2022 Annual Report
Our corporate purpose
We are an upstream oil and gas company operating in the Asia-Pacific
region. We aim to deliver value for our stakeholders by acquiring and
maximising the life of fields which are already in production, as well as
developing discovered and fully appraised gas resources which can help
satisfy domestic energy demand and support regional economic growth.
We believe this strategy is fit for the energy transition, as existing fields
and discoveries can fulfil global hydrocarbon demand without requiring
new resource additions through exploration. By investing to increase
production and improve asset infrastructure we provide good stewardship,
which will also result in lower overall upstream GHG emissions, a reduced
environmental impact, and is consistent with our pledge of Net Zero Scope
1 and 2 GHG emissions1 from our operated assets by 2040.
Our strategy is predicated on our values of respect, integrity, safety,
results-oriented, sustainability and passion.
2022 Business Performance
2P Reserves (mmboe)
2022:
64.8
2021: 44.7
Revenue (US$ million)
2022:
421.6
2021: 340.2
Production (boe/d)
2022:
11,487
2021: 12,545
Realised oil price (US$/boe)
2022:
103.9
2021: 74.3
Production costs (US$ million)
2022:
Adjusted EBITDAX1 (US$ million)
2022:
250.7
2021: 212.0
161.9
2021: 142.2
Profit/(loss) after tax (US$ million)
2022:
Capital expenditure (US$ million)
2022:
Net cash2 (US$ million)
2022:
8.5
2021: (17.7)
82.9
2021: 86.0
123.3
2021: 117.9
1
2
Jadestone defines Net Zero Scope 1 and 2 greenhouse gas ("GHG") emissions as the state reached when its emissions are reduced in line with the goals of the Paris
Agreement, and any remaining emissions that cannot be further reduced are fully neutralised by like-for-like permanent removals. Jadestone is currently working
on a detailed Net Zero roadmap, which will include interim GHG emissions reduction targets prior to 2040.
Alternative performance measure – please see Financial Review on pages 31 to 37 for calculation.
04
04
STRATEGIC REPORT
Chair’s statement
05 - 06
Chief Executive Officer’s review
07
Market overview
08 - 09
Jadestone’s portfolio
10
Business model and strategy
11 - 22
Sustainability at Jadestone
23
24
25 - 27
28 - 30
31 - 37
38
40
41
41 - 45
46 - 49
50 - 51
52 - 53
54 - 61
62 - 63
64 - 65
67
68
70
Key performance indicators
Section 172 statement
Risk management, principal risks and uncertainties
Operational review
Financial review
CORPORATE GOVERNANCE
Chair’s corporate governance statement
Principles of corporate governance
Application of QCA Code principles
Directors’ report
Board of Directors
Audit Committee report
Remuneration Committee report
Governance and Nomination Committee report
Health, Safety, Environment and Climate Committee report
Disclosure Committee report
FINANCIAL STATEMENTS
Directors’ responsibility statement
71 - 79
Independent auditor’s report
80
81
82
83
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
84 - 131
Notes to the financial statements
132
133
Company’s statement of financial position
Company’s statement of changes in equity
134 - 141
Notes to the financial statements
142
144
145
146
ADDITIONAL INFORMATION
Oil and gas reserves and resources
Licence interests
Report on payments to governments
147 - 148
Glossary
149
Contact information
0 3
CHAIR’S STATEMENT
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Chair’s statement
Dennis McShane | Non-Executive Chair
Dear shareholder,
Welcome to Jadestone’s 2022 Annual Report. 2022 was a year
of two halves for Jadestone. We had a robust start with strong
operating performance, a reengaged M&A market and a liquidity
position at mid-year which was significant enough to justify a
buyback programme. The second half was dominated by the
shut-down, inspection of and repairs to the Montara Venture
FPSO. The extended shut-in, and the resultant impact on our
operating performance and financial position, has been a huge
disappointment to all of our stakeholders and overshadowed
positive progress elsewhere in our portfolio during 2022.
The decision to shut-in Montara was a difficult, but necessary
one, in order to expedite the inspection and repairs of the FPSO’s
oil cargo tanks. The guiding principle of your Board throughout
this process was our duty to all stakeholders, from employees,
communities, shareholders and regulators, to ensure the safety,
structural integrity and fitness for service of the FPSO over the
remaining life of the Montara field. The Board worked closely with
the executive team, providing support and oversight of repair
activities and engagement with regulatory authorities. Jadestone’s
employees worked tirelessly to restart production as soon and as
safely as possible, with this activity delivered without any serious
incidents or accidents, testament to the Group’s safety-first
mindset. The issues experienced at Montara also enabled us to
thoroughly test and strengthen our FPSO management systems
and processes. The Board understands the disappointment of
shareholders during this period, and is committed to embedding
lessons learnt into our operating disciplines going forward.
The Board remains confident in Jadestone’s strategy and business
model, in particular its ability to deliver on the strategic objective
of becoming a leading upstream independent in the Asia-Pacific
region, primarily through acquisition-led growth. I am pleased
to report that we continued to execute this strategy, principally
through the acquisition of an interest in the CWLH fields offshore
Australia and the remaining 10% interest in the Akatara project,
both in 2022, and an interest in the Sinphuhorm field onshore
Thailand in early 2023. We also delivered organic growth, with the
successful Stag infill drilling programme in late 2022. The Akatara
gas field development in Indonesia remains on budget and schedule
for first gas in the first half of 2024 – a key driver of our near-
term growth. All this activity is geared towards delivering greater
diversification in our portfolio, thereby reducing the impact of any
asset on the Group’s performance. Progress, albeit slow, is being
made on a commercial framework to allow the development of our
Vietnam assets to move forward. Finally, we terminated the Maari
acquisition given little clarity or engagement from the New Zealand
government on how to move this transaction forward.
Our operational performance in 2022 was delivered against a
backdrop of significant upheaval in energy markets. The immediate
aftermath of Russia’s war on Ukraine saw benchmark oil and gas
prices spiral higher. More than a year later, prices have moderated
somewhat, although remain well supported by OPEC discipline
and the structural theme of underinvestment in upstream supply
capacity. With demand for oil and gas remaining resilient, oil and
gas prices are, based on the current futures pricing, expected to
stay at elevated levels for the foreseeable future.
million and the repurchase of 20.2 million shares by January
2023 at a cost of US$17.9 million. However, and notwithstanding
the successful closing of a new reserves-based loan (“RBL”) in
May 2023, the impact of the Montara shut-in on our financial
position, the significant planned investment programme over
the second half of 2022 and 2023, and the evolution of the RBL
debt availability over 2023 and 2024, required us to put in place
additional financing for the business to underpin the near-term
growth of the business. As a result, on 6 June 2023, we announced
a US$50 million financing, underwritten by our largest shareholder
Tyrus Capital Event S.à.r.l (“Tyrus”), including an equity placing to
existing and new investors, followed by an open offer to allow retail
participation. We also agreed a US$35 million standby working
capital facility with Tyrus. In parallel, the Board has decided against
recommending a final 2022 dividend, in keeping with our dividend
policy of prioritising organic reinvestment while maintaining a
conservative capital structure. While we understand that these
decisions may come as a disappointment to many shareholders,
prioritising the continued growth of the Company is the right thing
to do. We look forward to resuming returns to shareholders once
excess liquidity and balance sheet strength have been restored.
We continue to believe that Jadestone’s strategy is fit for the energy
transition in our chosen markets of Southeast Asia and Australia.
Upstream companies will have a key role to play in delivering
essential energy, ensuring a just energy transition with the lowest
possible environmental impact. During 2022, we pledged to Net
Zero Scope 1 & 2 GHG emissions from our operated assets by
2040, and we are currently working on the detailed asset-level
decarbonisation plans which will underpin this pledge.
As first disclosed in the 2021 Annual Report, the Board decided that
an independent third-party should be engaged to undertake its
annual evaluation review. Socia was subsequently commissioned
and delivered a report to the Board in December 2022, which
confirmed that the Board meets the principles of the QCA Code,
the Group's chosen corporate governance code. Please refer to the
Corporate Governance section of this report for more detail on the
Socia review.
During the year, we welcomed Jenifer Thien to the Board as a
Non-Executive Director. Jenifer’s familiarity with implementing
sustainability programmes will be valuable as we navigate the
energy transition. We also welcomed Bert-Jaap Dijkstra to the Board
as Chief Financial Officer in 2022. Board gender diversity increased
from 13% to 22% at the end of 2022, evidence of our commitment to
fostering diversity across Jadestone.
I want to assure our shareholders that the Board is clear on the
importance of restoring confidence in the Montara asset and
Jadestone's wider operating model. This, and continuing to lay the
foundations for further accretive growth, are our key objectives in
2023. I would like to thank Jadestone’s employees, management and
directors for their efforts this year, as well as our shareholders, who
have also supported us during this difficult period and provided
valuable feedback and engagement.
High oil prices and production in the first half of 2022 delivered
record cash balances of US$162 million at 30 June 2022. This
facilitated a 10% increase in the interim 2022 dividend to US$3.0
Dennis McShane
Non-Executive Chair
6 June 2023
0 4
Chief Executive Officer’s
review
A. Paul Blakeley | Executive Director, President and Chief Executive Officer
While Jadestone achieved several notable successes during 2022 in line with strategy, the
shut-in at Montara during the second half weighed heavily on our overall operational and
financial performance for the year. However, the resulting repair activity on the Montara
Venture FPSO, will underpin the delivery of the substantial remaining value we see at
Montara. Through the CWLH, additional Lemang PSC and Sinphuhorm acquisitions, and
organic investment, principally at the Akatara gas development, we will deliver significant
growth in the near-term, keeping us on the path towards delivery of our strategic objective
of being a leading independent in the Asia-Pacific upstream sector.
2022: Montara overshadows portfolio progress
During the year, we produced 11,487 boe/d, an 8% decrease on
2021, falling short on original guidance issued in February 2022. A
45% fall in production at Montara, primarily due to the field being
shut in from mid-August through year-end 2022, offset a full-year
of the PenMal Assets acquired in 2021 and the contribution of the
CWLH assets from completion of the acquisition in November
2022. At Stag, we successfully drilled two infill wells at the field
in the final quarter of 2022, one of which was the longest well
drilled by Jadestone to date. Initial delivery from these was in line
with expectations and provides increased confidence in several
additional infill well locations earmarked for potential future
drilling. We also saw good performance from the operated PenMal
Assets, where uptime at the two main facilities on the PM323
and PM329 PSCs increased year-on-year, reducing aggregated
production declines by 40%. Production at the previously non-
operated PenMal Assets was curtailed, with the FPSO being taken
out of service prematurely and remaining shut-in since February
2022. Subsequently, Jadestone has assumed operatorship of these
licences, and is currently exploring whether a redevelopment
opportunity exists.
Development activity was focused on the Akatara gas field onshore
Indonesia. The final investment decision was taken in June 2022,
which allowed us to award the EPCI contract, giving the green light
for an acceleration in activity at the field. The project remains on
track and budget for first gas in the first half of 2024. Furthermore,
subsurface analysis of the Akatara field highlights that the in-place
gas resource is likely larger than first thought, which may allow
for incremental gas sales at premium prices. In Vietnam, progress
towards monetising the significant gas resource at the Nam Du and
U Minh discoveries remained frustratingly slow, though during the
second half of 2022 the Vietnam government mandated the end
user to commence gas sales negotiations directly with Jadestone.
This gas resource is of strategic importance and the sole option to
prolong supply to the Ca Mau power station in southern Vietnam.
Delivering inorganic growth
The highlight of our business development activity during 2022
was the acquisition of a 16.67% interest in the CWLH fields offshore
Western Australia. Though a small non-operated interest, we
believe it highly likely that we can acquire further interests in
the asset over time, through which we would seek to exercise
greater influence over future work activity, in particular accessing
the significant resource and value upside we see in the asset.
The positive impact of the CWLH acquisition, and the potential
for further growth there, offset the termination of the Maari
acquisition. In 2023 to date, we have seen a significant increase
in M&A activity in the region and hope to take advantage of
opportunities which fit our screening criteria.
Montara – a disappointing year, but significant
value remains in this core asset for Jadestone.
Our operational performance during 2022 was impacted by the
shut-in of production at the Montara Project from August to
year-end due to a small leak in a crude oil storage tank and an
integrity issue in a water ballast tank within the FPSO. Montara
also experienced unscheduled downtime in the first quarter of
2022 due to a faulty engine core in the gas reinjection compressor.
Jadestone has significant experience in the management and
maintenance of mature assets, and while we have invested over
US$250 million into Montara since we became operator of the asset
in 2019, it was frustrating to have this happen in a part of the vessel
we were about to enter as part of the approved maintenance cycle.
Through our tank maintenance and repair programme, as well as a
thorough review and upgrade of our FPSO maintenance processes
and procedures, we have taken significant steps to minimise the
likelihood of extended periods of unplanned downtime in the
future. While the Montara field remains important to our business,
the CWLH, Lemang PSC and Sinphuhorm acquisitions, as well as
the planned start-up of the Akatara gas field in the first half of
2024, will reduce Montara’s impact on our operational and financial
performance. I would like to thank everyone at Jadestone involved
in the Montara repair programme, both onshore and offshore, for
their hard work and dedication during this challenging period.
Reserves and resources
Jadestone delivered significant reserves growth and reserve
replacement in 2022, with independently evaluated 2P reserves
of 64.8 mmboe at year-end, a 45% increase from the 44.7 mmboe
at year-end 2021. The primary drivers of the increase were the
initial reserve booking from the Akatara gas field following final
investment decision in June 2022, and the contribution from
booking the Group's net share of CWLH 2P reserves at year-end.
These additions, and minor revisions elsewhere in the portfolio,
resulted in a near six-fold replacement of production during 2022.
0 5
JADESTONE ENERGY 2022 ANNUAL REPORT CHIEF EXECUTIVE OFFICER’S REVIEW
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Well positioned for the energy transition
There is pressure on publicly-listed upstream companies to prioritise
balance sheet strength and shareholder returns above production
growth. However, resilient demand for oil and gas and tightening
energy supply markets, is in turn supporting high prices, and
placing a significant burden on consumers, at a time of high levels of
inflation in the global economy.
The profile of mid-life and maturing upstream assets inevitably
results in a higher emissions intensity than new fields. However,
it is much better, in our view, to have these assets fulfilling energy
demand, rather than creating new sources of significant GHG
emissions through greenfield exploration and development that
could span decades into the future. This stance is aligned with
the IEA’s Net Zero scenario, which emphasises that continued
investment in existing upstream assets is necessary to meet energy
demand. Furthermore, it is a favourable outcome, in our view, to
have maturing assets stewarded by Jadestone, a publicly-listed
company with a commitment to transparency, robust governance
and a Net Zero target, rather than ownership where similar levels of
scrutiny, transparency and a commitment to reduce GHG emissions
may not apply.
During 2022, our Scope 1 & 2 GHG emissions, as per operational
control approach, totalled 489,126 tonnes of CO2 equivalent. Please
refer to pages 13 to 14 of the Strategic Report for a detailed review of
our GHG emissions performance during the year.
It is increasingly clear that a just and orderly transition to a low-
carbon energy system requires investment in upstream supply
capacity for many years to come, while minimising its environmental
impact. Jadestone intends to meet this challenge head on, and
to that end in 2022 pledged to deliver Net Zero Scope 1 & 2 GHG
emissions from its operated assets by 2040. Since making this
pledge, we have analysed the GHG profile of our operated assets,
associated emissions abatement opportunities, and their potential
cost, with a view to setting our detailed asset level decarbonisation
pathways later in 2023.
High oil prices drive record revenues and robust cash
generation
Jadestone realised a record average price of US$103.85/bbl for its oil
sales during 2022, a 40% increase on 2021, driven by a 35% increase
in the average lifted Brent price and a more than doubling of the
average premium to Brent. In particular, Stag averaged a US$22.78/
bbl premium to Brent across the three liftings during the year, as the
field’s heavy sweet crude remained in high demand as a bunker fuel
in the shipping industry.
This increase in realised oil price more than compensated for the
year-on-year fall in production and liftings, delivering record annual
revenues for Jadestone of US$422 million, a 24% increase on the
US$340 million in 2021. Production costs increased 18% year-on-
year, primarily due to a full-year of the PenMal Assets and the CWLH
acquisition accounting. On an underlying basis, which management
believes gives a more comparable view year-on-year, production
costs were broadly unchanged. Revenue growth more than offset the
increase in reported production costs to deliver adjusted EBITDAX of
US$162 million, up 14% from US$142 million in 2021, and a net profit
of US$9 million, compared to a US$17 million loss in 2021.
The trends highlighted above led to an increase in operating
cashflow (before working capital movements) of US$158 million, a
73% increase year-on-year from the US$91 million in 2021. Capital
expenditures totalled US$83 million, (2021: US$56 million) slightly
below the lower end of the guidance range, primarily due to the
phasing of procurement activity at the Akatara gas development.
Other notable cash movements during the year were an initial
payment of US$41 million into the decommissioning trust fund for the
CWLH assets, as well as US$28 million of insurance proceeds relating
to a shut-in of the Skua-11 well between Q2 2020 and Q4 2021.
0 6
Robust business performance in the first half of 2022 resulted in
an enhancement of Jadestone's shareholder returns. The interim
dividend was increased by 10% to US$ 3.0 million and in August 2022,
Jadestone instigated a share buyback programme, which as at May
2023 has returned an additional US$18 million to shareholders.
Recent events and outlook
In January 2023, we announced the acquisition of an initial stake
in the Sinphuhorm gas field onshore Thailand – a modest addition
to our portfolio, but one which establishes a new country entry
and positions us for further Thailand acquisition opportunities
in the future. Production from Montara resumed in March 2023.
The phased restart plan has made good progress, with initial
production focused on a subset of wells prior to commissioning of
the FPSO gas system in late-April 2023 which allowed additional
wells to be brought onstream. Since then, production has averaged
approximately c.6,800 bbls/d, with a peak during this period of
c.7,200 bbls/d.
In May 2023, we were very pleased to close a new reserves-based
lending facility with four international banks, providing significant
debt capability in support of our strategy as a responsible operator
in the Asia-Pacific region. The lending banks recognised that our
strategy fits well within the energy transition, and will work closely
with us to ensure we deliver on environmental and operating
performance objectives. However, the impact of the Montara
shut-in on our financial position, the significant planned investment
over the 18 month period to the end of 2023, and the evolution of
RBL debt availability over 2023 and 2024, led us to a decision that
new funding was required to underpin delivery of key projects,
particularly Akatara. Consequently, on 6 June 2023, we announced
a US$50 million financing, underwritten by our largest shareholder
Tyrus Capital Event S.à.r.l (“Tyrus”), including an equity placing to
existing and new investors, followed by an open offer to allow retail
participation. We also agreed a US$35 million standby working
capital facility with Tyrus. Consistent with our dividend policy, which
emphasises a priority on growth while maintaining a conservative
capital structure, the Board has decided not to recommend a final
dividend in respect of 2022. The reinforcement of the balance
sheet at this point will de-risk the delivery of our organic growth
profile. With a return to routine operations at Montara and the
onset of production at Akatara in the first half of 2024, we expect
net debt to peak at the end of 2023 and the balance sheet to exhibit
a deleveraging trend by the end of 2024. This will be a key step in
restoring the balance sheet strength which has been a hallmark
of the Jadestone investment case in the past and reenabling
shareholder returns.
During 2023, we will continue the important work of minimising
the environmental impact of operations, most notably through the
workstreams supporting our pledge to Net Zero by 2040.
Our production averaged just over 10,000 boe/d for the first three
months of 2023, and is expected to average 13,500 – 17,000 boe/d
between April and December 2023. Underlying operating costs for
2023 are expected to be in the range US$180-210 million and we will
spend an estimated US$110-140 million in capital expenditure, a
record investment for a second year, with the Akatara development
project accounting for approximately 70%.
While 2022 was a most challenging year for us at Montara,
there were also many highlights which will bring growth and
add significant value going forward. I remain convinced that our
approach to fulfilling energy demand through efficient investment
into existing producing fields will be a winning strategy, and there
there is significant opportunity to build on the successes already
achieved. My thanks go out to all Jadestone’s employees for their
efforts in 2022 and who continue to work incredibly hard to underpin
the future success of the company.
A. Paul Blakeley
Executive Director, President and Chief Executive Officer
6 June 2023
Market overview
Oil markets
The majority of Jadestone’s current production is crude oil. During
2022, the Company did not hedge any of its production, and as a
result, realised oil prices were based on market conditions at the
time of sale. Furthermore, Jadestone’s oil production sells at a
varying differentials to Brent depending on demand for crudes with
certain characteristics.
Brent oil prices averaged $98.94/bbl in 2022, a 40% increase on
2021. In the early part of 2022, benchmark prices continued to
strengthen, indicating a tight oil market amid further relaxations of
COVID-19 pandemic restrictions. However, prices leapt in February
2022 following Russia’s invasion of Ukraine and stayed elevated
for several months, reflecting fears of disruption to the global
supply of oil. In the second half of 2022, prices softened, signalling
concerns about the global economy due to an inflation surge which,
in part, was caused by the upswing in global energy prices earlier
in the year. At least part of the tightness in global energy markets
and ensuing high prices has been attributed to a structural trend of
under-investment in upstream supply, over several years.
Several of these factors continued to impact oil prices in early 2023.
While oil prices are expected to be supported by low inventory
levels inflation and related high interest rates continue to cloud the
global macroeconomic outlook.
Supply chain inflation and equipment lead times
During 2022, there were significant increases in upstream industry
costs, against a backdrop of embedded inflation more widely in the
global economy.
S&P Global, whose broad-based indices track changes in upstream
costs, estimates that upstream capital costs increased by 11% in
2022, while upstream operating costs rose by 12%.
In 2022, Jadestone experienced some cost increases across its
operations, driven primarily by the rising cost of logistical support
(helicopters and supply vessels), in turn driven by rising fuel costs
on the back of higher oil prices. The Group is also seeing increasing
lead times for specialised equipment.
In Malaysia, Indonesia and Vietnam, the impact of cost inflation is
substantially offset by the cost recovery mechanism embedded
within the PSC structure.
The Akatara field development is largely unaffected due to the
fixed price nature of the EPCI contract.
In 2023, we expect to see further inflation impacts, particularly the
cost of offloading tankers, and revised logistics contracts.
Jadestone expects to see an impact on the cost of near-term drilling
campaigns due to inflation in rig rates. Where possible, the Group
will aim to mitigate these increases through efficient planning and
optimisation of drilling campaigns and by participating in consortia
to purchase goods and services.
Regional M&A activity
Jadestone aims to become a leading Asia-Pacific independent
upstream company primarily through identifying, acquiring,
developing and operating assets throughout the Asia-Pacific
region. As a result, the Group’s growth trajectory will be influenced,
to a large extent, by broader trends in M&A activity within the
Asia-Pacific region.
Jadestone continues to believe that there is likely to be a healthy
M&A market in Asia-Pacific in the near-to-medium term,
underpinned by the sell-down of mid-life/mature oil assets by
larger companies to support energy transition strategies. During
2022, Jadestone closed the acquisition of a non-operated interest
in the CWLH fields offshore Australia and the acquisition of the
remaining 10% interest in the Lemang PSC.
In early 2023, Jadestone closed the acquisition of a non-operated
interest in the Sinphuhorm gas field onshore Thailand, giving the
Group a platform to expand its footprint in Thailand over time.
Asia-Pacific energy markets
The Asia-Pacific region continues to consume significantly more
oil and gas than it produces. According to the IEA, the Asia-Pacific
region produced 22% of its own oil needs in 2021, and 70% of its
gas consumption. This import dependency is likely to remain in the
future, with the IEA forecasting, under different climate scenarios,
that the Asia-Pacific region will produce 11-22% of its oil demand
and 58-70% of its gas demand over the 2030-2050 period.
Despite the significant growth in the global liquefied natural
gas market in recent years, Asia-Pacific regional demand for gas
is expected to stay robust as countries look to monetise their
indigenous resources, deliver economic growth, jobs, taxes and
reduce imported emissions.
Similarly, while crude oil is a global commodity, security of
supply is an increasingly important factor for oil markets in
light of geopolitical turmoil in 2022, with consumers in the
region spreading their imports over several countries to avoid
dependency on any particular producer.
In this context and to maximise economic output, Jadestone
anticipates that many countries in Asia- Pacific will continue
to promote and support their domestic upstream industries,
complementing Jadestone’s strategy of maximising the output
from existing oil fields.
Availability of finance
Upstream companies require continuous access to funding to
develop, produce and maximise the value of their assets.
In recent years, traditional providers of finance to the upstream
industry, particularly large banks, have come under pressure from
their own stakeholders to cut back and/or restrict lending to the
upstream sector as part of their own Net Zero ambitions.
Notwithstanding, Jadestone has seen support from banks for its
responsible upstream operator strategy of maximising recovery
from existing assets, in line with the IEA’s Net Zero scenario.
Jadestone has, in recent years, funded its business through cash
flow and balance sheet cash resources. To part fund a period of
significant development activity, Jadestone closed an RBL facility in
May 2023, which saw good support from four international banks.
0 7
JADESTONE ENERGY 2022 ANNUAL REPORT JADESTONE’S PORTFOLIO
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Sinphuhorm field
THAILAND
VIETNAM
MALAYSIA
HO CHI MINH CITY
Block 51 PSC
Block 46/07 PSC
PM329, PM318
PM 323, AAKBNLP
KUALA LUMPUR
SINGAPORE
Lemang PSC
JAKARTA
INDONESIA
Montara
Cossack-Wanaea-
Lambert-Hermes
Stag
PERTH
AUSTRALIA
Laos
Thailand
Sinphuhorm field
0
30
60kms
Ho Chi Minh
Dong Mun
Cambodia
Khon Kaen
Vietnam
Gulf of Thailand
Ca Mau
Block 51
Gas Pipeline
Block 46/07
0 25 50 75 100kms
PM329
PM318 /
AAKBNLP
Malay Basin
PM323
Malaysia
0
50
100
400kms
Lemang PSC
Thailand
Field:
Status:
Working interest: 9.52%, non-operated
Gross acreage:
Location:
232km2
Khorat Basin
Sinphuhorm
Producing
Dong Mun
Pre-development
Discovery:
Status:
Working interest: 27.2%, operated
(through APICO)
32km2
Khorat Basin
Gross acreage:
Location:
Block 51 and Block 46/07 PSCs, Vietnam
Nam Du, U Minh and Tho Chu
Discoveries:
Status:
Pre-development
Working interest: 100%, operated
Gross acreage:
Location:
Water depth:
Block 51 – 887km2,
Block 46/07 – 2,622km2
Malay-Tho Chu Basin
Block 51 – 64 metres,
Block 46/07 – 48 metres
Fields:
Penara, North Lukut
and Puteri
(PM318 & AAKBNLP PSCs)
Status:
Non -producing
Working interest: 100%, operated
Gross acreage:
Water depth:
1,698km2
70 metres
Peninsular Malaysia, Malay Basin
Fields:
East Belumut,
West Belumut and
Chermingat (PM323 PSC)
East Piatu (PM329 PSC)
Producing
Status:
Working interest: PM323 - 60%, operated
PM329 - 70%, operated
PM323 & PM329 - 1,691km2
63-72 metres
Gross acreage:
Water depth:
Lemang PSC, Indonesia
Field:
Status:
Working interest:
Gross acreage:
Location:
Akatara
In development
100%*, operated
743km2
South Sumatra Basin
Akatara field
Indonesia
0
15
30kms
* Pre local government back-in right of up to 10%
Montara
Timor Sea
Cossack-Wanaea-
Lambert-Hermes
Indian Ocean
Western
Australia
0
25
50
75
100kms
Western Australia
0
25
50
75
100kms
Stag
Indian Ocean
Montara Project
Fields:
Status:
Working interest:
Gross acreage:
Location:
Water depth:
Montara, Swift/ Swallow, Skua
Producing
100%, operated
672km2
Timor Sea, offshore
Western Australia
77 metres
CWLH
Fields:
Status:
Working interest:
Gross acreage:
Location:
Water depth:
Stag
Field:
Status:
Working interest:
Gross acreage:
Location:
Water depth:
Cossack, Wanaea, Lambert,
Hermes
Producing
16.67%, non-operated
160km2
North Carnarvon Basin,
offshore Western Australia
157 metres
Stag
Producing
100%, operator
160km2
Carnarvon Basin, offshore
Western Australia
47 metres
0 8
0 9
Star denotes Jadestone office
Western Australia
0
25
50
75
100kms
JADESTONE ENERGY 2022 ANNUAL REPORT
Business model and strategy
Sustainability at Jadestone
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Jadestone pursues an acquisition-led growth strategy with a focus on mid-life
and maturing upstream assets and/or discovered gas resource capable of being
commercialised within a short time frame. The geographic focus is the Asia-Pacific region,
where Jadestone’s management team has significant experience, and which is expected
to provide a positive investment climate for upstream companies, given the region is
currently a net importer of oil and gas against a backdrop of an increasing focus on
energy security.
E x tend field life of existing assets
1
Acquire producing mid-life
assets or discovered gas
resources in APAC
c y c l e s
t m e n t
s
e
v
k i n
r - r i s
e
w
o r t, l o
S h
4
Maximise production an
d re
d
u
c
e o
p
e
r
a
t
i
n
g
c
o
s
t
s
2
Add additional reserves
and production volumes through additional
low risk in-field and near-field
development
Realise additional value through
superior operating capabilities, cost control
and incremental brownfield
development
Jadestone’s strategic approach to embedding sustainability throughout its business
is overseen by the Board and supporting sub-committees.
The ESG framework sets out priority areas that we focus on in
order to meet local energy demand in a safe and responsible way,
whilst seeking to maximise social and economic benefits for people
associated with our operations. The ESG framework was refreshed
in 2022 to reflect the themes that most often intersect with
Jadestone’s business, and where it believes it can make the biggest
contribution. The framework was developed in a consultative
manner and included consideration of the United Nations
Sustainable Development Goals ("UN SDGs") and the IPIECA SDG
Roadmap for the Oil and Gas Sector.
This section provides a high-level overview of Jadestone’s approach
to ESG. The detail of Jadestone’s ESG performance is reported in
the 2022 Sustainability Report.
Refer to 2022 Sustainability Report
ESG framework
I
n
c
r
e
a
s
e piv
o
t to g
as a
n
3
Move existing gas
discoveries to production
in APAC’s energy short markets
d unlock stalled projects
Playing a role in the energy transition that is consistent wi t h I E A ’ s N e t Z e r o b y 2
No greenfield exploration
U p h o l d c l
i m a
H G e missions
u c e G
d
p
n
d r e
d m a
s a
a
t
e
o
a
g
r
0 r
e t
t
5
0
Strategic pillar
Energy
transition
Responsible
operator
Benefitting
stakeholders
Achieving Net Zero
by 2040 in support of the
Paris agreement and in
line with the IEA’s
guidance
Striving to improve
environmental
performance whilst
ensuring safe and reliable
operations
Building a strong and
diverse organisation whilst
fostering community
prosperity around
own activities
The assets we target for acquisition are those where Jadestone
believes it can create value through additional capital investment
across commodity price cycles to unlock reserves upside and
improve operating performance. This is complemented by organic
growth activity, principally through infill drilling on the Group’s
oil assets and development of gas discoveries in Indonesia and
Vietnam.
Jadestone believes that with the application of its deep knowledge
of the Asia-Pacific upstream oil and gas industry, a rigorous
technical approach, proven operating capabilities and reduced
competition for target assets, it can execute this strategy
successfully and deliver benefits to all stakeholders.
The typical profile of Jadestone’s counterparties in asset
transactions are larger upstream companies for whom mid-life
producing assets are natural divestment candidates to fund their
own energy transition strategies. As a result, the energy transition
is likely to bring more opportunities, increasing the likelihood that
Jadestone’s strategy will be successful.
important in the global energy mix until a low carbon energy
system is sufficiently developed, to ensure basic energy needs are
met in as an efficient way as possible.
The Group’s strategy for maximising reserves from existing
producing oil and gas fields explicitly precludes frontier
exploration, which Jadestone believes is unnecessary in the
scenario where oil and gas demand is declining as low-carbon
energy takes a greater share of the primary energy mix. This
position is in line with the International Energy Agency’s Net Zero
scenario, which emphasises that continued investment in existing
upstream supply is necessary to meet energy demand.
Moreover, Jadestone believes that the energy transition should
be just and orderly, with developing and vibrant economies in
Asia-Pacific not being disadvantaged relative to their developed
peers. Through employment, significant new expenditure with
suppliers, payments to host governments and community
outreach programmes, Jadestone contributes directly to increasing
prosperity and economic growth in its core areas of operations.
Jadestone recognises that the upstream industry is a key source
of GHG emissions, the main cause of climate change, which in turn
has a negative effect on the planet and its people. However, the
energy transition is likely to be one where oil and gas will remain
Jadestone believes that it can continue to execute its growth
strategy for the benefit of all stakeholders, while minimising the
impact on the environment through careful stewardship and
efficient operations.
Corporate governance
Further strengthen governance and business ethics standards and practices
Deliver intermediate Net Zero
target and roadmap
Continue to enhance climate
disclosures, informed by the
TCFD framework1
Ensure robust GHG & ESG data
systems and processes across
assets
Continue to improve
environmental performance
across key areas of impact
Ensure safe operations, targeting
zero life altering events and Tier 1
process safety events
Maintain support from regulators
and target zero material2
enforcement notices
Strive for improved employee
engagement and alignment with
Group values
Deliver community development
programmes in operating
countries
2023 ESG
aspirations
and targets
UN SDGs
alignment
1
2
Task Force on Climate-Related Financial Disclosures.
That result in activity cessation.
10
11
JADESTONE ENERGY 2022 ANNUAL REPORT
SUSTAINABILITY AT JADESTONE
ESG highlights
Net Zero by 2040
firm pledge
Local economies
taxes and royalty payments doubled
GHG review
asset-level screening
>95%
planned safety critical integrity
maintenance completed
Scope 3
calculated for material categories
Board diversity
female representation increased
Zero
violations of anti-bribery
and anti-corruption laws
94%
local nationals employed
30% increase
in community engagement budget
Business ethics
policies strengthened
Solar power
piloted at the Akatara site
Biodiversity
action plan commitment for the Akatara site
Governance and business ethics
Effective governance at Jadestone requires that Board members
and the leadership team understand their roles and responsibilities.
It also means that the right policies and procedures are in place
which promote individual and group accountability, ethical and
responsible decision making and effective risk management.
Jadestone has embedded appropriate governance systems to
ensure that the Board and Jadestone’s leadership have oversight of
critical ESG issues and enterprise-level risks, such as climate change,
safety, incident preparedness and community impacts. Our ESG
governance approach is discussed in more detail in the section on
Climate-related financial disclosures on pages 15 to 22.
Jadestone takes a strong position on ethical matters, with zero
tolerance for fraud, bribery and corruption. The Code of Conduct
Policy was updated in 2022 and reflects Jadestone’s commitment
to a culture of honesty, integrity and accountability, and which
extends expectations of exceptional standard of conduct to its
business partners too.
Energy transition
As an upstream oil and gas company focused on acquiring and
maximising the life of fields already in production, as well as
developing discovered gas resources, Jadestone is well-positioned
to play an important role in the Asia-Pacific region in the context
of the energy transition. As oil and gas peers divest their mid-life
and maturing upstream assets, Jadestone is well placed to
be the steward of those assets through to the end of field life.
We believe this strategy is fit for the energy transition, as existing
fields and discoveries can fulfill global hydrocarbon demand
without requiring new resource additions through exploration.
This position is informed by the IEA Net Zero by 2050 scenario,
which precludes the need for new oil fields whilst stressing the
necessity of continued investment in existing assets.
IEA’s World Energy Outlook 2022 – global oil demand in its climate scenarios
The IEA’s recently updated scenarios (2022 World Energy
Outlook) propose three alternative outlooks for global oil
demand:
l Net Zero Emissions by 2050 Scenario (“NZE”): faster
l Stated Policies Scenario (“STEPS”): global oil demand
rebounds and surpasses 2019 levels by 2023, despite high
prices; demand peaks in the mid-2030s at 103 million barrels
per day (mb/d). Rising demand and declining output from
existing sources of production mean that new conventional
upstream projects are required to ensure that supply and
demand stay in balance. Around US$ 470 billion annual
upstream investment is spent on average to 2030, which is
50% more than has been invested in recent years.
l Announced Pledges Scenario (“APS”): stronger policy
action brings forward the peak in oil demand to the mid-
2020s. Whilst oil demand is lower than in STEPS, there is still
a need for new conventional projects, and US$ 380 billion is
invested annually on average to 2030.
global action to cut emissions means oil demand never
returns to its 2019 level and falls to 75 mb/d by 2030.
Declining fossil fuel demand can be met without the need
for the development of new oil fields, but with continued
investment in existing assets (e.g., for example through the
use of infill drilling), and this requires US$ 300 billion annual
average upstream investment to 2030.
Furthermore, the IEA reflects on the repercussions of Russia’s
military conflict in Ukraine leading to a volatile oil price
environment and energy security concerns. In order to alleviate
these pressures, the IEA emphasises that “Projects with shorter
lead times and quick payback periods – such as tight oil and projects
to extend production from existing fields – are better candidates
for making good any short-term shortfalls in supply. They play an
important role in all our scenarios”.
Jadestone’s business strategy is informed by the IEA’s insights.
The Group continues to test its portfolio resilience in all three
scenarios as outlined on pages 20 to 21.
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Net Zero roadmap and progress made
completed
completed
pending
1. Business-as-usual
inventory baseline
Asset-level forecasts of
GHG drivers
2. GHG emission
reduction options
Screening matrix of generic
reduction opportunities ranked
GHG forecast methodology
Identification, assessment
3. Feasibility studies
of shortlisted options
Techno-economic feasibility
studies completed to shortlist
GHG mitigations
Net Zero roadmap
Alternative GHG forecast and
interim target
Cost-effective GHG emission
reduction pathway
and prioritisation using marginal
abatement cost curves
GHG mitigations included
in work plans and budgets
Net Zero roadmap
Managing the GHG trajectory of mature assets
When acquiring mid-life producing assets, Jadestone pursues
additional capital investment opportunities to maximise reserves
recovery, and improve operating performance, whilst striving to
mitigate GHG emissions. Jadestone is cognisant of the emissions
trajectory of mature assets as well as the existing constraints for
implementing GHG reduction strategies. Emissions during the
decline phase of the asset life are typically higher than during
normalised midlife operations, when equipment is sized to run
at optimal efficiency. With production in decline, this results
in high emissions intensity that is on an upward trend, as, for
example, more power is required to produce fewer barrels. The
alternative to maximising production from existing oil assets
would be the development of long-lead time greenfield projects,
which is not aligned with the IEA’s Net Zero scenario (as discussed
previously). Whilst initially having lower emissions intensities, such
developments would lock in absolute emissions over timelines that,
in the context of the global carbon budget, are not aligned with the
Paris target.
Jadestone is focused on reducing the business-as-usual absolute
GHG emissions profile of the acquired assets, and delivering an
improved, mitigated GHG profile, subject to techno-economic
feasibility studies.
In June 2022, Jadestone committed to achieve Net Zero Scope 1
and 2 GHG emissions for its operated assets by no later than 2040.
To that end, Jadestone partnered with a reputable consultancy
to put workstreams in motion to deliver a Net Zero roadmap by
the end of 2023. Throughout 2022, workshops were conducted
with Jadestone’s operational and engineering teams to review and
rank the most applicable options, which were then shortlisted
through a screening matrix. Factors such as technical complexity,
site constraints, project cost and GHG reduction potential were
included in the final prioritisation.
At the top of this page is a snapshot of progress made in 2022, with
the key achievement being the identification of GHG reduction
options for all of the assets we operated during the year. We continue
to assess these potential options for implementation and are well
on track to finalise the details of the roadmap by the end of 2023.
Refer to 2022 Sustainability Report, section Net Zero roadmap
Net Zero roadmap and business growth
Jadestone believes that its strategy of maximising recovery from
existing oil assets and commercialising existing gas discoveries
has strong merits in the context of the energy transition,
as discussed on the previous page. As Jadestone takes on
operatorship of assets, it inherits the associated GHG emissions.
It pledges to integrate the newly acquired assets into its Net Zero
roadmap, in line with the GHG Protocol’s guidance. The approach
to integrating operated acquisitions involves:
l Screening new business development opportunities.
Due diligence involves reviewing historical and forecast GHG
emissions, requesting undertaken and planned mitigations
from the incumbent operator and reviewing GHG forecasts in
the context of planned field activity. Climate regulation in the
given jurisdiction is also reviewed as part of the process;
l GHG abatement opportunities are reviewed after transfer
of operatorship (“TOO”). A similar process, as outlined above
in relation to existing assets, will be undertaken after TOO:
desktop reviews followed by feasibility studies for shortlisted
options; and
l
Integration of associated GHG emissions into the Net Zero
baseline and the interim targets.
In relation to Jadestone’s non-operated assets, while these are
not covered by the Group’s Net Zero pledge, Jadestone commits
to working with its partners to reduce Scope 1 and 2 GHG emissions
on its non-operated assets, either existing or acquired
in the future.
GHG emissions and Streamlined
Energy and Carbon Reporting
Jadestone continues to report and consolidate its GHG emissions
on an operational control basis, reporting 100% of GHG emissions
from operated sites, regardless of the working interest. In 2022,
Jadestone included Scope 1 GHG emissions for its Malaysia
operated assets for the first time, following the acquisition of
PenMal Assets in the second half of 2021. In 2022, the Group’s
Scope 1 GHG emissions amounted to 488,951 tonnes CO2-e. When
compared to full-year 2021 GHG emissions1 of 649,770 tonnes
CO2-e, the Group’s 2022 GHG emissions were circa 25% lower year-
on-year, largely due to the suspension of Montara operations for
part of the year. Jadestone’s indirect, Scope 2 GHG emissions from
the consumption of purchased electricity across its offices and
warehouses account for less than 1% of its total GHG footprint2.
Jadestone does not consume any purchased electricity at any of its
operated sites.
As detailed within the Directors’ Report of this Annual Report,
the Group has voluntarily elected to report Scope 1 and 2 GHG
emissions from its operated assets and regional offices under the
Streamlined Energy and Carbon Reporting (“SECR”) framework.
The data in the following table represents 100% operational control
of Jadestone’s Australian and PenMal Assets. Jadestone has no
operations in the UK3, its emissions and energy use are therefore nil.
The GHG emissions section of the 2022 Sustainability Report
details Jadestone’s approach to managing energy use and GHG
emissions, and discusses energy efficiency measures taken at its
operated sites.
Including the period when PenMal Assets were operated by the previous operator for comparative purposes.
1
2 Defined as sum of Scope 1 and 2.
3 With the exception of one employee working in home office mode.
12
13
JADESTONE ENERGY 2022 ANNUAL REPORT
SUSTAINABILITY AT JADESTONE
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Jadestone reports and consolidates its GHG emissions on an operational control basis. GHG emissions for Jadestone’s business are
defined and calculated using methodologies consistent with the Greenhouse Gas Protocol: A Corporate Accounting and Reporting
Standard. Jadestone calculates its GHG emissions according to the local regulatory framework in the country of operations, an approach
validated by a third party, following a review of the relevant international frameworks and standards for GHG accounting as well as
industry practice. In an absence of such regulatory framework, the API Compendium of Greenhouse Gas Emissions methodologies (2021)
and its emission factor method are applied.
Consequently, for Australia operations, Jadestone continues to calculate its GHG emissions in accordance with the Australian National
Greenhouse and Energy Reporting (Measurement) Determination 2008. In Malaysia, GHG data for the Peninsular Malaysia (“PenMal”)
operated assets is prepared in accordance with the requirements of the local industry regulator, which is aligned with the API
Compendium.
Scope 1 GHG emissions, 2019–20221 (100% operational control), including the annualised impact of acquisitions and
transfer of operatorship in 2019 and 2021
)
e
-
2
O
C
t
(
s
n
o
i
s
s
i
m
e
G
H
G
700,000
600,000
500,000
400,000
300,000
200,000
100,000
-
*TOO of Montara
in August 2019
*TOO of PenMal assets
in August 2021
2019
2020
2021
2022
Stag
Montara (previous operator)
Montara (Jadestone-operated)
PenMal (previous operator)
PenMal (Jadestone-operated)
Streamlined Energy and Carbon Reporting – operational control
Climate-related financial disclosures
As Jadestone is not currently subject to the Financial Conduct Authority Listing Rules, it is not required to make disclosures consistent with
the TCFD recommendations or report against the TCFD recommendations on a “comply or explain” basis and has not done so in 2022.
Jadestone has used the recommendations of the Task Force on Climate-Related Financial Disclosures ("TCFD") to inform its approach to
managing and disclosing climate-related risks and opportunities, as outlined in this section. Over time, we expect the requirement to
make disclosures consistent with the TCFD recommendations on a “comply or explain” basis, will be applicable to a much broader range of
companies, including those listed on the AIM market, and as such we will continue to develop and enhance our climate-related disclosures.
GOVERNANCE
Disclose the organisation’s governance around climate-related risks and opportunities.
TCFD recommendation
Summary of approach
a. Describe the board’s oversight of climate-
related risks and opportunities.
b. Describe management’s role in assessing
and managing climate-related risks and
opportunities.
l The Board and its committees have oversight of climate-related risks and
opportunities, with areas of accountability formalised through terms of
reference.
l The Board delegates day-to-day management of the business to the CEO, who,
supported by the CFO, directs the management team to manage climate-
related issues.
l As an example, throughout 2022, the Board and management were engaged
regularly during the development of the Net Zero strategy.
Reference
Annual Report
Strategic Report,
Climate-related financial
disclosures, pages 15 to 21;
Sustainability Report
Governance and business
ethics, pages 9 to 10.
STRATEGY
Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy, and
financial planning where such information is material.
a. Describe the climate-related risks and
opportunities the organisation has
identified over the short, medium, and
long-term.
l Jadestone sees two categories of transition risks as most relevant to its
Annual Report
business: stakeholder and reputational risks as well as policy and regulatory
risks. It also recognises a major opportunity that the trend of majors and/or
peers divesting assets presents to Jadestone.
Strategic Report,
Climate-related financial
disclosures, pages 15 to 21.
b. Describe the impact of climate-related risks
and opportunities on the organisation’s
businesses, strategy, and financial planning.
c. Describe the resilience of the organisation’s
strategy, taking into consideration different
climate-related scenarios, including a 2°C or
lower scenario.
l Risk impacts have been quantified where feasible with risk metrics defined
and mitigations and accountability assigned.
l Jadestone undertook a Group climate scenario analysis for the second time
for its whole portfolio of assets, reflecting IEA’s scenarios as per the 2022
WEO, that represent temperature outcomes of 1.7 and 1.5°C. Carbon costs, as
forecasted under these scenarios, have been applied in line with the expected
regulatory developments as well as a decrease in hydrocarbon pricing.
Metrics
Units
2022
20212
2020
20193
RISK MANAGEMENT
Disclose how the organisation identifies, assesses, and manages climate-related risks.
Total Scope 1 and 2 emissions from operated entities and offices
Total Scope 1 emissions
Total Scope 2 emissions5
Total Scope 1 and 2 emissions
tCO2-e
tCO2-e
tCO2-e
488,951
175
489,126
440,987
(649,770)
1855
441,165
(649,956)
280,328
1905
280,509
149,7024
(342,699)
174
149,580
(342,872)
Upstream GHG intensity6
kgCO2-e/boe
99
92 (100)
67
56 (69)
Energy use by operated entities and offices7
Direct energy: Fuel consumption
MWh
1,119,973
772,248
(1,240,456)
462,934
Indirect energy: Electricity consumption (offices)
MWh
299
303
311
Total direct and indirect energy consumption
MWh
1,120,272
772,551
(1,240,754)
463,245
198,884
(289,579)
240
199,124
(289,819)
Including PenMal 2021 GHG emissions and the period under the previous operator (see green outline).
1
2 2021 data has been restated to include data from the PenMal Assets where operational control commenced in August 2021. Data in brackets represents full
3
calendar year including performance under previous operator to allow comparisons on a like-for-like basis.
2019 performance reported includes data for the time period where Jadestone was the operator of relevant assets. Data in parentheses represents a full calendar
year of data, including the period under previous operator.
4 Minor restatement of data to include fugitive emissions. Previously reported at 149,417 tCO2-e.
5
6
7 Direct energy is energy generated onsite by the facility. Indirect energy defined as that generated and purchased offsite.
Represents electricity used at Jadestone offices. Data restated due to revised emissions factors.
Includes direct, Scope 1 GHG emissions, excluding Scope 2 related to offices.
14
a. Describe the organisation’s processes for
identifying and assessing climate-related
risks.
b. Describe the organisation’s processes for
managing climate-related risks.
c. Describe how processes for identifying,
assessing, and managing climate-related
risks are integrated into the organisation’s
overall risk management.
l Climate-related transition risks and opportunities are managed within the
Annual Report
Group risk register framework, supported by regional risk workshops, as part
of the country Climate Change Working Group (“CCWG”).
l Regional analysis is followed by a leadership CCWG workshop with risks
assessed from the Group-level perspective.
l The most relevant climate-related risks are reflected in the Group’s principle
risk framework under the umbrella risk “Climate change transition risks”.
l Following a high-level portfolio screening of potential physical climate risks,
initial insights into the asset exposure to a set of hazards such as cyclones,
extreme heat and flooding was established. Moving onwards, physical
risk analysis will be integrated into the overall climate risk process, where
transition risks are considered by the regional teams in tandem with the
physical risks.
Strategic Report,
Climate-related financial
disclosures, pages 15 to 21;
Strategic Report, Risk
Management, principal
risks and uncertainties,
pages 25 to 27.
METRICS AND TARGETS
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.
a. Disclose the metrics used by the
organisation to assess climate-related risks
and opportunities in line with its strategy
and risk management process.
b. Disclose Scope 1, Scope 2 and, if
appropriate, Scope 3 GHG emissions and
the related risks.
c. Describe the targets used by the
organisation to manage climate-related
risks and opportunities and performance
against targets.
Governance
l As part of the risk assessment, key risks and opportunities were assigned
metrics to monitor risk exposure and effectiveness of mitigating actions.
l Jadestone reports its Scope 1 and 2 GHG emissions on an operational control
basis. Scope 3 emissions for select categories have been quantified for all
operating assets in 2022.
l Jadestone continues to work on its Net Zero roadmap, to deliver on the Net
Zero by 2040 pledge. This work will be completed by end of 2023, when interim
targets will be defined.
Annual Report
Strategic Report,
Climate-related financial
disclosures, pages 15 to 21;
Strategic Report, Net Zero
roadmap, page 13;
Sustainability Report
Energy transition, GHG
emissions pages 18 to 21.
Board oversight of climate-related risks and opportunities
Jadestone’s Board of Directors has a primary responsibility to foster the short, medium and long-term success of the Group and be
accountable to its shareholders. The Board and its committees have oversight of climate-related risks and opportunities, which are
relevant to the Group’s ability to deliver shareholder value. The responsibilities of the Committees as they pertain to climate are
summarised below with further detail included in the Corporate Governance report.
The Health, Safety, Environment and Climate (“HSEC”) Committee assists the Board in meeting its oversight responsibilities relating
to the operational impacts of ESG topics. Its role is to ensure that management has designed and implemented effective health, safety,
social, environmental, and climate risk programmes, as well as controls and reporting systems.
15
JADESTONE ENERGY 2022 ANNUAL REPORT
SUSTAINABILITY AT JADESTONE
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
The Governance and Nomination Committee oversees corporate governance practices, reviews membership and nominations to the
Board and ensures continued development programmes are in place for all Directors, including in relation to the ESG agenda.
Following a decision in late-2021 to complement the Board’s existing skillset, diversity, and regional experience of ESG practices, Jenifer
Thien was appointed as an independent Non-Executive Director in April 2022, joining the HSEC and Governance and Nomination
Committees. Jenifer brings significant experience in leading sustainability programmes in major corporations, including climate change
expertise.
The Audit Committee ensures proper and timely disclosure of material financial information and reviews all material matters affecting the
risks and financial position of the Group, which includes monitoring of the Group’s responses to climate risk and ESG disclosures generally.
In 2022, the Audit Committee reviewed the Group’s inaugural climate scenario analysis and ESG disclosures.
The Remuneration Committee determines executive remuneration including approval of executive incentive schemes, which incorporate
ESG performance objectives. In 2022, ESG performance objectives, which form part of the CEO’s performance contract, increased in
weighting from 20% to 25%, and included objectives pertaining to GHG emissions reviews as well as development of a Net Zero roadmap.
The Disclosure Committee oversees timely and accurate disclosures as required to meet the Group’s legal and regulatory obligations,
including sustainability and climate-related disclosures.
Jadestone’s ESG and climate governance structure: Board level
Management’s role in assessing and managing climate-related risks and opportunities.
The Board delegates day-to-day management of the business of the Group to the CEO. The CEO is responsible for the identification and
assessment of climate risks and opportunities, defining the strategy and approving action plans suitable to control and mitigate identified
risks. The CEO is supported by the CFO in discharging Jadestone’s climate responsibilities as they relate to financial materiality. The CEO
and CFO engage with the Board on all actions related to climate change and the energy transition.
The CEO leads senior management in delivering the Jadestone strategy and annual work plan and budget. Jadestone has allocated internal
resources to manage the wide array of climate change issues, including the ESG Manager, HSE Manager and regional HSE teams, Legal and
Regulatory team, Investor Relations Manager, Country Managers, Subsurface, Operations, Commercial and Supply Chain functions. These
responsibilities include such matters as GHG emissions reporting and management, mitigation and adaptation, impacts of climate-related
legislation, and GHG-related operational issues.
Jadestone’s Climate Change Working Group (“CCWG”) is the main forum for driving forward the Group’s response to climate change and
manage the interdisciplinary inputs from across the business. The CCWG is organised at an operational/country and Group/leadership
levels.
External subject matter experts are commissioned to provide specific expertise across the climate agenda. In 2022 this involved several
Net Zero workstreams being progressed with a reputable global environmental consultancy. Jadestone’s ESG and climate governance
structure at the management level is summarised below.
Board of Directors
Jadestone’s ESG and climate governance structure: management level
Retains overall accountability for the strategic direction and performance of the Group
and in doing so acts on behalf of its stakeholders
ESG remit: overseeing control and accountability systems designed to ensure appropriate standards are met in relation to health,
safety, environment, and climate-related impacts as well as social responsibility and governance of the Group.
p
q
Board Committees
Assists the Board to discharge its responsibilities across:
Governance and
Nomination Committee
Audit Committee
Remuneration
Committee
Disclosure
Committee
Health, Safety,
Environment and
Climate (“HSEC”)
Committee
How the Board considered climate-related matters in 2022
Climate-related risks and opportunities were discussed at each of the four Board meetings held in 2022. In addition, the Board receives
monthly updates on most significant ESG developments that include updates on climate-related workstreams as well as emerging climate risks
or topics. The Board, supported by the HSEC Committee, jointly facilitated the following actions:
Strategy
l During the March 2022 Board meeting, recommendations from an expert consultancy on strategic options for Jadestone’s Net Zero
approach, as well as results of peer benchmarking, were reported to the Board, and supported the Board’s decision to announce its
Net Zero by 2040 pledge in June 2022;
l Engagements with lending banks and investors on GHG emissions management in the context of business strategy were relayed to the
l
Board and informed the Net Zero strategy endorsed by the Board;
Following the announcement of the Net Zero pledge, progress of Net Zero roadmap development was reviewed by the Board each quarter,
with a more detailed oversight by the HSEC Committee.
Expenditure and investments
Executive Directors: CEO and CFO
Executive Directors hold the ultimate responsibility for the formation, delivery and execution of the Group’s strategy
Ultimate responsibility and accountability for the Group’s approach to climate change and management of ESG risks and opportunities lies
with the CEO.
The CEO is supported by the CFO, with particular regard to the growing financial materiality aspects of climate change and ESG agenda.
p
q
Management team
The management team is responsible for the delivery of strategy in accordance with the requirements of the Board
ESG topics are managed through internal resources, reporting directly to the CEO and providing updates to the Board on a regular basis.
These responsibilities also cover climate risk mitigation and adaptation, emissions management and other related operational issues.
Climate Change
Working Group
Country HSE
committees
Country
operational forum
Community
engagement forum
Legal and governance
forum
How the management considered climate-related matters in 2022
The leadership CCWG includes senior leaders from Jadestone’s management team, including the CEO and CFO, and representatives of Finance,
Risk & Strategy, HSE, Investor Relations, Subsurface, Legal and ESG functions. Its remit is to act as a focal point for managing climate-related
risks and opportunities as they relate to the Group. The country CCWGs are set up in respective operating countries (Australia, Malaysia,
Indonesia), bringing together expertise form across key functions such as Operations, Subsurface, HSE, ESG, Commercial and Legal. These
country-level CCWGs are tasked with identifying and managing significant climate issues as they relate to the country operations.
Net Zero roadmap
l
In the first quarter of 2022, the leadership CCWG met twice to review the results of an external analysis of Net Zero strategic options as
well as peer benchmarking, leading to a recommendation to the Board and resulting in the announcement of the Net Zero by 2040 pledge
in June 2022;
l Throughout the second half of 2022, the leadership CCWG convened three times to monitor the progress of the Net Zero workstreams,
l A business development opportunity, as a way of mitigating Jadestone’s future GHG emissions profile, was reviewed by the Board for
commissioned to develop the Net Zero roadmap.
strategic fit;
l Analysis of the GHG emissions performance of all prospective M&A opportunities were presented to the Board as part of the acquisition
due diligence process.
Risk Management
l Consideration of climate risk exposure as part of biannual Group risk register review;
l Sustainability disclosures and climate scenario analysis were approved by the Audit Committee.
Performance
l Monthly ESG-related updates regarding key projects and developments;
l Group GHG performance dashboard reviewed quarterly in the HSEC Committee and Board meetings;
l Review of ESG performance, including climate mitigations and the progress made in the development of the Net Zero roadmap on a
quarterly basis.
Corporate Governance
l Approval and review of several key governance-related policies in 2022, including the new Climate Policy.
l Concurrently, the country CCWG sessions were held throughout the year at least every other month with respective country teams,
focused on GHG emission performance across operated assets, GHG accounting methodologies and review of mitigation options. A
number of these sessions were facilitated by a third party, with final results reported back to the leadership CCWG.
Climate risk
Climate risk analysis informed by the TCFD recommendations was undertaken in the second half of 2022, with a deep-dive analysis of climate
risks emerging in operating countries, including a review of mitigation options for their effectiveness. These sessions were conducted through
the country CCWGs and culminated in the Group-level climate risk session in November 2022, with conclusions incorporated into the Group
risk register.
Governance
Oversight of the development of a new Climate Policy, approved by the leadership CCWG.
Performance
Improved asset-level GHG emissions reporting provided to the management team on a monthly basis as of 2022.
16
17
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Strategy
Climate-related risks and opportunities identified over the short, medium and long-term
For the purposes of the Group’s climate-related disclosures, granular transition risks identified in a bottom-up process (see page 21) have
been grouped into two main themes: reputational and policy risks. These risk themes represent developments that have the potential
to significantly impact Jadestone’s ability to execute its strategy. This does not necessarily mean that these risks have materialised in
practice, but instead, reflects the key risks that could affect Jadestone’s business and are therefore subject to management’s attention,
with ongoing mitigations being implemented to minimise potential exposure to levels that are acceptable by the Board and the
management. Similarly, Jadestone sees opportunities being brought about by the energy transition dynamics in the region of focus.
Jadestone’s assessment of the potential impacts of climate-related risks and opportunities is outlined in the following tables.
In monitoring the delivery of its strategy, the Board and the management team consider climate-related risks and opportunities across
three time horizons:
l Short-term ("ST"):
up to 2024
l Medium term ("MT"): 2025 - 2032
l Long-term ("LT"):
beyond 2033
«
Risk has increased during the year
«»
No change in the risk over the year
Transition risk
Potential impact
Mitigations
Risk metric
Stakeholder and reputation risks
Access to finance
Change in year
«
Time frame: ST-MT
l Restricted availability of debt financing and/
or equity impacting the ability to execute the
strategy; might lead to higher interest rates
and/or higher cost of equity.
Debt availability,
Cost of capital
l Transparent, robust climate disclosures
that communicate Jadestone’s strategic
positioning;
l Net Zero roadmap with interim targets,
including progress updates;
l Proactive engagement with financial
institutions; and
l Prudent financial management (limited
leverage).
Shareholder action
Change in year
«»
Time frame: ST-MT
l If Group climate strategy is not in step with
shareholder expectations, this might lead
to activism and/or divestment, potentially
resulting in downward pressure on the share
price.
l Transparent, robust climate disclosures
that communicate Jadestone’s strategic
positioning;
l Net Zero roadmap with interim targets,
including progress updates; and
Shareholder
monitoring,
Share price
performance
l Proactive engagement with the investment
community.
In 2022, the Group has made the following progress with regard to implementing risk mitigations:
3 Achieved
1 Ongoing
Climate risk mitigations
Progress in 2022
l Transparent, robust climate disclosures that
communicate Jadestone’s strategic positioning
3 l Jadestone reviewed its strategic positioning in the energy transition context,
as described in section Energy transition, page 12.
l Net Zero roadmap with interim targets,
including progress updates
1 l Net Zero roadmap continues to be developed and will be completed by the
end of 2023. For status as of 2022, see page 13.
l Proactive engagement with the financial
institutions
l Proactive engagement with the shareholders
3
l Jadestone has been maintaining close relationships with several international
lending banks, which culminated in the arrangement and closing of an RBL
in May 2023. During this process, there was frequent engagement with the
lending banks on the Group’s ESG performance and profile
3 l Frequent direct and indirect dialogue is maintained via the Investor Relations
manager or at the CEO and CFO level, where energy transition is a standing
topic.
l Prudent financial management (limited
leverage)
3 l Jadestone funded its 2022 operating and capital expenditure without any debt
requirement and ended 2022 with a higher cash balance than the end-2021.
l Monitor policy changes in core jurisdictions/
regions
3 l Regulatory developments are monitored by country teams and new changes
were reviewed in the regional CCWG risk workshops, highlighting new reforms
in Australia, as discussed on page 22.
l Deliver GHG emission reductions projects to
reduce exposure
1 l Potential GHG emission reduction options have been identified in 2022
and are subject to detailed techno-economic feasibility studies in 2023
(see page 13).
l Annual climate scenario analysis that includes
carbon impacts
3 l Climate scenario was refreshed in 2022 to include more robust GHG forecasts,
updated IEA scenarios and most recent understanding of carbon taxes.
See pages 20 to 21.
l Focus on Southeast Asia market
3 l Clear focus of the business strategy as evidenced by current portfolio
and recent acquisitions.
Policy and regulatory risks
Carbon pricing and more
stringent GHG reduction
standards enacted by
governments.
Change in year
«
Time frame: ST-MT
l Increased operating cost and/or capex for
l Monitor policy changes in core jurisdictions/
GHG reduction options;
l Further incentive to reduce emissions; and
l Curtailed field life if standards can’t be met.
regions (please see page 22, regarding recent
regulatory developments in Australia);
l Deliver emission reduction projects to reduce
exposure; and
l Annual climate scenario analysis that includes
carbon pricing impacts.
Overarching energy transition risk
Decrease in hydrocarbon
price due to the impacts
of energy transition on
supply and demand
Change in year
«»
Time frame: MT-LT
l Undermines investment case and strategy;
l Negative impact on share price; and
l Potential to accelerate repayments on any
outstanding debt.
l Focus on Southeast Asia market, where energy
demand is projected to increase according to
most forecasts; and
l Annual climate scenario exercise where
impacts of lower oil price outlook are
modelled.
Transition opportunity
Potential impact
Management actions
Carbon cost per
barrel,
Capex to
decarbonise,
Marginal cost
abatement,
Scope 1 GHGs
(actual vs.
forecast)
Operating cash
flow impacts,
Portfolio
diversification,
including
increased pivot
to gas (with fixed
price)
Opportunity
metric
M&A opportunity
pipeline
l Clearly defined business strategy that is
centred around mid-life assets, and which
prioritises GHG mitigations;
l Focus on improving emissions performance of
fields compared to previous operators; and
l Net Zero roadmap with interim targets.
Opportunity to serve
major Asian growth
markets from existing
mid-life assets as majors
and/or peers divest assets
Change in year
«
Time frame: ST-MT
l Increasing M&A opportunity set of mid-life
assets allows Jadestone to position itself as
a preferred buyer, committed to upholding
climate targets; and
l Asian markets receive crude oil and natural
gas from existing fields in line with IEA’s Net
Zero by 2050 roadmap, whilst minimising
GHGs.
New business growth
opportunities presented
by the energy transition
l Opportunity to diversify and expand into
technologies that stand to play a role in the
energy transition.
Change in year
«»
Time frame: MT-LT
18
l Monitoring of low-carbon technologies and
business ventures in the core region; and
l Engagement with industry associations,
regulators and business partners on energy
transition.
Number of
opportunities
presented to the
Board
19
JADESTONE ENERGY 2022 ANNUAL REPORT
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Physical risks
Whilst maintaining focus on managing business exposure to
transition risks, Jadestone recognises that adaptation to physical
risks is an increasingly challenging task facing the whole of society.
As average temperatures rise, climate science finds that acute
hazards such as heat waves and floods grow in frequency and
severity, and chronic hazards, such as drought and rising sea levels,
intensify.
Following a high-level portfolio screening of potential physical
climate risks that may affect Jadestone’s assets, key physical
hazards have been identified for infrastructure type. As climate
hazards manifest locally, potential risk relevance was further
established based on local climate data in different temperature
scenario outcomes, as per the Intergovernmental Panel on Climate
Change (“IPCC”). The screening provided initial insights into the
exposure of Jadestone assets to a set of hazards such as cyclones,
extreme heat and flooding.
Moving forward, physical risk analysis will be integrated into the
overall climate risk process, where transition risks are considered
by regional teams in tandem with the physical risks.
Impact of climate-related risks and opportunities on the
organisation’s businesses, strategy, and financial planning,
(including the resilience of the organisation’s strategy, taking
into consideration different climate-related scenarios,
including a 2°C or lower scenario)
Climate scenario approach
Whilst some impacts of climate change are apparent in the short-
term, the most significant effects of climate change are likely to
emerge over the medium to longer-term and their timing and
magnitude are uncertain. Consequently, Jadestone has undertaken
a climate scenario analysis to help explore the resilience of its
business to a range of external policy, economic, market and
technological conditions that may lead to different temperature
outcomes, depending on the pace of the energy transition.
Jadestone has focused its analysis on possible changes to oil prices
as a result of the energy transition’s impact on oil demand as
well as the potential impact of tighter carbon-related regulations
through additional carbon costs.
Similar to the analysis included in the 2021 Annual Report,
scenarios described by the IEA in its 2022 World Energy Outlook,
representing the “gold standard” among investors, policymakers
and other key stakeholders, formed the basis for Jadestone’s
approach:
l Stated Policies Scenario ("STEPS"), which assumes latest
policies and targets already announced by governments are
enacted, but that there is no further policy development on
climate change beyond them, which results in an average
temperature rise of 2.5°C above pre-industrial levels by 2100;
l Announced Pledges Scenario ("APS"), which assumes that all
aspirational targets announced by governments are met on
time and in full, including their long-term Net Zero and energy
access goals, and estimates an average temperature rise of
1.7°C by 2100; and
l Net Zero Emissions Scenario ("NZE"), which maps out a
trajectory consistent with limiting the temperature increase to
less than 1.5 °C in 2100, alongside universal access to modern
energy by 2030.
The oil prices modelled for each of the three climate scenarios are
based on the IEA 2022 WEO, which forecasts the price of oil (in
real terms) in 2030 and 2050. Between 2023 and 2025, Jadestone
models an oil price assumption based on external forecasts,
including futures and consensus oil prices, as well as third-party
consultants. A linear interpolation is then applied to establish oil
price forecasts between 2025-2030 and 2030-2050.
2 0
Estimating carbon costs in each of the three scenarios followed a
similar approach. The CO2 prices for the three climate scenarios
in 2030, 2040 and 2050 from the IEA WEO 2022 were applied,
augmenting the forecasts where country-specific climate policy
developments were more mature. In particular, Jadestone’s
analysis now assumes that carbon costs apply to its Australian
assets in scope, on the basis that the Safeguard Mechanism
Reform Bill (the "Safeguard Mechanism") has been passed into
law effective 1 July 2023. The modelling results will be fine-tuned
over the course of 2023 to reflect the recent Safeguard Mechanism
reforms. It should be noted that there are a significant number of
assumptions and uncertainties around carbon costs and how these
may develop over time within the various jurisdictions in which
Jadestone is active. The scenarios are by no means a prediction of
the future and the results of the climate scenario analysis should
not be interpreted as such.
The STEPS scenario is underpinned by policies and targets already
announced by governments, and therefore in Jadestone’s view
represents the current base case outlook for the impact on energy
demand. Consequently, it is utilised as Jadestone’s base case for
the purposes of modelling the impact of the APS and NZE scenarios
on the Group’s portfolio, which forecast faster declines (vs. STEPS)
in demand for oil as part of the energy transition.
Discussion of results
Jadestone defines financial resilience as the ability to fund planned
activity across its existing portfolio in periods of lower oil prices
without compromising the Group’s financial strength. In practice,
this means generating sufficient cash flows from its assets to fund,
along with existing cash resources and external sources of finance,
planned operating costs, capital investment and abandonment
spend while delivering acceptable returns.
Jadestone adopts a flexible financial framework, assessing planned
activity over a multi-year period and the associated funding
requirement. As a result, and in the context of the climate scenario
analysis, Jadestone believes that operating cash flow ("OCF") is the
most appropriate metric on which to judge resilience, as this will
directly impact its ability to fund planned activity.
The impact on operating cash flow of the climate scenarios against
the base case of the STEPS scenario is displayed in the table below,
split out over the short-term, medium-term and long-term time
periods (as defined on page 18).
Climate scenario results - operating cash flow impacts versus
base case STEPS scenario
ST (<3 years) MT (3-10 years)
LT (>10 years)
Announced Pledges Scenario
Net Zero Emmisions
< = 10%
10 - 25%
> = 25%
Low impact
Moderate impact
High impact
The scenario analysis suggests that Jadestone would see a negative
impact on operating cash flow in most scenarios, although the
impact is only significant in the NZE and APS climate scenario over
the long-term time horizon (i.e. more than 10 years from now).
Furthermore, it should also be noted that the majority of the
operating cash flows assessed in this analysis were in the short-
term and medium-term time horizons, as illustrated in the
following chart, mitigating the overall impact of the NZE scenario
on Jadestone’s business.
OCF distribution - APS Scenario
OCF distribution - NZE Scenario
9%
91%
5%
95%
91%
Short-term and medium-term
Long-term
The carbon tax assumptions in the scenario analysis were applied
to an unmitigated GHG emissions profile of the Group’s current
asset portfolio, and therefore do not take into account any
initiatives which may be taken to reduce or offset these emissions
over the time horizons analysed. This was a deliberate step to set a
baseline as the Group intends to run the climate scenario analysis
with a mitigated case once any initiatives are matured and finalised
over the course of 2023 and beyond. Furthermore, lower oil price
scenarios may result in a deflationary environment for Jadestone’s
purchased goods and services, which is not reflected in the
scenario analysis, and which may also offset the impact of reduced
cash flows.
Over the time periods assessed in the scenario analysis, natural
gas, both through domestic production and imports, is likely to play
an increasingly important role as a transition fuel in several Asia-
Pacific energy markets. This trend underpins Jadestone’s strategic
aim to increase the share of gas in its portfolio by acquiring and/or
developing regional gas assets. In early 2023, Jadestone started to
deliver on this objective by acquiring an interest in the Sinphuhorm
field onshore Thailand in early 2023, where operations have a
Scope 1 and 2 GHG intensity estimated at 7.5kg/boe of CO2-e,
significantly lower than the global upstream average. In addition,
the Group is developing the Akatara gas field onshore Indonesia
with first production expected in the first half of 2024. Jadestone’s
growing gas portfolio will also increase portfolio diversification and
will reduce the sensitivity of the Group’s financial performance to
oil prices. Finally, the Group is taking proactive steps to manage
its exposure to climate-related risks, as outlined in its Net Zero
approach on page 13. Jadestone is a nimble business that is able
to adapt its strategic approach in response to external changes in
the business environment, which is carefully monitored though the
Group’s risk management process. To provide context and linkage
between Jadestone’s climate scenario analysis and its financial
statements, the value of the Group’s oil and gas properties was
tested on the NZE scenario oil and carbon pricing, set out above.
The resulting sensitivity was above the carrying value of the
Group’s oil and gas properties at year-end 2022, and therefore
would not result in an impairment. Please refer to Note 3c in the
Group’s consolidated financial statements for more information.
Risk management
Process of identifying, assessing and managing climate
related risks
The Group manages its principal risks in line with its Risk
Management Policy, maintaining a Group risk register, along with
a systematic process for the identification, assessment and
management of material risks, including definition of accountability,
with owners of mitigating actions assigned. The Risk Management
Policy is owned by the CEO, who delegates responsibility to the
CFO, country nanagers, and functional heads including the Group
Operations Manager.
The Board regularly reviews the principal risks and defines the key
performance indicators based on acceptable risk levels. The Board
undertakes a full review of the risk matrix at least twice per year.
Climate-related risks and opportunities are managed within the
Group risk register framework, supported by detailed regional
transition climate risk and opportunity workshops, as part of
the country CCWGs. This bottom-up approach ensures that
geographical nuances to the energy transition context, including
regulatory developments, are well understood and appreciated
before informing a corporate view of risk exposure. A standardised
approach is applied year-on-year, with the review facilitated by an
expert climate risk consultant. Regional analysis is followed by a
leadership CCWG workshop, where the results of country groups
are prioritised from Group-level perspective. Risks that may impact
the business in the short to medium-term are prioritised over
those that may manifest themselves over longer timeframes, also
taking into account business relevance and life of the assets.
“Climate change – transition risks” is one of the principal risks
identified within Jadestone’s strategic risk profile, which is
reflective of the transition risks listed on page 18. Identified
mitigation actions are assigned ownership across key functions and
progress and effectiveness is tested during the risk register review.
Metrics and targets
Metrics used by the Group to help monitor progress on the climate
risk mitigations are summarised on page 18. Quantifiable metrics
have been elected where feasible, with qualitative actions of
equal importance, particularly in relation to the Net Zero roadmap
delivery. Jadestone is completing the underlying workstreams
to deliver a Net Zero roadmap by the end of 2023, as outlined on
page 13.
Scope 1 and 2 GHG emissions are disclosed on page 14 of this
report. A detailed GHG performance overview of Scope 1, 2 and 3
GHG emissions is included in the 2022 Sustainability Report.
Refer to 2022 Sustainability Report
Responsible operator
Responsible operatorship is at the cornerstone of Jadestone’s
ability to deliver on its strategy of acquiring mid-life assets and
goes beyond the “licence to operate” considerations. This section
provides an update on how the Group performed in 2022 across
health, safety and environment impacts, including regulatory
management and asset integrity.
The Group’s priority remains the health and safety of its staff,
contractors and communities in which it operates, along with
ensuring that any negative environmental impacts from operations
are minimised. Levels of activity increased significantly in 2022,
working over 1.7 million man hours1 (2021: 0.39 million work
hours), and with the total recordable injury rate (“TRIR”) at 2.86, a
significant improvement on the previous year. Overall, the Group
has had no major events resulting in significant environmental
impact. Regrettably, one lost time injury was suffered by a
contractor in 2022, who has since made a full recovery. A detailed
investigation was completed, with corrective actions including
engineering controls implemented to prevent reoccurrence.
Occupational health and safety performance, 2019–2022
R
I
R
T
14
12
10
8
6
4
2
0
12.32
0
2019
0
2020
3.0
2.0
1.0
0
7.8
0
2021
2.86
2022
Total recordable injury rate ("TRIR")
Lost time injury
s
e
i
r
u
n
j
i
e
m
i
t
t
s
o
L
1 Man hours represent Jadestone permanent employees, contractors and consultants as well as subcontractors
21
JADESTONE ENERGY 2022 ANNUAL REPORT
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Key performance indicators
Each year, Jadestone’s Board agrees a performance contract with the CEO, which contains key objectives aligned to the Group’s strategic
aims, and key performance indicators (“KPIs”) which measure the degree of success in achieving these objectives.
These key objectives and KPIs are cascaded down through the business, ensuring there is a clear understanding, accountability and
alignment among all employees, how they are measured, how each business area contributes and how the outcome will impact annual
compensation.
The outcome of the CEO’s 2022 performance contract, and the detail of the CEO’s 2023 performance contract, are summarised in the
Remuneration Committee report on pages 54 to 61.
The following table provides an overview of the outcomes of the 2022 performance measures.
Performance measure
Commentary
Achieve 2022 operation
targets
l Group production in 2022 was below original target due to the shut-ins of production at Montara and
PM318 and AAKBNLP PSCs in Malaysia.
l Adjusted operating cost per boe exceeded target due to the shut-ins described above.
l Capital expenditure and outcomes were delivered in line with target.
Deliver continuous
improvement in ESG
performance
Deliver per share
accretive growth
Create sustainable
shareholder value
l Safety targets were met, with both the total recordable injury ratio and recordable incidents below plan.
l Completed review of Scope 1 and 2 GHG emissions reduction opportunities.
l Net Zero by 2040 pledge announced.
l The number of enforcement notices exceeded the target due to the two received in respect of the
Montara leak of oil to sea in June 2022.
l The targets for reserve additions and production growth through acquisitions were partially met.
l The value creation target was met based on the terms of the CWLH acquisition announced in July 2022.
l The objective of delivering a significant increase in the share price while outperforming the peer group
was not met.
l Post-tax operating cashflow in 2022 was below target but within the range of outcomes.
At the Akatara gas development within the Lemang PSC, Indonesia,
work commenced to prepare the site for construction of the gas
processing plant, following final investment decision on the project
in June 2022. Jadestone is working closely with the EPCI contractor
to ensure that robust HSE management practices are implemented
and monitored. In 2022, 0.6 million manhours were worked at the
Akatara development site without a recordable injury, including
high-risk activities such as pile driving, earth moving and general
construction activities. Senior management, from both Jadestone
and the EPCI contractor, visited the site on a monthly basis, with a
key focus on HSE performance during those visits.
As an upstream operator in the APAC region, Jadestone is subject
to numerous sustainability-related regulations and an often rapidly
changing regulatory environment. Compliance is facilitated by legal
advice in the respective countries of operations as well as through
such functions as HSE, which ensure compliance with operational
requirements. Direct and proactive engagement with regulators is
key to Jadestone’s licence to operate.
In 2022, Jadestone received two regulatory enforcement notices,
a General Direction and Environmental Prohibition Notice, both
related to an oil leak at the Montara Project, offshore Australia.
In June 2022, three to five cubic metres of crude oil was released to
sea during a routine oil transfer between cargo tanks onboard the
Montara Venture FPSO. The leak was successfully stopped within
10 minutes and the Australian Regulator, NOPSEMA, was notified.
The released oil had fully dispersed naturally within 24 hours.
NOPSEMA issued a Prohibition Notice requiring Jadestone to assess
the fitness for service of any tank capable of holding petroleum and
undertake any appropriate remediation works prior to loading into
that tank.
Production operations resumed in July but were then shut in
again in August 2022 after an additional defect was identified
in a ballast water tank on the FPSO. NOPSEMA issued a General
Direction in September, requiring an independent third party
undertake a management system gap analysis, and provide
advice on the remediation plans developed by Jadestone, and
confirm operational readiness of the facility. The General Direction
was lifted on 8 February 2023, followed by a systematic restart
programme that commenced on 23 March.
In 2022, the Australian government launched a consultation over
the Safeguard Mechanism in order to align it with Australia’s
climate targets. The existing mechanism provided a framework
for Australia’s largest emitters (facilities with more than 100,000
tonnes of CO2-e per annum) to measure, report and manage their
emissions below an emissions limit (baseline). The proposed
changes are to commence on 1 July 2023 and will introduce a
required reduction in emissions of 4.9% per annum. Jadestone’s
Montara Project falls under the Safeguard Mechanism and will be
subject to the new reforms. The Group is evaluating the impacts of
the scheme on its operations, Net Zero roadmap and acquisition
strategy. Please refer to pages 20 to 21 for more details on how
potential carbon costs may impact Jadestone’s business as
explored in the climate scenario analysis.
Similarly in Australia, the Tipakalippa1 court decision has had
wide-ranging implications on how energy and mining companies
approach negotiations with indigenous groups. Jadestone has been
working with the industry regulator to ensure that its consultation
practices are fit for purpose and has revisited its Environmental
Approvals Stakeholder Engagement Strategy to reflect the court
decision.
Benefitting stakeholders
Jadestone understands that its business relies on positive
contributions from employees, business partners, communities
and, more broadly, society and the environment at large in order
to operate effectively and create value. It strives to deliver positive
socio-economic outcomes for local communities in operating
countries and to provide productive employment, and high
standards of worker health, safety and well-being.
Workforce management and diversity continues to be a material
ESG topic for Jadestone. During 2022, the Group continued to
grow its asset base, which is reflected in a 10% increase in total
workforce numbers2 year on year, largely driven by the expansion
of activities in Indonesia. In 2022, 94% of Jadestone permanent
employees represented local talent, exceeding the target of
90%, reflective of the deliberate effort to bring employment
opportunities to the communities where Jadestone operates.
In terms of gender balance, 18% of Jadestone’s employees are
female, a slight increase from 2021. At the Board level, an increase
of female representation to 22% (from 13%) was achieved with
the addition of Jenifer Thien to the Board in April 2022. Overall,
gender statistics are reflective of the common challenge of gender
diversity for most oil and gas operators. During 2022, Jadestone
had no reported incidents of discrimination.
In 2022, the Group has increased its budget for community
activities by 30%, developing a needs-driven initiative in each
country of operations.
Refer to 2022 Sustainability Report for a more detailed discussion
of Jadestone’s performance across the key areas of ESG
1
2
Relates to the Australian Federal Court decision in Tipakalippa v National Offshore Petroleum Safety and Environmental Management Authority, 21 September 2022.
Includes permanent employees, contractors and consultants.
Anzac Day dawn service on the Montara Venture FPSO
2 2
2022 Stag infill drilling campaign
2 3
JADESTONE ENERGY 2022 ANNUAL REPORT Section 172 statement
Under the Companies Act 2006, Jadestone is required to include,
within the Strategic Report, a statement reporting how the
Directors have had regard to the matters set out in section 172 (1)
(a) to (f) when performing their duties.
engagement, can be found within the Sustainability Review on
pages 11 to 22 and the HSEC Committee Report on pages 64 to 65.
The following summarises key activities and decisions made by
Jadestone’s Directors in 2022 in support of their s172 duties:
Section 172 of the Companies Act 2006 (“section 172”, or “s172”)
A director of a company must act in the way he or she considers,
in good faith, would be most likely to promote the success of the
company for the benefit of its members as a whole, and in doing so
have regard (amongst other matters) to:
a. the likely consequences of any decision in the long term;
b. the interests of the company’s employees;
c. the need to foster the company’s business relationships with
suppliers, customers and others;
d. the impact of the company’s operations on the community and
the environment;
e. the desirability of the company maintaining a reputation for
high standards of business conduct; and
f. the need to act fairly as between members of the company.
Jadestone’s Board of Directors has a primary responsibility to
foster the short and long-term success of the Group and be
accountable to its shareholders. These responsibilities are set out
in detail in the Board of Directors Charter (the “Charter”) which
can be viewed on Jadestone’s website. The Charter explicitly
recognises and incorporates the section 172 duties required of
Jadestone’s Directors. The Charter includes, inter alia, the following
responsibilities:
l adopting and periodically reviewing the Group’s long-term
objectives and a commercial strategic planning process for
the Group (s172 (a))
l considering the balance of interests between shareholders,
employees, other stakeholders and the community (s172 (a)
– (f))
l ensuring that workforce policies and practices are consistent
with the Group’s values and support the long-term sustainable
success of the Group (s172 (a) and (b))
l approving and acting as the guardian of the Group’s corporate
values, including the implementation of a Code of Conduct
policy for the Group (s172 (c) and (e))
l overseeing control and accountability systems designed to
ensure appropriate standards are met in relation to health,
safety, environmental (including climate), social responsibility
and governance of the Group s172 (s172 (d))
receiving reports on views of shareholders and ensuring
effective communication with shareholders and key
stakeholders (s172 (c) and (f))
l
In support of exercising their section 172 duties, the Directors
receive:
l monthly updates which include a summary of health and
safety, environmental and operational performance, as well as
financial, legal, regulatory and shareholder developments;
l a detailed monthly financial report;
l detailed briefings in advance of regular Board meetings and
also prior to key decisions (for example business development
opportunities);
l an annual briefing from the Company’s Nominated Adviser on
the AIM Rules for Companies 2021; and
l where appropriate, external legal advice.
The Group has adopted the Quoted Companies Alliance Corporate
Governance Code 2018, with the annual compliance statement to
the QCA Code principles contained on pages 41 to 45 of this report.
Detailed information on how Jadestone’s Board assesses, monitors
and mitigates the environmental footprint of its business, as well
the Group’s approach to responsible operatorship and community
2 4
Montara shut-in and Technical Committee formation
Following the shut-in of the Montara fields in August 2022 and
recognising the importance of the asset to operational and
financial performance, but also an obligation to all stakeholders to
ensure the safety and integrity of Montara operations, Jadestone’s
Board established a special Technical Committee. This action was
taken in order to provide additional support, advice and challenge
to management during the Montara Venture FPSO hull and tank
remediation work.
The decision of the Board to establish the Technical Committee was
directly linked to the importance of the Montara asset to Jadestone,
in particular the contribution of the asset to the Group’s financial
performance, in turn underpinning the ability of the Group to
deliver additional organic and inorganic growth. In establishing
the Technical Committee and during its business, the members
touched on topics related to employees (for example ensuring
safety was the key consideration during an intensive period of oil
tank inspection and repair) and maintaining relationships with
the regulatory authorities in Australia. There was also a focus on
ensuring no further loss of containment at Montara (demonstrating
regard for the Group’s impact on the environment), as well the
reputational consequences of the multi-month shut in at the field
(demonstrating regard for high standards of business conduct).
Net Zero pledge
Jadestone’s Directors recognise the need for action to arrest the
impact of rising temperatures caused by human activities and
support the view that, as a result, the world’s energy mix must
diversify towards a low-carbon future. The Directors continue to
assess the Group’s business model in this context, and believe that
the Group’s strategy is well-positioned to succeed, as it focuses
on fulfilling future hydrocarbon demand from existing fields and
discoveries, rather than greenfield exploration. The Group intends
to deliver this strategy while ensuring that environmental impacts
are minimised. Consequently, the Directors endorsed a pledge of
Net Zero Scope 1 and 2 emissions from the Group’s operated assets
by 2040.
In endorsing the Group’s energy transition strategy and Net Zero
pledge, the Board is promoting the longer-term success of the
Company through anticipating a longer-term decline in fossil fuel
demand and ensuring that the Group’s strategy can succeed in
such a scenario. The Net Zero pledge also implicitly recognises the
impact of the Group’s operations on the environment through the
release of greenhouse gas emissions, but also the need for further
investment in hydrocarbon production to ensure a just transition
and energy security and economic benefits for the communities
and countries in which it operates.
Third-party Board effectiveness evaluation
To ensure that Jadestone’s Board can exercise its responsibilities
and carry out its duties effectively (including those required by
section 172), the Chair commissioned an external review of the
Board and its Committees during 2022.
The decision to undertake a third-party evaluation, and the
recommendations resulting from it, will ensure the Group’s
governance structure continues to improve, supporting the
delivery of strategy and the longer-term success of the Group.
Acting on the recommendations of the third-party review should
result in greater direct dialogue between the Board, employees,
shareholders and all stakeholders, in turn providing direct
feedback and allowing these views to be reflected in future
decision making.
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Risk management, principal risks
and uncertainties
The Board is responsible for the Group’s risk appetite and monitoring the principal risks to which it is exposed. The Board delegates
responsibility for managing the risks to the senior management team which assesses the principal and emerging risks and the associated
response to accept, transfer or mitigate the risk. The Board conducts bi-annual, or more frequent reviews in response to changing market
conditions, in order to ensure the risks are acceptable when balanced against the business objectives.
The senior management team maintains a risk assessment framework which provides a structure for all areas of the business to assess
their risks. The identified principal risks are assessed and recorded in the corporate risk matrix which details the risk and its impact on the
business in the short, medium and long-term.
The principal risks currently recognised, and their mitigating actions, are detailed below. It should be noted that there may be additional
risks unknown to the Group and/or other risks that have currently been assessed as less material, but which may develop into material
risks in the future.
«
Risk has increased during the year
«
Risk has decreased over the year
«»
No change in the risk over the year
Risk
Risk description
Select mitigations
Business
development
opportunities
Risk Owner:
EVP Business
Development
Change in year
«»
The Group seeks to acquire producing (or near
production) assets that complement its current portfolio.
If there are limited business development opportunities
that fit the Group’s strict acquisition criteria, this may
restrict the ability to grow the business.
A persistent lack of business development success may
result in negative investor confidence, in turn impacting
funding availability.
Poor due diligence or unfavourable transaction terms
may add low quality assets or unexpected liabilities
to the Group.
Availability
of capital to
fund business
activities and
investment in
organic and
inorganic growth
The Group’s business model requires access to capital
(debt and/or equity) to fund the Group’s business
activities, including investment in development assets
and acquisition related investments.
A change in sentiment towards funding of upstream oil
& gas production and development could impact the
Group’s ability to access capital, the cost of this capital
and any other terms under which capital is obtained.
Risk Owner:
CFO
Change in year
«
Climate change
transition risks
Climate change is requiring the energy system to undergo
a transition towards lower carbon energy sources.
Risk Owner:
ESG &
Sustainability
Manager
Change in year
«
Jadestone’s most relevant transition risks in the short
to medium term include reputational and stakeholder
pressures as well as policy changes through carbon
pricing mechanisms or GHG emissions standards.
The potential impacts of these risks, if unmitigated,
may affect Jadestone’s ability to fund its growth or lead
to higher operating costs, with impacts further detailed
on pages 18 to 19.
In 2022, the world has witnessed geopolitical instability
that has led to increased hydrocarbon pricing levels,
whilst bringing the issue of energy security to the
forefront. Overall, however, stakeholder pressure
with regard to climate action has continued within
the industry.
The risk remains unchanged compared to prior year as the controls in place
ensure only appropriate opportunities are pursued. The Group is committed
to grow via acquisitions, so the risk remains a principal risk for the group.
The Group reviews a significant number of business development
opportunities within its core region on an annual basis. In addition to the
auction processes that are available to the market, the Group actively
pursues bi-lateral transactions to expand the M&A opportunity set.
If an opportunity complements the portfolio and supports the achievement
of business objectives, it will be progressed to a formal due diligence review.
The Group’s senior management team has extensive knowledge and
experience in the region with the necessary skills and experience to evaluate
potential business opportunities that align with the Group’s strategic focus.
Additional third-party expertise is sought for select key disciplines,
if required.
Acquisition opportunities are only progressed if they create shareholder
value by generating returns in excess of the Group’s hurdle rate.
The Group targets a capital structure with a conservative level of leverage.
The Group intends to use debt funding in support of strategic acquisitions
and organic development opportunities. In general, the availability of debt
is dependent on investors and lenders’ changing sentiment towards oil and
gas companies, especially in light of sustainability trends. The Group has
pledged to achieve its Net Zero Scope 1 and 2 greenhouse gas emissions
from its operated assets by 2040, and is progressing the work around
defining the pathway to this target. Its strategic position as a responsible
operator of mid-life field assets is informed by the IEA’s guidance
around optimising producing assets rather than investing in greenfield
developments.
The Board and management deploy a disciplined approach to the allocation
of capital across the portfolio.
Strong long-term relationships are sought and maintained with both major
international financial institutions lending to upstream oil & gas companies
and leading institutions investing in the equity of the same companies.
With a strategy of acquiring and maximising the life of fields already in
production, as well as developing discovered gas resources, Jadestone is
well positioned to play an important role in energy transition as majors and/
or peers divest their mid-life assets. Jadestone’s strategic positioning as a
responsible operator of existing assets is informed by the IEA’s Net Zero by
2050 Roadmap.
Jadestone monitors the developments impacting its exposure to transition
risks in a structured approach and manages the key transition risks through
targeted mitigations including:
l Transparent, robust GHG emissions and climate-related disclosures that
communicate Jadestone’s strategic positioning;
l Net Zero roadmap with interim targets, underpinned by a
decarbonisation plan; and
l Proactive engagement with financial stakeholders and investment
community.
Energy transition-related policy developments are monitored in core regions
and potential implications on the business are evaluated and reflected
in the Group’s financial modelling. In Jadestone’s operating region more
specifically, new policy changes are being enacted in Australia (through
reforms to the Safeguard Mechanism, see page 22) and initial evaluation
of the pending reforms have been incorporated into the 2022 Group climate
scenario analysis.
Please refer to pages 18 to 19 for more details on how Jadestone identifies,
monitors and manages climate-related risks.
2 5
JADESTONE ENERGY 2022 ANNUAL REPORT RISK MANAGEMENT, PRINCIPAL RISKS AND UNCERTAINTIES
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Risk
Risk description
Select mitigations
Risk
Risk description
Select mitigations
The Group’s earnings are dependent on commodity
prices, which are influenced by supply and demand trends
and geopolitical events. A prolonged decline in oil prices
would have a negative impact on revenues, margins,
profitability and cashflows of the Group.
The commodity price risk remains the same as the prior year as short
term commodity prices have decreased but the risk remains high due to
the uncertain economic outlook with elevated inflation, risk of recession,
uncertainty around OPEC activity and the impact from the Russian/Ukraine
conflict.
Oil price risk
Risk Owner:
CFO
Change in year
«»
A sustained period of low oil prices would adversely
impact the Group’s liquidity, investment and expansion
plans. In addition, it could also adversely impact
commercial reserves and asset values.
Decommissioning
regulatory risk
Risk Owner:
Regional
Operations
Manager
Change in year
NEW
The asset retirement obligations, including future
estimated decommissioning costs and timing of
decommissioning activities, are based on judgements,
estimates and assumptions that may differ from the
actual expenditure when it is incurred.
The asset retirement obligation estimate is based upon
current legislation, industry best practice, timing and
prevailing decommissioning technologies. There is a
risk that any element of the judgement may prove to
be incorrect, potentially negatively impacting business
performance.
The risk has increased this year as there is an increasing
regulatory focus to ensure operators have sufficient
financial capability to fund all their decommissioning
commitments as and when they fall due. Any future
changes in legislation could require capital to be paid
earlier for decommissioning activities, restricting
cashflows and the availability of funds for business
activities and investments.
Health, safety,
and environment
(“HSE”) risks
The nature of our operations and location of key
producing assets offshore Malaysia and Australia
means HSE is a key priority for the Board and senior
management team.
An unsafe working environment and the failure to
observe appropriate 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 the potential loss
of the Group’s license to operate.
The Company can deploy commodity price hedging to mitigate the exposure
to fluctuations in oil prices during periods of elevated capital expenditure.
Hedging will likely be required when debt is obtained to support the ability
to service this debt in the future in case of adverse movements in the oil
price.
During the formulation of the annual work plan & budget and three-year
plan, different scenarios are considered which include a range of oil price
outcomes and cost profiles to establish the potential impact on Group
revenues, profitability and cashflows.
The Group seeks to diversify its asset portfolio and reduce exposure to
commodity price fluctuation through fixed price gas contracts, including the
Akatara gas and liquids project in Indonesia and the Nam Du/U Minh gas
development project in Vietnam.
The Group reviews and updates its decommissioning obligations at least
annually, and estimates are subsequently reviewed by third-party experts.
The annual review process is on a three-year cycle based on a detailed
bottom-up cost assessment followed by two years of top-down
assessments. This ensures at least once every three years the portfolio of
assets has a full detailed cost assessment performed that is independently
and resources by a third-party expert.
Legislative changes are monitored, and changes discussed with relevant
bodies including regulators and industry bodies. From time to time, the
Group obtains independent legal opinions, as required.
When reviewing acquisition opportunities, any required acceleration of
funding of decommissioning liabilities generally decreases the net present
value of the opportunity, which is incorporated in the Group’s purchase
price consideration.
There has been no change in the potential impact or likelihood of the HSE
risks due to the nature of our operations and the environments in which the
group operates.
The Board’s HSEC committee oversees and sets standards for the Group, to
drive accountability and commitment throughout the organisation.
The Group targets zero lost time incidents. Any lost time or near miss
incidents are investigated and any and all lessons learnt implemented
promptly throughout the Group, alongside active monitoring of HSE 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 Group’s HSE management system includes environmental impact
statements, environmental plans, oil spill response and other emergency
plans and operational safety cases.
The Group’s financial performance may be adversely
impacted by uncertain macroeconomic conditions
including inflation and supply chain disruptions
generating unanticipated additional costs and time
delays on the delivery of material projects for the group.
The Group maintains a focus on its cost structure and cost efficiency. The
group maintains a system of key financial controls across the business to
monitor cost trends and apply mitigations where required and possible.
Forecasts are regularly updated, including applying scenarios and potential
mitigations.
This is a new risk as a result of changes in the
macroeconomic conditions as the Group experiences
increased production costs for materials and longer
lead times for delivery of materials and equipment.
A high inflationary environment impacts critical
judgements as management is required to make
assessments, estimates and assumptions regarding
future activities, which if incorrect could result in an
under-estimation of future liabilities and provisions.
The audit committee regularly reviews liquidity, funding, and financial
performance.
Risk Owner:
Regional HSE
Manager
Change in year
«»
Inflationary
pressures and
timelines
Risk Owner:
CFO
Change in the year
NEW
26
IT resiliency
and continuity
Risk Owner:
Regional IT
Manager
Change in year
«
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.
A cyber security breach could impact operations resulting
in a financial loss and/or the disclosure of confidential
information resulting in financial loss, corporate
reputational damage and/or legal exposure for the Group.
The likelihood and impact increased during the year and the Group
continues to enhance its security systems and processes in order to
minimise business disruption.
Extensive data and server backups are performed regularly.
The Group’s IT 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 minimize the exposure of security
threats.
Network and critical system penetration tests are also performed to
measure and ensure an appropriate level of protection.
Multi-Factor Authentication (MFA) has been enabled for IT systems with the
required functionality, Multi-Factor Authentication (MFA) has been enabled
for all IT systems with the required functionality. Plus, hard disk encryption
was rolled out across the Group as a further preventative control. The Group
continues to enhance its security systems with plans to implement Mobile
Device Management and other data protection solutions scheduled for
implementation in the near term.
Operating
performance
The Group is focused on producing assets and aims to
bring discovered hydrocarbons into production rapidly.
The risk increased during the year following the Montara incident and the
associated impacts on production and production repairs.
In the case of mid-life and/or mature producing assets
there is a risk that operational performance will decline
through lower production, increased costs and/or
deteriorating infrastructure reliability/uptime.
The Group deploys a mid-life field operating philosophy, which closely
monitors reservoir, well and plant performance while continuously seeking
operating efficiencies and reinvestment opportunities to increase recovery
rates and the production life of each field.
Risk Owner:
Regional
Operations
Manager
Change in year
«
Significant oil spill
Risk Owner:
Country Managers
Change in year
NEW
The nature of our operations with mature assets and
fields will always have an inherent risk of a significant
incident occurring including a loss of containment or
large oil spill. The nature of our current business portfolio
means that we are reliant on relatively few mature assets.
A release of gas or liquids from an integrity breach could
result in a prolonged production outage and potentially
significant environment damage. Any environmental
or loss of production incident could negatively impact
business performance and cashflows through fines,
penalties, remediation and business disruption.
This is a new risk this year as the Group experienced
a small loss of containment at the Montara FPSO during
the year, any reoccurrence or major oil spill would impact
the group’s reputation and their license to operate.
Capital execution
activity
The Group is dependent on the successful execution
of strategic projects in Indonesia and Vietnam.
Developing large capital projects in complex business
environments generates multiple challenges for
engineering, technology and skilled labour availability,
any cost over-runs or project delays would negatively
impact the business performance and the achievement
of objectives and targets.
The Akatara project is in the development phase with first
gas anticipated in early 2024, any significant cost over-
runs or time delays would negatively impact the project
economics and financial returns of the group.
The Nam Du/ U Minh project is subject to government
approval and FID but remains a material project for the
group and significant delays or inflationary pressures will
impact the economics of the project.
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.
Risk Owner:
Country Managers
Change in year
«»
Regulatory
infringement
Risk Owner:
Country Managers
Change in year
«»
Development
& recovery of
reserves
The Group is currently dependent on a small number
of producing assets. A reserve write down may impact
business performance and corporate reputation.
The company operates mid to late life assets and low
oil prices or prolonged field shutdowns requiring high
cost remediation could accelerate the end of field life
impacting recoverable reserves.
Risk Owner:
Country Managers
Change in year
«»
The Group operates a continuous improvement mindset, designed to
identify cost saving opportunities that lower the cost base across Group
operations and offices.
The Group is focused on building a diverse and resilient portfolio, to
minimize the risk of over exposure to the performance of individual assets.
The Group maintains detailed policies and procedures covering corrosion
strategy management, emergency response and various maintenance
programmes to ensure the integrity of our assets.
There are periodic FPSO planned shutdowns to carry out required
inspections, maintenance, repairs and modifications to ensure and protect
our asset integrity. This includes assurance and compliance management
(including class) undertaken on all assets.
Senior management visits and inspections of operated offshore assets are
undertaken regularly to demonstrate commitment and adherence to policy
and procedures.
Independently verified safety cases are in place on all operated assets.
Detailed crisis management and emergency response processes are in place
which are regularly tested.
There has been no material change in the likelihood or impact of the risk,
and project economics and execution are a key feature of the long term
strategy for the Group.
The Board and management seek out regular dialogue with national oil
companies, regulators, and other government bodies to ensure acceptance
and approvals are obtained as soon as possible.
Projects are tailored to local market conditions, including with regard to
supply and price.
Project economics are assessed with multiple sensitivities to identify critical
challenges, including contingency planning for potential project failures.
Management regularly provides strategic updates and project status to
shareholders and other stakeholders.
There has been no material change in the likelihood or impact of the risk
but due to the nature the risk remains a principal risk for the group.
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.
There has been no material change in the likelihood or business impact
and potential reserve write downs continue to be a principal risk.
The majority of the Group’s reserves are in production. Reserves are
assessed by reference to 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.
The group places a strong emphasis on subsurface analysis and have
centralised its subsurface teams in order to develop a centre of excellence
to manage the asset portfolio and evaluate new opportunities across the
region.
2 7
JADESTONE ENERGY 2022 ANNUAL REPORT Operational review
Producing assets
Australia
Montara Project
The Montara Project, in production licences AC/L7 and AC/L8,
is located 254 km offshore Western Australia, in water depth of
approximately 77 metres. The Montara Project comprises three
separate fields being Montara, Skua and Swift/Swallow, which are
produced through an owned FPSO, the Montara Venture.
As at 31 December 2022, the Montara assets had 2P reserves
of 18.5mmbbls (31 December 2021: 20.9mmbbls), 100% net to
Jadestone.
The fields produce light sweet crude (42º API, 0.067% mass
sulphur), which typically sells for average Dated Brent plus the
average Tapis differential in the month of lifting. The premium in
2022 ranged between US$3.53/bbl to US$6.19/bbl, with an average
premium of US$4.70/bbl.
Since acquiring a 100% interest in the Montara Project, the Group
has invested over US$250.0 million in the field, incorporating
significant amounts on repair and refurbishment of the Montara
Venture, including well repairs and the drilling of the Montara H6
well. However, reduced offshore manning levels and then limited
inter-state travel resulting from the COVID-19 pandemic slowed the
pace of cargo tank inspection and repair activity onboard the FPSO
in 2020 and 2021.
In June 2022, during routine production and crude oil cargo
operations onboard the Montara Venture, approximately three
to five cubic metres of oil was released to sea from a small hole in
the bottom of cargo tank 2C, which while still in class, had seen a
delay to its scheduled maintenance activity due to the COVID-19
impact referred to above. A temporary repair was effected in order
to remove the remaining oil from tank 2C and key stakeholders,
including the Australia offshore regulator NOPSEMA, were notified.
Production was safely reinstated in early July 2022, although was
shut-in again in August after a further defect in ballast water tank
4S was detected. At this point, the Group took the decision to shut-
in production at Montara to prioritise tank inspection and repairs.
In September 2022, NOPSEMA issued a General Direction to the
Company, which required Jadestone to engage an independent
reviewer to undertake a gap recognition review, and assure the
Group’s remediation plans and operational readiness prior to the
restart of production operations at Montara. DNV, the world’s
leading maritime classification society and an independent expert
in risk management and assurance, was subsequently engaged as
the independent reviewer and a report submitted to NOPSEMA
in January 2023. NOPSEMA’s review of the independent report
was subsequently concluded and the General Direction lifted in
February 2023. The Group’s policies and procedures relating to
FPSO tank inspection and repair and corrosion management have
been strengthened as a result of this process.
Following successful completion of tank inspection and repair
activities, as well as scheduled four-yearly maintenance activities,
a phased production restart campaign commenced in March
2023. Initially, the Montara H6 well and Skua-10 and 11 wells were
brought online in different configurations, with average production
of 4,700 bbls/d over a 19 day period while works continued to
commission the gas compression system on the FPSO, including
specialist welding repairs to a reboiler.
2 8
There was a controlled shutdown of the Montara Project in April
2023 as a precautionary measure due to the impact of Cyclone
Ilsa. The facility was successfully remanned and production
recommenced after a four-day period.
Oil is currently being produced into oil tank 5C, with oil tank 6C
due to be returned to service shortly, with the remaining oil tanks
due to come back online sequentially following planned detailed
inspection and any required repairs. To provide operational
flexibility during this period, an offtake tanker has been contracted
for a three month period and will be stationed nearby the Montara
Venture until sufficient oil storage capacity is available. This is
expected to result in an incremental cost of c.US$2.0 million
per month.
The gas compression system on the Montara Venture was
restarted in late April 2023, which allowed for additional
production wells to be brought back online. Since gas compression
was restored, Montara production has averaged approximately
6,800 bbls/d, with a peak of 7,200 bbls/d during this period.
As previously announced, absent any unplanned downtime, but
including eight days of scheduled downtime in October 2023
for a compressor service and assuming well and subsurface
performance in line with expectations, the Group expects Montara
production to average approximately 6,000 bbls/d between April
and December 2023. Montara Project oil production will become
constrained by increasing gas production from Montara field
reservoir until the installation of further compression on the
Montara Venture, which remains in the planning phase.
Montara production averaged 4,227 bbls/d in 2022 (2021: 7,647
bbls/d), with the difference, in part, due to declines but more
materially due to the production shut-in described above. Prior to
the shut-in, production during H1 2022 was 7,509 bbls/d compared
to 7,269 bbls/d in H1 2021.
There were five liftings in 2022, resulting in total sales of 1.7
mmbbls of crude oil compared to 3.0 mmbbls from six liftings
in 2021.
Montara Venture FPSO
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Stag oilfield
The Stag oilfield, in production licence WA-15-L, is located 60 km
offshore Western Australia in a water depth of approximately 47
metres.
As at 31 December 2022, the field contained total proved plus
probable reserves of 12.1mmbbls (31 December 2021: 12.6mmbbls),
100% net to Jadestone.
The Stag oilfield produces heavy sweet crude (18º API, 0.14% mass
sulphur), which historically sells at a premium to Dated Brent. The
premium in 2022 ranged between US$21.88/bbl to US$23.72/bbl
with an average premium of US$ 22.78/bbl. The most recent lifting
in February 2023 was agreed at a premium of US$19.10/bbl.
Production was 2,176 bbls/d in 2022 compared to 2,359 bbls/d in
2021. This decrease was predominately the result of a May 2022
shut down to perform planned pressure vessel inspections, which
occur every three years.
During H2 2022, the Stag 50H and 51H infill wells were successfully
drilled, completed and brought online in November 2022,
generating additional production of approximately 600 bbls/d
during December 2022.
There were four liftings in 2022 for total sales of 0.8 mmbbls,
compared to 1.0 mmbbls in 2021 from the same number of liftings.
North West Shelf Project
The Cossack, Wanaea, Lambert and Hermes oil fields (the “North
West Shelf Project” or “CWLH Assets”) are located 115km offshore
Western Australia in production licences WA-3-L, WA-9-L, WA-11-L
and WA-16-L situated in water depths of 80-130 metres.
On 28 July 2022, the Group executed a sale and purchase
agreement (“SPA”) with BP Developments Australia Pty Ltd to
acquire BP’s non-operated 16.67% working interest in the CWLH
Assets for a total initial headline cash consideration of US$20.0
million, and certain subsequent contingent and decommissioning
payments. The acquisition completed on 1 November 2022,
following the satisfaction of all conditions precedent. In May 2023,
the Group received approval from the National Offshore Petroleum
Titles Administrator ("NOPTA") for the dealing and registration on
the petroleum titles relating to the acquired interest.
As at 31 December 2022, the CWLH Assets contained total proved
plus probable reserves of 5.1mmbbls, net to Jadestone.
The economic effective date of the acquisition was 1 January 2020,
meaning that the Group was entitled to the net cash generated
between the economic effective date and completion. As a result,
the Group received a net cash of US$7.0 million. Under the SPA and
just prior to closing, the Group paid US$41.0 million in cash into a
decommissioning trust fund held and managed by the operator.
The last two instalments of US$20.5 million each will be paid before
31 December 2023 following NOPTA approval of title transfer in
May 2023.
The average production since the completion date of 1 November
2022 was 2,290 bbls/d, net to Jadestone’s working interest. On an
annualised basis, this was equivalent to 383 bbls/d net to Jadestone
in 2022.
Jadestone lifted one cargo following completion of the acquisition,
resulting in sales of 0.7 mmbbls in 2022.
Okha FPSO, CWLH fields
Malaysia
PM 323, PM329, PM318 and AAKBNLP PSCs
The PenMal Assets consist of four PSCs, two of which (PM323 and
PM329 PSCs) have been operated by the Group since acquisition of
the PenMal Assets. PM318 and AAKBNLP PSCs were non-operated
during 2022, with the Group subsequently assuming operatorship
of these PSCs in April 2023. The Group has a 70% interest in PM329,
which contains the East Piatu field, and a 60% interest in PM323,
which contains the East Belumut, West Belumut and Chermingat
fields, with these PSCs located approximately 230km northeast of
Terengganu in shallow water.
During 2022, the Group had a 50% non-operated working interest
in the PM318 and AAKBNLP PSCs. These two PSCs are located in
the same region as PM323 and PM329.
As at 31 December 2022, the PenMal Assets contained total
proved plus probable reserves of 8.9mmboe (31 December 2021:
11.2mmboe), net to Jadestone. This did not include any contribution
from the PM318 and AAKBNLP PSCs.
The PM323 and PM329 PSCs produce light sweet crude that is
blended to Tapis grade (43º API, 0.04% mass sulphur). The premium
in 2022 ranged between US$0.96/bbl to US$14.41/bbl with an
average premium realised of US$6.38/bbl. The most recent lifting
in April 2023 was agreed at a premium of US$4.68/bbl.
In 2022, average production from the PenMal Assets was 3,884
bbls/d of oil and 4,908 mscf/d of gas, or 4,702 boe/d, net to
Jadestone’s working interest. In 2021, the average production
after taking ownership in August 2021 was 5,377 bbls/d of oil and
4,084 mscf/d of gas, or 6,057 boe/d. The decrease of 1,355boe/d
was the result of natural decline and production from the PM318
and AAKBNLP PSCs being shut-in from February 2022 due to the
class suspension of the FPSO which served the assets , which also
resulted in an impairment at year-end (see page 32).
Jadestone assumed operatorship of PM318 and AAKBNLP in April
2023 following the decision of the previous operator to withdraw.
Jadestone believes there may be significant remaining reserves on
the licences and is evaluating redevelopment options for the PSCs.
There were 13 liftings from the PenMal Assets in 2022, resulting
in total oil sales of 0.8 mmboe and total gas sales of 1.8 mmscf,
compared to total oil sales of 0.6 mmboe and total gas sales of 0.6
mmcf in 2021 achieved between the date of acquisition up to 2021
year end.
2 9
JADESTONE ENERGY 2022 ANNUAL REPORT OPERATIONAL REVIEW
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Vietnam
Block 51 and Block 46/07 PSCs
Jadestone holds a 100% operated working interest in the Block
46/07 and Block 51 PSCs, both in shallow water 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, with aggregate 2C contingent resources assessed
at 93.9 mmboe.
The Tho Chu discovery in Block 51 is currently under a suspended
development area status. A request for an extension to the Tho
Chu suspended development area status has been submitted to
the industry regulator and is expected to be granted in due course.
Jadestone continues to negotiate with the proposed buyer of
gas from its offshore discoveries, aiming to sign a heads of
agreement in the near-term for gas sales from the Nam Du/U Minh
development. Following a gas sales agreement, the Group would
work to finalise the field development plan and submit this for
approval - a key step towards commercialising this significant and
strategic resource. Development of this resource would lessen
Vietnam’s future dependence on expensive LNG imports and would
contribute towards the country’s energy transition and stated goal
of Net Zero greenhouse gas emissions by 2050.
Pre-production assets
Indonesia
Lemang PSC
The Lemang PSC is located onshore Sumatra, Indonesia. The PSC
contains the Akatara field, which has been substantially de-
risked with 11 wells drilled into the structure, plus three years of
oil production history, up until the field ceased oil production in
December 2019. Jadestone is redeveloping the Akatara field to
supply gas, condensate and LPGs for local and regional use.
The Akatara gas field has been independently estimated to contain
gross 2P reserves (pre local government back-in right) of 71.1 bcf
of sales gas, 2.2 mmbbls of condensate and 8.4 mmboe of LPG,
equating to a combined 22.5 mmboe of resource. Following
completion of the Hexindo acquisition (see below) Jadestone
currently has a 100% interest in the Lemang PSC, with the local
government retaining a back-in right of up to 10%, which is
expected to be exercised prior to first gas.
On 1 December 2021, a gas sales agreement was signed between
Jadestone and PT Pelayanan Listrik Nasional Batam, as buyer.
On 6 June 2022, the Group announced that a final investment
decision had been taken on the Akatara field development
following the necessary approvals by the Indonesian upstream
regulator. The Group awarded the engineering, procurement,
construction and installation contract on 3 June 2022 and
development activities commenced. As at 7 April 2023, the Akatara
development project is approximately 28.3% complete and first gas
remains on schedule for the first half of 2024.
On 23 November 2022, the Group completed the acquisition of
the remaining 10% interest in the Lemang PSC. The 10% interest
was acquired through the execution of a Settlement and Transfer
Agreement between the Group and PT Hexindo Gemilang Jaya
(“Hexindo”). In return for the transfer of Hexindo’s 10% stake, the
Group paid a cash consideration of US$0.5 million and released
Hexindo from previously unpaid amounts relating to Hexindo’s
interest in the Lemang PSC.
Akatara gas processing plant construction
3 0
Financial review
The following table provides selected financial information of the Group, which was
derived from, and should be read in conjunction with, the consolidated financial
statements for the year ended 31 December 2022.
USD’000 except where indicated
Sales volumes, barrels of oil equivalent (boe)
Production, boe/d
Realised oil price per barrel of oil equivalent (US$/boe)2
Realised gas price per thousand standard cubic feet (US$/mscf)
Revenue
Production costs
Adjusted operating cost per barrel of oil equivalent (US$/boe)3
Adjusted EBITDAX3
Unit depletion, depreciation & amortisation (US$/boe)
Impairment of assets
Profit/(Loss) before tax
Profit/(Loss) after tax
Earnings/(Loss) per ordinary share: basic & diluted (US$)
Operating cash flows before movement in working capital
Capital expenditure
Net cash3
Benchmark commodity price and realised price
The average Brent price incorporated into the Group’s liftings
was US$101.32/bbl in 2022, an increase of 43% compared to the
US$70.91/bbl achieved in 2021.
The actual average realised price in 2022 increased in line with
the benchmark price, by 40% to US$103.85/bbl, compared to
US$74.34/bbl in 2021. The average realised premium for the year
was US$7.81/bbl, compared to US$3.39/bbl in 2021. All producing
assets saw an increase in premium, with Stag averaging US$22.78/
bbl (2021: US$11.20/bbl), Montara US$4.70/bbl (2021: US$1.14/bbl)
and the PenMal Assets US$6.67/bbl (2021: US$1.62/bbl).
The premiums have subsequently reduced from their peak in Q3
2022 with the most recent liftings in 2023 achieving a premium of
US$19.10/bbl at Stag and US$4.68/bbl at the PenMal Assets.
Production and liftings
The Group produced an average of 11,487 boe/d in 2022, compared
to 12,545 boe/d in 2021. Production decreased predominately due
to the shut-in of Montara from mid-August 2022 to mid-March
2023.
Montara production declined 45% to 4,227 bbl/d in 2022 from 7,647
bbl/d in 2021 due to the shut-in of production from mid-August
2022 to mid-March 2023 following a decision to suspend operations
to focus on FPSO hull and tank repairs. Stag production in 2022 was
2,176 bbl/d, a decrease from 2021 of 2,359 bbls/d predominately
due to a once-in-every-three-year routine shut down. Lower
production at Stag and Montara was partly offset by a full year
of production from the PenMal Assets of 4,702 boe/d in 2022
compared to 2,539 boe/d in 2021, and the acquisition of the CWLH
Assets contributing an annualised production of 383 bbls/d.
The production rate from the CWLH Assets since acquisition
on 1 November 2022 was 2,290 bbl/d.
2022
4,326,770
11,487
103.85
1.63
421,602
(250,700)
37.49
161,929
10.80
(13,534)
62,540
8,522
0.02
158,148
82,876
123,329
2021
Restated1
4,663,397
12,545
74.34
1.61
340,194
(211,896)
26.22
142,242
13.67
-
(4,293)
(17,073)
(0.04)
91,249
55,996
117,865
The Group had 22 liftings during the year (2021: 17), mainly due to a
full year of production and liftings from the PenMal Assets in 2022
compared to 2021 when the assets were owned for part of the year.
Total Group sales of 4.3 mmboe in 2022 included lifted volumes
of 0.7 mmbbls from the CWLH Assets, a decrease compared to 4.7
mmboe in 2021 due to the lower production at Montara and the
previously non-operated PenMal Assets.
Revenue
The Group generated revenue of US$421.6 million in 2022, an
increase of 24% compared to 2021 of US$340.2 million. This
represents the highest revenue ever recorded by the Group. The
increase of US$81.4 million was predominately due to:
l Higher average realised prices in 2022, compared to 2021,
contributing an additional US$150.8 million;
l A reduction in lifted volumes year-on-year resulting in
decreased revenue of US$128.2 million (excluding price effects);
l The acquisition of the CWLH Assets in November 2022, which
contributed US$56.6 million; and
l PenMal Assets generating higher gas revenue of US$2.1 million
compared to US$1.0 million in 2021.
1 Restatements explained in Note 45 of the Group’s consolidated financial
statements.
2 Realised oil price represents the actual selling price inclusive of premium.
3 Adjusted operating cost per boe, adjusted EBITDAX and net cash are non-
IFRS measures and are explained in further detail on the Non-IFRS Measures
section from pages 35 to 37.
31
JADESTONE ENERGY 2022 ANNUAL REPORT FINANCIAL REVIEW
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Production costs
Other expenses
Taxation
Production costs increased by 18% in 2022 to US$250.7 million,
from US$211.9 million in 2021, predominately due to:
l The acquisition of the CWLH Assets in November 2022
Other expenses decreased in 2022 to US$22.3 million (2021:
US$26.2 million). The variance of US$3.9 million was predominately
due to:
l Reduction of non-recurring costs by US$3.6 million compared
to 2021. In 2022, the Group incurred non-recurring costs of
US$1.6 million, relating to the acquisition of CWLH Assets,
business development and various other one-off projects. In
comparison, the Group incurred total non-recurring costs of
US$5.2 million in 2021, which included internal reorganisation
costs of US$1.1 million, acquisition costs of US$0.8 million
associated with the PenMal Assets, and other business
development related expenses of US$3.3 million;
l The 2021 costs included a fair value loss on commodity swaps
of US$4.6 million related to hedge contracts. The Group had no
hedging in 2022;
l Assets written off reduced US$4.9 million to US$0.2 million in
2022 due to the prior year impairment of exploration assets.
l Net foreign exchange loss of US$0.4 million in 2022 (2021:
US$1.0 million);
l Additional contingent payments related to the future Dated
Brent prices and Saudi CP prices associated with the Lemang
PSC of US$7.3 million were recognised in 2022; and
l Higher provisions for slow-moving materials and spares on
hand in 2022 of US$3.8 million (2021: US$2.6 million).
Other income
Other income of US$28.0 million was generated during 2022
compared to US$7.7 million in 2021, due to:
l
Insurance claim receipts of US$18.0 million compensating for
loss of Montara production related to drilling activities at Skua-
10 and 11 in 2021;
l Rebate income of US$5.0 million (2021: US$4.5 million) arose
from the sublease of right-of-use assets under the Group’s
helicopter lease contract; and
l Net foreign exchange gains of US$0.5 million (2021: US$2.5
million).
Impairment
In 2022, the Group recorded an impairment of US$13.5 million
associated with the oil and gas properties of the previously
non-operated PenMal Assets, following the decision by the
previous operator to shut-in production after the FPSO class
suspension in February 2022. The impairment of US$13.5 million
comprised US$6.9 million of oil and gas properties written off and
US$6.6 million associated with the 2022 year-end revaluation of
decommissioning estimates embedded in the ARO provision.
As at 31 December 2022, the fields were shut-in and management
does not expect to restart production in 2023 while the
Group is exploring strategic alternatives, including a potential
redevelopment of the PM318 and AAKBNLP PSCs.
incurred production costs of US$37.7 million. This production
cost is impacted by the accounting treatment of underlift at
acquisition. This underlift of 315kbbls was recorded at fair value
of US$27.3 million based on the market oil price of US$86.68/
bbl. Please refer to Note 5 of the Group’s consolidated financial
statements for further details. The actual production cost per
barrel was US$20.58/bbl, being the actual cash cost since the
acquisition on 1 November 2022;
l Full year operations at the PenMal Assets, compared to five
months in 2021, caused an increase in production costs by
US$31.8 million which included a full year of supplementary
payments with an increase of US$16.3 million, as a result of
realised prices exceeding the PSC escalated base price;
l Production costs at Montara decreased by US$18.9 million
reflecting the higher-than-normal workover costs at Skua-10
and 11 in 2021, partly offset by higher repairs and maintenance
and logistics costs in 2022. The total repairs and maintenance
costs directly associated with the FPSO hull and tank repairs
were US$3.8 million; and
l Stag production costs decreased by US$11.8 million year-on-
year predominately due to a decrease in workover activities in
2022.
Adjusted unit operating cost per barrel of oil equivalent was
US$37.49/boe (2021: US$26.22/boe) (see Non-IFRS measures
section below in this section). The increase in adjusted unit
operating cost reflects the reduction in production at Montara and
the previously non-operated PenMal Assets.
Depletion, depreciation and amortisation (“DD&A”)
DD&A charges were US$61.8 million during the year, compared
to US$80.2 million in 2021, predominately due to the lower
production at Montara, resulting in a decrease of US$20.2 million.
The reduction was partly offset by additional depletion charges at
the CWLH Assets of US$1.7 million, since the date of acquisition of
1 November 2022.
Depreciation of the Group’s right-of-use assets increased to
US$13.0 million in 2022 from US$11.2 million in 2021, primarily due
to an extension of a two-year lease for airport services to replace
an expired lease.
The depletion cost on a unit basis was US$10.80/boe in 2022 (2021:
US$13.67/boe), due to the lower depletion per unit of production
at the PenMal Assets. The unit depletion cost in 2022 was US$1.76/
boe compared to US$3.87/boe in 2021. This was due to the absence
of production from the previously non-operated PSCs which incurs
a higher unit depletion rate.
The combined depletion cost per unit at both Stag and Montara
increased to US$17.35/bbl from US$16.16/bbl in 2021 due to the
capital expenditures spent in 2021. The CWLH Assets recorded a
unit depletion cost of US$12.36/bbl.
Staff costs
Total staff costs in 2022 were US$55.3 million (2021: US$51.8
million), comprising US$26.1 million (2021: US$26.8 million) in
relation to offshore employees, recorded under production
costs, and US$29.2 million (2021: US$25.1 million) for office-based
employees. The average number of employees during the year
was 369 (2021: 278), with the additional staff costs and headcount
year-on-year predominately associated with the PenMal Assets
following completion of the acquisition in August 2021.
3 2
The tax charge of US$54.0 million in 2022 (2021: US$12.8 million) includes a current tax charge of US$27.1 million (2021: US$7.3 million) and
a deferred tax charge of US$26.9 million (2021: US$5.4 million).
The tax paid during the year included US$18.5 million of corporate tax payments and a PRRT tax refund of US$1.1 million in Australia, plus
US$15.7 million of petroleum income tax ("PITA") in Malaysia.
The weighted average effective tax rate based on profit jurisdictions was 56% (2021: 49%). The consolidated Group effective tax rate was
86% (2021: -198%) as loss making jurisdictions negatively impacted profit before tax. The profit before tax from Australia and Malaysia was
US$87.6 million (2021: US$15.3 million), which was impacted by corporate, development and exploration losses of US$25.0 million (2021;
US$19.6 million). The corporate tax losses are not recognised as deferred tax as there is not sufficient certainty that taxable income will be
realised in the future.
USD’000
Profit before tax
Expected effective tax rate
Tax at the country level effective rate
Effect of different tax rates in loss making jurisdictions
Malaysia PITA tax losses on previously non-operated PSCs
Utilisation of PRRT credits
PRRT tax refunded
Capital gain tax from acquisition of CWLH Assets
Australian decommissioning levy
Non-deductible expenses
Deferred tax permanent differences
PRRT permanent differences
Adjustment in respect to prior years
Tax charge for the year
Australian taxes
2022
62,540
56%
35,022
13,934
8,742
(21,661)
(1,121)
1,486
336
938
9,645
7,032
(335)
54,018
2021
Restated1
(4,293)
49%
(2,103)
11,167
6,298
(2,845)
(1,374)
-
196
3,226
(3,176)
3,371
(1,980)
12,780
The Australian corporate income tax rate is 30% and PRRT is 40%, which is cash based and income tax deductible. The combined standard
effective tax rate is 58%, while the actual effective tax rate of 46% was lower predominately due to the utilisation of PRRT credits brought
forward at Montara. As at year-end, Montara and the CWLH Assets have US$3.5 billion and US$535.5 million of unutilised carried forward
PRRT credits, respectively. Both assets are not expected to incur any PRRT over their remaining economic lives.
Malaysian taxes
Malaysian petroleum income tax is a PSC based tax on petroleum operations at the rate of 38%. There are no other material taxes in
Malaysia. The Group incurred losses from the previously non-operated PSCs (PM318 / AAKBNLP) as a result of ceasing production in
February 2022, which resulted in a tax non-deductible impairment of US$13.5 million. There has been a significant increase in deferred tax
permanent taxable difference which predominately relates to changes in the ARO estimates at year-end, which won’t be tax deductible at
the end of the field life when the Group commences decommissioning activities, due to insufficient estimated taxable income.
1 Restatements explained in Note 45 of the Group’s consolidated financial statements.
3 3
JADESTONE ENERGY 2022 ANNUAL REPORT FINANCIAL REVIEW
Reconciliation of net cash
US$’000
Cash and cash equivalents at the beginning of year
Revenue
Other operating income
Production costs
Staff costs
General and administrative expenses
Operating cash flows before movements in working capital
Movement in working capital
Net tax paid
Purchases of intangible exploration assets, oil and gas
properties, and plant and equipment1
Cash received on acquisition of CWLH Assets
Placement of decommissioning trust fund for CWLH Assets
Cash paid for acquisition of 10% interest of Lemang PSC
Net cash inflows from acquisition of PenMal Assets
Other investing activities
Shares repurchased
Dividends paid
Repayment of lease liabilities
Repayment of borrowings
Other financing activities
Total cash and cash equivalent at the end of year
421,602
26,485
(250,700)
(28,247)
(10,992)
340,194
6,030
(206,523)
(24,117)
(18,962)
2022
117,865
158,148
37,219
(33,130)
(82,628)
5,750
(41,000)
(500)
-
881
(16,070)
(9,216)
(13,914)
-
(76)
123,329
2021
89,441
96,622
18,808
(11,834)
(55,920)
-
-
-
9,219
80
-
(7,745)
(12,972)
(7,296)
(538)
117,865
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Non-IFRS measures
The Group uses certain performance measures that are not specifically defined under IFRS, or other generally accepted accounting
principles. These non-IFRS measures comprise adjusted operating cost per barrel of oil equivalent (adjusted opex/boe), adjusted EBITDAX,
debt and net cash.
The following notes describe why the Group has selected these non-IFRS measures.
Adjusted operating costs per barrel of oil equivalent (Adjusted opex/boe)
Adjusted opex/boe is a non-IFRS measure used to monitor the Group’s operating cost efficiency, as it measures operating costs to extract
hydrocarbons from the Group’s producing reservoirs on a unit basis.
Adjusted opex/boe is defined as total production costs excluding oil inventories movement and underlift/overlift, write down of
inventories, workovers (to facilitate better comparability period to period) and non-recurring repair and maintenance. It includes lease
payments related to operational activities, net of any income earned from right-of-use assets involved in production, and excludes
transportation costs, PenMal Asset supplementary payments, DD&A and short-term COVID-19 subsidies.
The adjusted production costs are then divided by total produced barrels of oil equivalent for the prevailing period to determine the unit
operating cost per barrel of oil equivalent.
USD’000 except where indicated
Production costs (reported)
Adjustments
Lease payments related to operating activity1
Underlift, overlift and crude inventories movement2
Workover costs3
Other income4
Non-recurring repair and maintenance5
Transportation costs
PenMal Assets supplementary payments and Australian royalties6
PenMal non-operated assets FPSO rectification costs7
Australian Government JobKeeper scheme
Adjusted production costs
Total production (barrels of oil equivalent)
Adjusted operating costs per barrel of oil equivalent
2022
250,700
13,687
(39,436)
(10,190)
(5,030)
(13,761)
(8,341)
(26,381)
(4,056)
-
157,192
2021
211,896
10,619
(15,053)
(67,006)
(4,512)
(6,593)
(1,231)
(8,255)
196
120,061
4,192,618
4,578,962
37.49
26.22
1
Total capital expenditure was US$82.9 million (2021: US$56.0 million), comprising total capital expenditure paid of US$82.6 million (2021: US$55.9 million), plus
accrued capital expenditure of US$0.3 million (2021: US$0.1 million).
3 4
1
Lease payments related to operating activities are lease payments considered to be operating costs in nature, including leased helicopters for transporting offshore
crews. These lease payments are added back to reflect the true cost of production.
2 Underlift, overlift and crude inventories movement are added back to the calculation to match the full cost of production with the associated production volumes
(i.e., numerator to match denominator).
3 Workover costs are excluded to enhance comparability. The frequency of workovers can vary significantly, across periods.
4 Other income represents the rental income from a helicopter rental contract (a right-of-use asset) to a third party.
5 Non-recurring repair and maintenance costs in 2022 predominately related to Montara Skua-11 repair works, gas compressor solar engine change out and tank
6
repairs following the shut-in of Montara in August 2022.
The supplementary payments are required under the terms of PSCs based on Jadestone’s profit oil after entitlements between the government and joint venture
partners. The Australian royalties were related to local decommissioning cost recovery levy plus royalties payable to the local state government arising previously
from the acquisition of the CWLH Assets.
7 PenMal non-operated assets FPSO rectification costs refer to the costs incurred to repair the FPSO BUK at the PM318 and AAKBNLP PSCs following its suspension in
February 2022.
3 5
JADESTONE ENERGY 2022 ANNUAL REPORT FINANCIAL REVIEW
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.
Adjusted EBITDAX is defined as profit from continuing activities before income tax, finance costs, interest income, DD&A, other financial
gains, non-recurring expenses and exploration assets write-offs.
The calculation of adjusted EBITDAX is as follow:
USD’000
Revenue
Production cost
Administrative staff costs
Impairment of assets
Other expenses
Other income, excluding interest income
Other financial gains
Unadjusted EBITDAX
Non-recurring
Net loss from oil price derivatives
Impairment of assets
Non-recurring opex2
Intangible exploration assets written off
Insurance claim receipts3
Change in provision – Lemang PSC contingent payments
Fair value loss on contingent considerations
Others4
Adjusted EBITDAX
2022
421,602
(250,700)
(29,218)
(13,534)
(22,305)
27,152
1,904
134,901
-
13,534
20,534
-
(17,977)
7,333
1,920
1,684
27,028
2021
Restated1
340,194
(211,896)
(25,068)
-
(26,181)
7,602
266
84,917
4,633
-
53,096
5,260
(10,333)
-
438
4,231
57,325
161,929
142,242
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Debt
As at 31 December 2022, the Group had no outstanding borrowings (2021: US$nil).
As part of its previously announced plan to arrange an RBL, on 17 February 2023, the Group entered into a US$50.0 million Interim Facility
with two international banks. The Interim Facility has a term of nine months and carries an initial margin of 450 basis points over SOFR,
which steps up in the event repayment occurs more than three months after closing. Subsequently, US$28.5 million of the Interim Facility
was drawn principally to fund the acquisition of a 9.52% interest in the Sinphuhorm gas field in February 2023, with the remaining US$21.5
million was utilised to fund the next US$20.5 million instalment of the CWLH abandonment trust funding and related Interim Facility
expenses. The Interim Facility was repaid on 1 June 2023 from the RBL facility obtained by the Group in May 2023.
On 19 May 2023, the Group announced that it had signed a new US$200.0 million RBL facility with the RBL Banks. The RBL facility provides
for an uncommitted accordion of US$160.0 million, subject to incremental availability of bank debt. The RBL facility was closed on 22 May
2023, following satisfaction of the conditions precedent.
The RBL facility has a four-year tenor and is subject to bi-annual redeterminations to determine available debt capacity, which will vary
over time depending on several parameters including oil prices, operating performance, hedging, future acquisitions and abandonment
estimates. Under current assumptions, borrowing capacity under the RBL facility is constrained prior to the Akatara field being integrated
as a producing asset, after which it will increase significantly. The Group and the RBL Banks can initiate additional redeterminations when
appropriate. The borrowing base is secured over by the Group’s assets being Montara, Stag, CWLH Assets, Sinphuhorm gas field, PenMal
Assets’ PM323 and PM329 PSCs and Lemang PSC.
The RBL facility pays interest at 450 basis points over the secured overnight financing rate, plus the applicable credit spread. The Group
will also pay customary arrangement and commitment fees. The facility incorporates standard terms and conditions for RBL facility,
including a parent company financial covenant of maximum total debt of 3.5 times annual EBITDAX plus the assets under the RBL facility
are required to hold a total minimum liquidity balance of US$15.0 million and cover forward looking capital expense for two quarters.
The RBL facility was initially used to repay the US$50.0 million Interim Facility, which was fully drawn on 22 May 2023. The RBL facility will
also fund the Group’s operations and capital investment programme, particularly the Akatara gas project onshore Indonesia.
As part of the RBL, the Group has commenced its hedging programme and intends to progressively increase to approximately 50% of
its forecasted production from October 2023 to September 2025. As of the signing date, the Group entered into oil price swap contracts
for 3,494,000 bbls, representing approximately 32% of its forecasted future production between October 2023 to September 2025, at a
weighted average price of US$70.66/bbl. The Group continues to monitor oil prices and will enter into additional hedging contracts when
considered appropriate in the coming months to align with the RBL commitment.
The Company has agreed an equity fundraising, comprising an underwritten placing, and subscription, pursuant to which it expects to
issue 92,312,691 new ordinary shares, together with a director placing and subscription for 1,769,135 new ordinary shares, in each case at
45 pence per share, to raise aggregate net proceeds of US$50.0 million. The Company has also launched an open offer of up to 14,887,039
new ordinary shares, at 45 pence per share, to raise additional proceeds of up to EUR8.0 million (up to US$8.6 million).
In support of the equity fundraising, the Company has entered into an up to US$50.0 million equity underwrite debt facility agreement
with Tyrus Capital Event S.à.r.l, the Company's largest shareholder. The equity underwrite facility will reduce pro-rata to the total funds
raised from the equity fundraising and the open offer and therefore is expected to reduce to zero. However, to the extent the facility does
not reduce to zero, it will mature with a bullet repayment on 31 December 2024, will bear interest at 13.5% on drawn amounts and 5%
on undrawn amounts and can be repaid or cancelled without penalties. Further details are disclosed in the Note 43 of the consolidated
financial statements.
In addition, the Company has entered into a committed standby working capital facility with Tyrus Capital Event S.à.r.l for a facility size
of up to US$35.0 million. The standby working capital facility will reduce pro-rata to the total funds raised from the equity fundraising
and the open offer in excess of US$50.0 million. The facility will mature with a bullet repayment on 31 December 2024. The facility bears
interest of 15% on drawn amounts and 5% on undrawn amounts and can be repaid or cancelled without penalties.
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. This measure is used to ensure capital is managed effectively in order to support ongoing
operations, and whether additional funds are required.
USD’000
Cash and cash equivalents, representing net cash of the Group
2022
123,329
2021
117,865
Net cash is defined as the sum of cash and cash equivalents and restricted cash, less outstanding borrowings, of which there were none at
31 December 2022 and 2021.
1 Restatements explained in Note 45 of the Group’s consolidated financial statements.
2
Includes one-off major maintenance/well intervention activities, in particular the Montara Skua-11 repair works, gas compressor solar engine change out and
storage tank repairs after the Montara production shut-in since mid-August 2022.
3 Represents insurance claim received at Montara for the compensation for the loss of production relating to the Skua-11 well in 2020.
The 2021 insurance claim receipt was received at Montara and related to the well control claim for the Skua-11 well workovers.
Includes business development costs, external funding sourcing costs, transition team costs relating to the terminated Maari acquisition and internal
reorganisation costs.
4
3 6
3 7
JADESTONE ENERGY 2022 ANNUAL REPORT STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Corporate
governance
report
40 Chair’s corporate governance statement
41 Principles of corporate governance
41 Application of QCA principles
46 Directors’ Report
50 Board of Directors
52 Audit Committee report
54 Remuneration Committee report
62 Governance and Nomination Committee report
64 HSEC Committee report
67 Disclosure Committee report
Crew change, PenMal Assets
3 8
3 9
JADESTONE ENERGY 2022 ANNUAL REPORT Chair’s corporate governance
statement
As the Chair of Jadestone, it is my responsibility to work with my fellow Directors to
ensure that the Group embraces good corporate governance and delivers the highest
standards. Strong corporate governance helps to underpin the foundations of a solid and
successful business. The Board seeks to embed good corporate governance throughout
the business, from the executive level to in-country operations.
Jadestone is committed to upholding high standards of governance
and responsible, social and ethical behaviour. The Group 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 Jadestone’s commitment to a culture of
honesty, integrity and accountability. Jadestone has 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 Group’s reputation. Jadestone’s core values underpin the work
the business does, and they form the foundation of its Code of
Conduct Policy.
A copy of the Group’s key governance documents, including
the Code of Conduct Policy and other policies, and the Articles
of Association, are available on Jadestone’s website at www.
jadestone-energy.com/sustainability-2020/key-policies/.
In line with the AIM Rules, Jadestone adopted the Quoted
Companies Alliance Corporate Governance Code 2018 (the “QCA
Code”) in 2020. Following the completion of the Group’s internal
reorganisation in April 2021, Jadestone Energy plc became the new
ultimate holding company of the Group.
As a UK company, Jadestone Energy plc is in compliance with the
QCA Code. The Board recognises the value and importance of
high standards of corporate governance, and believes that the
QCA Code provides an appropriate framework for a company of
Jadestone’s size and stage of development.
In line with the Company’s commitment to high standards of
corporate governance, the Board, in 2022, engaged an independent
expert who undertook an effectiveness review and evaluation
of the Board’s performance, its Committees and each individual
Director. The evaluation, by Socia Ltd ("Socia"), involved attendance
at Board and Committee meetings, a review of corporate
governance policies and procedures, and one-on-one interviews
with all Directors and selected senior management. Socia
concluded that: “In the opinion of this review the Jadestone Energy
Board takes its governance responsibilities seriously and operates in
a professional manner, compliant with the QCA Governance Principles
as they apply to this business. The Board currently provides effective
governance of the organisation and is actively engaged in developing
its governance arrangements further.” The evaluation delivered
several recommendations to facilitate this development. The Board
has considered the results of the evaluation and, through the
Governance and Nominations Committee, will carry forward the
recommendations. Further details of the Board evaluation can be
found on pages 62 to 63.
over ESG related matters. Relevant committee mandates include
responsibility for monitoring and ensuring performance of climate-
related and social responsibilities.
The Board is responsible to Jadestone’s shareholders for the
leadership, control and management of the Group. The Board
is responsible for the long-term success of the Group and for
ensuring its appropriate management and operation in pursuit
of its objectives. The Board is in constant communication and
meets regularly. The Directors are all identified on pages 50 to
51, together with a summary of their current and past experience
and skills. Whilst there is a formal schedule of matters specifically
reserved for consideration by the Board, as identified on page
44, the Executive Directors have the responsibility for specific
functional aspects of the Group’s affairs. The Board currently
comprises nine Directors, of whom two are executive and
seven are non-executive. Jenifer Thien was appointed as a Non-
Executive Director effective 7 April 2022 and Bert-Jaap Dijkstra
joined Jadestone as an Executive Director and CFO effective 22
August 2022. The Board has established an Audit Committee, a
HSEC Committee, a Governance and Nominations Committee, a
Remuneration Committee and a Disclosure Committee as further
described on page 44. Each committee’s terms of reference can
be found on Jadestone’s website. In September 2022, the Board
formed a special Technical Committee to provide additional
support, advice and challenge to management during the Montara
Venture FPSO hull and tank remediation work. See page 24 (Section
172 statement) for additional information.
The report below provides a high-level overview of how the
Group has applied the principles of the QCA Code throughout 2022.
I am pleased to report that the Group complies with the disclosure
requirements of the QCA Code.
Jadestone’s corporate governance culture will continue to
be regularly benchmarked against the QCA Code, with any
developments and changes communicated to shareholders.
Jadestone publishes on its website a Joint Modern Slavery
Statement pursuant to both Section 54 of the UK Modern Slavery
Act 2015 and the Australian Modern Slavery Act 2018, which sets
out the steps that Jadestone has taken, and continues to take, to
ensure no modern slavery or human trafficking occurs within its
supply chains or business.
As we reflect on the successes and challenges of 2022, I look
forward to continuing to build upon our existing values and to
ensuring that sound corporate governance growth will be built on
strong foundations of respect and integrity, to the benefit of all our
stakeholders.
The Group constantly seeks to improve its corporate governance
practices to reflect the QCA Code, as illustrated in the Board’s
continued focus during 2022 on a range of ESG issues. The Board of
Directors’ Charter specifically recognises the Board’s responsibility
Dennis McShane
Board Chair
6 June 2023
4 0
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
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 QCA in April 2018. The Board
views the QCA Code as an appropriate, recognised governance code for a company of
Jadestone’s size, structure and AIM listing.
The QCA Code identifies ten principles of corporate governance for companies to apply and against which companies must publish
certain specified disclosures. The Group has committed to apply these ten principles within its business. These principles are:
1. Establish a strategy and business model which promote long-term value for shareholders.
2. Seek to understand and meet shareholder needs and expectations.
3. Take into account wider stakeholder and social responsibilities and their implications for long-term success.
4. Embed effective risk management, considering both opportunities and threats, throughout the organisation.
5. Maintain the Board as a well-functioning, balanced team led by the chair.
6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities.
7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement.
8. Promote a corporate culture that is based on ethical values and behaviours.
9. 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.
Application of QCA Code principles
PRINCIPLE ONE
Establish a strategy and business model which promote
long-term value for shareholders
PRINCIPLE TWO
Seek to understand and meet shareholder needs and
expectations
Jadestone is a leading independent upstream oil and gas
production and development company in the Asia-Pacific
region. The Group aims to grow primarily through acquisitions
and is focused on creating value through identifying, acquiring,
developing and operating assets within select parts of the
Asia-Pacific region. The Group aims to leverage 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 believes this strategy and business model are consistent
with the energy transition and positions Jadestone as a responsible
operator, as the Group can play a role in fulfilling oil and gas
demand from existing oil fields and gas discoveries during the
transition to a low-carbon energy system.
The Board believes this strategy can generate, over time, significant
shareholder returns, primarily through capital growth.
The Group’s strategy and business model are further detailed in
the Strategic Report on page 10. The Board regularly reviews the
Group’s strategy and considers annual work plans, budgets, and
potential acquisitions in light of the strategy.
Jadestone is committed to effective communication and
constructive dialogue with its shareholders and the investment
community. Jadestone actively strives to understand and meet
shareholder needs and expectations. Jadestone endeavours to
ensure members of the Board and the executive team are highly
accessible to shareholders. Jadestone offers direct lines of access
to the Chief Executive Officer (“CEO”) and Chief Financial Officer
(“CFO”), and where necessary, the Chair and other Non-Executive
Directors.
Furthermore, Jadestone has dedicated spokespersons for
investors, including an Investor Relations Manager and
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. The Investor Relations
Manager actively manages and improves on the shareholder
communications plan with guidance from the CEO, CFO and Chair.
In 2022, webcast presentations accompanied financial results
disclosures and the announcement of major acquisitions. As part
of the webcast presentations, live question and answer sessions
allowed participants to engage directly with the CEO and CFO.
The contact details of Jadestone’s Investor Relations Manager and
public relations adviser can be found on the Group’s website at the
following link: www.jadestone-energy.com/contact/.
41
JADESTONE ENERGY 2022 ANNUAL REPORT
COMPLIANCE STATEMENT TO QCA CODE PRINCIPLES
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Shareholder feedback
Jadestone regularly meets with shareholders and prospective
investors through investor conferences and roadshows, as well
as ad hoc individual meetings. Through these interactions, which
take the form of both one-on-one and group meetings, the Board
and executive team form and maintain relationships with investors
and obtain feedback from shareholders on the Group’s strategy,
execution and performance. During 2022, these interactions were
increasingly in person, as COVID-19 pandemic-related travel and
engagement restrictions receded. Further, with one of the Non-
Executive Directors (“NED”) directly connected to a significant
shareholder, the Board regularly receives feedback on strategy and
performance from a shareholder perspective.
Information
Jadestone provides regular updates to shareholders in the form
of guidance announcements, operations updates, and the release
of half-yearly and annual financial and operating results. These
disclosures are designed to set expectations and to provide
reviews of performance against those expectations. In accordance
with its continuous disclosure obligations, Jadestone will provide
updates when internal forecasts differ materially from publicly
disclosed expectations, and announce price-sensitive business
developments without delay.
Shareholder advisory bodies
Jadestone maintains ongoing relationships with multiple
shareholder advisory bodies, including during the off-season
cycle in the second half of each calendar year, 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 (“AGM”) is the main forum for dialogue
between the Board and the Company’s shareholders, and all
shareholders are encouraged to attend and participate. The 2022
AGM was attended by the CEO, the Chair, several other NEDs and
senior management. Shareholders in attendance engaged directly
with these individuals, posing questions and delivering feedback.
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 Group
is reliant upon the efforts of its employees, shareholders,
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.
In addition, the Group engages with its key stakeholders through
various channels, dependent on the nature of the relationship,
and values the feedback it receives from those stakeholders. For
example, in 2022, Jadestone conducted an employee engagement
survey which assisted the Group with gauging employee attitudes
towards several matters. The Group 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 Group’s
business activities.
Jadestone has published on its website a joint Modern Slavery
Statement pursuant to both Section 54 of the UK Modern
Slavery Act 2015 and the Australian Modern Slavery Act 2018.
This Statement sets out the steps that Jadestone has taken, and
is continuing to take, to ensure no modern slavery or human
trafficking occurs within its supply chains or business. A copy of
4 2
Jadestone’s Modern Slavery Statement is available at https://www.
jadestone-energy.com/wp-content/uploads/2022/05/20220512-
JEP-Modern-Slavery-Statement.pdf.
For the latest update on Jadestone’s key stakeholder consultation
and engagement activities in 2022, please refer to the Stakeholder
Management section in the 2022 Sustainability Report. The Section
172 statement contained within the Strategic Report sets out how
Jadestone’s Directors have taken into account the interests of
stakeholders when performing their statutory duty to promote
the success of the Group during 2022, while the Sustainability
Review within the Strategic Report sets out the Group’s governance
approach to climate risks and opportunities.
PRINCIPLE FOUR
Embed effective risk management, considering both
opportunities and threats, throughout the organisation
The Board is ultimately responsible for managing Jadestone’s risk
appetite and exposure, and delegates to management the task
of identifying, managing and monitoring the risks faced by the
business. 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 Board undertakes a
bi-annual assessment of the risks and their potential impact on the
current business plan and longer-term operational strategy.
Jadestone’s risk management process is aligned with the
requirements of ISO 31000 and addresses risk management
at three levels: business, facility and task. The Group’s risk
management framework is also discussed in the Audit
Committee report and the "Risk management, principal risks and
uncertainties" section of the Strategic Report on pages 25 to 27.
The Board holds at least one formal strategy review annually. In
addition, the Board regularly identifies opportunities for growth,
both organic and inorganic, in the form of possible acquisitions.
PRINCIPLE FIVE
Maintain the Board as a well-functioning, balanced team
led by the Chair
Board composition and independence
The Board composition experienced change in 2022. Jenifer Thien
was appointed as a Non-Executive Director effective 7 April 2022.
Daniel Young stepped down as an Executive Director and CFO
effective 29 April 2022. Bert-Jaap Dijkstra was appointed as an
Executive Director and CFO effective 22 August 2022. Following
Bert-Jaap’s appointment 2022, the Board comprised nine Directors.
These included the Non-Executive Chair, the Group’s President
and CEO, the Group’s CFO and six additional Non-Executive
Directors. More than half of the Board is independent when
accounting for the independent Non-Executive Chair and four
further independent Non-Executive Directors. In 2022, both A.
Paul Blakeley and Bert-Jaap Dijkstra were Executive Directors and
considered to be full time employees. A. Paul Blakeley was not
considered to be independent due to his role as President and CEO,
and Bert-Jaap Dijkstra was not considered to be independent due
to his role as CFO.
In the Board’s judgement, six of the seven Non-Executive Directors,
namely Dennis McShane (Chair), Robert Lambert, Jenifer Thien,
Iain McLaren, Cedric Fontenit and Lisa Stewart are considered
independent. David Neuhauser, a Non-Executive Director, is
not considered to be independent as a result of his managerial
responsibilities with a material shareholder of the Company,
Livermore Partners LLC.
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 50 to 51 speak to their relevant skills and experience.
The Group has effective procedures in place to monitor and deal
with conflicts of interest. The Board is aware of the external
commitments and interests of its Directors, and changes to
those commitments and interests are reported to and, where
appropriate, agreed with the rest of the Board. All the 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.
The Board believes that its current balance of skills reflects a
very broad range of commercial and professional skills across
geographies and industries. Further, each of the Directors has
experience in public markets. Details of the Directors’ experience
and areas of expertise are outlined on pages 50 to 51.
The Board considers and reviews the requirement for continued
professional development. The Board undertakes to ensure
that its awareness of developments in corporate governance
and regulatory frameworks is current, as well as remaining
knowledgeable of any industry-specific updates. The Company’s
Nominated Adviser and other external advisers, including legal
counsel, also support this development by providing guidance and
updates as required.
The Board is supported by its committees being Audit, Governance
and Nomination, Remuneration, Health , Safety, Environment
and Climate, and Disclosure. In 2022, a Technical Committee was
established on temporary basis to provide additional support,
advice and challenge to management during the Montara Venture
FPSO hull and tank remediation work. The composition of both
the Audit Committee and the Remuneration Committee are fully
independent. Directors are all individuals of high-calibre and most
have many years’ experience in the oil and gas industry. The details
of Board and committee meetings during 2022, as well as director
attendance, is disclosed in the Directors’ Report and the committee
reports later in this section.
Each of the Directors, both executive and non-executive, has
considerable experience and all have demonstrated skills which
are complementary, independent and sufficient to cover the
requirements of the Board. As the Group continues to grow its
asset base, the Governance and Nomination Committee will
continue to monitor Board composition to ensure that it has
the appropriate mix of experience, skills, personal qualities and
capabilities. This includes a commitment to diversity where
possible. With Jenifer Thien’s appointment, female representation
on the Board is 22%, an improved ratio from 13% in 2021. The
Governance and Nomination Committee is charged with increasing
diversity at the Board level and within senior management.
The Board is of the view that it is appropriately resourced to
meet its statutory duties and comply with the QCA Code. The
composition of the Board is reviewed regularly to ensure it has the
appropriate level of skills and experience as the Group continues
to grow. The appointment of Jenifer Thien in April 2022 expanded
the Board’s gender diversity, its range of experience in the areas
of governance and social matters, and represented the first NED
based within the Asia-Pacific region.
Non-Executive Directors are advised on appointment that they are
expected to devote such time, individual circumstances permitting,
as is necessary for the proper performance of their duties, which
is expected to be not less than three days per month, based on
preparation for and attendance at:
l Scheduled Board meetings;
l The Annual General Meeting;
l Site visits;
l Meetings of Non-Executive Directors;
l Meetings with shareholders;
l Director education/training; and
l Meetings as part of the Board evaluation process.
Non-Executive Directors are also advised that this time
commitment may increase if they become a committee member or
chair, or if they are given additional responsibilities.
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 knowledge of financial, legal, operational,
technical and sustainability matters, plus experience of risk
management and growth in both the independent E&P sector
and public capital markets. In particular, during 2022, the Board
strengthened its skills, capability and knowledge in the area of
ESG and sustainability through the appointment of Jenifer Thien
as a Non-Executive Director. The Board had also considered the
finance and management roles held by Bert-Jaap Dijkstra in his
previous professional experience before appointing him as CFO
and Executive Director.
The Company Secretary is responsible for ensuring that Board
procedures are complied with and that governance matters are
addressed by the Group. 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”), taking into account additional facts, including
the role of the Board Chair, the size of the Board, the existence
and experience of the Deputy Chair, the number of independent
Non-Executive Directors, and the channels of communication
amongst the Company’s Executive, Non-Executive Directors and
shareholders. In light of the foregoing, the Board has determined
that the appointment of a SID is not required, though the matter is
reviewed regularly.
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 Directors and highlights any potential skill gaps
to address. The Board considers that its effectiveness and the
individual performance of Directors is vital to the success of the
Company. The Board currently conducts an annual internal review.
This process is led by the Governance and Nomination Committee
and involves, in part, each Board member completing a self
assessment. Recent appointments to the Board reflect findings
from internal reviews, such as an increased focus on sustainability.
In addition, an external Board review was conducted by an
independent expert as further described below. Further details
on the Board and Committee performance evaluation are outlined
in the Governance and Nomination Committee Report on pages
62 to 63.
Directors are re-appointed by shareholders at the Company’s AGM
pursuant to the Company’s Articles of Association, 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).
4 3
JADESTONE ENERGY 2022 ANNUAL REPORT COMPLIANCE STATEMENT TO QCA CODE PRINCIPLES
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
In line with the requirements of the QCA Code, the Group, in
2022, engaged an independent expert to conduct an external
Board review. The objectives of the review were to (i) provide an
opportunity for the Board to reflect on its current performance
and identify improvements in its capability and ways of working,
in order to ensure that it meets the future demands of the Group’s
business; and (ii) give confidence to stakeholders that the current
Board operations and governance meet best practices as outlined
in the QCA Code.
As set out in the Code of Conduct Policy, employees are encouraged
to talk to their supervisor, line manager or other appropriate
personnel should they have concerns over any ethical matters.
Following the policy review mentioned above, the Company
retained an independent service provider for the reporting of
concerns or complaints over ethical matters (i.e., a whistleblower
line). This provides an additional channel for employees to
communicate concerns and one by which confidentiality may be
maintained.
The findings of the review demonstrated that the Board
governance meets the requirements of the principles of the QCA
Code as it applies to the particular remit of the Board. The review
also noted that the Board is positively engaged in work to further
develop its corporate governance arrangements to match the
needs of Jadestone’s evolving business. The review did not identify
any significant areas of concern with regard to compliance.
The review provided recommendations for improvement to the
governance system so that Board governance is fully fit for the
future of Jadestone’s business. The recommendations build on
and affirm the changes that the Board is already implementing
and/or considering, including (i) enhancing the review of the
strategy implementation plan and principal risks; (ii) continuing
to develop the governance mechanism by improving information
flows; and (iii) managing the engagement and communication with
shareholders and other stakeholders. Additional details on the
Board and Committee performance evaluation are outlined in the
Governance and Nomination Committee Report on pages 62 to 63.
PRINCIPLE EIGHT
Promote a corporate culture that is based on ethical
values and behaviours
The Board is responsible for the management, or for supervising
the management, of the Group’s business and affairs. In
supervising the conduct of the business, the Board, through the
CEO, sets the standards of conduct for the Group. The application
of details of the Group’s corporate governance, including business
ethics and integrity, are set out on page 12 of this report and pages
9-10 of the 2022 Sustainability Report, which is available from
Jadestone’s website.
The Group’s values of respect, integrity, safety, results-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 written policies and
working practices, including the Code of Conduct Policy, which
is applied by all Group employees. The Code of Conduct Policy
provides a framework of principles for conducting business,
dealing with other employees, clients and suppliers, and reflects
the Group’s commitment to a culture of honesty, integrity and
accountability. Following a review by subject matter specialists,
both internal and external, the Code of Conduct Policy and other
governance related policies were reviewed and updated in 2022.
These other policies included the Anti-Bribery and Anti-Corruption
Policy, Human Rights Policy and Whistleblower Policy which can
be accessed at Key Policies - Jadestone Energy (jadestone-energy.
com). Further details on this review can be found under Principle
Nine below.
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 that may arise,
escalating these to Board level as necessary. The Board also
receives regular written updates from the senior management
team which include workforce related matters.
4 4
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 Group and is accountable to its shareholders.
Reserved matters for the Board
The Board is responsible for the direction and overall performance
of the Group with an emphasis on strategy, policy, financial results,
compliance matters and good governance. The matters reserved
for the Board include, amongst others:
l setting the Group’s purpose, values and standards;
l
reviewing and approving the Group’s strategy and annual plans
for achievement;
l monitoring compliance with significant policies and procedures,
including health and safety;
l oversight of communications and timely disclosure;
l ensuring the integrity of internal controls and management of
risks, including regular risk reviews;
l approving the Group’s annual and interim reports and
accounts; and
l overseeing control and accountability systems designed to
ensure appropriate standards are met in relation to health,
safety, environmental (including climate), social responsibility
and governance of the Group.
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 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 2021 to align with the QCA Code. During the calendar year 2022,
the Board operated five standing committees: Audit, Governance
and Nomination, Remuneration, Health, Safety, Environment and
Climate and Disclosure. A summary of the roles, responsibilities,
composition and 2022 activities of each of these committees can be
found at pages 52 to 67.
Additionally, the Board organises temporary committees on an
ad hoc basis. For example, following the pause of production at
the Montara facility in Q3 2022, the Board established a technical
committee. In part, this committee was mandated to ensure
sufficient resources were allocated to safely complete the repairs
and other activities necessary to resume production at Montara.
The committee received weekly updates from, and met up to two
times per month with, personnel managing the activities. In turn,
the technical committee kept the Board apprised of progress.
Governance Processes
In 2022, the Group engaged Control Risks, an external specialist
firm, to undertake a review of Jadestone business ethics and
compliance policies to identify gaps and areas for improvement,
principally from a UK market perspective. The Group implemented
the majority of recommendations including, amongst others,
updating the Code of Conduct Policy and the Whistleblower
Policy, and adopting a new Investigation Policy and new External
Grievance Procedure to provide clear distinction between the
handling of internal and external complaints. Consequently,
Jadestone has engaged Safecall, an independent services provider
to receive whistleblower complaints on a confidential and, if
applicable, anonymous basis. Effective January 2023, the Audit
Committee’s mandate was expanded to include specific provisions
related to the Whistleblower Policy and the Investigation Policy.
The Audit Committee now explicitly retains responsibility for
supervising relevant investigations and appropriate follow up
action.
Furthermore, Jadestone has adopted a separate Human Rights
Policy which, while cross-referring to the Code of Conduct Policy
and the Environmental, Social and Governance (“ESG”) Policy,
addresses human rights more broadly, of which modern slavery
is one component. In addition, it was noted that the Group has
issued its annual modern slavery statement since 2021 to meet
requirements under UK and Australia legislation. As part of the
2022 policy review, the Group has also updated its ESG Policy, the
Climate Policy, the Gifts, Entertainment and Hospitality Guidelines,
and the Anti-Bribery and Anti-Corruption Policy.
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 Two
and Three above. The Group’s annual financial and operational
performance, in addition to reports from each of the Board
committees, is summarised in this Annual Report.
Shareholders are encouraged to attend the AGM and to ask
questions. Outcomes of votes cast by shareholders will be
disclosed in a clear, transparent and timely manner. Shareholders
vote to fix the number of directors and elect the directors to hold
office until the next AGM or until their successors are elected or
appointed. In addition, shareholders vote to appoint the Group’s
auditor, and to authorise the Board to determine the auditor’s
remuneration. The Group receives reports from shareholder
advisory bodies, reviews their findings and meets with them to
discuss shareholder matters. The Board takes the view that, if there
is a resolution passed at a general meeting of shareholders with
20% votes against, the Group will seek to understand the reason
for the result and, where appropriate, take suitable action.
In addition, the Company has set out its Section 172 disclosures
in the Strategic Report on page 24. The Section 172 statement
describes how the directors have considered the interests and
likely consequences of any decisions on the Group’s employees,
suppliers, customers, community and the environment, in
accordance with the Directors’ statutory duties.
4 5
JADESTONE ENERGY 2022 ANNUAL REPORT COMPLIANCE STATEMENT TO QCA CODE PRINCIPLES
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Directors’ report
The Directors present their Annual
Report on the affairs of the Group and the
audited Group and consolidated financial
statements of Jadestone Energy plc for the
year ended 31 December 2022.
Incorporation and listing
Jadestone Energy is a public listed company was incorporated and
registered in England and Wales on 22 January 2021 under the
Companies Act 2006, with its head office located in Singapore.
The Company’s shares were admitted to trading on the AIM market
on 26 April 2021, as part of the corporate reorganisation by which
the Company became the ultimate parent company of the Group
(the “Reorganisation”). This Annual Report, including the Financial
Statements, are prepared and presented with Jadestone Energy plc
as the parent company of the Group for the financial year 2022.
Adoption of QCA code
At the time of the Reorganisation, Jadestone Energy plc adopted
the QCA Code and currently applies corporate governance
practices to reflect the QCA Code, which are similar to the practices
adopted by the Group. The Group prepares a corporate governance
statement at least annually to explain how it has applied the QCA
Code and to identify any areas in which the Group’s governance
structures and practices differ from the expectations set by the
QCA Code.
BCSC order
Following the delisting of Jadestone Energy Inc’s shares from the
TSX Venture Exchange on 24 March 2020, the Company continued
as a reporting issuer in the Provinces of British Columbia and
Alberta. During that period, satisfaction of its disclosure obligations
under the AIM Rules and applicable UK legislation satisfied
remaining Canadian requirements.
In March 2022, the Company applied to the British Columbia
Securities Commission (“BCSC”), as its then principal regulator
in Canada, to cease to be a reporting issuer in British Columbia
and Alberta, the Company’s two Canadian reporting jurisdictions.
The BCSC, by way of an Order, granted the relief which was then
disclosed by the Company on 6 April 2022. As a result, the Company
was no longer classified as a designated foreign issuer under
Canadian securities regulations and was no longer required to file
financial statements and other continuous disclosure documents
with the Canadian securities regulatory authorities. The application
was justified by the very low and decreasing level of Canadian
based shareholding in the Company (estimated at 0.09% at the time
of the application), and has resulted in efficiency improvements
and cost reductions.
Jadestone will continue to comply with all relevant UK regulatory
and disclosure requirements.
Principal activities
Jadestone is an independent oil and gas production and
development company focused on the Asia-Pacific region. The
Group has an acquisitive strategy and is focused on growth and
creating value through identifying, acquiring, developing and
operating assets throughout the Asia-Pacific region.
Jadestone currently has a portfolio of oil and gas production,
development and exploration assets in Australia, Malaysia,
Thailand, Indonesia and Vietnam. The Group 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 believe this strategy and business
model are consistent with the energy transition and positions
Jadestone as a responsible operator, as the Group can play a role
in fulfilling oil and gas demand from existing oil fields and gas
discoveries during the transition to a low-carbon energy system.
The Board believes this strategy can generate, over time, significant
shareholder returns, primarily through capital growth.
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 Chair’s statement,
Chief Executive Officer’s review, Business model and strategy,
Financial review and Operational review) (all of which, together
with the Corporate Governance report, are considered as part of
the audit report and incorporated by reference into this Directors’
Report).
The Directors continue to review and evaluate strategic acquisition
opportunities recommended by senior management, which align
with the strategy and requirements of the Group.
Streamlined Energy and Carbon Reporting
Legislation introduced in 2018 requires UK companies to report on
GHG emissions and energy use from 2019 onwards (Streamlined
Energy and Carbon Reporting, or “SECR”). As Jadestone is listed
on the AIM market, the Group is only required to disclose its GHG
emissions and energy use within the UK and its offshore areas. The
Group has no operations within the UK or its offshore areas, and
has only one employee located within the UK, hence its emissions
and energy footprint within the country are immaterial.
However, given the strategic importance of the Group’s GHG
emissions and energy use to its stakeholders, Jadestone has
elected to report in line with the SECR requirements for main
market UK-listed companies, which covers, inter alia, annual global
GHG emissions and underlying global energy use. These SECR
disclosures for 2022 have been included within the Sustainability
Review of the Strategic Report.
Dividend
Since 2020, the Board has provided direct returns to shareholders
by way of a dividend. The Board prioritises growth and a strong
balance sheet. If both conditions are met, the Group intends to pay
and grow dividends over time, in line with underlying cash flow
generation.
In light of the Group’s strong financial position at the midpoint of
2022, the Company paid out an interim dividend on 14 October
2022 of US$3.0 million (0.65 US cents/share), an increase of 10%
over the Company’s interim dividend of US$2.8 million paid in
October 2021.
With the Group’s cash balances having declined significantly in the
second half of 2022 and early 2023 due to the extended Montara
shut-in during the period, and a need to manage obligations under
the RBL facility signed in May 2023 and prioritise spending on the
Akatara development and Malaysia infill drilling later in 2023, the
Board decided not to recommend a final dividend for 2022.
4 6
Share buyback
On 2 August 2022, the Company launched its first share buyback programme (the “Programme”) in accordance with authority granted
by shareholders at the Company’s Annual General Meeting on 30 June 2022 (the “AGM”). Stifel Nicolaus Europe Limited conducted the
Programme and repurchased the Company’s ordinary shares of £0.001 each on the Company’s behalf. The maximum pecuniary amount
of the Programme is US$25 million and, in line with the authority granted to the Company at the AGM, the Programme will not exceed
46,574,528 Ordinary Shares. As of the publication date of this report, under the Programme, the Company has repurchased 20.2 million
Ordinary Shares at an average price of £0.76 per Ordinary Share, for an aggregate amount of US$17.9 million. While the Company has
launched the Programme, there is no certainty on the volume of shares that may be acquired, nor any certainty on the pace and quantum
of acquisitions. The Board has considered, and will continue to consider, tender offers as a way of enhancing shareholder returns.
Share capital
Details of shares issued by the Company during the period are set out in Note 30 to the Consolidated Financial Statements.
Financial instruments
The Group’s financial risk management objectives and policies are discussed in Note 39 to the Consolidated Financial Statements.
2022 Board and committee attendance
The table below provides a summary of Directors’ attendance at Board and committee meetings for the period from 1 January 2022 to
31 December 2022.
Name and positions
held in the Company
Board
Audit Committee
Governance and
Nomination Committee
Remuneration
Committee
HSEC Committee
Disclosure
Committee
A. Paul Blakeley
Director, President and CEO
Bert-Jaap Dijkstra1
Director and CFO
Dennis McShane
Director and Chair
Robert Lambert
Director and Deputy Chair
Iain McLaren
Director
David Neuhauser
Director
Cedric Fontenit2
Director
Lisa A. Stewart
Director
Jenifer Thien3
Director
6 of 6
3 of 3
6 of 6
6 of 6
6 of 6
6 of 6
6 of 6
6 of 6
5 of 5
N/A
N/A
N/A
3 of 3
3 of 3
N/A
N/A
3 of 3
N/A
2 of 2
N/A
2 of 2
N/A
2 of 2
N/A
2 of 2
N/A
1 of 1
N/A
N/A
2 of 2
N/A
2 of 2
N/A
2 of 2
N/A
1 of 1
3 of 3
N/A
N/A
3 of 3
N/A
N/A
N/A
3 of 3
2 of 2
1 of 1
1 of 1
N/A
N/A
N/A
N/A
N/A
N/A
N/A
1
2
3
Bert-Jaap Dijkstra was appointed Director and Chair of the Disclosure Committee on 22 August 2022.
Cedric Fontenit stepped down from the position as Chair of the Remuneration Committee upon the appointment of Jenifer Thien.
Jenifer Thien was appointed as Director and Chair of the Remuneration Committee on 7 April 2022.
Board Meetings:
10 March 2022, 4 May 2022, 1 June 2022, 29 June 2022, 15 September 2022, 8 December 2022. See each of the Board committee reports for schedule of meetings in 2022.
Directors and their interests
The Directors, who served throughout the year and up to the date
of this report, except as noted, were as follows:
l Dennis McShane (Independent Non-Executive Chair)
l A. Paul Blakeley (Executive Director, President and CEO)
l Daniel Young (Executive Director and CFO) 1
l Bert-Jaap Djikstra (Executive Director and CFO) 2
l Robert Lambert (Independent Non-Executive Deputy Chair)
l Cedric Fontenit (Independent Non-Executive Director)
l
Iain McLaren (Independent Non-Executive Director)
l Lisa A. Stewart (Independent Non-Executive Director)
l
Jenifer Thien (Independent Non-Executive Director) 3
l David Neuhauser (Non-Executive Director)
The Directors who held office at the end of the 2022 financial year
had the following interests in the ordinary shares of the Company:
Director
A. Paul Blakeley
Bert-Jaap Djikstra
Dennis McShane
Robert Lambert
Iain McLaren
David Neuhauser
Cedric Fontenit
Lisa A. Stewart
Jenifer Thien
Interest at 1
January 2022
or date of
appointment
Interest as at
31 December 2022
4,232,798
4,232,798
Nil
453,651
153,919
166,208
32,319,1674
200,0005
Nil
Nil
Nil
453,651
153,919
169,564
31,393,0944
200,0005
Nil
Nil
Stepped down as CFO and Executive Director on 29 April 2022.
1
2 Appointed 22 August 2022.
3 Appointed 7 April 2022.
4 Mr. Neuhauser does not own any ordinary shares of the Company directly but, as managing director of Livermore Partners LLC, exercises control or direction over
the ordinary shares beneficially owned by Livermore Partners LLC.
5 Mr. Fontenit owns 200,000 ordinary shares of the Company directly. He also holds 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 ordinary shares of the Company. However, Mr. Fontenit does not exercise control or
direction over the Fund’s holding in the Company.
47
JADESTONE ENERGY 2022 ANNUAL REPORT DIRECTORS’ REPORT
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
No rights to subscribe for shares in, or debentures of, Group
companies, were granted to any of the Non-Executive Directors
or their immediate families, or exercised by them, during the 2022
financial year.
Details of share awards that have been granted to the Executive
Directors in calendar year 2022 under the Group’s Stock Option
Plan in addition to details of awards to Executive Directors in
calendar year 2022 under the Performance Share Plan and the
Restricted Share Plan are included in the Remuneration Committee
report on pages 54 to 61. During the calendar year 2022, no Non-
Executive Directors received any awards under the Group’s long-
term incentive plans.
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 Group also purchased and
maintained throughout the financial period directors’ and officers’
liability insurance in respect of itself and its Directors.
Political donations
The Group did not make any political donations nor incur any
political expenditures to candidates or political campaigns during
the period.
Conflicts of interest
There are no potential conflicts of interest between any duties
owed by the Directors to the Group and their private interests and/
or other duties, nor any arrangements or understandings with any
of the shareholders of the Group, customers, suppliers or others
pursuant to which any Director was selected to be a Director. The
Group performs regular tests to ensure awareness of any future
potential conflicts of interest and related party transactions.
Directors are required to declare any additional or changed
interests as they arise. In the event a conflict should arise, the
relevant Director does not take part in decision making related to
the conflict. In March 2022, A. Paul Blakeley recused himself when
the Board approved the LTIP grants of which he was a recipient.
Related party transactions
There were no related party transactions to which the Group
was a party during the period, save as disclosed in Note 44 of the
Consolidated Financial Statements.
Substantial shareholders
The following table sets out, to the best of the Company’s
knowledge, its significant shareholders as at 30 April 2023.
Number of
ordinary shares
as at 30 April 2023
% interest
as at
30 April 2023
118,122,188
26.46
Share dealing code
The Group adopted a code for share dealings (the “Dealing Code”)
appropriate for an AIM company, in compliance with Rule 21 of the
AIM Rules and with the Market Abuse Regulation. The Dealing Code
applies to the Directors, members of the senior management team
and other relevant employees of the Group.
Corporate governance policies
The Board reviewed and updated several key governance policies
in 2022, including the Code of Conduct Policy, the Anti-Bribery and
Anti-Corruption Policy, the Whistleblower Policy, the Climate Policy,
the Environmental, Social and Governance Policy and the Human
Rights Policy. The Group’s key governance policies are available on
the Group’s website. The Board, assisted by senior management,
reviews and refines Group policies on a regular schedule.
Risk management
Risk management is integral to all of the Group’s activities. Each
member of senior management is responsible for continuously
monitoring and managing risk within the relevant business areas.
Every material decision is preceded by an evaluation of applicable
business risks. Reports on the Group’s risk exposure and reviews
of its risk management are regularly undertaken and presented
to the Board. The Directors conduct a review of the Group’s risk
register bi-annually. Additional details regarding the Group’s risk
management can be found on pages 25 to 27.
Workforce diversity and disability statement
Jadestone has a Diversity Policy (accessible at https://www.
jadestone-energy.com/wp-content/uploads/2023/04/Diversity-
Policy.pdf). It sets out Jadestone’s approach to equality and
diversity, its commitment to promoting a culture that actively
values diversity, and recognises that people from different
backgrounds and experiences can bring valuable insights to the
workplace and enhance its work practices. Jadestone considers
diversity to mean celebrating difference, valuing everyone and
recognising that each person is an individual with visible and
non-visible differences. Jadestone’s talent acquisition process
considers diversity and gender equality to ensure it develops
and maintains an inclusive workforce that is representative of
the places it operates in, and brings a range of knowledge, skills
and perspectives to the business. Jadestone will not tolerate any
acts of unlawful or unfair discrimination (including harassment)
committed against an employee, contractor or job applicant
because of a protected characteristic, including disabilities.
Jadestone also commits to adapt its organisation and adapt
working practices to include everyone and will not tolerate any
discrimination on the basis of work pattern (i.e., part-time working,
fixed-term contract, flexible working).
Stakeholder engagement
Please see the section 172 statement on page 24 of this report
for how the Company’s Directors had regard to the interests of
employees, suppliers, customers and other stakeholders during
the year.
Registrar
Jadestone Energy plc’s share registrar in respect of its ordinary
shares traded on AIM is Computershare Investor Services plc.
Contact details can be found on the Group’s website.
Independent auditor
Having reviewed the independence and effectiveness of the
auditor, the Audit Committee has recommended to the Board
that Deloitte Ireland LLP (“Deloitte”) be reappointed. Deloitte has
expressed its willingness to be reappointed as auditor. A resolution
to appoint Deloitte, as auditor of Jadestone Energy plc, will be put
to the shareholders at the AGM.
Additional disclosures
Supporting information that is relevant to the Directors’ Report,
which is incorporated by reference into this Directors’ Report, can
be found throughout this Annual Report. For considerations of post
balance sheet events, please refer to Note 43 in the Consolidated
Financial Statements within this Annual Report.
Going concern
The Consolidated Financial Statements have been prepared under
the going concern assumption, which presumes the Group will
be able to meet its obligations as they fall due during the going
concern period. The financial position of the Group, its cash
flow, liquidity position and borrowing facilities are described
in the Financial Review on pages 31 to 37. In addition, Note 2
to the financial statements on page 84 includes: the Group’s
objectives and processes for managing its capital, its financial risk
management mitigants; details of its financial instruments and
hedging activities; and its exposure to credit risk and liquidity risk.
The Group’s assessment of the going concern assumption and
viability has considered the Group’s financial position, available
facilities and forecast compliance with covenants, and capital
expenditure commitments. These are underpinned by assumptions
in respect of production based on the Group’s approved 2023
work plan and budget, and oil price. The Board regularly reviews
the updated liquidity projections of the Group. The detailed going
concern and viability analysis, including sensitivity analysis and
stress testing, were presented to the Audit Committee and the
Board in May 2023. This analysis was considered and challenged
prior to approval of the audited 2022 full year results. After
appropriate consideration, including the analysis referenced here
and in Note 2 to the financial statements, the Directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence over the going concern period.
Director confirmations
Each of the Directors, whose name and functions are listed in the
Directors’ Report, confirms that, to the best of their knowledge:
l The financial statements have been prepared in accordance
with UK-adopted International Accounting Standards and
International Financial Reporting Standards as issued by the
International Accounting Standards Board and in conformity
with the requirements of the Companies Act 2006; and
l The Strategic Report includes a fair review of the development
and performance of the business and the position of the Group
and the Company, together with a description of the principal
risks and uncertainties that it faces.
Corporate governance statement
The Group currently complies with the QCA Code and a more
detailed compliance statement is provided at pages 41 to 45.
Disclosure of information to auditors
Each of the persons who is a Director at the date of approval of this
annual report confirms that:
l so far as the Director is aware, there is no relevant audit
information of which the Group’s auditors are unaware; and
l
the Director has taken all the steps that he/she ought to have
taken as a director in order to make himself/herself aware of
any relevant audit information and to establish that the Group’s
auditors are aware of that information.
This confirmation is given and should be interpreted in accordance
with the provisions of s418 of the Companies Act 2006.
This Annual Report was approved by the Board of Directors and
authorised for issue on 6 June 2023.
On behalf of the Board
A. Paul Blakeley
Executive Director,
President and Chief Executive Officer
6 June 2023
43,615,034
39,195,875
31,393,094
29,327,162
15,882,974
15,245,749
13,450,000
9.77
8.78
7.03
6.57
3.56
3.42
3.01
Annual general meeting
The Company’s AGM will be held in London, England on 22 June
2023. Full details of the proposals to be addressed at the AGM
are set out in a separate Notice of AGM. Shareholders are invited
to complete the proxy form received either by post or vote
electronically in accordance with the notes contained within the
Notice of AGM. The Notice of AGM and the Proxy Form are available
on the Group’s website at https://www.jadestone-energy.com/aim/
notices/.
Akatara gas processing facility site
4 9
Shareholder
Tyrus Capital
Fidelity International
Baillie Gifford
Livermore Partners
Odey Asset Management
Invesco
Premier Miton Investors
Canaccord Genuity Wealth
Management
4 8
JADESTONE ENERGY 2022 ANNUAL REPORT Board of Directors
A. Paul Blakeley OBE
Executive Director, President
and Chief Executive Officer
Dennis McShane
Independent Non-Executive Director,
Chairman
Appointed: Executive Chairman June 7, 2016 / President and CEO June
15, 2017 by Jadestone Energy Inc. | Executive Director, President and
CEO January 22, 2021 by the Company
Committee Memberships: HSEC Committee, Disclosure Committee; and
Governance and Nomination Committee
Paul commenced a role 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.
Appointed: December 10, 2017 by Jadestone Energy Inc.| April 23, 2021
by the Company
Committee Memberships: Governance and Nomination Committee
(Chair) and Remuneration Committee
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 and 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.
Current external roles: None.
Current external roles: None.
Bert-Jaap Dijkstra
Executive Director and
Chief Financial Officer
Robert Lambert
Independent Non-Executive Director,
Deputy Chairman
Appointed: Executive Director and CFO August 22, 2022 by the
Company
Appointed: May 5, 2011 by Petra Petroleum Inc. (former name of
Jadestone Energy Inc.) | April 23, 2021 by the Company
Committee Memberships: HSEC Committee (Chair) and Audit
Committee
Robert has over 50 years’ experience in the international petroleum
exploration and production business. Robert is MBA-qualified
and previously held numerous operational and management
positions during his career with Conoco Inc. from 1978 to 2004.
Robert contributes his extensive experience in commercial
and operational risk management in upstream oil & gas to the
Jadestone Board.
Current external roles: Hillcrest Energy Technologies Ltd.
Committee Memberships: Disclosure Committee (Chair)
Bert-Jaap joined Jadestone in August 2022. He has 25 years of
experience in finance roles, most recently as Group Treasurer
and Head of Investor Relations with SBM Offshore, where he
built significant experience of equity and debt capital markets.
Bert-Jaap was directly responsible for managing all financing
activities for SBM Offshore, including structuring c.US$5 billion
in project financings and managing financial risk, optimisation of
funding sources and corporate finance. He was voted best investor
relations professional for the energy services sector in the 2019
Extel and in the 2020 and 2021 Institutional Investor surveys.
Prior to his employment at SBM Offshore, Bert-Jaap held various
finance roles in European commercial real estate and with Royal
Dutch Shell, where he lived and worked for a period in Southeast
Asia as Finance and Planning Manager. Bert-Jaap holds a MSc
degree (with honours) from Wageningen University. He is a
Chartered Management Accountant and completed an MBA in
Financial Management from MIT Sloan School of Management.
Current external roles: None.
5 0
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Lisa Stewart
Independent Non-Executive Director
Cedric Fontenit
Independent Non-Executive Director
Appointed: December 1, 2019 by Jadestone Energy Inc. | April 23, 2021
by the Company
Appointed: June 7, 2016 by Jadestone Energy Inc. | April 23, 2021 by the
Company
Committee Memberships: HSEC Committee and Audit Committee
Lisa has over 40 years of experience in the upstream oil and
gas industry in engineering and senior management positions.
Currently, Lisa is a Director of Cottera Energy Inc., Director of
Western Midstream Partners LP, and Executive Chair of Sheridan
Production Partners LLC. Previously, Lisa 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.
Current external roles:
Cottera Energy Inc. | Western Midstream Partners LP | Sheridan
Production Partners LLC.
Jenifer Thien
Independent Non-Executive Director
Appointed: April 7, 2022 by the Company
Committee Memberships: Remuneration Committee (Chair),
Governance and Nomination Committee and HSEC Committee
Jenifer is the Founder and Principal of Grit and Pace, through which
she advises corporations on Environmental, Social and Governance
strategy and what it takes to drive change in supply chain,
procurement and operational excellence. Currently, Jenifer is an
Independent Non-executive Director of UEM Edgenta Berhad and
AEON Co. (M) Berhad. She has over 30 years of international senior
executive experience in the consumer-packaged goods industry
and had the opportunity to live and work in several countries
across Asia and the US throughout her career. This includes 25
years with Mars, Incorporated, where she last served as the Global
Chief Procurement Officer. Jenifer has successfully led complex
business transformation and sustainability programmes through
her deep understanding of the business enterprise, the ability to
mobilise required capabilities, as well as intensive stakeholder
engagement.
Current external roles: UEM Edgenta Berhad AEON Co. (M) Berhad.
Committee Memberships: Remuneration Committee, and Governance
and Nomination Committee
Cedric has extensive experience in advising on M&A, financing
and structuring investments gained from his 20-year career in
the investment banking and hedge fund industries. Cedric is
co-founder and currently managing partner of Amavia Capital, a
private investment firm and the President of Tall Mount SAS. He
was previously a senior member of the investment team at Tyrus
Capital S.A.M. where he acquired significant investment experience
in the oil and gas and mining industries, among others.
Current external roles: None.
Iain McLaren
Independent Non-Executive Director
Appointed: April 21, 2015 by Jadestone Energy Inc. | April 23, 2021 by
the Company
Committee Memberships: Audit Committee (Chair), Governance and
Nomination Committee and Remuneration Committee
Iain has significant experience in the oil and gas sector and is
currently a Director, Chair of the Audit Committee and a member
of the Remuneration and Nomination Committees for Wentworth
Resources Plc, as well as a Director of Ecofin Global Utilities and
Infrastructure Trust Plc. Iain was previously a Senior Independent
Director for Capricorn Energy plc (formerly 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.
Current external roles: Ecofin Global Utilities and Infrastructure Trust
Plc | Wentworth Resources Plc.
David Neuhauser
Non-Executive Director
Appointed: June 7, 2016 by Jadestone Energy Inc. | April 23, 2021 by
the Company
Committee Memberships: None
David has extensive capital markets and M&A experience and is
founder and currently CIO of event-driven hedge fund Livermore
Partners in Chicago. He is a Non-Executive Director of Amaroq
Minerals Ltd. and the Chairman of the Board 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.
Current external roles: Amaroq Minerals Ltd. | Kolibri Global Energy Inc.
51
JADESTONE ENERGY 2022 ANNUAL REPORT Audit Committee report
Committee members and meeting attendance
In 2022, the Audit Committee comprised:
Iain McLaren (Committee Chair)
l
l Robert Lambert
l Lisa Stewart
All of whom are independent.
Meeting Attendance:
l
Iain McLaren
l Robert Lambert
l Lisa Stewart
3 out of 3
3 out of 3
3 out of 3
Meetings: 31 May 2022 | 30 August 2022 | 22 November 2022
Role of the Committee
The Audit Committee (the “Committee”) has oversight of the
Group’s financial reporting including accompanying narrative,
internal controls and risk management systems, compliance,
whistleblowing and fraud, as well as external statutory financial
audits and independent evaluations of the Group’s reserves.
Letter from the Committee Chair
Dear shareholder,
It is my pleasure to present the Audit Committee Report
for the year ended 31 December 2022.
Governance
There were no changes in the composition of the Audit Committee
during 2022. Chief Financial Officer (CFO), Dan Young, left the
Group during the year. A successor was found in Bert-Jaap Dijkstra
who started with Jadestone on 22 August 2022. The Chief Financial
Officer, the Head of Group Finance and the Australia Finance
Manager are invited to attend the meetings of the Committee. The
Head of Group Finance serves as the secretary to the Committee.
Representatives of the external auditor are invited to attend each
regular meeting of the Committee. Additional ad-hoc (virtual)
meetings may be organised with relevant Group representatives
invited. Other Board and management representatives can attend
meetings of the Committee by invitation. The external auditor has
unrestricted access to the Committee Chair.
In 2022, the Committee met on three occasions. Meetings are
scheduled to allow sufficient time for full discussion of key topics
and to enable early identification and resolution of risks and issues.
Meetings are aligned with the Group’s financial reporting calendar.
Summary of responsibilities
The Committee’s detailed responsibilities are described in its terms
of reference (“TOR”) which are available on the Group’s website and
include:
a. Monitoring the integrity of the Group’s financial statements
including its annual (both preliminary and final) and interim
financial statements and reviewing significant financial
reporting issues and judgments contained within them and
reporting any issues to the Board;
b. Overseeing the Group’s accounting and financial reporting
processes, the Group’s internal controls and risk management
systems and the resolution of any issues identified by the
Group’s external auditor;
c. Meeting with the Group’s external auditor, along with the
Chief Financial Officer and select senior finance managers of
the Group, to plan for and to subsequently review the annual
audited and interim unaudited financial statements of the
Group; and
d. Supervising the Group’s reporting of its oil and gas reserves
including overseeing the work undertaken by the Group’s
independent third-party reserves evaluator.
Review of the financial statements
The Audit Committee monitors the integrity of the annual and
interim financial statements and reviews 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.
At the conclusion of the annual audit process the external auditor
provides a detailed final report to those charged with governance,
including the results of their audit and other audit matters. The
Audit Committee evaluates the overall performance of the auditor
and recommends their continued appointment to the Board.
Financial reporting
Over the last twelve months the Audit Committee has monitored
and reviewed the preparation and issuance of the Group’s
consolidated audited financial statements and Company audited
financial statements for the year ended 31 December 2022,
along with the Group’s unaudited condensed interim financial
statements for the six-month period ended 30 June 2022.
The Audit Committee has remained focused on reviewing material
matters affecting the risks and financial position of the Group.
Specific focus has been given to the circumstances of the Montara
shut-in from August 2022 to March 2023 and the impact of the
shut-in on the Group’s financial position. The progress towards
obtaining a Reserves Based Loan facility and the evolution of Group
liquidity was monitored. The risks and financial impacts on the
Group from the impacts of the COVID-19 pandemic and continued
volatility in oil prices also continued to be assessed.
The Audit Committee also reviewed the external auditor’s planning
report for the 2022 full year audit, including consideration of
the planned scope and audit approach, the materiality level, the
auditor’s identified items of significant risk and areas of audit focus
and auditor independence, among other factors.
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
External Auditor
Under cl. 8.6.2(b) of the TOR, the Company is required to tender
out the Group’s audit services contract at least once every ten
years. This helps to ensure the Group can compare the quality
and effectiveness of the services provided by external auditors.
Additionally, the external audit lead partner must be rotated after
a maximum of five years, cl. 8.6.2(a).
As mentioned in the 2021 Annual Report, the Audit Committee
initiated an audit tender in the fourth quarter of 2022. Given the
geographic spread of the Group’s activities spanning five countries,
the Audit Committee judged it appropriate to approach audit firms
that could provide the transnational resources required. Five firms
were approached to determine whether they were interested in
tendering. Following initial consultations, it was established there
were insufficient qualified firms to perform a tender. Accordingly,
the Audit Committee has decided to postpone a formal tender
until 2025, when the present auditor will have completed five years
of service. At this time, the Committee will reappraise the audit
market and expects to conduct a tender process.
Audit fees and non-audit services by the auditor
Under the Audit Committee TOR, the Group is precluded from
engaging Deloitte for any non-audit services across the business.
Exceptions to this principle, on a one-off basis, may be considered,
but in all cases subject to the Audit Committee’s prior approval.
This policy is applied on a global basis to all member firms of the
Group’s auditors. This restriction has been complied with in 2022,
as it was in prior years, with no non-audit services and no non-
audit fees paid to the auditors. Total fees paid to the auditors were
as follows:
US$’000
Total audit fees
Non audit fees paid to
auditors
Total fees paid to
auditors
Twelve months
ended 31
December 2021
Twelve months
ended 31
December 2022
828
-
828
907
-
907
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.
Yours sincerely,
Iain McLaren
Non-Executive Director and
Chair of the Audit Committee
6 June 2023
The Committee then oversaw the completion of the preparation
and finalisation of the issuance of the Group’s consolidated audited
financial statements for the year ended 31 December 2022. This
has included a 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 May 2023 final report to those charged with governance.
Reserves reporting
The Board has continued to delegate to the Audit Committee
the oversight, monitoring and review of the Group’s oil and gas
reserves and resources disclosures.
The Audit Committee has duly overseen the work conducted by
management and by the Group’s qualified third-party reserves
evaluator culminating in the Group’s disclosure of year end 2022
reserves on page 144.
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 25 to 27.
Management identifies the key operational and financial processes
that exist within the business and has developed an internal risk
control framework. This is structured around Group policies and
procedures and includes a delegated authority framework.
Compliance, whistleblowing and fraud
The Audit Committee reviews the Group’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 2022.
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. No concerns were
raised during 2022. In early 2023, the Group engaged Safecall, an
independent services provider, to receive whistleblower complaints
on a confidential and, if applicable, anonymous basis.
ESG
Consistent with the evolving reporting requirements associated
with climate transition risk, the Audit Committee has monitored
the Group’s responses to climate risk and ESG disclosures generally
and reviewed the Group’s climate-related scenarios, analysis and
disclosure specifically.
Internal reorganisation
Following the introduction of Jadestone Energy plc as new
ultimate holding company of the Group in 2021, the Group
commenced its final phase of this reorganisation at the end of
2022. The Group currently does not have business activity in
Canada, and it is not planning to have activity in Canada in the
future. As such, the Group is moving its business activities from
the Canadian sub-holding entities to a Singapore registered entity.
The Audit Committee has endorsed the project’s execution plan
and reviewed the project’s objectives and key elements.
The relevant transactions, to be executed at arm’s length using
third-party expert advice, will be executed and closed in the
2023 financial year.
5 2
5 3
JADESTONE ENERGY 2022 ANNUAL REPORT Remuneration Committee report
Committee members and meeting attendance
In 2022 the Remuneration Committee comprised:
l
Jenifer Thien*
l Cedric Fontenit**
l Dennis McShane
Iain McLaren
l
Meeting Attendance
l
Jenifer Thien
l Cedric Fontenit
l Dennis McShane
Iain McLaren
l
1 out of 1
2 out of 2
2 out of 2
2 out of 2
Meetings: 3 March 2022 | 22 November 2022
Jenifer Thien - Chair of the Remuneration Committee, effective 1st July 2022.
*
** Cedric Fontenit - Resigned as Chair of the Remuneration Committee on
1st July 2022.
Role of the Committee
The Remuneration Committee ensures that the remuneration 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
Group.
Key roles and responsibilities
Responsibilities of the Remuneration Committee include (but not
limited to):
l Annually reviewing and making recommendations with respect
to remuneration, including short-term and long-term incentives
of the executive directors and other senior executives;
l Reviewing the appropriateness of and approving any changes
to remuneration policies of the Group;
l Obtaining reliable and up-to-date information about
remuneration in other companies of comparable size and
scope; and
l Overseeing any major changes in employee benefits structures
throughout the Group.
Responsibilities of the Remuneration Committee
Chair include:
l Setting agendas, chairing committee meetings and ensuring all
tasks delegated to the committee are dealt with;
l Where required, leading consultations with shareholders on
the Group’s remuneration policy;
l Answering questions about remuneration more generally with
shareholders.
Responsibilities of all members of the Remuneration
Committee include:
l Be independent and willing to justify the decisions of the
Remuneration Committee to executive directors and senior
management;
l Be willing and able to resist inappropriate demands from
executive directors and senior management;
l Be prepared to seek external advice when necessary;
l 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), and
to work as part of a small committee;
l 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
l Review the Group’s legal obligations, including changes to
Base salary
employment and discrimination law, company law and relevant
regulations as well as the effect of any changes to tax law or
rates of tax.
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Letter from the Committee Chair
Dear shareholder,
On behalf of the Board, I am pleased to present the
Remuneration Committee report for the year ended 31
December 2022.
The Remuneration Committee strives to ensure that the level and
structure of remuneration of the Board and key management
personnel are appropriate and proportionate to the sustained
performance and value creation of the Group, attract and retain
highly talented individuals; whilst ensuring alignment of interests
of shareholders and the ongoing generation of shareholder value.
The total remuneration framework for the Group is provided in
the first section of this report. This framework was approved by
shareholders in May 2019 and includes a three-year transition
away from North American remuneration structures to norms and
practices typical of a UK-listed entity. As part of this transition, in
2019 Jadestone announced a transition of its long-term incentive
(LTI) programme away from time-vested share options to a
Performance Share Plan (“PSP”), with a three-year cliff vesting
linked to specific stretch performance conditions. The LTI awards
made to management in April 2022 comprised of a combination of
share options (25%) and performance shares (75%). The April 2022
awards represented the final year in the three-year transition in
which share options formed part of the LTI awards
for management.
The Remuneration Committee remains focused on ensuring that
the LTI programme aligns the interests of senior leaders of the
organisation to the interests of shareholders, while at the same
time retains and incentivises our top talent. In consultation with
Mercer, we continue to review relevant LTI metrics as well as
industry best practices to ensure that the LTI programme meets its
objectives of performance and retention.
In 2022 and the early part of 2023, other key matters considered by
the Remuneration Committee included the following:
i. Reviewed the CEO’s 2022 performance agreement, and agreed
on outcomes relating to performance pay;
ii. Approved the overall 2022 performance of 35% of the total
objectives, as further detailed below;
iii. Reviewed recommendations for salary adjustments for 2023,
which consider the impact of inflation and market wage
movements across the region, in which we operate;
iv. Approved the 2023 Performance Share Plan metrics. As of the
date of publication of the annual report, the Board has not
approved grants in 2023 under any of the LTIPs;
v. Reviewed and approved an overall 15% vesting for the 2020 -
2022 Performance Shares Plan cycle; and
vi. Determined the remuneration of the Group’s new CFO who
commenced employment with the Group in August 2022.
(As noted in the 2021 report, the CEO and CFO remuneration
packages were previously re-aligned with shareholder’s
interests for greater transparency to increase the amount of
pay which is performance linked).
In conducting its work, the Remuneration Committee sought
the support of Mercer, which provided independent advice on
governance best practices, long-term incentives and compensation
benchmarking. PwC has also provided advice on tax and
remuneration as required.
I welcome any feedback from investors on our remuneration
arrangements.
Yours sincerely
Jenifer Thien
Non-Executive Director and
Chair of the Remuneration Committee
6 June 2023
Total rewards structure
Jadestone’s total rewards structure offers a competitive package aligned to the principles of performance and delivery. The Group
believes its emphasis on performance pay and long-term incentives, with clear goal-setting, helps to deliver a results-oriented culture that
generates exceptional results with visible recognition and rewards in the event of the delivery of agreed objectives.
a. Remuneration at a glance
Total reward component
Detail
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.
Eligible employees
All permanent employees
Pension
Aligned to pension standards in the country of jurisdiction.
All permanent employees
Performance pay
Long-term incentive
Annual performance pay target for eight job bands with performance pay
ranging from 0-10% to 0-150%. Annual performance pay depends on both
employee and Group performance against agreed KPIs.
All permanent employees
The Performance Share Plan is used to retain staff whose contributions
are essential to the well-being and prosperity of the Group and to give
recognition to executive committee members and any other key roles of
strategic significance who contribute to the growth of the Group.
Limited to permanent employees
at a senior job band who can most
influence corporate outcomes.
5 4
5 5
JADESTONE ENERGY 2022 ANNUAL REPORT
REMUNERATION COMMITTEE REPORT
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
b. Executive employment agreements
As CEO, 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 is based on the
date of notice:
l
If the date of notice precedes the date upon which such
performance pay amount would have been paid, the Annual
Performance Pay Target Amount is based on the year preceding
the date of notice, and
l A pro-rata portion of the Annual Performance Pay Target
Amount is based on current year until 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. Dijkstra 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. Dijkstra
in connection with such change of control, Mr. Dijkstra is entitled
to payment in the amount of twelve (12) times his monthly salary;
one (1) times the annual performance pay target (The annual
performance pay target amount is based on the date of notice:
l
If the date of notice precedes the date upon which such
performance pay amount would have been paid, the Annual
Performance Pay Target Amount is based on the year preceding
the date of notice, and
l A pro-rata portion of the Annual Performance Pay Target
Amount is based on current year until the date of notice)
and an amount equivalent to US$180,000 as compensation for the
loss of foreign service allowances and all other benefits over the
period of twelve (12) months.
c.
Illustration of policy application
The following table presents the target and maximum possible
for the main components of the total rewards structure for the CEO
and CFO.
Reward
component
2022 base salary
Pension allowance
Performance pay
Long-term incentive
Position Detail
CEO
CFO
CEO
CFO
CEO
CFO
CEO
CFO
Annual salary of US$650,0001
Annual salary of US$360,000
10% of base salary
10% of base salary
0 – 150%
0 – 130%
95% of base salary
80% of base salary
1 Under the terms of employment, Mr Blakeley has a right to receive US$50,000
of his annual base salary in the form of restricted share units.
As on the date of publication there has been no grant made to Mr. Blakeley
for the year 2023.
a. Total remuneration
The following table sets out the total remuneration, including the value of LTI awards, for both the executive directors and the non-
executive directors for 2022, as compared to 2021 and 2020.
Name and position
Executive Directors
A. Paul Blakeley1
President and
Chief Executive Officer
Bert-Jaap Dijkstra6
Chief Financial Officer
and Chair of Disclosure
Committee
Non-Executive Directors
Dennis McShane
Board Chair and Chair
of Governance and
Nomination Committee
Robert Lambert
Deputy Board Chair and
Chair of HSEC Committee
Iain McLaren
Chair of Audit Committee
Jenifer Thien
Chair of Remuneration
Committee
Lisa Stewart
Cedric Fontenit
David Neuhauser
Pension
allowance
(10%
of base
salary)
Perform-
ance pay
(US$)2
Committee
or meeting
fees
(US$)
Value of
overseas
allowance
support4
(US$)
Salary or
fees (US$)
Year
LTI3
(US$)
Other
benefits5
Total
fixed
remun-
eration
Total
variable
remun-
eration
Total
remun-
eration
2022
2021
2020
650,000
625,000
437,500
65,000
62,500
55,000
341,250
492,375
536,250
Nil
Nil
Nil
280,000
356,708
443,332
502,254
347,763
410,062
34,470
29,219
36,256
1,029,470
1,073,427
972,088
843,504
840,138
946,312
1,872,974
1,913,565
1,918,400
2022
130,435
13,043
59,348
Nil
87,291 250,638
3,217
233,986
309,986
543,972
2022
2021
2020
2022
2021
2020
2022
2021
2020
150,000
150,000
114,583
80,000
80,000
56,667
80,000
80,000
56,667
2022
58,681
2022
2021
2020
2022
2021
2020
2022
2021
2020
80,000
80,000
56,667
80,000
80,000
56,667
80,000
80,000
56,667
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
5,000
5,000
4,375
15,000
15,000
13,125
25,000
25,000
21,875
12,335
20,000
10,000
17,500
10,000
15,000
9,792
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
17,093
Nil
Nil
11,395
Nil
Nil
11,395
Nil
Nil
Nil
11,395
Nil
Nil
11,395
Nil
Nil
11,395
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
155,000
155,000
118,958
95,000
95,000
69,792
105,000
105,000
78,542
Nil
Nil
17,093
Nil
Nil
11,395
Nil
Nil
11,395
155,000
155,000
136,051
95,000
95,000
81,187
105,000
105,000
89,937
71,016
Nil
71,016
100,000
90,000
74,167
90,000
95,000
66,459
80,000
80,000
56,667
Nil
Nil
11,395
Nil
Nil
11,395
Nil
Nil
11,395
100,000
90,000
85,562
90,000
95,000
77,854
80,000
80,000
68,062
1 Under the terms of employment, Mr Blakeley has a right to receive US$50,000 of his annual base salary in the form of restricted share units.
2 Performance pay is finalised and approved in March of the year following the prevailing year, based on the achievement of various corporate targets and objectives.
3
The amounts shown in 2022 reflect performance pay paid in 2023 with respect to 2022 performance.
LTI represents the market value of the share awards during the year. There have been no awards to the non-executive directors since 2021. An LTI award, in the
form of Restricted Share Units (RSUs), was granted to Mr. Dijsktra in 2022 on joining Jadestone as CFO.
4 Overseas allowance support includes international talent allowance, benefits in-kind (housing, schooling, home leave).
5 Other benefits comprise healthcare and life insurance plans.
6 Mr. Dijkstra’s remuneration is pro-rated for the year 2022 as he only commenced employment with Jadestone on 20 August 2022.
b. Overseas allowance support
Overseas allowances are 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 is a company incorporated in the United Kingdom
with shares listed on the AIM market, but the Group operates in
Southeast Asia and Australia with offices in Singapore, Australia,
Malaysia, Indonesia and Vietnam. The Group does not maintain
staffed offices in the UK.
This unique approach, among its listed peers, of locating
Jadestone’s leadership close to its key assets, ensures management
works closely with activities and operations in the Asia-Pacific
region, as well as providing coherent and aligned thinking
throughout the business. This has an advantage both in managing
the day-to-day activities of the Company, as well as being able
to interact directly with with key regional and local external
stakeholders. It also eliminates the cost of maintaining an office in
the UK.
Because the CEO and CFO are foreigners working abroad, aligned
with standard market practice, they receive support to recognise
the extra costs arising from living in a host location. These
allowances are independently reviewed and benchmarked on a
periodic basis with Mercer.
c. Other benefits
The CEO and CFO are provided with private medical insurance and
covered under Group insurance plans (Group term life, long-term
disability and personal accident).
d. Comparison of fixed and variable remuneration
The following charts illustrate the 2022 remuneration mix for
the CEO and CFO, based on their prevailing total rewards plan
and target outcomes. Note that variable pay, including
performance pay and LTI, with respect to a calendar year
compensation cycle, is normally determined and granted in the
following year.
Sunset at the Montara fields
5 6
5 7
JADESTONE ENERGY 2022 ANNUAL REPORT
CEO – 2022 remuneration mix, at target (not actual), in thousands of US dollars1
Fixed2
100%
1,029
Target3
23%
29%
2,134
48%
32%
Maximum4
30%
38%
3,239
0
500
1,000
1,500
2,000
2,500
3,000
3,500
REMUNERATION COMMITTEE REPORT
Fixed
STI
LTI5
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
CEO – 2022 remuneration mix, at target (not actual), in thousands of US dollars1
CFO – 2022 remuneration mix, at target (not actual), in thousands of US dollars1
Fixed2
100%
1,029
Fixed2
100%
623
Target3
Maximum4
48%
32%
23%
29%
2,134
Target3
62% 17% 21% 1,145
30%
38%
3,239
Maximum4
47%
26%
28%
1,667
0
500
1,000
1,500
2,000
2,500
3,000
3,500
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Fixed
STI
LTI5
Fixed
STI
LTI5
This is depicting annual remuneration mix at target value and does not reflect actual payout during the year.
Fixed pay comprises base salary (including US$50,000 for CEO paid as RSUs), pension allowance, overseas allowance, and other benefits.
Target pay comprises fixed pay plus performance pay at target (CFO at 65% and CEO at 75%) and assumed LTI value.
1
2
CFO – 2022 remuneration mix, at target (not actual), in thousands of US dollars1
3
4 Maximum pay comprises fixed pay plus performance pay at maximum pay-out (CFO at 130% and CEO at 150%) and assumed LTI value.
5
100%
623
Fixed2
Values for performance shares and stock options are based on the independently verified values at the time of the grant. Maximum award to achieve 200%
performance outcome requires Jadestone Energy to be at the 80th percentile or higher within Jadestone Energy’s peer group for relative TSR and should achieve an
absolute TSR of 40% or higher
Target3
62% 17% 21% 1,145
47%
e. Performance pay
26%
Maximum4
Performance pay is tracked by the Remuneration Committee directly back to the achievement of KPIs set out in the CEO’s performance
contract. These KPIs are also distilled into the management team’s performance evaluation.
1,667
3,500
1,000
1,500
3,000
2,000
2,500
28%
500
0
Fixed
STI
LTI5
The following table summarises the KPIs in the CEO’s performance contract and were used to determine performance pay in respect of
2022 and paid in 2023.
Performance measure
Weighting
Key targets summary
Individual
key targets
weighting
Assessed
overall 2022
performance
Achieve 2022 operations
targets
Deliver continuous
improvement
in ESG performance
Deliver per share accretive
growth in the Asia-Pacific
region
Create sustainable
shareholder value
30%
25%
25%
20%
100%
Deliver plan production & operating cost targets.
Capital programmes and work programmes.
Performance improvement targets.
Maintain top quartile Health & Safety (H&S) Performance.
Maintain MSCI ESG Rating at BBB – strive to progress to A.
Deliver improving performance on environmental targets.
Conduct GHG emission review reducing current Scope 1 and
2 intensity and announce Net Zero Emissions target and
strategy.
Build a strong, diverse and sustainable organisation.
Adhere to top quartile governance standards.
Maintain delivery of strategic objectives.
Complete one or more new accretive acquisitions.
Improve market value and share price.
Maintain sustainable funding and leverage.
Investor Relations
20.0%
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
2.5%
2.5%
5.0%
20.0%
12.5%
2.5%
5.0%
5.0%
14.0%
10.0%
6.0%
35.0%
Each of these categories contains at least four sub-sections with outcomes for each target assessed by the Remuneration Committee.
Performance pay is paid usually 100% in cash with no deferral.
f. LTI awards
LTI grants are subject to a three-year cliff vest. The LTI awards granted to Jadestone employees under the performance share plan are
aligned to Group and individual performance and are subject to Board approval. Awards granted under the Group’s performance share
plan are subject to good/bad leaver, malus and clawback provisions.
LTI performance for 2020-2022 performance cycle
The performance measures set by the Remuneration Committee have not changed since 2020. They 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 continues to consider several other performance metrics, but in the context of volatility in the sector share price performance
and the oil price, the Remuneration Committee considers that TSR-based metrics continue to offer the most transparent and efficient way
to measure and reward long-term performance.
Performance measure 1: absolute TSR (weighting: 30%)
Share price 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 and must be 25% or greater for the target payout.
Performance measure 2: relative TSR (weighting: 70%)
Jadestone’s 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.
Jadestone peer group for 2020-2022 performance cycle
Serica Energy
Genel Energy
Senex Energy*
Premier Oil**
EnQuest
TransGlobe Energy*
Horizon Oil
Gulf Keystone
Cooper Energy
Tullow Oil
Pharos Energy
Energean
Senex Energy is no longer considered a peer following the takeover by POSCO in 2021. TransGlobe was also acquired by Vaalco in October 2022.
*
** Now Harbour Energy.
Parameters for the final assessment of the 2020-2022 performance cycle
Full Performance Period
1 January 2020 to 31 December 2022
Performance Testing Date
31 December 2022
% of performance period elapsed
100%
The charts below illustrate the relationship between absolute and relative TSR and vesting outcome.
Relative TSR vs. peer group1 (70% of 2022 awards)
Absolute TSR1 (30% of 2022 awards)
)
t
n
e
m
e
l
e
f
o
%
(
g
n
i
t
s
e
V
200%
150%
100%
50%
0%
)
t
n
e
m
e
l
e
f
o
%
(
g
n
i
t
s
e
V
200%
150%
100%
50%
0%
50th
60th
80th
10%
25%
40%
Jadestone’s 3-year average1 TSR ranking vs peer group2
Jadestone’s 3-year average1 TSR
1. 3-year average TSR is calculated as the average annual TSR over 3 years.
Mercer was commissioned to review Jadestone’s relative and absolute TSR performance, in order to provide assessment of the 2020-2022
performance cycle LTI award.
5 8
59
JADESTONE ENERGY 2022 ANNUAL REPORT
REMUNERATION COMMITTEE REPORT
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Final assessment: TSR calculation and outcome of the absolute performance measure
Company
TransGlobe Energy
Gulf Keystone
Serica Energy
Horizon Oil
Senex Energy
EnQuest
Energean
Jadestone Energy
Tullow Oil
Genel Energy
Pharos Energy
Premier Oil
Cooper Energy
TSR
121.5%
52.1%
48.6%
43.9%
24.7%
24.5%
22.9%
9.8%
(1.3)%
(1.7)%
(2.6)%
(24.6)%
(25.1)%
Jadestone’s 3-year average TSR was 9.8%, placing it at the 42nd percentile of the peer group.
Final assessment outcome
Actual performance to 31 December
(16.1)%
57.5%
(12.2)
9.8%
Below threshold
Below threshold
Year 1 TSR
(2020)
Year 2 TSR
(2021)
Year 3 TSR
(2022)
3-year
average TSR
Absolute TSR
vesting outcome
Absolute TSR
vesting outcome
The Remuneration Committee met and discussed the TSR results and vesting outcomes for 2020-22 Performance Share cycle. Discretion
was used to adjust the 3-year average TSR from 9.8% to 10.0%.
As a result, the final outcome of the Absolute TSR element for 2020-22 Performance Shares cycle was 50.0%, and the Relative TSR element
was 0%, leading to an overall result of 15.0% vesting as detailed in the table below.
Absolute TSR element
Relative TSR element
Overall result
Vesting outcome
50.0%
0.0%
Weight
30%
70%
15.0%
g. Statement of the Board’s shareholding interests
Directors are encouraged to acquire a meaningful shareholding
interest in the Company; however the Group does not impose
mandatory share ownership guidelines. The Committee believes
the total rewards policy is appropriate to ensure alignment of
interests between the Board and shareholders.
The number of shares held by Directors as at 31 December 2022 are
set out in the table below. The number of shares held by Directors
as at 1 January 2022 or at date of appointment are detailed in the
Directors’ report.
Director
A. Paul Blakeley
Director, President and
Chief Executive Officer
Bert-Jaap Dijkstra
Director and CFO
Dennis McShane
Director and Chair
Robert Lambert
Director and Deputy Chair
Iain McLaren
Director
David Neuhauser
Director
Cedric Fontenit
Director
Lisa Stewart
Director
Jenifer Thien
Director
Shares
owned
outright
Interests in share
incentive schemes,
subject to performance
conditions
4,232,798
6,255,584
Nil
453,651
153,919
169,564
31,393,0941
200,0002
Nil
Nil
250,000
420,000
425,000
525,000
275,000
125,000
125,000
Nil
Crane operator, PenMal Assets
1 Mr. Neuhauser does not own any ordinary shares of the Company directly, but as managing director of Livermore Partners LLC, exercises control or direction over
the ordinary shares beneficially owned by Livermore Partners LLC.
2 Mr. Fontenit owns 200,000 ordinary 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 ordinary shares of the Company. However, Mr. Fontenit does not exercise control or
direction over the Fund’s holding in the Company.
h. KPIs enshrined into CEO’s 2023 performance contract
Performance measure
Weighting
Key targets summary
Achieve 2023
operations targets
30%
l Deliver plan production targets
l Deliver plan capital programmes
Deliver continuous improvement
in ESG performance
l Maintain H&S performance at top quartile
l Deliver environmental targets consistent with improving performance
25%
l Deliver GHG emissions to within 10% of plan
l Build a strong, diverse and sustainable organisation
l Maintain top quartile governance standards
Deliver per share accretive
growth in Asia-Pacific
25%
l Complete one or more new acquisitions adding an aggregate 7,500 boe/d (value
accretive on certain metrics)
Create sustainable
shareholder value
l Increase share price by more than 10% above the median of the peer group in 2023
20%
l Maintain sustainable funding & leverage
l Investor relations
Montara Venture FPSO tank inspection and repair activities
6 0
61
JADESTONE ENERGY 2022 ANNUAL REPORT Governance
and Nomination
Committee report
Committee members and meeting attendance
In 2022 the Governance and Nomination Committee comprised:
l Dennis McShane (Committee Chair)
l Cedric Fontenit
l
Iain McLaren
Jenifer Thien*
l
l A. Paul Blakeley
Meeting Attendance:
l Dennis McShane
l Cedric Fontenit
Iain McLaren
l
l
Jenifer Thien
l A. Paul Blakeley
2 out of 2
2 out of 2
2 out of 2
1 out of 1
2 out of 2
Meetings: 3 March 2022 | 22 November 2022
*
Appointed 7 April 2022 as Director and member of the Governance
and Nomination Committee
Role of the Committee
The Governance and Nomination Committee ("the Committee")
exercises general oversight with respect to the Group’s corporate
governance practices, to ensure the Board has a strong and
responsible leadership together with a wide range of skills,
knowledge and experience to support business success and
generate long-term shareholder value. It also reviews the
qualifications of, and recommends to the Board, proposed
nominees for appointment to the Board, and establishes the
framework for assessment of the Board performance and
evaluation.
Activities during the year
March 2022:
l Considered results of the Board skills matrix, with the
Committee determining that there would be an appropriate
balance of skills with the addition of Jenifer Thien as a Non-
Executive Director.
l Consistent with best practices for a listed company, the
Committee recommended an independent review of the Board.
Socia was engaged to perform this independent assessment
and review.
l The Committee reviewed the leadership team succession plan
and the status of the search for the CFO replacement.
November 2022:
l Consideration was given to the preliminary update available
from Socia on the Board evaluation.
l The Committee continued to review the leadership succession
plan for critical roles in the business and additionally suggested
a review of succession planning for Non-Executive Directors.
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Letter from the Committee Chair
Dear shareholder,
It is my pleasure to present the Governance and
Nomination Committee Report for the year ended
31 December 2022.
The report summarises the objectives and responsibilities of the
Committee, the work carried out during 2022, and plans for the
2023.
Principal responsibilities of the Committee
l Oversee the Group’s corporate governance practices, including
regular reviews of Board mandates and committees, develop
and review the Group’s corporate governance policies, and
assess and prepare an annual statement on the compliance of
the Group with the QCA Code;
l Considering succession planning for directors and senior
executives, considering tenure on the Board, evolving
challenges and opportunities facing the Group, and the skills
and expertise required to manage these challenges and
opportunities;
l
Identifying and nominating candidates for appointment as
directors, ensuring rigorous and transparent selection and
appraisal procedures, with the ultimate appointment of
directors made by the Board based on the recommendations of
the Committee;
l Monitoring the structure, size, and composition of the Board
as a whole and the committees, making recommendations for
changes as may be necessary to achieve an appropriate balance
of experience, independence and diversity; and
l Commissioning a Board performance evaluation process
annually, reviewing the results and making recommendations.
The terms of reference for the Governance and Nomination
Committee are reviewed annually and aligned with the QCA
guidelines.
Governance
The Board Chair’s Corporate Governance Statement and
Compliance Statement to the QCA Code Principles can be found on
pages 40 to 45.
Board changes
Jenifer Thien was appointed to the Board as Non-Executive Director
in April 2022. The Company announced the appointment of Bert-
Jaap Dijkstra, Chief Financial Officer (CFO) and Executive Director in
August 2022. Bert-Jaap Dijkstra replaced Daniel Young who left his
role as the CFO and an Executive Director at the end of April 2022.
Diversity and inclusion
The Governance and Nomination Committee recognises the
importance of building a diverse Board and is focused on
continuing to increase diversity at both the Board and senior
leadership level within Jadestone.
The Board remains diverse in terms of its culture, nationality, and
international experience. The Board’s core expertise includes
upstream oil and gas, ESG, technical, operational, financial,
governance and commercial skills and experience. The Committee
will continue to monitor and consider diversity in the context of
future Board appointments.
The Board continues to support diversity across the organisation
considering national origin, race, ethnicity, gender and sexual
orientation to maintain an inclusive workplace. All appointments
are made based on merit, experience and performance, whilst
actively seeking diversity of skills, gender, and social and ethnic
backgrounds. The Committee’s oversight role includes ensuring
that diversity and inclusion are integrated into the Group’s Human
Resources standards and recruitment processes.
The Committee maintains its current policy of embracing diversity
in its broadest sense, including gender, ethnic and social diversity
but without setting formal, measurable objectives.
Succession planning
The Governance and Nomination Committee maintains a
comprehensive succession plan for appointments to the Board
ensuring there is an appropriate balance of skills and experience
that aligns with its strategic aims. The Group’s succession plan
also includes contingency plans for the sudden or unexpected
departure of Executive Directors and other senior roles.
Consequently, the Board has a detailed understanding of talent
management and succession planning across the Group, as well as
the plan to continually recognise and develop internal talent.
Board and committee performance evaluation
The Board retains overall responsibility for the implementation of
its annual performance evaluation. The 2022 evaluation process
was undertaken by an independent third-party Socia UK.
Socia’s review focused on:
l A comprehensive benchmark of the Board’s performance
against the principles of the QCA Code;
l Feedback that allows the Board to address any long-standing
issues and/or areas for development with recommendations
for action;
l Data to encourage improved collaboration across the Board –
especially between Executives and Non-Executive Directors;
l A plan of action to improve the contribution of the Board to the
changing needs of the business;
l
Individual feedback and ongoing support to assist with the
implementation of any recommendations from the review; and
l A self-assessment tool for future internal Board reviews.
Yours sincerely,
Dennis McShane
Non-Executive Director and
Chair of the Governance and Nomination Committee
6 June 2023
6 3
Montara Venture FPSO
6 2
JADESTONE ENERGY 2022 ANNUAL REPORT Health, Safety, Environment and
Climate Committee report
Committee members and meeting attendance
l
In 2022, the Health, Safety, Environment and Climate Committee
comprised:
l Robert Lambert (Chair)
l Lisa Stewart
l A. Paul Blakeley
l
Jenifer Thien *
Meeting Attendance:
l Robert Lambert
l Lisa Stewart
l A. Paul Blakeley
Jenifer Thien
l
3 out of 3
3 out of 3
3 out of 3
2 out of 2
Meetings: 3 March 2022 | 7 September 2022 | 10 November 2022
*
Jenifer Thien joined as a director and a member of the
HSEC Committee effective 7 April 2022
Role of the Committee
The Committee assists the Board in obtaining assurance that
appropriate policies, controls and systems are in place to
effectively manage the health, safety, social, environmental and
climate (“HSSEC”) 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. The Committee reports to the Board
regarding the Group’s HSSEC performance, with the Board holding
ultimate responsibility for HSSEC matters, including those related
to climate change. The Committee meets at least three times per
year and otherwise as required.
Responsibilities of the Committee include:
l
formulating the Group’s policies and systems for identifying
and managing HSSEC risks within Jadestone’s operations;
l evaluating the effectiveness of the Group’s policies and systems
for identifying and managing HSSEC risks within Jadestone
operations;
l overseeing the development of the Net Zero roadmap and
progress made as per external commitments;
l assessing the policies and systems within the Group for
ensuring compliance with HSSEC regulatory requirements;
l assessing the performance of the Group with regard to
the impact of HSSEC related decisions, and actions upon
employees, communities and other third parties. The
Committee also assesses the impact of such decisions and
actions on the reputation of the Group;
l on behalf of the Board, receiving reports from management
concerning all serious safety-related incidents within the Group
and actions taken by management as a result of such incidents;
l evaluating and overseeing, on behalf of the Board, the quality
and integrity of any reporting to external stakeholders
concerning HSSEC issues;
l ensuring that the Group maintains an appropriate level of
engagement in industry HSSEC initiatives;
l
reviewing and recommending changes to the HSSEC framework
management system annually; and
6 4
reviewing the results of independent audits of the
Group’s performance in regard to HSSEC matters, and any
strategies and action plans developed by management in
response to issues raised, and where appropriate making
recommendations to the Board concerning the same.
All Committee members were also members of the special
Technical Committee established in September 2022 in respect of
the Montara shut-in. Please see page 24 for further details of the
Technical Committee.
Letter from the Committee Chair
Dear shareholder,
I am pleased to present the Health, Safety,
Environmental and Climate Committee Report for the
year ended 31 December 2022.
The Committee provides assurance to the Board on occupational
health, safety, social, environmental and climate leadership. It is
primarily focused on ensuring that the Group’s policies related to
HSSEC matters are adopted and applied across the Group, and the
safety leadership within both management and the workforce is
visible and impactful.
In late 2021, the Committee’s mandate was expanded to include
sustainability and social responsibilities into its remit. The Board
believes that the expanded remit is important for the Group given
the ever-increasing prominence of HSSEC issues, particularly
climate change, on the corporate agenda and the need for the
Board and senior management to devote sufficient time to
considering these matters in detail.
During 2022, the Committee held three formal meetings to review
and discuss matters pertaining to HSSEC issues ensuring that
adequate policies related to HSSEC are adopted and applied across
the Group and the safety leadership of both management and the
workforce is visible and impactful. The Group continually reinforces
and implements safe working procedures such as inspection of
all instruments and equipment, obtaining the requisite permit-
to-work applications, providing training and awareness sessions
and above all implementing checks to ensure risks are reduced as
low as reasonably practicable. All incidents during the year were
investigated and lessons learned as appropriate, and actions to
prevent recurrence were implemented.
At the Committee’s meeting in September 2022, Socia attended the
meeting as an observer for independent Board evaluation. In 2022,
the Group undertook a review of Jadestone compliance policies
assisted by Control Risks, and effective January 2023, the Group
adopted a Climate Change Policy and an updated Environmental,
Social and Governance (“ESG”) Policy. The Committee also reviewed
its terms of reference.
In February 2023, the Group has announced that the General
Direction issued by NOPSEMA was closed, following NOPSEMA’s
review of an independent assessment focusing on Jadestone’s
systems for managing the structural integrity of the Montara
Venture FPSO. The Montara Project resumed production
operations in March 2023.
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
The Group’s management and workforce operate within both
challenging onshore and offshore environments over multiple
jurisdictions. In 2022, processes were improved and deployed to
further minimise the risk of COVID-19 infection at all workforce
sites. These actions, which included a continuation of onshore
staff working from home, when warranted, and reduced offshore
crew sizes, were successful at minimising workplace transmission
throughout the year.
We continued to strengthen the reviews of key operations and
enhanced safety control measures over both production facilities
and drilling operations. These improvements were acknowledged
within the inspection reports received over the year.
Jadestone continues to enhance its climate-related disclosures,
which are informed by the TCFD recommendations. We recognise
the value and importance of clear and consistent climate-related
disclosures, and over time we will continue to develop and enhance
our climate-related disclosures.
In summary, Jadestone remains committed to strong performance
in safety management and high health, safety, social,
environmental and climate standards.
Accomplishments over the course of 2022
l Achieved high standards of environmental performance;
l Continued to successfully monitor and support the Group’s
response to COVID-19 challenges in terms of workforce well-
being and the safe management of operations;
l Evaluated HSSEC performance against industry standards;
l Assessed regulator feedback and monitored the
implementation of recommendations to ensure that required
actions are enacted, while also enabling the Board to reflect the
latest regulatory views in their decisions;
l Reviewed major and reportable incidents and investigations,
then followed up on lessons learned; and
l Reviewed the Group’s sustainability and ESG-related
communications and performance, including the operational
GHG review, Net Zero workstreams, climate workstreams, as
well as the composition and preparation for issuance of the
Group’s 2022 Sustainability Report.
Key activities during the year
During 2022, the Committee reviewed and deliberated the Group’s
safe and responsible operations, measured against specific
metrics, and compliance with regulatory requirements pertaining
to health and safety and environment at each committee meeting.
The Committee also addressed several prioritised topics which
included:
Process safety
l A review of Jadestone’s practices and performance relating to
health, safety and environment, including the safe condition
and responsible operations of Jadestone’s assets, with a focus
on both employees and contractors.
l A review of measures completed to improve safety
performance and respond to regulator directions, in particular
on the General Direction issued by NOPSEMA relating to the
Montara Project.
l A review of all major incidents that impacted, or had the
potential to impact, Jadestone’s safety and environmental
performance.
n The Committee, with input from senior management,
reviewed the trends of workplace safety incidents (e.g.,
medical treatment cases, near misses) within the wider
context of pandemic related restrictions and changes to
work conditions.
n Pandemic related risks to the workforce were also assessed,
including increased stress from quarantine conditions
and extended separation from home. It was noted that
such increased stress was identified as a wider industry
challenge and not limited to the Group. In fact, Australia’s
Work Safe Commissioner characterised Jadestone’s
approach to pandemic related restrictions as “best in class”.
l Assessment of Jadestone’s overall sustainability performance
and provided input to Jadestone’s annual reporting and
disclosures regarding sustainability.
Climate risk and Net Zero roadmap
l Continued to enhance Jadestone’s climate-related
reporting; and
l Commissioned an independent party to assist with Net
Zero roadmap development; progress of the associated
workstreams was reported to the Committee at each meeting.
The 2022 Sustainability Report (available through the Group’s
website) details the Group’s 2022 ESG performance, covering
sustainability, environmental management, climate change and
greenhouse gas emissions, occupational health and safety and
critical incident risk management.
Planned enhancements for 2023
l Finalisation of the Net Zero decarbonisation plan, underpinning
Jadestone’s Net Zero by 2040 pledge for its operated assets;
l A continued review of the Group’s process safety and personal
safety; and
l Evaluation of the processes and tools to manage the Group’s
HSE performance against internal metrics, regulatory
requirements and industry standards.
Yours sincerely,
Robert Lambert
Non-Executive Director and
Chair of the Health, Safety, Environment and Climate Committee
6 June 2023
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JADESTONE ENERGY 2022 ANNUAL REPORT STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Disclosure Committee report
Committee members and meeting attendance
In 2022, the Disclosure Committee comprised:
l Bert-Jaap Dijkstra (Committee Chair) *
l A. Paul Blakeley
l Neil Prendergast
Meeting Attendance:
l Bert-Jaap Dijkstra
l A. Paul Blakeley
l Neil Prendergast
Meeting: 24 November 2022
1 out of 1
1 out of 1
1 out of 1
* Bert-Jaap Dijkstra joined as a director and the chair of the Disclosure
Committee effective 22 August 2022. Daniel Young served on the
Committee until 29 April 2022.
Role of the Disclosure Committee (the "Committee")
The principal role of the Committee is to ensure that adequate
procedures, systems and controls are maintained to enable the
Group to fully meet its legal and regulatory obligations regarding
the timely and accurate identification and disclosure of information
arising under the Market Abuse Regulation (EU) No. 596/2014
(“MAR”) and the AIM Rules.
The Committee assists the Group in meeting the above
requirements and has responsibility for, among other things,
determining the disclosure of material information on a timely
basis. The Committee also has responsibility for the identification
of inside information for the purpose of maintaining the Group’s
insider lists.
The Committee also ensures the Group takes reasonable steps
to establish and maintain adequate procedures, systems and
controls to enable it to comply with its obligations in this regard,
and oversees the appropriateness of disclosures included in the
Group’s financial and non-financial reporting, which includes
sustainability and climate-related disclosures.
Letter from the Committee Chair
Dear shareholder,
I am pleased to present the Disclosure Committee Report
for the year ended 31 December 2022.
Share buyback programme
The Committee monitored and reviewed the Group’s processes for
continuous disclosure, with particular regard to the launch of the
share buyback programme as announced by the Group on 2 August
2022 in accordance with the authority granted by shareholders at
the Company’s Annual General Meeting on 30 June 2022.
The Group entered into a buyback agreement with Stifel Nicolaus
Europe Limited (“Stifel”) who conducted the Programme and
repurchased Jadestone’s ordinary shares (“Ordinary Share”) on the
Group’s behalf. The buyback agreement enabled the Group to grant
Stifel the authority to enact purchases and make trading decisions
concerning the timing of the purchases under the Programme
independent of the Group. Therefore, purchases could continue
during any closed periods of the Group.
The purpose of the Programme was to reduce the share capital of
Jadestone. All of the Ordinary Shares repurchased, to date, have be
cancelled.
It was intended that the Programme be conducted within the
parameters prescribed by the MAR (as in force in the UK by virtue
of the European Union (Withdrawal) Act 2018 and as amended
by the Market Abuse (Amendment) (EU Exit) Regulations 2019)
(the “Regulation”), the Commission Delegated Regulation (EU)
2016/1052 (as in force in the UK by virtue of the European Union
(Withdrawal) Act 2018 and as amended by the FCA’s Technical
Standards (Market Abuse Regulation) (EU Exit) Instrument 2019)
(the “Delegated Regulation”). The Company retained the ability
to make purchases under the Programme which would exceed
the average daily volume limits established by the Delegated
Regulation. All decisions to exceed such volume limits were taken
following the receipt of external, specialist advice, including from
the Company’s nominated advisor.
The first share repurchase under the Programme was completed
on 2 August 2022.
2023 Priorities
l Assess and advise on the controls and procedures related to
the disclosure of ESG data, including climate-related disclosures
and the Modern Slavery Statement.
The Committee was responsible for and monitored the following
actions and reviews during the year:
Yours sincerely,
Bert-Jaap Dijkstra
Executive Director and
Chair of the Disclosure Committee
6 June 2023
l Trading updates including announcement of Jadestone’s first
share buyback programme, as further described below.
l Ensuring compliance with the timelines and obligations under
the MAR in connection with the share buyback programme,
including the submission of necessary filings with UK
Companies House and notification to the FCA;
l The maintenance of insider lists;
l The procedures to complete filings for the exercise of share
options, including disclosure of changes to total share capital
issued;
l The process to ensure compliance with the timelines and
obligations under the MAR / part B of the Group’s Dealing Code;
l Communication protocols around closed periods; and
l Ensuring that all relevant policies and procedures remained in
compliance and up-to-date with MAR, and the AIM Rules.
6 7
Apprentices on the Stag platform
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JADESTONE ENERGY 2022 ANNUAL REPORT STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Consolidated
and Company
financial
statements
For the year ended 31 December 2022
70 Directors’ responsibilities statement
71
Independent auditor’s report
80 Consolidated statement of profit or loss
and other comprehensive income
81 Consolidated statement of financial position
82 Consolidated statement of changes in equity
83 Consolidated statement of cash flows
84 Notes to the financial statements
132 Company’s statement of financial position
133 Company’s statement of changes in equity
134 Notes to the financial statements
East Piatu Alpha platform, PenMal Assets
6 8
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JADESTONE ENERGY 2022 ANNUAL REPORT
CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Directors’ responsibilities
statement
Responsibility statement
We confirm that to the best of our knowledge:
l The financial statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the Company and the undertakings included in the
consolidation taken as a whole; and
l The strategic report includes a fair review of the development
and performance of the business and the position of the
Company and the undertakings included in the consolidation
taken as a whole, together with a description of the principal
risks and uncertainties that they face.
This responsibility statement was approved by the Board of
Directors on 6 June 2023 and is signed on its behalf by:
Bert-Jaap Dijkstra
Director
6 June 2023
The Directors are responsible for preparing the Annual Report and
the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors are
required to prepare the Group’s financial statements in accordance
with International Accounting Standards (“IAS”) in conformity with
the requirements of the Companies Act 2006 and have elected to
prepare the Company’s financial statements in accordance with
FRS 101 “Reduced Disclosure Framework” and applicable law.
Under Company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the assets, liabilities and financial position of the Company
and the Group and of the profit or loss of the Group for the
financial year.
In preparing the parent company’s financial statements, the
Directors are required to:
l Select suitable accounting policies and then apply them
consistently;
l Make judgments and accounting estimates that are reasonable
and prudent;
l State whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
l Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
In preparing the Group’s financial statements, IAS 1 requires that
Directors:
l Properly select and apply accounting policies;
l Present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
l Provide additional disclosures when compliance with the
specific requirements in IFRSs are insufficient to enable users
to understand the impact of particular transactions, other
events and conditions on the entity’s financial position and
financial performance; and
l Make an assessment of the Group’s ability to continue as a
going concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Company and enable them to ensure
that the financial statements comply with the Companies Act
2006. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Independent auditor’s report
to the shareholders of
Jadestone Energy plc
Report on the audit of the financial statements
1
OPINION
In our opinion:
l
l
l
the financial statements of Jadestone Energy plc (the ’parent company’) and its subsidiaries (the ’Group’) give a true and fair
view of the state of the Group’s and of the parent company’s affairs as at 31 December 2022 and of the Group’s profit for the
year then ended;
the Group financial statements have been properly prepared in accordance with United Kingdom adopted international
accounting standards and International Financial Reporting Standards (IFRSs) as issued by the International Accounting
Standards Board (IASB);
the parent company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure Framework”; and
l
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements which comprise:
The Group financial statements:
l
l
l
l
l
the consolidated statement of profit or loss and other comprehensive income;
the consolidated statement of financial position;
the consolidated statement of changes in equity;
the consolidated statement of cash flows; and
the related notes 1 to 45, including a summary of significant accounting policies as set out in note 2 to the financial statements.
The parent company financial statements:
l
l
l
the company statement of financial position;
the company statement of changes in equity;
the related notes 1 to 13, including a summary of significant accounting policies as set out in note 3 to the financial statements.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law,
United Kingdom adopted international accounting standards and IFRSs as issued by the IASB. The financial reporting framework
that has been applied in the preparation of the parent company financial statements is applicable law and United Kingdom
Accounting Standards, including FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting
Practice).
2
BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements
section of our report.
We are independent of the Group and the parent company in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the Financial Reporting Council’s (the ’FRC’s’) Ethical Standard as applied to
listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
70
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JADESTONE ENERGY 2022 ANNUAL REPORT
INDEPENDENT AUDITOR’S REPORT
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
3
SUMMARY OF OUR AUDIT APPROACH
5
KEY AUDIT MATTERS
Key audit matters
The key audit matters that we identified in the current year were:
l
l
Impairment of oil and gas properties
Impairment of intangible exploration assets
l Cossack, Wanaea, Lambert, and Hermes (CWLH) acquisition
Within this report, key audit matters are identified as follows:
NEW
«
«»
«
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality
The materiality that we used for the Group financial statements was US$6,775,000 which was determined
by using 1.25% of combined intangible exploration assets and oil and gas properties, which was then
rounded up to the determined figure.
The materiality that we used for the parent company financial statements was determined by using 1% of
the selected benchmark being net assets which was capped at component materiality of US$2,134,125 in
order to reduce aggregation risk.
Scoping
We applied a risk-based approach to the audit and weighted the scope towards the revenue generating
and asset holding components. The audit work was undertaken and performed by a group audit team
based in Ireland and component teams based in Singapore, Australia, Malaysia and Vietnam.
Significant changes
in our approach
The audit work covered 24 components, of which nine were deemed significant components. These
were subject to full scope audits with the remaining components subject to analytical procedures, plus
substantive testing of specific balances to ensure appropriate coverage at an account balance and class of
transaction level.
There has been a change in components in scope in the current year to include Jadestone Energy (CWLH)
Pty Ltd as a result of the acquisition of an interest in a joint operation. Key audit matters considered in
the prior year were broadly aligned with the items identified above however the prior year key audit
matter in relation to the Peninsular Malaysia acquisition has been removed as the acquisition accounting
was completed in the prior year. A key audit matter has been added in relation to the Cossack, Wanaea,
Lambert, and Hermes (CWLH) acquisition in the current year in line with the developments in the Group in
the current year to reflect the current year acquisition of an interest in a joint operation.
4
CONCLUSIONS RELATING TO GOING CONCERN
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s and parent company’s ability to continue to adopt the going concern
basis of accounting included:
l obtaining an understanding of the relevant controls relating to the going concern assumption;
l
reviewing the Group’s financing arrangements including the nature of the facilities and whether the Directors have appropriately
considered the repayment terms and financial covenants in place and incorporated them into the cash flow forecasts over the
going concern period;
l performing an assessment of the cash resources available to the Group and parent company;
l challenging the forecasts in the Group cash flow forecast model, including:
n checking the clerical accuracy of the cash flow forecast model;
n completing an assessment of the consistency of the cash flow forecast model in line with other areas of our audit, such as
key inputs relating to future costs, production to other financial and operational information.
n challenging the Directors as to the reasonableness of commodity pricing assumptions applied to the cash flow forecast
model, based on benchmarking to market data and considering the impact of climate change;
l performing a look back analysis of the historical accuracy of forecasts prepared by the Directors;
l assessing the results of the Group and parent company for the period after the reporting date, comparing to budget, in order to
assess if there are any other indicators that the business may not be able to continue as a going concern;
l assessing any contradictory evidence as part of our audit work and the impact on the Directors’ conclusion;
l assessing the appropriateness of the sensitivity analysis prepared by the Directors; and
l assessing the adequacy of the disclosures in the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group’s and parent company’s ability to continue as a going concern for
a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of
this report.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of
resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
The removal of the prior year key audit matter of the ’Peninsular Malaysia acquisition’ and the addition of the ’Cossack, Wanaea,
Lambert, and Hermes (CWLH)’ acquisition in the current year reflect the developments in the Group in the current year, being the
acquisition of an interest in a joint operation.
5.1. Impairment assessment of oil and gas properties
«
Key audit matter
description
As at 31 December 2022, oil and gas properties had a carrying value of US$456,768k which represents
56% of the Group’s total assets. These assets relate to Montara, Stag, Peninsula Malaysia, Lemang and the
recently acquired CWLH Assets.
There is a risk of impairment in respect to the Montara and Lemang oil and gas properties with balances
of US$222,985k and US$36,935k respectively at year end.
We have identified a key audit matter related to the impairment of oil and gas properties as this is a key
area of management estimation in relation to the key assumptions to the impairment assessment and
involved a significant allocation of resources and directing efforts of engagement team.
Refer to Notes 2 and 22 to the financial statements for further information.
How the scope of our
audit responded to
the key audit matter
In order to address this matter we:
l Assessed the design and determined the implementation of management’s relevant controls in
respect to the accounting for oil and gas properties in line with IFRS.
l Obtained management’s impairment assessment and performed the following procedures on the
assessment:
n Reviewed the internal and external factors set out in IAS 36 Impairment of Assets and used by
management to determine impairment indicators.
n Assessed the competence, capability and objectivity of management’s expert involved in the
preparation of the reserve reports underlying management’s impairment assessment;
n Challenged the assumptions used by management in the cash flow projections, including
consistency with the cash flows included in the forecast model use in the assessment of going
concern;
n Challenged the reserve reports prepared by management’s expert relating to the Group’s
estimated oil reserves, including involvement of an internal reserves specialist as part of our
engagement team, to determine whether there had been a significant change with an adverse
effect on the recoverable amount;
n Challenged management’s oil price assumptions used in the cash flow projections against external
data, including considering the impact of climate change, to determine whether there had been a
significant change with an adverse effect on the recoverable amount;
n Challenged management’s discount rate used to discount cash flows in the impairment
assessment , including assignment of a valuation specialist; and
n Extended inquiries to individuals outside of the accounting department to corroborate
management’s ability and intent to carry out plans that were relevant to developing the estimate.
l Reviewed the financial statements to ensure all relevant disclosures were appropriately included in
relation to oil and gas properties.
We are satisfied that the Directors’ assessment that no impairment of the Montara and Lemang oil and
gas properties is required, is appropriate, albeit we noted that the discount rate used by management lay
outside the reasonable range determined by our valuation specialist. We identified a control deficiency
which we have separately reported to the Audit Committee on the precision of the management review
controls.
Key observations
5.2. Impairment assessment of intangible exploration assets
«»
Key audit matter
description
As at 31 December 2022, the Group recorded US$77,928k of intangible exploration assets, which
represents 9% of the Group’s total assets. These assets relate to the Montara seismic study in Australia
and two Vietnamese PSCs: 46/07 and Block 51. The Lemang project received Final Investment Decision
(FID) approval during the year and has transferred to oil and gas properties. Extraction at the Vietnamese
sites is dependent on government approval and should approval not be granted these assets would be
impaired. As a result, there is a risk of impairment in respect to intangible exploration assets.
We have identified a key audit matter related to the impairment of intangible exploration assets as this
is a key area of management estimation and involved a significant allocation of resources and directing
efforts of engagement team.
Refer to Notes 2 and 21 to the financial statements for further information.
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JADESTONE ENERGY 2022 ANNUAL REPORT INDEPENDENT AUDITOR’S REPORT
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
How the scope of our
audit responded to
the key audit matter
In order to address this matter we have:
l Assessed the design and determined the implementation of management’s relevant controls in
respect to the accounting for intangible exploration assets in line with IFRS.
l Reviewed management’s assessment of the potential impairment indicators set out in IFRS 6.
l Assessed the competence, capability and objectivity of management’s expert involved in the
preparation of the reserve reports that support recognition of the intangible exploration assets.
l Assigned an internal reserves specialist as part of our engagement team to challenge the reserve
reports prepared by management’s expert relating to the Group’s estimated oil reserves to determine
whether they indicate the requirement for an impairment review.
l Reviewed the Group’s budget to evaluate whether management has a plan for the assets, including
the funding options for future capital expenditure to be able to realise the future cash flows.
l Performed a retrospective review of prior year’s work budget and current year’s actual activity to
determine the reliability of management’s plan and budget for the purpose of assessing impairment
indicators.
l Extended inquiries to individuals outside of the accounting department to corroborate management’s
ability and intent to carry out plans that are relevant to developing the estimate.
l Reviewed the financial statements to ensure all relevant disclosures are appropriately included in
relation to intangible exploration assets.
Key observations
We have no observations that impact on our audit in respect of impairment of intangible exploration
assets.
5.3. Cossack, Wanaea, Lambert, and Hermes (CWLH) acquisition
NEW
Key audit matter
description
On 1 November 2022, the Group completed the acquisition of a non-operated 16.67% working interest in
the Cossack, Wanaea, Lambert, and Hermes (“CWLH”) oil fields development (the “North West Shelf Oil
Project”) which are assets based in offshore Australia.
6
OUR APPLICATION OF MATERIALITY
6.1. Materiality
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of
our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Parent company financial statements
Materiality
US$6,775,000 (2021: US$4,441,000)
US$2,134,125 (2021: US$2,220,500)
Basis for determining
materiality
1.25% of combined intangible exploration assets
and oil and gas properties, rounded up to the
determined figure.
1% of net assets which was reduced to
component materiality in order to reduce
aggregation risk.
Rationale for the
benchmark applied
The benchmark set out above is appropriate
because there is a direct correlation with the
future economic performance of the Group
which is a primary focus of users of the financial
statements. This benchmark also tends to be
less volatile than other possible benchmarks.
The benchmark set out above is appropriate as
it is stable and reflects the limited operations of
the parent company given its purpose is to hold
investments in subsidiaries which is a focus of
users of the financial statements.
There is a risk associated with the acquisition accounting in accordance with IFRS 3 Business Combinations
and IFRS 11 Joint Arrangements, given the judgements by management around elements such as the
application of the appropriate accounting treatment and the determination of the fair value of contingent
consideration, oil and gas properties and asset replacement obligations.
We have identified a key audit matter related to the CWLH acquisition as this is a key area of management
judgement and estimation and involved a significant allocation of resources and directing efforts of
engagement team.
Refer to Notes 2 and 18 to the financial statements.
Combined intangible exploration assets
and oil and gas properties US$534,696k
6.2. Performance materiality
Group materiality
US$6,775k
Component materiality range
US$2,134k to US$3,557k
Clearly trivial reporting threshold US$339k
How the scope of our
audit responded to
the key audit matter
In order to address this matter we have:
l Assessed the design and determined the implementation of management’s relevant controls around
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and
undetected misstatements exceed the materiality for the financial statements as a whole.
accounting for acquisitions in line with IFRS.
l Reviewed the purchase agreement to identify key elements related to the acquisition and assessed
whether they are appropriately reflected in the accounting treatment adopted.
l Reviewed the measurement of consideration, including contingent consideration, and determination
of what is part of the business combination to ensure appropriate recognition in line with IFRS.
l Challenged management’s assessment of the acquisition including application of IFRS 11 and the
concentration test set out in IFRS 3 to determine whether the transaction is a business combination or
asset acquisition.
l Challenged the appropriateness and fair value of assets and liabilities identified by management,
including identifiable intangible assets, with reference to relevant supporting documentation and
relevant accounting standards including IFRS 3 and IAS 38 Intangible Assets.
l Assessed the competence, capability and objectivity of management’s expert involved in the
valuation of assets and liabilities as part of the acquisition.
l Engaged internal reserves and valuation specialists as part of our engagement team to challenge
the key assumptions underlying the fair values of identified assets and liabilities, including oil price,
discount rate and reserves.
l Reviewed the financial statements to ensure all relevant disclosures are appropriately included in
relation to the acquisition.
Group financial statements
Parent company financial statements
Performance materiality
70% (2021: 80%) of Group materiality
70% (2021: 80%) of parent company materiality
Basis and rationale
for determining
performance materiality
In determining performance materiality, we considered a number of factors.
a) our understanding of the entity and its environment and the impact of various macro-economic
factors;
b) the nature of the business has remained consistent to that of the prior year
c) the high degree of centralisation and common processes within the Group’s finance function;
d) new accounting issues that require significant judgement such as the CWLH acquisition, shut-in
of the Montara project and impairment of non-operated contracts;
e) the nature, volume and size of corrected and uncorrected misstatements in the prior year audit;
f)
the likelihood of the prior year misstatements to reoccur in the current year audit; and
g) our understanding of the Group’s control environment including entity-level controls and
consideration of control deficiencies identified.
Key observations
We have no observations that impact on our audit in respect of the CWLH acquisition.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of US$338,750, (2021:
US$222,050) as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also
report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial
statements.
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STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
7
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
7.1.
Identification and scoping of components
We determined the scope of our group audit by obtaining an understanding of the Group and its environment and assessing the
risks of material misstatement at the group level. The Group consists of 24 components with a presence in 10 jurisdictions. There
has been a change in components in scope in the current year to include Jadestone Energy (CWLH) Pty Ltd following the acquisition
in the current year.
Nine components were deemed significant components and subject to full scope audits based on financial significance by
considering key benchmarks.
Jadestone Energy plc;
1.
Jadestone Energy Holdings Limited;
2.
Jadestone Energy (Australia) Pty Ltd;
3.
4.
Jadestone Energy (Eagle) Pty Ltd;
5. Mitra Energy (Vietnam Nam Du) Ltd;
6. Mitra Energy (Vietnam Tho Chu) Ltd;
Jadestone Energy (Lemang) Pte Ltd;
7.
Jadestone Energy (PM) Inc; and
8.
Jadestone Energy (CWLH) Pty Ltd.
9.
These significant components were located in United Kingdom, Australia, Vietnam, Indonesia and Malaysia and the component
materialies ranged from US$2,124,125 to US$3,556,875.
Significant components were subject to a full audit of the component. This scope covered 100% of Group revenue, 114% of the
Group’s profit before tax and 89% of Group net assets.
Two components were subject to specific audit procedures completed by the group audit team:
1.
2.
Jadestone Energy (Singapore) Pte Ltd; and
Jadestone Energy Inc.
As part of our procedures in respect to the risk identified, we obtained management’s climate related risk assessment and made
inquiries of management to understand their process for considering the impact of climate-related risks. We have considered
the impact of climate change on assumptions used in disclosing critical judgements and key estimates recorded in the financial
statements as part of the assessment of future cash flows. Our internal sustainability specialists were engaged to assess the
climate-related disclosures and evaluate the consistency of climate-related disclosures included in other information within the
financial statements.
We have also read the Group’s disclosure of climate-related information in the front half of the annual report, including the
sustainability review on pages 11 to 22.
7.4. Working with other auditors
Direction and supervision was provided to component auditors through a combination of:
l
issuance of group referral instructions;
l upfront team briefings to all component teams including risk assessment discussions;
l coordination of discussions with internal reserves and valuation specialists involved in work performed by components;
l
regular progress calls and ongoing involvement in responding to significant risks;
l component visits to revenue-generating components; and
l detailed workpaper reviews.
8
OTHER INFORMATION
The other information comprises the information included in the annual report, other than the financial statements and our
auditor’s report thereon. The Directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance conclusion thereon.
The scope covered when components subject to specified audit procedures completed by the group audit team are included is 102%
of the Group’s profit before tax and 100% of the Group’s net assets. Scoped out balances are loss making resulting in coverage in
excess of 100%.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be
materially misstated.
At the parent company entity level, we also tested the consolidation process and carried out analytical procedures to confirm our
conclusion that there were no significant risks of material misstatement of the aggregated financial information of the remaining
components not subject to audit or audit of specified account balances.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives
rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact.
0%
-12%
2%
11%
0%
Revenue
Profit before tax
Net assets
39%
Full audit scope
Specified audit procedures
100%
114%
89%
Review at Group level
7.2. Our consideration of the control environment
We have not relied upon the GITCs (General Information Technology Controls) as part of our audit.
We developed an understanding of key relevant controls for the revenue business cycle. The operating effectiveness of controls
was then tested through inquiries of management and staff responsible for the controls and a combination of inspection of
documentation, reperformance of the control or observation of the control operating. Without providing an opinion on the
effectiveness of the controls, we determined that it was appropriate to rely on the controls for this business cycle.
7.3. Our consideration of climate-related risks
The Group has set out its climate policy and net zero commitment in their sustainability review on pages 11 to 22. The Group have
also identified climate change and resulting physical and transition risks as part of their principal risks and uncertainties in the
strategic report on pages 11 to 22.
As part of our risk assessment process, we performed the following procedures:
l obtaining an understanding of management’s process and controls in considering the impact of climate risks; and
l assessing whether the risks identified by management within their climate-related risk assessment and related documentation
were complete
The Group considered the impact of climate change on assumptions used in disclosing critical judgements and key estimates
recorded in the financial statements as part of their assessment of future cash flows as stated in Note 2 to the financial statements.
We have nothing to report in this regard.
9
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the parent company’s ability
to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or the parent company or to cease operations, or have no
realistic alternative but to do so.
10
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
76
7 7
JADESTONE ENERGY 2022 ANNUAL REPORT INDEPENDENT AUDITOR’S REPORT
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Report on other legal and regulatory requirements
12
OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion, based on the work undertaken in the course of the audit:
l
the information given in the strategic report and the Directors’ report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
l
the strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent company and their environment obtained in the
course of the audit, we have not identified any material misstatements in the strategic report or the Directors’ report.
13
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
13.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
l we have not received all the information and explanations we require for our audit; or
l adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been
received from branches not visited by us; or
l
the parent company financial statements are not in agreement with the accounting records and returns.
We have nothing to report in respect of these matters.
13.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of Directors’ remuneration have
not been made.
We have nothing to report in respect of this matter.
14
USE OF OUR REPORT
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
Cathal Treacy (Senior statutory auditor), For and on behalf of Deloitte Ireland LLP
Chartered Accountants and Statutory Auditor, Deloitte & Touche House, Charlotte Quay, Limerick, Ireland
7 June 2023
11
EXTENT TO WHICH THE AUDIT WAS CONSIDERED CAPABLE OF DETECTING IRREGULARITIES,
INCLUDING FRAUD
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud is detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with
laws and regulations, we considered the following:
l
l
the nature of the industry and sector, control environment and business performance including the design of the Group’s
remuneration policies, key drivers for Director remuneration, bonus levels and performance targets;
results of our enquiries of management, the Directors and the audit committee about their own identification and assessment
of the risks of irregularities, including those that are specific to the Group’s sector;
l any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to:
n
identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-
compliance other than the loss of containment of oil that occurred at the Montara Venture FPSO on 17 June 2022 and
the subsequent and ongoing investigation by the National Offshore Petroleum Safety and Environmental Management
Authority (“NOPSEMA”);
n detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
n
the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
l
the matters discussed among the audit engagement team including significant component audit teams and relevant internal
specialists, including reserves specialists, valuation specialists, sustainability specialists and industry specialists regarding how
and where fraud might occur in the financial statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and
identified the greatest potential for fraud in respect to revenue recognition. In common with all audits under ISAs (UK), we are also
required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Group operates in, focusing on provisions
of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial
statements. The key laws and regulations we considered in this context included the Companies Act 2006, AIM Regulations and tax
legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but
compliance with which may be fundamental to the Group’s or parent company’s ability to operate or to avoid a material penalty.
These included the Group’s operating licences, health and safety legislation, anti-bribery legislation and environmental regulations
in the locations in which the Group and parent company operates.
11.2. Audit response to risks identified
Our procedures to respond to risks identified included the following:
l
reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of
relevant laws and regulations described as having a direct effect on the financial statements;
l enquiring of management, the Directors, the audit committee and in-house and external legal counsel concerning actual and
potential litigation and claims;
l performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material
misstatement due to fraud;
l
l
reading minutes of meetings of those charged with governance and reviewing correspondence with relevant regulatory
authorities such as NOPSEMA;
reviewing the disclosures in note 42 relating to the loss of containment of oil that occurred at the Montara Venture FPSO on 17
June 2022 and the subsequent and ongoing investigation by NOPSEMA;
l understanding the direct and indirect effects of identified areas of non-compliance including making enquiries of legal advisors;
l
l
in addressing the risk of fraud in revenue recognition, we assessed the appropriateness of the revenue recognition criteria
for each revenue stream with reference to IFRS 15 Revenue from Contracts with Customers and have tested a statistical sample
of sales transactions to ensure each performance obligation was satisfied before the allocated revenue was recognised with
reference to relevant supporting documentation including evidence of shipment to ensure that they represented valid sales
transactions; and
in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and
other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias;
and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members
including internal specialists and significant component audit teams, and remained alert to any indications of fraud or non-
compliance with laws and regulations throughout the audit.
7 8
7 9
JADESTONE ENERGY 2022 ANNUAL REPORT
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
for the year ended 31 December 2022
Continuing operations
Revenue
Production costs
Depletion, depreciation and amortisation
Administrative staff costs
Other expenses
Impairment of assets
Other income
Finance costs
Other financial gains
Profit/(Loss) before tax
Income tax expense
Profit/(Loss) for the year
Profit/(Loss) per ordinary share
Basic and diluted (US$)
Profit/(Loss) for the year, representing total comprehensive income for the year
2022
Notes
USD’000
2021
Restated*
USD’000
4 & 40
5
6
7
10
12
13
14
15
16
18
421,602
(250,700)
(61,834)
(29,218)
(22,305)
(13,534)
28,033
(11,408)
1,904
62,540
(54,018)
8,522
0.02
8,522
340,194
(211,896)
(80,215)
(25,068)
(26,181)
-
7,682
(9,075)
266
(4,293)
(12,780)
(17,073)
(0.04)
(17,073)
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2022
Notes
2022
USD’000
2021
Restated*
USD’000
ASSETS
Non-current assets
Intangible exploration assets
Oil and gas properties
Plant and equipment
Right-of-use assets
Other receivables and prepayment
Deferred tax assets
Cash and cash equivalents
Total non-current assets
Current assets
Inventories
Trade and other receivables
Tax recoverable
Cash and cash equivalents
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Capital and reserves
Share capital
Share premium account
Merger reserve
Share-based payments reserve
Capital redemption reserve
Accumulated losses
Total equity
Non-current liabilities
Provisions
Lease liabilities
Deferred tax liabilities
Total non-current liabilities
Current liabilities
Lease liabilities
Trade and other payables
Provisions
Tax liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
21
22
23
24
28
26
29
27
28
16
29
30
30
32
33
34
35
36
26
36
38
35
77,928
456,768
7,318
8,193
90,590
9,118
676
650,591
18,911
20,368
9,725
122,653
171,657
822,248
339
983
146,270
26,907
21
(51,787)
122,733
508,539
2,880
88,406
599,825
6,227
73,752
703
19,008
99,690
699,515
822,248
93,241
353,592
8,963
13,852
48,500
26,389
852
545,389
23,299
32,578
9,367
117,013
182,257
727,646
358
201
146,270
25,936
-
(35,023)
137,742
410,697
4,504
66,166
481,367
11,161
70,107
930
26,339
108,537
589,904
727,646
* Certain 2021 comparative information has been restated. Please refer to Note 45.
All comprehensive income is attributable to the equity holders of the parent.
8 0
Bert-Jaap Dijkstra
Director
81
* Certain 2021 comparative information has been restated and reclassified between line items. Please refer to Note 45.
The financial statements were approved by the Board of Directors and authorised for issue on 6 June 2023. They were signed on its
behalf by:
JADESTONE ENERGY 2022 ANNUAL REPORT CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2022
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2022
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Capital
redemption
reserves
USD’000
Accumulated
losses
USD’000
Total
USD’000
(331,322)
160,642
(17,073)
(17,073)
321,117
(7,745)
-
-
-
(7,745)
951
967
As at 1 January 2021
Loss for the year, representing
total comprehensive income
for the year
Share
capital
USD’000
466,979
-
Capital reduction (Note 30)
(467,387)
Dividends paid (Note 31)
Share-based payments (Note 8)
Shares issued (Note 30)
-
-
766
Share
premium
account
USD’000
Merger
reserve
USD’000
-
-
-
-
-
201
-
-
146,270
-
-
-
Total transactions with owners,
recognised directly in equity
(466,621)
201
146,270
Share-
based
payments
reserve
USD’000
24,985
-
-
-
951
-
951
As at 31 December 2021
(Restated)*
Profit for the year, representing
total comprehensive income for
the year
Dividends paid (Note 31)
Share-based payments (Note 8)
Shares issued (Note 30)
Share repurchases (Note 30)
Total transactions with owners,
recognised directly in equity
As at 31 December 2022
358
201
146,270
25,936
-
-
-
2
(21)
(19)
339
-
-
-
782
-
782
-
-
-
-
-
-
-
-
971
-
-
971
983
146,270
26,907
-
-
-
-
-
-
-
-
-
-
-
-
21
21
21
Operating activities
Profit/(Loss) before tax
Adjustments for:
Depletion, depreciation and amortisation
Impairment of oil and gas properties
Finance costs
Change in provision
Allowance for slow moving inventories
Share-based payments
Unrealised foreign exchange loss/(gain)
Assets written off
313,372
(5,827)
Accretion income on Australian tax repayment plan
Reversal of impairment of amount due from joint arrangement partner
(35,023)
137,742
8,522
8,522
(9,216)
(9,216)
-
-
971
784
(16,070)
(16,070)
(25,286)
(23,531)
Interest income
Reversal of loss on oil derivatives
Accretion income on non-current VAT receivables
Operating cash flows before movements in working capital
Increase in trade and other receivables
(Increase)/Decrease in inventories
(Decrease)/Increase in trade and other payables
Cash generated from operations
Net tax paid
Net cash generated from operating activities
(51,787)
122,733
Investing activities
Cash received from acquisition of CWLH Assets
Cash paid for acquisition of 10% interest of Lemang PSC
Cash received from acquisition of Peninsular Malaysia assets
Cash paid for acquisition of Peninsular Malaysia assets
Payment for oil and gas properties
Payment for plant and equipment
Payment for intangible exploration assets
Transfer from debt service reserve account
Interest received
Net cash used in investing activities
Financing activities
Proceeds from issuance of shares
Shares repurchased
Dividends paid
Repayment of borrowings
Repayment of lease liabilities
Interest on lease liabilities paid
Interest on borrowings paid
Interest paid
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Notes
2022
USD’000
2021
Restated*
USD’000
62,540
(4,293)
6
12
14
10
10
7
10/13
10
15
13
13
10
15
18
19
20
20
22
23
21
29
13
30
30
31
37
37
37
37
61,834
13,534
11,408
7,333
3,768
971
245
212
(1,904)
(912)
(881)
-
-
158,148
(214)
(1,096)
(2,471)
154,367
(33,130)
121,237
5,750
(500)
-
-
(78,938)
(356)
(3,334)
-
881
80,215
-
9,075
-
2,624
951
(1,838)
5,332
-
-
(80)
(471)
(266)
91,249
(6,602)
9,152
21,631
115,430
(11,834)
103,596
-
-
29,252
(20,033)
(51,380)
(682)
(3,858)
8,445
80
(76,497)
(38,176)
784
(16,070)
(9,216)
-
(13,914)
(769)
-
(91)
967
-
(7,745)
(7,296)
(12,972)
(1,222)
(209)
(74)
(39,276)
(28,551)
5,464
117,865
36,869
80,996
* Certain 2021 comparative information has been restated. Please refer to Note 45.
* Certain 2021 comparative information has been restated and reclassified between line items. Please refer to Note 45.
8 2
8 3
Cash and cash equivalents at end of the year
29
123,329
117,865
JADESTONE ENERGY 2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS for the year ended 31 December 2022
1
CORPORATE INFORMATION
Jadestone Energy plc (the “Company” or “Jadestone”) is an oil and gas company incorporated and registered in England and Wales.
The Company’s registration number is 13152520. The Company is the ultimate parent company of all Jadestone subsidiaries (the
“Group”). These consolidated financial statements have been prepared for the Jadestone Energy Group and reflect the full financial
year ended 31 December 2022 in respect of the ultimate parent company in accordance with IFRS (see Note 2).
The Company’s shares are traded on AIM under the symbol “JSE”.
The financial statements are expressed in United States Dollars (“US$” or “USD”).
The Group is engaged in production, development, exploration and appraisal activities in Australia, Malaysia, Vietnam and
Indonesia. The Group’s producing assets are in the Vulcan (Montara) basin, Carnarvon (Stag) basin and Cossack, Wanaea, Lambert,
and Hermes oil fields, located in offshore of Western Australia, and in the East Piatu, East Belumut, West Belumut and Chermingat
fields, located in shallow water in offshore Peninsular Malaysia.
The Company’s head office is located at 3 Anson Road, #13-01 Springleaf Tower, Singapore 079909. The registered office of the
Company is 6th Floor, 60 Gracechurch Street, London, EC3V 0HR United Kingdom.
2
SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared in accordance with UK-adopted International Accounting Standards and International
Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and in conformity with the
requirements of the Companies Act 2006 (the “Act”).
The financial statements have been prepared on the historical cost convention basis, except as disclosed in the accounting policies
below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.
Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of whether that price is directly observable or estimated using another
valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the
asset or liability which market participants would take into account when pricing the asset or liability at the measurement date. Fair
value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except
for share-based payment transactions that are within the scope of IFRS 2 Share-based Payment, leasing transactions that are within
the scope of IFRS 16 Leases, and measurements that have some similarities to fair value but are not fair value, such as net realisable
value in IAS 2 Inventories, or value in use in IAS 36 Impairment of Assets.
In addition, for financial reporting purposes, fair value adjustments are categorised into level 1, 2 or 3, based on the degree to
which the inputs to the fair value adjustments are observable and the significance of the inputs to the fair value measurement in its
entirety, which are described as follows:
l Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the
measurement date;
l Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either
directly or indirectly; and
l Level 3 inputs are unobservable inputs for the asset or liability.
Going concern
During 2022, the Group generated US$121.2 million of cash flow from operating activities and had net cash out flows of US$115.8
million from investing and financing activities, generating an increase in net cash of US$5.5 million to arrive at the year-end cash and
cash equivalents of US$123.3 million.
Post year end up to 30 April 2023, the Group maintained a net cash balance between US$14.0 and US$90.0 million after borrowings
and trade expenses. The Group made two contingent payments for a total of US$5.0 million, relating to the acquisition of the
Cossack, Wanaea, Lambert and Hermes oil field development (the “North West Shelf Project” or “CWLH Assets”) and the Peninsular
Malaysia assets (the "PenMal Assets") (Notes 18 and 20). Separately, the Group paid US$27.8 million for the acquisition of an interest
in Sinphuhorm gas field in February 2023 (Note 43). On 21 March 2023, Montara production restarted with lifting recommencing in
June 2023 (Note 43).
On 17 February 2023, the Group entered into an interim loan facility with two international banks for US$50.0 million (the “Interim
Facility”). The Interim Facility had a nine-month term ending on 15 November 2023, and was repaid via the reserves-based lending
facility (“RBL”), on 1 June 2023 (Note 43).
On 19 May 2023, the Group announced that it had signed a new US$200.0 million RBL facility with a group of four international
banks ("the RBL Banks"). The RBL facility provides for an uncommitted accordion of US$160.0 million, subject to incremental
availability of bank debt. The RBL facility closed on 22 May 2023, following satisfaction of the conditions precedent (Note 43). The
facility tenor is four years, with the final maturity date being the earlier of 31 March 2027 and the projected reserves tail date1
(which is expected later). The borrowing base includes the Group’s main producing assets being Montara, Stag, CWLH, Sinphuhorm,
the PenMal Assets’ PM323 and PM329 PSCs and the Group’s development asset being the Lemang PSC. The Group is required
to maintain a parent company financial covenant of consolidated net debt of 3.5 times annual EBITDAX. The entities in the RBL
ringfence are required to hold a total minimum liquidity balance of US$15.0 million and cover forward looking capital expense for
two quarters (Notes 39 and 43).
8 4
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
The Company has agreed an equity fundraising, comprising an underwritten placing, and subscription, pursuant to which it expects
to issue 92,312,691 new ordinary shares, together with a director placing and subscription for 1,769,135 new ordinary shares, in each
case at 45 pence per share, to raise aggregate net proceeds of US$50.0 million. The Company has also launched an open offer of up
to 14,887,039 new ordinary shares, at 45 pence per share, to raise additional proceeds of up to EUR8.0 million (up to US$8.6 million).
In support of the equity fundraising, the Company has entered into an up to US$50.0 million equity underwrite debt facility
agreement with Tyrus Capital Event S.à.r.l, the Company's largest shareholder. The equity underwrite facility will reduce pro-rata to
the total funds raised from the equity fundraising and the open offer and therefore is expected to reduce to zero. However, to the
extent the facility does not reduce to zero, it will mature with a bullet repayment on 31 December 2024, will bear interest at 13.5%
on drawn amounts and 5% on undrawn amounts and can be repaid or cancelled without penalties. Further details are disclosed in
Note 43.
In addition, the Company has entered into a committed standby working capital facility with Tyrus Capital Event S.à.r.l for a facility
size of up to US$35.0 million. The standby working capital facility will reduce pro-rata to the total funds raised from the equity
fundraising and the open offer in excess of US$50.0 million. The facility will mature with a bullet repayment on 31 December 2024.
The facility bears interest of 15% on drawn amounts and 5% on undrawn amounts and can be repaid or cancelled without penalties.
The Directors have considered the going concern assessment period of up to 31 December 2024 (the “Review Period”). The Group
regularly monitors its cash, funding and liquidity position. Near-term cash projections are revised and underlying assumptions
reviewed, generally monthly, and longer-term projections are also updated regularly. The Group's latest cash forecast and analysis
includes the RBL facility and the equity fundraising amounting to US$50.0 million. It also includes the Equity Underwrite and
commitment from Tyrus Capital Event S.à.r.l for a [standby working capital] facility of up to US$35.0 million to generate the 'base
case' which includes the Group's current financial position and changes in trading performance based on the current portfolio of
assets excluding any future acquisitions.
The Group's cash forecast and scenario analysis is, among other factors, based on commodity prices per the current forward curve
taking into account downside risks the associated impacts. In addition, under the RBL the Group will also undertake commodity
hedging. Sensitivities were created and included, among others, a reasonably possible low case and high case oil price; and various
hedging scenarios for duration and volumes.
Various risking scenarios, such as medium to long-term oil prices which could also be potentially impacted by the transition to a
lower carbon economy, costs estimates (including inflation assumptions) for, and phasing of, operating and capital expenditure have
been considered. In addition, the Group is also potentially exposed to potential production interruptions such as weather downtime
and planned and unplanned shutdowns for workovers and repair and maintenance activities.
The Directors have assessed that based on the near-term cash projections for the Review Period, the Group will have sufficient cash
resources in place throughout the Review Period, also after taking into consideration of the various risking scenarios.
Having taken into consideration the above factors, the Directors have reasonable expectation that the Group will continue in
operational existence for the going concern period. Accordingly, they adopted the going concern basis in preparing these financial
statements.
Adoption of new and revised standards
New and amended IFRS standards that are effective for the current year
In the current year, the Group adopted the following amendment that is effective from the beginning of the year and is relevant to
its operations. The adoption of this amendment has not resulted in changes to the Group’s accounting policies.
Amendments to IAS 16
Amendments to IFRS 3
Amendments to IAS 37
Amendments to IFRSs
Property, Plant and Equipment – Proceeds before Intended Use
Reference to Conceptual Framework
Onerous Contracts – Cost of Fulfilling a Contract
Annual Improvements to IFRS Standards 2018 – 2020
New and revised IFRSs in issue but not yet effective
At the date of authorisation of these financial statements, the Group has not applied the following amendments to IFRS standards
relevant to the Group that have been issued but are not yet effective:
Amendments to IAS 12
Amendments to IAS 12
Amendments to IAS 1 and Practice Statement 22 Making Materiality Judgements – Disclosure of Accounting Policies
Amendments to IAS 82
Amendments to IAS 122
Amendments to IFRS 163
Non-current Liabilities with Covenants
Lease Liability in a Sale and Leaseback
Definition of Accounting Estimates
Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction
Classification of Liabilities as Current or Non-current – Deferral of Effective Date
For amendments that are effective from 1 January 2023, the Directors of the Group anticipate that the application of these
amendments may have an impact on the Group’s consolidated financial statements in future periods. For amendments that
are effective from 1 January 2024, the Directors of the Group are currently performing an assessment of the impact of these
amendments and anticipate that the application of these amendments may have an impact on the Group’s consolidated financial
statements in future periods should such transactions arise.
1 Reserves tail date refers to the last day of the quarter immediately preceding the quarter in which the remaining borrowing base reserves is forecast to be
25 per cent (or less) of the initial approved borrowing base reserves.
Effective from 1 January 2023.
Effective from 1 January 2024.
2
3
8 5
JADESTONE ENERGY 2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company
and its subsidiaries made up to 31 December of each year. Control is achieved where the Company:
l Has power over the investee;
l
Is exposed, or has rights, to variable returns from its involvement with the investee; and
l Has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or
more of the three elements of control listed above.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses
control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in
the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the
date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company. Total
comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests, even if this
results in the non-controlling interests having a deficit balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with
the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group
are eliminated in full on consolidation.
Business combinations
Acquisitions of businesses, including joint operations which are assessed to be businesses, are accounted for using the acquisition
method. The consideration for each acquisition is measured as the aggregate of the acquisition date fair values of assets given,
liabilities incurred by the Company to the former owners of the acquiree, and equity interests issued by the Company in exchange
for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except that:
l Deferred tax assets or liabilities, and liabilities or assets related to employee benefit arrangements are recognised and
measured in accordance with IAS 12 Income Taxes and IAS 19 Employee Benefits respectively;
l Liabilities or equity instruments related to share-based payment transactions of the acquiree, or the replacement of an
acquiree’s share-based payment awards transactions with share-based payment awards transactions of the acquirer, in
accordance with the method in IFRS 2 Share-based Payment at the acquisition date; and
l Assets, or disposal groups, that are classified as held for sale in accordance with IFRS 5 Non-Current Assets Held for Sale and
Discontinued Operations are measured in accordance with that Standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the
acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-
date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date
amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount
of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the
excess is recognised immediately in profit or loss as a bargain purchase gain.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration
arrangement, measured at its acquisition date fair value. Subsequent changes in such fair values are adjusted against the cost of
acquisition where they qualify as measurement period adjustments. Measurement period adjustments are adjustments that arise
from additional information obtained during the ’measurement period’ (which cannot exceed one year from the acquisition date) about
facts and circumstances that existed at the acquisition date. The subsequent accounting for changes in the fair value of the contingent
consideration, that do not qualify as measurement period adjustments, depends on how the contingent consideration is classified.
Contingent consideration that is classified as equity is not re-measured at subsequent reporting dates and its subsequent settlement
is accounted for within equity. Contingent consideration that is classified as a liability is remeasured at subsequent reporting dates
with the corresponding gain or loss being recognised in profit or loss.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs,
the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted
during the measurement period (see below), or additional assets or liabilities are recognised, to reflect new information obtained
about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as
at that date.
The measurement period is the period from the date of acquisition to the date the Group obtains complete information about facts
and circumstances that existed as at the acquisition date and is subject to a maximum of one year from acquisition date.
Where an interest in a production sharing contract (“PSC”) is acquired by way of a corporate acquisition, the interest in the PSC is
treated as an asset purchase unless the acquisition of the corporate vehicle meets the definition of a business and the requirements
to be treated as a business combination.
Accounting for transaction that is not a business combination
When a transaction or other event does not meet the definition of a business combination due to the asset or group of assets not
meeting the definition of a business, it is termed an ’asset acquisition’. In such circumstances, the acquirer:
l
Identifies and recognises the individual identifiable assets acquired (including those assets that meet the definition of, and
recognition criteria for, intangible assets in IAS 38) and liabilities assumed; and
l Allocates the cost of acquiring the group of assets and liabilities to the individual identifiable assets and liabilities on the basis of
their relative fair values at the date of purchase.
Such a transaction or event does not give rise to goodwill or a gain on a bargain purchase.
Transaction costs in an asset acquisition are generally capitalised as part of the cost of the assets acquired in accordance with
applicable standards.
Foreign currency transactions
The Group’s consolidated financial statements are presented in USD, which is the parent’s functional currency and presentation
currency. The functional currencies of subsidiaries are determined based on the economic environment in which they operate.
In preparing the financial statements of each individual Group entity, transactions in currencies other than the entity’s functional
currency are recorded at the rates of exchange prevailing on the dates of the transactions. At the end of each reporting period,
monetary items denominated in foreign currencies are retranslated at the rates prevailing at the end of the reporting period. Non-
monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date
when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not
retranslated.
Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items, are included in profit or
loss for the period.
Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the
period, except for differences arising on the retranslation of non-monetary items in respect of which gains or losses are recognised
in other comprehensive income. For such non-monetary items, any exchange component of that gain or loss is also recognised
in other comprehensive income. There is no foreign currency translation reserve created at the Group level as the functional
currencies of all subsidiaries are denominated in USD.
Joint operations
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets,
and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing
control.
When a Group entity undertakes its activities under joint operations, the Group as a joint operator recognises in relation to its
interest in a joint operation:
l
l
l
l
Its assets, including its share of any assets held jointly;
Its liabilities, including its share of any liabilities incurred jointly;
Its revenue from the sale of its share of the output arising from the joint operation; and
Its expenses, including its share of any expenses incurred jointly.
The Group accounts for the assets, liabilities, revenue and expenses relating to its interest in a joint operation in accordance with
the IFRS standards applicable to the particular assets, liabilities, revenues and expenses.
When a Group entity transacts with a joint operation in which a Group entity is a joint operator (such as a sale or contribution of
assets), the Group is considered to be conducting the transaction with the other parties to the joint operation, and gains and losses
resulting from the transactions are recognised in the Group’s consolidated financial statements only to the extent of other parties’
interests in the joint operation.
When a Group entity transacts with a joint operation in which a Group entity is a joint operator (such as a purchase of assets), the
Group does not recognise its share of the gains and losses until it resells those assets to a third party.
Changes to the Group’s interest in a PSC usually require the approval of the appropriate regulatory authority. A change in interest is
recognised when:
l Approval is considered highly likely; and
l All affected parties are effectively operating under the revised arrangement.
Where this is not the case, no change in interest is recognised and any funds received or paid are included in the statement of
financial position as contractual deposits.
8 6
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JADESTONE ENERGY 2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Exploration and evaluation costs
The costs of exploring for and evaluating oil and gas properties, including the costs of acquiring rights to explore, geological and
geophysical studies, exploratory drilling and directly related overheads such as directly attributable employee remuneration,
materials, fuel used, rig costs and payments made to contractors are capitalised and classified as intangible exploration assets
(“E&E assets”).
If no potentially commercial hydrocarbons are discovered, the E&E assets are written off through profit or loss as a dry hole. If
extractable hydrocarbons are found and, subject to further appraisal activity (e.g., the drilling of additional wells), it is probable that
they can be commercially developed, the costs continue to be carried as intangible exploration costs, while sufficient/continued
progress is made in assessing the commerciality of the hydrocarbons.
Costs directly associated with appraisal activity undertaken to determine the size, characteristics and commercial potential of a
reservoir following the initial discovery of hydrocarbons, including the costs of appraisal wells where hydrocarbons were not found,
are initially capitalised as E&E assets.
All such capitalised costs are subject to technical, commercial and management review, as well as review for indicators of
impairment at the end of each reporting period. This is to confirm the continued intent to develop or otherwise extract value from
the discovery. When such intent no longer exists, or if there is a change in circumstances signifying an adverse change in initial
judgment, the costs are written off.
When commercial reserves of hydrocarbons are determined and development is approved by management, the relevant
expenditure is transferred to oil and gas properties. The technical feasibility and commercial viability of extracting a mineral
resource is considered to be determinable when proved or probable reserves are determined to exist. The determination of proved
or probable reserves is dependent on reserve evaluations which are subject to significant judgments and estimates.
Costs related to geological and geophysical studies that relate to blocks that have not yet been acquired, and costs related to blocks
for which no commercially viable hydrocarbons are expected, are taken direct to the profit or loss and have been disclosed as
exploration expenses.
Oil and gas properties
Producing assets
The Group recognises oil and gas properties at cost less accumulated depletion, depreciation and impairment losses. Directly
attributable costs incurred for the drilling of development wells and for the construction of production facilities are capitalised,
together with the discounted value of estimated future costs of decommissioning obligations. Workover expenses are recognised
in profit or loss in the period in which they are incurred, unless it generates additional reserves or prolongs the economic life of the
well, in which case it is capitalised. When components of oil and gas properties are replaced, disposed of, or no longer in use, they
are derecognised.
Depletion and amortisation expense
Depletion of oil and gas properties is calculated using the units of production method for an asset or group of assets, from the date
in which they are available for use. The costs of those assets are depleted based on proved and probable reserves.
Costs subject to depletion include expenditures to date, together with approved estimated future expenditure to be incurred in
developing proved and probable reserves. Costs of major development projects are excluded from the costs subject to depletion
until they are available for use.
The impact of changes in estimated reserves is dealt with prospectively by depleting the remaining carrying value of the asset over
the remaining expected future production. If reserves estimates are revised downwards, earnings could be affected by higher
depletion expense, or an immediate write-down of the property’s carrying value.
Depletion amount calculated based on production during the year is adjusted based on the net movement of crude inventories
at year end against beginning of the year, i.e., depletion cost for crudes produced but not lifted are capitalised as part of cost of
inventories and recognised as depletion expense when lifting occurs.
Asset restoration obligations
The Group estimates the future removal and restoration costs of oil and gas production facilities, wells, pipelines and related
assets at the time of installation or acquisition of the assets, and based on prevailing legal requirements and industry practice. In
most instances, the removal of these assets will occur many years in the future. The estimates of future removal costs are made
considering relevant legislation and industry practice and require management to make judgments regarding the removal date, the
extent of restoration activities required, and future removal technologies.
Site restoration costs are capitalised within the cost of the associated assets, and the provision is stated in the statement of financial
position at its total estimated present value. These costs are based on judgements and assumptions regarding removal dates,
technologies, and industry practice. This estimate is evaluated on a periodic basis and any adjustment to the estimate is applied
prospectively. Changes in the estimated liability resulting from revisions to estimated timing, amount of cash flows, or changes in
the discount rate are recognised as a change in the asset restoration liability and related capitalised asset restoration cost within oil
and gas properties.
The Malaysian and Indonesian regulators require upstream oil and gas companies to contribute to an abandonment cess fund,
including making periodic cess payments, throughout the production life of the oil or gas field. The cess payment amount is
assessed based on the estimated future decommissioning expenditures. For operated licences, the cess payment paid is classified
as non-current receivables as the cess payment paid is reclaimable by the Group in the future following the commencement of
decommissioning activities. For non-operated licences, the cess payment paid reduces the asset restoration liability.
An abandonment trust fund was set up as part of the acquisition of the CWLH Assets to ensure there are sufficient funds available
for decommissioning activities at the end of field life. The payment paid into the trust fund is classified as non-current receivables as
the amount is reclaimable by the Group in the future following the commencement of decommissioning activities.
The change in the net present value of future obligations, due to the passage of time, is expensed as an accretion expense within
financing charges. Actual restoration obligations settled during the period reduce the decommissioning liability.
Capitalised asset restoration costs are depleted using the units of production method (see above accounting policy).
Borrowing costs
Borrowing costs are allocated to periods over the term of the related debt, at a constant rate on the carrying amount. Borrowings,
as shown on the consolidated statement of financial position, are net of arrangement fees and issue costs, and the borrowing costs
are amortised through to the statement of profit or loss and other comprehensive income as finance costs over the term of the
debt.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until
such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in the profit or loss in the period in which they are incurred.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is
deducted from the borrowing costs eligible for capitalisation. All other borrowing costs are recognised in the statement of profit or
loss in the period in which they are incurred.
Plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any recognised impairment loss.
Depreciation is charged so as to write off the cost of assets evenly over their estimated useful lives, on the following:
l Computer equipment: 3 years; and
l Fixtures and equipment: 3 years.
The estimated useful lives, residual values and depreciation method are reviewed at each year end, with the effect of any changes in
estimate accounted for on a prospective basis.
Materials and spares which are not expected to be consumed within the next twelve months from the year end are classified as
plant and equipment.
Right-of-use assets are depreciated over the shorter period of the lease term and the useful life of the underlying asset. If the
ownership of the underlying asset in a lease is transferred, or the cost of the right-of-use asset reflects that the Group expects to
exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset.
An item of plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the
continued use of asset. Any gain or loss arising on the disposal or retirement of an item of plant and equipment is determined as the
difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Impairment of oil and gas properties, plant and equipment, right-of-use assets and intangible assets
excluding goodwill
At the end of each reporting period, the Group reviews the carrying amounts of its oil and gas properties, plant and equipment,
right-of-use assets and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). The impairment is determined on each individual cash-generating unit basis (i.e.,
individual oil or gas field or individual PSC). Where there is common infrastructure that is not possible to measure the cash flows
separately for each oil or gas field or PSC, then the impairment is determined based on the aggregate of the relevant oil or gas fields
or the combination of two or more PSCs. When a reasonable and consistent basis of allocation can be identified, corporate assets
are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units
for which a reasonable and consistent allocation basis can be identified.
Recoverable amount is the higher of fair value less costs of disposal (“FVLCOD”) and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset for which estimates of future cash flows have not been
adjusted. FVLCOD will be assessed on a discounted cash flow basis where there is no readily available market price for the asset or
where there are no recent market transactions. Assumptions relating to forecast capital expenditures that enhance the productive
capacity can be included in the discounted cash flows model, but only to the extent that a typical market participant would take a
consistent view. The post-tax discounted cash flows are compared against the carrying amount of the asset on an after-tax basis;
that is, after deducting deferred tax liabilities relating to the asset or group of assets.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount
of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit
or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years.
A reversal of an impairment loss is recognised immediately in profit or loss.
8 8
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JADESTONE ENERGY 2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Inventories
Inventories are valued at the lower of cost and net realisable value. Cost is determined as follows:
l Petroleum products, comprising primarily of extracted crude oil stored in tanks, pipeline systems and aboard vessels, and
natural gas, are valued using weighted average costing, inclusive of depletion expense; and
l Materials, which include drilling and maintenance stocks, are valued at the weighted average cost of acquisition.
Net realisable value represents the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale. The Group uses its judgement to determine which costs are necessary to make
the sale considering its specific facts and circumstances, including the nature of the inventories. If the carrying value exceeds net
realisable value, a write-down is recognised. The write-down may be reversed in a subsequent period if the inventory is still on
hand, but the circumstances which caused the write-down no longer to exist.
Provision for slow moving materials and spares are recognised in the “other expenses” (Note 10) line item in profit or loss as they are
non-trade in nature.
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s consolidated statement of financial position when the Group
becomes a party to the contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the
acquisition or issue of the financial assets and financial liabilities (other than financial assets and financial liabilities measured at
fair value through the profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition.
Transaction costs directly attributable to the acquisition of financial assets or financial liabilities measured at fair value through
profit or loss are recognised immediately in profit or loss.
Financial assets
All financial assets are recognised and derecognised on a trade date basis, where the purchases or sales of financial assets is under
a contract whose terms require delivery of assets within the time frame established by the market concerned.
All recognised financial assets are measured subsequently in their entirety, at either amortised cost or fair value, depending on the
classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are measured subsequently at amortised cost:
l The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash
flows; and
l The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive income
(“FVTOCI”):
l The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and
selling the financial assets; and
l The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
By default, all other financial assets are subsequently measured at fair value through profit or loss (“FVTPL”).
Amortised cost and effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income
over the relevant period.
For financial assets, the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees
paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts)
excluding expected credit losses, through the expected life of the financial asset, or, where appropriate, a shorter period, to the
gross carrying amount of the financial instrument on initial recognition.
The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the
principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial
amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised
cost of a financial asset before adjusting for any loss allowance.
Interest income is recognised using the effective interest method for financial assets measured subsequently at amortised cost
and at fair value through other comprehensive income. For financial assets other than purchased or originated credit impaired
financial assets, interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset,
except for financial assets that have subsequently become credit impaired. For financial assets that have subsequently become
credit impaired, interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset.
If, in subsequent reporting periods, the credit risk on the credit impaired financial instrument improves so that the financial asset
is no longer credit impaired, interest income is recognised by applying the effective interest rate to the gross carrying amount of
the financial asset.
Interest income is recognised in profit or loss and is included in “other income” (Note 13) line item.
Impairment of financial assets
The Group’s financial assets that are subject to the expected credit loss model comprise trade and other receivables. While cash and
bank balances are also subject to the impairment requirements of IFRS 9 Financial Instruments, the expected credit loss allowances
are not expected to be significant due to the banks have external credit ratings of ’investment grade’ in accordance with the globally
understood definition.
The Group’s trade and other receivables are primarily with counterparties to oil and gas sales, joint arrangement partners and non-
trade related parties.
The concentration of credit risk relates to the Group’s single customer with respect to oil sales in Australia, and a different single
customer for oil and gas sales in Malaysia. Both customers have an A2 credit rating (Moody’s). All trade receivables are generally
settled 30 days after the sale date. In the event that an invoice is issued on a provisional basis then the final reconciliation is paid
within three days of the issuance of the final invoice, largely mitigating any credit risk.
The Group recognises lifetime expected credit loss (“ECL”) for trade receivables. The expected credit losses on these financial assets
are estimated based on days past due, applying expected non-recoveries for each group of receivables.
The Group measures the loss allowance for other receivables and amounts due from joint arrangement partners at an amount
equal to 12 months ECL, as there is no significant increase in credit risk since initial recognition.
Significant increase in credit risk
In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Group
compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on
the financial instrument as at the date of initial recognition. In making this assessment, the Group considers both quantitative and
qualitative information that is reasonable and supportable, including historical experience and forward looking information that is
available without undue cost or effort. Forward looking information considered includes the future prospects of the industries in
which the Group’s debtors operate, based on consideration of various external sources of actual and forecast economic information
plus environment impacts that relate to the Group’s core operations.
In particular, the following information is taken into account when assessing whether credit risk has increased significantly since
initial recognition:
l An actual or expected significant deterioration in the financial instrument’s external (if available), or internal credit rating;
l Significant deterioration in external market indicators of credit risk for a particular financial instrument, e.g., a significant
increase in the credit spread, the credit default swap prices for the debtor, or the length of time or the extent to which the fair
value of a financial asset has been less than its amortised cost;
l Existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant
decrease in the debtor’s ability to meet its debt obligations;
l An actual or expected significant deterioration in the operating results of the debtor;
l Significant increases in credit risk on other financial instruments of the same debtor; and
l An actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that
results in a significant decrease in the debtor’s ability to meet its debt obligations.
Despite the foregoing, the Group assumes that the credit risk on a financial instrument has not increased significantly since
initial recognition if the financial instrument is determined to have low credit risk at the reporting date. A financial instrument is
determined to have low credit risk if i) the financial instrument has a low risk of default, ii) the borrower has a strong capacity to
meet its contractual cash flow obligations in the near term and iii) adverse changes in economic and business conditions in the
longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations.
The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit
risk and revises them, as appropriate, to ensure that the criteria are capable of identifying a significant increase in credit risk before
the amount becomes past due.
Definition of default
The Group considers the following as constituting an event of default, for internal credit risk management purposes, as historical
experience indicates that receivables that meet either of the following criteria are generally not recoverable:
l When there is a breach of financial covenants by the counterparty; or
l
Information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors,
including the Group, in full (without taking into account any collateral held by the Group).
Credit-impaired financial assets
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of
that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following
events:
l Significant financial difficulty of the issuer or the borrower;
l A breach of contract, such as a default or past due event;
l The lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted
to the borrower a concession(s) that the lender(s) would not otherwise consider;
l
It is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
l The disappearance of an active market for that financial asset because of financial difficulties.
9 0
9 1
JADESTONE ENERGY 2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Write-off policy
The Group writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty
and there is no realistic prospect of recovery, e.g., when the counterparty has been placed under liquidation or has entered into
bankruptcy proceedings, or in the case of trade receivables, when the amounts are over one year past due, whichever occurs sooner.
Financial assets written off may still be subject to enforcement activities under the Group’s recovery procedures, taking into account
legal advice where appropriate. Any recoveries made are recognised in profit or loss.
Measurement and recognition of expected credit losses
The measurement of ECL is a function of the probability of default, loss given default (i.e., the magnitude of the loss if there is a
default), and the exposure at default. The assessment of the probability of default, and loss given default, is based on historical data
adjusted by forward looking information as described above.
As for the exposure at default, for financial assets, this is represented by the assets’ gross carrying amount at the reporting date,
together with any additional amounts expected to be drawn down in the future by the default date determined based on historical
trend, the Group’s understanding of the specific future financing needs of the debtors, and other relevant forward looking information.
Fair value estimation of financial assets and liabilities
The fair value of current financial assets and liabilities carried at amortised cost, approximate their carrying amounts, as the effect
of discounting is immaterial.
Share-based payments
Share-based incentive arrangements are provided to employees, allowing them to acquire shares of the Company.
The fair value of equity-settled options granted is recognised as an employee expense, with a corresponding increase in equity.
Equity-settled share options are valued at the date of grant using the Black-Scholes pricing model, and are charged to operating
costs over the vesting period of the award. The charge is modified to take account of options granted to employees who leave the
Group during the vesting period and forfeit their rights to the share options. In the case of market-related performance conditions,
the Group revises its estimates of the number of equity instruments expected to vest at the end of the reporting period. The impact
of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised
estimate, with a corresponding adjustment to the share options reserve.
For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows that are due to the
Group in accordance with the contract, and all the cash flows that the Group expects to receive, discounted at the original effective
interest rate.
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of goods or
services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the
equity instruments granted, measured at the date at which the entity obtains the goods or the counterparty renders the service.
If the Group has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting
period, but determines at the current reporting date that the conditions for lifetime ECL are no longer met, the Group measures the
loss allowance at an amount equal to 12 month ECL at the current reporting date, except for assets for which the simplified approach
was used.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group
neither transfers nor retains substantially all the risks and rewards of ownership, and continues to control the transferred asset, the
Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains
substantially all of the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial
asset and also recognises a collaterialised borrowing for the proceeds received.
On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum
of the consideration received and receivables, is recognised in the profit or loss.
Financial liabilities
All financial liabilities are measured subsequently at amortised cost, using the effective interest method or at FVTPL.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition, or when the continuing
involvement approach applies, are measured in accordance with the specific accounting policies set out below.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent consideration of an acquirer in a business
combination, (ii) held for trading, or (iii) designated as at FVTPL.
A financial liability other than a contingent consideration of an acquirer in a business combination may be designated as at FVTPL
upon initial recognition if:
l Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or
l The financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance
is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and
information about the grouping is provided internally on that basis; or
l
It forms part of a contract containing one or more embedded derivatives, and IFRS 9 permits the entire combined contract to be
designated as at FVTPL.
Financial liabilities classified as at FVTPL are measured at fair value, with any gains or losses arising on changes in fair value
recognised in profit or loss to the extent that they are not part of a designated hedging relationship (see hedge accounting policy).
The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in either “other
financial gains” (Note 15) or “finance costs” (Note 14) line item in profit or loss.
Financial liabilities measured subsequently at amortised cost
Other financial liabilities are measured subsequently at amortised cost, using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense
over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all
fees paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts)
through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire.
The difference between the carrying amount of the financial liability derecognised, and the consideration paid and payable, is
recognised in profit or loss.
Equity instruments
Ordinary shares issued by the Company are classified as equity and recorded at the par value in the share capital account and the
fair value of the proceeds received recorded in the share premium account.
Leases
The Group as lessee
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use
asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases
(defined as leases with a lease term of 12 months or less) and leases of low value assets (such as personal computers, small items of
office furniture and telephones). For these leases, the Group recognises the lease payments as an operating expense on a straight-
line basis over the term of the lease, unless another systematic basis is more representative of the time pattern in which economic
benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the lessee uses its estimated incremental
borrowing rate.
Lease payments included in the measurement of the lease liability comprise fixed lease payments (including in substance fixed
payments).
The lease liability is presented as a separate line in the consolidated statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease
liability (using the effective interest method), and by reducing the carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset) whenever:
l The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of
exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a
revised discount rate;
l The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual
value, in which case the lease liability is remeasured by discounting the revised lease payments using an unchanged discount
rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is
used); or
l A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability
is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount
rate at the effective date of the modification.
During the year, the Group did not make any such adjustments.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments
made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently
measured at cost less accumulated depreciation and impairment losses.
Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located,
or restore the underlying asset to the condition required by the terms and conditions of the lease, a provision is recognised and
measured under IAS 37. To the extent that the costs relate to a right-of-use asset, the costs are included in the related right-of-use
asset, unless those costs are incurred to produce inventories.
Right-of-use assets are depreciated over the shorter period of the lease term and the useful life of the underlying asset. If a lease
transfers ownership of the underlying asset, or the cost of the right-of-use asset reflects that the Group expects to exercise a
purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at
the commencement date of the lease.
Right-of-use assets are presented as a separate line in the consolidated statement of financial position.
The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as
described in the “Impairment of Assets” policy.
92
9 3
JADESTONE ENERGY 2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and
associated non-lease components as a single arrangement. The Group has not used this practical expedient. For contracts that
contain a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in
the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate
standalone price of the non-lease components.
Provisions
Provisions are recognised when the Group has a present obligation, legal or constructive, as a result of a past event, and it is probable
that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end
of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured
using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows,
and where the effect of the time value of money is material. The provisions held by the Group are asset restoration obligations,
contingent payments, employee benefits and incentive scheme, as set out in Note 35.
Retirement benefit obligations
Payments to defined contribution retirement benefit plans are charged as an expense as and when employees have tendered the
services entitling them to the contributions. Payments made to state managed retirement benefit schemes, such as Malaysia’s
Employees Provident Fund, are dealt with as payments to defined contribution plans where the Group’s obligations under the plans
are equivalent to those arising in a defined contribution retirement benefit plan. The Group does not have any defined benefit plans.
Revenue
Revenue from contracts with customers is recognised in the profit or loss when performance obligations are considered met, which
is when control of the hydrocarbons are transferred to the customer.
Revenue from the production of oil and gas, in which the Group has an interest with other producers, is recognised based on the
Group’s working interest and the terms of the relevant production sharing contracts.
Liquids production revenue is recognised when the Group gives up control of the unit of production at the delivery point agreed
under the terms of the sale contract. This generally occurs when the product is physically transferred into a vessel, pipe or other
delivery mechanism. The amount of production revenue recognised is based on the agreed transaction price and volumes delivered.
In line with the aforementioned, revenue is recognised at a point in time when deliveries of the liquids are transferred to customers.
Gas production revenue is meter measured based on the hydrocarbon volumes delivered. The volumes delivered over a calendar
month are invoiced based on monthly meter readings. The price is either fixed (gas) or linked to an agreed benchmark (high sulphur
fuel oil) in advance. This methodology is considered appropriate as it is normal business practice under such arrangements. In line
with the aforementioned, revenue is recognised at a point in time when deliveries of the gas are transferred to the customer.
A receivable is recognised once transfer has occurred, as this represents the point in time at which the right to consideration
becomes unconditional, and only the passage of time is required before the payment is due.
Under/Overlift
Offtake arrangements for oil and gas produced in certain of the Group’s jointly owned operations may result in the Group not
receiving and selling its precise share of the overall production in a period. The resulting imbalance between the Group’s cumulative
entitlement and share of cumulative production less stock gives rise to an underlift or overlift.
Entitlement imbalances in under/overlift positions and the movements in inventory are included in production costs (Note 5). An
overlift liability is measured on the basis of the cost of production and represents a provision for production costs attributable to
the volumes sold in excess of entitlement. The underlift asset is measured at the lower of cost and net realisable value, consistent
with IAS 2, to represent a right to additional physical inventory. A underlift of production from a field is included in current
receivables and an overlift of production from a field is included in current liabilities.
Income tax
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of
profit or loss and other comprehensive income, because it excludes items of income or expense that are taxable or deductible in
other years and it further excludes items that are not taxable or tax deductible. The Group’s liability for current tax is calculated
using tax rates (and tax laws) that have been enacted or substantively enacted, in countries where the Company and its subsidiaries
operate, by the end of the reporting period.
Petroleum resource rent tax (PRRT)
PRRT incurred in Australia is considered for accounting purposes to be a tax based on income. Accordingly, current and deferred
PRRT expense is measured and disclosed on the same basis as income tax.
PRRT is calculated at the rate of 40% of sales revenues less certain permitted deductions and is tax deductible for income tax
purposes. For Australian corporate tax purposes, PRRT payment is treated as a deductible expense, while PRRT refund is treated
as an assessable income. Therefore, for the purposes of calculating deferred tax, the PRRT tax rate is combined with the Australian
corporate tax rate of 30% to derive a combined effective tax rate of 28%.
Malaysia Petroleum Income Tax (PITA)
PITA incurred in Malaysia is considered for accounting purposes to be a tax based on income derived from petroleum operations.
Accordingly, current and deferred PITA expense is measured and disclosed on the same basis as income tax.
9 4
PITA is calculated at the rate of 38% of sales revenues less certain permitted deductions and deferred tax is calculated at the
same rate.
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial
statements, and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally
recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable
profits will be available, against which deductible temporary differences can be utilised. Such deferred tax assets and liabilities are
not utilised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of
other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the
Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in
the foreseeable future.
Deferred tax assets arising from deductible temporary differences associated with such investments and interests, are only
recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the
temporary differences, and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled, or the asset realised,
based on the tax rates (and tax laws) that have been enacted or substantively enacted, by the end of the reporting period. The
measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the
Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax
assets and liabilities on a net basis.
Current and deferred tax for the year
Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items credited or
debited outside profit or loss (either in other comprehensive income or directly in equity), in which case the tax is also recognised
outside profit or loss (either in other comprehensive income or directly in equity, respectively).
Other taxes
Revenue, expenses, assets, and liabilities are recognised net of the amount of goods and services tax (“GST”) or value added tax
(“VAT”) except:
l When the GST/VAT incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case
the GST/VAT is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
l Receivables and payables, which are stated with the amount of GST/VAT included.
The net amount of GST/VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables in
the consolidated statement of financial position.
Cash and bank balances
Cash and bank balances comprise cash in hand and at bank, and other short-term deposits held by the Group with maturities of less
than three months. Restricted cash and cash equivalents balances are those which meet the definition of cash and cash equivalents
but are not available for use by the Group.
3
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group’s accounting policies, management is required to make judgments, estimates and assumptions
about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods,
if the revision affects both current and future periods.
Critical accounting judgments
In the application of the Group’s accounting policies, management is required to make judgments, estimates and assumptions
about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from
these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods,
if the revision affects both current and future periods.
The following is the critical judgement, apart from those involving estimates (see below) that management has made in the
process of applying the Group’s accounting policies that have the most significant effect on the amounts recognised in the financial
statements.
9 5
JADESTONE ENERGY 2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
a) Acquisitions, divestitures and/or assignment of interests
The Group accounts for acquisitions and divestitures by considering if the acquired or transferred interest relates to that of an
asset, or of a business as defined in IFRS 3 Business Combinations paragraph B7, B8 and Appendix A, in so far as those principles
do not conflict with the guidance in IFRS 11 Joint Arrangements paragraph 21A. Accordingly, the Group considers if there is the
existence of business elements as defined in IFRS 3 (e.g., inputs and substantive processes), or a group of assets that includes
inputs and substantial processes that together significantly contribute to the ability to create outputs and providing a return to
investors or other economic benefits. The justifications for this assessment on both acquisition of the CWLH Assets and the 10%
remaining interest in the Lemang PSC have been set out in Notes 18 and 19, respectively.
b) Impairment of oil and gas properties and intangible exploration assets
The Group assesses each asset or cash-generating unit (’CGU’) (excluding goodwill, which is assessed annually regardless of
indicators) in each reporting period to determine whether any indication of impairment exists. Assessment of indicators of
impairment or impairment reversal and the determination of the appropriate grouping of assets into a CGU or the appropriate
grouping of CGUs for impairment purposes require significant management judgement. For example, individual oil and gas
properties may form separate CGUs whilst certain oil and gas properties with shared infrastructure may be grouped together to
form a single CGU. Alternative groupings of assets or CGUs may result in a different outcome from impairment testing. See Note
12 for details on how these groupings have been determined in relation to the impairment testing of oil and gas properties.
For the intangible exploration assets, the Group takes into consideration the technical feasibility and commercial viability of
extracting a mineral resource and whether there is any adverse information that will affect the final investment decision.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year, are discussed below.
a) Deferred taxes
The Group recognises the net future economic benefit of deferred tax assets to the extent that it is probable that the deductible
temporary differences will reverse in the foreseeable future and the carry forward of unutilised tax credits and unutilised tax
losses can be utilised accordingly. Assessing the recoverability of deferred income tax, PRRT and PITA assets require the Group
to make significant estimates related to expectations of future taxable income. Estimates of future taxable income are based on
forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash
flows and taxable income differ significantly from estimates, the ability of the Group to realise the net deferred tax assets as
recorded in the statement of financial position, could be impacted.
The carrying amount of the Group’s deferred tax assets are disclosed in Note 26 to the financial statements.
Sensitivity analysis
Sensitivities have been run on the oil price assumption, with a 10% change to the price assumptions used at year end, sourced
from independent third party, ERCE being considered a reasonable possible change for the purposes of sensitivity analysis. A
10% decrease/increase in oil price would not result in a change in the deferred tax asset recognised by the Group due to the
unrecognised deferred tax assets being associated with the unwinding of provision of asset retirement obligations in the future
during the decommissioning period. The Group is not expected to be in taxable profit position during the decommissioning
period to enable it to utilise the unrecognised deferred tax assets at year end.
b) Reserves estimates
The Group’s estimated reserves are management assessments, and are audited by an independent third party, which involves
reviewing various assumptions, interpretations and assessments. These include assumptions regarding commodity prices,
exchange rates, future production, transportation costs, climate related risks and interpretations of geological and geophysical
models to make assessments of the quality of reservoirs and the anticipated recoveries. Changes in reported reserves can
impact asset carrying amounts, the provision for restoration and the recognition of deferred tax assets, due to changes in
expected future cash flows. Reserves are integral to the amount of depreciation, depletion and amortisation charged to the
statement of profit or loss and other comprehensive income, and the calculation of inventory. Based on the analysis performed,
management does not expect a 5% increase/decrease in the reserves estimates would significantly impact the carrying
amounts of the assets and liabilities of the Group at year end. Management considers 5% movements to the existing reserves
a reasonable assumption based on the historical technical adjustments during the annual reserves audit performed by an
independent third party.
c) Impairment of oil and gas properties and intangible exploration assets
For the impairment assessment of oil and gas properties, management assesses the recoverable amounts using the FVLCOD
approach. The post-tax estimated future cash flows are prepared based on estimated reserves, future production profiles,
future hydrocarbon price assumptions and costs. The future hydrocarbon price assumptions used are highly judgemental and
may be subject to increased uncertainty given climate change and the global energy transition. Management further takes into
consideration the impact of climate change on estimated future commodity prices with the application of the Paris aligned price
assumptions.
The carrying amounts of intangible exploration assets, oil and gas properties and right-of-use assets are disclosed in Notes 21,
22 and 24, respectively.
The Group recognises that the climate change and energy transition is likely to impact the demand for oil and gas, thus affecting
the future prices of these commodities and the timing of decommissioning activities. This in turn may affect the recoverable
amount of the Group’s oil and gas properties and intangible exploration assets, and the carrying amount of the asset retirement
obligations provision. The Group acknowledges that there is a range of possible energy transition scenarios that may indicate
different outcomes for oil prices. There are inherent limitations with scenario analysis and it is difficult to predict which, if any, of
the scenarios might eventuate.
The Group has assessed the potential impacts of climate change and the transition to a lower carbon economy in preparing
the consolidated financial statements, including the Group’s current assumptions relating to demand for oil and gas and their
impact on the Group’s long-term price assumptions, and also taking into consideration the forecasted long-term prices and
demand for oil and gas under the Paris aligned scenarios.
Management will continue to review various price assumptions such as Paris aligned price assumptions and demand in line with
the scenarios based on decrease to emissions as the energy transition progresses and will take into consideration in the future
impairment assessments. See further disclosures under the Sustainability Review section from pages 11 to 22.
Sensitivity analyses
Management assessed the impact of a change in cash flows in impairment testing arising from a 10% reduction in price
assumptions used at year end, sourced from independent third party, ERCE and approved by management. The forecasted price
assumptions are US$84.5/bbl in 2023, US$82.1/bbl in 2024, US$79.9/bbl in 2025, US$80.6/bbl in 2026 and an average of US$89.7/
bbl from 2027 onwards. Management is of the view that these price assumptions are aligned with the Group’s latest internal
forecasts, reflecting long-term views of global supply and demand. The price assumptions used are reviewed and approved
by management. Based on the analysis performed, management concluded that a 10% price reduction in isolation under the
various scenarios would not impact the carrying amount of the Group’s oil and gas properties.
Management also assessed the impact of the change in cash flows used in impairment testing arising from the application of the
oil price assumptions under the Net Zero Emissions by 2050 Scenario plus the inclusion of carbon cost estimates as disclosed
below. The oil prices under the Net Zero Emissions by 2050 Scenario for each asset are as follow:
Montara
Stag
CWLH Assets
PenMal Assets – PM323 PSC
PenMal Assets – PM329 PSC
Lemang PSC
2023
US$/bbl
2024
US$/bbl
2025
US$/bbl
2026
US$/bbl
2027
US$/bbl
88.3
88.3
88.3
88.3
88.3
88.3
84.2
84.2
84.2
84.2
84.2
84.2
81.8
81.8
81.8
81.8
81.8
81.8
73.8
73.8
73.8
73.8
73.8
73.8
65.8
65.8
65.8
65.8
65.8
65.8
The carbon costs estimates under the Net Zero Emissions by 2050 Scenario for each asset are as follow:
Montara
Stag
CWLH Assets
PenMal Assets – PM323 PSC
PenMal Assets – PM329 PSC
Lemang PSC
2023
US$’000
2024
US$’000
2025
US$’000
2026
US$’000
2027
US$’000
756
-
115
572
303
-
3,469
-
427
1,128
597
-
5,566
1,715
692
1,700
890
210
7,571
2,295
964
2,176
1,182
555
9,666
2,802
1,119
-
1,474
829
2028
onwards
US$/bbl
45.9
44.6
46.7
57.8
47.5
45.3
2028
onwards
US$’000
54,536
15,415
6,855
-
15,813
41,257
Based on the analysis performed, the reduction in operating cash flows under the Net Zero Emissions by 2050 Scenario would
not result in an impairment on the carrying amount of the Group’s oil and gas properties.
The oil price sensitivity analyses above do not, however, represent management’s best estimate of any impairments that might
be recognised as they do not fully incorporate consequential changes that may arise, such as reductions in costs and changes
to business plans, phasing of development, levels of reserves and resources, and production volumes. As an example, as price
reduces, it is likely that costs would decrease across the industry. The oil price sensitivity analysis therefore does not reflect a
linear relationship between price and value that can be extrapolated.
Management also tested the impact of a 5% (2021: 5%) change to the discount rate used of 8.99% (2021: 10%) for impairment
testing of oil and gas properties, and concluded that a 5% increase/decrease in the discount rate will not result in impairment as
the net present value of either outcome is above the carrying amount of the Group’s oil and gas properties at year end.
9 6
9 7
JADESTONE ENERGY 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
d) Asset restoration obligations
5
PRODUCTION COSTS
The Group estimates the future removal and restoration costs of oil and gas production facilities, wells, pipelines and related
assets at the time of installation of the assets and reviewed subsequently at the end of each reporting period. In most instances
the removal of these assets will occur many years in the future.
The estimate of future removal costs is made considering relevant legislation and industry practice and requires management
to make judgments regarding the removal date, the extent of restoration activities required and future costs and removal
technologies.
Operating costs
Workovers
Logistics
Repairs and maintenance
Tariffs and transportation costs
Underlift, overlift and crude inventories movement
2022
USD’000
100,664
10,190
31,895
60,174
8,341
39,436
250,700
2021
Restated*
USD’000
62,399
67,006
20,212
44,417
2,809
15,053
211,896
The carrying amounts of the Group’s asset restoration obligations is disclosed in Note 35 to the financial statements.
While the transition to a lower carbon economy is currently ongoing, oil and gas demand is expected to remain a key element of
the energy mix in the foreseeable future as oil and gas will still remain as one of primary energy sources globally while countries
work to reduce emissions gradually over the coming years to achieve stated emission targets.
Therefore, given the useful lives of the Group’s current portfolio of oil and gas assets of up to 2040, management does not
expect the potential decline on oil prices as a result of climate change and the transition to a lower carbon economy will have a
material adverse change to the operating cash flows of the Group during the lives of those assets and thus the carrying amounts
of the Group’s assets and liabilities will not be significantly impacted, as evidenced by the sensitivity analyses performed using
price assumptions under the Net Zero Emissions by 2050 Scenario as disclosed on page 97.
Sensitivity analyses
Sensitivities have been run on the discount rate assumption, with a 1% change being considered a reasonable possible change
for the purposes of sensitivity analysis. A 1% reduction in discount rate would increase the liability by US$53.3 million and a
1% increase in discount rate would decrease the liability by US$47.3 million. A 10% increase in current estimated costs would
increase the liability by US$45.7 million and a 10% decrease in current estimated costs would decrease the liability by US$45.7
million. A one year deferral to the estimated decommissioning year of each asset as disclosed in Note 35 would decrease the
liability by US$5.6 million and an acceleration of one year to the estimated decommissioning year as disclosed in Note 35 would
increase the liability by US$5.7 million. Management considers the 1% movement to the discount rate, 10% to the current
estimated costs and one year movement to the estimated decommissioning year a reasonable assumption based on the
historical adjustments to the risk-free rates, base decommissioning costs and estimated decommissioning year.
4
REVENUE
The Group presently derives its revenue from contracts with customers for the sale of oil and gas products.
In line with the revenue accounting policies set out in Note 2, all revenue is recognised at a point in time.
Liquids revenue
Gas revenue
2022
USD’000
418,483
3,119
421,602
2021
USD’000
339,210
984
340,194
There was no hedge contract entered into by the Group during the year. In 2021, the Group entered into Australian commodity swap
contracts hedging approximately 30% of its planned production for the period January to June. The commodity swap contracts were
measured at FVTPL as opposed to hedge accounting, in part because the swap contracts covered a short time span, commenced
and matured in the same reporting period. The swap contracts incurred a loss of US$4.6 million during the year which is recorded as
other expense (Note 10).
Operating costs predominately consists of offshore manpower costs of US$26.1 million (2021: US$26.8 million), chemicals, services,
supplies and other production related costs for a total of US$38.3 million (2021: US$21.1 million), Malaysian supplementary
payments totalled US$24.5 million (2021: US$8.3 million), insurance of US$4.8 million (2021: US$2.7 million) and non-operated assets
production costs of US$3.3 million (2021: US$1.2 million). The Malaysian supplementary payments are payable under the terms of
PSCs based on the Group’s entitlement to profit from oil and gas. It is calculated at 70% of the excess revenue over the base price of
the sale of oil as set out under the terms of PSCs. These supplementary payments are made to PETRONAS.
Underlift, overlift and crude inventories movement resulted in an expense of US$39.4 million (2021: US$15.1 million), mostly related
to the CWLH Assets acquired in November 2022. At closing of the acquisition on 1 November 2022, the Group acquired an underlift
position with a fair value of US$27.3 million (Note 18). The underlift position was recognised as an expense following a lifting which
occurred in the middle of November 2022. At the year end, the Group is in an overlift position of 205,510 bbls (2021: underlift of
88,398 bbls) and accordingly has recognised a production expense of US$6.8 million (2021: production credit of US$1.5 million),
measured at the lower of cost and net realisable value of US$32.94/bbl (2021: US$16.77/bbl). The overlift position at 2022 year end
will unwind in 2023 based on the subsequent net productions entitled to the Group. The underlift position at 2021 year end had
unwound in 2022.
Workovers in current year are recurring in nature. In 2021, the costs included the Montara subsea workovers for the Skua-10 and 11
wells of US$47.2 million, net of insurance claim receivable of US$10.3 million on the well control claim for the Skua-11 well workovers.
Repairs and maintenance in current year include Montara Skua-11 repairment works, solar engine change out and emergency tank
repairs. In 2021, the costs included a once-in-every-three-year subsea flowline inspection and Swift North subsea control module
change out at Montara and a once-in-five-year changeout of the under-buoy hose at Stag which totalled US$6.6 million.
6
DEPLETION, DEPRECIATION AND AMORTISATION (“DD&A”)
Depletion and amortisation (Note 22):
Depreciation of:
Plant and equipment (Note 23)
Right-of-use assets (Note 24)
Crude inventories movement
2022
USD’000
2021
USD’000
45,288
616
13,015
2,915
61,834
62,586
508
11,191
5,930
80,215
The depreciation of right-of-use assets in 2021 included US$1.5 million associated with the Skua-10 and 11 workovers.
The crude inventories movement represents additional/reversal of depletion expense recognised during the year based on the net
movement of crude inventories at year end against beginning of the year. For the purpose of the consolidated statement of cash
flows, this amount has been excluded from the movement in working capital.
The depletion charge is calculated based on units of production and adjusted based on the net movement of crude inventories
at year end against beginning of the year. In 2022, the adjustment was for 94,989 bbls of crude inventories at the end of 2022
compared to 274,103 bbls at the end of 2021, mostly due to the cessation of production at Montara since August 2022, which
resulted in an additional depletion charge of US$2.9 million.
9 8
9 9
* Certain 2021 comparative information has been restated. Please refer to Note 45.
JADESTONE ENERGY 2022 ANNUAL REPORT
7
ADMINISTRATIVE STAFF COSTS
10 OTHER EXPENSES
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Wages, salaries and fees
Staff benefits in kind
Share-based compensation
2022
USD’000
24,825
3,422
971
29,218
2021
USD’000
21,066
3,051
951
25,068
The compensations of Directors and key management personnel are included in the above and disclosed separately in Notes 9 and
44, respectively.
8
STAFF NUMBERS AND COSTS
The average number of employees (including Executive Directors) was:
Production
Technical
Administration
Management
2022
Number
2021
Number
152
206
2
9
369
125
143
3
7
278
Staff costs are split between production costs (Note 5) for offshore personnel and administrative staff costs (Note 7) for onshore
personnel.
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Defined contribution pension costs
Share-based compensation
Contractors and consultants costs
9
DIRECTORS’ REMUNERATION AND TRANSACTIONS
Directors’ remuneration
Salaries, fees, bonuses and benefits in kind
Gains on exercise of options
Amounts receivable under long term incentive plans
Money purchase pension contributions
Remuneration of the highest paid Director:
Salaries, fees, bonuses and benefits in kind
Gains on exercise of options
Amounts receivable under long term incentive plans
Money purchase pension contributions
The number of Directors who:
Are members of a defined benefit pension scheme
Are members of a money purchase pension scheme
Exercised options over shares in the Company
Had awards receivable in the form of shares under a long-term incentive scheme
2022
USD’000
2021
USD’000
45,548
199
3,573
971
50,291
4,976
55,267
39,158
186
3,177
951
43,472
8,363
51,835
2022
USD’000
2021
USD’000
2,805
-
341
78
3,224
1,236
-
271
65
1,572
3,093
1,259
278
96
4,726
1,516
481
302
63
2,362
Number
Number
-
2
-
2
-
2
2
2
Corporate costs
Change in provision – Lemang PSC contingent payments
Allowance for slow moving inventories
Assets written off
Net foreign exchange loss
Loss on valuation of oil derivatives
Other expenses
2022
USD’000
2021
USD’000
10,405
7,333
3,768
212
442
-
145
22,305
11,487
-
2,624
5,332
950
4,633
1,155
26,181
Corporate costs consists of recurring operating expenses of the Group plus certain non-recurring costs such as business
development costs of US$1.2 million (2021: US$3.2 million), professional fees in relation to internal reorganisation of US$0.2 million
(2021: US$1.1 million) and external funding sourcing of US$0.2 million (2021: nil). The non-recurring corporate costs in 2021 included
project transition costs of US$0.9 million.
The change in provision associated with the Lemang PSC contingent payments represents additional contingent payments related
to the future Dated Brent prices and Saudi CP prices during the first and second years of production in the Lemang PSC (Note 35).
In 2021, the Group incurred a loss on valuation of oil derivatives that arose from the Australian commodity swap contracts entered
for the period January to June. For the purpose of the consolidated statement of cash flows, the US$4.6 million included a reversal of
loss on oil derivatives of US$0.5 million from 2020.
The Group has written off the office equipment located in the New Zealand office following the termination of the Maari acquisition
in October 2022. The amount in prior year included the write-off of intangible exploration assets of US$5.3 million previously
capitalised as they were not expected to generate future economic benefits.
For the purpose of the consolidated statement of cash flows, the net foreign exchange loss reported above in 2022 included a net
unrealised loss of US$0.2 million.
11 AUDITOR’S REMUNERATION
The analysis of the auditor’s remuneration is as follows:
Fees payable to the Company’s auditor for the audit of the parent company and Group’s
consolidated financial statements
Audit fees of the subsidiaries
2022
USD’000
2021
USD’000
517
390
907
413
415
828
No fees were paid to the Group’s auditors for non-audit services for either the Group or the Company in 2021 or 2022.
The audit fee in prior year represented the actual finalised fee agreed with the auditors.
12 IMPAIRMENT OF ASSETS
Impairment of oil and gas properties (Note 22)
2022
USD’000
13,534
2021
USD’000
-
The impairment expense of US$13.5 million in current year relates to the oil and gas properties associated with the PenMal Assets’s
non-operated PSCs, which was treated as a single cash-generating unit, following the decision made by the operator to shut-in
production after FPSO class suspension in February 2022. Management does not expect future economic inflows from the non-
operated PSCs due to the uncertainty in respect to any potential restart date for production as at the 2022 year end until mutual
agreement is reached between the Group and the operator on the future plans of the non-operated PSCs. Accordingly, the value in
use of the non-operated PSCs is valued at nil as at the 2022 year end. The impairment was made in relation to the producing asset of
the Group located in Southeast Asia as disclosed in Note 40.
On 14 April 2023, the Group signed a Withdrawal Agreement and Operatorship Transfer and Assistance Agreement with the
previous operator, which sets out the terms and conditions of the Group’s assumption of operatorship and the previous operator’s
continuing obligations and liabilities with respect to the non-operated PSCs. The Group sees the redevelopment of the non-
operated PSCs at a 100% interest as a potentially significant opportunity for the Group. A redevelopment plan is currently being
prepared and the Group plans to submit it to the regulator by mid-2023.
Since 2021, the Non-Executive Directors were not granted any options/shares under the Company’s long term incentive plans.
10 0
10 1
JADESTONE ENERGY 2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
13
OTHER INCOME
Interest income
Net foreign exchange gain
Insurance claims receipt
Other income
2022
USD’000
2021
USD’000
881
341
17,977
8,834
28,033
80
2,525
-
5,077
7,682
Insurance claims receipt in 2022 represents the claim received at Montara for the compensation for the loss of production relating
to drilling activities at the two Skua field wells in 2020. These insurance claims were settled and the cash was received in Q4 2022.
Other income consists of rental income from a helicopter rental contract (a right-of-use asset) to a third party of US$5.0 million
(2021: US$4.5 million) and US$0.9 million related to income recognised for previously unrecognised amount due from joint
arrangement partner.
For the purpose of the consolidated statement of cash flows, the net foreign exchange gain reported above in 2021 included a net
unrealised gain of US$1.8 million.
14
FINANCE COSTS
Interest expense
Accretion expense for asset retirement obligations (Note 35)
Changes in fair value of:
PenMal Assets contingent payment (Note 35)
Lemang PSC contingent payments (Note 35)
Interest expense on lease liabilities
Accretion expense from non-current Lemang PSC VAT receivables
Other finance costs
2022
USD’000
2021
USD’000
5
8,314
1,571
349
769
314
86
11,408
150
5,920
124
314
1,222
-
1,345
9,075
The second contingent payment arising from the acquisition of the PenMal Assets was recognised in full for an amount of US$3.0
million as at 31 December 2022 (Note 35), resulting in an increase in the provision of US$1.6 million. The amount was therefore
recognised as an accrual as at 2022 year end.
The changes in fair value of the provision associated with the Lemang PSC of US$0.3 million represents adjustments to the previous
recognised contingent payments, reflecting the effect of the time value of money.
Other finance costs in 2021 included accretion expense of US$1.2 million generated from an Australian Taxation Office (“ATO”) 2019
repayment plan of US$43.3 million to support companies impacted by COVID-19. The repayment schedule was between December
2020 and June 2022 but the plan was fully repaid in May 2022.
16 INCOME TAX EXPENSE
Current tax
Corporate tax charge/(credit)
Under/(Over)provision in prior year
Australian petroleum resource rent tax (“PRRT”)
Malaysian petroleum income tax (“PITA”)
Deferred tax
Corporate tax
PRRT
PITA
2022
USD’000
2021
Restated*
USD’000
15,656
666
16,322
(1,121)
11,899
27,100
14,149
7,032
5,737
26,918
54,018
(486)
(270)
(756)
(1,374)
9,469
7,339
5,246
3,371
(3,176)
5,441
12,780
Jadestone Energy plc’s tax domicile is Singapore and is subjected to Singapore’s domestic corporate tax rate of 17%. Subsidiaries are
resident for tax purposes in the territories in which they operate.
The Australian corporate income tax rate is applied at 30% of Australian corporate taxable income. PRRT is calculated at 40% of
sales revenue less certain permitted deductions and is tax deductible for Australian corporate income tax purposes.
The Malaysian corporate income tax is applied at 24% on non-petroleum taxable income. PITA is calculated at 38% of sales revenue
less certain permitted deductions and is tax deductible for Malaysian corporate income tax purposes.
During the year, Stag recorded a net PRRT expense of US$5.9 million (2021: US$2.0 million).
As at year end, Montara and the CWLH Assets have US$3.5 billion (2021: US$3.4 billion) and US$535.5 million of unutilised carried
forward PRRT credits, respectively. Based on management’s latest forecasts, the historic accumulated PRRT net losses are larger
than cumulative future expected PRRT taxable profits. Accordingly, Montara and the CWLH Assets are not anticipated to incur any
PRRT expense in the future of the asset.
The tax recoverable of US$9.7 million as at year end includes of a PITA receivable of US$5.1 million which arose from pre-economic
effective date of the PenMal Assets acquisition which will be payable to SapuraOMV following the receipt of a tax refund. The Group
has recognised the payable to SapuraOMV as at year end.
The tax expense on the Group’s profit/(loss) differs from the amount that would arise using the standard rate of income tax
applicable in the countries of operation as explained below:
2022
USD’000
2021
Restated*
USD’000
15 OTHER FINANCIAL GAINS
Accretion income from Australian tax repayment plan
Accretion income from non-current Lemang PSC VAT receivables
2022
USD’000
2021
USD’000
1,904
-
1,904
-
266
266
Profit/(Loss) before tax
Tax calculated at the domestic tax rates applicable to the profit/loss in the respective
countries (Australia 30%, Malaysia 24% & 38%, Canada 27% and Singapore 17%)
Effects of non-deductible expenses
Effect of PRRT/PITA tax expense
Deferred PRRT/PITA tax expense
Effect of unutilised tax losses recognised as deferred tax asset
Under/(Over)provision in prior year
Accretion income in 2022 was generated from the Australian Taxation Office (“ATO”) 2019 repayment plan due to early settlement by
the Group in May 2022.
Tax expense for the year
102
* Certain 2021 comparative information has been restated. Please refer to Note 45.
62,540
20,292
9,513
10,778
12,769
-
666
54,018
(4,293)
1,906
5,845
8,095
196
(2,992)
(270)
14,822
10 3
JADESTONE ENERGY 2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
17 PROFIT/(LOSS) PER ORDINARY SHARE
18.3 Fair value of consideration
Profit/(Loss) for the purposes of basic and diluted per share, being the net profit/(loss) for
the year attributable to equity holders of the Company
Weighted average number of ordinary shares for the purposes of basic EPS
Effect of diluted potential ordinary shares – share options
Effect of diluted potential ordinary shares – performance shares
Effect of diluted potential ordinary shares – restricted shares
2022
USD’000
2021
Restated*
USD’000
8,522
(17,073)
Number
Number
461,959,228
3,876,548
334,163
202,823
463,567,519
-
-
-
Weighted average number of ordinary shares for the purposes of dilutive EPS
466,372,762
463,567,519
In 2021, 6,640,985 of weighted average potentially dilutive ordinary shares available for exercise from in the money vested options,
associated with share options were excluded from the calculation of diluted EPS, as they are anti-dilutive in view of the loss for the
year.
In 2021, 899,306 of weighted average contingently issuable shares associated under the Company’s performance share plan based
on the respective performance measures up to year end were excluded from the calculation of diluted EPS, as they are anti-dilutive
in view of the loss for the year.
In 2021, 140,965 of weighted average contingently issuable shares under the Company’s restricted share plan were excluded from
the calculation of diluted EPS, as they are anti-dilutive in view of the loss for the year.
Profit/(Loss) per share (US$)
- Basic and diluted
2022
0.02
2021
Restated*
(0.04)
18 ACQUISITION OF INTEREST IN CWLH JOINT OPERATION
18.1 Effective Date and Acquisition Date
On 28 July 2022, the Group executed a sale and purchase agreement (“SPA”) with BP Developments Australia Pty Ltd (“BP”) to
acquire BP’s non-operated 16.67% working interest in the Cossack, Wanaea, Lambert and Hermes oil field development (the “North
West Shelf Project” or “CWLH Assets”), offshore Australia. The initial cash consideration was US$20.0 million plus two contingent
payments of US$2.0 million each if the annual average Dated Brent price is equal to or above US$50/bbl in 2022 and US$60/bbl in
2023. The first contingent payment materialised as at year end and was paid in January 2023. Based on current oil prices and the
outlook in the oil market, management believes the second contingent payment (in case Dated Brent price exceeds US$60/bbl) will
likely materialise at the end of 2023.
In addition to the consideration and contingent payments, as part of this transaction, the Group is committed to pay a total of
US$82.0 million into a decommissioning trust fund administered by the operator of the CWLH Assets. The first tranche of US$41.0
million was paid immediately prior to closing of the acquisition and two further payments of US$20.5 million each are due upon
Offshore Petroleum & Greenhouse Gas Storage Act (2006) title registration, or as soon as practical after 31 December 2022, and
before 31 December 2023, respectively.
The acquisition completed on 1 November 2022. The acquisition has an economic effective date of 1 January 2020, which meant the
Group was entitled to net cash generated since effective date to completion date, resulting in net cash receipts of US$6.9 million
at completion on 1 November 2022. On 17 May 2023, the Group received approval from the National Offshore Petroleum Titles
Administrator (“NOPTA”) for the title transfer.
The legal transfer of ownership and control of the non-operated 16.67% working interest in the CWLH Assets occurred on the date
of completion, 1 November 2022 (the “Acquisition Date”). Therefore, for the purpose of calculating the purchase price allocation,
management has assessed the fair value of the assets and liabilities associated with the CWLH Assets as at the Acquisition Date.
18.2 Acquisition of a 16.67% non-operated working interest
The CWLH Assets contain inputs (working interest in the CWLH Assets) and processes (existing organised workforce and onshore
and offshore infrastructures managed by the operator), which when combined has the ability to contribute to the creation of
outputs (oil). Accordingly, the CWLH Assets constitute a business and as a consequence, we have accounted for our acquisition of
a 16.67% working interest in those assets using the accounting principles of business combinations accounting as set out in IFRS 3,
and other IFRSs as required by the guidance in IFRS 11 paragraph 21A.
A purchase price allocation exercise was performed to identify, and measure at fair value, the assets acquired and liabilities
assumed in the business combination. The consideration transferred was measured at fair value. The Group has adopted the
definition of fair value under IFRS 13 Fair Value Measurement to determine the fair values, by applying Level 3 of the fair value
measurement hierarchy.
* Certain 2021 comparative information has been restated. Please refer to Note 45.
10 4
After taking into account various adjustments the net consideration for the CWLH Assets resulted in a cash receipt of US$6.9 million,
as set out below:
Asset purchase price
Closing statement adjustments
Net cash receipts from the acquisition
USD’000
20,000
(26,953)
(6,953)*
Management assessed the fair value of the two deferred contingent payments by considering the forecasted Dated Brent prices and
expects that both contingent payments will materialise. The contingent payment due at the end of 2023 was discounted using the
Australian risk-free rate of 3.08%. The total fair value of these contingent payments was calculated at US$3.9 million, representing
US$2.0 million and US$1.9 million for the 2022 and 2023 deferred contingent payments, respectively. The assessment of the
contingent payments was performed as at 1 November 2022, based on the facts and circumstances existed as at that date. The 2022
payment materialised at year end and the amount was recognised in full as an accrual at year end. The payment was subsequently
made in January 2023.
Fair value of purchase consideration
Asset purchase price
Closing statement adjustments
Net cash receipts from the acquisition
Deferred contingent consideration
Fair value of purchase consideration
USD’000
20,000
(26,953)
(6,953)*
3,940
(3,013)
The Group considers that the purchase consideration and the transaction terms to be reflective of fair value for the following
reasons:
l Open and unrestricted market: there were no restrictions in place preventing other potential buyers from negotiating with BP
during the sales process period and there were a number of other interested parties in the formal sale process;
l Knowledgeable, willing but not anxious parties: both the Group and BP are experienced oil and gas operators under no duress to
buy or sell. The process was conducted over several months which gave both parties sufficient time to conduct due diligence and
prepare analysis to support the transaction; and
l Arm’s length nature: the Group is not a related party to BP. Both parties had engaged their own professional advisors. There is
no reason to conclude that the transaction was not transacted at arm’s length.
18.4 Assets acquired and liabilities assumed at the date of acquisition
During the year, the Group has completed the provisional purchase price assessment (“PPA”) to determine the fair values of the net
assets acquired within 12 months from the Acquisition Date. The adjusted fair values of the identifiable assets and liabilities as at
the Acquisition Date were:
Asset
Non-current asset
Oil and gas properties (Note 22)
Current asset
Trade and other receivables
Liabilities
Non-current liabilities
Provision for asset retirement obligations (Note 35)
Deferred tax liabilities
Current liability
Trade and other payables
Net identifiable liabilities assumed
USD’000
41,976
27,870*
69,846
60,158
12,593
108
72,859
(3,013)
* Trade and other receivables consisted of a gross underlift position of 314,078 bbls acquired by the Group, with a fair value of
US$27.3 million, measured at the prevailing market price of US$86.68/bbl. The underlift position was recognised as an expense
following a lifting which occurred in the middle of November 2022. The balance also included a gross cash overcall position
owing by the operator of US$0.6 million as at the acquisition date. The overcall position will be unwound in the future based on
the joint arrangement expenditures claim raised by the operator. No loss allowances have been recognised in respect to trade
and other receivables.
10 5
JADESTONE ENERGY 2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
18.5 Impact of acquisition on the results of the Group
The Group’s 2022 results included US$56.6 million of revenue and US$8.2 million of after tax profit attributable to the CWLH Assets.
Acquisition-related costs amounting to US$0.5 million have been excluded from the consideration transferred and have been
recognised as an expense in the period, within “other expenses” line item in the consolidated statement of profit or loss and other
comprehensive income.
Had the business combination been effected at 1 January 2022, and based on the performance of the business during 2022 under
BP, the Group would have generated revenues of US$109.6 million and an estimated net profit after tax of US$29.5 million.
19 ACQUISITION OF 10% INTEREST IN LEMANG PSC
19.1 Acquisition date
On 23 November 2022, the Group completed the acquisition of the remaining 10% interest in the Lemang PSC. As a result,
Jadestone’s interest (pre local government back-in rights) in the Lemang PSC has increased to 100%.
The 10% interest was acquired through the execution of a Settlement and Transfer Agreement (“STA”) between the Group and PT
Hexindo Gemilang Jaya (“Hexindo”). In return for the transfer of Hexindo’s 10% stake, the Group released Hexindo from unpaid
amounts of US$1.4 million relating to Hexindo’s interest in the Lemang PSC, which consisted of US$0.4 million (Note 28) generated
since 11 December 2020 when the Group first acquired the 90% working interest in the Lemang PSC up to the STA date of 23
November 2021, plus US$1.0 million which arose prior to 11 December 2020. Additionally, the Group paid a cash consideration of
US$0.5 million (inclusive of transfer taxes, which the Group has remitted directly to the Indonesian government).
19.2 Assets acquired and liabilities assumed at the date of acquisition
The assets and liabilities associated with the 10% interest in the Lemang PSC, acquired and assumed as at the date of acquisition,
were:
Asset
Non-current asset
Oil and gas properties (Note 23)
VAT receivables
Current asset
Trade and other receivables
Inventories
Liabilities
Non-current liabilities
Provision for asset retirement obligations (Note 36)
Current liability
Trade and other payables
Net identifiable assets acquired
USD’000
1,414
1,338
15
26
2,793
337
598
935
1,858
The provision for asset restoration obligations assumed by the Group is associated with historical oil production by Mandala Energy
that ceased in 2016, prior to the acquisition of the 90% operated interest by the Group in December 2020. The obligation was
assumed following the acquisition, and the decommissioning expenditure is expected to be incurred from 2036, at the end of the
life of the planned gas development.
20 ACQUISITION OF SAPURAOMV (PM) INC.
20.1 Effective Date and Acquisition Date
In 2021, the Group executed a sale and purchase agreement (“SPA”) with SapuraOMV Upstream (PM) Sdn Bhd (“SapuraOMV”)
to acquire the entire share capital of SapuraOMV (PM) Inc. for a cash consideration of US$20.0 million, comprising initial price of
US$9.0 million, plus contingent payments and customary adjustments of US$11.0 million (see Note 20.3). There were two contingent
payments to SapuraOMV of US$3.0 million each related to the annual average Dated Brent price equal or above US$65/bbl in 2021
and US$70/bbl in 2022. The first contingent payment was paid in January 2022 and the second contingent payment was materialised
in 2022 and was paid in January 2023.
Subsequent to the acquisition, the name of SapuraOMV (PM) Inc. was changed to Jadestone Energy (PM) Inc. (“JEPM”).
20.2 Business acquisition
Management has concluded that the acquisition of JEPM is that of a business as defined in IFRS 3 Business Combinations. JEPM
contains inputs and processes, which when combined has the ability to contribute to the creation of outputs (oil and gas).
Accordingly, the transaction has been accounted for as a business combination.
As a result, the Group has applied the acquisition method of accounting as at the Acquisition Date. A purchase price allocation
exercise was performed to identity, and measure at fair value, the assets acquired and liabilities assumed in the business
combination. The consideration transferred was measured at fair value. The Group has adopted the definition of fair value under
IFRS 13 Fair Value Measurement to determine the fair values, by applying Level 3 of the fair value measurement hierarchy.
20.3 Fair value of consideration transferred
The fair value consideration for the PenMal Assets reflected a net cash receipt of US$9.2 million, as set out below:
Fair value of purchase consideration
Asset purchase price
Crude inventory value
Cash at bank, 1 January 2021
Closing statement adjustments
Cash payment on Acquisition Date
Less: cash and bank balances acquired, 1 August 2021
Net cash receipts from the acquisition
USD’000
9,000
3,236
8,091
(294)
20,033
(29,252)
(9,219)
The crude inventory was measured at the market value and the cash at bank represents the cash on hand, as at the economic
effective date of 1 January 2021.
The closing statement adjustments relates to permitted leakages of US$0.3 million of audited intercompany charges that relate to
SapuraOMV Group (pre 1 January 2021).
Fair value of purchase consideration
Asset purchase price
Crude inventory value
Cash at bank
Closing statement adjustments
Cash payment on Acquisition Date
Working capital adjustment
Deferred contingent consideration
Fair value of purchase consideration
USD’000
9,000
3,236
8,091
(294)
20,033
(1,059)
4,305
23,279
The Group considers that the purchase consideration and the transaction terms to be reflective of fair value for the following
reasons:
l Open and unrestricted market: there were no restrictions in place preventing other potential buyers from negotiating with
SapuraOMV during the sales process period and there were a number of other interested parties in the formal sale process;
l Knowledgeable, willing but not anxious parties: both the Group and SapuraOMV are experienced oil and gas operators under
no duress to buy or sell. The process was conducted over several months which gave both parties sufficient time to conduct due
diligence and prepare analysis to support the transaction; and
l Arm’s length nature: the Group is not a related party to SapuraOMV. Both parties had engaged their own professional advisors.
There is no reason to conclude that the transaction was not transacted at arm’s length.
10 6
10 7
JADESTONE ENERGY 2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
20.4 Assets acquired and liabilities assumed at the date of acquisition
21 INTANGIBLE EXPLORATION ASSETS
During the year, the Group has completed the purchase price assessment (“PPA”) to determine the fair values of the net assets
acquired within the stipulated time period of 12 months from the Acquisition Date, in accordance with IFRS 3. The adjusted fair
values of the identifiable assets and liabilities as at the Acquisition Date were:
Asset
Non-current assets
Oil and gas properties (Note 22)
Other receivables
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Tax recoverable
Cash and bank balances
Liabilities
Non-current liabilities
Provision for asset retirement obligations (Note 35)
Deferred tax liabilities
Current liability
Trade and other payables
Net identifiable assets acquired
USD’000
21,744
42,092*
10,343
2,853
21,276
10,226
29,252
137,786
91,552
6,177
16,778
114,507
23,279
Cost
As at 1 January 2021
Additions
Change in asset retirement obligations (Note 35)
Reversal
Written off
As at 31 December 2021
Additions
Transfer
As at 31 December 2022
Impairment
As at 1 January 2021
Written off
As at 31 December 2021 and 31 December 2022
Net book value
As at 1 January 2021
As at 31 December 2021
As at 31 December 2022
USD’000
151,125
3,934(a)
(44)(b)
(6,059)(c)
(55,715)(d)
93,241
3,582(a)
(18,895)(e)
77,928
50,455
(50,455)
-
100,670
93,241
77,928
(a) For the purpose of the consolidated statement of cash flows, current year expenditure on intangible exploration assets of
US$0.3 million remained unpaid as at 31 December 2022 (2021: US$0.1 million).
(b) The change in asset retirement obligations of US$0.04 million in 2021 related to assets at the Lemang PSC.
* Other receivables represent the accumulated CESS paid to the Malaysian regulator for operated licences, which will be reclaimable
(c) The US$6.0 million reversal in 2021 related to an overprovision of costs owed to a third party contractor. The overprovision was
by the Group in the future following the commencement of decommissioning activities.
identified following an assessment of actual costs incurred.
20.5 Impact of acquisition on the results of the Group
Included in the Group’s revenue and after tax loss in 2021 was US$46.6 million and a profit of US$6.5 million attributable to the
PenMal Assets, respectively.
Acquisition-related costs amounting to US$0.7 million have been excluded from the consideration transferred and have been
recognised as an expense in the period, within “other expenses” line item in the consolidated statement of profit or loss and other
comprehensive income.
Had the business combination been effected at 1 January 2021, and based on the performance of the business during 2021 under
SapuraOMV’s operatorship, the Group would have generated revenues of US$107.2 million and an estimated net profit after tax of
US$29.6 million.
The Directors of the Group consider these “pro-forma” numbers to represent an approximate measure of the performance of the
combined Group on an annualised basis and to provide a reference point for comparison in future periods.
(d) In November 2020, Total, as operator of SC56 voluntarily surrendered a combined 100% interest in SC56 to the Philippines
Department of Energy (“DOE”). As a result, the carrying value of US$50.4 million was impaired in Q4 2020. The DOE
acknowledged the relinquishment in February 2021 and the exit obligation terms were agreed in June 2021. Accordingly, the
carrying value was formally written off in 2021.
The Group had also written off intangible exploration assets of US$5.3 million in 2021 (Note 10).
(e) The transfer relates to the Lemang PSC in Indonesia. On 6 June 2022, a final investment decision was taken at the Akatara gas
development project following regulatory approval to award the engineering, procurement, construction and installation
contract which established commercial viability. The capitalised cost of US$18.9 million was transferred to development assets
as disclosed in Note 22.
10 8
10 9
JADESTONE ENERGY 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
22 OIL AND GAS PROPERTIES
23
PLANT AND EQUIPMENT
Cost
As at 1 January 2021
Changes in asset restoration obligations (Note 35)
Acquisition of PenMal Assets (Note 20)
Additions
As at 31 December 2021
Changes in asset restoration obligations (Note 35)
Acquisition of CWLH assets (Note 18)
Acquisition of 10% interest in Lemang PSC (Note 19)
Additions
Written off
Transfer
As at 31 December 2022
Accumulated depletion, amortisation and impairment
As at 1 January 2021
Charge for the year
As at 31 December 2021
Charge for the year
Impairment
Written off
As at 31 December 2022
Net book value
As at 1 January 2021
As at 31 December 2021
As at 31 December 2022
Production
assets
USD’000
Development
assets
USD’000
496,992
23,894
21,744
52,864
595,494
20,768
41,976
-
62,319
(3,704)
-
716,853
179,316
62,586
241,902
45,288
13,534
(3,704)
297,020
317,676
353,592
419,833
-
-
-
-
-
7
-
1,414
16,619
-
18,895
36,935
-
-
-
-
-
-
-
-
-
36,935
Total
USD’000
496,992
23,894
21,744
52,864*
595,494
20,775
41,976
1,414
78,938*
(3,704)**
18,895
753,788
179,316
62,586
241,902
45,288
13,534
(3,704)**
297,020
317,676
353,592
456,768
Cost
As at 1 January 2021
Additions
Written off
Transfer
As at 31 December 2021
Additions
Written off
Transfer
As at 31 December 2022
Accumulated depreciation
As at 1 January 2021
Charge for the year
Written off
As at 31 December 2021
Charge for the year
Written off
As at 31 December 2022
Net book value
As at 1 January 2021
As at 31 December 2021
As at 31 December 2022
Computer
equipment
USD’000
Fixtures and
fittings
USD’000
Materials
and spares
USD’000
Total
USD’000
3,104
450
-
-
3,554
204
(313)
-
3,445
1,657
302
-
1,959
450
(101)
2,308
1,447
1,595
1,137
1,508
232
(169)
-
1,571
152
(14)
-
1,709
1,303
206
(97)
1,412
166
(14)
1,564
205
159
145
-
-
-
7,209
7,209
-
-
(1,173)
6,036
-
-
-
-
-
-
-
-
7,209
6,036
4,612
682
(169)
7,209*
12,334
356
(327)
(1,173)*
11,190
2,960
508
(97)
3,371
616
(115)
3,872
1,652
8,963
7,318
* The transfer represents the material and spares that are not expected to be consumed within the next 12 months from the year
end. The reclassification amount is net of allowance of slow moving items of US$2.7 million (2021: US$1.9 million).
* The additions in 2022 represents cash paid for the Group’s capital expenditure projects. In 2021, the amount consisted of cash
payments of US$51.4 million and capitalisation of depreciation of US$1.5 million associated with right-of-use assets in Australia
in accordance with IAS 16, both associated with the drilling of the H6 infill well at Montara.
** The written off amount represents the fully depreciated oil and gas properties associated with the Indonesian Ogan Komering
PSC of which the PSC had expired in 2018.
24
PLANT AND EQUIPMENT
Cost
As at 1 January 2021
Additions
As at 31 December 2021
Additions
Written off*
As at 31 December 2022
Accumulated depreciation
As at 1 January 2021
Charge for the year
As at 31 December 2021
Charge for the year
Written off
As at 31 December 2022
Net book value
As at 1 January 2021
As at 31 December 2021
As at 31 December 2022
Transportation
and logistics
USD’000
Buildings
USD’000
Total
USD’000
42,345
1,200
43,545
6,701
(4,146)
46,100
19,938
11,470*
31,408
12,224
(4,146)
39,486
22,407
12,137
6,614
3,169
1,654
4,823
655
(1,835)
3,643
1,903
1,205
3,108
791
(1,835)
2,064
1,266
1,707
1,579
45,514
2,854
48,368
7,356
(5,981)
49,743
21,841
12,675**
34,516
13,015
(5,981)
41,550
23,673
13,852
8,193
110
111
* This represents the write off of expired leases.
** The amount included US$1.5 million which has been capitalised within oil and gas properties as the related right-of-use assets
were used as part of the drilling of the H6 infill well at Montara (see Note 22).
JADESTONE ENERGY 2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Most of the Group’s lease liabilities are contracts to lease assets including helicopters, a supply boat, logistic facilities for the
Montara field and buildings. The average lease term is 2.8 years.
The maturity analysis of lease liabilities is presented in Note 36.
Amount recognised in profit or loss
Depreciation expense on right-of-use assets
Interest expense on lease liabilities
Expenses relating to short-term leases
Expense relating to leases of low value assets
2022
USD’000
2021
USD’000
13,015
769
16,028
68
11,191
1,222
63,734
81
At 31 December 2022, the Group is committed to US$3.0 million of short-term leases (2021: nil).
The total cash outflow in 2022 relate to leases was US$13.9 million (2021: US$13.0 million).
The additions to right-of-use assets during the year represent the extension of the Group’s ongoing right-of-use assets, plus a
two-year lease for airport services contract to replace an expired lease and a four-and-half-year lease for additional space in the
Australian office building.
25
INTERESTS IN OPERATIONS
Details of the operations, of which all are in production except for 46/07 and 51 PSCs offshore Vietnam which are in the exploration
stage, while the Lemang PSC is in the development stage, are as follows:
Group effective working
interest % as at
31 December
2022
2021
Contract Area
Date of expiry
Held by
Montara oilfield
Indefinite
Jadestone Energy (Eagle) Pty Ltd
Stag Oilfield
25 Aug 2039
Jadestone Energy (Australia) Pty Ltd
PM329
PM323
PM318
AAKBNLP
WA-3-L
WA-9-L
WA-11-L
WA-16-L
46/07
51
Lemang
8 December 2031
Jadestone Energy (PM) Inc.
14 June 2028
24 May 2034
24 May 2024
Indefinite
15 July 2033
Jadestone Energy (PM) Inc.
Jadestone Energy (PM) Inc.
Jadestone Energy (PM) Inc.
Jadestone Energy (CWLH) Pty Ltd
Jadestone Energy (CWLH) Pty Ltd
4 September 2035
Jadestone Energy (CWLH) Pty Ltd
11 September 2039
Jadestone Energy (CWLH) Pty Ltd
29 Jun 2035
10 Jun 2040
17 Jan 2037
Mitra Energy (Vietnam Nam Du) Pte Ltd
Mitra Energy (Vietnam Tho Chu) Pte Ltd
Jadestone Energy (Lemang) Pte Ltd
Indonesia
Place of
operations
Australia
Australia
Malaysia
Malaysia
Malaysia
Malaysia
Australia
Australia
Australia
Australia
Vietnam
Vietnam
100
100
70
60
50
50
17
17
17
17
100
100
100
26
DEFERRED TAX
The following are the deferred tax liabilities and assets recognised by the Group and movements thereon.
Australian
PRRT
USD’000
Malaysian
PITA
USD’000
Tax
depreciation
USD’000
As at 1 January 2021
Charged to profit or loss (Note 16)
Acquisition of PenMal Assets (Note 20)
As at 31 December 2021 (Restated)*
Charged to profit or loss (Note 16)
Acquisition of CWLH Assets (Note 18)
As at 31 December 2022
17,917
(3,371)
-
14,546
(7,032)
(12,593)
(5,079)
-
3,176
4,166
7,342
(5,737)
-
1,605
The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
(56,419)
(5,246)
-
(61,665)
(14,149)
-
(75,814)
(79,288)
Deferred tax liabilities
Deferred tax assets
* Certain 2021 comparative information has been restated. Please refer to Note 45.
112
2022
USD’000
(88,416)
9,118
(79,288)
2021
Restated*
USD’000
(66,166)
26,389
(39,777)
100
100
70
60
50
50
-
-
-
-
100
100
90
Total
USD’000
(38,502)
(5,441)
4,166
(39,777)
(26,918)
(12,593)
The Group has unutilised PRRT credits of approximately US$3.5 billion (2021: US$3.4 billion) and US$535.5 million available for offset
against future PRRT taxable profits in respect of the Montara field and the CWLH Assets, respectively. The PRRT credits remain
effective throughout the production licence of Montara and the CWLH Assets. No deferred tax asset has been recognised in respect
of these PRRT credits, due to management’s projections that the historic accumulated PRRT net losses are larger than cumulative
future expected PRRT taxable profits. As PRRT credits are utilised based on a last-in-first-out basis, the unutilised PRRT credits
of approximately US$3.5 billion (2021: US$3.4 billion) and US$535.5 million with respect to Montara and the CWLH Assets are not
expected to be utilised and are therefore not recognised as a deferred tax asset.
27
INVENTORIES
Materials and spares
Less: allowance for slow moving (Note 10)
Crude oil inventories
28
TRADE AND OTHER RECEIVABLES
Current assets
Trade receivables
Prepayments
Other receivables and deposits
Amount due from joint arrangement partners (net)
Underlift crude oil inventories
GST/VAT receivables
Non-current assets
Other receivables
Prepayment
VAT receivables
2022
USD’000
2021
USD’000
18,236
(6,334)
11,902
7,009
18,911
13,590
(3,639)
9,951
13,348
23,299
2022
USD’000
2021
Restated*
USD’000
6,332
3,119
4,859
4,268
107
1,683
20,368
83,192
-
7,398
90,590
110,958
9,143
3,770
13,281
2,203
1,482
2,699
32,578
41,726
2,000
4,774
48,500
81,078
Trade receivables arise from revenues generated from the Group’s respective sole customer in Australia and Malaysia. The average
credit period is 30 days (2021: 30 days). All outstanding receivables as at 31 December 2022 and 2021 have been recovered in full in
2023 and 2022, respectively.
Other receivables under the current asset in 2021 consisted of insurance claim receivable of US$10.3 million on the well control
claim for the Skua-11 well workovers. The cash amount was received in June 2022.
Amount due from joint arrangement partners of US$4.3 million (2021: US$1.8 million) represents cash calls receivable from the
Malaysian joint arrangement partner, net of joint arrangement expenditures. The amount is unsecured, with a credit period of 15
days. A notice of default will be served to the joint arrangement partner if the credit period is exceeded, which will become effective
seven days after service of such notice if the outstanding amount remains unpaid. Interest of 3% per annum will be imposed on the
outstanding amount, starting from the effective date of default. The outstanding receivable was received in 2023.
The amount due from joint arrangement partners in 2021 also included a cash call receivable of US$0.4 million due from the
Indonesian joint arrangement partner, Hexindo. The amount was unsecured, with a credit period of 7 days. A notice of default will
be served to the joint arrangement partner if the credit period is exceeded, which will become effective seven days after service of
such notice if the outstanding amount remains unpaid. An interest at SONIA1 plus 3% per annum will be imposed on the outstanding
amount, starting from the effective date of default. Following the completion of the 10% interest acquisition, the Group released
Hexindo from the unpaid cash call receivable (Note 19).
Non-current other receivables represent the accumulated cess payment paid to the Malaysian regulator for the operated licences
and an abandonment trust fund set up following the acquisition of the CWLH Assets. The Malaysian PSCs require upstream
operators to contribute periodic cess payments to a cess abandonment fund throughout the production life of the upstream oil
and gas assets, while the abandonment trust fund was set up as part of the acquisition of the CWLH Assets. The payments made
were to ensure there are sufficient funds available for decommissioning expenditures activities at the end of the fields’ life. The cess
payment amount is assessed based on the estimated future decommissioning expenditures.
* Certain 2021 comparative information has been restated. Please refer to Note 45.
1
Sterling Overnight Index Average rate
113
JADESTONE ENERGY 2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
The non-current VAT receivables are associated with the Lemang PSC. It is classified as a non-current asset as the recovery of the
VAT receivables is dependent on the share of revenue entitlement by the Indonesian government after the commencement of gas
production, which is expected to occur in the first half of 2024.
There are no trade receivables older than 30 days. The credit risk associated with the trade receivables is disclosed in Note 39.
29
CASH AND BANK BALANCES
Cash and bank balances, representing cash and cash equivalents in the consolidated
statement of cash flows, presented as:
Non-current
Current
2022
USD’000
2021
Reclassified*
USD’000
676
122,653
123,329
852
117,013
117,865
The non-current cash and cash equivalents represents the restricted cash balance of US$0.4 million (2021: US$0.4 million) and
US$0.3 million (2021: US$0.5 million) in relation to a deposit placed for bank guarantee with respect to the PenMal Assets and
Australian office building, respectively. The bank guarantees are expected to be in place for a period of more than twelve months.
Accordingly, reclassification was made to 2021 comparatives to classify the amount as a non-current asset as disclosed in Note 45,
as a result of the the April 2022 IFRIC Agenda item “Demand Deposits with Restrictions on Use arising from a Contract with a Third
Party (IAS 7 Statement of Cash Flows).
In 2021, for the purpose of the consolidated statement of cash flows, the transfer from debt service reserve account represented
a restricted cash balance of US$7.4 million which was deposited into a debt service reserve account (“DSRA”) under the Group’s
previous reserve based lending arrangement. The DSRA was released on 31 March 2021, upon the repayment of the final balance
outstanding on the loan. The Group also had a restricted cash balance in 2020 of US$1.0 million, placed with the Indonesian
regulator in relation to a joint study agreement (“JSA”). The amount was released to the Group during Q3 2021 upon the completion
of the JSA.
30
SHARE CAPITAL AND SHARE PREMIUM ACCOUNT
Issued and fully paid
As at 1 January 2021
Issued during the year
Capital reduction, at £0.499 each
As at 31 December 2021 (Restated)*
Issued during the year
Share repurchases
As at 31 December 2022
No. of shares
461,842,811
3,238,427
-
465,081,238
1,446,108
(18,173,683)
448,363,663
Share capital
USD’000
Share premium
account
USD’000
466,979
766
(467,387)
358
2
(21)
339
-
201
-
201
782
-
983
On 4 May 2021, the High Court of Justice, Business and Property Court, Companies Court in England and Wales approved the
reduction of share capital of the Company pursuant to section 648 of the Act by cancelling the paid-up capital of the Company to
the extent of 49.9 pence on each ordinary share of £0.50 in the issued share capital of the Company. The effective date of the capital
reduction was 6 May 2021.
On 2 August 2022, the Company announced the launch of a share buyback programme (the “Programme”) in accordance with the
authority granted by the shareholders at the Company’s annual general meeting on 30 June 2022. The maximum amount of the
Programme was US$25.0 million, and the Programme will not exceed 46,574,528 ordinary shares.
As at 31 December 2022, the Company had acquired 18.2 million shares at a weighted average cost of £0.76 per share, resulting in
an accumulated total expenditure of US$16.1 million. The total nominal value of the shares repurchased was US$20,779. All shares
repurchased were cancelled.
As at 31 December 2022, the Company did not have a liability in respect to the remaining unutilised amount of US$8.9 million under
the Programme as the Company had full discretion over the number of shares to be repurchased.
On 19 January 2023, the Company paused the share buyback programme. A total of 20.2 million shares had been acquired for a total
accumulated expenditure of US$17.9 million up to 18 January 2023.
During the year, employee share options of 1,446,108 were exercised and issued at an average price of GB£ 0.42 per share (2021:
3,238,427; GB£0.33 per share).
The Company has one class of ordinary share. Fully paid ordinary shares with par value of £0.001 per share carry one vote per share
without restriction, and carry a right to dividends as and when declared by the Company.
31
DIVIDENDS
The parent company has sufficient distributable reserves to declare dividends. The distributable reserves were created at the
Company level through the reduction of share capital of the Company in May 2021 (Note 8 of Company level financial statements).
The dividends declared were in compliance with the Act.
On 20 September 2022, the Directors declared a 2022 interim dividend of 0.65 US cents/share, equivalent to a total distribution of
US$3.0 million. The dividend was paid on 11 October 2022.
On 6 June 2022, the Directors recommended a final 2021 dividend of 1.34 US cents/share, equivalent to a total distribution of US$6.2
million, or US$9.0 million in respect of total 2021 dividends. The dividend was approved by shareholders on 30 June 2022 and paid
on 5 July 2022.
On 9 September 2021, the Directors declared a 2021 interim dividend of 0.59 US cents/share, equivalent to a total distribution of
US$2.8 million. The dividend was paid on 1 October 2021.
On 11 June 2021, the Directors declared the second interim 2020 dividend of 1.08 US cents/share, equivalent to a total distribution of
US$5.0 million, or US$7.5 million in respect of total 2020 dividends. The dividend was paid on 30 June 2021.
32
MERGER RESERVE
The merger reserve arose from the difference between the carrying value and the nominal value of the shares of the Company,
following completion of the internal reorganisation in 2021.
33
SHARE-BASED PAYMENTS RESERVE
The total expense arising from share-based payments of US$1.0 million (2021: US$1.0 million) was recognised as ’administrative staff
costs’ (Note 7) in profit or loss for the year ended 31 December 2022.
On 15 May 2019, the Company adopted, as approved by the shareholders, the amended and restated stock option plan, the
performance share plan, and the restricted share plan (together, the “LTI Plans”), which establishes a rolling number of shares
issuable under the LTI Plans up to a maximum of 10% of the Company’s issued and outstanding ordinary shares at any given time.
Options under the stock option plan will be exercisable over periods of up to 10 years as determined by the Board.
33.1 Share options
Management has applied the Black-Scholes option-pricing model, with the following assumptions, was used to estimate the fair
value of the options at the date of grant:
Risk-free rate
Expected life
Expected volatility1
Share price
Exercise price
Expected dividends
33.2 Performance shares
Options granted on
9 March 2022
18 March 2021
1.34% to 1.38%
5.5 to 6.5 years
63.0% to 66.7%
GB£ 1.01
GB£ 0.92
1.96%
0.49% to 0.61%
5.5 to 6.5 years
65.2% to 67.6%
GB£ 0.65
GB£ 0.77
1.79%
The performance measures for performance shares incorporate both a relative and absolute total shareholder return (“TSR”)
calculation on a 70:30 basis to compare performance vs. peers (relative TSR) and to ensure alignment with shareholders (absolute
TSR).
Relative TSR: measured against the TSR of peer companies; the size of the pay out is based on Jadestone’s ranking against the TSR
outcomes of peer companies.
Absolute TSR: 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 pay out at all, and must be
25% or greater for target pay out.
* Certain 2021 comparative information has been restated and reclassified between line items. Please refer to Note 45.
expected life of the awards for a group of ten peer companies.
1 Expected volatility was determined by calculating the average historical volatility of the daily share price returns over a period commensurate with the
114
115
JADESTONE ENERGY 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
A Monte Carlo simulation model was used by an external specialist, with the following assumptions to estimate the fair value of the
performance shares at the date of grant:
Risk-free rate
Expected volatility1
Share price
Exercise price
Expected dividends
Post-vesting withdrawal date
Early exercise assumption
33.3 Restricted shares
Performance shares granted on
9 March 2022
18 March 2021
1.39%
53.1%
GB£ 1.01
N/A
1.71%
N/A
N/A
0.06%
51.4%
GB£ 0.77
N/A
2.64%
N/A
N/A
Restricted shares are granted to certain senior management personnel as an alternative to cash under exceptional circumstances
and to provide greater alignment with shareholder objectives. These are shares that vest three years after grant, assuming the
employee has not left the Group. They are not eligible for dividends prior to vesting.
The following assumptions were used to estimate the fair value of the restricted shares at the date of grant, discounting back from
the date they will vest and excluding the value of dividends during the intervening period:
Risk-free rate
Share price
Expected dividends
Restricted shares granted on
22 August 2022
9 March 2022
18 March 2021
1.73%
GB£ 0.90
1.73%
1.39%
GB£ 1.01
1.71%
0.08%
GB£ 0.77
2.64%
The following table summarises the options/shares under the LTI plans outstanding and exercisable as at 31 December 2022:
Performance
shares
Restricted
shares
Number
of options
Shares Options
Weighted
average
exercise
price GB£
Weighted
average
remaining
contract life
As at 1 January 2021
New options/share awards issued
Vested during the year
Accelerated vesting during the year
Exercised during the year
Cancelled during the year
683,200
1,136,512
101,063
25,192,842
50,570
2,852,631
-
-
-
(332,819)
-
-
-
-
-
198,687
(3,238,427)
(3,690,244)
As at 31 December 2021
1,486,893
151,633
21,315,489
New options/share awards issued
1,385,013
293,655
1,023,561
Vested during the year
Accelerated vesting during the year
Exercised during the year
Cancelled during the year
-
-
-
(147,906)
-
-
-
-
-
1,354,702
(1,446,108)
(120,854)
As at 31 December 2022
2,724,000
445,288
22,176,790
0.40
0.77
0.42
0.55
0.33
0.46
0.45
0.92
0.50
0.46
0.42
0.50
0.48
Share options exercisable as at 31 December 2021
11,409,854
0.26 - 0.99
Share options exercisable as at 31 December 2022
12,437,185
0.26 - 0.99
Number of
options
Range of
exercise
price GB£
Number
of options
exercisable
12,212,827
-
3,776,672
198,687
(3,238,427)
(1,539,905)
11,409,854
-
2,010,007
1,354,702
(1,446,108)
(891,270)
7.78
9.21
6.92
8.39
-
-
7.16
9.19
6.27
6.45
-
-
6.33
12,437,185
Weighted
average
exercise
price GB£
Weighted
average
remaining
contract life
0.38
0.41
6.18
5.46
34
CAPITAL REDEMPTION RESERVE
The capital redemption reserve arose from the Programme launched by the Company in August 2022. It represents the par value of
the shares purchased and cancelled by the Company under the Programme (Note 30).
35
PROVISIONS
Asset
restoration
obligations
(a)
Contingent
payments
(b)
Employees
benefits
(c)
USD’000
USD’000
USD’000
Others
USD’000
Total
USD’000
As at 1 January 2021
Charged to profit or loss
Acquisition of PenMal Assets (Note 20)
Accretion expense (Note 14)
Changes in discount rate assumptions (Notes 21, 22 and 28)
Payment/Utilised
Fair value adjustment (Note 14)
Reversal (Note 13)
As at 31 December 2021 (Reclassified)*
Charged/(Credited) to profit or loss
Acquisition of CWLH Assets (Note 18)
Acquisition of 10% interest in Lemang PSC (Note 19)
Accretion expense (Note 14)
Changes in discount rate assumptions (Note 22)
Payment/Utilised
Change in provision (Note 10)
Fair value adjustment – Lemang PSC (Note 14)
Fair value adjustment – PenMal Assets (Note 14)
Reclassification
As at 31 December 2022
As at 31 December 2021 (Reclassified)*
Current
Non-current
As at 31 December 2022
Current
Non-current
283,749
-
91,552
5,921
23,179
-
-
-
404,401
-
60,158
337
8,314
20,775
-
-
-
-
-
493,985
-
404,401
404,401
-
493,985
4,436
-
4,305
-
-
(3,000)
438
-
6,179
-
1,940
-
-
-
-
7,333
349
1,571
(3,000)
14,372
-
6,179
6,179
-
14,372
493,985
14,372
896
-
-
-
-
(52)
-
-
844
122
-
-
-
-
(81)
-
-
-
-
885
728
116
844
703
182
885
-
202
-
-
-
-
-
-
202
(202)
-
-
-
-
-
-
-
-
-
-
202
-
202
-
-
-
289,081
202
95,857
5,921
23,179
(3,052)
438
-
411,626
(80)
62,098
337
8,314
20,775
(81)
7,333
349
1,571
(3,000)
509,242
930
410,696
411,626
703
508,539
509,242
(a) The Group’s asset restoration obligations (“ARO”) comprise the future estimated costs to decommission each of the Montara,
Stag, Lemang PSC, PenMal Assets and CWLH Assets.
The carrying value of the provision represents the discounted present value of the estimated future costs. Current estimated
costs of the ARO for each of the Montara, Stag, Lemang PSC, PenMal Assets and CWLH Assets have been escalated to the
estimated date at which the expenditure would be incurred, at an assumed blended inflation rate. The estimates for each
asset are a blend of assumed US and respective local inflation rates to reflect the underlying mix of US dollar and respective
local dollar denominated expenditures. The present value of the future estimated ARO for each of the Montara, Stag, Lemang
PSC, PenMal Assets and CWLH Assets has then been calculated based on a blended risk-free rate. The base estimate ARO
for Montara, Stag, Lemang PSC and PenMal Assets remains largely unchanged from 2021. The ARO of CWLH Assets was
assessed in 2022, based on its share of the future estimated decommissioning expenditure at the end of field life according to
the Group’s 16.67% non-operating working interest. The blended inflation rates and risk-free rates used, plus the estimated
decommissioning year of each asset are as follows:
No.
Asset
1.
2.
3.
4.
5.
Montara
Stag
Lemang PSC
PenMal Assets
CWLH Assets
Blended inflation rate
Blended risk-free rate
2022
3.01%
2.62%
2.93%
2021
2.06%
2.12%
2.82%
2022
3.97%
4.01%
6.43%
2021
1.77%
1.91%
5.96%
Estimated
decommissioning year
2033
2036
2036
2.46% - 2.48%
2.05% - 2.07%
3.48% - 4.02%
2.81% - 3.24%
2024 onwards
3.05%
-
3.94%
-
2032
1
Expected volatility was determined by calculating Jadestone’s average historical volatility of each trading day’s log growth of TSR over a period between the
grant date and the end of the performance period.
* Certain 2021 comparative information has been reclassified between line items. Please refer to Note 45.
116
117
JADESTONE ENERGY 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
In 2019, Jadestone Energy (Eagle) Pty Ltd, a wholly owned subsidiary of the Company entered into a deed poll with the Australian
Government with regard to the requirements of maintaining sufficient financial capacity to ensure Montara’s asset restoration
obligations can be met when due. The deed states that the Group is required to provide a financial security in favour of the
Australian Government when the aggregate remaining net after tax cash flow of the Group is below 1.25 times of the Group’s
estimated decommissioning costs.
Following the enactment of the Offshore Petroleum and Greenhouse Gas Storage Amendment (Titles Administration and Other
Measures) Act 2021 which, amongst other things, enhanced the decommissioning framework applying to offshore assets in
Australia, on 29 March 2023 Jadestone Energy (Australia) Pty Ltd, Jadestone Energy (Eagle) Pty Ltd and Jadestone Energy (CWLH)
Pty Ltd, each wholly owned subsidiaries of the Company, entered into a deed poll with the Australian Government with regard
to the requirements of maintaining sufficient financial capacity to ensure that each of Montara’s, Stag’s and CWLH’s asset
restoration obligations can be met when due. The deed states that the Group is required to provide financial security in favour of
the Australian Government when the aggregate remaining net after-tax cash flow of the Group is below 1.25 times of the Group’s
estimated decommissioning liabilities net of any residual value, tax benefits, and other financial assurance committed by the
Group for such purposes. This deed poll replaced the previous deed poll entered into by Jadestone Energy (Eagle) Pty Ltd in respect
of the Montara asset in 2019. The Group does not expect to provide financial security under the deed poll this year based on the
financial capacity assessment.
The Malaysian and Indonesian regulators require upstream oil and gas companies to contribute to an abandonment cess fund,
including making monthly cess payments, throughout the production life of the oil or gas field. The cess payment amount is
assessed based on the estimated future decommissioning expenditures. The cess payment paid for non-operated licences reduces
the asset restoration liability. The Malaysian abandonment cess fund only covers the decommissioning costs related to the oil and
gas facilities. The Group has recognised ARO provisions for the estimated decommissioning costs of the wells in the PSCs.
An abandonment trust fund was set as part of the acquisition of the CWLH Assets to ensure there are sufficient funds available for
decommissioning activities at the end of field life. The payment paid into to the trust fund is classified as non-current receivables
as the amount is reclaimable by the Group in the future following the commencement of decommissioning activities.
(b) A contingent payment of US$1.4 million payable to SapuraOMV for the PenMal Assets acquisition was recognised in full at US$3.0
million at the 2022 year end as materialised and was reclassified as accrual due to the average Dated Brent price in 2022 exceeding
US$70/bbl. The contingent payment was paid in January 2023.
The fair value of the contingent payments payable to Mandala Energy Lemang Pte Ltd for the Lemang PSC acquisition are valued at
US$12.4 million as at 31 December 2022 (2021: US$4.8 million) for the trigger events as disclosed below. The increase in provision
represents the recognition of additional contingent payments which are associated with the Saudi CP and Dated Brent prices.
No.
Trigger event
Consideration Management’s rationale
1.
2.
3.
4.
5.
6.
7.
8.
9.
First gas date
The accumulated VAT receivables
reimbursements which are attributable to the
unbilled VAT in the Lemang PSC as at the Closing
Date, exceeding an aggregate amount of US$6.7
million on a gross basis
US$5.0 million
US$0.7 million
This contingent payment is virtually certain as it will be payable
when gas production in the Lemang PSC is commenced.
Management estimated that the accumulated receipts of VAT
reimbursements received will exceed US$6.7 million on a gross
basis.
First gas date on or before 31 March 2023
US$3.0 million
Total actual Akatara Gas Project “close out”
costs set out in the AFE(s) approved pursuant to
a joint audit by SKK MIGAS and BPKP is less than,
or within 2% of the “close out” development
costs set out in the approved revised plan of
development for the Akatara Gas Project
US$3.0 million
The average Saudi CP in the first year of
operation is higher than US$620/MT
US$3.0 million
The average Saudi CP in the second year of
operation is higher than US$620/MT
US$2.0 million
The average Dated Brent price in the first year of
operation is higher than US$80/bbl
US$2.5 million
The average Dated Brent price in the second
year of operation is higher than US$80/bbl
US$1.5 million
A plan of development for the development
of a new discovery made, as a result of the
remaining exploration well commitment
under the PSC, is approved by the relevant
government entity.
US$3.0 million
Not payable as the trigger event has expired. First gas is
scheduled in first half of 2024.
The Akatara Gas Project has not been sanctioned as at year end
due to ongoing preparation of project approval documentation.
It is unknown if the future close out costs will be less than or
within 2% of the budgeted amount and it is unable to be reliably
measured as at year end.
The average Saudi CP is expected to be above US$620/MT in
2024, with the first gas is anticipated to be in H1 2024. The
contingent payment will be due for payment within 15 business
days of the occurrence of the trigger event if it falls due.
The average Saudi CP is expected to be above US$620/MT in
2025, the second year of production. The contingent payment
will be due for payment within 15 business days of the
occurrence of the trigger event if it falls due.
The average Dated Brent price is expected to be above US$80/
bbl in 2024, with the first gas is anticipated to be in H1 2024. The
contingent payment will be due for payment within 15 business
days of the occurrence of the trigger event if it falls due.
The average Dated Brent price is expected to be above US$80/
bbl in 2025, the second year of production. The contingent
payment will be due for payment within 15 business days of the
occurrence of the trigger event if it falls due.
There are no prospects or leads presently selected for the
exploration well commitment. As at year end, it is not probable
that this contingent consideration trigger will be met.
10.
The plan of development described in item 9
above is approved by the relevant government
entity and is based on reserves of no less than
8.4mm barrels (on a gross basis).
US$8.0 million
There are no prospects or leads presently selected for the
exploration well commitment. As at year end, it is not probable
that this contingent consideration trigger will be met.
118
(c) Included in the provision for employee benefits is provision for long service leave which is payable to employees on a pro-rata
basis after 7 years of employment and is due in full after 10 years of employment.
36 LEASE LIABILITIES
Presented as:
Non-current
Current
Maturity analysis of lease liabilities based on undiscounted gross cash flows:
Year 1
Year 2
Year 3
Year 4
Year 5
Future interest charge
2022
USD’000
2021
USD’000
2,880
6,227
9,107
6,649
2,261
426
334
-
(563)
9,107
4,504
11,161
15,665
12,247
3,440
209
221
233
(685)
15,665
The Group does not face a significant liquidity risk with regards to its lease liabilities. Lease liabilities are monitored within the
Group’s treasury function.
37
RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash changes.
Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group’s
consolidated statement of cash flows, as cash flows from financing activities.
The cash flows represent the repayment of borrowings and lease liabilities, in the consolidated statement of cash flows.
Reserved based lending facility
USD’000
Lease liabilities
USD’000
As at 1 January 2021
Financing cash flows
New lease liabilities
Interest paid
Non-cash changes - interest
As at 31 December 2021
Financing cash flows
New lease liabilities
Interest paid
Non-cash changes - interest
As at 31 December 2022
38
TRADE AND OTHER PAYABLES
Trade payables
Other payables
Accruals
Contingent payments
Malaysian supplementary payment payables
Amount due to joint arrangement partner
Overlift crude oil inventories
GST/VAT payables
* Certain 2021 comparative information has been reclassified between line items. Please refer to Note 45.
7,296
(7,296)
-
150
(150)
-
-
-
-
-
-
25,783
(12,972)
2,854
(1,222)
1,222
15,665
(13,914)
7,356
769
(769)
9,107
2022
USD’000
2021
Reclassified*
USD’000
13,606
8,643
36,757
5,000
855
1,269
7,357
265
73,752
26,847
7,627
30,716
3,000
1,907
-
-
70,107
119
JADESTONE ENERGY 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Trade payables, other payables and accruals principally comprise amounts outstanding for trade and non-trade related purchases
and ongoing costs. The average credit period taken for purchases is 30 days (2021: 30 days). For most suppliers, no interest is
charged on the payables in the first 30 days from the date of invoice. Thereafter, interest may be charged on outstanding balances
at varying rates of interest. The Group has financial risk management policies in place to ensure that all payables are settled within
the pre-agreed credit terms.
Contingent payments in the current year consist of US$3.0 million payable to SapuraOMV, being the second contingent payment
arose from the acquisition of the PenMal Assets (Notes 20 and 35). The payment was made in January 2023. The Group is obliged to
pay to a contingent payment of US$2.0 million to BP which arose from the acquisition of the CWLH Assets (Note 18) as the annual
average Brent crude price in 2022 exceeded US$50/bbl. The payment was made in January 2023. The contingent payment in the
prior year represented the first contingent payment of US$3.0 million payable to SapuraOMV as the annual average Brent crude
price in 2021 exceeded US$65/bbl. The payment was made in January 2022.
The overlift crude oil inventories represent entitlement imbalances at 2022 year end of 205,510 bbls and 31,076 bbls at the CWLH
Assets and PenMal Assets, respectively. The overlift liabilities are measured at cost of US$32.92/bbl and US$19.07/bbl for both
assets, respectively. The overlift position at 2022 year end will unwind in 2023 based on the subsequent net productions entitled to
the Group.
39 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT
Financial assets and liabilities
Current assets and liabilities
Management considers that due to the short-term nature of the Group’s current assets and liabilities, the carrying amounts equate
to their fair value.
Non-current assets and liabilities
The carrying amount of non-current assets and liabilities approximates their fair values due to the carrying amount representing
the actual cash paid.
Financial assets
At amortised cost
Trade and other receivables, excluding prepayments, GST/VAT receivables and underlift
crude oil inventories
Cash and bank balances
Financial liabilities
At amortised cost
Trade and other payables, excluding GST/VAT payables and overlift crude oil inventories
Lease liabilities
Contingent consideration for Lemang PSC acquisition
Contingent consideration for CWLH Assets acquisition
Contingent consideration for PenMal Assets acquisition
2022
USD’000
2021
Restated*
USD’000
98,651
123,329
221,980
61,130
9,107
12,432
3,940
3,000
89,609
66,353
117,865
184,218
70,097
15,665
4,750
-
1,429
91,941
Fair values are based on management’s best estimates, after consideration of current market conditions. The estimates are
subjective and involve judgment, and as such may deviate from the amounts that the Group realises in actual market transactions.
Commodity price risk
The Group’s earnings are affected by changes in oil prices. The Group manages this risk by monitoring oil prices and potentially
entering into commodity hedges against fluctuations in oil prices if and when considered appropriate. The Group does not enter
into speculative hedges. The Group may enter into hedging arrangements as required under a reserves based lending facility. The
Group had hedging in place associated with its RBL which were fully settled in 2021.
There was no hedge contract in place nor entered into by the Group in 2022.
Montara
In December 2020, the Group entered into a commodity swap arrangement to hedge 31% of its planned production volumes from
January to March 2021, to provide downside oil price protection. The swap price was set at US$49/bbl.
On 16 February 2021, the Group entered into a commodity swap arrangement to further hedge 31% of its planned production
volumes from April to June 2021. The swap price was set at US$61.40/bbl.
Foreign currency risk
Foreign currency risk is the risk that a variation in exchange rates between United States Dollars (“US Dollar”) and foreign currencies
will affect the fair value or future cash flows of the Group’s financial assets or liabilities presented in the consolidated statement of
financial position as at year end.
Cash and bank balances are generally held in the currency of likely future expenditures to minimise the impact of currency
fluctuations. It is the Group’s normal practice to hold the majority of funds in US Dollars, in order to match the Group’s revenue and
expenditures.
In addition to US Dollar, the Group transacts in various currencies, including Australian Dollar, Malaysian Ringgit, Vietnamese Dong,
Indonesian Rupiah, Singapore Dollar, New Zealand Dollar and British Pound Sterling.
Foreign currency sensitivity
Material foreign denominated balances were as follows:
Cash and bank balances
Australian Dollars
Malaysian Ringgit
Trade and other receivables
Australian Dollars
Malaysian Ringgit
Trade and other payables
Australian Dollars
Malaysian Ringgit
2022
USD’000
2021
USD’000
11,086
5,336
4,789
42,392
32,767
12,422
6,027
4,622
2,706
41,774
43,219
15,094
A strengthening/weakening of the Australian dollar and Malaysian Ringgit by 10%, against 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 increasing/
decreasing by approximately US$1.8 million (2021: decreasing/increasing by US$0.4 million), and which would be credited/charged
(2021: 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. The Group’s other financial instruments are
non-interest bearing or fixed rate, and are therefore not subject to interest rate risk.
The Group holds some of its cash in interest bearing accounts and short-term deposits. Interest rates currently received are at
relatively low levels. Accordingly, a downward interest rate movement would not cause significant exposure to the Group.
Credit risk
Credit risk represents the financial loss that the Group would suffer if a counterparty in a transaction fails to meet its obligations in
accordance with the agreed terms.
The Group actively manages its exposure to credit risk, granting credit limits consistent with the financial strength of the Group’s
counterparties and respective sole customer in Australia and Malaysia, requiring financial assurances as deemed necessary,
reducing the amount and duration of credit exposures, and close monitoring of relevant accounts.
The Group trades only with recognised, creditworthy third parties.
The Group’s current credit risk grading framework comprises the following categories:
Category
Description
Basis for recognising expected credit losses (“ECL”)
Performing
The counterparty has a low risk of default and does not
have any past due amounts.
12-month ECL
Doubtful
In default
Write-off
Amount is > 30 days past due or there has been a
significant increase in credit risk since initial recognition.
Lifetime ECL – not credit-impaired
Amount is > 90 days past due or there is evidence
indicating the asset is credit-impaired.
Lifetime ECL – credit-impaired
There is evidence indicating that the debtor is in severe
financial difficulty and the Group has no realistic
prospect of recovery.
Amount is written off
* Certain 2021 comparative information has been restated. Please refer to Note 45.
12 0
121
JADESTONE ENERGY 2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
On 19 May 2023, the Group announced that it had signed a new US$200.0 million RBL facility with a group of four international
banks ("the RBL Banks"). The RBL facility provides for an uncommitted accordion of US$160.0 million, subject to incremental
availability of bank debt. The RBL facility closed on 22 May 2023, following satisfaction of the conditions precedent (Note 43).
The facility tenor is four years, with the final maturity date being the earlier of 31 March 2027 and the projected reserves tail date1
(which is expected later). The borrowing base includes the Group’s main producing assets being Montara, Stag, CWLH, Sinphuhorm,
the PenMal Assets’ PM323 and PM329 PSCs and the Group’s development asset being the Lemang PSC. The Group is required
to maintain a parent company financial covenant of consolidated net debt of 3.5 times annual EBITDAX. The entities in the RBL
ringfence are required to hold a total minimum liquidity balance of US$15.0 million and cover forward looking capital expense for
two quarters.
The RBL imposes restrictions on the ability of the Group to freely utilise the cashflows generated by the borrowing base assets
for purposes that are not connected with the borrowing base assets or the RBL. It is therefore necessary of the Group to maintain
two separate cash pools, a) cash balances within the RBL facility (“RBL Cash Pool”) and b) cash balances outside the RBL facility,
which comprise cash held by the entities that are not part of the RBL facility including the corporate G&A, Malaysia Technical Office
and Singapore, the Vietnamese exploration assets and the previously non-operated PenMal Assets (PM318 and AAKBNLP PSCs)
(“Corporate Cash Pool”). The distribution of cash out of the RBL Cash Pool is allowed provided that certain tests are met, such as (i)
the maintenance of two quarters principal, interest and fees in a separate debt service reserve account and (ii) the maintenance of
the minimum cash balance within the RBL Cash Pool.
The Company has agreed an equity fundraising, comprising an underwritten placing, and subscription, pursuant to which it expects
to issue 92,312,691 new ordinary shares, together with a director placing and subscription for 1,769,135 new ordinary shares, in each
case at 45 pence per share, to raise aggregate net proceeds of US$50.0 million. The Company has also launched an open offer of up
to 14,887,039 new ordinary shares, at 45 pence per share, to raise additional proceeds of up to EUR8.0 million (up to US$8.6 million).
In support of the equity fundraising, the Company has entered into an up to US$50.0 million equity underwrite debt facility
agreement with Tyrus Capital Event S.à.r.l, the Company's largest shareholder. The equity underwrite facility will reduce pro-rata to
the total funds raised from the equity fundraising and the open offer and therefore is expected to reduce to zero. However, to the
extent the facility does not reduce to zero, it will mature with a bullet repayment on 31 December 2024, will bear interest at 13.5%
on drawn amounts and 5% on undrawn amounts and can be repaid or cancelled without penalties.
In addition, the Company has entered into a committed standby working capital facility with Tyrus Capital Event S.à.r.l for a facility
size of up to US$35.0 million. The standby working capital facility will reduce pro-rata to the total funds raised from the equity
fundraising and the open offer in excess of US$50.0 million. The facility will mature with a bullet repayment on 31 December 2024.
The facility bears interest of 15% on drawn amounts and 5% on undrawn amounts and can be repaid or cancelled without penalties.
Further details are disclosed in the Going Concern section in Notes 2 and 43.
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:
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
2022
Cash and bank balances
Trade receivables
Other receivables and deposits
Amount due from joint arrangement
partners (net)
Non-current other receivables
2021
Cash and bank balances
Trade receivables
Other receivables
Amount due from joint arrangement
partners (net)
Non-current other receivables
* The amount is negligible.
29
28
28
28
28
29
28
28
28
28
n.a
n.a
n.a
n.a
n.a
n.a
n.a
n.a
n.a
n.a
Performing
12m ECL
123,329
(i)
Lifetime ECL
Performing
12m ECL
Performing
12m ECL
6,332
4,859
4,268
Performing
12m ECL
83,192
Performing
12m ECL
117,865
(i)
Lifetime ECL
Performing
12m ECL
Performing
12m ECL
9,143
13,281
2,203
Performing
12m ECL
41,726
-*
-*
-*
-*
-*
-*
-*
-*
-*
-*
123,329
6,332
4,859
4,268
83,192
117,865
9,143
13,281
2,203
41,726
(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 2022, total trade receivables amounted to US$6.3 million (2021: US$9.1 million). The balance in 2022 and 2021
had been fully recovered in 2023 and 2022, respectively.
The concentration of credit risk relates to the Group’s single customer with respect to oil sales in Australia, and a different single
customer for oil and gas sales in Malaysia. Both customers have an A2 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 3 to
14 days from 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 receivables are
expected to be insignificant.
The Group measures the loss allowance for other receivables and amount due from joint arrangement partners at an amount equal
to 12-months ECL, as there is no significant increase in credit risk since initial recognition. ECL for other receivables are expected to
be insignificant.
The credit risk on cash and bank balances is limited because counterparties are banks with high credit ratings assigned by
international credit rating agencies. The banks are also regulated locally, 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.
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 manages its liquidity risk by optimising the positive free cash flow from its producing assets, on-going cost reduction
initiatives, merger and acquisition strategies, bank balances on hand and in case appropriate, lending.
The Group’s net profit after tax for the year was US$8.5 million (2021: loss after tax of US$17.1 million). Operating cash flows before
movements in working capital and net cash generated from operating activities for the year ended 31 December 2022 was US$158.1
million and US$121.2 million (2021: US$91.2 million and US$103.6 million) respectively. The Group’s net current assets remained
positive at US$72.0 million as at 31 December 2022 (2021: US$73.7 million).
On 17 February 2023, the Group entered into an interim loan facility with two international banks for US$50.0 million (the “Interim
Facility”). The Interim Facility had an initial margin of 450 basis points over secured overnight financing rate, which stepped up to
500 basis points after three months from closing. The Interim Facility had a nine-month term ending on 15 November 2023, and was
repaid via the reserves-based lending facility (“RBL”), on 1 June 2023.
12 2
1 Reserves tail date refers to the last day of the quarter immediately preceding the quarter in which the remaining borrowing base reserves is forecast to be 25 per
cent (or less) of the initial approved borrowing base reserves.
12 3
JADESTONE ENERGY 2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Non-derivative financial liabilities
The following table details the expected contractual maturity for non-derivative financial liabilities with agreed repayment periods.
The table below is 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 interest 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
2022
Non-interest bearing
Trade and other payables, excluding
contingent payments, GST/VAT payables
and overlift crude oil inventories
Contingent consideration for Lemang
PSC acquisition
Contingent consideration for CWLH
Assets acquisition
Contingent consideration for PenMal
Assets acquisition
Fixed interest rate instruments
-
-
-
-
-
61,130
-
-
12,432
2,000
3,000
1,940
-
Lease liabilities
6.031
6,649
3,021
2021 (Reclassified)*
Non-interest bearing
Trade and other payables, excluding
contingent payments, GST/VAT payables
Contingent consideration for Lemang
PSC acquisition
Fixed interest rate instruments
Lease liabilities
-
-
-
72,779
17,393
70,097
-
-
-
4,750
1,429
Variable interest rate instruments
5.847
12,247
4,103
81,327
10,282
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
61,130
12,432
3,940
3,000
(563)
9,107
(563)
89,609
-
-
-
70,097
4,750
1,429
(685)
15,665
(685)
91,941
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 assists in understanding the Group’s liquidity position and phasing of net assets and liabilities, as the Group’s
liquidity risk is managed on a net asset and liability basis. The table is 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
More
than
5 years
USD’000
Adjustments
USD’000
Total
USD’000
-
-*
-
-*
15,459
83,192
122,653
676
138,112
83,868
24,627
41,726
117,013
852
141,640
42,578
-
-
-
-
-
98,651
-*
-*
123,329
221,980
-
66,353
-*
-*
117,865
184,218
2022
Non-interest bearing
Trade and other receivables, excluding
prepayments, GST/VAT receivables and
underlift crude oil inventories
Variable interest rate instruments
Cash and bank balances
2021
Non-interest bearing
Trade and other receivables, excluding
prepayments, GST/VAT receivables and
underlift crude oil inventories
Variable interest rate instruments
Cash and bank balances
* The effect of interest is not material.
Capital management
The Group manages its capital structure and makes adjustments to it, based on funding requirements of the Group combined with
sources of funding available to the Group, in order to support the acquisition, exploration and development of resource properties
and the ongoing (investment in) 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.
The capital structure of the Group represents the equity of the Group, comprising share capital, merger reserve, share-based
payment reserve and capital redemption reserve, as disclosed in Notes 30, 32, 33 and 34, respectively.
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, position and will work to raise
additional debt and/or equity funding 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 2022. The Group is not subject to externally imposed capital requirements.
Cash and cash equivalents, representing net cash
2022
USD’000
123,329
2021
USD’000
117,865
The Group’s overall strategy towards its capital structure remained unchanged from 2021.
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).
* Certain 2021 comparative information has been reclassified between line items. Please refer to Note 45.
12 4
12 5
JADESTONE ENERGY 2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Financial
assets/financial
liabilities
Fair value (USD’000) as at
2022
2021
Assets Liabilities Assets Liabilities
Fair
value
hierarchy
Valuation
technique(s)
and key input(s)
Significant
unobservable
input(s)
Others - contingent consideration from Lemang PSC acquisition
1) Contingent
consideration
(Note 35)
-
12,432
-
4,750
Levels 1
and 3
Based on the nature
and the likelihood of
the occurrence of the
trigger events. Fair value
is estimated, taking
into consideration the
estimated future gas
production schedule
(Q1 2024), forecasted
Dated Brent oil prices
of US$86.83/bbl in 2024
and US$82.23/bbl in 2025
and Saudi CP prices of
US$714.35/MT in 2024
and US$676.50/MT in
2025, as well as the effect
of the time value of
money.
Gas production
schedule could
be deferred
depending on
the on-going
progress of the
development
activities.
Expected future
oil price volatility
is based on
an analysis of
Dated Brent
oil prices and
Saudi CP prices
movements.
Relationship
of unobservable
inputs to fair
value
A change in
gas production
schedule or
significant
decrease in Dated
Brent oil prices
and Saudi CP
prices in the future
would result to
the reversal of
the contingent
payments
recognised.
A one year deferral to the estimated gas production date would decrease the liability by US$0.4 million.
Others - contingent consideration from CWLH Assets acquisition
2) Contingent
consideration
(Notes 18, 35
and 38)
-
3,940
-
-
Level 1
Expected future
oil price volatility
is based on an
analysis of Dated
Brent oil prices
movements.
A significant
decrease in Dated
Brent oil prices in
2023 would result
to the reversal of
the contingent
payments
recognised.
Based on the nature
and the likelihood of
occurrence of the trigger
event. Fair value is
estimated using 2023
Dated Brent oil price
forecasts of US$89.41/bbl
at the end of the reporting
period and taking into
account the time value of
money and volatility of oil
prices.
Others - contingent consideration from PenMal Assets acquisition
3) Contingent
consideration
(Notes 20 and
38)
-
3,000
-
4,429
Level 1
Based on the actual
average Dated Brent
prices in 2022 of
US$101.32/bbl.
-
-
40 SEGMENT INFORMATION
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:
Producing assets
Australia
USD’000
SEA
USD’000
Exploration/
development
SEA
USD’000
Corporate
USD’000
Total
USD’000
2022
Revenue
Liquids revenue
Gas revenue
Production cost
DD&A
Administrative staff costs
Other expenses
Impairment
Other income
Finance costs
Other financial gains
Profit/(Loss) before tax
Additions to non-current assets
Non-current assets
2021 (Restated)*
Revenue
Liquids revenue
Gas revenue
Production cost
DD&A
Administrative staff costs
Other expenses
Other income
Finance costs
Other financial gains
Profit/(Loss) before tax
Additions to non-current assets
Non-current assets
328,863
-
328,863
(189,041)
(57,835)
(13,839)
(8,872)
-
24,226
(6,698)
1,904
78,708
110,405
424,017
293,566
-
293,566
(182,001)
(75,848)
(13,364)
(14,970)
7,038
(7,452)
-
6,969
57,130
367,451
89,620
3,119
92,739
(61,659)
(3,405)
(4,073)
(1,877)
(13,534)
2,718
(2,033)
-
8,876
582
101,835
45,644
984
46,628
(29,895)
(3,621)
(1,433)
(2,466)
9
(875)
-
8,347
64,117
59,892
-
-
-
-
(235)
(2,020)
(8,188)
-
965
(903)
-
(10,381)
23,266
115,390
-
-
-
-
(281)
(1,612)
(5,875)
76
(503)
266
(7,929)
4,744
90,938
-
-
-
-
(359)
(9,286)
(3,368)
-
124
(1,774)
-
(14,663)
69
231
-
-
-
-
(465)
(8,659)
(2,870)
559
(245)
-
(11,680)
183
719
418,483
3,119
421,602
(250,700)
(61,834)
(29,218)
(22,305)
(13,534)
28,033
(11,408)
1,904
62,540
134,322
641,473
339,210
984
340,194
(211,896)
(80,215)
(25,068)
(26,181)
7,682
(9,075)
266
(4,293)
126,174
519,000
Non-current assets as shown here comprises oil and gas properties, intangible exploration assets, right-of-use assets, other
receivables and prepayment and plant and equipment used in corporate offices. Deferred tax assets are excluded from the
segmental note but included in the Group’s consolidated statement of financial position.
Revenue arising from producing assets relates to the Group’s single customer with respect to oil sales in Australia, and a different
single customer for oil and gas sales in Malaysia. There is an active market for the Group’s oil and gas.
126
12 7
* Certain 2021 comparative information has been restated. Please refer to Note 45.
JADESTONE ENERGY 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
41
FINANCIAL CAPITAL COMMITMENTS
New debt facility
Certain PSCs and service concessions have firm capital commitments. The Group has the following outstanding minimum
commitments:
SEA portfolio PSC operational commitments
Not later than one year
One to five years
More than 5 years
2022
USD’000
400
19,284
3,016
22,700
2021
USD’000
400
12,000
10,700
23,100
The SEA portfolio PSC operational commitments as at 31 December 2022 amounted to US$17.3 million (2021: US$ 17.3 million), and
relates to the minimum work commitment outstanding for the Block 46/07 PSC and the Lemang PSC. The operational commitments
also include training commitment of US$5.4 million (2021: US$5.8 million), for the Block 46/07 PSC, Block 51 PSC and the PenMal
Assets.
Work commitment
Under the terms of the Block 46/07 PSC, Jadestone is committed to drill one more appraisal well on the block. The Group 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. The current exploration phase expires on 29 June 2024. If necessary, the Group will request an
extension to this deadline to align drilling of the appraisal well with development of the Nam Du/U Minh gas fields.
As part of the acquisition under the terms of the Lemang PSC, the Group, as the operator, has inherited unfulfilled work
commitments of US$7.3 million consisting of one exploration well and a 3D seismic programme. The work commitments should
have been completed during the exploration phase of the PSC by the previous owner. It has been agreed with the Indonesian
regulator that the work commitments can be completed after first gas in 2024 but before the end of 2026.
Training commitment
Under the terms of the Block 46/07 PSC and Block 51 PSC, the Group commits to pay an annual training commitment amount
of US$0.4 million to Petrovietnam until the expiration of the respective PSC licence. The training commitment amount is for the
purpose of developing the local employees in the oil and gas industry.
As part of the acquisition under the terms of the PenMal Assets, the Group has inherited net training commitments of US$0.3
million and US$0.1 million for PM323 PSC and PM318 PSC, respectively. Funds provided with respect to this training commitment are
applied to the development of local employees in the oil and gas industry. The training commitments are required to be completed
before the expiration of the respective PSC.
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 Stag and Montara:
Not later than one year
2022
USD’000
310
2021
USD’000
5,254
The capital commitment of US$0.3 million as at 2022 year end predominately arose from the installation of produced water
treatment unit and subsea control system upgrade at Montara, which are expected to be completed by end of 2023. The 2021
capital commitment of US$5.3 million mainly related to long leads for 50H and 51H drilling programme at Stag, which were
completed during 2022.
42
CONTINGENT LIABILITY
On 17 June 2022, a loss of containment of between three and five cubic metres of oil occurred at the Montara Venture FPSO.
The facility was shut-in immediately and the incident was reported to the local regulator. The local regulator has commenced
an investigation into the incident for potential breach of the local regulations. The investigation is ongoing as at year end and is
anticipated to continue throughout 2023. It is too early to reliably estimate the outcome of the investigation and if any prosecution
will eventuate.
43 EVENTS AFTER THE END OF THE REPORTING PERIOD
Acquisition of interest in Sinphuhorm gas field
On 19 January 2023, the Group has executed a sale and purchase agreement with Salamander Energy (S.E. Asia) Limited (the
“Seller”), an affiliate of PT Medco Energi Internasional Tbk, to acquire the Seller’s interest in three legal entities, which collectively
own a 9.52% non-operated interest in the producing Sinphuhorm gas field and a 27.2% interest in the Dong Mun gas discovery
onshore northeast Thailand. The acquisition was completed on 23 February 2023, for a cash consideration of US$27.9 million post
closing adjustments. The effective date of the transaction is 1 January 2022.
On 17 February 2023, the Group announced that it has closed a US$50.0 million debt facility (“Interim Facility”) with two
international banks. The closing of the Interim Facility forms part of the previously announced plan to arrange an RBL, which is a
key element of the Group’s medium-term financing strategy to fund development capital at the Indonesian Akatara Gas Project and
further growth through merger and acquisition.
The Interim Facility has a term of nine months and carries an initial margin of 450 basis points over secured overnight financing rate,
which steps up in the event repayment occurs more than three months after closing. The Interim Facility was repaid on 1 June 2023
from the RBL facility obtained by the Group in May 2023.
Montara operations update
Production at Montara was restarted on 21 March 2023. In a carefully planned restart programme, production has increased
following a systematic restart of production wells and FPSO topsides processes. Since the gas reinjection system on the Montara
Venture FPSO was restarted in late April 2023, production from the field has averaged approximately 6,800 bbls/d, with a peak
during that period of c.7,200 bbls/d.
Closing of US$200.0 million RBL facility
On 19 May 2023, the Group announced that it had signed a new US$200.0 million RBL facility with the RBL Banks. The RBL facility
provides for an uncommitted accordion of US$160.0 million, subject to incremental availability of bank debt. The RBL facility was
closed on 22 May 2023, following satisfaction of the conditions precedent.
The RBL facility has a four-year tenor and is subject to bi-annual redeterminations to determine available debt capacity, which will
vary over time depending on several parameters including oil prices, operating performance, hedging, future acquisitions and
abandonment estimates. Under current assumptions, borrowing capacity under the RBL facility is constrained prior to the Akatara
field being integrated as a producing asset, after which it will increase significantly. The Group and the RBL Banks can initiate
additional redeterminations when appropriate. The borrowing base is secured over by the Group's assets being Montara, Stag,
CWLH Assets, Sinphuhorm gas field, PenMal Assets' PM323 and PM329 PSCs and Lemang PSC.
The RBL facility pays interest at 450 basis points over the secured overnight financing rate, plus the applicable credit spread. The
Group will also pay customary arrangement and commitment fees. The facility incorporates standard terms and conditions for RBL
facility, including a parent company financial covenant of maximum total debt of 3.5 times annual EBITDAX plus the assets under the
RBL facility are required to hold a total minimum liquidity balance of US$15 million and cover forward looking capital expense for
two quarters.
The RBL facility was initially used to repay the US$50.0 million Interim Facility, which was fully drawn on 22 May 2023. The RBL facility
will also fund the Group's operations and capital investment programme, particularly the Akatara gas project onshore Indonesia.
As part of the RBL, the Group has commenced its hedging programme and intends to progressively increase to approximately
50% of its forecasted production from October 2023 to September 2025. As of the signing date, the Group entered into oil price
swap contracts for 3,494,000 bbls, representing approximately 32% of its forecasted future production between October 2023
to September 2025, at a weighted average price of US$70.66/bbl. The Group continues to monitor oil prices and will enter into
additional hedging contracts when considered appropriate in the coming months to align with the RBL commitment.
Placement of additional shares and issue of warrants
On 6 June 2023, the Company agreed an equity fundraising, comprising an underwritten placing of an additional 94,081,826
ordinary shares at a share price of 45 pence and will be structured as set out below:
l a placing of 92,312,691 new ordinary shares to existing and new institutional shareholders; and
l a subscription of 1,769,135 new ordinary shares by directors.
At the same time, an incremental open offer of up to EUR8.0 million (up to US$8.6 million) was made to offer pre-emptive rights to
existing shareholders who have not participated in the placing an ability to acquire shares at the offer price.
In support of the equity fundraising, the Company has entered into an up to US$50.0 million equity underwrite debt facility
agreement with Tyrus Capital Event S.à.r.l, the Company's largest shareholder. The equity underwrite facility will reduce pro-rata to
the total funds raised from the equity fundraising and the open offer and therefore is expected to reduce to zero. However, to the
extent the facility does not reduce to zero, it will mature with a bullet repayment on 31 December 2024, will bear interest at 13.5%
on drawn amounts and 5% on undrawn amounts and can be repaid or cancelled without penalties.
As part of the underwritten placing of additional ordinary shares, the Company has also entered into a warrant instrument with
Tyrus Capital Event S.à.r.l for 30 million ordinary shares at an exercise price of 50 pence per share. The warrants are exercisable
within 36 months from the date of issuance. The warrants are transferrable subject to customary restrictions.
Committed standby working capital facility
On 6 June 2023, the Company entered into a committed standby working capital facility with Tyrus Capital Event S.à.r.l for a facility
size of up to US$35.0 million. The standby working capital facility will reduce pro-rata to the total funds raised from the equity
fundraising and the open offer in excess of US$50.0 million. The facility will mature with a bullet repayment on 31 December 2024.
The facility bears interest of 15% on drawn amounts and 5% on undrawn amounts and can be repaid or cancelled without penalties.
12 8
12 9
JADESTONE ENERGY 2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
44 RELATED PARTY TRANSACTIONS
Internal reorganisation
During the comparative period, on 23 April 2021, pursuant to the internal reorganisation, a transfer of beneficial interest agreement
was entered into between Jadestone Energy Inc. (“JEI”), Jadestone Energy Holdings Limited (“JEHL”) and Daniel Young, the former
Chief Financial Officer. Under the transfer of beneficial interest agreement, JEI transferred the beneficial interest in 100,000 of the
Company’s shares to Daniel Young, with a corresponding reduction in the issuance of any new JEP shares due to Daniel Young in
exchange for his existing JEI shares transferred to JEHL.
The purpose of this transfer was to ensure that the adjusted total outstanding number of Jadestone Energy plc shares of
463,649,477 at the completion of the internal reorganisation was exactly equal to the number of outstanding Jadestone Energy Inc.
shares of 463,649,477 immediately prior to the completion of the reorganisation.
Compensation of key management personnel
Short-term benefits
Other benefits
Share-based payments
2022
USD’000
7,492
2,029
810
10,331
2021
USD’000
8,179
1,295
713
10,187
The total remuneration of key management members in 2022 (including salaries and benefits) was US$10.3 million (2021: US$10.2
million) and recognised as part of the Group’s administrative 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
2022
A. Paul Blakeley
Bert-Jaap Dijkstra
Dennis McShane
Iain McLaren
Robert Lambert
Cedric Fontenit
Lisa Stewart
David Neuhauser
Jenifer Thien
Daniel Young
2021
A. Paul Blakeley
Daniel Young
Dennis McShane
Iain McLaren
Robert Lambert
Cedric Fontenit
Lisa Stewart
David Neuhauser
1,236
268
155
105
95
90
100
80
71
229
2,429
1,367
748
155
105
95
95
90
80
-
23
-
-
-
-
-
-
-
353
376
148
210
-
-
-
-
-
-
2,735
358
271
35
6
4
4
4
13
4
-
-
341
302
(75)
10
7
7
7
13
7
278
1,507
326
161
109
99
94
113
84
71
582
3,146
1,817
883
165
112
102
102
103
87
3,371
(a) Short-term benefits comprise salary, director fee as applicable, performance pay, pension and other allowances. Other benefits
comprise benefits-in-kind.
13 0
45 RESTATEMENT AND RECLASSIFICATION OF COMPARATIVE FIGURES
Certain comparative figures in the consolidated financial statements of the Group have been restated arising from a change in
accounting policy as well as reclassifications to conform to the presentation in the current period and to better reflect the nature of
the respective items in the Group’s consolidated financial statements.
The prior year restatement made was in relation to the change in accounting policy on the measurement of under/overlift, from
recorded at the prevailing market price to recorded at the lower of cost and net realisable value as disclosed in Note 2.
The reclassifications made in the consolidated statement of financial position are related to the restricted cash held by the Group in
relation to deposits placed for bank guarantees with respect to the PenMal Assets and Australian office buildings as a result of the
April 2022 IFRIC Agenda item “Demand Deposits with Restrictions on Use arising from a Contract with a Third Party (IAS 7 Statement
of Cash Flows). Additionally, the Group reclassed the fair value proceeds received from the issuance of shares to share premium
account, plus incentive scheme payable the Group’s employees are now recognised as an accrual. The reclassifications do not have
impact on the consolidated statement or profit or loss and other comprehensive income and consolidated statement of cash flows.
The reclassifications made in the consolidated statement of cash flows are related to the interest paid, which now classified in
accordance to its nature of activities. The reclassifications do not have impact on the consolidated statement or profit or loss and
other comprehensive income and consolidated statement of financial position.
The restatements and reclassifications impact the following items:
As previously
reported
USD’000
Restatements and
reclassifications
USD’000
As restated and
reclassified
USD’000
Consolidated statement of profit or loss and other comprehensive
income for the year ended 31 December 2021
Production costs
Income tax expense
Consolidated statement of financial position as at 31 December 2021
Deferred tax assets
Trade and other receivables
Cash and cash equivalents – non-current
Cash and cash equivalents - current
Share capital
Share premium account
Accumulated losses
Deferred tax liabilities
Provisions - current
Trade and other payables
Consolidated statement of cash flows for the year ended
31 December 2021
Profit/(Loss) before tax
Increase in trade and other receivables
Interest paid – operating activities
Interest paid – financing activities
Interest on lease liabilities paid – financing activities
Interest on borrowings paid – financing activities
(206,523)
(14,822)
25,278
37,951
-
117,865
559
-
31,692
(67,097)
(1,947)
(69,090)
1,080
(11,975)
(1,505)
-
-
-
(5,373)
2,042
1,111
(5,373)
852
(852)
(201)
201
3,331
931
1,017
(1,017)
(5,373)
5,373
1,505
(74)
(1,222)
(209)
(211,896)
(12,780)
26,389
32,578
852
117,013
358
201
(35,023)
(66,166)
(930)
(70,107)
(4,293)
(6,602)
-
(74)
(1,222)
(209)
131
JADESTONE ENERGY 2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
COMPANY STATEMENT OF FINANCIAL POSITION
(Company Registration Number: 13152520)
as at 31 December 2022
Notes
2022
USD’000
2021
Restated*
USD’000
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2022
Share
capital
USD’000
Share
premium
account
USD’000
Capital
redemption
reserve
USD’000
Share-based
payments
reserve
USD’000
Merger
reserve
USD’000
Retained
earnings
USD’000
-
25,493
31
412
-
-
-
-
-
-
-
-
61,068
-
-
-
-
(7,745)
-
-
321,117
Total
USD’000
68
25,493
31
412
(7,745)
382,676
-
25,936
61,068
313,372
400,867
-
-
(6,964)
(6,964)
25,936
61,068
306,408
393,971
38
933
-
-
-
971
-
-
-
-
-
-
-
-
-
-
(9,216)
-
38
933
(9,216)
784
(16,070)
(16,070)
(25,286)
(23,531)
(48,123)
(48,123)
26,907
61,068
232,984
322,302
ASSETS
Non-current asset
Investment in subsidiaries
Loan to a subsidiary
Total non-current asset
Current assets
Amount owing by subsidiaries
Prepayments
Cash and cash equivalents
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Capital and reserves
Share capital
Share premium account
Merger reserve
Share-based payment reserve
Capital redemption reserve
Retained earnings
Total equity
Liabilities
Current liabilities
Other payables and accruals
Amount owing to a subsidiary
Total current liabilities
Total liabilities
Total equity and liabilities
As at incorporation date, 22 January 2021
68
Transfer of share-based payment reserve
to the Company following internal
reorganisation
Share-based compensation:
Company
Subsidiaries
Dividends paid (Note 9)
Shares issued
Capital reduction
Total transactions with owners
Loss and total comprehensive income for
the period
As at 31 December 2021 (Restated)*
Share-based compensation:
Company
Subsidiaries
Dividends paid (Note 9)
Shares issued
Shares repurchases
Total transactions with owners
Loss and total comprehensive income for
the year
-
-
-
-
321,407
(321,117)
290
-
358
-
-
-
2
(21)
(19)
-
-
-
-
-
-
201
-
201
-
201
-
-
-
782
-
782
-
As at 31 December 2022
339
983
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21
21
-
21
5
7
7
8
8
10
11
7
26,838
252,485
279,323
32,521
20
18,814
51,355
25,905
365,598
391,503
4,812
-
2,912
7,724
330,678
399,227
339
983
61,068
26,907
21
232,984
322,302
851
7,525
8,376
8,376
358
201
61,068
25,936
-
306,408
393,971
212
5,044
5,256
5,256
330,678
399,227
During the year, the Company made a loss after tax of US$48.1 million (2021: US$7.0 million loss).
* Certain 2021 comparative information has been restated. Please refer to Note 13.
The financial statements were approved by the Board of Directors and authorised for issue on 6 June 2023. They were signed on its
behalf by:
Bert-Jaap Dijkstra
Director
13 2
* Certain 2021 comparative information has been restated. Please refer to Note 13.
13 3
JADESTONE ENERGY 2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2022
1
CORPORATE INFORMATION
The Company is incorporated and registered in England and Wales. The Company’s head office is located at 3 Anson Road, #13-01
Springleaf Tower, Singapore 079909. The registered office of the Company is 6th Floor, 60 Gracechurch Street, London, EC3V 0HR
United Kingdom.
The Company’s ordinary shares are listed on AIM, a market regulated by the London Stock Exchange plc.
The principal activity of the Company is that of investment holding in the production and exploration of oil and gas.
2
BASIS OF PREPARATION
The Company meets the definition of a qualifying entity under FRS 100, and as such these financial statements have been prepared
in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101). The financial statements have been
prepared under the historical cost convention.
As permitted by s408 of the Companies Act 2006 the Company has elected not to present its own statement of profit or loss and
other comprehensive income for the period. The loss attributable to the Company is disclosed in the footnote to the Company’s
statement of financial position. The auditor’s remuneration for the audit is disclosed in Note 11 to the consolidated financial
statements. The Company has also applied the following disclosure exemptions under FRS 101:
l paragraphs 45(b) and 46 to 52 of IFRS 2 Share-based Payment (details of the number and weighted average exercise prices of
share options, and how the fair value of goods or services received was determined), as equivalent disclosures are included
within the consolidated financial statements;
l all requirements of IFRS 7 Financial Instruments: Disclosures, as equivalent disclosures are included in the consolidated financial
statements;
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
l Recoverability of the loan to a subsidiary, Jadestone Energy Holdings Ltd
The recoverability of the loan is based on the evaluation of expected credit loss. A considerable amount of estimation
uncertainty exists in assessing the ultimate realisation of the loan, including the past collection history from Jadestone Energy
Holdings Ltd (“JEHL”) plus estimation of the future profitability of JEHL, with its sole source of income being dividend income to
be received from JEHL’s subsidiaries. Accordingly, the management exercised judgement in estimating the future profitability of
the oil and gas operations held by the JEHL’s subsidiaries.
In estimating the future profitability of the JEHL’s subsidiaries, management estimated the available reserves owned by the
subsidiaries and performed sensitivity analysis on the estimated reserves as disclosed in Note 3 of the consolidated financial
statements. Management concluded that the subsidiaries will be able to declare sufficient dividend income to JEHL based on the
estimated reserves and also after taking into the account the sensitivity analysis.
Management also considered the future hydrocarbon prices in determining the future profitability of the JEHL’s subsidiaries.
The future hydrocarbon price assumptions used are highly judgemental and may be subject to increased uncertainty given
climate change and the global energy transition. Management further takes into consideration the impact of climate change
on estimated future commodity prices with the application of the Paris aligned price assumptions as disclosed in Note 3 of the
consolidated financial statements. Based on the analysis performed, the potential future reduction on the hydrocarbon prices
as impacted by the climate change and the global energy transition will not significantly impact the future operating cash flows
of the subsidiaries. Accordingly, management estimates that the subsidiaries will be able to declare sufficient dividend income
to JEHL.
5
INVESTMENT IN SUBSIDIARIES
Unquoted share, at cost
Share-based payment:
At beginning of year/As at incorporation date
2022
USD’000
2021
USD’000
-*
25,905
-
933
26,838
26,838
-*
-
25,493
412
25,905
25,905
l paragraphs 91 to 99 of IFRS 13 Fair Value Measurement (disclosure of valuation techniques and inputs used for fair value
measurement of assets and liabilities);
Transfer of share-based payment reserve to the Company following internal reorganisation
Share-based compensation at subsidiaries during the year/period
l paragraph 38 of IAS 1 Presentation of Financial Statements - the requirement to disclose comparative information in respect of:
At end of year/period
n paragraph 79(a)(iv) of IAS 1 (a reconciliation of the number of shares outstanding at the beginning and end of the period);
and
n paragraph 73(e) of IAS 16 Property, Plant and Equipment (reconciliations between the carrying amount at the beginning and
end of the period).
l
IAS 7 Statement of Cash Flows;
l paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (the requirement for the disclosure
of information when an entity has not applied a new IFRS that has been issued but is not yet effective); and
l paragraph 17 of IAS 24 Related Party Disclosures (key management compensation), and the other requirements of that standard
to disclose related party transactions entered into between two or more members of a group, provided that any subsidiary
which is a party to the transaction is wholly owned by such a member.
3
ACCOUNTING POLICIES
The Company’s accounting policies are aligned with the Group’s accounting policies as set out within the consolidated financial
statements, with the addition of the following:
Investment in subsidiaries
Investments in subsidiaries are held at cost less any accumulated provision for impairment losses. Investment in subsidiaries also
consist of capital contribution by the Company to its subsidiaries by assuming the ownership of the LTIP awards previously granted
by the former parent company of the Group.
4
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the process of applying the Company’s accounting policies, the management is required to make judgements, estimates and
assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates
and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results
may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised, if the revision affects only that period, or in the period of the revision and future periods,
if the revision affects both current and future periods.
The following is the critical judgement and estimate that the management has made in the process of applying the Company’s
accounting policies that have the most significant effect on the amounts recognised in the financial statements.
13 4
13 5
* Rounded to the nearest thousand.
JADESTONE ENERGY 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Details of the direct and indirect investments the Company holds are as follows:
7
RELATED PARTY TRANSACTIONS
Name of the company
Direct
Place of
incorporation
% voting rights
and ordinary
shares held
2022
% voting
rights and
ordinary shares
held 2021
Nature of business
Jadestone Energy Holdings Ltd (1)
England and Wales
Indirect
Jadestone Energy (Australia) Pty Ltd (2)
Jadestone Energy (Australia Holdings) Pty Ltd (2)
Jadestone Energy (CWLH) Pty Ltd (2)
Jadestone Energy (Eagle) Pty Ltd (2)
Jadestone Energy Inc. (3)
Jadestone Energy International Holdings Inc. (3)
Jadestone Energy (Lemang) Pte Ltd (4)
Jadestone Energy Ltd (5)
Australia
Australia
Australia
Australia
Canada
Canada
Singapore
Bermuda
Jadestone Energy (New Zealand) (6) Ltd
New Zealand
Jadestone Energy (New Zealand Holdings) Ltd (6)
New Zealand
Jadestone Energy (Ogan Komering) Ltd (7) *
Mitra Energy (Philippines SC- 56) Ltd (5)
Mitra Energy (Philippines SC- 57) Ltd (8)
Jadestone Energy (PM) Inc. (9)
Jadestone Energy (Singapore) Pte Ltd (4)
Jadestone Energy Sdn Bhd (10)
Canada
Bermuda
BVI
Bahamas
Singapore
Malaysia
Jadestone Energy UK Services Ltd (1)
England and Wales
Jadestone Energy (Vietnam) Pte Ltd (4)
Mitra Energy (Indonesia Bone) Ltd (8) **
Mitra Energy (Vietnam 05-1) Pte Ltd (4) ***
Mitra Energy (Vietnam Nam Du) Pte Ltd (4)
Mitra Energy (Vietnam Tho Chu) Pte Ltd (4)
Singapore
BVI
Singapore
Singapore
Singapore
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
Investment holdings
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Production of oil & gas
Investment holdings
Production of oil & gas
Production of oil & gas
Investment holdings
Investment holdings
Exploration
Investment holdings
Production of oil & gas
Investment holdings
Production of oil & gas
Exploration
Exploration
Production of oil & gas
Investment holdings
Administration
Administration
Exploration
Exploration
Exploration
Exploration
Exploration
Registered office addresses:
(1) 6th Floor, 60 Gracechurch Street, London, EC3V 0HR United Kingdom
(2) Atrium Building Level 2, 168-170 St Georges Terrace, Perth WA 6000, Australia
(3) 10th Floor, 595 Howe St., Vancouver BC, V6C 2T5, Canada
(4) 3 Anson Road #13-01, Springleaf Tower, Singapore 079909
(5) 3rd Floor - Par la Ville Place, 14 Par la Ville Road, Hamilton HM08, Bermuda
(6) Bell Gully, 171 Featherston Street, Wellington Central, Wellington, 6011, New Zealand
(7) 29 Tuscany Hills Bay NW, Calgary, Alberta, T3L2G5, Canada
(8) TMF (BVI) Ltd, Palm Grove House, P.O. Box 438, Road Town, Tortola, British Virgin Islands
(9) H&J Corporate Services Ltd, Ocean Centre, Montagu Foreshore, East bay Street, P.O. Box N-3247, Nassau, Bahamas
(10) Level 15-2, Bangunan Imperial Court, Jalan Sultan Ismail, 50250, Kuala Lumpur, Malaysia
*
** Mitra Energy (Inodnesia Bone) Ltd has been dissolved on 13 Apr 2022.
*** Mitra Energy (Vietnam 05-1) Pte Ltd has been dissolved on 9 Mar 2023.
Jadestone Energy (Ogan Komering) Ltd has been dissolved on 10 Mar 2023.
6
STAFF NUMBER AND COSTS
The Company has one (2021: one) employee during the year.
The aggregate remuneration comprised:
Wages and salaries
Social security costs
Defined contribution pension costs
13 6
2022
Number
2021
Number
141
38
-
179
104
4
-
108
The Company does not enter into new loan with its subsidiary during the year. In 2021, the Company entered into a loan with its
subsidiary, Jadestone Energy Holdings Limited, for the purpose of recovering the amount of the consideration shares issued by the
Company to former Jadestone Energy Inc. shareholders as part of the internal reorganisation exercise which was completed on 23 April
2021. The loan is non-interest bearing and repayable on demand or at any time, as agreed with the Company, before 21 April 2031.
Amount owing by subsidiaries are mainly related to payments on behalf, and a receipt on behalf of the Company by a subsidiary for
the proceeds from issuance of shares during the period. The amount owing by subsidiaries are non-trade in nature, unsecured, non-
interest bearing and repayable on demand.
Amount owing to a subsidiary is mainly related to advances received for the purpose of depositing the funds into the Company’s bank
account. The amount owing to subsidiaries are non-trade in nature, unsecured, non-interest bearing and repayable on demand.
During the year, the Company entered into the following transactions with:
Loan to a subsidiary
At beginning of the year/As at incorporation date
Loan provided during the year/period
Repayment during the year/period
Unrealised foreign exchange differences
At end of the year/period
Subsidiaries
Advances
Repayment received
Payment on behalf by
8
SHARE CAPITAL AND SHARE PREMIUM ACCOUNT
2022
USD’000
2021
USD’000
365,598
-
(68,284)
(44,829)
252,485
31,971
(4,200)
(61)
-
382,555
(12,967)
(3,990)
365,598
23,856
(19,033)
(12)
No. of shares
Share capital
USD’000
Share premium account
USD’000
Issued and fully paid
As at incorporation date, 22 January 2021, at £1 each
Sub-division of shares, at £0.50 each
50,000
50,000
Ordinary shares issued during the period, at £0.50 each
464,981,238
Capital reduction, at £0.499 each
As at 31 December 2021 (Restated)*
Issued during the year
Share repurchases
As at 31 December 2022
-
465,081,238
1,446,108
(18,173,683)
448,363,663
68
-
321,407
(321,117)
358
2
(21)
339
-
-
201
-
201
782
-
983
On 6 April 2021, the Company sub-divided its ordinary shares into 100,000 units of share, at £0.50 each.
On 4 May 2021, the High Court of Justice, Business and Property Court, Companies Court in England and Wales approved the
reduction of share capital of the Company pursuant to section 648 of the Act by cancelling the paid-up capital of the Company to
the extent of 49.9 pence on each ordinary share of £0.50 in the issued share capital of the Company. The effective date of the capital
reduction was 6 May 2021.
On 2 August 2022, the Company announced the launch of a share buyback programme (the “Programme”) in accordance with the
authority granted by the shareholders at the Company’s annual general meeting on 30 June 2022. The maximum amount of the
Programme was US$25.0 million, and the Programme will not exceed 46,574,528 ordinary shares.
As at 31 December 2022, the Company had acquired 18.2 million shares at a weighted average cost of £0.76 per share, resulting in
an accumulated total of US$16.1 million. The total nominal value of the shares repurchased was US$20,779. All shares repurchased
were cancelled.
As at 31 December 2022, the Company did not have a liability in respect to the remaining unutilised amount of US$8.9 million under
the Programme as the Company had full discretion over the number of shares to be repurchased.
On 19 January 2023, the Company paused the share buyback programme. A total of 20.2 million shares had been acquired for a total
accumulated expenditure of US$17.9 million up to 18 January 2023.
During the year, employee share options of 1,446,108 were exercised and issued at an average price of GB£ 0.42 per share (2021:
3,238,427; GB£0.33 per share).
The Company has one class of ordinary share. Fully paid ordinary shares with par value of £0.001 per share carry one vote per share
without restriction, and carry a right to dividends as and when declared by the Company.
* Certain 2021 comparative information has been restated. Please refer to Note 13.
13 7
JADESTONE ENERGY 2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
9
DIVIDENDS
10.3 Restricted shares
The Company has sufficient distributable reserves to declare dividends. The distributable reserves were created through the
reduction of share capital of the Company in May 2021 (Note 8 of Company level financial statements). The dividends declared were
in compliance with the Act.
On 20 September 2022, the Directors declared a 2022 interim dividend of 0.65 US cents/share, equivalent to a total distribution of
US$3.0 million. The dividend was paid on 11 October 2022.
On 6 June 2022, the Directors recommended a final 2021 dividend of 1.34 US cents/share, equivalent to a total distribution of US$6.2
million, or US$9.0 million in respect of total 2021 dividends. The dividend was approved by shareholders on 30 June 2022 and paid
on 5 July 2022.
On 9 September 2021, the Directors declared a 2021 interim dividend of 0.59 US cents/share, equivalent to a total distribution of
US$2.8 million. The dividend was paid on 1 October 2021.
On 11 June 2021, the Directors declared the second interim 2020 dividend of 1.08 US cents/share, equivalent to a total distribution of
US$5.0 million, or US$7.5 million in respect of total 2020 dividends. The dividend was paid on 30 June 2021.
10
SHARE-BASED PAYMENTS RESERVE
The total expense arising from share-based payments of US$0.1 million (2021: US$0.1 million) was recognised in profit or loss for the
year ended 31 December 2022.
On 15 May 2019, the Company adopted, as approved by the shareholders, the amended and restated stock option plan, the
performance share plan, and the restricted share plan (together, the “LTI Plans”), which establishes a rolling number of shares
issuable under the LTI Plans up to a maximum of 10% of the Company’s issued and outstanding ordinary shares at any given time.
Options under the stock option plan will be exercisable over periods of up to 10 years as determined by the Board.
10.1 Share options
Management has applied the Black-Scholes option-pricing model, with the following assumptions, was used to estimate the fair
value of the options at the date of grant:
Risk-free rate
Expected life
Expected volatility1
Share price
Exercise price
Expected dividends
10.2 Performance shares
Options granted on
9 March 2022
18 March 2021
1.34% to 1.38%
5.5 to 6.5 years
63.0% to 66.7%
GB£ 1.01
GB£ 0.92
1.96%
0.49% to 0.61%
5.5 to 6.5 years
65.2% to 67.6%
GB£ 0.65
GB£ 0.77
1.79%
The performance measures for performance shares incorporate both a relative and absolute total shareholder return (“TSR”)
calculation on a 70:30 basis to compare performance vs. peers (relative TSR) and to ensure alignment with shareholders (absolute
TSR).
Relative TSR: measured against the TSR of peer companies; the size of the pay out is based on Jadestone’s ranking against the TSR
outcomes of peer companies.
Absolute TSR: 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 pay out at all, and must be
25% or greater for target pay out.
Restricted shares are granted to certain senior management personnel as an alternative to cash under exceptional circumstances
and to provide greater alignment with shareholder objectives. These are shares that vest three years after grant, assuming the
employee has not left the Group. They are not eligible for dividends prior to vesting.
The following assumptions were used to estimate the fair value of the restricted shares at the date of grant, discounting back from
the date they will vest and excluding the value of dividends during the intervening period:
Risk-free rate
Share price
Expected dividends
Restricted shares granted on
22 August 2022
9 March 2022
18 March 2021
1.73%
GB£ 0.90
1.73%
1.39%
GB£ 1.01
1.71%
0.08%
GB£ 0.77
2.64%
The following table summarises the options/shares under the LTI plans outstanding and exercisable as at 31 December 2022:
Performance
shares
Restricted
shares
Number of
options
Shares Options
Weighted
average
exercise
price GB£
Weighted
average
remaining
contract life
Number
of options
exercisable
As at 1 January 2021
683,200
101,063
25,192,842
New options/share awards issued
1,136,512
50,570
2,852,631
Vested during the year
Accelerated vesting during the year
Exercised during the year
-
-
-
Cancelled during the year
(332,819)
-
-
-
-
-
198,687
(3,238,427)
(3,690,244)
As at 31 December 2021
1,486,893
151,633
21,315,489
New options/share awards issued
1,385,013
293,655
1,023,561
Vested during the year
Accelerated vesting during the year
Exercised during the year
-
-
-
Cancelled during the year
(147,906)
-
-
-
-
-
1,354,702
(1,446,108)
(120,854)
As at 31 December 2022
2,724,000
445,288
22,176,790
0.40
0.77
0.42
0.55
0.33
0.46
0.45
0.92
0.50
0.46
0.42
0.50
0.48
7.78
9.21
6.92
8.39
-
-
7.16
9.19
6.27
6.45
-
-
12,212,827
-
3,776,672
198,687
(3,238,427)
(1,539,905)
11,409,854
-
2,010,007
1,354,702
(1,446,108)
(891,270)
6.33
12,437,185
Number of
options
Range of
exercise
price
GB£
Weighted
average
exercise
price GB£
Weighted
average
remaining
contract life
Share options exercisable as at 31 December 2021
11,409,854
0.26 - 0.99
Share options exercisable as at 31 December 2022
12,437,185
0.26 - 0.99
0.38
0.41
6.18
5.46
A Monte Carlo simulation model was used by an external specialist, with the following assumptions to estimate the fair value of the
performance shares at the date of grant:
11 OTHER PAYABLES
Risk-free rate
Expected volatility2
Share price
Exercise price
Expected dividends
Post-vesting withdrawal date
Early exercise assumption
Performance shares granted on
9 March 2022
18 March 2021
1.39%
53.1%
GB£ 1.01
N/A
1.71%
N/A
N/A
0.06%
51.4%
GB£ 0.77
N/A
2.64%
N/A
N/A
Other payables
Accruals
1
2
Expected volatility was determined by calculating the average historical volatility of the daily share price returns over a period commensurate with the
expected life of the awards for a group of ten peer companies.
Expected volatility was determined by calculating Jadestone’s average historical volatility of each trading day’s log growth of TSR over a period between the
grant date and the end of the performance period.
13 8
2022
USD’000
2021
USD’000
456
395
851
1
211
212
13 9
JADESTONE ENERGY 2022 ANNUAL REPORT NOTES TO THE FINANCIAL STATEMENTS
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Committed standby working capital facility
On 6 June 2023, the Company entered into a committed standby working capital facility with Tyrus Capital Event S.à.r.l for a facility
size of up to US$35.0 million. The standby working capital facility will reduce pro-rata to the total funds raised from the equity
fundraising and the open offer in excess of US$50.0 million. The facility will mature with a bullet repayment on 31 December 2024.
The facility bears interest of 15% on drawn amounts and 5% on undrawn amounts and can be repaid or cancelled without penalties.
13
RESTATEMENT OF COMPARATIVE FIGURES
Certain comparative figures in the financial statements of the Company have been restated to conform to the presentation in the
current period and to better reflect the nature of the respective items in the Company’s financial statements.
The restatement made in the statement of financial position is related to the fair value proceeds received from the issuance of
shares, which is recorded in the share premium account.
The restatement impacts the following items:
Statement of financial position as at 31 December 2021
Share capital
Share premium account
559
-
(201)
201
358
201
As previously reported
USD’000
Restatement
USD’000
As reclassified
USD’000
12
EVENTS AFTER THE END OF THE REPORTING PERIOD
Acquisition of interest in Sinphuhorm gas field
On 19 January 2023, the Group has executed a sale and purchase agreement with Salamander Energy (S.E. Asia) Limited (the
“Seller”), an affiliate of PT Medco Energi Internasional Tbk, to acquire the Seller’s interest in three legal entities, which collectively
own a 9.52% non-operated interest in the producing Sinphuhorm gas field and a 27.2% interest in the Dong Mun gas discovery
onshore northeast Thailand. The acquisition was completed on 23 February 2023, for a headline cash consideration of US$27.8
million post customary closing adjustments. The effective date of the transaction is 1 January 2022.
New debt facility
On 17 February 2023, the Group announced that it has closed a US$50.0 million debt facility (“Interim Facility”) with two
international banks. The closing of the Interim Facility forms part of the previously announced plan to arrange a reserves-based
lending facility (“RBL”), which is a key element of the Group’s medium-term financing strategy to fund development capital at the
Indonesian Akatara Gas Project and further growth through merger and acquisition.
The Interim Facility has a term of nine months and carries an initial margin of 450 basis points over secured overnight financing rate,
which steps up in the event repayment occurs more than three months after closing. The Interim Facility was repaid on 1 June 2023
from the RBL facility obtained by the Group in May 2023.
Montara operations update
Production at Montara was restarted on 21 March 2023. In a carefully planned restart programme, production has increased
following a systematic restart of production wells and FPSO topsides processes. Since the gas reinjection system on the Montara
Venture FPSO was restarted in late April 2023, production from the field has averaged approximately 6,800 bbls/d, with a peak
during that period of c.7,200 bbls/d.
Closing of US$200.0 million RBL facility
On 19 May 2023, the Group announced that it had signed a new US$200.0 million RBL facility with the RBL Banks. The RBL facility
provides for an uncommitted accordion of US$160.0 million, subject to incremental availability of bank debt. The RBL facility was
closed on 22 May 2023, following satisfaction of the conditions precedent.
The RBL facility has a four-year tenor and is subject to bi-annual redeterminations to determine available debt capacity, which will
vary over time depending on several parameters including oil prices, operating performance, hedging, future acquisitions and
abandonment estimates. Under current assumptions, borrowing capacity under the RBL facility is constrained prior to the Akatara
field being integrated as a producing asset, after which it will increase significantly. The Group and the RBL Banks can initiate
additional redeterminations when appropriate. The borrowing base is secured over by the Group's assets being Montara, Stag,
CWLH Assets, Sinphuhorm gas field, PenMal Assets' PM323 and PM329 PSCs and Lemang PSC.
The RBL facility pays interest at 450 basis points over the secured overnight financing rate, plus the applicable credit spread. The
Group will also pay customary arrangement and commitment fees. The facility incorporates standard terms and conditions for RBL
facility, including a parent company financial covenant of maximum total debt of 3.5 times annual EBITDAX plus the assets under the
RBL facility are required to hold a total minimum liquidity balance of US$15 million and cover forward looking capital expense for
two quarters.
The RBL facility was initially used to repay the US$50.0 million Interim Facility, which was fully drawn on 22 May 2023. The RBL facility
will also fund the Group's operations and capital investment programme, particularly the Akatara gas project onshore Indonesia.
As part of the RBL, the Group has commenced its hedging programme and intends to progressively increase to approximately
50% of its forecasted production from October 2023 to September 2025. As of the signing date, the Group entered into oil price
swap contracts for 3,494,000 bbls, representing approximately 32% of its forecasted future production between October 2023
to September 2025, at a weighted average price of US$70.66/bbl. The Group continues to monitor oil prices and will enter into
additional hedging contracts when considered appropriate in the coming months to align with the RBL commitment.
Placement of additional shares and issue of warrants
On 6 June 2023, the Company agreed an equity fundraising, comprising an underwritten placing of an additional 94,081,826
ordinary shares at a share price of 45 pence and will be structured as set out below:
l a placing of 92,312,691 new ordinary shares to existing and new institutional shareholders; and
l a subscription of 1,769,135 new ordinary shares by directors.
At the same time, an incremental open offer of up to EUR8.0 million (up to US$8.6 million) was made to offer pre-emptive rights to
existing shareholders who have not participated in the placing an ability to acquire shares at the offer price.
In support of the equity fundraising, the Company has entered into an up to US$50.0 million equity underwrite debt facility
agreement with Tyrus Capital Event S.à.r.l, the Company's largest shareholder. The equity underwrite facility will reduce pro-rata to
the total funds raised from the equity fundraising and the open offer and therefore is expected to reduce to zero. However, to the
extent the facility does not reduce to zero, it will mature with a bullet repayment on 31 December 2024, will bear interest at 13.5%
on drawn amounts and 5% on undrawn amounts and can be repaid or cancelled without penalties.
As part of the underwritten placing of additional ordinary shares, the Company has also entered into a warrant instrument with
Tyrus Capital Event S.à.r.l for 30 million ordinary shares at an exercise price of 50 pence per share. The warrants are exercisable
within 36 months from the date of issuance. The warrants are transferrable subject to customary restrictions.
14 0
141
JADESTONE ENERGY 2022 ANNUAL REPORT STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Additional
information
144 Oil and gas reserves and resources
145 Licence interests
146 Report on payments to governments
147 Glossary
149 Contact information
14 2
14 3
JADESTONE ENERGY 2022 ANNUAL REPORT Oil and gas reserves and resources
Licence interests
Total Proved plus Probable Reserves1 (net, mmboe)
Australia
Malaysia2
Indonesia2
Total Group
Country/licences
Acreage
Field/discovery
Region
Location Water depth Operator
Working
interest
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Opening balance, 1 January 2022
Acquisitions
Transfer from 2C resources
Technical revisions
Production
Ending balance, 31 December 2022
33.5
5.1
-
(0.5)
(2.5)
35.6
11.2
-
-
(0.6)
(1.7)
8.9
-
-
16.8
3.5
-
20.3
44.7
5.1
16.8
2.4
(4.2)
64.8
As at 31 December 2022, the Group had proved plus probable oil reserves (“2P Reserves”) of 64.8 mmboe, a 45% increase compared with
31 December 2021 and a near six-fold replacement of production in the year. The primary drivers of the significant increase in reserves
were the reclassification of 2C Contingent Resources from the Akatara gas field development in Indonesia to 2P Reserves following a final
investment decision in June 2022, as well as the acquisition of the 16.67% interest in the producing CWLH fields offshore Australia, which
completed in November 2022. Jadestone completed the acquisition of an interest in the Sinphuhorm gas field onshore Thailand, adding a
further 4.1 mmboe of 2P Reserves, after the period end and was therefore not included in end-2022 reserves calculation.
ERCE independently evaluated the Group’s year-end 2022 reserves.
Total 2C Contingent Resources3 (net, mmboe)
Australia
Malaysia
Indonesia2
Vietnam2
Total Group
Opening balance, 1 January 2022
Acquisitions
Transfer to 2P reserves
Technical revisions
Ending balance, 31 December 2022
-
-
-
6.5
6.5
-
-
-
-
-
16.8
-
(16.8)
3.9
3.9
93.9
-
-
-
93.9
110.7
-
(16.8)
10.4
104.3
The Group’s best case contingent resources (“2C resources”) decreased slightly from 110.7 mmboe in 2021 to 104.3 mmboe in 2022. The
reclassification of the Akatara gas development contingent resources to 2P reserves was partially offset by the inclusion of the Group’s
share of contingent resources associated with the potential life extension of, and infill drilling on, the CWLH Assets, as well as additional
Akatara upside potential identified in excess of the volumes covered under the gas sales agreement.
AUSTRALIA
AC/L7, ACL8
WA-15-L
672km2 Montara, Swift/
Swallow, Skua
Timor Sea
Offshore
77 metres
Jadestone
100%
160km2
Stag
Carnarvon Basin
Offshore
47 metres
Jadestone
100%
WA-3-L, WA-9-L, WA-11-L,
WA-16-L
160km2
Cossack, Wanaea,
Hermes, Lambert
North Carnarvon Basin Offshore
157 metres
Woodside
Energy
16.67%
MALAYSIA
PM323 PSC
1,304km2
East Belamut,
Chermingat, West
Belamut
Malay Basin
Offshore
72 metres
Jadestone
60%
PM329 PSC
387km2
East Piatu
Malay Basin
Offshore
63 metres
Jadestone
70%
PM318/AAKBNLP PSCs
1,698km2 North Lukut,
Penara, Puteri
Malay Basin
Offshore
70 metres
Jadestone
100%
INDONESIA
Lemang PSC
THAILAND
THAILAND
EU5, EU-1
L27/43
VIETNAM
743km2
Akatara
South Sumatra
Onshore
n/a
Jadestone
100%1
232km2
Sinphuhorm
Khorat Basin
32km2
Dong Mun
Khorat Basin
Onshore
Onshore
n/a
n/a
PTTEP
APICO
9.52%
27.2%
Block 46/07 PSC
2,622km2 Nam Du
Malay /Tho Chu Basin
Offshore
48 metres
Jadestone
100%
Block 51 PSC
887km2
U Minh, Tho Chu
Malay /Tho Chu Basin
Offshore
64 metres
Jadestone
100%
1 Proven and Probable Reserves for Jadestone’s assets have been prepared in accordance with the June 2018 SPE/WPC/AAPG/ SPEE/SEG/SPWLA/EAGE Petroleum
Resources Management System (“PRMS”) as the standard for classification and reporting.
2 Assumes oil equivalent conversion factor of 6,000 scf/boe.
3 Contingent Resources based on ERCE estimates as at 31 December 2022, except for Vietnam 2C resources which are based on ERCE Competent Person’s Report
effective 31 December 2017.
14 4
1
* Pre local government back-in right of up to 10%.
14 5
JADESTONE ENERGY 2022 ANNUAL REPORT
Report on payments to
governments
This report sets out details of the payments made to governments by Jadestone Energy
Plc and its subsidiary undertakings for the year ended 31 December 2022.
l Single payments of less than GBP86,000 need not be disclosed
in the report, nor does any payment forming part of a series
of related payments within a financial year where the total
amount is less than GBP86,000.
l Where payments in kind are made to a government, the report
must state their value and, where applicable, the volume of
those payments.
l
’government’ means any national, regional or local authority of
a country, and includes a department, agency or undertaking
that is a subsidiary undertaking where the authority is the
parent undertaking.
The following table sets out the Group’s payments to governments
for 2022 based on the principles above. All figures are in US dollars.
This information is required under the Disclosure and
Transparency Rules of the UK Financial Conduct Authority and
is provided in accordance with Jadestone’s interpretation of the
Industry Guidance issued for the UK’s Report on Payments to
Governments Regulations 2014, as amended in December 2015 (the
“Regulations”).
The Regulations require payments to governments to be disclosed
on the following basis:
l Categories
i. production entitlements;
ii. taxes levied on the income, production or profits of
companies (excluding taxes levied on consumption such as
value added taxes, personal income taxes or sales taxes);
iii. royalties;
iv. dividends (other than where paid to the government as an
ordinary shareholder which is paid on the same terms as
the other ordinary shareholders);
v. signature, discovery and production bonuses;
vi. licence/rental fees; and
vii. payments for infrastructure improvements.
US$
Stag
Montara
CWLH
Non-project related
Fees
531,346
770,906
-
-
Taxes
Royalties
-
-
-
18,509,764
39,940
-
-
-
Totals
571,286
770,906
-
18,509,764
Total Australia
1,302,252
18,509,764
39,940
19,851,956
PM323
PM329
PM318
AAKBNLP
Lemang PSC
Block 46/07
Block 51
-
-
-
-
-
227,864
227,864
200,000
200,000
400,000
3,260,715
5,937,591
449,402
449,402
8,965,952
16,876,759
80,651
111,698
12,226,667
22,814,350
530,053
561,100
-
-
-
-
-
-
-
-
-
-
227,864
227,864
200,000
200,000
400,000
1,930,116
28,606,874
26,075,001
56,611,990
Total Malaysia
Total Indonesia
Total Vietnam
Totals
14 6
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
2022 Annual report glossary
British Columbia Securities Commission
indirect
energy
energy generated offsite and purchased by the
Company
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
AAKBNLP
Abu, Abu Kecil, Bubu, North Lukut, and Penara
oilfields
AIM
Alternative Investment Market
the AIM Rules
the AIM Rules for Companies 2021
AGM
APAC
API
APS
bbl
bbls/d
BCSC
annual general meeting
the Asia-Pacific region
American Petroleum Institute gravity
Announced Pledges Scenario
barrel
barrels per day
the Board
the board of directors of Jadestone Energy plc
boe/d
barrels of oil equivalent per day
carbon
dioxide
equivalent
(or CO2-e)
standard unit used to compare and account for
emissions from various GHGs based on their global
warming potential
CCWG
Climate Change Working Group
CEO
CFO
Chief Executive Officer
Chief Financial Officer
the Company
Jadestone Energy plc
COVID-19
an infectious disease caused by the SARS-CoV-2
virus
CWLH
DD&A
Cossack, Wanaea, Lambert, Hermes
depletion, depreciation and amortisation
direct energy
energy generated onsite at Company facilities
E&P
exploration and production
EBITDAX
earnings before interest tax, depreciation,
amortisation and exploration expense
emissions
intensity
emissions intensity
EPCI
ERCE
ESG
engineering, procurement, construction
and installation
ERC Equipoise Limited
environmental, social and governance
FID
FPSO
fugitive
emissions
final investment decision
floating production storage and offloading vessel
losses, leaks and other releases of gases such as
methane and carbon dioxide to the atmosphere
that are associated with industries producing
natural gas, oil and coal
FVLCOD
Fair value less costs of disposal
GBP
GHG
British Pounds
Greenhouse gases, with three main gases including
carbon dioxide (CO2), methane (CH4) and nitrous
oxide N20.
the Group
Jadestone Energy plc and its subsidiaries
HSE
HSEC
health, safety and environment
health, safety, environment and climate
HSSEC
health, safety, social, environmental and climate
IEA
IFRS
International Energy Agency
International Financial Reporting Standards
IPCC
IPIECA
ISO
IT
Intergovernmental Panel on Climate Change
originally the “International Petroleum Industry
Environmental Conservation Association”
International Organisation for Standardisation
information technology
Jadestone or
Jadestone plc
Jadestone Energy plc
KPIs
LPG
LTI
LTIP
MACC
MAR
mmcf
M&A
key performance indicators
liquified petroleum gas
long-term incentive
long-term incentive plan
marginal abatement cost curve
Market Abuse Regulation
million standard cubic feet of natural gas
mergers and acquisitions
mmbbls/d
million barrels per day
mmboe
millions of barrels of oil equivalent
NED
Non-Executive Director
Net Zero
the state reached when an organisation’s GHG
emissions are reduced in line with the goals of the
Paris Agreement, and any remaining emissions that
cannot be further reduced are fully neutralised by
like-for-like permanent removals.
NOPSEMA
The National Offshore Petroleum Safety and
Environmental Management Authority
147
10,097,110
26,035,061
36,132,171
the Directors
the directors of Jadestone Energy plc
JADESTONE ENERGY 2022 ANNUAL REPORT
2022 ANNUAL REPORT GLOSSARY
NZE
OCF
OPEC
OPEC+
IEA Net Zero Emissions scenario
operating cash flow
Organisation of Petroleum Exporting Countries
the 13 OPEC members and 10 of the world’s major
non-OPEC oil-exporting nations
the Paris
Agreement
a legally binding international treaty on climate
change
PenMal
Assets
collectively, the assets acquired offshore Peninsular
Malaysia by Jadestone in 2021
PETRONAS
Petroliam Nasional Berhad
PITA
petroleum income tax (Malaysia)
produced
water
water produced from the reservoir with crude oil
PRRT
Petroleum Resource Rent Tax
PSC
QCA
RBL
RSU
production sharing contract
Quoted Companies Alliance
reserves-based loan
restricted stock unit
SapuraOMV
SapuraOMV Upstream Sdn. Bhd.
scf
standard cubic feet of gas
Scope 1, 2
and 3 GHG
emissions
direct operational emissions (Scope 1), indirect
emissions from purchased energy (Scope 2) and
remaining indirect GHG emissions emitted across
the value chain (Scope 3)
SECR
Streamlined Energy and Carbon Reporting
Section 172
Section 172 of the Companies Act 2006
SID
senior independent director
STEPS
IEA Stated Policies scenario
TCFD
TSR
Task Force on Climate-Related Financial Disclosures
total shareholder return
UN SDGs
UN Sustainable Development Goals
US$
VOC
WEO
United States dollar
volatile organic compound
IEA World Energy Outlook
Contact information
Auditors
Deloitte & Touche LLP
Deloitte & Touche House
Charlotte’s Quay
Limerick
Ireland, V94 X63C
Solicitors
Simmons & Simmons LLP
Citypoint
1 Ropemaker Street
London, UK, EC2Y 9SS
Competent Person
ERC Equipoise Limited
6th Floor, Stephenson House
2 Cherry Orchard Road
Croydon
London, UK, CR0 6BA
Tel : +44 (0) 20 8256 1150
enquiries@erce.energy
Head Office
Jadestone Energy plc
3 Anson Road
#13-01 Springleaf Tower
Singapore 079909
Investor Relations
Jadestone Energy plc
ir@jadestone-energy.com
Nominated Adviser and 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 (an APCO Worldwide Company)
40 Strand
London, WC2N 5RW
Phone (UK): +44 (0) 203 757 4980
jse@camarco.co.uk
Registrar
Computershare Investor Services plc
The Pavilions
Bridgwater Road
Bristol, UK, BS99 6ZZ
UK: +44 (0)370 702 0000
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www.jadestone-energy.com
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JADESTONE ENERGY 2022 ANNUAL REPORT