The Company is humbled by recognising the opportunity to support the center, its staff and the children, recognising the devastating effects of the COVID-19 pandemic on those groups who are particularly vulnerable. Water tank in transit, Vietnam JADESTONE ENERGY 2020 ANNUAL REPORT 68 SUSTAINABILITY REPORT STRATEGIC REPORT 69 MATERIAL MATTER M ATERIAL M ATTER Workforce Management and Diversity 2020 HIGHLIGHTS Jadestone strives to create a working environment that recognises and rewards performance, offers development opportunities and promotes diversity. • Diversity Policy developed • Mental Health programme for Offshore Workforce • ESG Employee Survey conducted • NETTS apprentice programme participant Why it Matters Comprehensive workforce management helps provide a positive working environment, improves retention, and minimises operational disruptions. Jadestone values its people and the contribution they make and has an engaged, supported and diverse workforce. “We attract the best talent from different backgrounds, empower them, develop capable leaders and offer challenging opportunities that help them realise their potential.” As per Jadestone’s mission Management Approach Jadestone’s people strategy focuses on building strong capabilities and driving a diverse culture that optimises workforce performance and fuels business growth. Its approach to managing people is reflective of a diverse workforce that is office and site-based, spanning across a number of geographies and cultures. Jadestone’s working environment offers equal opportunities, safe working conditions, competitive terms of employment and comprehensive learning and development opportunities. Jadestone’s HR, compensation and performance management practices are overseen by the Board’s Compensation Committee. Jadestone’s Ho Chi Minh City office Diversity Jadestone’s approach to diversity and inclusion is underpinned by its Diversity Policy, which was approved by the Board in 2020. This policy recognises that people from different backgrounds and experiences can bring valuable insights to the workplace and enhance Jadestone’s operations. Ultimate responsibility for ensuring implementation and operation of this policy rests with the Jadestone Board and Leadership team. Jadestone’s diversity principles • Develop a workforce that reflects the diversity of the communities we serve • Cultivate a culture which fosters access and inclusion, with all internal and external stakeholders treated fairly and with respect • Recruit, develop and manage employees in line with individual competencies • Provide a supportive working environment that is adapted as required to meet the needs of a diverse workforce • Adapt and adopt an organisation and work methods to include everyone • Commit to a policy of equal employment opportunity and pay equality • Maintain a workplace that is free of any harassment or unfair discrimination with appropriate avenues for the investigation of complaints Workforce profile At the end of 2020, Jadestone had 161 permanent employees and 66 temporary employees, with females representing 19% and 27% of the totals respectively. Jadestone only had 1 part-time employee. Permanent and temporary employees by regions - Southeast Asia (SEA) and Australia & New Zealand (A&NZ) are summarised below: • Permanent: SEA - 41, A&NZ - 120 • Temporary: SEA - 14, A&NZ - 52 32% of total employees were at year’s end covered by Enterprise Bargaining Agreements. Women represent 36% of the total onshore workforce and 18% of total overall workforce, with 25% percent of women holding leadership positions at year end. A Company-wide gender balance of 18% female is reflective of gender diversity being a common challenge for most oil and gas operators. Diversity at Jadestone has many facets and goes beyond the issues of gender balance. Jadestone is committed to developing a workforce that reflects the diversity of the communities it serves. Jadestone prioritises the employment of suitably qualified nationals and supports this by investing in their skills, knowledge and experience. 88% of Jadestone’s employees are nationals. Jadestone’s Diversity Policy can be found on Jadestone’s website. Jadestone Permanent Employees 161 2020 162 2019 Women in Jadestone* 36% of onshore workforce 19% of overall workforce 21% of Senior Management 12.5% of Jadestone’s Board * relates to permanent employees % of Local Nationals across Jadestone Offices 100% 75% 72% 44% 96% in Vietnam in Indonesia in Malaysia in Singapore in Australia Performance, training and development Jadestone has an annual performance review process that enables employees and managers to review the performance of the previous year and to determine performance outcomes for the year ahead. This is in line with Jadestone's focus on a performance culture, with all permanent employees required to complete a performance review. Jadestone develops its workforce through on-the-job opportunities and formal training. In Australia, Jadestone provides training and competency assessments to all of its workforce through the implementation of role-specific training matrices for office and offshore workforce. Jadestone is committed to ensuring its offshore workforce achieves training and competency levels as defined in the Offshore training matrix, targeting at least 90% completion. Performance against the matrix Key Performance Indicators is tracked on a monthly basis for each site. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 70 SUSTAINABILITY REPORT STRATEGIC REPORT 7 1 Diversity of Governance Bodies and Employees (2020) % Female <30 years old 30-50 years old >50 years old 12.5% Board % Senior Management* % 21% 16% Middle Management* % 21% Other Employees* % 0% 0% 0% 8% 13% 43% 47% 49% 88% 57% 53% 43% * employee categories have been established according to job bands HR Metrics Unit 2020 2019 Total permanent employees Female Male Retention rate Local national representation # # # % % 161 29 132 96 88 162 33 129 97 88 Graduate and apprentice programme Jadestone seeks to create opportunities and build capacity amongst the future workforce through a programme of apprenticeship and internships, enabling in 2020: • 4 apprentices seconded to Jadestone Australia. Jadestone has committed to ongoing apprenticeship placement via the NETTS programme in Australia • A vacation student programme established in Perth with 2 Engineering, 1 Finance and 1 HR student • Graduate and Intern programmes established in Malaysia in Subsurface, Finance and IT NETTS apprentices RUOK?: Raising awareness of mental health Jadestone Australia participated in the 2020 RUOK? day for the second year running. RUOK? is a suicide prevention charity that aims to start life- changing conversations by creating a more connected world. The charity aims to engage as many people as possible in a safe and inspiring way, and we are proud to be ambassadors toward that endeavour. Jadestone's objective is to help its team learn simple but effective ways to be more connected with one another and the world around them, and to raise awareness of mental health issues. Future Outlook 2021 ESG STRATEGIC CORPORATE GOALS • Conduct an Employee Engagement Survey, aiming for 80% participation rate • Sponsor 2 more apprentices as part of NETTS programme (Australia), and provide student internships for at least 5 new graduates (Australia and Malaysia) • Ensure all employees have completed a Performance Review • Ensure the offshore workforce achieves training and competency levels as defined in the Offshore training matrix, targeting at least 90% completion • Retain local national talent, targeting 90% representation or more Commitment to building a highly skilled workforce for the future • NETTS is the National Energy Technician Training Scheme, an innovative collaboration between major oil and gas organisations and Programmed to build a skilled, diverse and capable workforce for the future of the oil and gas industry. • • Jadestone has registered with the NETTS programme for 2021, where it will select apprentices across Process, Mechanical, and Electrical disciplines. Jadestone Australia welcomed two 3rd year Process Plant specialist apprentices to its offshore team in July 2020 as part of the scheme. • Their enthusiasm and eagerness to learn was an excellent fit with the Jadestone culture, and through this programme the Company provided plenty of exposure and real-life experience in the offshore environment to further their education. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 72 SUSTAINABILITY REPORT STRATEGIC REPORT 73 Governance and Leadership 2020 Highlights 0 Incidents of non-compliance in business ethics 0 Critical risk incidents QCA Corporate governance code adoption TCFD Alignment across risk and governance ESG Metrics incorporated into executive KPI’s 2021 Outlook • Target Zero violations of anti-bribery and anti- • Target Zero loss of primary containment corruption laws • Support timely regulatory approvals for new operations and growth projects • Continue strengthening governance over climate risk as per TCFD recommendations • Undertake comprehensive emergency training “Sustainability is a C-suite matter at Jadestone that starts with effective governance.” Incident response exercise, Perth office Neil Prendergast GENERAL COUNSEL T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 74 SUSTAINABILITY REPORT STRATEGIC REPORT 75 MATERIAL MATTER M ATERIAL M ATTER Governance, Business Ethics and Compliance Operating in accordance with high standards of governance, transparency and business ethics is essential to creating long-term sustainable value and a key priority for Jadestone. 2020 HIGHLIGHTS • QCA corporate governance code adoption • Zero fines for any regulatory breaches for non-compliance • ESG metrics incorporated in executive performance plans Jadestones's ESG Governance The Board Ensures ESG risks and opportunities have been identified and incorporated into the Corporate Risk Framework, with risk considerations integrated into the Company’s long-term strategy HSE Committee Oversees operational risks pertaining to health, safety, environment and sustainability, including those related to climate change. The Committee’s remit has been expanded in 2020 to formalise its oversight over ESG topics. Compensation Committee Develops and proposes changes to the Remuneration Policy which are in line with Jadestone’s strategic performance targets. As of 2020, ESG Strategic Corporate Goals have been aligned with executive incentive schemes, cascading from CEO through to the leadership team and deeper into the organisation. Disclosure Committee Oversees the appropriateness of disclosures included in the Company’s financial and non-financial reporting, which include sustainability and climate-related disclosures. Why it Matters Effective governance at Jadestone means that Board members, the management team and shareholders clearly understand their roles and responsibilities. It also ensures that the right policies and procedures are in place which promote individual and group accountability, ethical and responsible decision making and effective risk management. The ability to create long-term value is the ultimate measurement of successful corporate governance. Management Approach Corporate governance Jadestone believes that an effective corporate governance framework adds value to its business and enhances stakeholder confidence in the Company. Jadestone complies with the Quoted Companies Alliances Corporate Governance Code 2018 (the “QCA Code”), which was adopted in December 2020. Jadestone has embedded appropriate governance systems to ensure that the Board and Jadestone leadership have oversight of the critical ESG issues and enterprise-level risks, such as climate change, safety, incident preparedness and community impacts. The Board’s HSE, Compensation as well as Disclosure Committees are jointly responsible for overseeing Jadestone’s strategies, programmes, performance and disclosures relating to ESG. In 2020, the HSE Committee oversaw changes to: • Jadestone’s Community Investment programme with an increased budget allocation • Further alignment with the TCFD • UN SDG alignment The Jadestone Board recognises that the QCA Code provides the Company with the appropriate framework to sustain a strong level of governance, given its size on the AIM market of the London Stock Exchange. The Board of Directors regularly assesses Jadestone’s corporate governance against regulatory developments, relevant best practice standards and stakeholder demands. For details of Jadestone's governance, including our Board of Directors, Board Committees and other governance arrangements, please see the Website and the Corporate Governance section of the Annual Report. Refer to QCA Disclosures for more information on how Jadestone abides by the QCA Code. In 2020 Jadestone recoded zero incidents of non-compliance in relation to violations of anti-bribery and anti-corruption laws. Business ethics The Board sets the “tone at the top” that demonstrates the Company’s commitment to integrity and compliance. This tone lays the groundwork for a corporate culture that is communicated to individuals at all levels of the organisation. Jadestone has implemented a Code of Conduct Policy ("Code" or "Code of Conduct") that applies to all individuals working at Jadestone. The Code clarifies Jadestone’s mission, values and principles, linking them with standards of professional conduct. The Code articulates the values Jadestone wishes to foster with all who work for the Company and defines desired behaviours. The Code of Conduct reflects the Company’s commitment to a culture of honesty, integrity and accountability. It condemns such practices as corruption, anti-trust or any other practices that may result in violating anti-bribery and anti-corruption laws. The Company shares a set of core values – Respect, Integrity, Safety, Results-Orientated, Sustainability and Passion. All individuals working at Jadestone are expected to make a commitment to these values, and to contribute to protecting and enhancing the Company’s reputation. Jadestone’s core values underpin every aspect of work done within the business, and form the foundation of the Code of Conduct. It is the responsibility of all individuals working at Jadestone to familiarise themselves with the Code, and to comply with it. All Jadestone onshore and offshore employees undertake an e-learning course on the Code of Conduct upon commencing their employment. The induction is monitored to ensure a 100% completion rate. Employees are required to complete a refresher on the Code of Conduct every 12 months including confirmation of their compliance with the Code. Regulatory compliance The oil and gas industry is subject to a rapidly-changing regulatory environment, which can result in material impacts on shareholder value. As the Company’s footprint spans across several jurisdictions in Asia Pacific, Jadestone sets high expectations of all of its business activities in relation to meeting regulatory obligations as well as managing risk and stakeholder expectations. This task is carried out jointly in the regions with such functions as Legal, HSE and Finance working in tandem to ensure Jadestone maintains its licence to operate. Extractive sector transparency As part of its commitment to transparency and legal compliance, Jadestone disclosed all payments made to governments in all jurisdictions, in accordance with Canada’s Extractive Sector Transparency Measures Act. Jadestone’s Code of Conduct can be found on Jadestone’s website. Business Ethics Metrics Unit 2020 2019 Number of legal actions for anti- competitive behaviour, anti-trust, and monopoly practices and their outcomes Significant fines and non-monetary sanctions for non-compliance with laws and regulations Confirmed incidents of corruption # per year # per year # per year 0 0 0 0 0 0 2020 Performance Jadestone is committed to conducting business in accordance with all applicable laws and regulations and the highest ethical standards in all jurisdictions in which it operates. In 2020 Jadestone has recoded zero incidents of non-compliance in relation to violations of anti-bribery and anti-corruption laws. 2021 ESG STRATEGIC CORPORATE GOALS • Target Zero violations of anti-bribery and anti-corruption laws • Support timely regulatory approvals for new operations and growth projects • Continue strengthening Governance over climate risk as per TCFD recommendations Jadestone’s Kuala Lumpur office T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 76 SUSTAINABILITY REPORT STRATEGIC REPORT 7 7 MATERIAL MATTER M ATERIAL M ATTER Asset Integrity and Process Safety Jadestone deploys robust processes and systems that ensure process safety and integrity of its operating assets. 2020 HIGHLIGHTS • Safe and reliable adaptation to COVID operations • Assimilation of Montara • Realisation of savings from innovative maintenance Asset Integrity Asset integrity includes all integrity aspects of Company owned facilities. Significant effort is applied to ensure fabric maintenance is managed consistently with Jadestone’s end of field life projection for each of its facilities. Innovation is applied to maximise productivity and impact in all of its activities (as per Case Study). 2020 Performance Lagging process safety metrics (Tier 1 and 2) In 2020, there were zero Loss of Primary Containment events associated with Jadestone’s Australian facilities in either Tier 1 or Tier 2 classification. There was, however, a Tier 1 release of 3,900kg of lift gas from one of the Montara wells in November. A lift-gas leak is not a part of primary well containment and the wellbore remained intact. As a result, the well was removed from service awaiting a well workover, scheduled in the second half of 2021. The investigation into this event is ongoing and will be informed by recovery of key components during the well workover. Leading process safety metrics (Tier 3 and 4) COVID-19 had a significant impact on the ability to execute work efficiently in 2020. By year end, however, logistical efficiencies were re-established and 97% of assurance activities were completed on time. Annual Independent Competent Person audits were completed for Stag and, for the first time, Montara. Six performance standards were reviewed for Stag, with four minor non-compliances identified. Sixteen performance standards were reviewed for the Montara assets, including the Montara Venture FPSO and wellhead platform, with one significant and nine minor non-compliances identified. Why it Matters Process Safety is a disciplined framework for managing the integrity of operating systems and processes that handle hazardous substances . Its primary focus is on prevention and control of events that have the potential to release hazardous materials and could result in an explosion or fire, leading to a major incident. Whilst typically initiated by a hazardous release, a major incident may also result from a structural failure or loss of stability. Process safety is delivered through its innovative and holistic approach to asset integrity management. Management Approach As an operator of mid-life assets, Jadestone’s approach to delivering best practice asset integrity & process safety performance covers Plant, Process and People improvements: • Plant: Upgrading asset infrastructure in line with remaining field life • Process: Rapid assimilation of new assets into Jadestone’s rigorous facility and well integrity management systems • People: Adoption of skills and good practice from the experienced staff from newly acquired assets Process safety Process safety management practices in Australian operations are described in facility Safety Cases. These are accepted by the regulator, NOPSEMA to reduce risks to As Low As Reasonably Practicable. Safety Cases for each of the Company’s Australian assets describe the specific process safety controls. Failure of these controls upon demand, may lead to Tier 1 or Tier 2 process safety events as defined by the International Association of Oil & Gas Producers (“IOGP”). Verification of the effectiveness of these controls are subject to Jadestone’s assurance and audit processes. Jadestone tracks its IOGP Tier 3 performance for each asset by measuring the percentage of assurance activities completed versus plan. Tier 4 performance is assured by Independent Competent Person audits, which investigate the entire set of performance standards on each asset on a rolling 5-year review cycle. CASE STUDY: Stag conductor guide repair When Cyclone Damien passed directly over the Stag platform in February 2020 it caused violent swells that dislodged the stabilising guides of several well conductors. Conductors are non-pressure retaining piping elements that support individual well heads. With dislodged guides, the conductors lose lateral stiffness and move with ocean waves and tides. Such subsea repair work is complicated by the marine growth that occurs in the warm waters of North West Australia and the congestion caused by the close coupling of the Stag wells. CASE STUDY: Montara fabric maintenance campaign On Montara, a fabric maintenance campaign was launched as part of the careful transition to Jadestone Operations. Improvements to the facility are much more than cosmetic, symbolising Jadestone’s intent to reinforce the value of its assets through to end of field life. The following images provide an example of after shots of the starboard deck at the Bow of the Montara Venture FPSO: The four tiers of lagging and leading indicators1 Tier 1 LOPC events of greater consequence L e a d i n g i n Tier 2 LOPC events of lesser consequence d i c a t o r s Tier 2 Challenges to safety systems Leading indicators Tier 4 Operating discipline & management system performance indicators 1 IOGP. “Process safety – recommended practice on key performance indicators”, IOGP Report 456 The typical repair would need to be conducted by a full work-class Remote Operated Vehicle (“ROV”), launched from a specialised vessel with Dynamic Positioning capability. With careful planning and innovative use of a smaller package ROV, deployed directly from the Stag platform, the displaced guides were refitted directly from the platform, facilitating repair up to 6 months earlier than the traditional approach, at a saving of some $3-4 million. Other 2020 highlights Jadestone retains Technical Authorities (“TAs”) to oversee all aspects of asset integrity and process safety, including well integrity and environment. The TAs are required to provide direction on specific and systemic risk issues, ensuring that the primacy of safety is preserved at all times. In line with Jadestone’s focus on establishing systematic processes to efficiently support the acquisition of new assets, all of the core TA disciplines were brought in house in 2020. • Zero Tier 1 or 2 LOPC events at Jadestone facilities • Refinement of the Jadestone process safety Management Framework • Design of an electronic implementations of the Jadestone Management of Change (“MOC”) system • Integration of TAss across regulatory areas (Safety; Well integrity and environment) • Development of the Jadestone Well Integrity Assurance Management Framework • Closeout of 6/7 Stag 2019 Independent Competent Person review actions Future outlook Jadestone will continue its focus on maintaining effective and efficient process safety and asset Integrity practices built on best practice industry standards. In 2021, these considerations will be extended onto newly acquired assets as part of operatorship transition and careful change management. Good practices from new assets will be codified in Jadestone’s corporate standards. 2021 ESG STRATEGIC CORPORATE GOALS • Zero Loss of Primary containment • Extending process safety and asset integrity practices onto newly acquired assets T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 78 SUSTAINABILITY REPORT STRATEGIC REPORT 79 MATERIAL MATTER M ATERIAL M ATTER Critical Incident Risk Management Effective Risk Management and Incident Response in the unlikely event of a major incident are a key priority for Jadestone. 2020 HIGHLIGHTS • 75% of the Perth office are trained and participate in the IMT • Successful IMT exercise with AMSA • 1 full emergency and 4 IMTs Why it Matters The unplanned release of hydrocarbons or spills of chemicals, oils, and fuels, can potentially affect soil, water, air, biodiversity, and human health. Effective and reliable emergency response and preparedness systems including hydrocarbon spill response capability is crucial. As an operator of two offshore oil and gas facilities in Australia, Jadestone is committed to managing major incident risk and developing robust response capabilities in line with regulatory requirements and industry best practice. Management Approach Risk management The Jadestone Energy Risk Management framework is aligned with the requirements of ISO 31000 and addresses risk management at three levels 1 - Task, 2 - Facility and 3 – Business. The three risk levels are directly related and the risk assessments cascade such that Business level risks set the context for Facility risk assessments, and Facility level risks set the context for Task risk assessments. Emergency Preparedness Corporate response Jadestone’s Group Crisis Team (“GCT”) are responsible for the development of the Group Crisis plan and the management of Jadestone’s reputation, operability, licence to operate, liabilities and potential financial loss. The GCT identify and manage domestic and global issues and developments that may have an impact upon the business operations of Jadestone Energy. The GCT follow the Jadestone Energy Crisis Management Plan that defines process and procedures to respond effectively to a major crisis event and provide the framework for the integrated management of crisis and incidents within Jadestone Energy. The GCT provide technical, operational and communication advice to country-level incident management teams or to the wider Jadestone organisation. Jadestone utilises a tiered incident response structure to deal with and manage crises, incidents and disruptions associated with each of the organisation’s risks. This structure is activated progressively, from facility-based Emergency Response Team “ERT”, shore-based Incident Management Team “IMT”, then if required to the corporate GCT as illustrated below. Level 1 Task Task level risks are assessed ahead of execution of each task, as required by the Integrated Safe System of Work. Strategic 3 Group Crisis Team Corporate response • Business Continuity • Liability • Reputation • Stakeholder management Level 2 Facility Risks are assessed concurrently with the requirements of key regulatory documents, and are continually reviewed against the context of planned activity over the detailed plan time horizon. Operational 2 Incident Management Team Shore-based response • People • Environment • Assets • Recovery Level 3 Business Risks are assessed concurrently with the development of the Annual Value Plan, which details the high-level activities over a 12 month reporting period. Tactical 1 Emergency Response Team & First Responders Facility/Site-Level response • Lifesaving • Mustering • Firefighting • Rescue • First Strike Actions T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A Operational response Jadestone’s IMT Response Plan is the Company’s response tool at a facility level, that, amongst other things, defines the IMT exercises that the Company undertakes. To maintain Jadestone’s ability to react to and manage major incidents, a three-year exercise cycle has been implemented. Over the course of a three-year period it is intended that all major incident events including key major accident events and oil spills are exercised using a stand-alone IMT drill or as part of an annual functional exercise. The exercise cycle is planned in such a way as to include a quarterly major accident event scenario, oil spill response workshop and exercises to test the IMT. The exercises alternate between offshore facilities, with all completed IMT exercises recorded. 2020 Performance Jadestone has remained committed to its culture of safety and delivered on its IMT Exercise and Testing Programme in 2020 as planned. Throughout 2020 Jadestone focused on improving its oil spill and incident management team training and drills. To ensure the best response in the event of an incident, 75% of the Perth office are trained and participate in the IMT. CASE STUDY: Incident management team exercise: “Black Hawk Down” In June 2020 Jadestone conducted an IMT exercise drill - ‘Black Hawk Down’ in the Perth office. The drill was one of the quarterly IMT drills that are planned to address a Jadestone major accident event for both Stag and Montara over a period of three years. The Black Hawk Down scenario was a controlled emergency landing into the ocean from a helicopter on route to Montara for a crew change-out. Planning for the exercise involved the key personnel from Operations, the Aviation contractor and the Australian Maritime Safety Authority “AMSA” representatives. Montara control room Future Outlook Jadestone will ensure that it maintains high levels of preparedness and response through its testing and exercising programme. 2021 ESG STRATEGIC CORPORATE GOALS Undertake: • Quarterly IMT exercises* • Annual oil spill response exercise*, • Annual oil spill workshop*, • Weekly facility drills * Relates to Australia IMT The drill achieved the key objectives: clarification of roles and responsibilities and ensuring collaborative approach with the external parties. IMT exercises form a cornerstone of Jadestone’s commitment to safety and emergency preparedness. JADESTONE ENERGY 2020 ANNUAL REPORT 80 SUSTAINABILITY REPORT STRATEGIC REPORT GRI Content Index Standard Disclosure Description GRI 102: General disclosures (2016) Organisational profile 102-1 102-2 102-3 102-4 102-5 102-6 102-7 102-8 102-9 102-10 102-11 102-12 102-13 Strategy 102-14 Ethics and integrity 102-16 Governance 102-18 Name of organisation Activities, brands, products and services Location of headquarters Location of operations Ownership and legal form Markets served Scale of the organisation Information on employees and other workers Supply chain Significant changes to the organisation and its supply chain Precautionary principle or approach External initiatives endorsed Membership of associations Statement from senior decision-maker Values, principles, standards, and norms of behaviour Governance structure Stakeholder engagement 102-40 102-41 102-42 102-43 102-44 List of stakeholder groups Collective bargaining agreements Identifying and selecting stakeholders Approach to stakeholder engagement Key topics and concerns raised Reporting practice 102-45 102-46 102-47 102-48 102-49 102-50 102-51 102-52 102-54 102-54 102-55 102-56 Entities included in the consolidated financial statements Defining report content and topic boundaries List of material topics Restatement of information Changes in reporting Reporting period Date of most recent report Reporting cycle Contact point for questions regarding the report Claims of reporting in accordance with the GRI standards GRI content index External assurance Topic-specific disclosures Environmental Management and Regulatory Management 103-1 103-2 103-3 GRI 307 (2016): Environmental Compliance 307-1 GRI 306: Effluents and Waste (2016) 306-3 Significant spills Explanation of the material topic and its Boundary The management approach and its components Evaluation of the management approach Non-compliance with environmental laws and regulations Explanation of the material topic and its Boundary The management approach and its components Evaluation of the management approach Interactions with water as a shared resource Management of water discharge-related impacts Discharges and Emissions 103-1 103-2 103-3 GRI 303: Water and Effluents (2018) 303-1 303-2 GRI 305: Emissions (2016) 305-7 GRI 306: Waste (2020) 306-1 Nitrogen oxides (NOX), sulfur oxides (SOX), and other significant air emissions Waste generation and significant waste-related impacts Reference page 38 pages 14 – 21, 38 page 38 pages 14 – 21, 38 page 38 page 38 pages 4, 16 – 21, 68 – 70 pages 68 – 70 page 63, 65 page 10 page 48 page 39 page 39 page 41 pages 74 – 75 pages 74 – 75, 82 – 111 page 63 page 69 pages 45, 63 pages 63 – 64 pages 63 – 64 pages 16 – 21 page 39, 45 page 45 page 39 pages 39, 45 page 39 2019 page 39 page 39 page 39 page 80 page 39 page 48 pages 48 – 49 pages 48 – 49 pages 48 – 50 pages 49 – 50 pages 51 – 53 pages 51 – 53 pages 51 – 53 pages 51 – 53 pages 51 – 53 pages 51 – 53 page 52 Standard Disclosure Description Climate Change and GHG 103-1 103-2 103-3 GRI 305: Emissions (2016) 305-1 305-2 305-5 GRI 302: Energy (2016) 302-1 Explanation of the material topic and its Boundary The management approach and its components Evaluation of the management approach Direct (Scope 1) GHG emissions Energy indirect (Scope 2) GHG emissions Reduction of GHG emissions Energy consumption within the organisation Explanation of the material topic and its Boundary The management approach and its components Evaluation of the management approach Occupational Health & Safety 103-1 103-2 103-3 GRI 403: Occupational Health ad Safety (2018) 403-1 403-2 403-3 403-4 403-5 403-9 403-10 Occupational health and safety management system Hazard identification, risk assessment, and incident investigation health and safety Occupational health services Worker participation, consultation, and communication on occupational Worker training on occupational health and safety Work-related injuries Work-related ill health Workforce Management & Diversity 103-1 103-2 103-3 GRI 405: Diversity and Equal opportunity 405-1 Explanation of the material topic and its Boundary The management approach and its components Evaluation of the management approach Diversity of governance bodies and employees Stakeholder Management * As per general disclosures GRI 102-40 to 102-44 103-1 103-2 103-3 Explanation of the material topic and its Boundary The management approach and its components Evaluation of the management approach Leadership & Governance*, Business Ethics & Transparency, Regulatory Management * As per general disclosures GRI 102-18 103-1 103-2 103-3 GRI 205: Anti-Corruption (2016) 205-3 GRI 206: Anti-competitive behaviour (2016) 206-1 Explanation of the material topic and its Boundary The management approach and its components Evaluation of the management approach Confirmed incidents of corruption and actions taken Legal actions for anti-competitive behaviour, anti-trust, and monopoly Practices Asset Integrity & Process Safety 103-1 103-2 103-3 GRI 306: Effluents and Waste (2016) 306-3 Significant spills Explanation of the material topic and its Boundary The management approach and its components Evaluation of the management approach Critical Incident Risk Management 103-1 103-2 103-3 GRI 306: Effluents and Waste (2016) 306-3 Significant spills Explanation of the material topic and its Boundary The management approach and its components Evaluation of the management approach Economic Performance and Contribution 103-1 103-2 103-3 GRI 203: Indirect Economic Impacts (2016) 203-1 203-2 GRI 201: Economic Performance (2016) 201-1 201-2 Explanation of the material topic and its Boundary The management approach and its components Evaluation of the management approach Infrastructure investments and services supported Significant indirect economic impacts Direct economic value generated and distributed Financial implications and other risks and opportunities due to climate change 81 T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A Reference page 54 – 55 pages 54 – 57 pages 54 – 57 pages 55, 56 pages 54 – 57 pages 55, 56 pages 55, 56 pages 60 – 62 pages 60 – 62 pages 60 – 62 page 61 page 61 page 62 pages 60 – 62 pages 61, 69 page 62 page 62 pages 68 – 71 pages 68 – 71 pages 68 – 71 pages 69 – 70 page 63 page 63 pages 63 - 64 page 74 pages 74 – 75 pages 74 – 75 page 75 page 75 page 76 pages 76 – 77 pages 76 – 77 pages 49 – 50 page 78 pages 78 – 79 page 79 pages 49 – 50 page 25, 65 page 25, 65 page 25, 65 pages 65 – 66 pages 55, 65 – 66 pages 25 – 31 page 57 JADESTONE ENERGY 2020 ANNUAL REPORT 82 CORPORATE GOVERNANCE C o r p o r a t e G o v e r n a n c e Preparing for Montara crude oil offload 83 T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A Corporate GovernanceStatement on Corporate Governance Approach 84Board Chair’s Corporate Governance Statement 86Compliance Statement to QCA Principles 88Directors’ Report 90Board of Directors Biographies 94Senior Management Biographies 96Committee ReportsAudit Committee Report 98Compensation and Nominating Committee Report 100Disclosure Committee Report 108HSE Committee Report 110JADESTONE ENERGY 2020 ANNUAL REPORT 84 STATEMENT ON CORPORATE GOVERNANCE APPROACH CORPORATE GOVERNANCE 85 Statement on Corporate Governance Approach Jadestone Energy Inc. was the parent company of the Group for the full calendar year 2020. This Annual Report, including the audited financial statements as at and for the year ended 31 December 2020, is a report of the business of Jadestone Energy Inc. Adoption of QCA Code Over 2020, the Board reviewed the Company's corporate governance practices and assessed the codes commonly adopted by UK listed companies. With a view to the size, structure and business of the Company, the Board adopted the Quoted Companies Alliance Corporate Governance Code (the "QCA Code"), with implementation to be effective 31 December 2020. As a result, the Board completed a review and update of the Board Charter and Terms of Reference for each of the Board Committees. The Board also determined that the Compensation and Nominating Committee would be separated into a Remuneration Committee and a Nomination Committee. Following the internal reorganisation, Jadestone Energy plc adopts and currently applies corporate governance practices to reflect the QCA Code. Jadestone Energy plc will prepare a corporate governance statement at least annually to explain the way in which it has applied the QCA Code and to identify any areas in which governance structures and practices differ from the expectations set out under the QCA Code. TSX Venture Exchange Delisting Since the admission of the Company’s shares to trading on AIM, in August 2018, the Company has experienced a significant shift away from Canada in both the composition of its share register and in the trading volume of its shares. Approximately 97% of the Company’s shares were held by non-Canadian residents as at 31 December 2019, while more than 98% of all Jadestone shares that traded in 2019, were traded on AIM. Effective at the close of business on 24 March 2020, the Company’s shares were delisted from the TSX Venture Exchange. The Company’s shares continued to trade on AIM. BCSC Order Following the TSX Venture Exchange de-listing, on 28 May 2020, the Company's principal regulator in Canada, the British Columbia Securities Commission (“BCSC”) issued an order (the “Order”), granting the Company relief from certain Canadian disclosure requirements, generally consistent with the relief granted to a designated foreign issuer (“DFI”), as defined in National Instrument 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers. While the Company remained as a British Columbia incorporated company, following issuance of the BCSC Order, the Company provided disclosure in Canada generally consistent with the disclosures required of a DFI. In the Company’s case, satisfaction of its disclosure obligations under the AIM Rules and UK legislation applicable to the Company, were required under the BCSC Order. Corporate Reorganisation Jadestone Energy Inc. was the parent company of the Group for the full calendar year 2020. In early 2021, the Group commenced an internal corporate reorganisation by way of a plan of arrangement under the Business Corporations Act (British Columbia) (the “Reorganisation”). Under the Reorganisation, a newly incorporated English public limited company, Jadestone Energy plc (“Jadestone plc”), became the ultimate parent company of the Jadestone Group, including all subsidiaries. Jadestone plc acquired the entire issued share capital of Jadestone Energy Inc., in exchange for new ordinary shares in Jadestone plc on a one for one basis. The Arrangement was approved by Jadestone Energy Inc. shareholders and received the required court approvals. The Reorganisation did not result in a change in control in the ultimate holding company of the Group, or in a change of ultimate shareholding in any of the assets of the Group, or in a change in the management of any the Group’s assets. Immediately prior to completion of the Arrangement on 23 April 2021, the shares of Jadestone Energy Inc. were delisted from trading on AIM. On 26 April 2021, the shares of Jadestone plc were admitted to trading on AIM. As Jadestone Energy Inc. was the parent company of the Group for the full calendar year 2020, this Report, including the enclosed audited financial statements, are prepared and presented with Jadestone Energy Inc. as the parent company of the Group. Reference to the Company in relation to the period prior to 23 April 2021 means Jadestone Energy Inc. Reference to the Company in relation to the period from 23 April 2021 means Jadestone Energy plc. The Reorganisation effected a re-domicile of the ultimate holding company to the United Kingdom. Upon completion at 11:59pm Canadian Pacific Time on 23 April 2021, Jadestone plc became the ultimate holding company of the Group in place of Jadestone Energy Inc. Reserved Matters for the Board The Board has a primary responsibility to foster the success of the Company through the management or supervision of the management of the Company’s business and affairs. The Board is responsible for the direction and overall performance of the Company with an emphasis on strategy, policy, financial results and compliance matters. The matters reserved for the Board include, amongst others: (i) setting the Group’s purpose, values and standards; (ii) reviewing and approving the Group’s strategy and annual plans for achievement; (iii) monitoring corporate governance compliance with significant policies and procedures, including health and safety; (iv) oversight of communications and timely disclosure; (v) ensuring the integrity of internal controls and management of risks, including regular risk review; and (iv) approving the Group’s annual and interim reports and accounts. In addition to the above, the Board has approved a set of financial delegations of authority to ensure clarity throughout the business concerning the distinction between financial matters which require Board approval and those that can be delegated to senior management. Board Composition and Independence During calendar year 2020, the Board was comprised of eight directors. These included the Non-Executive Chair, the Group’s President and CEO, the Group’s CFO and five Non-Executive Directors. Four of the five Non-Executive Directors are considered independent. The skills and experience of the Non-Executive Directors vary across disciplines, each enhancing the Board’s independent oversight of the Group’s business. The Directors biographies on pages 94 and 95 speak to their relevant skills and experience. More than half of the Board is independent when accounting for the independent Non-Executive Chair and four independent Non- Executive Directors. The composition of each of the Audit Committee and the Remuneration Committee is fully independent. With Lisa Stewart’s appointment at the end of 2019, female representation on the Board has improved from 0 to 13%. The Nomination Committee is charged with increasing diversity at the Board level and within senior management. All Directors have access to independent legal advice in addition to the Company Secretary. Any Director may take independent professional advice at the Group’s expense in the furtherance of their duties. Board Committees The Board delegates specific responsibilities to the Board committees. Each committee has Board approved Terms of Reference which describe the committee’s responsibilities and the framework by which those responsibilities are fulfilled. The Terms of Reference for each Committee were last reviewed and updated in 2020 to align with the QCA Code. During calendar year 2020, the Board operated four committees: an Audit Committee, a Compensation and Nominating Committee, an HSE Committee and a Disclosure Committee. A summary of the roles, responsibilities, composition and 2020 activities of each of these committees is found at pages 98 to 111 of this Report. With the adoption of the QCA Code, effective 31 December 2020, the Compensation and Nominating Committee was separated into the following two committees: a Remuneration Committee and a Nomination Committee. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 86 BOARD CHAIR’S CORPORATE GOVERNANCE STATEMENT CORPORATE GOVERNANCE 87 Board Chair’s Corporate Governance Statement It is the role of the Board, led by myself as Board Chair, to ensure that Jadestone has both sound corporate governance and an effective Board. Strong corporate governance helps strengthen the foundations of a solid and successful business. The Board is supportive of embracing a high level of corporate governance and works to instil a culture across the Company which delivers strong values and behaviours. It is my responsibility to ensure that good standards of governance are delivered, from executive level and throughout the operations of the business. The importance of engaging with our shareholders underpins the essence of the business, ensuring that there are opportunities for investors to engage with both the Board and executive team. Jadestone is committed to upholding high standards of governance and responsible, social and ethical behaviour. Jadestone has implemented a Code of Conduct Policy that applies to all employees and contractors and which provides a framework of principles for conducting business, dealing with other employees, clients and suppliers, and reflects the Company’s commitment to a culture of honesty, integrity and accountability. The Company shares a set of core values – Respect, Integrity, Safety, Results-Orientated, Sustainability and Passion. Each employee is expected to make a commitment to these values, and to contribute to protecting and enhancing the Company’s reputation. Jadestone’s core values underpin the work the business does, and forms the foundation of the Code of Conduct. A copy of the Company’s key governance documents, including the Company’s Articles of Association, the Code of Conduct and related policies, are available on the Company’s website at www.jadestone-energy.com. In accordance with the QCA Code and AIM Rule 26, the report below provides a high-level overview of how Jadestone has applied the principles of the QCA Code. The Board considers that the Company complies with the QCA Code in all material respects. Further details on the Company’s adherence to the QCA Code can be found on the Company’s website at https://www.jadestone-energy.com/wp- content/uploads/2020/12/QCA-Code-JSE-Board-Chairs-Corp-Gov- Statement-vf-PDF.pdf. As Board Chair, I will work with the Board members to build upon the existing values that are in place and ensure that good corporate governance continues within the organisation and is delivered throughout the business, ensuring that Jadestone grows with foundations of integrity and strong principles for the benefit of all stakeholders. Dennis McShane Board Chair Dennis McShane NON-EXECUTIVE CHAIRMAN Principles of Corporate Governance The Board fully endorses the importance of good corporate governance and applies the corporate governance code in the form issued by the Quoted Companies Alliance in April 2018. The Board views the QCA Code as an appropriate, recognised governance code for a company of Jadestone’s size and structure with shares listed on AIM. The Board believes that the QCA Code provides the Company with the framework to add value to its business, enhance stakeholder confidence in the Company and sustain a strong level of governance. The QCA Code identifies ten principles of corporate governance for companies to apply and against which companies must publish certain specified disclosure. The Company has committed to apply these ten principles within the foundation of the business. These principles are: 1. 2. 3. 4. 5. 6. 7. 8. 9. Establish a strategy and business model which promote long-term value for shareholders. Seek to understand and meet shareholder needs and expectations. Take into account wider stakeholder and social responsibilities and their implications for long term success. Embed effective risk management, considering both opportunities and threats, throughout the organisation. Maintain the Board as a well-functioning, balanced team led by the chair. Ensure that between them the directors have the necessary up to date experience, skills and capabilities. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement. Promote a corporate culture that is based on ethical values and behaviours. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board. 10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 88 COMPLIANCE STATEMENT TO QCA PRINCIPLES CORPORATE GOVERNANCE 89 Compliance Statement to QCA Principles PRINCIPLE ONE – Establish a strategy and business model which promote long-term value for shareholders Jadestone is a leading independent upstream oil and gas production and development company in the Asia Pacific region. The Company has an acquisitive strategy and is focused on growth and creating value through identifying, acquiring, developing and operating assets within select parts of the Asia Pacific region. The Company is focused on creating value through leveraging the significant experience and track-record of its management team to maximise value from Jadestone’s existing asset base through production and cost optimisation, and on identifying acquisitions that offer significant value both at the time of purchase and through potential organic development and reinvestment. The Board’s objective is to create and maintain a leading independent Asia-Pacific- focused upstream oil and gas company that generates significant shareholder returns through capital growth and, dividends. The Company’s strategy and business model are further detailed in the Strategic Report at page 10. PRINCIPLE TWO – Seek to understand and meet shareholder needs and expectations Jadestone is committed to effective communication and constructive dialogue with its shareholders and the investment community at large. The Company actively strives to understand and meet shareholder needs and expectations. Jadestone works hard to ensure members of the Board and the executive team are highly accessible to shareholders. The Company offers direct lines of access to the Chief Executive Officer and Chief Financial Officer, as applicable, and members of the Board. The Company has two retained corporate brokers, with mandates that include coordinating corporate access for shareholders, and eliciting feedback from the investment community on corporate developments and news flow. Jadestone hosts conference calls and webcast presentations to accompany financial results disclosures, and in respect of major announcements. Shareholder feedback Jadestone regularly meets with shareholders and prospective investors through periodic investor conferences and roadshows which are conducted at numerous times throughout the year. Through these interactions, which take the form of both one-on- one and group meetings, the Board and executive team maintain relationships with investors and elicit ad-hoc feedback to understand shareholder preferences and needs. Information Jadestone provides regular updates to shareholders through guidance announcements, operations updates, and the release of half yearly and annual financial and operating results. These disclosures are designed to set expectations, to provide previews of performance against those expectations, and to offer detailed accounts of performance. In accordance with its continuous disclosure obligations, Jadestone will provide corrective guidance where forecasts differ materially from publicly disclosed expectations, and announce price-sensitive developments in its business without delay. Shareholder advisory bodies Jadestone has ongoing relationships with multiple shareholder advisory bodies to enable feedback regarding proposals either put to, or to be put to, shareholders for voting at annual meetings. Annual General Meeting The annual general meeting is the main forum for dialogue between the Board and the Company’s shareholders, and all shareholders are encouraged to attend and participate. PRINCIPLE THREE – Take into account wider stakeholder and social responsibilities and their implications for long- term success The Board recognises that the long-term success of the Company is reliant upon the efforts of employees of the Group and its contractors, suppliers, regulators and other stakeholders. With an expanding operating footprint in the Asia-Pacific region, Jadestone recognises the importance of a comprehensive stakeholder management strategy to successfully and considerately operate in this diverse range of countries. The Company engages with its key stakeholders through various channels, dependent on the nature of the relationship, and values the feedback it receives from those stakeholders. The Company takes every opportunity to ensure that, where possible, the views of its stakeholders are considered and acted upon when these are believed likely to bring material benefit to the success and integrity of the Company’s business activities. For the latest update on Jadestone’s key stakeholder consultation and engagement activities in 2020, please refer to the “Stakeholder Management” section in the Sustainability Report at page 63. PRINCIPLE FOUR – Embed effective risk management, considering both opportunities and threats, throughout the organisation Jadestone has in place a risk management framework which assists the Board in identifying, assessing, and mitigating the risks faced by the Group to an acceptable level. This is reviewed on an ongoing basis and actions are taken as needed to reduce the risks to an acceptable level, as required. The Company’s risk management process is aligned with the requirements of ISO 31000 and addresses risk management at three levels: Business, Facility and Task. The Company's risk management framework is also discussed in the Audit Committee Report. PRINCIPLE EIGHT – Promote a corporate culture that is based on ethical values and behaviours As stated in the Chair’s corporate governance statement above, the Board is responsible for the management, or for supervising the management, of the Company’s business and affairs. In supervising the conduct of the business, the Board through the CEO sets the standards of conduct for the Company. Further the application of details of the Company’s corporate governance, including business ethics and integrity, are set out within the Sustainability Report on pages 74-75. The Group’s values of respect, integrity, safety, result-oriented, sustainability and passion foster a culture of accountability, efficiency and innovation which support the Group’s mission and promote a corporate culture based on ethical behaviours and conduct. These values are enshrined in the written policies and working practices, including the Code of Conduct, adopted by all Group employees. An open culture is encouraged across the Group, with regular communications to staff regarding progress. The senior management team regularly monitors the Group’s cultural environment and seeks to address any concerns than may arise, escalating these to Board level as necessary. PRINCIPLE NINE – Maintain governance structures and processes that are fit for purpose and support good decision- making by the Board The Board has a primary responsibility to foster the short and long- term success of the Company and is accountable to the shareholders. Details on the Company’s governance structures, including matters reserved for the Board are set out on pages 84 and 85. PRINCIPLE TEN – Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders The Board is committed to ensuring that it communicates with shareholders and other stakeholders in a transparent and timely manner, and believes that by doing so it demonstrates the importance it places upon the views of all stakeholders. The Company’s methods for maintaining a dialogue with shareholders and other relevant stakeholders is set out in Principles 2 and 3 above. The Company’s financial and operational performance, in addition to reports from each of the Board Committees, is summarised in this Annual Report. PRINCIPLE FIVE – Maintain the Board as a well- functioning, balanced team led by the chair Details on the Board structure and composition are set out on page 85. PRINCIPLE SIX – Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities The Board covers a wide range of experience and skills. To meet the requirements of an independent upstream oil and gas production and development company, these experiences and skills must cover financial, legal, operational and technical knowledge, experience of risk management and growth in the independent E&P sector and of public markets. The Company believes that the current balance of skills in the Board as a whole reflects a very broad range of commercial and professional skills across geographies and industries and each of the Directors has experience in public markets. Details of the Directors’ experience and areas of expertise are outlined on pages 94 and 95. The Company’s secretary (“Company Secretary”) is responsible for ensuring that Board procedures are complied with and that governance matters are addressed by the Company. All Directors have direct access to the Company Secretary and are able to take independent legal advice. The Board has considered the guidelines under the QCA Code with regard to the key responsibilities of a Senior Independent Director (“SID”), and took into account additional facts, including the role of the Board Chair, the size of the Board, the existence of a Deputy Chair of the Board, the number of independent non-executive directors, and the channels of communication amongst the Company’s executive, the non-executive directors and shareholders. As such, the Board has determined that it will not currently appoint a SID, though the matter will be considered at regular intervals and as circumstances change. PRINCIPLE SEVEN – Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement A Board matrix helps guide the assessment of the skills and diversity of the Board members and highlights any skill gaps that requires addressing. The Board considers that its effectiveness and the individual performance of Directors is vital to the success of the Company. The Company currently conducts an internal process which involves each Board member completing a self-assessment and delivering it to the Board Chair who is also the Chair of the Nomination Committee. However, it is recognised that with the potential increase of the Board, in parallel with the expansion of the Company's activities, and the need to meet the requirements of the QCA Code, a more formal evaluation process will be adopted during the course of 2021. Directors are (re)elected by shareholders pursuant to the Company’s Articles, while taking into consideration the provisions of the QCA Code, having due regard to their performance and ability to continue to contribute to the Board in the light of the knowledge, skills and experience required and the need for progressive refreshing of the Board (particularly in relation to Directors serving for a term beyond nine years). T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 90 DIRECTORS REPORT CORPORATE GOVERNANCE 91 Directors’ Report The Directors present their Annual Report on the affairs of the Group and the audited Group, including the audited consolidated financial statements of Jadestone Energy Inc. as at and for the year ended 31 December 2020. Corporate Reorganisation Jadestone Energy Inc. was the parent company of the Group for the full calendar year 2020. In early Q1 2021, the Group commenced an internal corporate reorganisation by way of a plan of arrangement under the Business Corporations Act (British Columbia). Under the Reorganisation, a newly incorporated English public limited company, Jadestone Energy plc (“Jadestone plc”), became the ultimate parent company of the Group. The Reorganisation did not result in a change in control in the ultimate holding company of the Jadestone group, or in a change of ultimate shareholding in any of the assets of the Jadestone group, or in a change in the management of any the Jadestone group’s assets. Following completion of the Arrangement on 23 April 2021, the Company’s shares were delisted from trading on AIM. On 26 April 2021, the shares of Jadestone plc were admitted to trading on AIM. On 15 March 2021, Jadestone plc, Jadestone Energy Inc. and a wholly owned subsidiary, Jadestone Energy Holdings Limited, entered into an arrangement agreement pursuant to which, through Jadestone Energy Holdings Limited, Jadestone plc acquired the entire issued share capital of Jadestone Energy Inc., in exchange for new ordinary shares in Jadestone plc on the basis of one ordinary share in Jadestone plc for each outstanding common share in Jadestone Energy Inc. The arrangement agreement was approved by Jadestone Energy Inc. shareholders and received the required court approvals. The Reorganisation effected a re-domicile of the ultimate holding company to the United Kingdom. Upon completion, Jadestone plc became the ultimate holding company of the Jadestone group of companies, in place of Jadestone Energy Inc. As Jadestone Energy Inc. was the parent company of the Group for the full calendar year 2020, this Report, including the audited consolidated financial statements, are prepared and presented with the Jadestone Energy Inc. as the parent company of the Group. Incorporation and Listing Jadestone Energy Inc. was incorporated and exists under the Business Corporations Act (British Columbia) and its head office is located in Singapore. The Company’s shares were admitted to trading on AIM on 8 August 2018. The Company’s shares were delisted from AIM on 23 April 2021 as part of the Reorganisation, with the shares of Jadestone plc admitted to trading on AIM on 26 April 2021. Principal Activities Jadestone is an independent oil and gas production and development company focused on the Asia-Pacific region. The Company has an acquisitive strategy and is focused on growth and creating value through identifying, acquiring, developing and operating assets within select parts of the Asia-Pacific region. Jadestone currently has a portfolio of oil and gas production, development and exploration assets in Australia, Indonesia, Vietnam and the Philippines and has signed binding sales and purchase agreements to acquire assets in New Zealand and Malaysia. The Company is focused on creating value through leveraging the significant experience and track-record of its management team to maximise value from Jadestone’s existing asset base through production and cost optimisation, and on identifying acquisitions that offer significant value both at the time of purchase and through potential organic development and/or reinvestment. The Directors’ objective is to create a leading independent Asia- Pacific-focused upstream oil and gas company that generates significant shareholder returns through capital growth and dividends. Business Review and Future Developments A review of the business and the future developments of the Group is included in the Strategic Report (including the Chief Executive Officer’s Report, Review of Operations and Financial Review) and Chairman’s Statement (all of which, together with the Corporate Governance Statement, are incorporated by reference into this Directors’ Report). Dividend The Board’s target is provide direct returns to shareholders by way of dividend, on a biannual basis, and intends to maintain and grow the dividend over time, in line with underlying cash flow generation. In light of the Group's strong financial position including a record high net cash position, the Company declared its maiden dividend in 2020, and paid the interim one third portion, being 0.54 US cents per share in October 2020. The Board intends to declare the second 2020 dividend of US$5.0 million following completion of the capital reduction and filing of audited initial accounts. The dividend policy reflects the Group’s current and expected future cash flow generation potential. The Board may further revise the Group’s dividend policy from time to time in line with the actual results and financial position of the Group. Financial Instruments The Group’s financial risk management objectives and policies are discussed in note 35 to the Consolidated Financial Statements. Events Since the Balance Sheet Date Events since the balance sheet date are disclosed in note 38 to the Consolidated Financial Statements. Directors and Their Interests The following Directors have held office in the Company during the year: • Dennis McShane • A. Paul Blakeley • Daniel Young • Robert A. Lambert • Cedric Fontenit • Iain McLaren • David Neuhauser • Lisa A. Stewart (Independent Non-Executive Chair) (Executive Director, President and CEO) (Executive Director and CFO) (Independent Non-Executive Deputy Chair) (Independent Non-Executive Director) (Independent Non-Executive Director) (Non-Executive Director) (Independent Non-Executive Director) The Directors who held office at the end of the financial year had the following interests in the ordinary shares of the Company: Director Dennis McShane A. Paul Blakeley Daniel Young Robert A. Lambert Iain McLaren David Neuhauser Cedric Fontenit Lisa A. Stewart Interest as at start of year Interest as at end of year 302,919 2,482,798 217,919 553,919 162,870 32,319,167 1 Nil Nil 453,651 2,732,798 217,919 553,919 163,778 32,319,167 1 200,000 2 Nil No rights to subscribe for shares in or debentures of Group companies were granted to any of the Directors or their immediate families, or exercised by them, during the financial year. Details of share awards that have been granted to certain Directors under the Company's Stock Option Plan in addition to details of performance shares awarded to certain Directors under the Performance Share Plan and the Restricted Share Plan are also included in the Compensation and Nominating Committee report, included in this Annual Report. 1 Mr. Neuhauser does not own any common shares of the Company directly but, as managing director of Livermore Partners LLC, exercises control or direction over the common shares beneficially owned by Livermore Partners LLC. 2 Mr. Fontenit owns 200,000 Common Shares of the Company directly. He also holds an indirect beneficial interest in the Company through 443.5565 units of a fund managed by Tyrus Capital S.A.M. (the “Fund”) holding an interest in the common shares of the Company. However, Mr. Fontenit does not exercise control or direction over the Fund’s holding in the Company. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 92 DIRECTORS REPORT CORPORATE GOVERNANCE 93 Statement of Directors’ Responsibilities The Directors are responsible for preparing the Annual Report and the Financial Statements in accordance with applicable law and regulations. The Directors are required to prepare financial statements for each financial year. They have elected to prepare the Financial Statements in accordance with International Financial Reporting Standards “IFRS” as adopted by the European Union. In preparing these Financial Statements, the Directors are required to: • Select suitable accounting policies and then apply them consistently; • Make judgments and accounting estimates that are reasonable and prudent; • State whether the applicable IFRS’s as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the Financial Statements; and • Prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain Jadestone’s transactions and disclose with reasonable accuracy the financial position of the Company. They are also responsible for safeguarding the assets of Jadestone and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. They are further responsible for ensuring that the strategic report and director’s report and other information included in the annual report and financial statements is prepared in accordance with applicable law. The maintenance and integrity of the website is the responsibility of the Directors. The work carried out by the auditors does not involve consideration of information included on the Company’s website and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the information contained in the Financial Statements since they were initially presented on the website. Legislation governing the preparation and dissemination of the Financial Statements and other information included in annual reports may differ from legislation in other jurisdictions. Share Dealing Code The Group adopted a code for share dealings appropriate for an AIM company, in compliance with Rule 21 of the AIM Rules for Companies and with the Market Abuse Regulation. Annual General Meeting Jadestone Plc’s annual general meeting will be held in Singapore on 16 June 2021. Formal notice of the AGM will be issued separately from this Annual Report. Registrar Jadestone plc’s share registrar in respect of its ordinary shares traded on AIM is Computershare Investor Services plc, full details of which can be found on the Company's website. Auditor Having reviewed the independence and effectiveness of the auditor, the Audit Committee has recommended to the Board that the existing auditor, Deloitte & Touche LLP (“Deloitte”) be reappointed. Deloitte has expressed its willingness to continue in office as auditor. A resolution to appoint Deloitte, as auditor of Jadestone plc, will be put to the shareholders at the annual general meeting of Jadestone plc. Disclosure of information to auditors The Directors who were members of the Board at the time of approving the Directors’ Report are listed above. So far as each person who was a Director at the date of approving this report is aware, there is no relevant audit information, being information needed by the auditors in connection with preparing its report, of which the auditors are unaware. Having made enquiries of fellow Directors and the Group’s auditors, each Director has taken all the steps that he or she is obliged to take as a director in order to make him or herself aware of any relevant audit information and to establish that the auditors are aware of that information. Directors’ Indemnities As permitted by the Articles of Association, the Directors have the benefit of an indemnity, which is a qualifying third party indemnity provision as defined by Section 234 of the Companies Act 2006. The indemnity is currently in force. The Company also purchased and maintained throughout the financial period Directors’ and Officers’ liability insurance in respect of itself and its Directors. On behalf of the Board A. Paul Blakeley DIRECTOR | 22 APRIL 2021 2020 Board and Committee Attendance Conflicts of Interest There are no potential conflicts of interest between any duties owed by the Directors to the Company and their private interests and/or other duties, nor any arrangements or understandings with any of the shareholders of the Company, customers, suppliers or others pursuant to which any Director was selected to be a Director. The Company tests regularly to ensure awareness of any future potential conflicts of interest and related party transactions. Substantial Shareholders As at 19 May 2021, the Jadestone plc has received notification from the following shareholders of interests in excess of 3% of the Company’s issued ordinary shares with voting rights, being the level at which notification is required to be made to the Jadestone plc. Shareholder Tyrus Capital S.A.M. Baillie Gifford & Co Livermore Partners LLC Odey Asset Management Premier Miton Investors Polar Capital Blackrock Invesco Sandgrove Capital Management Number of Common Shares as at 19 May 2021 % Interest as at 19 May 2021 118,205,247 39,195,875 32,295,867 28,690,514 23,117,512 22,440,273 17,296,655 16,400,791 15,189,197 25.49% 8.45% 6.96% 6.19% 4.99% 4.84% 3.73% 3.54% 3.28% The table below shows a summary of directors’ attendance at Board and Committee meetings for the period from 1 January 2020 to 31 December 2020. Name and positions held in the Company A. Paul Blakeley Director, President and Chief Executive Officer Daniel Young Director and Chief Financial Officer Dennis McShane Director and Chairman Robert A. Lambert Director and Deputy Chairman Cedric Fontenit Director Iain McLaren Director David Neuhauser Director Lisa Stewart Director Board 6 of 6 6 of 6 6 of 6 6 of 6 6 of 6 6 of 6 6 of 6 6 of 6 Audit committee Compensation and nominating committee Disclosure committee N/A N/A N/A 4 of 4 N/A 4 of 4 N/A 4 of 4 N/A N/A 5 of 5 N/A 5 of 5 5 of 5 N/A N/A 1 of 1 1 of 1 N/A N/A N/A N/A N/A N/A • 2020 Board Meetings (6 meetings): 4 Mar, 25 Mar, 17 Jun, 9 Sep, 27 Oct and 1 Dec • 2020 Audit Committee Meetings (4 meetings): 15 April, 22 May, 4 Sep, and 24 Nov • 2020 Compensation and Nominating Committee Meetings (5 meetings): 25 Feb, 11 Mar, 19 Mar, 27 Apr and 20 Nov • 2020 HSE Committee Meetings (3 meetings): 18 Feb, 30 Jul and 1 Oct • 2020 Disclosure Committee Meeting (1 meeting): 16 Dec Health, safety and environment committee 3 of 3 N/A N/A 3 of 3 N/A N/A N/A 3 of 3 T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 94 BOARD OF DIRECTORS CORPORATE GOVERNANCE Board of Directors 95 Paul Blakeley OBE EXECUTIVE DIRECTOR, PRESIDENT AND CHIEF EXECUTIVE OFFICER Cedric Fontenit INDEPENDENT NON-EXECUTIVE DIRECTOR Dennis McShane INDEPENDENT NON-EXECUTIVE DIRECTOR, CHAIRMAN David Neuhauser NON-EXECUTIVE DIRECTOR Appointed: Executive Chairman June 7, 2016 / President and CEO June 15, 2017 Appointed: June 7, 2016 Appointed: December 10, 2017 Appointed: June 7, 2016 Committee Memberships: HSE Committee, Disclosure Committee and Nomination Committee Committee Memberships: Remuneration Committee (Chair) and Nomination Committee Committee Memberships: Nomination Committee (Chair) and Remuneration Committee Paul commenced at Jadestone in June 2016. Paul holds a BSc. from Bedford College, University of London. Paul has over 40 years’ energy experience, including over 20 years at Talisman Energy Inc (‘Talisman’). As Executive Vice President Asia Pacific & Middle East at Talisman, Paul led the building of Talisman’s portfolio in Asia Pacific to become the largest upstream independent in the region. Paul has a long track record of acquiring production and managing commercial and operational risks, while overseeing investment to further enhancing value through follow-on development activity. Directorships of Other Reporting Issuers: None Cedric has extensive experience in advising on M&A, financing and structuring investments gained from his 20-year career in investment banking and hedge fund industries. Cedric is currently co-founder and managing partner of Amavia Capital, a private investment firm. He was previously a senior member of the investment team at Tyrus Capital S.A.M. where he had significant investment experience in the oil and gas and mining industries, among others. Directorships of Other Reporting Issuers: None Dennis has over 40 years’ experience in finance, oil and gas, and mining sectors in the US, Europe, Africa, and Australia. Dennis has been involved in numerous transformational corporate transactions both as director or advisor. He currently serves as an Executive Director of The Advertising Checking Bureau, Inc., and previously he was the Executive Director of Strategy for Ophir Energy, Plc having previously served as a Senior Independent Director during its Initial Public Offering (IPO), and Director of Finance and Strategy leading the IPO of Ferrexpo, Plc. Dennis was also previously a Managing Director with JP Morgan Chase and Co. Directorships of Other Reporting Issuers: None David has extensive capital markets and M&A experience and is currently founder and managing director of event-driven hedge fund Livermore Partners in Chicago, and the chairman of Kolibri Global Energy Inc. He has invested in and advised global public companies for the past 21 years and has a strong track record of enhancing intrinsic value through restructuring and strategic initiatives. Directorships of Other Reporting Issuers: Kolibri Global Energy Inc. Robert Lambert INDEPENDENT NON-EXECUTIVE DIRECTOR, DEPUTY CHAIRMAN Appointed: May 5, 2011 Committee Memberships: HSE Committee (Chair) and Audit Committee Robert has over 50 years’ experience in the international petroleum exploration and production business. Robert is MBA-qualified and is a Chartered Geologist (GSL and EFG), having held numerous operational and management positions (during his long career with Conoco Inc from 1978 to 2004), Robert’s contributes his extensive experience in commercial and operational risk management in upstream oil & gas to the Jadestone board. Robert is currently also a Director of Ipex Energy Ltd. and Hillcrest Petroleum Ltd. Directorships of Other Reporting Issuers: Hillcrest Petroleum Inc. Iain McLaren INDEPENDENT NON-EXECUTIVE DIRECTOR Appointed: April 21, 2015 Committee Memberships: Audit Committee (Chair), Nomination Committee and Remuneration Committee Iain has significant experience in the oil and gas sector and is currently Director, Chair of the Audit Committee and a member of the Remuneration and Nominations committees for Wentworth Resources Plc, as well as a Director of Ecofin Global Utilities and Infrastructure Trust Plc. Iain is a past Senior Independent Director for Cairn Energy Plc and a number of other companies. Iain was the President of the Institute of Chartered Accountants of Scotland, and was a partner in KPMG for 28 years until 2008, bringing extensive experience in public company audit, internal control and risk management. Directorships of Other Reporting Issuers: Ecofin Global Utilities and Infrastructure Trust Plc; and Wentworth Resources Plc. Lisa Stewart INDEPENDENT NON-EXECUTIVE DIRECTOR Appointed: December 1, 2019 Committee Memberships: HSE Committee and Audit Committee Lisa has over 30 years of experience in the upstream oil and gas industry in engineering and senior management positions. Currently Lisa is a Director of Cimarex Energy Co, Director of Western Midstream Partners LP, and Executive Chairman of Sheridan Production Partners, previously Lisa has served as President and Chief Executive Officer of Sheridan Production Company LLC. Lisa was an Executive Vice President of El Paso Corporation, President of El Paso E&P, and Director of Talisman Energy Inc. Prior to her time at El Paso, Lisa spent 20 years at Apache, including extensive experience in Asia Pacific, leaving in January 2004 as Executive Vice President with responsibility for reservoir engineering, business development, land, environmental, health & safety, and corporate purchasing. Directorships of Other Reporting Issuers: Cimarex Energy Co., Western Midstream Partners LP Dan Young EXECUTIVE DIRECTOR AND CHIEF FINANCIAL OFFICER Appointed: CFO January 18, 2017, Executive Director August 8, 2018 Committee Memberships: Disclosure Committee Dan commenced at Jadestone in January 2017. Dan holds a BCom (Hons) from the University of Western Australia, and an MBA(Hons) from the University of Chicago Booth School of Business. Dan is a Chartered Accountant and a CFA charter holder. Dan has more than 24 years’ experience in senior oil and gas, energy and natural resources investment banking, advisory and consulting roles, including financial and commercial risk. Prior to joining Jadestone, Dan was the Senior Vice President and Head of APAC Consulting for Wood Mackenzie. Dan also worked for 13 years in JP Morgan’s investment banking coverage/mergers and acquisitions group. Directorships of Other Reporting Issuers: None T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 96 SENIOR MANAGEMENT CORPORATE GOVERNANCE 97 Senior Management Fauzi Abbas GROUP DRILLING MANAGER AND GENERAL MANAGER, MALAYSIA Fauzi has 25 years’ of operations and technical experience with a strong background in Drilling, Wells and Completions, with a track record of leading low cost drilling initiatives and delivering numerous development projects from conceptual well design through FDP approval to production. Just prior to Jadestone, he worked for Vestigo Petroleum, the marginal field development specialist company within PETRONAS, as a Senior Manager, Well Engineering. Fauzi planned and executed wells from conceptual design through first oil on the fast-track South Angsi development in Malaysia, and has prior experience in drilling and engineering roles in for Petronas Carigali, for BG Group in Tunisia and for Saudi Aramco in the Middle East. Mark Craig GROUP OPERATIONS MANAGER Lucy Dean GROUP HR MANAGER Nguyen Thanh Ha GROUP COMMERCIAL MANAGER Mark has 28 years’ energy experience, including over four years at Jadestone Energy. He previously held positions in Wells, Projects and Operations departments, and has spent the last four years at Jadestone working within the asset teams, and now as the Group Operations Manager. Mark’s focus is on implementing midlife operating philosophies in the operated assets and ensuring efficient design of the Jadestone project portfolio. Marks holds an MBA and a Masters in Petroleum Engineering, both from Robert Gordon University, Aberdeen. Lucy has over 26 years’ HR experience working in both the Energy Sector and top tier Financial Institutions in South East Asia and the UK. Her experience includes business partnering at an international level and coordinating HR activities across multiple geographies. Lucy has spent the last 10 years in Singapore working in the upstream oil and gas industry. During her time with Jadestone she has overseen all HR activities including the successful transition of employees to Jadestone as part of the Stag and Montara acquisitions. Ha has spent over 17 years working in the oil and gas industry with both BP and Talisman Energy. Ha has significant experience in M&A, operational commercial, project evaluation, strategy and portfolio management. Ha’s last seven years were with Talisman Energy where she undertook a regional Business Development and Commercial role for the Company’s Asia Pacific portfolio. During her time with Jadestone, Ha has played a pivotal role in delivering successful M&A transactions. She also oversees commercial evaluation and portfolio analysis to support the Company’s organic growth. Paul Blakeley OBE EXECUTIVE DIRECTOR, PRESIDENT AND CHIEF EXECUTIVE OFFICER Helen Astill HSE MANAGER Owen Hobbs COUNTRY MANAGER, AUSTRALIA AND NEW ZEALAND Henning Hoeyland GROUP SUBSURFACE MANAGER Michael Horn EXECUTIVE VICE PRESIDENT, CORPORATE AND BUSINESS DEVELOPMENT Paul commenced at Jadestone in June 2016. Paul holds a BSc. from Bedford College, University of London. Paul has over 40 years’ energy experience, including over 20 years at Talisman Energy Inc (‘Talisman’). As Executive Vice President Asia Pacific & Middle East at Talisman, Paul led the building of Talisman’s portfolio in Asia Pacific to become the largest upstream independent in the region. Paul has a long track record of acquiring production and managing commercial and operational risks, while overseeing investment to further enhancing value through follow-on development activity. Helen is an HSE specialist with over 15 years’ experience in development of business and HSE management systems, risk management and organisational processes, and capability building across a number of industries. Prior to Jadestone, Helen has worked with ConocoPhillips, Quadrant Energy, and Apache Energy. She has extensive experience with regulatory requirements within the Australian offshore oil and gas industry, and in the development and implementation of assurance systems used for compliance, executive performance reporting and continuous improvement objectives. Owen has over 30 years of experience in the upstream oil and gas industry, including leading some of Australia and New Zealand’s largest onshore and offshore operations with roles in Boral Energy, Santos, and Origin Energy. He has managed conventional and unconventional assets, provided leadership to cross- functional teams, worked closely with regulators, and been involved in M&A and divestment activities. Prior to Owen’s career in the Oil and Gas industry he spent five years with the Royal New Zealand Navy as an Executive Branch officer. Henning has 20 years’ experience in the upstream sector and was with Schlumberger and Talisman Energy in the North Sea and Southeast Asia prior to joining Jadestone. He has held various roles across operations and subsurface where his focus has been on maximising value from producing assets and extending field life. Over the last five years Henning has led all subsurface activities within Jadestone with a special focus on technical due diligence. Henning’s strong analytical bias is a key differentiator which identifies the value opportunities that underpin Jadestone's investment options and growth potential. Michael has over 30 years’ experience in the oil and gas industry, largely in Asia Pacific, with assignments in Vietnam, Malaysia and Singapore, 12 of which were with Talisman Energy. He has identified and closed a number of key transactions which were a vital part of Talisman Energy’s success in Asia, and has a strong reputation as a dealmaker within Asia amongst industry stakeholders and the investment community. Over the past five years, Michael has successfully delivered Jadestone’s acquisitions in Australia, Indonesia and New Zealand and remains active in the pursuit of new opportunities. James Borras GENERAL MANAGER, VIETNAM James has worked in oil and gas for 26 years. Prior to Jadestone, he worked for Talisman Energy and BP, and holds a BEng in Electrical Engineering. James has been in Vietnam for 13 years and was lead engineer on several field development projects before joining Jadestone in 2018. James has a strong track record in successful project delivery and HSE leadership. He assembled the Vietnam project team and led the gas development project to the point of being sanction ready in less than 18 months. David Lamb COUNTRY MANAGER, INDONESIA Neil Prendergast GENERAL COUNSEL AND COMPANY SECRETARY Dan Young EXECUTIVE DIRECTOR AND CHIEF FINANCIAL OFFICER David has over 40 years’ oil and gas industry experience, mostly in Asia. He has a proven track record of operational excellence, particularly with HSE matters, and is also fluent in Bahasa Indonesia. David was previously the country manager of Talisman Energy Indonesia where he created and executed the company’s South Sumatra Strategy, successfully partnering with the national oil company Pertamina. Jadestone has returned to South Sumatra as operator of the Lemang PSC and are now progressing development of the Akatara gas field. Neil has more than 19 years of experience advising on operations, joint venture projects, acquisitions and divestitures within the energy industry and across Asia Pacific, the Middle East, North Africa and North America. He has played an integral role in the expansion of Jadestone’s portfolio and the Company’s listing on AIM since joining in early 2017. Neil previously spent six years as a member of Talisman Energy Indonesia’s senior management team, setting strategy, mitigating risk and ensuring safe and profitable production. Dan commenced at Jadestone in January 2017. Dan holds a BCom (Hons) from the University of Western Australia, and an MBA(Hons) from the University of Chicago Booth School of Business. Dan is a Chartered Accountant and a CFA charter holder. Dan has more than 24 years’ experience in senior oil and gas, energy and natural resources investment banking, advisory and consulting roles, including financial and commercial risk. Prior to joining Jadestone, Dan was the Senior Vice President and Head of APAC Consulting for Wood Mackenzie. Dan also worked for 13 years in JP Morgan’s investment banking coverage/ mergers and acquisitions group. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 98 AUDIT COMMITTEE REPORT CORPORATE GOVERNANCE 99 Audit Committee Report Committee members and meeting attendance In 2020 the Audit Committee comprised: • Iain McLaren (Committee Chair) • Robert Lambert • Lisa Stewart All of whom are independent. Iain McLaren 4 out of 4 Robert Lambert 4 out of 4 4 out of 4 Lisa Stewart 15 April • 22 May • 4 September • 24 November Role of the Committee The Audit Committee has oversight of the Company's financial reporting, including any accompanying narrative, internal controls and risk management systems, compliance, whistle-blowing and fraud, as well as external statutory financial audits and reserves audits. Responsibilities of the Audit Committee include: a. Monitor the integrity of the Company's financial statements, including its annual and interim financial statements and reviewing significant financial reporting issues and judgments contained within them; b. Overseeing the Company’s accounting and financial reporting processes, the Company's internal controls and risk management systems and the resolution of any issues identified by the Company’s external auditors; c. Meeting with the Company's external auditors, along with the Chief Financial Officer and select senior finance managers of the Company, to review the annual and interim financial statements of the Company; and d. Ensuring the Company meets its reporting obligations related to oil and gas reserves, as prescribed under the Canadian National Instrument on Standards of Disclosure for Oil and Gas Activities (“NI 51-101”), including overseeing the work undertaken by the Company’s independent third party reserves evaluator. Review of the financial statements The Audit Committee monitored the integrity of the annual and interim financial statements and reviewed the significant financial reporting matters and accounting policies and disclosures in the financial reports. The external auditor attended all Audit Committee meetings during the year. The annual audit process included consideration of the auditor's annual planning report to the Audit Committee. This report addressed a number of topics including the planned scope and audit approach, the level of materiality, significant risks and areas of focus, and independence, among other matters. At the conclusion of the annual audit process, the auditor provided a detailed final report to those charged with governance, which revisited these same topics, along with the results of their audit and other audit matters. The audit committee also evaluated the overall performance of the auditors and recommended their continued appointment to the Board. In addition, the Audit Committee monitored the integrity of the interim financial statements for both the three month period ended 31 March 2020 (as was required by Canadian financial reporting obligations at the time) and the interim financial statements for the six month period ended 30 June 2020. Internal controls and risk management The Audit Committee is responsible for the oversight of the Group’s system of internal controls, including the risk management framework. The Group’s principal risks and uncertainties, which provide a framework for the Committee’s focus, are discussed on pages 32-33. Management has identified the key operational and financial processes that exist within the business and has developed an internal control framework. This is structured around a number of Group policies and procedures and includes a delegated authority framework. Compliance, whistleblowing and fraud The Audit Committee reviews the Company’s procedures, systems and controls, including for detecting fraud, for the prevention of bribery, money-laundering, and corporate criminal offence. The Committee receives reports on any non-compliance, of which there were none in 2020. The Group has a Whistleblowing policy in place and the Committee is responsible for overseeing the arrangements and the effectiveness of the processes for this. The policy exists to enable employees to raise any concerns in confidence about wrongdoing or impropriety within the Group. Internal audit The Group currently does not have an internal audit function. The committee continues to monitor the appropriateness of this as the Group evolves and grows. Letter from the Committee Chair Dear shareholder, It is my pleasure to present the Audit Committee Report for the year ended 31 December 2020. Financial reporting Over the last twelve months, the Audit Committee has monitored and reviewed the preparation and issuance of the Company's consolidated audited financial statements as at and for the year ended 31 December 2020, along with each of the unaudited condensed consolidated interim financial statements for the three- months ended 31 March 2020 and for the six months ended 30 June 2020. Following the Company’s delisting from the TSX-V in late March 2020, the Company was granted relief from certain Canadian disclosure requirements, generally consistent with the relief granted to a designated foreign issuer, as defined in Canadian National Instrument 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers. The Company was no longer required to report quarterly financial information, and immediately moved to report financial results on a semi-annual basis, in line with market practice in the UK, and as required by the AIM Rules for Companies. The Audit Committee has remained focussed on reviewing material matters affecting the risks and financial position of the Company. This focus took on a special meaning in early 2020 as the combined impact of the COVID-19 pandemic and the collapse in the price of crude oil presented significant new risks for the Company. We reviewed and challenged a series of stress tests to the Company’s financial resilience, along with a number of scenarios as part of impairment testing of the Company’s carrying values for oil and gas properties. We also reviewed the auditor's planning report for the 2020 full year audit, including consideration of the materiality level and the auditor’s identified items of significant risk and areas of audit focus. The Committee then oversaw the completion of the preparation and finalisation of the issuance of the Company’s consolidated audited financial statements as at and for the year ended 31 December 2020. This has included a thorough review and challenge of the financial statements as well as the significant financial reporting issues and judgements contained within them, and a detailed discussion with the auditor of their April 2021 final report to those charged with governance. QCA Code implementation During Q4 2020 the Audit Committee Terms of Reference (“TOR”) were modified, along with a number of other changes noted in the Directors’ Report, as part of the adoption of the QCA Code. Changes to the Audit Committee’s TOR included: • Ensuring at least one member of the committee has recent and relevant technical experience in reserves audits and reserves reviews; • Appointments to the committee shall be for up to three years, extended for further periods of three years provided the director still meets the membership eligibility requirements; • The external audit lead partner must be rotated after a maximum period of five years; • At least once every ten years the audit service contract shall be put out to competitive tender; and • A series of provisions to ensure that the Committee subjects the Company’s annual reserves disclosures to challenge and review, including the procedures related to the determination and accompanying disclosures of the Company’s reserves and resources. Reserves reporting The Board has continued to delegate to the Audit Committee the oversight, monitoring and review of the Company’s oil and gas reserves and resources disclosures, including the Company’s disclosures in April 2020 under the Canadian National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities. The Audit Committee has duly overseen the work conducted by management and by the Company’s qualified third party reserves evaluator, culminating in the Company’s disclosure of year end 2020 reserves in March 2021. Sincerely, Iain McLaren NON-EXECUTIVE DIRECTOR AND CHAIR OF THE AUDIT COMMITTEE T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 100 COMPENSATION AND NOMINATING COMMITTEE REPORT CORPORATE GOVERNANCE 101 Compensation and Nominating Committee Report Committee members and meeting attendance In 2020 the Compensation and Nominating Committee comprised: • Cedric Fontenit (Committee Chair) • Dennis McShane • Iain McLaren All of whom are independent. Cedric Fontenit 5 out of 5 Dennis McShane 5 out of 5 5 out of 5 Iain McLaren 25 February • 11 March • 19 March • 27 April • 20 November Role of the Committee The Compensation and Nominating Committee ensures that the compensation of directors, employees and officers is set appropriately based on industry data, with the goal of attracting, retaining and motivating key management personnel to ensure the long-term success of the Company. • Be willing to seek and take into consideration the views of shareholders; committing sufficient time to the role to develop the necessary skills and knowledge (including, for example, current market practice, taxation and legal requirements) to work as part of a small committee; • Conduct an annual review of remuneration committee advisers, and the fees charged for remuneration committee advice and other services, including review of their independence and potential conflicts of interest; and • Review the Company’s legal obligations, including changes to employment and discrimination law, Company law and relevant regulations as well as the effect of any changes to tax law or rates of tax. Key roles and responsibilities The Compensation and Nominating Committee responsibilities include: • Annually reviewing and making recommendations with respect to executive remuneration including short term and long-term incentives; • Identifying individuals qualified to become new Board members; and • Annually assessing the contribution and effectiveness of each director, as well as the competencies and characteristics each director is expected to bring to the Board. The Chairman of the Compensation and Nominating Committee is responsible for: • Setting agendas, chairing committee meetings and ensuring all tasks delegated to the committee are dealt with; • Leading consultations with shareholders on the Company’s remuneration policy when ever there is a significant change proposed; • Answering questions about remuneration more generally with shareholders. Members of the Compensation and Nominating Committee must: • Be independent and willing to justify the decisions of the remuneration committee to executive directors and senior management; • Be willing and able to resist inappropriate demands from executive directors and senior management; • Be prepared to seek external advice when necessary; Letter from the Committee Chair Dear shareholder, On behalf of the Board, I am pleased to present the Compensation and Nominating Committee Report for the year ended 31 December 2020. This report is divided into three sections – this introductory letter, a summary of our Total Reward structure, and the remuneration report. The first section describes the in-place Total Reward structure, and explains its application and implementation in 2020 and beyond, including the application of long-term incentive policies, which were approved by shareholders on 15 May 2019. Our remuneration strategy was crafted in recognition of the Company’s ongoing pivot away from its Canadian heritage and toward norms and practices more typical of a UK-based entity. This prescribes a three-year transition in aspects which include director compensation, performance-based compensation, and long-term incentives. Also in keeping with that transition, for 2021 and beyond we have divided the committee’s responsibilities into a separate Remuneration Committee and a Nomination Committee. The remuneration report provides detail on how the policy was applied in 2020, and demonstrates the inherent flexibility we have instilled in our policies so as to preserve shareholder value in the face of a challenging external environment for the upstream industry as a whole, while still ensuring we are able to attract, retain, and motivate the team for success. The report details the remuneration paid to senior management and directors in 2020, and underscores the adjustments made in service of protecting long- term project returns and ensuring the ongoing financial strength of the business in light of the challenges our industry faced in 2020. In 2020, key matters considered by the committee included: • Reviewing the CEO’s 2019 Performance contract and agreeing on outcomes relating to performance pay, as well as reviewing and providing constructive input on the CEO’s proposed 2020 performance agreement; • Reviewing recommendations for salary increases for 2020, and subsequently agreeing that salary revisions would not be implemented in 2020 as a result of the economic downturn due to COVID-19; • Reviewing and agreeing on Performance Share Plan metrics for 2020 and 2021 and agreeing on long term incentive plan grants for individuals; • Acknowledging an overall 2020 performance of 46% of total objectives for the year 2020, as further detailed below; • Reviewing Board fees in relation to the decision to no longer have Board members participate in the Long Term Incentives (“LTIP”) programme, but instead receive cash fees only, in alignment with the pivot toward UK company practices; • Conducting a review of foreign service allowances; • Reviewing Board competencies in line with the Company’s move toward adopting the QCA code; and • Overseeing an update to the Company’s succession plans for key roles in the organisation, a project that will continue into 2021. In conducting its work, the Compensation and Nominating Committee sought the support of several independent specialist service providers. Mercer Singapore provided assistance with the roll out of the Performance Share Plan, and Mercer UK assisted with NED compensation benchmarking and Pay Peer Group Disclosure with regard to executive compensation. Mercer Singapore presented a Performance Share Plan (“PSP”) proposal to the Compensation and Nominating Committee and PWC Singapore provided benchmarking analysis on foreign service allowances in several of the Company’s key office locations - Singapore, Kuala Lumpur and Jakarta. The Committee also works to ensure that the Board continues to have the appropriate balance of skills, knowledge, experience, independence and diversity to lead the Company effectively. The Committee keeps under review the composition of the Committees to ensure that they retain the appropriate combination of expertise and diversity, and that their non-executive members remain independent and are not overly committed elsewhere such that they risk being unable to attend properly to Jadestone’s affairs. Further, the Committee takes into account the findings of an annual Board and Committees evaluation exercise, commissioned by the Board chair, in exercising its duties. The Board recognises that diversity and inclusion are essential both for the Board and throughout the Company. In 2020, the Board approved the Company’s Diversity Policy, which recognises that people from different backgrounds and experiences can bring valuable insights to the workplace and enhance Jadestone’s operations. While all appointments are made based on merit, the Board embraces the principles of the Diversity Policy and seeks to ensure inclusion and diverse representation in all its recommendations. In 2021 and beyond, the newly formed Remuneration Committee will consider how best to instill additional linkages between ESG performance and performance pay, and will once again, conduct a review of remuneration for Senior Management roles, and a review of Board performance. The Remuneration Committee will be comprised of the same members as the Compensation and Nominating Committee. The newly formed Nomination Committee will primarily focus on identifying individuals qualified to become new Board members, and will make recommendations to the Board with respect to membership on Board committees other than the Nomination Committee, as well as assisting the Board with respect to providing continuing education programmes for directors. The Nomination Committee is comprised of Dennis McShane (Committee Chair), Cedric Fontenit, Iain McLaren and Paul Blakeley. The work of both new committees is founded in the notion that the Company’s practices should evolve in step with its ongoing pivot toward practices more typical of a UK company, while ensuring our key objectives, as identified above, are met to best support the ongoing delivery of shareholder value. Sincerely, Cedric Fontenit NON-EXECUTIVE DIRECTOR AND CHAIR OF THE COMPENSATION AND NOMINATING COMMITTEE (2020) / REMUNERATION COMMITTEE (2021) T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 102 COMPENSATION AND NOMINATING COMMITTEE REPORT CORPORATE GOVERNANCE 103 Total Rewards Structure Jadestone’s Total Rewards structure offers a competitive package aligned to the principles of performance and delivery. The Company believes that emphasis on performance pay, with clear goal-setting, helps to deliver a results-oriented culture that generates exceptional results with visible recognition and reward for delivery of objectives. Jadestone is committed to employees’ personal and professional development in a work place environment that appreciates diversity, inclusion and provides equal opportunities. a. Remuneration at a glance Total Reward component Detail Base Salary Performance Pay Pension Long Term Incentive To enable the recruitment and retention of individuals who possess the appropriate experience, knowledge, commercial acumen and capabilities required to deliver sustained long-term shareholder value. Annual Performance Pay Target for 8 Job Bands with performance pay ranging from 0-10% to 0-150%. Annual performance pay depends on both employee and company performance against agreed Key Performance Indicators. Eligible employees All permanent employees All permanent employees Aligned to pension standards in the country of jurisdiction (EPF for Malaysia; CPF for Singapore; Superannuation for Australia) etc. All permanent employees Transition from Share Option Plan to a Performance Share Plan to align with pivot to UK market. Implemented over a 3-year transition with 100% PSP award by 2023. Limited to permanent employees at a senior job band who can most influence corporate outcomes. b. Executive employment agreements Mr. Blakeley is party to an executive employment agreement which provides that in the event of a change of control of Jadestone and where notice of termination is given by Jadestone to Mr. Blakeley in connection with such change of control, Mr. Blakeley is entitled to payment in the amount of twenty-four (24) times his monthly salary; two (2) times the annual performance pay target (the annual performance pay target amount in respect of the year preceding the date of notice, if the date of notice precedes the date upon which such performance pay amount would have been paid and, a pro-rata portion of the annual performance pay target amount in respect of that portion of the current year to the date of notice) and an amount equivalent to US$500,000 as compensation for the loss of foreign service allowances and all other benefits over the period of twenty-four (24) months. Mr. Young is similarly party to an executive employment agreement which provides that in the event of a change of control of Jadestone and where notice of termination is given by Jadestone to Mr. Young in connection with such change of control, Mr. Young is entitled to payment in the amount of twelve (12) times his monthly salary; two (2) times the annual performance pay target (the annual performance pay target amount in respect of the year preceding the date of notice, if the date of notice precedes the date upon which such performance pay amount would have been paid and, a pro-rata portion of the annual performance pay target amount in respect of that portion of the current year to the date of notice) and an amount equivalent to US$100,000 as compensation for the loss of foreign service allowances and all other benefits over the period of twenty-four (24) months. c. External input to policy Where required, the Compensation and Nominating Committee relies on external input to remuneration-related policy, and in 2020 has elicited input from Mercer in the UK and Singapore and PWC in Singapore. d. External appointments The Company has no explicit restriction to its directors accepting additional directorship appointments, external to Jadestone seeking to ensure adequate time commitment to Jadestone and no conflicts of interest. e. Illustration of policy application The following table presents the targets and maximums possible for each component of the Total Reward structure. Reward component 2020 Base Salary Performance Pay Pension Allowance LTIP – SOPs and PSPs Position Detail CEO CFO CEO CFO CEO CFO CEO CFO Annual salary of USD$550,000 per annum1 Annual salary of USD$320,000 0 – 150% 0 – 130% (Increased from 0 -100% to 0 – 130% effective for 20202) 10% of base salary 10% of base salary 95% of base salary 80% of base salary (increased from 70% to 80% effective for 20202) 1 In 2020 Mr Blakeley elected to receive USD50,000 of his annual base salary of USD 550,000 in the form of Restricted Share Units. Note that RSUs are only used as an alternative to cash under exceptional circumstances to provide greater alignment with shareholder objectives. 2 Following an independent market review, Mr Young’s Performance Pay target and LTIP target in 2020 was increased to ensure competitive remuneration within the peer group. Remuneration Report a. Total remuneration The following table sets out the total remuneration, excluding the value of Long Term Incentive Programme (“LTIP”) awards, for Executive Directors and Non-Executive Directors for 2020, as compared to 2019. Name and position Year Salary, con- sulting fee, retainer, or commission (US$) Perfor- mance pay (US$) 1 2 Committee or meeting fees (US$) Pension allowance (10% of base salary) Value of overseas allowance support (US$) Value of all other compen– sation (US$) Total fixed remuner- ation Total variable compen- sation Total compen- sation LTIP 1 2 3 2020 2019 437,500 500,000 536,250 585,000 Nil Nil 55,000 50,000 443,332 516,926 A. Paul Blakeley Director, President and Chief Executive Officer Cedric Fontenit Director Robert Lambert Director and Deputy Chairman 2020 2019 56,667 56,250 2020 2019 56,667 56,250 Iain McLaren Director 2020 2019 56,667 56,250 Dennis McShane Director and Chairman 2020 2019 114,583 125,000 David Neuhauser Director 2020 2019 56,667 56,250 2020 2019 n/a 56,250 2020 2019 56,667 5,000 Eric Schwitzer Director Lisa Stewart Director Daniel Young Director and CFO Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil n/a Nil Nil Nil 9,792 10,000 13,125 12,500 21,875 25,000 4,375 5,000 Nil Nil n/a 10,000 17,500 833 Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil n/a Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil n/a Nil Nil Nil Nil Nil 449,433 317,640 935,832 1,066,926 985,683 902,640 1,921,515 1,969,566 11,395 19,853 11,395 19,853 66,459 66,250 69,792 68,750 11,395 19,853 78,542 81,250 17,093 26,470 118,958 130,000 11,395 19,853 0 19,853 11,395 28,343 56,667 56,250 n/a 67,619 74,167 5,833 Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil 66,459 66,250 69,792 68,750 78,542 81,250 118,958 130,000 56,667 56,250 n/a 67,619 74,167 5,833 213,952 198,525 640,460 683,538 437,952 396,925 1,078,412 1,080,463 2020 2019 280,000 320,000 224,000 198,400 Nil Nil 32,000 32,000 328,460 331,538 1 2 3 The performance pay is finalised and approved in the March of the following year based on the achievement of various corporate targets and objectives. The amounts shown in 2020 reflect the bonus paid during the year based on performance targets set for 2019, the bonus for 2020 will be paid in April 2021 once targets have been reviewed and approved by the remuneration committee. The LTIP awards are subject to three year cliff vesting as discussed further in this report. Performance pay and LTIP awards comprise amounts paid or awarded in the prevailing year based on performance in the prior year. LTIP for CEO includes Share Options, Performance Shares and USD$50,000 elected by CEO to be received in form of RSUs. Overseas allowance support Overseas Allowance Support is provided to individuals on assignment in a Host Location with the objective of providing market competitive benefits consistent with the role and location of the posting. Jadestone shares are listed on AIM but the Company is headquartered in Singapore. This unique approach among its peers ensures the leadership team work closely within the business in Asia Pacific. This has an advantage both within the organisation in managing the activity, as well as with external stakeholders, being able to interact directly. It also eliminates the cost of maintaining a London office. Because the CEO and CFO are foreigners working in a host location, aligned to standard market practice, they receive certain allowances to ensure that they are maintained cost neutral on housing, schooling, transportation, home leave and utilities when compared with their home location. These allowances are reviewed on an annual basis by a third-party provider. The overseas allowance values could not be benchmarked against Jadestone peer companies, due to limited data points. The review was based on the current market data for each element, per the relevant assumption (i.e. median values were used where a range existed, applied based on compensation, location and / or family size as appropriate) across a range of sectors including Finance, Oil and Gas, Blue Chip companies. There are a significant number of data points to ensure competitive positioning by Jadestone. Market data in this context means actual costs in each location / location combination as researched by Mercer, rather than reported allowance values by a peer group of companies. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 104 COMPENSATION AND NOMINATING COMMITTEE REPORT CORPORATE GOVERNANCE 105 CEO Fixed Pay Targets CFO Fixed Pay Targets Fixed 1 2 95% 5% US$985,832 Fixed 2 100% US$640,460 Target 3 53% 23% 24% US$1,776,677 Target 3 61% 20% 19% US$1,053,527 Maximum 4 42% 37% 21% US$2,241,223 Maximum 4 50% 32% 18% US$1,286,399 0 $,000 500 1,000 1,500 2,000 2,500 0 $,000 500 1,000 1,500 2,000 Fixed Short Term Incentive Long Term Incentive 5 1 2 3 4 5 2020 Base salary figure reflects reduction as a result of Project Clover and described below. Fixed Pay – Base Salary (including USD50,000 for CEO paid as RSUs and reflected as LTIP), Pension Allowance, Overseas Allowance. Total Pay Target – Base Salary (including USD50,000 for CEO paid as RSUs and reflected as LTIP), Pension Allowance, Performance Pay at Target – CFO at 65% and CEO at 75% and assumed LTIP value. Total Pay Maximum – Base Salary (including USD50,000 for CEO paid as RSUs and reflected as LTIP), Pension Allowance, Performance Pay at maximum pay-out – CFO at 130% and CEO at 150% and assumed LTIP value. Performance Share Target – calculated on 2020 share price at date of grant. Maximum award to achieve 200% performance outcome requires >80% share performance compared with Jadestone Peer group for Relative TSR and >40% increase in share price for Absolute TSR. Further details see page 106. In recognition of the extraordinary financial challenges the industry faced in 2020, and with a priority on protecting balance sheet strength, the CEO and CFO agreed to a 25% reduction to base salary and a 20% reduction to all cash-based allowances (excluding pension) for the period 1 June 2020 to 30 November 2020. As oil prices recovered late in the year and economic performance improved, the CEO and CFO’s base salaries were restored to 100% in December 2020. Cash based allowances (excluding pension) remained at 80% until the end of the calendar year 2020. In line with the salary reduction of the CEO and CFO, all Board members agreed to a 25% reduction in Board fees. Board Fees were reinstated in December 2020 and were subject to a pre-agreed increase, which had been presented in the 2019 circular, but placed on hold, and was introduced as a result of the Board no longer participating in the Company’s Share Option Plan. This is, once again, aimed at further aligning Board remuneration with UK standards as a part of the shift away from Canadian practices. During 2020, an external independent benchmarking of compensation for senior executives was carried out by Mercer in the UK. The review resulted in a base salary increase for the CFO to USD$340,000 effective 1 April 2021 and a revised Performance Pay target from 100% to 130% and LTIP target from 70% to 80% both of which were effective for the 2020 calendar year. 2020 Performance pay Information on 2020 performance pay The following table presents the key performance indicators specified in the CEO’s Performance Contract, and was used to determine performance pay in 2020. Despite the challenges in 2020, and based on these reasons, among others, the committee believes it was appropriate to award executive directors a performance pay award for 2020. Performance is paid 100% in cash with no deferral. Performance measure Weighting Key targets summary Assessed overall 2020 performance Achieve 2020 Operations Targets Deliver Continuous Improvement in ESG Performance Deliver Per Share Accretive Growth in Asia-Pacific Create Sustainable Shareholder Value 40% 20% 20% 20% 100% Deliver plan production & operating cost targets. Capital programmes and work programmes. Performance Improvement targets. Maintain top quartile HSE. Deliver improving performance on environmental targets. Build a strong, diverse and sustainable organisation. Adher to top quartile governance standards. Deliver strategic portfolio objectives. Complete one or more new accretive acquisitions. Improve market value and share price. Maintain sustainable funding and leverage. Broaden shareholder base, increase liquidity and maintain investor relationship. 20% 15% 5% 10% 5% 2.5% 2.5% 7.5% 12.5% 12.5% 2.5% 5% 12% 16% 6% 12% 46% Each of these categories contains at least 4 sub sections with outcomes for each target assessed by the Committee. LTIP Awards During the Year Long-term incentives were granted to the senior executives and directors in April 2020. This was the first year in which the Company granted incentives under the Performance Share Plan ("PSP") in addition to the Stock Option Plan (“SOP”), and was the first year of the Company’s transition away from a long-term incentive programme based solely on stock options. This transition will be completed over three years and stock options will no longer be used as a long-term incentive after 2022. The phased replacement of stock options towards performance shares, is consistent with the Company's pivot away from typical Canadian company practices. In the same context, 2020 was the final year that non executive directors ("NED") will receive any form of long-term shares or share option-based incentive awards and, following an external review of Non-executive cash remuneration within the peer group, the NED salaries were adjusted, to compensate for the loss in value of stock options, and targeted to place pay at around the 50% percentile. This increase was finally awarded in December, 2020, having been withheld from April as part of the Project Clover initiative to reduce 2020 costs. The 2020 grant was the first year where the LTIP grants were subject to a 3-year cliff vest. Awards granted prior to 2020 will continue to vest over a 3-year period. The Long-Term incentive awards granted by Jadestone under the LTIP Plans are aligned to company and individual performance and are subject to Board approval. Both the SOP and PSP grants are subject to Good Leaver/Bad Leaver and malus and clawback provisions. The following table summarises the long-term incentive awards granted in 2020. Name and position Type of compensation security Number of compensation securities A. Paul Blakeley Director, President and Chief Executive Officer Stock Options Performance Share Units Restricted Share Units 1,290,000 155,000 101,063 Stock Options Performance Share Units 700,000 80,000 Stock Options 75,000 Date of issue or grant 27 April 2020 27 April 2020 27 April 2020 27 April 2020 27 April 2020 27 April 2020 44.0 56.0 40.0 44.0 56.0 44.0 Stock Options 50,000 27 April 2020 44.0 Stock Options 50,000 27 April 2020 44.0 Stock Options 50,000 27 April 2020 44.0 Stock Options 50,000 27 April 2020 44.0 Stock Options 50,000 27 April 2020 44.0 Daniel Young Director and CFO Dennis McShane Director and Chairman Iain McLaren Director Robert Lambert Director and Deputy Chairman David Neuhauser Director Cedric Fontenit Director Lisa Stewart Director Strike price or unit value at issuance (GBp)1 Closing price of security or underlying security at year end (GBp) Expiry date 26 April 2030 n/a n/a 26 April 2030 n/a 26 April 2030 26 April 2030 26 April 2030 26 April 2030 26 April 2030 26 April 2030 61.5 61.5 61.5 61.5 61.5 61.5 61.5 61.5 61.5 61.5 61.5 1. For Stock Options, values are strike price, for Performance Share Units and Restricted Share Units, values are unit value at issuance. b. Stock options phase-out While common practice in North America, the granting of stock options is being phased out by the Company, as part of the ongoing pivot towards UK standards and best practice. A phased approach is being taken, and 2020 was the first year in which options were reduced by 25% of the grant value in favour of performance shares which were introduced at matching value. Valuations of both forms of long-term incentive were independently assessed and verified by Mercer UK. The table below lays out the plan for full conversion to performance shares. It is worth re-emphasising that this transition does not apply to NEDs who will no longer receive any LTIP awards going forwards, in line with UK best practice. Year 2020 2021 2022 2023 SOP grant allocation PSP grant allocation 75% 50% 25% 0% 25% 50% 75% 100% T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 106 COMPENSATION AND NOMINATING COMMITTEE REPORT CORPORATE GOVERNANCE 107 2020 Performance measures The Performance Measures agreed by the Committee incorporate a balance of relative and absolute Total Shareholder Return (“TSR”) to reward outperformance vs. peers (relative TSR) and alignment with shareholders (absolute TSR). Jadestone considered a number of other performance metrics but in the context of extreme volatility in the sector and in the oil price, TSR metrics seem the most transparent and efficient to measure long term performance. c. Performance share award details The Performance Share awards granted by the Company in 2020 will vest in accordance with a pre-defined set of performance measures, to be determined over a three-year performance period. Performance measure 1: Absolute Total Shareholder Return Share price target plus dividend to be set at the start of the performance period and assessed annually; the threshold share price plus dividend has to be equal to or greater than a 10% increase in absolute terms to earn any payout at all, and must be 25% or greater for target payout. Weighting: 30% Performance measure 2: Relative Total Shareholder Return Jadestone’s Total Shareholder Return (TSR) as measured against the TSR of our agreed peer companies; the size of the payout is based on Jadestone’s ranking against the TSR outcomes of our peer group. Weighting: 70% Jadestone peer group Cooper Energy Energean Enquest Genel Energy Australia UK UK UK Gulf Keystone Horizon Oil Pharos Energy Premier Oil UK Australia UK UK Senex Energy Serica Energy Transglobe Tullow Oil Australia UK UK UK In 2020, Mercer undertook the first review of Jadestones Relative and Absolute TSR performance. Full Performance Period Performance Testing Date % of performance period elapsed 1 January 2020 to 31 December 2022 31 December 2020 33% Performance measure 1 – Absolute TSR 2020 Outcome Performance measure 2 – Relative TSR 2020 Outcome Average FY2020 -2022 Performance Achievement Factor (AF) Average FY2020 -2022 Performance Achievement Factor (AF) Superior 40% Target 25% Threshold 10% <10% 2.0 1.0 0.5 NIL <10% Achievement Factor - Nil Superior P80 (20%) Target P60 (15%) Threshold P50 (10%) 30 days past due or there has been a significant increase in credit risk since initial recognition. Amount is > 90 days past due or there is evidence indicating the asset is credit-impaired. There is evidence indicating that the debtor is in severe financial difficulty and the Group has no realistic prospect of recovery. 12-month ECL Lifetime ECL – not credit-impaired Lifetime ECL – credit-impaired Amount is written off In addition to US Dollar, the Group transacts in various currencies, including Australian Dollar, Singapore Dollar, Vietnamese Dong, Malaysian Ringgit, Indonesian Rupiah, New Zealand Dollar, British Pounds Sterling and Canadian Dollar. The table below details the credit quality of the Group’s financial assets and other items, as well as maximum exposure to credit risk by credit risk rating grades: Foreign currency sensitivity Material foreign denominated balances were as follows: Cash and bank balances Australian Dollars Trade and other receivables Australian Dollars Trade and other payables Australian Dollars Provisions Australian Dollars 2020 USD’000 2019 USD’000 8,043 1,547 21,233 2,692 7,088 5,853 16,236 7,158 A strengthening/weakening of the Australian dollar by 10%, versus the functional currency of the Group, is estimated to result in the net carrying amount of Group's financial assets and financial liabilities as at year end decreasing/increasing by approximately US$1.4 million (2019: US$1.0 million), and which would be charged/credited to the consolidated statement of profit or loss. Interest rate risk The Group’s interest rate exposure arises from some of its cash and bank balances and borrowings. The Group’s other financial instruments are non-interest bearing or fixed rate, and are therefore not subject to interest rate risk. Jadestone holds some of its cash in interest bearing accounts and short-term deposits. Interest rates currently received are relatively low levels historically. Accordingly, a downward interest rate movement would not cause significant exposure to the Group. On 2 August 2018, the Group entered into a reserve based lending agreement with the Commonwealth Bank of Australia and Société Générale to borrow US$120.0 million, repayable quarterly to 31 March 2021. The loan was fully drawn down on 28 September 2018 and incurred interest at LIBOR plus 3%. The loan incurred establishment and other costs of US$3.2 million, which were offset against the proceeds received. Based on the carrying value of the reserve based loan as at 31 December 2020, if interest rates had increased or decreased by 1% and all other variables remained constant, the impact on the Group’s quarterly net income/(loss) before tax would be immaterial (2019: US$0.1 million). The loan was fully repaid on 31 March 2021. External credit rating Internal credit rating 12-month (“12m”) or lifetime ECL Note Gross carrying amount(i) USD’000 Loss allowance USD’000 Net carrying amount USD’000 2020 Cash and bank balances Trade receivables Other receivables 2019 Cash and bank balances Trade receivables Other receivables 24 23 23 24 23 23 n.a n.a n.a n.a n.a n.a Performing (i) Performing 12m ECL Lifetime ECL 12m ECL Performing (i) Performing 12m ECL Lifetime ECL 12m ECL 89,441 106 4,273 99,419 34,007 2,311 - - - - - - 89,441 106 4,273 99,419 34,007 2,311 (i) For trade receivables, the Group has applied the simplified approach in IFRS 9 to measure the loss allowance at lifetime ECL. The Group determines the expected credit losses on these items by using specific identification, estimated based on historical credit loss experience based on the past due status of the debtors, adjusted as appropriate to reflect current conditions and estimates of future economic conditions. Accordingly, the credit risk profile of these assets is presented based on their past due status in terms of specific identification. As at 31 December 2020, total trade receivables amounted to US$0.1 million (2019: US$34.0 million). The balance in 2020 and 2019 had been fully recovered in 2021 and 2020, respectively. The concentration of credit risk relates to the main counterparty to oil sales in Australia, where the sole customer has an A1 credit rating (Moody’s). All trade receivables are generally settled 30 days after sale date. In the event that an invoice is issued on a provisional basis, the final reconciliation is paid within three days of the issuance of the final invoice, largely mitigating any credit risk. The Group recognises lifetime ECL for trade receivables. The ECL on these financial assets are estimated based on days past due, by applying a percentage of expected non-recoveries for each group of receivables. As at year end, ECL from trade and other receivables are expected to be insignificant. Cash and bank balances are placed with reputable banks and financial institutions, which are regulated, and with no history of default. The maximum credit risk exposure relating to financial assets is represented by their carrying value as at the reporting date. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 164 CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 165 Liquidity risk Liquidity risk is the risk that the Group will not be able to meet all of its financial obligations as they become due. This includes the risk that the Group cannot generate sufficient cash flow from producing assets, or is unable to raise further capital in order to meet its obligations. The Group’s manages it liquidity risk by optimising the positive free cash flow from its producing assets, on-going cost reduction initiatives, merger and acquisition strategies, and bank balances on hand. The Group’s net loss after tax for the year was US$60.2 million (2019: profit after tax of US$40.5 million), and inclusive of the non-cash SC56 impairment of US$50.4 million (2019: nil). Operating cash flows before movements in working capital and net cash generated from operating activities for the year ended 31 December 2020 was US$86.9 million and US$84.6 million (2019: US$176.9 million and US$144.6 million) respectively. The Group’s net current assets remained positive at US$79.5 million as at 31 December 2020 (2019: US$26.8 million). The Group’s reserve based loan was sized on a borrowing base drawn from projected cash flows from the Montara assets, and based on proved and probable producing reserves but including certain infill wells. This borrowing base was subject to scheduled semi-annual redeterminations and as such, and in the event of a significant reduction in the borrowing base, there was a risk that scheduled repayments might increase to offset any such borrowing base deficiency. The existing borrowing base, as assessed by the lenders as at 31 December 2020, was significantly above aggregate commitments, and was fully repaid on 31 March 2021. During the life of the loan, no semi-annual redetermination resulted in an increase in scheduled repayments, or the determination of any borrowing base deficiency. The Group believes it has sufficient liquidity to meet all reasonable scenarios of operating and financial performance for the next 18 months. Non-derivative financial liabilities The following table details the expected contractual maturity for non-derivative financial liabilities with agreed repayment periods. The table below has been drawn up based on the undiscounted contractual maturities of the financial liabilities, including interest, that will be paid on those liabilities, except where the Group anticipates that the cash flow will occur in a different period. The adjustment column represents the estimated future cash flows attributable to the instrument included in the maturity analysis, which are not included in the carrying amount of the financial liabilities on the consolidated statement of financial position, namely expense and ARO accretion expense. Weighted average effective interest rate % On demand or within 1 year USD’000 Within 2 to 5 years USD’000 More than 5 years USD’000 Adjustments USD’000 Total USD’000 2020 Non-interest bearing Fixed interest rate instruments Variable interest rate instruments 2019 Non-interest bearing Fixed interest rate instruments Variable interest rate instruments - 6.049 7.570 - 7.317 7.735 36,740 13,448 7,445 57,633 27,802 20,228 44,425 38 14,042 - 352,771 - - (69,021)1 (1,707) (149) 320,528 25,783 7,296 14,080 352,771 (70,877) 353,607 5,052 50,507 7,477 377,882 - - (102,460)1 (8,463) (2,779) 308,276 62,272 49,123 92,455 63,036 377,882 (113,702) 419,671 Non-derivative financial assets The following table details the expected maturity for non-derivative financial assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Group’s liquidity risk management, as the Group’s liquidity risk is managed on a net asset and liability basis. The table has been drawn up based on the undiscounted contractual maturities of the financial assets, including interest that will be earned on those assets, except where the Group anticipates that the cash flow will occur in a different period. The adjustment column represents the estimated future cash flows attributable to the instrument included in the maturity analysis, which are not included in the carrying amount of the financial assets on the consolidated statement of financial position, namely interest income. Weighted average effective interest rate % On demand or within 1 year USD’000 Within 2 to 5 years USD’000 Adjustments USD’000 Total USD’000 - -* - -* 4,379 89,441 93,820 36,318 89,419 125,737 - - - - 10,000 10,000 - -* -* - -* * 4,379 89,441 93,820 36,318 99,419 135,737 2020 Non-interest bearing Variable interest rate instruments 2019 Non-interest bearing Variable interest rate instruments * The effect of interest is not material. Capital management The Group manages its capital structure and makes adjustments to it, based on the funds available to the Group, in order to support the acquisition, exploration and development of resource properties and the ongoing operations of its producing assets. Given the nature of the Group’s activities, the Board of Directors works with management to ensure that capital is managed effectively and the business has a sustainable future. To carry-out planned asset acquisitions, exploration and development, and to pay for administrative costs, the Group may utilise excess cash generated from its ongoing operations and may utilise its existing working capital, and will work to raise additional funds should that be necessary. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Group, is reasonable. There were no changes in the Group’s approach to capital management during the year ended 31 December 2020. The Group is not subject to externally imposed capital requirements. Gearing ratio Debt Cash and cash equivalents Restricted cash Cash less borrowings 2020 USD’000 (7,296) 81,996 7,445 82,145 2019 USD’000 (49,123) 75,934 13,485 40,296 T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A 1 Relates to ARO accretion expense. JADESTONE ENERGY 2020 ANNUAL REPORT 166 CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 167 Borrowings comprise long and short-term borrowings, incorporating effective interest method financing costs, and excludes derivatives, as detailed in Note 31. Cash and cash equivalents include the Montara assets’ minimum working capital cash balance of US$15.0 million required under the RBL, while restricted cash comprises the US$7.4 million in the RBL debt service reserve account (2019: US$13.5 million). The restricted cash in 2020 excludes the US$1.0 million cash collateralised bank guarantee placed with the Indonesian regulator in respect of the JSA entered by the Group in Indonesia. The restricted cash in 2019 excludes the US$10.0 million deposited in support of a bank guarantee to a key supplier in respect of the Stag FSO. Equity includes all capital and reserves of the Group that are managed as capital. Information reported to the Group’s Chief Executive Officer (the chief operating decision maker) for the purposes of resource allocation is focused on two reportable/business segments driven by different types of activities within the upstream oil and gas value chain, namely producing assets and secondly development and exploration assets. The geographic focus of the business is on Southeast Asia (“SEA”) and Australia. Revenue and non-current assets information based on the geographical location of assets respectively are as follows: 36 | SEGMENT INFORMATION The Group’s overall strategy remains unchanged from 2019. Fair value measurements The Group discloses fair value measurements by level of the following fair value measurement hierarchy: i. Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1); ii. Inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly (Level 2); and iii. Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3). Financial assets/ financial liabilities Fair value (USD’000) as at 2020 2019 Assets Liabilities Assets Liabilities Fair value hierarchy Valuation technique(s) and key input(s) Significant unobservable input(s) Relationship of unobservable inputs to fair value Derivative financial instruments 1) Oil price swaps and calls (Note 34) - 471 5,275 - Level 2 Third party valuations based on market comparable information. n.a. n.a. Others - contingent consideration from Montara business acquisition - - - 359 Level 3 2) Contingent consideration (Note 29) Others - contingent consideration from Lemang PSC acquisition - 4,436 - - Level 3 3) Contingent consideration (Note 15) Based on the nature and the likelihood of occurrence of the trigger event. Fair value is estimated using future Dated Brent oil price forecasts at the end of the reporting period, taking into account the time value of money and volatility of oil prices. Expected future oil price volatility of 25% is based on an analysis of Dated Brent oil price movement prior to the acquisition date. A slight increase in Dated Brent oil prices would result in a significant increase in the fair value and vice versa. Based on the nature and the likelihood of occurrence of the trigger events. Fair value is estimated taken into consideration of future gas production schedule, forecasted Dated Brent oil prices and Saudi CP prices and respective volatility at the end of the reporting period, as well as the effect of time value of money. A change in gas production schedule or significant increase in Dated Brent oil prices and Saudi CP prices would result in a significant increase in the fair value. Gas production schedule could be changed depending on future gas contract negotiations Expected future oil price volatility is based on an analysis of Dated Brent oil price and Saudi CP price movement as at Closing Date. 2020 Revenue Liquids revenue Production cost DD&A Staff costs Other expenses Impairment of assets Other income Finance costs Other financial gains Profit/(Loss) before tax Additions to non-current assets Non-current assets 2019 Revenue Liquids revenue Production cost DD&A Staff costs Other expenses Other income Finance costs Other financial gains Profit/(Loss) before tax Additions to non-current assets Non-current assets Producing assets Australia USD’000 Exploration/ development SEA USD’000 Corporate USD’000 Total USD’000 217,938 (105,338) (84,024) (10,029) (15,068) - 14,292 (12,625) 359 5,505 11,162 349,292 325,406 (119,898) (90,277) (9,595) (4,699) 2,971 (16,387) 3,389 90,910 84,444 461,053 - - (110) (2,228) (9,690) (50,455) 1 (29) - (62,511) 27,706 97,838 - - (113) (3,543) (278) 2 (7) - (3,939) 20,456 116,162 - - (508) (9,646) (2,160) - 12,083 (1) - (232) 914 945 - - (356) (8,889) (4,402) 6 (49) - (13,690) 65 943 217,938 (105,338) (84,642) (21,903) (26,918) (50,455) 26,376 (12,655) 359 (57,238) 39,782 448,075 325,406 (119,898) (90,746) (22,027) (9,379) 2,979 (16,443) 3,389 73,281 104,965 578,158 Non-current assets as shown here comprises oil and gas properties, intangible exploration assets, right-of-use assets, other receivables, restricted cash and plant and equipment used in corporate offices. Deferred tax assets of US$19.7 million (2019: US$16.0 million) are excluded from the segmental note but included in the Group’s consolidated statement of financial position. Revenues arising from producing assets in 2020 of approximately US$217.9million (2019: US$325.4 million) primarily arose from sales to the Group’s largest customer. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 168 CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 37 | FINANCIAL CAPITAL COMMITMENTS 39 | RELATED PARTY TRANSACTIONS Certain PSC’s and service concessions’ have firm capital commitments. The Group has the following outstanding minimum exploration commitments: During the year, the Group did not enter into any transactions with related parties other than the following: Compensation of key management personnel SEA portfolio PSC operational commitments Not later than one year More than 5 years 2020 USD’000 10,000 7,284 17,284 2019 USD’000 10,000 - 10,000 Short-term benefits Other benefits Share-based payments 2020 USD’000 6,284 1,006 816 8,106 169 2019 USD’000 6,746 1,052 1,038 8,836 The SEA portfolio PSC operational commitments as at 31 December 2020 amounted to US$17.3 million (2019: US$ 10.0 million), and relates to the minimum work commitment outstanding for the Block 46/07 PSC and the Lemang PSC (2019: Block 46/07 PSC). Under the terms of the Block 46/07 PSC, Jadestone is committed to drill one more appraisal well on the block. The Company plans to drill an appraisal well on the Nam Du field to facilitate transition of 3C resource to 2C status. This well would be retained for future use as a Nam Du gas producer. Following the Group’s announcement on 19 March 2020 to delay the project, the Group is seeking Vietnam Government approval for a further extension in order to align drilling of the appraisal well with development of Nam Du/U Minh. The request of extension was submitted in December 2020. The Group is committed to the project and expects to receive approval for the extension request in due course. Under the terms of the Lemang PSC, Jadestone has inherited an operational commitment of US$7.3 million consisting of one exploration well and a 3D seismic acquisition program. The commitment was carried over from the previous exploration period and is expected to be fulfilled during the future gas production period. Capital commitments The Group has the following capital commitments for expenditure that were contracted for at the end of the reporting year but not recognised as liabilities for Montara: Not later than one year 2020 USD’000 8,977 2019 USD’000 19,441 38 | EVENTS AFTER THE END OF THE REPORTING PERIOD Corporate reorganisation The Company in undertaking an internal reorganisation to effect a re-domicile of the ultimate holding company to the United Kingdom. A newly incorporated English company, Jadestone Energy plc has been established for this exercise. Following the approval from shareholders and required court approvals, the shares of the Company will be replaced on a one-for-one basis with shares in Jadestone Energy plc. The estimated effective date for the internal organisation is on 23 April 2021. Jadestone Energy plc is anticipated to be admitted to AIM for trading on 26 April 2021. The internal reorganisation will not result in a change in control in the ultimate holding company of the Jadestone group of companies and, accordingly, will not result in a change in control in the ultimate shareholding in any of the companies or assets of the Jadestone group of companies. Further, the internal reorganisation will not result in a change in the management of any of the companies or assets of the Jadestone group of companies. Oil price commodity contracts On 16 February 2021, the Group entered into commodity swap contracts to hedge 31% of its planned production volumes from April to June 2021 to provide downside price protection. The swap price, referenced to Dated Brent, was set at US$61.40/bbl. The total remuneration of key management members in 2020 (including salaries and benefits) was US$8.1 million (2019: US$8.8 million) and recognised as part of the Group’s staff costs as disclosed in Note 7. Compensation of directors Short-term benefits (a) USD’000 Other benefits (a) USD’000 Share-based payments USD’000 Total compensation USD’000 2020 A. Paul Blakeley Daniel Young Dennis McShane Iain McLaren Robert Lambert Cedric Fontenit David Neuhauser Lisa Stewart 2019 A. Paul Blakeley Daniel Young Dennis McShane Iain McLaren Eric Schwitzer Robert Lambert Cedric Fontenit David Neuhauser Lisa Stewart 991 696 119 79 70 66 57 74 2,152 1,302 707 130 81 68 69 66 56 6 2,485 324 189 - - - - - - 513 350 174 - - - - - - - 524 186 114 16 10 10 9 10 11 366 233 139 21 13 25 13 9 12 - 465 1,501 999 135 89 80 75 67 85 3,031 1,885 1,020 151 94 93 82 75 68 6 3,474 (a) Short-term benefits comprise salary, director fee as applicable, performance pay, pension and other allowances. Other benefits comprise benefits-in-kind. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 1 70 CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 1 7 1 40 | RECLASSIFICATION OF COMPARATIVE FIGURES Certain comparative figures in the consolidated financial statements of the Group have been reclassified to conform to the presentation in the current period. These reclassifications were made to better reflect the nature of the respective items in the Group’s consolidated financial statements. The reclassification made in the consolidated statement of profit or loss is related to third party contractor costs, which are now included within staff costs. The reclassifications made in the consolidated statement of financial position are the Australia seismic costs, which are now included within intangible exploration assets. Additionally, provisions have been reclassified from trade and other payables, and are now presented separately in the face of the consolidated statement of financial position. In the consolidated statement of cash flows, the write-off of inventories has been reclassified from inventories movement to non-cash adjustment items, and the collection of PRRT receivables has been reclassified from trade and other receivables movement to tax refunded under operating activities. As previously reported USD’000 Reclassification USD’000 As reclassified USD’000 Consolidated statement of profit or loss and other comprehensive income for the year ended 31 December 2019 Staff costs Other expenses Consolidated statement of financial position as at 31 December 2019 Intangible exploration assets Oil and gas properties Provisions - non-current Other payables - non-current Trade and other payables - current Provisions - current Consolidated statement of cash flows for the year ended 31 December 2019 Inventories written off Increase in trade and other receivables Increase in inventories Tax refunded (19,714) (11,692) 116,096 383,018 (280,418) (359) (27,962) - - (9,483) (7,346) 1,851 (2,313) 2,313 1,344 (1,344) (415) 359 2,163 (2,107) 164 (700) (164) 700 (22,027) (9,379) 117,440 381,674 (280,833) - (25,799) (2,107) 164 (10,183) (7,510) 2,551 T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A Drilling rig on location at Stag JADESTONE ENERGY 2020 ANNUAL REPORT 1 72 ADDITIONAL INFORMATION A d d i t i o n a l I n f o r m a t i o n View from Montara 1 73 T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A Additional InformationOil and Gas Reserves 174Reserves Outlook 176Licence Interests 176Glossary 177Shareholder Information 180JADESTONE ENERGY 2020 ANNUAL REPORT 1 74 OIL AND GAS RESERVES ADDITIONAL INFORMATION 1 75 Oil and Gas Reserves Summary of Oil and Gas Reserves at 31 December 2020 Company’s Interest in Reserves1 2 Light and Medium Oil (mm bbls) As of 31 December 2020, the Company had proved plus probable oil reserves (“2P reserves”) of 37.1 mm bbls, decreased by 4.7 mm bbls from 31 December 2019. The decrease primarily reflects the impact of oil production during the year. Reserves and resources estimates for both Lemang and Maari are substantially unchanged from the Company’s previous disclosures. Reserve estimates have been calculated in compliance with Canada’s National Instrument 51-101 Standards of Disclosure (“NI 51-101”). Under NI 51-101, proved reserves are defined as reserves that can be estimated with a high degree of certainty to be recoverable with a target of a 90% probability that the actual reserves recovered over time will equal or exceed proved reserve estimates, while probable reserves are defined as having an equal (50%) probability that the actual reserves recovered will equal or exceed the proved and probable reserve estimates. In accordance with NI 51-101, proved undeveloped reserves have been recognised in cases where plans are in place to bring the reserves on production within a short, well defined time frame. Proved undeveloped reserves often involve infill drilling into existing pools. Of the net present value of the Company’s reserves, the Company’s Montara reserves were audited (and Stag reviewed) by an independent third-party reserves evaluator, ERCE as of 31 December 2020 and detailed in their report dated 17 March 2021. Reconciliation of Gross Reserves as at 31 December 2020 Forecast prices and costs Australia Proved Developed Producing Reserves Proved Developed Non-Producing Reserves Proved Undeveloped Reserves Total Proved Reserves Probable Total Proved Plus Probable Reserves Possible Total Proved Plus Probable Plus Possible Reserves Gross3 16.8 0.0 6.4 23.2 13.9 37.1 17.3 54.4 Net4 16.8 0.0 6.4 23.2 13.9 37.1 17.3 54.4 1 2 3 4 Totals may not add due to rounding. The definitions of the various categories of reserves and expenditures are those set out in NI 51-101. “Gross” reserves represent a 100% total of the estimated technically recoverable oil up to the economic limit. “Net” reserves are the Gross reserves multiplied by Jadestone’s working interest in the field/asset. Summary of Net Present Values of Future Net Revenues as of 31 December 2020 Forecast prices and costs (in US$ millions) Net Present Values Of Future Net Revenue1 2 3 4 5 After income taxes discounted at 0% (US$ millions) 5% (US$ millions) 10% (US$ millions) 15% (US$ millions) 20% (US$ millions) Light and Medium Crude Oil (mm bbls) Gross Proved2 Gross Probable2 Gross Proved Plus Probable2 Gross Possible2 Gross Proved Plus Probable Plus Possible2 Reserve category Opening balance1 31 December 2019 Plus: Extension & Improved Recovery Technical Revisions Discoveries Acquisitions Less: Dispositions Economic Factors Production Ending balance 31 December 20203 25.1 - 0.5 - - - 1.8 -4.2 23.2 16.7 - -1.0 - - - -1.8 - 13.9 41.8 - -0.5 - - - 0.0 -4.2 37.1 18.4 60.2 - -1.1 - - - 0.0 - 17.3 - -1.6 - - - 0.0 -4.2 54.4 Australia Proved Developed Producing Reserves Proved Developed Non-Producing Reserves Proved Undeveloped Reserves Total Proved Reserves Total Proved Plus Probable Reserves Total Proved Plus Probable Plus Possible Reserves -128 - 7 -121 175 810 -10 - 13 3 287 807 52 - 10 63 312 734 85 - 7 92 304 654 102 - 3 105 288 585 Opening balances are from the ERCE reserve report as of 31 December 2019 1 2 Gross reserves are based on the Company working interest share of the property gross reserves 3 Totals may not sum due to rounding 1 2 3 4 5 Based on the Company working interest. Totals may not add due to rounding. The definitions of the various categories of reserves and expenditures are those set out in NI 51-101. Based on forecast prices and costs at 31 December 2020. Interest expenses and corporate overhead, etc. were not included. The net present values may not necessarily represent the fair market value for reserves. T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 1 76 OIL AND GAS RESERVES ADDITIONAL INFORMATION 1 7 7 Reserves Outlook Glossary Jadestone anticipates adding material reserves in the coming years, relating to both organic and inorganic developments. The Company expects to close the acquisition of an operated 69% interest in the Maari project, offshore New Zealand in the first half of 2021. In addition to acquiring an interest in offshore production infrastructure and ongoing oil production, as of 28 February 2021 the fields contained 2P reserves of 10.6 mm bbls, net to the 69% interest being acquired, based on a Competent Persons Report prepared for the Company by ERCE. In addition, upon formal approval of its Field Development Plan for the Nam Du and U Minh gas development in Vietnam, the Company anticipates adding 2P reserves reflecting the final commercial terms of the project. As of 31 December 2017, a Competent Persons Report conducted by ERCE on behalf of the Company indicated 2C resources for the fields totalling 30.2 mm boe, most of which is gas. The Company is also pursuing a development of the Akatara gas field on its Lemang block in Indonesia. The Company anticipates adding 2P reserves reflecting the final commercial terms of the project, upon development sanction. As of 31 December 2020, a Competent Persons Report conducted by ERCE on behalf of the Company indicated 2C resources for the field of 15.2 mm boe, comprised of approximately 57% sales gas, and 43% condensate and LPG. Licence Interests Block Licence Acreage Fields Region Situation Water depth Operator Working interest Australia Montara Stag Indonesia Lemang New Zealand Maari Philippines SC 57 Vietnam AC/L7, AC/L8 WA-15-L 672km2 Montara, Swift/ Swallow, Skua Timor Sea Offshore 77m Jadestone 100% 160km2 Stag Carnarvon Basin Offshore 47m Jadestone 100% Lemang PSC 743km2 Akatara South Sumatra Onshore n/a Jadestone 90% Permit 38160 34km2 Maari, Manaia Taranaki Basin Offshore 100m Jadestone1 69%1 SC 57 7,120km2 n/a Palawan Island Offshore 1,500m CNOOC2 21%2 Block 46/07 Block 46/07 2,622km2 Nam Du Malay/Tho Chu Basin Offshore Block 51 Block 51 887km2 U Minh, Tho Chu Malay/Tho Chu Basin Offshore 48m 64m Jadestone 100% Jadestone 100% $ United States Dollars, unless otherwise indicated 2C resources, 2C best estimate contingent resource, being quantities of hydrocarbons which are estimated, on a given date, to be potentially recoverable from known accumulations but which are not currently considered to be commercially recoverable 2P reserves, 2P the sum of proved and probable reserves, reflecting those reserves with 50% probability of quantities actually recovered being equal or greater to the sum of estimated proved plus probable reserves AGM AIM annual general meeting The AIM market of the London Stock Exchange AMSA Australian Maritime Safety Authority ANZECC/ ARMCANZ Australian and New Zealand Environment and Conservation Council/Agriculture and Resource Management Council of Australia and New Zealand. Asset Safeguard limits The safeguard mechanism applies to facilities that emit more than 100,000 tonnes CO2-e emissions in a financial year. Emissions baselines are the reference point against which emissions performance is measured under the safeguard mechanism. A safeguard facility must keep its net emissions levels at or below its baseline/limit. bbls bbls/d bcf Board boe capex CEO CFO barrels of oil barrels of oil per day barrels of oil equivalent capital expenditures Chief Executive Officer Chief Financial Officer Clean Energy Regulator The Clean Energy Regulator is an Australian independent statutory authority responsible for administering legislation to reduce carbon emissions and increase the use of clean energy. Code of Conduct The Code of Conduct Policy MARPOL Company Jadestone Energy Inc. Deloitte Deloitte & Touche LLP ESG FCA FDP FSO GCT GHG GHG Group HiPO HSE HSE Environmental, Social and Governance Financial Conduct Authority field development plan floating storage and offloading vessel Group Crisis Team Greenhouse Gas Emissions greenhouse gas Jadestone Energy Inc., with its subsidiaries High Potential Events are defined to be any incident or near miss that could, in other circumstances, have realistically resulted in one or more fatalities. Health Safety Environment Health, Safety and Environment HSE MS Health Safety and Environment Management System IFRS IMT IPIECA International Financial Reporting Standards Incident Management Team Originally the "International Petroleum Industry Environmental Conservation Association" is a global not-for-profit oil and gas industry association for environmental and social issues KPI LOPC LPG LTI LTIP key performance indicator Loss of Primary Containment is an unplanned or uncontrolled release of material from primary containment, including non-toxic and non-flammable materials Liquified petroleum gas Lost Time Injury Long-term incentives The International Convention for the Prevention of Pollution from Ships (MARPOL) is the main international convention covering prevention of pollution of the marine environment by ships from operational or accidental causes. billion standard cubic feet Jadestone Jadestone Energy Inc. The board of directors of Jadestone Energy Inc. Jadestone plc Jadestone Energy plc 1 2 Subject to completion of acquisition and transfer of operatorship. Force majeure status, pending completion of farm-in. DOE DTR EBITDAX The Philippines Department of Energy Mercer Mercer LLC Disclosure Guidance and Transparency Rules mm million Earnings before interest, taxes, depreciation, amortisation and exploration expense mm scf/d millions of standard cubic feet per day MTC Medical Treatment Case EP Environment Plan T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 1 78 GLOSSARY ADDITIONAL INFORMATION 1 79 Glossary NETTS NGER National Energy Technician Training Scheme The National Greenhouse and Energy Reporting scheme is a single national framework in Australia for reporting greenhouse gas emissions, energy production and energy consumption. TCFD Total TSR TVOC Task Force on Climate-related Financial Disclosures Total E&P Philippines B.V. Total Shareholder Return Total volatile organic compounds NOPSEMA Australian National Offshore Petroleum Safety and Environmental Management Authority UN SDGs United Nation’s Sustainable Development Goals NOx OHS OIM OIW opex ppm nitrogen oxides Occupational Health and Safety Offshore Installation Manager Oil-in-Water concentration Operating expenditures Parts per million Produced water Produced water is water that comes out of the well with the crude oil during crude oil production PRRT Petroleum Resource Rent Tax PSC PSE PSP PWC Production Sharing Contract Process Safety Event Performance Share Plan Pricewaterhouse Coopers QCA Code the Corporate Governance Code in the form issued by the Quoted Companies Alliance in April 2018 RBL reserves based loan Reorganisation The Group’s internal corporate reorganisation by way of a plan of arrangement under the Business Corporations Act (British Columbia) Reportable incidents reserves RSP SID SOx SPA Stock Option Plan or SOP Reportable' refers to there being no breach of the Environmental Performance Outcomes as defined in the Environment Plan for the asset in alignment with NOPSEMA’s definition. hydrocarbon resource that is anticipated to be commercially recovered from known accumulations from a given date forward Restricted Share Plan Senior Independent Director sulphur oxides sale and purchase agreement The Jadestone Stock Option Plan Jadestone’s Kuala Lumpur office T R O P E R C I G E T A R T S E C N A N R E V O G E T A R O P R O C S T N E M E T A T S L A I C N A N I F N O I T A M R O F N I L A N O I T I D D A JADESTONE ENERGY 2020 ANNUAL REPORT 180 SHAREHOLDER INFORMATION ADDITIONAL INFORMATION Shareholder Information Head office Jadestone Energy Inc. 3 Anson Road #13-01 Springleaf Tower Singapore 079909 Investor Relations Jadestone Energy Inc Phone (Singapore): +65 6324 0359 Phone (UK): +44 7392 940 495 ir@jadestone-energy.com NOMAD, Joint Broker Stifel Nicolaus Europe Limited 150 Cheapside London, UK EC2V 6ET Phone (UK): +44 (0) 20 7710 7600 Joint Broker Jefferies International Limited 100 Bishopsgate London, UK EC2N 4JL Phone (UK): +44 (0) 20 7029 8000 Public Relations Adviser CAMARCO 3rd Floor, Cannongate House 62-64 Cannon Street London, UK, EC4N 6AE Phone (UK): +44 (0) 203 757 4980 jse@camarco.co.uk Transfer Agent (Canada) Computershare Investor Services Inc. 510 Burrard Street, 3rd Floor Vancouver, BC, Canada V6C 3B9 Phone (North America): +1 800 564 6253 Phone (international): +1 514 982 7555 Registrar (UK) Computershare Investor Services plc The Pavilions Bridgwater Road Bristol, UK BS99 6ZZ UK: +44 (0)370 702 0000 Auditors Deloitte & Touche LLP 6 Shenton Way OUE Downtown 2 #33-00 Singapore 068809 www.jadestone-energy.com

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