2023
Annual Report
2023 business
performance
2P reserves (mmboe):
68.0
2022: 64.8
Production (boe/d):
13,813
2022: 11,487
Realised oil price (US$/boe):
87.3
2022: 103.9
Revenue (US$ million):
309.2
2022: 421.6
Production costs (US$ million):
232.8
2022: 250.3
Adjusted EBITDAX2 (US$ million):
90.6
2022: 162.3
Our corporate purpose
We are an upstream 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 global hydrocarbon demand
should be fulfilled from existing fields and
discoveries where possible. By investing
to increase production and improve asset
integrity, we are well-positioned
to be the steward of these assets through
to the end of field life, in turn contributing
to our interim GHG emission reduction
Profit/(loss) after tax (US$ million):
targets on the path to Net Zero Scope 1
(91.3)
2022: 9.2
Capital expenditure (US$ million):
115.9
2022: 82.9
Net cash/(debt) (US$ million):
(3.6)
2022: 123.3
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.
04
Strategic Report
06
07
09
10
12
13
29
30
31
35
38
Chairman’s statement
Chief Executive Officer’s review
Market overview
Jadestone’s portfolio
Business model and strategy
Sustainability at Jadestone
Key performance indicators
Section 172 statement
Risk management, principal risks and uncertainties
Operational review
Financial review
46
Corporate Governance
48
49
49
54
58
60
62
70
72
74
75
Chairman’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
Montara Technical Committee report
Disclosure Committee report
76
Financial Statements
78
79
88
89
90
91
92
141
142
143
Directors’ responsibility statement
Independent auditor’s report
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Company’s statement of financial position
Company’s statement of changes in equity
Notes to the Company financial statements
150 Additional Information
152
152
153
154
155
Oil and gas reserves and resources
Licence interests
Report on payments to governments
Glossary
Contact information
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.
Alternative performance measure – please see Financial Review on pages 38 to 45 for calculation.
0 3
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Strategic Report
06
Chairman’s statement
07
09
10
12
13
29
30
31
35
38
Chief Executive Officer’s review
Market overview
Jadestone’s portfolio
Business model and strategy
Sustainability at Jadestone
Key performance indicators
Section 172 statement
Risk management, principal risks
and uncertainties
Operational review
Financial review
0 4
0 5
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Adel Chaouch
CHAIRMAN OF THE BOARD
Chairman’s
statement
Dear shareholder,
Welcome to Jadestone’s 2023 Annual Report and my first as
Chairman of the Board. As recently appointed Chairman, I am
confident that Jadestone’s strategic aim of establishing itself as a
leading independent upstream company in the Asia-Pacific region
remains an attractive one despite the challenges of recent years.
I look forward to working with the Board, executive management
and our employees to execute on this strategy and deliver value
for our shareholders.
2023 was a difficult year, with the Montara shutdown extending
through the first quarter and challenging the Group’s operational
and financial delivery. Notwithstanding the successful closing of
a reserves-based lending facility in May 2023, the erosion of our
balance sheet strength, coupled with the necessity of funding our
growth projects and maintaining stakeholder confidence, resulted
in an equity placing, issue of warrants, arrangement of a working
capital facility and a suspension of dividend payments in June 2023.
This was the right course of action at the time, but has weighed
on market confidence in the Group. While we have seen positive
momentum elsewhere in the portfolio, noticeably the progress
towards first gas at Akatara, positive drilling results in Malaysia
and the increase in our CWLH stake, we are very committed to
restoring and retaining credibility. This remains a key focus for
the Board and management.
The first step is to ensure Montara’s operational stability.
The Board’s Montara Technical Committee continued to provide
oversight, guidance and, where appropriate, challenge, to
the management team during 2023. The Montara Technical
Committee’s key objective is ensuring that the best interests of all
stakeholders are considered as we continue our efforts to improve
Montara’s uptime and operational performance, which led to a
reappraisal of and increase in the future repair and maintenance
requirements for the field. We continue to develop a longer-term
plan which ensures that the Montara facilities are maintained
in a safe and appropriate condition while cash flow and value
are maximised. The Board commends the efforts of Jadestone’s
employees at Montara for managing a significant amount of activity
in a safe and environmentally sound manner.
In parallel with improving Montara’s performance, Jadestone
reduced its reliance on the asset through further production
diversification of the Group. Since the beginning of 2023, we
acquired an interest in the Sinphuhorm gas field onshore Thailand,
drilled successful wells in Malaysia, invested in the development
of the Akatara gas field, acquired an additional interest in the
CWLH fields and advanced the commercialisation of our Vietnam
discoveries.
During 2023, Jadestone committed to refresh its Board and
enhance the executive management structure. Following the June
2023 financing transactions, a series of meetings were held with
Jadestone’s largest shareholders to hear their concerns and, as a
result, changes were implemented to the Group’s management and
governance structure. The Board decided, due to the significant
expansion of the Group’s operating footprint in recent years, to
create the position of Chief Operating Officer (“COO”). The search
for a COO is ongoing.
In November 2023, Gunter Waldner joined the Board as a NED and
appointee of our largest shareholder, Tyrus. Joanne Williams joined
the Board as an independent NED in January 2024, bringing a
0 6
strong technical background and significant upstream experience.
I joined the Board in March 2024 as an independent NED and
was elected Chairman in March 2024. Over the same time frame,
Dennis McShane, Lisa Stewart and Robert Lambert all stepped
down from the Board – we sincerely thank them for their efforts on
behalf of the Group and wish them well for the future. Iain McLaren
will also step down as a NED following completion of the 2023 audit
and appointment of his successor as Chair of the Audit Committee.
Overall Group production for 2023 of 13,813 boe/d represented
20% growth on 2022 and an annual record for Jadestone. However,
a decrease in liftings and a fall in oil prices year-on-year, were the
primary drivers of a loss of US$91.3 million for 2023 (2022: US$9.2
million profit). A year of record investment, both organic and
inorganic, was funded by the draw down of the RBL Facility closed
during the year and the proceeds of the June 2023 equity raise,
resulting in a small net debt position of US$3.6 million at year-end,
compared with a net cash position of US$123 million at end-2022.
In line with our dividend policy, no interim or final dividends
were payable in respect of 2023, and we will continue to focus
on strengthening Jadestone’s balance sheet before reinstituting
shareholder returns.
We expect growth to accelerate in 2024, primarily due to first
gas from the Akatara gas development onshore Indonesia, with
this project having made great progress since project sanction
in mid-June 2022. Credit is due to everyone who has played a
part in maintaining the Akatara project on budget and schedule
for first gas by the end of the second quarter of 2024. Equally, if
not more important, the Akatara development has delivered an
excellent health and safety record during the construction phase,
with over 5 million safe man hours worked by mid-March 2024.
We wish Jadestone’s Indonesia team well in the final stages of the
construction and commissioning process.
We doubled our interest in the CWLH fields in early 2024 and
strengthened Jadestone’s medium-term growth potential through
signature in early 2024 of a heads of agreement for gas sales from
the Nam Du/U Minh fields offshore Vietnam. This reinvigorated
the commercialisation of these assets and potentially unlocks
significant value for Jadestone.
Late in 2023, we delivered on a promise to set out the pathway
to Jadestone’s pledge of Net Zero Scope 1 and 2 GHG emissions
from our operated assets by 2040. We have committed to reduce
the combined Scope 1 and 2 GHG emissions from our operated
assets by 20% and 45% by 2026 and 2030 respectively, relative to
2021 levels. We continue to identify, screen and implement new
GHG reduction measures in an effort to further reduce direct
emissions from our assets and the impact of our operations on
the environment.
Your Board still has strong conviction in the Group’s strategy, and
that the energy needs of the Asia-Pacific region will continue to
generate accretive growth opportunities for a responsible operator
in support of a just and effective energy transition. Operational
challenges, such as those experienced at Montara in recent years,
are not uncommon in our industry and I support the portfolio
diversification that is underway to insulate the business from such
impacts. Our priorities are strengthening the balance sheet, where
we successfully concluded the recent scheduled redetermination
of the Group’s RBL Facility, and delivery of first gas from the
Akatara project, which remains on schedule for the second quarter
of 2024. I believe a successful outcome on both these fronts will
restore much of the trust eroded recently.
Jadestone’s employees, management and directors will continue
to focus their time and efforts on ensuring safe and effective
operations across the portfolio. The Board would like to recognise
their efforts towards this goal and thank all employees for their
commitment and resolve to build an exceptional business for
our shareholders.
Adel Chaouch
Chairman of the Board and Independent Non-Executive Director
27 April 2024
A. Paul Blakeley OBE
EXECUTIVE DIRECTOR, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
Chief Executive
Officer’s review
The excellent results of the Malaysian drilling
programme, significant progress towards first
gas at Akatara and increasing our interest
in the outperforming CWLH fields were all
strategic successes during 2023. While these
positive developments were overshadowed by
a disappointing performance at Montara in the
first half of the year, we have since seen steady
and improving uptime at the asset. Through our
diversification efforts, the impact of our two
legacy Australia assets is reducing – part of a
deliberate transition towards higher-quality and
higher-margin assets. Commercial progress on
Nam Du/U Minh in early-2024 provides greater
confidence in our medium-term outlook, as we
look to rebuild momentum in a year of transition
and significant growth for Jadestone.
Strategic progress made, despite Montara challenges
2023 provided a mixture of success and frustration for Jadestone
and its shareholders. We delivered record annual production of
13,813 boe/d, underpinned by the Sinphuhorm acquisition, a full-
year of the initial CWLH stake and higher Stag production following
the 2022 drilling programme. Strong performance from the PenMal
Assets and Montara into the year-end supported an annual exit
rate of c.20,000 boe/d.
The shut-in of Montara from August 2022 to March 2023 was the
primary driver of an erosion in our financial strength. This resulted
in the June 2023 financing transactions, which provided Jadestone
with the balance sheet resilience and financial flexibility needed to
progress both organic and M&A led projects to underpin growth
and diversification, in turn creating longer-term shareholder value.
However, we acknowledge the frustrations of our shareholders at
Jadestone’s performance through this period. We have listened
carefully to the feedback we have received and implemented
changes to both our governance and communication strategy
accordingly (see the Governance and Nomination Committee
Report on pages 70 to 71 for more detail). Restoring operational
performance and strengthening our financial position are key
goals for the Group in 2024, which I hope will help to restore
shareholder confidence.
Significant progress towards first gas at Akatara
One of the most pleasing aspects of 2023’s performance was
the significant progress towards first gas at the Akatara project,
maintaining both schedule and budget through 2023. All aspects of
the project have been extremely well managed, expediting critical
long lead items, the successful well test in July 2023, construction
of the sales gas pipeline and the well workover campaign. We have
been supported by key stakeholders at both the local and national
level, and we are strengthening community relations through a
series of local initiatives. I wish to thank the Jadestone Indonesia
team for what has been achieved in little over 22 months since the
original sanction decision.
This progress has been maintained into early 2024, with up to 2,000
people on site at times. Commissioning activity is continuing at
pace to ensure that the Akatara facilities are ready to deliver sales
gas by the end of the second quarter of 2024.
We are also increasingly confident of the upside potential at
Akatara, underpinned by the pressure data obtained during the
successful well test in July 2023 and subsequent technical analysis.
Consequently, we booked an additional 3mmboe of Akatara 2P
reserves at year-end, based on a second gas sales contract which
is expected to commence deliveries in 2026.
Akatara showcases Jadestone’s commercial and development
capabilities, which we will look to leverage into future projects, such
as the proposed Nam Du/U Minh development offshore Vietnam.
Malaysia drilling – far surpassing original aims
A key pillar of our corporate strategy is to acquire assets with
upside potential, which can be unlocked through a differentiated
subsurface interpretation and capital investment. The first four
well infill drilling campaign at the East Belumut field on the PM323
PSC offshore Malaysia during the second half of 2023 was an
excellent example of this strategy at work.
All four wells were drilled successfully, producing at an aggregate
gross rate of c.7,000 bbls/d once all were onstream towards the end
of 2023. This was double the targeted pre-drill rate, and provided
strong evidence that there is much more opportunity in the field,
especially a large, undrained feature in the southwest. We are
also maturing targets for a potential infill drilling campaign on the
PM329 licence in 2025, as well as expanding our position offshore
Peninsular Malaysia with the recent award of the PM428 licence.
This was a tactical move by Jadestone in the context of our ongoing
application for the Puteri Cluster (previously the non-operated
PenMal Assets acquired in 2021), where a decision is expected
around mid 2024.
CWLH: Rapidly becoming a defining asset for Jadestone
In November 2023, we announced the acquisition of an additional
16.67% stake in the CWLH fields offshore Australia, which increased
our overall interest in the asset to 33.33% when the transaction
completed in February 2024. Since acquiring our original CWLH
interest in November 2022, the subsurface performance of the
fields has exceeded expectations, validating our work and de-
risking the significant upside potential we see across the asset.
This incremental interest was acquired at an attractive 2P
acquisition cost of US$1.70/bbl, or less than US$1/bbl on a 2P
+ 2C basis, and provides Jadestone with greater influence over
investment decisions.
Based on recent field outperformance, we now believe that
production can be extended by four years to 2035 without the
requirement for infill drilling. This will result in additional reserves,
longer-term production, cashflow and significant value to our
shareholders – another example of Jadestone’s strategy to uncover
hidden upside on fields where existing owners have ceased to look.
0 7
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Recent events and outlook: 2024 is a year of transition
Our primary focus in 2024 is re-establishing the confidence of our
shareholders in Jadestone’s operational and financial execution.
In April 2024, we narrowed the 2024 production guidance range
from 20-23,000boe/d to 20-22,000 boe/d. The change to the
upper end of guidance reflects average first quarter Group
production performance of c.17,200 boe/d, which was impacted
by both planned and unplanned downtime across the portfolio,
particularly at the offshore Australia assets relating to the recent
cyclone season.
Current internal forecasts point to an outcome at the lower end
of the revised 20-22,000boe/d guidance range, based on first
commercial gas sales from Akatara in June 2024, albeit there
remains a wide range of possible outcomes for 2024 production,
principally based on the timing and nature of Akatara’s ramp up, as
well as initiatives underway to optimise production at the Group’s
current producing assets. Production guidance will be kept under
review, particularly in relation to the first gas schedule at Akatara,
and further updates will be provided when appropriate.
Our operating cost and capex guidance of US$240-290 million
(excluding forecast royalties and carbon taxes) and US$80-110
million respectively are reiterated. Other cash expenditure is still
expected to total c.US$77 million on a net basis, primarily reflecting
the CWLH 2 abandonment funding payments.
In January 2024, we signed a Heads of Agreement for gas sales
from the Nam Du and U Minh fields offshore Vietnam, which is
a key milestone as we restart the commercialisation of our Vietnam
discoveries, and regain momentum for the development of this
material asset within our portfolio. In February we completed
the acquisition of a further 16.67% interest in the CLWH fields
offshore Australia.
In April 2024, we successfully concluded the scheduled
redetermination of the RBL Facility borrowing base, setting a
US$200 million lending capacity for the six month period ending
30 September 2024. This will underpin our near-term activity and
investment programme.
The issues we have experienced at Montara in 2022 and 2023
have proved to be a considerable challenge to us, impacting our
financial resources, our growth trajectory and your confidence
in us. However, I firmly believe that we have righted the ship,
taken several steps to broaden and strengthen the portfolio and
re-established strong production growth for 2024 and beyond.
The strategic transition of the business towards higher-margin and
higher-value barrels is well underway, strengthening Jadestone’s
investment thesis and making it more robust to a wider range of
commodity and operational scenarios - in turn creating a platform
for the resumption of shareholder returns in the future.
There is much more organic upside in Malaysia, at CWLH, Akatara
and Num Du/U Minh. While our recent participation in Woodside’s
process to sell its interests in the producing Pyrenees Area and
Macedon fields offshore Australia did not bear fruit, we continue to
see an exciting set of inorganic opportunities across the Asia Pacific
region.
Finally, I would like to thank everyone at Jadestone for their
tremendous efforts in a very challenging year, as we look forward
to new momentum and a successful year ahead.
A. Paul Blakeley
Executive Director, President and Chief Executive Officer
27 April 2024
Montara – changing our operating philosophy
Montara has been an important asset in building Jadestone’s
operating capability and providing the foundation for subsequent
successful value and growth initiatives. However, the reliability of
the Montara Venture FPSO in recent years has been disappointing.
While Montara is still an important asset to us, with safety,
integrity and uptime performance at the forefront of our minds,
going forward we will adjust our operating philosophy to ensure
that operational and capital expenditure targets near-term value
maximisation, including how to crystallise the significant potential
that we see in the Montara fields’ associated gas resource.
Since the restart from the eight month shutdown in March 2023,
we have seen better than anticipated performance from the
Montara field wells, due to a lower gas oil ratio allowing higher
production rates while remaining within gas handling limits.
Towards the end of 2023, we experienced a casing integrity issue
inside the Skua-11 well, which was immediately shut in. Since then,
the Skua-11 well has been continually monitored, while plans
have been developed to restore production through the re-drill of
Skua-11 commencing in late 2024, which is also being designed to
efficiently capture the reserves that had previously been associated
with a future well location.
A pathway to Net Zero
As we set out in the Sustainability Review of this report, we have
provided greater clarity on our journey to Net Zero Scope 1 & 2
GHG emissions from our operated assets, through setting out
interim reduction targets in 2026 and 2030. We will continue to
ensure that the environmental impact of our operations is at the
forefront of decision making throughout the business.
Our 2023 Scope 1 & 2 GHG emissions, totalled 469,563 tonnes of
CO2 equivalent, a 4% absolute reduction year-on-year. Please refer
to pages 17 to 18 of the Strategic Report for a detailed review of our
GHG emissions performance during 2023.
2P reserve replacement of 164% in 2023
Jadestone’s independently evaluated 2P reserves at end 2023
totalled 68.0 mmboe, compared to 64.8 mmboe at year-end 2023.
The Group delivered reserves replacement of 164% during 2023,
with reserve additions at Sinphuhorm, Akatara, CWLH and PM323
offset by production during the year and reserves reductions at
Montara and PM329. These figures do not include the impact of the
CWLH 2 acquisition, which completed in February 2024.
Lower revenues impact financial performance
While we successfully delivered production, operating costs and
capital expenditures within the revised guidance framework set
out in September 2023, lower oil prices and liftings during the
year, negatively impacted our financial performance during 2023
compared to 2022.
Lower revenues were the primary driver of a 44% decline in
adjusted EBITDAX during the year to US$90.6 million (2022:
US$162.3 million), and a net loss of US$91.3 million, compared
to a US$9.2 million profit in 2022. The 2023 net loss included a
US$17.4 million impairment of the Stag asset.
The trends highlighted above led to an operating cashflow (before
working capital movements) of US$36.4 million in 2023, an 77%
decrease year-on-year from the US$158.5 million in 2022.
Capital expenditures totalled US$115.9 million, (2022: US$82.9
million) and reflected a record year of investment for Jadestone,
primarily due to a full year of spend on the Akatara gas
development.
Other notable cash movements during the year were the final
abandonment funding payments for the original CWLH deal
of US$41 million, the drawdown and subsequent repayment of
the US$50 million Interim Facility, a drawdown of US$157 million
of debt under the Group’s reserve-based lending facility after
successfully closing the loan in May 2023, and a US$51 million
inflow from the equity raise in June 2023.
0 8
Market overview
Oil markets and pricing
The majority of Jadestone’s current production is crude oil. Realised
oil prices are based on global benchmark prices at the time of sale,
adjusted for a differential which varies depending on demand for
crude grades with certain characteristics. The impact of volatility
in near-term oil prices is offset by the Group’s oil price hedging (see
below).
Brent oil prices averaged US$82.45/bbl in 2023, an 18% decrease
on 2022 (US$100.79/bbl), when oil prices had risen to multi-year
highs in the immediate aftermath of Russia’s invasion of Ukraine.
Brent oil prices traded in a US$71-97/bbl range during 2023, as oil
markets contended with conflicting supply and demand signals.
Global oil demand, as assessed by the International Energy
Agency (“IEA”), is expected to set an annual record in 2023 of 101.7
mmbbls/d, driven, in part, by post-COVID-19 recovery in economic
activity, particularly in China. The IEA expects demand to set
another high of 103.0 mmbbls/d in 2024, led by China where
the country’s petrochemical sector continues to grow and gain
market share.
Global oil supply is estimated by the IEA at 102.0 mmbbls/d in
2023, an annual record. Supply has generally exceeded the IEA’s
expectations, driven by increased production from the United
States, Brazil and Guyana, as well as higher Iranian exports. Supply
is expected to increase to another annual record in 2024 of 103.5
mmbbls/d, again driven by non-OPEC. Increasing non-OPEC supply
and an uncertain demand outlook prompted further cuts in OPEC’s
supply quotas during 2023, and the extent to which these cuts are
relaxed will have a major bearing on oil market balances during 2024
and beyond.
The factors discussed above, as well as increased instability in the
Middle East potentially impacting established shipping routes for
oil and oil products, are likely to underpin volatility in oil prices
during 2024 and beyond. Currently, futures prices forecast a modest
decline in oil prices in the near-term, albeit staying above US$78/bbl
throughout 2024 and 2025.
Jadestone’s average premium to Brent for its oil sales in 2023 was
US$5.58/bbl in 2023 (2022: US$7.81/bbl). The decline year-on-year
can be primarily explained by a reduction in the average premium
for Stag liftings during the year, due to changing supply and demand
dynamics for heavy sweet crudes for use as bunker fuel in the
maritime industry.
In connection with the RBL facility closed during 2023, the Group
hedged a proportion of its future production as a risk mitigation
measure at a weighted average price of US$70.57/bbl over the life
of the hedges. At the time of implementation, the volumes hedged
were approximately 50% of the forecast oil production in the RBL
banking model.
Supply chain inflation and equipment lead times
A key pillar of Jadestone’s strategy is exploiting the remaining
value in maturing oil assets which are no longer core to their
previous owners. The ability to deliver this value partly depends on
controlling and optimising operating costs at these oil assets, as well
as timely access to drilling rigs and associated equipment.
During 2023, inflation in oil industry capital and operating costs
declined from the very high levels seen during 2022, mirroring the
wider reduction in inflation throughout the global economy. S&P
Global, whose broad-based indices track changes in upstream costs,
estimates that as of Q4 2023, upstream capital costs increased by
3% year-on-year (Q4 2022: 11%), while upstream operating costs
also rose by 3% year-on-year (Q4 2022:12%).
In 2023, Jadestone experienced some cost increases across its
operations, driven primarily by the rising cost of logistical support
(helicopters and supply vessels), in turn caused by rising fuel
costs on the back of higher oil prices. Tanker costs also increased,
primarily due to higher demand in the global tanker fleet as trade
flows were rerouted on the back of Russia-related sanctions.
In Malaysia, Indonesia and Vietnam, the impact of cost inflation
is substantially offset by the cost recovery mechanism embedded
within the PSC structure which is the standard upstream fiscal
framework in these countries. The Akatara field development has
additional protection from cost inflation due to the fixed price
nature of the EPCI contract.
In 2024, we expect to see further inflation impacts, particularly
the cost of offloading tankers, revised logistics contracts and the
potential for higher day rates for the hire of drilling rigs. Industry
inflation was a contributing factor to the impairment of the Stag
asset recorded in the Group’s 2023 financial accounts.
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.
Overall, there was a consistent level of deal flow in the Asia-Pacific
region during 2023, with Jadestone actively bidding on several
opportunities. The Group acquired an interest in the Sinphhorm
field onshore Thailand in February 2023 and announced the
acquisition of a further 16.67% stake in the CWLH fields offshore
Australia in November 2023.
Jadestone continues to believe that there is likely to be a healthy
upstream M&A market in the Asia-Pacific region 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
and/or to high-grade their portfolios. In particular, Jadestone
expects to benefit from diminishing competition for opportunities
in Australia, where the Group is well-placed to leverage its
established operating capabilities.
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 2022, and 73% 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 9-16% of its oil demand and
56-64% of its gas demand over the 2030-2050 period.
Despite the 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 the
cost of, and emissions from, imported gas.
Similarly, while crude oil is a global commodity, security of supply
is an increasingly important factor for oil markets in light of ongoing
geopolitical turmoil, particularly in the strategically important
Middle East region, with consumers in the Asia-Pacific 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 the Asia-Pacific region will
continue to promote and support their domestic upstream
industries, underpinning 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 continued to see support and provision
of finance from both lending banks and shareholders during 2023,
including the addition of another bank to its lending syndicate in the
second half of the year. In the most recent redetermination of the
Group’s banking facilities, Jadestone secured a borrowing base of
US$200 million for the six month period ending 30 September 2024.
The Group continually reviews its financial framework and funding
sources, both respect to ongoing operations but also evolving its
financial framework as the Group grows by acquisition.
0 9
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Sinphuhorm field
THAILAND
VIETNAM
HO CHI MINH CITY
Block 51 PSC
Block 46/07 PSC
PM323, PM329, PM318
PM428, Puteri Cluster1
MALAYSIA
KUALA LUMPUR
SINGAPORE
Lemang PSC
JAKARTA
INDONESIA
Montara
Cossack-Wanaea-
Lambert-Hermes
Stag
PERTH
AUSTRALIA
Star denotes Jadestone office
Laos
Thailand
Sinphuhorm field
0
30
60kms
Ho Chi Minh
Dong Mun
Khon Kaen
Cambodia
Vietnam
Gulf of Thailand
Ca Mau
Block 51
Gas Pipeline
Block 46/07
0 25 50 75 100kms
PM329
Puteri Cluster1
PM428
Malay Basin
Peninsular
Malaysia
Lemang PSC
PM323
Sinphuhorm, Thailand
Field: Sinphuhorm
Status: Producing
Working interest: 9.52%, non-operated
Gross acreage: 232km2
Location: Khorat Basin
Discovery: Dong Mun
Status: Pre-development
Working interest: 27.2%, operated
(through APICO)
Gross acreage: 32km2
Location: Khorat Basin
Block 51 and Block 46/07 PSCs, Vietnam
Discoveries: Nam Du, U Minh and Tho Chu
Status: Pre-development
Working interest: 100%, operated
Gross acreage: Block 51 – 887km2, Block 46/07 – 2,622km2
Location: Malay-Tho Chu Basin
Water depth: Block 51 – 64 metres, Block 46/07 – 48 metres
Offshore Peninsular Malaysia assets
Fields: East Belumut, West Belumut and
Chermingat (PM323 PSC) East Piatu (PM329 PSC)
Status: Producing
Working interest: PM323 - 60%, operated,
PM329 - 70%, operated
Gross acreage: PM323 & PM329 - 1,691km2
Water depth: 63-72 metres
Licence: PM428
Status: Non-producing
Working interest: 60%
Gross acreage: 6,695km2
Water depth: 40-80 metres
0
50
100
400kms
1
Pending outcome of Jadestone’s application in ongoing Malaysia Bid Round Plus.
Lemang PSC, Indonesia
Field: Akatara
Status: In development
Working interest: 100%*, operated
Gross acreage: 743km2
Location: South Sumatra Basin
Akatara field
Indonesia
0
15
30kms
* Pre local government back-in right of up to 10%
Montara
Timor Sea
Western
Australia
0
25
50
75
100kms
Cossack-Wanaea-
Lambert-Hermes
Indian Ocean
Western Australia
0
25
50
75
100kms
Stag
Indian Ocean
Western Australia
0
25
50
75
100kms
Montara Project
Fields: Montara, Swift/ Swallow, Skua
Status: Producing
Working interest: 100%, operated
Gross acreage: 672km2
Location: Timor Sea, offshore Western Australia
Water depth: 77 metres
Cossack, Wanaea, Lambert, Hermes
Fields: Cossack, Wanaea, Lambert, Hermes
Status: Producing
Working interest: 33.33%, non-operated (16.67% as at 31 December 2023)
Gross acreage: 160km2
Location: North Carnarvon Basin, offshore Western Australia
Water depth: 157 metres
Stag
Field: Stag
Status: Producing
Working interest: 100%, operator
Gross acreage: 160km2
Location: Carnarvon Basin, offshore Western Australia
Water depth: 47 metres
10
11
Business model and strategy
Sustainability at Jadestone
Jadestone Energy | 2023 Annual Report
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 (“APAC”) 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.
Short, lower-risk
investment cycles
Maximise production,
reduce costs
Extend life of existing assets
Acquire producing mid-life
assets or discovered gas
resources in APAC
As a responsible operator, Jadestone contributes to an orderly
energy transition by helping to meet regional energy demand,
whilst bringing positive social and economic benefits for its
stakeholders, local communities and the people associated with
its operations.
Jadestone takes a strategic approach to embedding sustainability
throughout its business, which is overseen by the Board and
supporting sub-committees. ESG related KPIs contributed 25%
to the 2023 Group KPIs.
Jadestone’s ESG framework represents priority areas that are
most relevant to its business, and where it believes it can make the
biggest contribution. The framework includes consideration of the
United Nations Sustainable Development Goals (“UN SDGs”) and
IPIECA’s1 SDG Roadmap for the oil and gas sector.
ESG framework
This section provides a high-level overview of Jadestone’s approach
to managing its ESG impacts. The detail of Jadestone’s ESG
performance is reported in the 2023 Sustainability Report, which
will be published in the second quarter of 2024.
Add additional reserves
and production volumes through
additional low risk in-field and
near-field development
Move existing gas
discoveries to production
in APAC’s energy short
markets
Add value through
superior operating capabilities, cost
control and incremental brownfield
development
Pivot to gas
Shareholder value
Net Zero by 2040
No greenfield exploration
The assets Jadestone targets for acquisition are those where
the Group 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 its 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 no longer core.
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
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.
12
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 IEA’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 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 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 asset stewardship and
efficient operations.
Strategic pillars
Energy
transition
Responsible
operator
Achieving Net Zero Scope 1
and 2 GHG emissions for
operated assets by 2040, in
support of the Paris agreement
and in line with the IEA’s
guidance
Ensuring safe
and reliable operations
whilst striving to minimise
environmental impacts
Benefitting
stakeholders
Building a strong
and diverse organisation
whilst supporting local
communities around
our activities
Corporate governance
Further strengthen governance and business ethics standards and practices
2024 ESG aspirations
and targets
Progress towards intermediate
Net Zero targets
Continue to enhance climate
disclosures, informed by the TCFD
framework2
Ensure safe operations, targeting
zero life altering events and zero
Tier 1 process safety events
Continue to minimise negative
impacts on the environment
Ensure robust GHG and ESG data
Maintain support from regulators
systems and processes across assets
and target zero material3
enforcement notices
Strive for improved employee
engagement and alignment with
Group values
Deliver community development
programmes in areas where we
operate
UN SDGs
1
2
3
IPIECA, formerly known as the International Petroleum Industry Environmental Conservation Association.
Task Force on Climate-Related Financial Disclosures.
That result in activity cessation.
13
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
2023 ESG highlights
Net Zero
interim targets announced
Local economies
supported via taxes, royalties and
community programmes
TRIR1 year on year reduction
at 0.86 on par with IOGP2 benchmark
CDP3
reporting on climate initiated
94%
local nationals employed
86%
employee participation in the 2023
engagement survey
Zero violations
of anti-bribery and anti-corruption
laws
Zero LTIs4
across operations
Biodiversity plan
developed for the Akatara site
1
2
3
4
Total recordable injury rate.
The International Association of Oil & Gas Producers.
Climate Disclosure Project.
Lost time injury (“LTI”).
14
Governance, business ethics and
human rights
Corporate governance involves an effective system of policies
and procedures to promote and support 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 team have oversight of critical ESG issues and
enterprise-level risks, such as climate change, safety, incident
preparedness and community impacts. Jadestone’s ESG
governance is discussed in more detail in the section on climate-
related financial disclosures on pages 19 to 25.
Jadestone continuously seeks to improve its corporate governance
practices in alignment with the Quoted Companies Alliance (“QCA”)
Corporate Governance Code. Its latest compliance statement can
be accessed in the Corporate Governance section of this report.
The Group’s Code of Conduct Policy is a representation of its
core values and outlines expectations for ethical behavior, with
a focus on anti-bribery, human rights, safety, and environmental
sustainability. All new employees receive induction on the Code of
Conduct and a refresher is offered to employees annually. Further,
a standalone Anti-Bribery and Anti-Corruption Policy emphasises a
commitment to professionalism and integrity.
Jadestone is committed to protecting and respecting the human
rights of its employees, the communities where it operates and
those individuals and businesses working within its supply chain.
This commitment is evident through its Group-wide Human Rights
Policy, which condemns any form of human rights violations,
including child and forced labour, and discrimination within its
business operations and supply chain. Jadestone issues an annual
statement that sets out its approach to ensuring no modern slavery
or human trafficking occurs within its supply chains or business.
The statement is made pursuant to the UK Modern Slavery Act
2015 and a joint statement under the Australian Modern Slavery
Act 2018, with the most recent statement for the financial year
ending 31 December 2023 available from Jadestone’s website.
Strategic fit in the energy
transition
Jadestone recognises that combustion of fossil fuels is the main
cause of climate change and, consequently, the world needs to
transition away from fossil fuels to a low-carbon economy. This
transition needs to be just, orderly and equitable1, where any
phasing down of oil and gas output is met by an adequate scaling
up of clean energy sources to ensure that basic energy needs
are met in a reliable and affordable manner. These objectives
are particularly pressing in Southeast (“SE”) Asia. As this region
undergoes rapid urbanisation and economic development, it is
expected to depend on fossil fuels at least in the medium term2.
Natural gas is likely to play a significant role as a transition fuel for
some coal-dependent economies, at least in the medium term3.
With its focus on acquiring and maximising the life of fields already
in production, as well as developing already discovered gas
resources for supply to domestic markets in SE Asia, Jadestone
is well-positioned to play an important role in 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, committed to reducing GHG
emissions and upholding climate targets. Jadestone’s Akatara
gas development, when operational, will contribute up to 1,630
Jadestone’s approach to climate action
GWh/year to a regional power plant, most likely displacing more
emissions-intensive coal power. Similarly, its Nam Du/U Minh
(“NDUM”) gas development project offshore southern Vietnam is
of strategic importance to the country as a sole option to prolong
supply to the Ca Mau power station, with an estimated 20% of
output supporting local fertiliser production. These domestic gas
supply projects will help to pivot the Group towards a significant
gas-weighting within the portfolio from 2025 onwards4, whilst
demonstrating its alignment with the countries’ energy polices and
climate aspirations.
Jadestone’s strategy for maximising reserves from existing
producing oil and gas fields explicitly precludes frontier exploration
and new greenfield development, a position that is in line with the
IEA’s Net Zero Emissions by 2050 Scenario. This strategy is fit for
the energy transition, as global hydrocarbon demand should be
fulfilled from existing fields and discoveries where possible.
The three pillars of Jadestone’s approach to climate action,
illustrated below and informed by the Transition Plan Taskforce’s
Disclosure Framework5, represent a rounded and strategic
approach to energy transition:
1
2
3
Decarbonising operations:
By progressing its Net Zero by 2040 pledge, including interim GHG
reduction targets for its own operations.
Responding to climate risk and opportunity:
Jadestone’s business strategy and Net Zero plan are designed to
enhance its resilience to risks arising from the transition to a low-carbon
economy whilst capturing opportunities.
Pivot to gas:
Jadestone’s positioning as a responsible oil and gas operator sees a
gradual shift towards gas weighting as a bridging fuel for the energy
transition particularly in its core markets of SE Asia.
1 Decarbonising
operations
Jadestone’s
climate action
3 Portfolio pivot
towards gas
2 Increasing
climate-resilency of
the business
As per COP28 agreement reached between delegate countries in Dubai, December 2023.
Source: Renewable Energy Outlook for ASEAN by ASEAN Centre for Energy (ACE) and International Renewable Energy Agency (IRENA).
Source: Singapore-Asia Taxonomy for Sustainable Finance, 2023 Edition.
1
2
3
4 Gas is projected to have an increasing weighting in Jadestone’s sales mix by 2028, due to the contribution of Akatara from 2024 and the expectation of the NDUM development
offshore Vietnam being online by this point.
Source: https://transitiontaskforce.net/disclosure-framework/.
5
15
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
IEA’s World Energy Outlook
2023 – oil and gas demand in
its climate scenarios1
The IEA’s recently updated scenarios (2023 World Energy Outlook)
propose three alternative outlooks for global oil demand:
l Stated Policies Scenario (“STEPS”): global oil demand
increases from 97 mmbbls/d in 2022 throughout the 2020s
but the peak is brought forward by approximately five years to
the late 2020s at 120 mmbbls/d per day. The reduced demand
is driven by the uptake of electric vehicles for road transport,
despite an increased demand in the petrochemical feedstock
and aviation sectors. Prices remain flat around US$80/bbl.
Investment levels in upstream oil and gas fields (both new and
existing) are expected to remain steady (at just over US$500
billion per annum) to 2030.
l Announced Pledges Scenario (“APS”): incorporating
industry pledges and advancements in technology means oil
demand never returns to the 2019 peak and global oil demand
reduces from 97 mmbbls/d in 2022 to 93 mmbbls/d in 2030 and
to 55 mmbbls/d in 2050. Prices fall gradually to US$74/bbl by
2030 and US$60/bbl by 2050. Demand reduces more sharply
than in STEPS due to a much larger uptake of electric vehicles
and an increase in low emission fuels in shipping. Whilst oil
demand is lower than in STEPS, there is still a need for new
conventional projects, and approximately US$470 billion is
invested annually on average to 2030.
1
IEA’s oil price forecasts for each of the climate scenarios are in 2022 real terms.
Net Zero roadmap
Net Zero interim reduction targets1
l Net Zero Emissions by 2050 Scenario (“NZE”): global oil
demand falls from 97 mmbbls/d in 2022 to 78 mmbbls/d by
2030 and 24 mmbbls/d by 2050. The reduced demand is driven
by the electrification of road transport and the use of low
emission fuels in shipping and aviation. Prices fall to US$40/
bbl in 2030, trending lower thereafter (US$25/bbl by 2050).
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$260 billion of annual
average upstream investment to 2030.
Considering gas demand in SE Asia, it is set to increase through to
2050 in STEPS (from 158 billion cubic meters (“bcm”) in 2022 to 254
bcm in 2050). In APS, it increases into 2030 but decreases to 122
bcm by 2050. No regional breakdown for gas demand is available
in the NZE scenario, but observing the trend in emerging market
and developing economies, a gradual decline is observed from late
2020s with a steeper drop between 2030 and 2050.
Furthermore, the IEA reflects on the repercussions of Russia’s
war in Ukraine and recent instability in the Middle East leading
to disruption of energy markets and prices. The IEA emphasises
the benefits of energy security and the importance of affordable,
reliable and resilient supply, especially in price-sensitive developing
economies, during the shift to a more sustainable energy system.
Jadestone’s business strategy is informed by the IEA’s insights.
The Group continues to test its portfolio resilience in the above
scenarios as outlined on pages 23 to 24.
2021 9
2026 9
2030 9
2040
2021 base year1
20% reduction by 2026
45% reduction by 2030
Net Zero by 2040
Jadestone operated assets2: Stag, Montara, PM323, PM329, Akatara
Jadestone operated
assets: current and future
1
2
Representing total Scope 1 & 2 GHG emissions in tonnes of CO2-e for operated assets
Future acquisitions – Jadestone will make best endeavours to retain GHG reduction levels when integrating future acquisitions
into the interim targets, subject to reviews of GHG abatement opportunities (see page 17). This approach will also apply to the
NDUM gas development project.
In June 2022, Jadestone pledged to achieve Net Zero on its
Scope 1 and 2 emissions from its operated assets by 2040.
This pledge covers Scope 1 and 2 emissions from the Group’s
existing operated assets as well as emissions from future
acquisitions and developments, where Jadestone becomes
operator. The Group partnered with a reputable consultancy and
initiated workstreams to deliver interim reduction targets to 2030
as part of its Net Zero by 2040 pledge. This involved development
of robust GHG forecasts for Jadestone’s current asset base and
reviewing potential GHG reduction options, as outlined in the
diagram on page 17.
As per the previously communicated timeline and following an
over 18 month-long effort, Jadestone announced its interim GHG
emissions reduction targets in December 2023.
Net Zero implementation plan
The Group is committing to reduce its Scope 1 and 2 GHG
emissions from its operated assets by 20% by 2026 and by 45% by
2030 (from 2021 levels). Jadestone elected 2021 as its base year
as neither 2022 nor 2023 were representative of the anticipated
levels of activity due to a prolonged outage of the Montara asset
(approximately five months in 2022 and three and a half months in
2023). Interim targets represent an absolute Scope 1 and 2 metric
(as opposed to intensity-based metric).
The interim 2026 and 2030 targets will be achieved through
a combination of measures, ranging from operational GHG
reductions, including minimising flaring, methane quantification,
monitoring and reduction as well as reliance on some carbon
credits within the regulatory schemes of Jadestone regions, as
outlined in the following section. As an operator of mid-life assets,
field decline with eventual production cessation forms a natural
part of its Net Zero strategy, where safe and responsible phasing
down of assets, including decommissioning, is carefully planned.
Jadestone will provide an annual update on the progress made
towards achieving its interim targets.
Net Zero roadmap development
1. Business-as-usual
inventory baseline
2. GHG emission reduction
3. Feasibility studies of
options
shortlisted options
9
Net Zero roadmap
l
Asset-level forecasts of GHG
drivers
l GHG forecast methodology
l
l
Screening matrix of generic
reduction opportunities ranked
Identification, assessment and
prioritisation using marginal
abatement cost curves
l
l
Techno-economic feasibility
studies completed to shortlist
GHG mitigations
Cost-effective options included
in work plans and budgets
l
l
Alternative GHG forecast
established
Interim targets to 2030
announced
Regulatory scheme in Australia: Safeguard Mechanism
In Australia, the Montara asset falls under the scope of the
Safeguard Mechanism, which is a framework that covers Australia’s
largest GHG emitters (over 100 kilo tonnes of CO2-e) to measure,
report and manage their emissions below an emissions limit (the
“baseline”). Stag is not captured by this mechanism, as its emissions
are well below the threshold. The Safeguard Mechanism was
reformed and signed into law during 2023, resulting in a lower
baseline for Montara from the Australian financial year 2024,
ending June 30, 2024, in line with Australia’s climate commitments.
Jadestone can manage its excess emissions above the baseline by
either purchasing and surrendering the Australian carbon credit
units (“ACCUs”) or by reducing its operational emissions.
These obligations will most likely be achieved through a
combination of a step-change flare management and optimisation
plan at Montara as well as purchase of ACCUs. Overall, whilst direct
GHG reductions are prioritised, reliance on carbon credits and/or
offsets will most likely be an inevitable component of any upstream
oil and gas company’s roadmap. Jadestone intends to employ
ACCUs only for those GHGs that are technologically difficult or too
cost-prohibitive to eliminate.
New operated assets
As Jadestone takes on operatorship of assets released by larger
peers, it inherits the associated GHG emissions. It pledges to
integrate any acquired assets into its Net Zero roadmap, in line with
the Greenhouse Gas Protocol’s guidance2. Jadestone’s approach
to acquiring new assets is informed by the Environmental Defense
Fund’s report on transferred emissions, where real-world impact
is prioritised3. The integration of operated acquisitions involves a
preliminary screening step during the M&A due diligence phase,
where historical and forecast GHG emissions are reviewed. GHG
abatement opportunities are studied in detail after transfer of
operatorship. Best endeavours will be made to integrate future
operated sites into the interim targets and maintain the level of
ambition across those targets. Due to the time-consuming nature
of the GHG review process and uncertainty about the mitigation
levels, Jadestone may need to adjust interim targets, should the
desired reductions not be tenable.
With respect to new gas developments, Jadestone will embed lower
carbon principles from the outset, identifying mitigations at the
early design stage where feasible, including methane monitoring
and reduction measures.
Jadestone’s interest in the CWLH asset in Australia is also subject
to the Safeguard Mechanism and Jadestone as a JV partner will be
liable for its proportional share of the required reductions. The
final outcome of the baseline application to CWLH, which includes
the allocation of emissions between the oil and gas assets of
North-West Shelf, is pending with the regulator, with Jadestone
proportional share expected to be minimal1.
Net Zero roadmap boundaries
GHG emission scopes
Scope 1 and 2 GHG emissions form the basis of Jadestone’s Net
Zero commitments, which exclude Scope 3 emissions. Jadestone
has initiated reporting on its Scope 3 emissions across its most
material categories and is committed to ongoing transparency
across value chain impacts. Jadestone believes that it can exert
some influence over its GHG emissions from its key suppliers. It is
therefore taking steps to engage with its key suppliers in order to
establish more accurate data on the GHG emissions in its supply
chain and to progressively identify opportunities for reductions
where possible.
Operational control
Jadestone has elected to ring-fence its Net Zero pledge, including
interim targets, to operated assets only, as this is aligned with
Jadestone’s influence and ability to effect change. It is also in line
with its core operational competencies and preferred positioning
as an operator.
1
CWLH’s total 2022 GHG emissions were approximately 140 kt of CO2-e.
2 Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard,
3
4
published by the World Resources Institute and the World Business Council on
Sustainable Development.
Source: https://business.edf.org/insights/transferred-emissions-risks-in-oil-gas-
ma-could-hamper-the-energy-transition/.
An increased flaring trend was observed at Stag operations for 2023 during the
year. A subsequent internal investigation identified that a faulty flare meter
configuration led to historical flaring volumes and resulting GHG emissions being
understated. Jadestone is reviewing historical data and the potential impacts prior
to applying any adjustment.
5 With the exception of one employee working in home office mode.
6
American Petroleum Institute.
Streamlined Energy and Carbon
Reporting
Jadestone reports and consolidates its GHG emissions on an
operational control basis, reporting 100% of GHG emissions from
operated sites, regardless of the working interest. Its Net Zero
interim targets are consistent with this accounting approach. In
2023, the Group’s Scope 1 GHG emissions were 469 kilo tonnes of
CO2-e, largely on par with the previous year (2022: 489 kilo tonnes
of CO2-e)4. Levels of GHG emissions are reflective of suspension of
production at Montara during Q1 2023 as the site was gradually
restoring activity (see case study page 26). 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 Scope 1 and 2 emissions combined. 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 UK’s Streamlined Energy and Carbon Reporting (“SECR”)
framework. The data in the following table represents 100%
operational control of Jadestone’s Australian and PenMal Assets.
As Jadestone has no operations in the UK5, its emissions and
energy use are practically nil.
The GHG emissions section of the 2023 Sustainability Report
details Jadestone’s approach to managing energy use and GHG
emissions.
GHG emissions for Jadestone’s business are defined and
calculated using methodologies consistent with the GHG Protocol:
A Corporate Accounting and Reporting Standard. 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 operated PenMal Assets is prepared in accordance
with the requirements of the local industry regulator, which is
aligned with the API6 Compendium.
16
17
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Scope 1 GHG emissions, 2021–2023 (100% operational control), including emissions prior to transfer of PenMal
Assets operatorship under previous operator in 2021
700
600
500
400
300
200
100
-
)
e
-
2
O
C
s
e
n
n
o
t
o
l
i
k
(
s
n
o
i
s
s
i
m
e
G
H
G
2021
2022
2023*
Stag
Montara (Jadestone)
PenMal Assets ( Jadestone )
PenMal Assets ( previous operator )
*
An increased flaring trend was observed at Stag operations for 2023 during the year. A subsequent internal investigation identified that a faulty flare meter configuration led to
historical flaring volumes and resulting GHG emissions being understated. Jadestone is reviewing historical data and the potential impacts prior to applying any adjustment.
Streamlined Energy and Carbon Reporting (100% operational control)
Metrics
Units
2023
2022
20213
Total Scope 1 and 2 GHG emissions from operated entities, offices and warehouses
Total Scope 1 GHG emissions
Total Scope 2 GHG emissions
Total Scope 1 and 2 GHG emissions
tCO2-e
tCO2-e
tCO2-e
Upstream GHG intensity (Scope 1)
kgCO2-e/boe
Energy use by operated operated entities, offices and warehouses2
Direct energy: Fuel consumption
Indirect energy: Electricity consumption (offices and
warehouses)
Total direct and indirect energy consumption
MWh
MWh
MWh
469,310
2531
469,563
99
488,951
175
489,126
99
1,096,465
1,119,973
440,987
(649,770)
185
441,172
(649,955)
92 (100)
772,248
(1,240,456)
3591
299
303
1,096,824
1,120,272
772,551
(1,240,759)
1
2
3
2023 amount is higher than 2022 due to the inclusion of electricity consumption at storage and supply warehouses, which had not been included in prior years.
Direct energy is energy generated onsite by the facility. Indirect energy is defined as energy that is generated offsite and purchased for Jadestone office use only and excludes
consideration of home offices.
2021 figures incorporate data from the PenMal Assets where operational control commenced in August 2021. Data in parentheses represents a full year (including emissions
under the previous operator) to allow comparisons on a like-for-like basis.
Climate-related financial disclosures
Jadestone consulted 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. 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. In anticipation that these rules may apply to it in due course, the Group
continues to develop and enhance its climate-related disclosures as outlined in the following section.
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
l
The Board and its committees have oversight of climate-related risks and
opportunities, as per terms of reference.
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 Management-level governance was strengthened during 2023 by
establishing a Climate Change Steering Committee, providing oversight over
country Climate Working Groups.
Reference
Annual Report
Strategic report,
Climate-related financial
disclosures, pages 20 to 21.
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.
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
l
l
Jadestone has identified transition risks across reputation/stakeholder,
policy/legal and technology/market areas, as well as energy transition-
related opportunities.
Risk impacts have been assessed using the Group risk framework, with
impacts quantified, where feasible.
Jadestone undertook a Group climate scenario analysis for its whole
portfolio of assets, reflecting the IEA’s scenarios as per the 2023 WEO, that
represent temperature outcomes of 1.7 and 1.5°C.
Annual Report
Strategic report,
Climate-related financial
disclosures, pages 21 to 24.
Risk management
Disclose how the organisation identifies, assesses, and manages climate-related risks.
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
l
l
Jadestone takes a bottom-up approach to climate risk identification,
ensuring that regulatory developments, as well as physical manifestations
of climate change across regions, are well understood before informing a
view of the Group’s exposure.
Climate-related transition risks and physical impacts of climate change
are identified, evaluated and managed within the Group risk register
framework, supported by regional risk reviews.
Climate-related risks that have the potential to impact the business
materially are identified as principal climate change transition risks.
Annual Report
Strategic report,
Climate-related financial
disclosures, page 25;
Strategic report, Risk
management, principal risks
and uncertainties, page 25.
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
l Metrics used to monitor risk exposure and effectiveness of mitigating
Annual Report
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.
l
l
actions are identified for all relevant risks.
Jadestone reports its Scope 1 and 2 GHG emissions on an operational
control basis; Scope 3 emissions are quantified for key categories.
In December 2023, Jadestone announced its interim Scope 1 and 2 GHG
emissions targets by 2026 and 2030 vs. 2021 baseline.
Strategic report,
Climate-related financial
disclosures, page 25.
Strategic report, Net Zero
roadmap, pages 16 to 17.
Sustainability Report
Energy transition, and GHG
emissions sections.
18
19
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
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. The latter
includes monitoring of the Group’s responses to climate risk
and ESG disclosures generally. The Audit Committee reviews the
Group’s climate scenario analysis and the ESG disclosures forming
part of the Annual Report.
The Remuneration Committee determines executive
remuneration including approval of executive incentive schemes,
which incorporate ESG performance objectives. In 2023, ESG
performance objectives, which form part of the CEO’s performance
contract, had a weighting of 25%, and included objectives relating
to Net Zero interim targets.
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.
Governance
Board oversight of climate-related risks and
opportunities
Jadestone’s Board of Directors holds a primary responsibility for
fostering the short, medium and long-term success of the Group.
The Board and its committees have oversight of climate-related
risks and opportunities, as they pertain to the Group’s ability
to deliver shareholder value. The responsibilities of the Board
committees in relation 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 management of ESG impacts, risks
and opportunities across the Group. Its role is to ensure that
management has designed and implemented effective health,
safety, social, environmental, and climate risk systems and
controls. The HSEC committee supports the Board and the Audit
Committee in the oversight over the Group’s ESG disclosures.
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.
Jadestone’s ESG and climate governance structure: Board level
Board of Directors
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.
A
Board Committees
HSEC
Committee
Governance and
Nomination Committee
Audit
Committee
Remuneration
Committee
Disclosure
Committee
Assists the Board to discharge its responsibilities across:
How the Board considered climate-related matters in 2023
Climate-related risks and opportunities are a standing agenda item at every Board meeting, with four regular board meetings held in
2023. The Board delegates its responsibilities over ESG matters to the HSEC Committee. The following decisions and activities were
considered during 2023:
Net Zero strategy
l
l
l
l
Following the announcement of the Net Zero by 2040 pledge, the progress of the Net Zero roadmap development was reviewed by the each
quarter, with a more detailed oversight by the HSEC Committee.
This led to an approval of the interim GHG reduction targets to 2030 as part of the Net Zero roadmap, including the communications and
stakeholder engagement strategy in the December 2023 Board meeting.
The Board endorsed the Group’s first CDP climate submission and reviewed its first scope 3 GHG data for 2022 in the June 2023 meeting.
Engagements with the lending banks and investors on ESG requirements were relayed to the Board, informing the Net Zero roadmap endorsed by
the Board.
Expenditure and investments
l Analysis of the GHG emissions performance of all prospective M&A opportunities was presented to the Board as part of the acquisition due
diligence process.
Climate risk and disclosures
l
The sustainability section of the Annual Report, including climate risk assessments and climate scenario analysis, was reviewed by the HSEC
Committee and subsequently approved by the Audit Committee.
Performance
l Group GHG performance dashboards were reviewed quarterly in the HSEC Committee and Board meetings.
l
Review of ESG performance on a quarterly basis, including climate mitigations and the progress made in the development of the Net Zero roadmap.
Governance
l Approved the establishment of the Climate Change Steering Committee and its terms of reference, for the purpose of assisting the Board and
leadership in fulfilling their oversight responsibilities with respect to the implementation of Jadestone’s Climate Policy.
Management’s role in assessing and managing
climate-related risks and opportunities
Day-to-day management of the business is delegated by the
Board 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 establishing
climate risks through the lens of financial materiality. The CEO and
CFO engage the Board on the strategic aspects of climate change
and the energy transition.
Jadestone’s senior management team is led by the CEO in
delivering the Group’s strategy and annual work plan and budget.
The progression of the climate agenda is facilitated by both Group
and regional resources, including ESG, HSE, legal, subsurface,
operations, commercial, investor relations and supply chain
functions as well as country management. Expert resources are
called upon when required to support the wide array of climate
change issues. The Group has taken further steps to ensure greater
integration of climate-related issues across the business as well
as strengthening of governance. The Climate Change Steering
Committee (“CCSC”) was established during 2023 to assist the
Board and leadership in fulfilling its oversight responsibilities with
respect to the implementation of Jadestone’s Climate Policy.
The CCSC acts as a decision-making senior management forum
reporting into the Board’s HSEC Committee. The CCSC formally
reports to the Board three times a year during the Board’s HSEC
Committee meeting or more often as required. This includes
making any relevant recommendations on all matters relating
to Jadestone’s climate strategy.
Country-level Climate Change Working Groups (“CCWG”) support
the CCSC in progressing country-specific elements of its remit.
The outputs of the country-level CCWG are reported to the CCSC.
Climate governance tiers
Board level
Health Safety Environment Climate Committee
7
Management level
Climate Change Steering Committee
7
Country level
Climate Change Working Groups
How management considered climate-related
matters in 2023
The CCSC includes senior leaders from Jadestone’s management
team, including the CEO and CFO, representatives of finance,
business development, risk & strategy, HSE, investor relations,
subsurface, operations and ESG functions. Supporting members
are invited as required. Management via formal CCSC meetings
and targeted forums, supported the following activities
throughout 2023:
Net Zero strategy
l Ongoing review of the Net Zero roadmap progress, ensuring its
alignment with Jadestone’s business strategy, regional imperatives,
whilst being on par with peer practice.
l Oversight over development of GHG forecasts in line with the work
plan and budget.
l Decisions on GHG reduction-related business cases.
Climate risk and disclosures
l
l
The sustainability section of the Annual Report, including climate
risk assessments and the climate scenario analysis, was reviewed
by the management, before the Audit and HSEC Committee’s
approval.
Results of physical and transition climate risk workshops were
communicated to management.
Performance
l Group GHG performance dashboards were reviewed monthly.
Improvements to data coverage were introduced during 2023.
The ESG/GHG digital tool business case was approved by
management.
l
Strategy
Climate-related risks and opportunities
Transition risks
In monitoring the delivery of its strategy, the Board and
the management team consider climate-related risks and
opportunities across three time horizons: Short-term (ST): up
to 2025, Medium term (MT): 2026 - 2030 and Long-term (LT):
beyond 2030. Building on the experience of the past few years,
in 2023 Jadestone performed a detailed review of the potential
transition risks the Group may be exposed to across the reputation,
policy/legal, market and technology areas in the short term,
applying the Group risk assessment framework. The analysis
was supported by policy and market review of the operating
regions. The short-term timeframe was selected as a starting
point for narrowing down risks with highest potential for material
implications for the business over longer timeframes. Analysis of
risk impacts over longer timeframes requires assumptions to be
made, for example the pace of climate policy implementation or
adoption of low carbon technologies. These projections are best
addressed via a climate scenario exercise, referencing acceptable
scenarios as a backdrop to evaluating risks to the business.
Jadestone has been undertaking an annual climate scenario
analysis since 2021, investigating how accelerated climate action via
more aggressive government polices, in turn introducing carbon
pricing mechanisms and low carbon technology adoption, may
impact the resiliency of its business. For the 2023 exercise, please
refer to pages 23 to 24.
A shortlist of transition-related risks , with potential impact likely
to increase over the medium to long term, are summarised in the
table below. Whilst these risks have not necessarily materialised
in practice, they have the potential to impact Jadestone’s business
and are therefore subject to management’s attention, with ongoing
mitigations assigned to minimise potential exposure to levels that
are acceptable by the Board and the management.
Similarly, Jadestone sees opportunities emerging from the energy
transition dynamics in the Asia-Pacific region, such as serving major
Asian growth markets from existing mid-life assets.
2 0
21
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Summary of climate transition risks and opportunities
Transition risk
Potential impact
Mitigations
Risk metric
Access to finance
Change in year
6
Shareholder action
Change in year
6
Carbon pricing and
more stringent
GHG reduction
standards enacted by
governments*
Change in year
6
Increasing climate
action and reporting
obligations – UK
NEW
Limited cost-effective
GHG reduction
measures
NEW
Low carbon solutions
and new technologies*
NEW
Transition
opportunity
Opportunity to serve
major Asian growth
markets from existing
mid-life assets
Change in year
6
l
l
l
l
l
l
l
l
l
l
l
l
Reputation and stakeholder risks
Restricted availability of debt financing and/ or equity impacting the
ability to execute Jadestone’s growth strategy; potentially leading to
higher interest rates and/or higher cost of equity.
Short-term outlook:
Whilst the trend of retrenching from the industry continues within
lending banks, a diverse landscape is observed, with continued options
for lending (Jadestone was able to add an additional bank to its RBL
lending syndicate in 2023).
Shareholder activism and/or divestment on the grounds of the Group
climate strategy not being in step with shareholder expectations may
result in downward pressure on the share price.
Short-term outlook:
Whilst shareholders continue to integrate ESG factors when making
investment decisions, there has been no sign of investor selling solely
on climate grounds, hence no increase in this risk during 2023.
l
l
l
Transparent, robust climate
disclosures that communicate
Jadestone’s strategic positioning;
Announcement of Net Zero interim
targets and progress updates;
Proactive engagement with financial
institutions;
l
Prudent financial management.
l
l
l
Transparent, robust climate
disclosures that communicate
Jadestone’s strategic position;
Announcement of Net Zero interim
targets and progress updates; and
Proactive engagement with the
investment community.
Debt availability
Cost of capital
Shareholder
monitoring
Share price
performance
Policy and regulatory risks
Increased operating costs and/or capex for GHG reduction options may
impact asset profitability; whilst providing further incentive to reduce
emissions; in extreme cases may lead to curtailed field life.
Short-term outlook:
Regulatory developments within Australia and their impacts have been
included in the workplan and budgets and are managed accordingly. No
increase in risk exposure is anticipated in the other operating regions.
Increasing expectations of larger UK entities from the UK regulators,
e.g. regarding ambitious climate action, leading to higher costs of
compliance as well as potential reputational and stakeholder impacts if
failure to comply.
Short-term outlook:
This risk currently exists solely in the context of Jadestone’s stock
market listing as UK law or policy has no direct climate impact on
Jadestone at present. More stringent reporting frameworks applying
to Jadestone in due course. New guidance and frameworks regarding
transition planning are reviewed periodically, providing an indication of
the regulatory focus.
Technology and market risks
Cost-effective technologies to decarbonise operations for late-life
assets are limited, due to, amongst others, site design, structural
integrity and space; leading to a very limited pool of feasible direct
options.
Short-term outlook:
Opportunities continue to be evaluated and matured by applying
business case rigour, factoring in regulatory developments and
changing business circumstances.
Alternative low carbon solutions that displace conventional fuels
become economic and are adopted faster, leading to lower demand for
fossil fuels and consequently, depressed oil prices.
Short-term outlook:
Whilst there is recognition that, for example, EV sales are increasing,
there is little evidence to suggest that such developments will affect
near-term oil demand in the Asia-Pacific region.
l Monitor policy changes in core
jurisdictions/regions as well as carbon
market developments – Australia
(please see page 17, regarding recent
regulatory developments in Australia);
l Deliver emission reductions projects
to reduce exposure as per Net Zero
plan;
l
Annual climate scenario analysis that
models carbon pricing impacts over
all timeframes.
l Monitor policy changes within UK;
l
Progressive enhancement of climate
disclosures in anticipation of more
stringent regulations applying to
Jadestone.
Carbon cost per
barrel
Capex to decarbonise
assets
Scope 1 GHGs (actual
vs. forecast), cost of
ACCUs
Policy monitoring (e.g.
Financial Reporting
Council (“FRC”)
l
l
l
Net Zero plan to focus on operational
efficiencies and/or measures that
have robust economics;
Continued pivot towards gas, with
new, optimised developments.
GHG abatement
potential
Payback / IRR
Focus on SE Asia market, where
energy demand is projected to
increase according to most forecasts
(with continued heavy reliance on coal
and delayed uptake of low carbon
fuels or EVs in the region);
Policy monitoring
l Monitor policy and technological
developments in core regions.
Potential impact
Management actions
Opportunity
metric
l
l
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
Asian markets receive crude oil and natural gas from existing fields, as
opposed to large-scale greenfield developments, in line with IEA’s Net
Zero by 2050 roadmap. Natural gas is likely to play a significant role as a
transition fuel for some coal-heavy economies in Southeast Asia.
Short-term outlook:
Larger energy companies continue to high-grade their own portfolios,
leading to an active M&A market in which Jadestone continues to
participate. There is no sign of this changing in the near-term.
l
l
l
Clearly defined business strategy that
is centred around mid-life assets;
M&A opportunity set
Focus on improving emissions
performance of fields compared to
previous operators;
Progress towards Net Zero interim
targets.
7 Risk has increased during the year
6 No change in the risk over the year
*
risks examined over short, medium and long term in a climate scenario exercise
2 2
In 2023, the Group has made the following progress with regard to implementing risk mitigations:
3 Achieved 1 Ongoing
Climate risk mitigations
Progress in 2023
l Transparent, robust climate disclosures
that communicate Jadestone’s strategic
positioning
l Announcement of Net Zero interim
targets and delivery of the Net Zero plan
l Proactive engagement with financial
institutions and shareholders
l Financial Management
l Monitor policy changes in core
jurisdictions/ regions
3 l
Jadestone reviewed its strategic positioning in the energy transition context, as described
in on pages 15 to 16.
1 l Net Zero interim targets have been announced in December 2023. For status as of 2023,
see pages 16 to 17.
3
l
l
Jadestone maintains close relationships with several international lending banks, which
resulted in the arrangement and closing of an RBL in May 2023, with another bank joining
the RBL syndicate during the year. GHG-related reporting forms part of RBL obligations.
Frequent direct and indirect dialogue is maintained via the Head of Investor Relations or at
the CEO and CFO level, where energy transition is a standing topic.
3 l Despite combined capital and operational expenditure of over US$340 million, Jadestone
ended the year in a small net debt position.
l
3
Regulatory developments are monitored within the countries and new changes reviewed in
the regional CCWG meetings; At Group level, relevant developments are monitored by the
ESG function and reported to CCSC.
l Annual climate scenario analysis that
includes carbon impacts
3 l Climate scenario analysis undertaken since 2021. See pages 23 to 24.
l Progressive enhancement of climate
disclosures
1 l Further improvements as far as corporate risk framework alignment, e.g. inclusion of
physical impacts of climate change, see page 23.
l Focus on SE Asia market and continued
l Clear focus of the business strategy as evidenced by current portfolio and recent
pivot towards gas
3
acquisitions.
l As evidenced by the progression of the Akatara gas development and signing of Heads of
Agreement for gas sales from the NDUM development in Vietnam.
Physical risks
As global 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. The physical manifestation of climate change is
anticipated to affect geographic regions differently and therefore
require a location-specific analysis.
During 2023, physical risk workshops were held with each
operating region, facilitated by an external consultant, and
including interdisciplinary representation from operations,
engineering, HSE and supply chain. Jadestone’s corporate risk
matrix was applied when assessing risks, with an attempt to
quantify impacts where possible. The purpose of the workshops
was to:
n determine how the physical hazards in each region were
projected to change over time in different temperature
outcome scenarios;
n how these hazards may affect operations, supply chains and
n
export routes;
collect information relating to how each operation and
associated value chain is currently exposed to physical risks,
what mitigations are currently in place and whether further
mitigations might be required to adapt to a changing climate.
Climate projections from World Bank Country profiles for each
country of operation was used to inform this process and risks
were considered over the lifetime of each facility.
Generally, countries already experience adverse weather events
and as such have mitigations and plans in place to manage these
hazards. This exercise has increased understanding of the specific
impacts that climatic hazards may have on everyday operations,
identifying such hazards as e.g., increase in heatwaves, increase in
intensity of rainfall, flood events and tropical storms, depending
on the location of operations. In order to further improve the
integration of physical climate risk into business operations and
planning, physical risks rated as moderate and/or higher will be
incorporated into the country corporate risk registers, undergoing
periodic reviews throughout the year.
Testing climate resiliency 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 long-term and their timing
and magnitude are uncertain. Jadestone has been performing
climate scenario analysis that explores 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 transition
risks including the 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.
Scenarios developed by the IEA in its 2023 World Energy Outlook
formed the basis for the analysis, representing the “gold standard”
among financiers, policymakers and industry peers:
l Stated Policies Scenario (STEPS), reflects a detailed sector-
by-sector review of the policies and measures that are in place
or that have been announced, but that there is no further policy
development on climate change beyond them, which results in
an average temperature rise of 2.4°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, 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.
2 3
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Distribution of climate scenario analysis operating cash flows
across time horizons
OCF distribution - Announced
Pledges Scenario
OCF distribution - Net Zero
Emmissions Scenario
32%
68%
29%
71%
2024-2030
2030+
The carbon tax assumptions in the scenario analysis were
applied to Jadestone’s GHG emissions profile as per its Net Zero
roadmap, that takes into account committed mitigating initiatives.
We recognise that these profiles will be updated periodically as new
GHG mitigations mature and business plans evolve. 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 of CO2-e per boe,
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 second quarter of 2024 ,
and an expected upstream intensity of of approximately 20kg of
CO2-e/boe.
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 16. 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 calculated using the NZE oil
pricing, as set out above. The resulting impact on the Group’s
cashflows would lead to an impairment of the carrying value of the
Group’s oil and gas properties as of 31 December 2023. Please refer
to Note 3b of the Notes to the Financial Statements on page 105 for
further detail.
The assumptions under the NZE scenario do not reflect market
conditions at present and are dependent on various factors in the
future covering supply, demand, economic and geopolitical events
and legislative outcomes, and therefore are inherently uncertain
and subject to significant volatility.
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.
The oil prices modelled for each of the three climate scenarios are
based on the IEA 2023 WEO, which forecasts the price of oil (in 2022
real terms) in 2030 and 2050 for each scenario. Between 2024 and
2026, 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 2027-2030 and 2030-2050.
As far as estimating carbon costs in each of the three scenarios,
Jadestone has undertaken a review of climate-related policy
developments in its operating regions to inform the analysis.
Carbon prices for the three climate scenarios in 2030 and 2040
from the IEA WEO 2023 were applied, unless country-specific
climate policy developments were mature and well-understood,
as was the case with Australia. The analysis now assumes that
carbon costs (based on third-party pricing forecasts) apply to its
Australian assets that are in scope for the Safeguard Mechanism
reforms, which were passed into law in July 2023. It should be
noted that a significant number of assumptions around carbon
costs, and how these may develop over time within the various
jurisdictions, formed part of the analysis. 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.
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 on investment.
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 21).
Climate scenario results - operating cash flow impacts versus
base case STEPS scenario
S-T (2024-25)
M-T (2026-2030)
L-T (2030+)
Announced
Pledges Scenario
Net Zero
Emmisions
<=10%
Low impact
10-25%
Moderate impact
>=25%
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 climate scenario over the
long-term time horizon.
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. Jadestone’s business model is geared
towards having most impact in the short to medium term as an
operator of mid-life assets.
2 4
Responsible operator
Ensuring safe and reliable operations whilst safeguarding the
environment is at the center of Jadestone’s business strategy,
as depicted in its ESG framework. Responsible operatorship
is about putting safety first to create a safe workplace for
all employees and contractors, striving to minimise any
negative impacts on the environment from all activities, whilst
working closely with the regulators and engaging with its key
stakeholders. Jadestone is committed to complying with all
regulatory requirements underpinning safe operations and is
working tirelessly to instil a culture of strong health and safety
performance throughout all its operations and activities.
This section provides an update on how the Group performed
in 2023 across health, safety and environment, including
regulatory management and asset integrity.
HSE performance
The Group maintained strong safety performance despite
elevated levels of activity and numerous and often challenging
work fronts over the course of 2023. Jadestone worked over 4.6
million man hours (2022: 1.7), with the year on year increase
reflective of the ramp-up in construction activity at the Akatara
gas development. Consequently, the total recordable injury rate
(“TRIR”) of 0.86 is significantly lower than in previous years, and on
par with 2022 IOGP average of 0.90. Overall, the Group had zero
lost time injuries, as well as no material environmental incidents1.
Strong performance is the result of continuous reinforcement of
our safety leadership, culture and practices amongst employees
and contractors, and recognition that there is no room for
complacency when it comes to safety of staff. Six high-potential
events were recorded across the Group in 2023, with dropped
objects identified as a recurring theme (5 out of 6), which will
be the focus for 2024. The Group ensures that such events are
thoroughly investigated and corrective actions shared to ensure
learning and to minimise the probability of reoccurrence.
Occupational health and safety performance, 2021 – 2023
7.8
R
I
R
T
10
9
8
7
6
5
4
3
2
1
0
2.86
0.86
2021
2022
2023
Total recordable injury rate
Lost time injury
Risk management
Process of identifying, assessing and managing climate
related risks
The Group’s risk register is established in line with its Risk
Management Policy, and includes a systematic process for the
identification, assessment and management of significant risks,
including definition of accountability. The Risk Management Policy
is owned by the CEO, who delegates responsibility to the CFO,
country managers, 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.
Jadestone takes a bottom-up approach to climate risk
identification, ensuring that geographical nuances to the energy
transition context, including regulatory developments, as well as
physical manifestations of climate change, are well understood
before informing a view of the Group’s exposure. Specifically
in relation to physical risk, an expert climate risk consultant
was engaged in 2023 to help establish climate projections in a
range of scenarios for the operating regions prior to facilitating
an interdisciplinary risk workshop. Risks were assessed using
Jadestone’s risk framework with mitigations identified for medium
rated risks. Based on this initial assessment no major climate
vulnerabilities were identified, as discussed on page 23. Jadestone
is planning to integrate the results of the workshop into its in
country risk registers over the course of 2024 and will continue
to refine its understanding of potential impacts to its business
operations.
With regard to energy transition risks, building on the experience
of regional workshops over the past few years, Jadestone has
expanded the potential risk areas in line with the TCFD and
reviewed their potential impact applying its corporate risk matrix.
Assessment was supported by country-specific policy analysis and
market insights, with assessment results compared and calibrated
by the process owner. Identified mitigation actions are assigned
ownership across key functions and progress and effectiveness is
tested during the risk register review.
“Climate change – transition risks” is one of the principal risks
identified within Jadestone’s strategic risk profile, reflective of the
challenge faced by the industry, governments and society at large.
Metrics and targets
Quantifiable metrics are elected where feasible to help monitor
progress on the climate risk mitigations, as summarised on page
23. Qualitative actions are perceived to be of equal importance,
particularly in relation to the Net Zero roadmap delivery.
The Group has committed to reduce Scope 1 and 2 GHG emissions
from its operated assets by 20% by 2026 and by 45% by 2030 (from
2021 levels) as detailed on pages 16 to 17.
Both absolute and intensity-based Scope 1 and 2 GHG emissions
are disclosed on page 18 of this report. A detailed GHG
performance overview of Scope 1, 2 and 3 GHG emissions will be
included in the 2023 Sustainability Report.
As far as internal carbon pricing, GHG emissions and carbon
liabilities as per regulatory schemes inform Jadestone’s cost-
benefit analysis of potential acquisitions during M&A due diligence.
Further, climate scenario analysis of plausible implied carbon prices
affords a range of estimates on forward-looking carbon prices.
1
Those incidents rated as leading to minor effect, recovery in weeks to months or higher as per the Group’s risk matrix.
5
4
3
2
1
0
s
e
i
r
u
n
j
i
e
m
i
t
t
s
o
L
2 5
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Benefitting stakeholders
Jadestone recognises that its success relies on positive
contributions from its employees, business partners, communities
and, more broadly, society and the environment in order to operate
effectively and create value. Jadestone strives to deliver positive
socio-economic outcomes for local communities in operating
countries and regions, and to provide productive employment
while maintaining high standards of worker health, safety and
well-being.
Workforce management and diversity continues to be a key focus
for Jadestone. During 2023, the Group continued to grow its
asset base which is reflected in an 8% increase in total workforce
numbers1 year on year. In 2022 and 2023, 94% of permanent
employees represented local nationals, reflective of the deliberate
effort to bring employment opportunities to communities where
Jadestone operates.
In terms of gender balance, female representation in the workforce
increased by 3%. 21% of the Jadestone employees are now female,
in comparison to 18% from 2022. Overall, however, workforce
gender statistics reflect the common challenge of gender diversity
for most oil and gas operators. During 2023, Jadestone recorded no
incidents of discrimination.
Jadestone’s projects continue to be an important source of
investment and income for local communities and the region,
with approximately US$44 million contributed in payments to
governments (including fees, taxes and royalties) in the countries
in which we operate.
1
Includes permanent employees, contractors and consultants.
In 2023 the Group has continued to develop targeted community
activities, with a needs-driven initiative undertaken in each country
of operations.
During the year, as construction of the Akatara gas development
in Indonesia progressed, Jadestone was able to stimulate business
activity within the local region through direct engagement of
local manpower and its procurement decisions. Through its small
business development initiative, Jadestone continued to create
opportunities for local suppliers, with 23 contracts awarded to local
suppliers. Over 500 contractors from nearby villages were engaged
during the year on the site, representing 38% of all workers on site.
Restoration of a local canal was undertaken by the Jadestone
Indonesia team in partnership with the local authorities during
the year to help sustain agriculture activities in a village close to
the Akatara gas development. A stretch of 5.4 km canal was
revitalised through dredging and cleaning, not only enhancing
farming productivity but also improving the environmental for
the local community.
In Australia, Jadestone continued its support for the Clontarf
Foundation, helping create eight student placements in the
Broome Academy in Western Australia. In Malaysia, the team
organised a community-wide mangrove replanting day nearby its
PenMal operations, involving a local orphanage, business partners
and local NGOs. For a more detailed coverage of Jadestone’s
community initiatives, please refer to 2023 Sustainability Report.
In Australia, consultation requirements were clarified following
the Federal Court appeal decision of Santos NA Barossa Pty
Ltd v Tipakalippa [2022]1, which represents the law regarding
requirements for consultation in accordance with the Environment
Regulations. The court decision has had wide-ranging implications
on how energy and mining companies approach negotiations
with indigenous groups, representing a considerable shift in
consultation expectations within the regulatory context. Jadestone
has continued to develop relationships with indigenous groups
and the wider community through meetings with Directors and
Elders of the traditional owner groups in Western Australia and
Northern Territory, and reaching out to communities adjacent
to areas in which it operates. Open public sessions, local and
national advertisements, social media advertising and direct
communication have all resulted in an increased awareness of
Jadestone’s operations in Australia and ensured transparent
and open consultation feedback. This has all been undertaken
in accordance with the industry regulator’s expectations
and legislation and continues as part of Jadestone’s ongoing
consultation strategy for all its operating assets.
Of note is a pending review of consultation guidance by the
Australian federal Department of Industry, Science and Resources
(“DISR”) with the aim to provide greater certainty to operators
about the consultation requirements under the Offshore
Environment Regulations while maintaining the obligation of
industry to consult genuinely.
One Tier 1 process safety event was recorded at the PM323
offshore unmanned platform in Malaysia, where a gas release
from a dislodged electronic flow meter, estimated at 3,382.5 kg/
hr, occurred. An emergency shut down was activated immediately
upon discovery of the leak and a root cause investigation was
carried out by a third-party, determining contributing factors
and nine recommendations, all implemented as per the agreed
timeframes.
Overall, the Malaysia business unit has achieved cumulative
1.1 million safe manhours since taking over operatorship in
August 2021, with zero LTIs. Of note is the safe delivery of a
drilling campaign in Q4 2023, which involved at least 12 contractor
companies. The campaign continued throughout the monsoon
season with additional safety precautions taken and resulted
in safe and successful drilling operations without any injuries.
At the Akatara gas development project site on the Lemang
PSC, Indonesia, over 90% completion was achieved by year end
2023, whilst undertaking higher risk activities such as major
foundation works, pipe rack and storage tanks construction and
well workovers with over 3.28 million manhours worked without
an LTI. Jadestone has continued to engage with the Akatara EPCI
contractor to ensure that robust HSE management practices are
implemented and monitored.
Regulatory management
As an upstream operator in the APAC region, Jadestone is subject
to various HSE-related regulations in an often rapidly changing
regulatory environment and compliance is facilitated within
the countries of operations through experienced local HSE
professionals, supported by other functions, to ensure compliance
with operational requirements.
During the 2023 reporting period, the Group received zero
regulatory enforcement notices. Existing regulatory enforcement
in Australia, issued in 2022 in relation to the Montara oil leak,
was methodically addressed throughout the year, resulting in
NOPSEMA’s General Direction being lifted (see case study below).
Remedial work at the Montara site to ensure asset integrity
About the incident
As reported previously, between three to five cubic metres of
crude oil was released to sea during a routine oil transfer between
tanks at the Montara venture in June 2022. This loss of primary
containment (“LOPC”) was promptly stopped, the released oil
fully dispersing naturally within days, resulting in negligible
impact on environment. The industry regulator, NOPSEMA
issued a Prohibition Notice in June 2022 and a General Direction
in September after communications between two tanks was
observed. Production was shut-in for the larger part of the second
half of 2022 and into Q1 2023, whilst extensive inspection and
repairs work scopes were undertaken to ensure the structural
integrity of the facility’s hull and tanks on the FPSO. All activities on
the Montara tank integrity repair programme were executed with
no recordable injuries.
Jadestone’s response in 2023
Following the completion of an independent review of Jadestone’s
remediation plans and operational readiness for the Montara
Venture FPSO, the regulator lifted the General Direction in early
February 2023, which enabled production to re-commence
gradually in March 2023. Independent consultants conducted
a 90 day post start up review and confirmed all actions were
implemented effectively.
Future outlook
The Prohibition Notice issued in June 2022 remains open until
each tank that can contain oil has been inspected and a technical
file note demonstrating this has been issued to NOPSEMA and
accepted. Jadestone is currently methodically executing a tank
restoration program, which resulted in 6 centre, 5 centre, 5
port, 5 starboard and both slops tanks being removed from the
Prohibition Notice during 2023. Work is ongoing on the remaining
tanks and once all are completed, the Prohibition Notice will be
lifted. Jadestone continues to engage closely and transparently
with the regulator about the progress of the inspection work.
There have been no further loss of containment events to the
environment from the Montara Venture post the June 2022 event.
The NOPSEMA Level 4 investigation into the 2C loss of containment,
is ongoing.
1
FCAFC 193 on 2 December 2022.
26
2 7
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Key performance indicators
Each year, Jadestone’s Board agrees a performance contract with the Group’s CEO, which contains key objectives aligned to the Group’s
strategic aims, and key performance indicators 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 2023 performance contract is summarised in the Remuneration Committee report on pages 62 to 68.
The following table provides an overview of the outcomes of the 2023 performance measures.
Performance measure
Commentary
Achieve 2023 operations
targets
Deliver continuous
improvement in ESG
performance
l Group production in 2023 was in the lower half of the target range, primarily due to reduced
uptime at Montara during the year offsetting a full-year of production from the original CWLH
interest, an increase at Stag following the 2022 infill campaign and strong production from the
PenMal Assets towards the end of the year following the successful 2023 drilling campaign on
the East Belumut field.
l
l
2023 exit production (based on the December 2023 average) was in the upper half of the target
range, as strong year-end production from the PenMal Assets was partially offset by planned
maintenance at Montara.
Total Group operating costs were at the upper end of the target range, primarily due to higher
workover activity at Stag compared to plan, shuttle tanker operations at Montara lasting longer
than planned and charges related to decommissioning activity on the Group’s formerly non-
operated interests offshore Malaysia.
l Capital expenditure and outcomes were delivered in line with target.
l HSE performance was good, with zero life altering events and zero regulatory enforcement
notices during 2023. There were four minor recordable injuries during the year, a reduction of
20% on 2022 levels.
l
There was one Tier 1 loss of primary containment event at one of the Group’s assets offshore
Malaysia.
l Absolute greenhouse gas emissions of c.469 kt of CO2-e were significantly below target, primarily
due to reduced uptime at Montara during the year and lower emissions at the PM323 field
offshore Malaysia.
l
The Group announced interim greenhouse gas emissions reduction targets as part of its Net
Zero pledge by 2040.
Deliver per share accretive
growth
l The targets for reserve additions and production growth through acquisitions were partially
met, with only the Sinphuhorm transaction completing in the year. However, the value creation
target was met based on the terms of the Sinphuhorm acquisition.
Create sustainable
shareholder value
l The objective of delivering a significant increase in the share price was not met.
l
l
l
l
The target of closing a reserves based loan during Q2 2023 was met, with the size of the RBL
facility exceeding the target.
The sustainable leverage target (Net Debt/EBITDA) was met.
The minimum liquidity target at 31 December 2023 was met.
The targets for share trading liquidity and interactions with shareholders were met.
2 8
2 9
Section 172
statement
Under the Companies Act 2006, Jadestone is required to include in
its 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.
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.
b. the interests of the company’s employees;
c.
the likely consequences of any decision in the long-term;
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;
the desirability of the company maintaining a reputation for
high standards of business conduct; and
the need to act fairly as between members of the company.
e.
f.
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
l
objectives and a commercial strategic planning process for the
Group (s172 (a));
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 (d)); and
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 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 49 to 53 of this report.
The Group intends to apply the recent revisions to the QCA Code
in reporting for the financial period ending 31 December 2024.
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
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
engagement, can be found within the Sustainability Review on
pages 13 to 26 and the HSEC Committee Report on pages 72 to 73.
The following summarises key activities and decisions made by
Jadestone’s Directors in 2023 in support of their s172 duties:
Board engagement on Montara
During 2023, the Board continued to focus on the Montara fields,
particularly the condition of the Montara Venture FPSO, following
the shut-in of the Montara fields from August 2022 to March 2023
and then for a further month in August 2023. Notwithstanding the
successful diversification efforts of the Group in recent years, the
Board’s focus on Montara was in recognition of 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 (s(172) (a), (b), (d)-(f)).
The Board’s engagement on Montara was primarily through the
Montara Technical Committee, which was established in September
2022 to provide additional support, advice and challenge to
management during the Montara Venture FPSO hull and tank
remediation work.
During 2023, the Montara Technical Committee received
frequent updates from senior management on the ongoing work
programme at Montara. These were formally considered and
discussed at Technical Committee meetings, of which 10 were held
during 2023, which were then reported back to the full Board.
In addition to the general condition of the Montara fields and
the ongoing FPSO tank remediation work, the Montara Technical
Committee was also involved in activity to assess the best longer-
term options for the Montara fields. This project investigated all
possible scenarios for the Montara fields, including replacing or
dry-docking the Montara Venture FPSO. The most viable option was
deemed to be the existing mode of operations with increased long-
term repair and maintenance activity. As a result and incorporating
general industry inflation, it was assessed that Montara would
require a higher level of costs than previously assessed in order to
maintain the assets in an appropriate condition throughout their
remaining life, which was disclosed publicly in early 2024. Through
this process, the directors considered the likely consequences of
longer-term decisions on the business including asset impairments,
as well as maintaining a safe and appropriate level of condition
of the Montara Venture FPSO.
June 2023 equity fundraising
Following the decision of the Group to conduct a financing
transaction in June 2023, which included an equity placing and
open offer, the then Chairman of the Board met with the Group’s
major shareholders to explain the reasons for the equity raising
and understand their feedback on the equity fundraising and the
Group’s recent performance more generally. (s(172) (e), (f))
This engagement allowed the Board to fully understand the
dissatisfaction amongst certain shareholders with the Group’s
recent operational performance and clearly outline the sequence
of events which led to the June 2023 financing transactions.
The feedback from shareholders was formally considered
and discussed by the Board, which decided to implement
several changes to the management and governance structure
of the Group.
Given the significant growth and diversification of the Group’s
operations in recent years, it was deemed appropriate to
strengthen the senior management team and enhance internal
succession planning options by creating the role of Chief Operating
Officer, with a search currently ongoing. Furthermore, it was
established that the Board needed to be refreshed, with Dennis
McShane, Lisa Stewart and Robert Lambert stepping down, and
Gunter Waldner, Joanne Williams and Adel Chaouch appointed.
Adel Chaouch was elected Chairman in March 2024. Iain McLaren
has also signalled his intention to step down as a Non-Executive
Director and Chairman of the Audit Committee following
completion of the 2023 audit process and appointment of his
successor as Chair of the Audit Committee.
Risk management, principal risks
and uncertainties
The Board continues to be responsible for the Group’s risk appetite
and monitoring the principal risks to which it is exposed. Due to
the diversification of the Group in recent years, the development
of the Akatara project and further anticipated growth, the Board
commissioned the development of an enterprise risk register
(“ERR”) during 2023.
The ERR is comprised of country level risks (operations, HSE/
ESG, supply chain and contracts, engineering, HR, IT, drilling and
subsurface) as well as business development, commercial, finance
and legal.
A tiered approach to risk management and mitigation is now in
place across the Group, with quarterly reviews at three levels.
Countries and groups review their top 20 risks at a leadership level,
with the top 10 combined risks review by the CEO leadership team
and the top 10 business risks by the Board. At these meetings,
the outcomes will be to either avoid, accept, mitigate or transfer
the risk.
To help ensure consistency of risk assessment across the Group,
the risk management framework risk matrix was reviewed and is
now used consistently across the Group.
The complete ERR will be a regular agenda item at Board meetings.
The principal risks currently recognised, and their mitigating
actions, are detailed below. There may be additional risks
unknown to the Group and/or other risks that have currently been
assessed as not material, but which may develop into material risks
in the future.
7 Risk has increased during the year 8 Risk has decreased over the year 6 No change in the risk over the year
Risk
Risk description
Select mitigations
Availability of
capital to fund
business activities
and investment
in organic and
inorganic growth
Risk Owner:
CFO
Change in year
7
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 and 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.
Oil price risk
Risk Owner:
CFO
Change in year
6
The Group’s earnings and cashflow are
dependent on oil prices, which are subject
to global supply and demand trends.
These movements can be impacted by
global events such as the war in Ukraine
and escalating tensions in the Middle
East, as well as decisions made by major
oil-producing nations and organisations
like OPEC.
Predicting oil prices is challenging due
to the complexity of various factors
involved. A prolonged period of low oil
prices would adversely impact the Group’s
liquidity, investment, and expansion plans.
Additionally, forecasts of sustained low oil
prices could result in lower forecast asset
cashflows, reserves and asset valuations.
The risk that availability of capital may decline increased during the year, primarily due
to the extended Montara downtime impacting on the attractiveness of the Group as a
lending or investment proposition.
The Group uses 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 Net Zero Scope 1 and
2 greenhouse gas emissions from its operated assets by 2040, in late 2023 announced
interim GHG reduction targets in support of this Net Zero pledge. Jadestone’s strategy
as a responsible operator of mid-life field assets is informed by the IEA’s position that
future oil and gas supply should come from maximising the recovery from existing
fields, rather than through exploration and subsequent greenfield development.
The Board and management deploy a disciplined approach to the allocation of capital
across the portfolio.
Jadestone seeks to establish and maintain long-term relationships with both major
international financial institutions lending to upstream oil and gas companies and
leading institutions investing in the equity of the same companies.
The oil price risk remains the same as the prior year, as the war in Ukraine and the
tensions in the Middle East continue to generate volatility in oil prices. During 2023, oil
prices traded in a US$71-97/bbl range.
During the formulation of the annual work plan and budget and three-year plan,
different scenarios are considered which include a range of oil price outcomes to
understand the sensitivity of revenues, earnings and cashflows to movements in oil
prices.
In conjunction with the reserve based lending agreement executed in May 2023, the
Group hedged approximately 50% of forecast production over the next two years at an
average price of US$70.57/bbl to underpin the cash generation of the business.
The PSC environments in Malaysia and Indonesia provide assurance of cost recovery,
subject to regulatory frameworks, ensuring that operating costs for each location are
recovered from current or future revenues.
The Group remains committed to diversifying its asset portfolio as a part of its strategy
to mitigate exposure to commodity price fluctuations. This includes securing fixed
gas price contracts, such as the gas sales from the Akatara project, which are priced
at US$5.60/MMBtu with a 90% take-or-pay arrangement. Additionally, the Group has
entered into a Heads of Agreement in Vietnam for gas sales from the Nam Du/U Minh
gas development , based on a fixed gas price with inflation escalation.
3 0
31
Risk
Risk description
Select mitigations
Risk
Risk description
Select mitigations
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Business
development
opportunities
Risk Owner:
EVP Business
Development
Change in year
6
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 business development opportunity may
be negatively viewed by investors if it is
considered dilutive.
Poor due diligence or unfavourable
transaction terms may add low quality
assets or unexpected liabilities to the
Group.
Climate change
transition risks
Risk Owner:
ESG and
Sustainability
Manager
Change in year
6
As the energy systems in operating regions
and markets undergo a transition towards
lower carbon energy sources, the Group is
subject to energy transition risks including
reputational and stakeholder pressures,
policy changes through carbon pricing
mechanisms or GHG emissions standards
and technology and market changes
through, for example, the increased
uptake of low-carbon alternatives
(see page 22).
The Group is committed to grow via acquisitions, so the risk remains a principal risk for
the group. The risk remains unchanged compared to prior year as controls remain in
place to ensure only appropriate opportunities are pursued.
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 business
development 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, and accretive on all metrics.
The Group rigorously reviews acquisition and funding structures to ensure there is no
dilution to shareholders.
Overall, Jadestone has not seen a year-on-year change in terms of risk exposure, due to
proactively managing it’s lending counterparties and monitoring/mitigating transition
risks. 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 larger upstream companies 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, announced in December 2023;
l Proactive engagement with financial stakeholders and the investment community;
and
l Possible prepurchase of ACCU options.
Energy transition-related policy developments are monitored in core regions and
the potential implications on the business are evaluated and reflected in the Group’s
financial modelling.
Please refer to pages 21 to 23 for more details on how Jadestone identifies, monitors
and manages climate-related risks.
Due to the nature of the upstream industry
and with a focus on mature assets,
Jadestone operates with the inherent risk
of a loss of containment, including oil spills.
The oil spill risk has not changed during the year, with both preventative and mitigative
controls in place. The Group maintains detailed polices, strategies, and programmes
covering asset integrity management, emergency response and various maintenance
programs to ensure the integrity of itsassets.
A release of gas or liquids from an integrity
breach could result in a prolonged
production outage and potentially
significant environmental damage.
Any environmental or loss of production
incident could negatively impact business
performance and cashflows through
fines, penalties, remediation and business
disruption.
Whilst the small oil spill (3-5 cubic meters)
at Montara in 2022 did not have a negative
impact on the environment, and there
have been no fines or penalties to date, a
NOPSEMA investigation is ongoing, and
there was significant business interruption
whist repairs to the FPSO’s tanks took
place.
Occupational, process safety and
environmental risks due to the nature of
producing hydrocarbons and managing
these risks to as low as reasonably
practical is a key priority for the Board and
senior management team.
Any unsafe work practices, human error,
equipment failure, asset integrity and /
or loss of containment could result in
personal injury, fatality, environmental
harm 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
licence to operate.
Assets are maintained to industry standards and floating facilities maintain certification
with the relevant class society.
There is scheduled maintenance on all safety critical equipment, that either helps
prevent a loss of containment event, or mitigates the consequence.
Periodic planned shutdowns are conducted to carry out required inspections,
maintenance, repairs and modifications to ensure and protect Jadestone’s assets.
Assurance and compliance is managed through various key performance indicators and
deviations are risk assessed to ensure safe operation is achievable.
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 that are accepted by the regulator are in place on
operated assets to ensure risks are managed to as low as reasonably practicable.
Detailed crisis management and emergency response processes are also in place and
regularly tested.
There has been no change in the potential impact or likelihood of the HSE risks due
to the nature of Jadestone’s operations and the environments in which the Group
operates.
Occupational safety is governed by standards, procedures, life saving rules and
competency training where required. A behavioural base culture, allied with health
and wellbeing and fitness for work programmes all aid in the safe execution of work.
Learning from incidents and near misses is also key to the prevention of unwanted
events.
Excellence in process safety is key to prevention of major accident events. A safety
case for each field is a regulatory requirement, which helps to ensure there is no loss
of containment with asset integrity programs, safety critical element maintenance,
management of change, deviation and permitted operations tools.
The Board’s HSEC committee oversees and sets standards for the Group, and drives
accountability and commitment throughout the organisation. The Group targets zero
lost time incidents and uses key performance indicators to track progress.
The Group’s HSE management system includes environmental impact statements,
environmental plans, stakeholder consultation plans, oil spill response and other
emergency plans.
Oil spill risk
Risk Owner:
Country Managers
Change in year
6
Health, safety,
and environment
(“HSE”) risks
Risk Owner:
Group HSE Manager
Change in year
6
3 2
Development
and recovery of
reserves
Risk Owner:
Country Managers
Change in year
6
The Group is currently dependent on
a small number of producing assets. A
reserve write down may impact business
performance and corporate reputation.
The Group operates mid to late life assets
and low oil prices, unexpected loss of
well(s) or prolonged field shutdowns
requiring high cost remediation could
accelerate the end of field life impacting
recoverable reserves.
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 late-life production phase. Reserves
are assessed by reference to short and long-term performance data, reducing the
uncertainty range and risk of a write down. Internal technical reserves reviews ensure
a robust assessment process, taking into account any recent one-off events and long-
term trends that act as guides for the asset portfolio. All assets are audited to SPE-PRMS
guidelines on an annual basis by a competent person of international repute and
competence.
The Group places a strong emphasis on subsurface analysis twinned with knowledge
of mature infrastructure, and has centralised its subsurface teams in Kuala Lumpur in
order to develop excellence, competence and knowledge sharing in order to manage the
asset portfolio and evaluate new opportunities across the region.
Regulatory
infringement risk
Risk Owner:
Country Managers
Change in year
6
Decommissioning
regulatory risk
Risk Owner:
Regional
Operations
Manager
Change in year
6
IT resiliency,
continuity and
security risk
Risk Owner:
Group IT Manager
Change in year
7
Inflationary
pressures and
timeline risk
Risk Owner:
CFO
Change in year
6
The Group’s key assets are located in
politically stable countries, but there is an
inherent possibility of governmental or
regulatory changes which could negatively
impact Jadestone’s business.
There is also the threat of regulatory
enforcement actions as a result of
Jadestone’s activities in the event of a loss
of containment event to the sea, failing to
comply with regulations or as a result of, or
potential for, a significant workplace injury
or environmental harm.
The risk to regulatory infringement remains unchanged, as does the potential impact
from government legislative changes. 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.
In 2023, the Australian Federal Court ruled that NOPSEMA had approved certain oil
and gas operators’ environmental plans (“EP”) without ensuring that the required
stakeholder consultation had occurred. The EP’s were rescinded, causing significant
delays to the relevant projects. The upstream industry, industry bodies, affected
stakeholders and NOPSEMA worked collaboratively throughout 2023 on a revised
consultation framework. In late 2023, EP’s that had met the new consultation hurdles
began to be approved.
New assets, like Akatara, are assessed for political risk, and the potential negative
impacts that could arise on the Group.
There have been no changes to the decommissioning risks associated with government
policy in the regions in which the Group operates. The Group will accelerate studies
to assess whether there would be a net environmental benefit from leavin subsea
pipelines at Montara and Stag in situ.
The Group will continually update it’s knowledge and understanding of
decommissioning practices to ensure that decommissioning cost estimates can be
reduced and risks eliminated.
This risk increased in likelihood during the year due to an increase in cyber security risks
globally, leading to several instances of large data breaches. Extensive data and server
backups are performed regularly ensuring minimal data loss and fast recovery should
restoration be needed.
The Group’s IT redundancy strategy is applied to critical systems and networks.
The most up to date security solutions are deployed and maintained while training is
provided to all staff to minimise the exposure of security threats.
Periodic security assessments and penetration tests on networks and critical systems
are also performed to measure and ensure an appropriate level of protection.
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 to improve data protection and minimise data loss.
The Group continues to enhance its security systems with the implementation of mobile
device management, while a security operation centre has been established and other
data protection solutions are scheduled for near-term implementation.
The risk remains consistent with last year, due to the challenges created by the evolving
global macroeconomic environment.
The Group maintains a focus on its cost structure and operating efficiency. Through
a system of robust financial controls across the business, management effectively
monitors cost trends and project schedules and implements mitigations as necessary.
This approach provides flexibility to respond to a changing business environment in
order to safeguard the Group’s financial position.
Regular forecasts including various scenarios and potential mitigations are performed
by management and reviewed by the Board. This structured process allows
management to continually reassess future predictions and forecasts to ensure the
business responds to a changing environment.
The Audit Committee regularly reviews liquidity, funding, and financial performance.
Currently, the Group’s approach to
decommissioning is to leave subsea
pipelines in situ at both Stag and Montara.
NOPSEMA’s base case is full removal
of subsea infrastructure, unless it can
be proven there is a net environmental
benefit to leave the infrastructure in place.
There is a risk that Jadestone would be
required to remove subsea pipelines if the
Group cannot prove a net environmental
benefit of leaving them in situ.
The reliance on IT systems, networks
and processes continues to evolve
as technology becomes increasingly
embedded in every day business needs.
As the Group grows and develops, the
connectivity of networks and systems
becomes more complex while resiliency
from disruptions and outages are
essential.
Cyber security threats continue to
increase in sophistication and a cyber
security breach could impact operations
resulting in business interruption and/or
the disclosure of confidential information
resulting in financial loss, corporate
reputational damage and/or legal
exposure for the Group.
The Group’s financial performance may
be adversely impacted by uncertain
macroeconomic conditions including
inflation and supply chain disruptions.
These factors could result to additional
costs and delays in the delivery of key
projects for the Group.
This could lead to cost inflation impacting
financial performance and long lead times
for key materials and equipment.
In a high inflationary environment,
key decision-making may be adversely
impacted, and there is an increase in
uncertainty surrounding judgements and
estimations. Management is required
to make assessments, estimates, and
assumptions regarding future activities. If
these predictions prove incorrect, it could
affect financial performance and cash
balances, thereby impacting the ability
to finance investments and expansion
efforts.
3 3
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Risk
Risk description
Select mitigations
Operating
performance risk
The Group is focused on producing assets
and bringing discovered hydrocarbons into
production rapidly.
There was no change in operating performance risk during the year - the downtime
at Montara was balanced by the successful Malaysian drilling program in the fourth
quarter of 2023.
Risk Owner:
Regional Operations
Manager
Change in year
6
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 reducing uptime.
The Group continues to manage its mature assets and is focused on growth by acquiring
assets in the earlier years of their production life and developing gas reserves. This
builds a diverse and valuable portfolio thereby reducing the risk of over exposure to the
performance of individual assets. In 2022 the Group acquired 16.67% stake in CWLH
fields, with a further 16.67% interest closed in Q1 2024. This, with the planned start up
of the Akatara gas field in the second quarter of 2024, is expected to further de-risk
Jadestone’s operating performance.
The Group operates a continuous improvement mindset, designed to identify cost
saving opportunities that lower the cost base across operations and offices.
The risk of declining production, increased costs and deteriorating infrastructure
reliability and uptime, can be offset by infield drilling campaigns. The PM323 drilling
campaign in Malaysia in 2023 has delivered strong production growth and reserve
additions.
Developing late life operating and maintenance strategies is key to managing costs in
declining fields, whilst ensuring the facilities are maintained to prevent major accident
events. These strategies are regularly reviewed and updated.
The Group also uses its enterprise risk register to constantly understand the key
operational risks and how these risks are accepted, mitigated or eliminated.
There has been no material change in the likelihood or impact of the risk, and project
economics and execution of capital activity are a key feature of the long-term strategy
for the Group.
The Board and management seek out regular dialogue with national upstream
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. In certain countries this
includes PSCs, which help mitigate the impact of any significant capital or operating cost
overruns.
Management regularly provides strategic updates and project status to shareholders
and other stakeholders.
Capital execution
activity risk
Risk Owner:
Country Managers
Change in year
6
The Group is dependent on the successful
execution of strategic projects including
the Akatara development in Indonesia and
the proposed development of the Group’s
discoveries offshore Vietnam.
Developing large capital projects in
complex business environments presents
multiple challenges for engineering,
technology and skilled labour availability.
Cost over-runs or project delays could
negatively impact business performance
and the achievement of objectives and
targets.
The Akatara project is in the development
phase with first gas anticipated in the
second quarter of 2024. Any significant
cost over-runs or delays to first production
would negatively impact the project
economics and financial returns of the
project to the Group.
The Nam Du/U Minh project is subject to
government approval and FID but remains
a material opportunity for the Group, and
significant delays or inflationary pressures
could impact the economics of the project.
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 2023, the Montara assets had proven plus
probable reserves of 13.6 mmbbls (31 December 2022: 18.5
mmbbls), 100% net to Jadestone. The year-on-year change in
reserves at Montara is explained by production in the year (1.3
mmbbls) and a 3.5 mmbbls downgrade to reflect revisions to well
performance, timing and nature of future infill drilling activity, and
higher anticipated operating costs over life of field.
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
2023 ranged between US$1.36/bbl to US$6.59/bbl, with an average
premium of US$3.82/bbl. The most recent lifting in March 2024
was agreed at a premium of US$3.88/bbl.
Production from the Montara fields was shut in between August
2022 to March 2023 for storage tank inspection, maintenance and
repair work following a small release of oil to sea in June 2022 and
a further tank defect encountered in August 2022.
Following lifting of the General Direction issued by NOPSEMA in
September 2022 and the completion of tank inspection and repair
activities, as well as scheduled four-yearly maintenance activities,
a phased production restart campaign commenced late in March
2023.
On 29 July 2023, production at Montara was temporarily shut
in following a hydrocarbon gas alarm in ballast water tank 4S.
Production restarted on 1 September 2023 with tank 6C.
Inspections identified the location of a small defect between tank
4S and oil cargo tank 5C, with the repairs of both tanks completed
in Q1 2024 and returned to service thereafter.
On 4 October 2023, pressure was lost from the A annulus in the
Skua-11 well, likely as a result of gas in the annulus escaping from a
shallow leak point. The well was immediately shut in. A replacement
operation, which includes a sidetrack to target volumes associated
with Skua-11 and additional reserves in the vicinity is currently
being planned and is expected to commence in Q4 2024.
Montara production averaged 3,655 bbls/d in 2023 (2022: 4,227
bbls/d), lower compared to previous year due to facility constraints
caused by the separator limitations from March to July 2023 and
the limited storage tank capacity on the FPSO due to the repair and
maintenance activities referenced above.
There were five liftings in 2023, resulting in total sales of 1.2
mmbbls of crude oil compared to 1.7 mmbbls from the same
number of liftings in 2022.
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 2023, the field contained total proved plus
probable reserves of 11.1 mmbbls (31 December 2022: 12.1
mmbbls), 100% net to Jadestone. The majority of the year-on-year
change in reserves was explained by production during the year.
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 2023 ranged between US$10.10/bbl and US$19.10/
bbl with an average premium of US$ 13.03/bbl. The most recent
lifting in March 2024 was agreed at a premium of US$15.88/bbl.
Production was 2,672 bbls/d in 2023 compared to 2,176 bbls/d in
2022. This increase was predominately due to the completion of
the Stag 50H and 51H drilling campaign in November 2022.
There were four liftings in 2023 for total sales of 1.0 mmbbls,
compared to 0.8 mmbbls in 2022 from the same number of liftings.
The Group made an impairment charge of US$17.4 million to Stag’s
oil and gas properties as at 31 December 2023, following an annual
impairment assessment performed and identified that the VIU of
the operating asset is lower than the carrying amount (see Financial
Review section in this document).
North West Shelf Project
The Cossack, Wanaea, Lambert and Hermes oil fields (the
“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 a water depth of approximately 80 metres.
As at 31 December 2023, the CWLH Assets contained total proved
plus probable reserves of 6.8 mmbbls (31 December 2022: 5.1
mmbbls, net to Jadestone. The year-on-year increase reflects the
outperformance of the CWLH assets during 2023, with higher
uptime and lower decline rates incorporated into the end-2023
reserves assessment, with asset life now extending to 2035 (from
2031) as a result. The end-2023 CWLH Assets reserves figure above
does not include the recent doubling of the Group’s interest, which
is described below.
On 14 November 2023, the Group executed a sale and purchase
agreement with Japan Australia LNG (MIMI) Pty Ltd (the “Seller”),
to acquire the Seller’s non-operated 16.67% working interest in the
CWLH Assets, for a total initial cash consideration of US$9 million,
and certain subsequent Abandonment Trust Payments
(the “Acquisition”).
The Acquisition was completed on 14 February 2024, with a net
receipt to the Group from the Seller of US$6.3 million, reflecting the
accumulated economic benefits of the CWLH assets for the period
from the effective date of 1 July 2022 to completion. As a result,
the Group’s non-operated working interest in the CWLH assets
increased to 33.33%, from 16.67%.
On 9 February 2024, the US$6.3 million net receipt from the Seller
and US$35.7 million from Jadestone were paid into the CWLH
abandonment trust fund, in aggregate satisfying the initial US$42.0
million abandonment funding requirement required under the
terms of the Acquisition. The second US$23.0 million instalment
into the abandonment trust fund is payable on NOPTA’s approval
of the accession documents, which is expected in Q2 2024. The
final instalment of up to US$37.0 million will be paid into the
abandonment trust fund by 31 December 2024.
Contribution to Group production was 1,896 bbls/d in 2023
compared to 383 bbls/d in 2022 on an annualised basis, due to
the timing of the acquisition. The average production from the
completion date of 1 November 2022 to 31 December 2022 was
2,290 bbls/d, net to Jadestone’s working interest.
Jadestone lifted one cargo in 2023 for total sales of 0.7 mmbbls,
compared to 0.7 mmbbls in 2022, also from one lifting.
3 4
3 5
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Exploration phase two of the Block 46/07 PSC includes a
commitment to drill one exploration well. Jadestone proposes
to drill this well in conjunction with drilling the gas production wells
for the Nam Du field development and to utilise the well as
a future gas producer via the Nam Du/U Minh processing facilities.
Exploration phase two is due to expire on 29 June 2024. The Group
has submitted a request to Petrovietnam to extend the drilling
deadline to align the timing of the commitment well with the Nam
Du/U Minh project schedule. This approach is consistent with
previous extensions granted for the PSC exploration phase two.
The Tho Chu discovery in Block 51 was under a suspended
development area status. The Company is working with
Petrovietnam and other government entities to obtain a
suspension of the relinquishment obligation for Block 51.
A campaign with a 550 HP rig to work-over the planned five wells
commenced in Q1 2024. Currently, four out of five well workovers
have been completed and tested at an aggregate stabilised rate of
c.30 mmcf/d, ready to deliver the gas production required to fulfil
the daily contract quantity under the gas sales agreement.
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 of 93.9 mmboe.
Throughout 2023, the Group negotiated a gas sales heads of
agreement (“HoA”) with Petrovietnam Gas Joint Stock Corporation
(‘PV Gas’). The key terms were finalised after receiving approval
from PV Gas, Petrovietnam, and Jadestone, with the HoA signed
on 25 January 2024.
The HoA enables the submission of an updated Nam Du/U Minh
Field Development Plan for approval, which is required before
a final investment decision can be taken and commercialisation
of this potential resource advanced.
Malaysia
Operated: PM 323 and PM 329 PSCs & Non-operated: PM
318 and AAKBNLP PSCs
The PenMal Assets consist of two operated PSCs, which comprise
a 70% interest in PM329 PSC, containing the East Piatu field, and
a 60% interest in PM323 PSC, which contains the East Belumut,
West Belumut and Chermingat fields.
Additionally, the Group assumed 100% working interests in
PM318 and AAKBNLP PSCs (the “PNLP Assets”) after taking over
operatorship in April 2023 following the decision of the previous
operator to withdraw from the licences. As a result, the Group
acquired the rights over the 50% of abandonment cess fund and
assumed the remaining 50% of asset restoration obligations under
the PNLP Assets. As part of the takeover, the previous operator
paid the Group for a sum representing its share of future wells
preservation activities and decommissioning costs. The Group
believes that the PNLP Assets have significant reserve and resource
potential. Jadestone is currently overseeing operations and
maintenance in shut-in mode. In June 2023, the Group submitted
a business value proposition to PETRONAS outlining plans to
redevelop the PNLP Assets and resume production. The PNLP
Assets were included in the Malaysia Bid Round Plus (“MBR+”)
process in October 2023 and renamed as the “Puteri Cluster”.
The reinstatement of production and further development of the
Puteri Cluster by the Group is subject to retaining the licence as
part of the MBR+ process. The Group has submitted a bid for the
Puteri Cluster, with the results of the MBR+ process anticipated
in mid-2024.
All four PSCs are located approximately 230km northeast of
Terengganu in shallow water.
As at 31 December 2023, PM323 and PM329 PSCs contained
total proved plus probable reserves of 9.2 mmboe (2022: 8.9
mmboe), net to Jadestone. The year-on-year increase can be
primarily explained by a reserve upgrade at PM323 PSC following
the successful infill drilling campaign in late 2023 and offset by
production during the year.
The PenMal Assets produce light sweet crude that is blended to
Tapis grade (43º API, 0.04% mass sulphur). The premium in 2023
ranged between US$2.72/bbl to US$5.63/bbl with an average
premium realised of US$4.38/bbl. The most recent lifting in
March 2024 was agreed at a premium of US$4.16/bbl.
Production in 2023 was 3,664 bbls/d of oil and 3,744 mscf/d of gas,
or 4,288 boe/d, net to Jadestone’s working interest, compared to
3,884 bbls/d of oil and 4,908 mscf/d of gas, or 4,702 boe/d in 2022.
The year-on-year decrease is due to natural production decline at
the PM329 PSC only being partly offset by the initial contribution
of the new PM323 infill wells drilled in late 2023, and no production
from the PNLP Assets reflecting the current shut-in mode.
The East Belumut (PM323 PSC) infill campaign, which commenced
in August 2023, was very successful, with first oil achieved two
months earlier than expected. By adding four new horizontal oil
producers, field production was quadrupled and exceeded target,
with incremental gross oil production of c.8,000 bbl/d. The infill
campaign delivered incremental gross reserves of 4.2 mmbbls,
including 1.3 mmbbls from the existing wells on the field after
the economic limit was extended by c.3 years.
There were nine liftings from the PenMal Assets in 2023, resulting
in total oil sales of 0.8 mmbbls and total gas sales of 1.4 mmscf,
compared to total oil sales of 0.8 mmboe and total gas sales of
1.8 mmscf from 13 liftings in 2022.
Thailand
APICO LLC (Sinphuhorm gas field and Dong Mun gas
discovery)
On 23 February 2023, the Group closed the acquisition of interests
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 Dong Mun gas discovery onshore north-east Thailand.
The acquisition included a 27.2% interest in APICO LLC, which
operates the Sinphuhorm concessions (E5N and EU1) and Dong
Mun (L27/43). The cash consideration was US$27.8 million, based
on an effective date of 1 January 2022.
As at 31 December 2023, the Sinphuhorm Assets contained
proved plus probable reserves of 3.9 mmboe, net to Jadestone.
The Group’s 9.52% non-operated working interest in the
Sinphuhorm Assets enable the Group to exercise significant,
being the power to participate in the financial and operating policy
decisions but not control or joint control over the assets’ day-to-
day operations. Therefore, the Group does not recognise its share
of revenues and production costs, instead recognising dividend
income when receive. The Group received US$3.7 million of
dividends in 2023.
Average production since the date of acquisition was 1,450 boe/d,
contributing 1,303 boe/d to Group annual production in 2023.
Pre-production assets
Indonesia
Lemang PSC
The Lemang PSC is located onshore Sumatra, Indonesia.
The PSC contains the Akatara field, which has been 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 Akatara to supply gas, condensate and
LPGs for local and regional use.
The Akatara gas field has been independently estimated to
contain 2P gross reserves (pre local government back-in rights) of
81.4 bscf of sales gas, 2.8 mmbbls of condensate and 9.5 mmboe
of LPG, equating to a combined 25.9 mmboe of reserves. Jadestone
has a 100% interest in the Lemang PSC, with the local government
retaining a back-in right for a 10% participating interest. The Group
expects the local government to take the 10% interest from its
back-in rights, a process which is currently going through a due
diligence phase.
During 2023, the Group primarily focus was on the civil foundation
works, control and electrical buildings, erection of the LPG,
condensate and fire water tanks, and the main pipe-rack.
This was followed by installation of the static and rotating
equipment, installation of piping, and electrical/instrumentation
cables, including the sales gas pipeline, flowlines modification
and the gas metering station. By the end of December 2023, all
of the key long-lead items had arrived on site.
Currently, the Group is focused on testing all equipment, testing,
cleaning and reinstatement of interconnecting pipe, electrical and
instrument testing at both the gas plant and metering station,
and the hydrotesting of the gas pipeline. Overall progress of the
project has reached 95.72% completion at the end of March 2024.
Pre-commissioning and commissioning activities commenced
in November 2023 and continued into early Q1 2024 for utility
systems, with further progression towards commissioning for the
process system. Commercial production remains on track to start
in Q2 2024.
In June 2023, the Group successfully reactivated two wells
from the prior oil development on the Akatara field. During testing,
one well achieved a maximum flow rate of approximately 9 million
cubic feet per day (mmcf/d), with data from the well test supporting
the current Akatara 2P reserves estimate. The well is designated
to supply pre-commissioning and commissioning gas for the
AGPF, while the second well is intended for use as an injector/
disposal well.
3 6
3 7
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Financial review
The following table provides select 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 2023.
USD’000 except where indicated
Sales volume, barrels of oil equivalent (boe)
Production, boe/day1
Realised oil price per barrel of oil equivalent (US$/boe)2
Realised gas price per thousand standard cubic feet (US$/mscf)
Revenue3
Production costs
Adjusted unit operating costs per barrel of oil equivalent (US$/boe)4
Adjusted EBITDAX4
Unit depletion, depreciation & amortisation (US$/boe)
Impairment of assets
(Loss)/Profit before tax
(Loss)/Profit after tax
(Loss)/Earnings per ordinary share: basic & diluted (US$)
Operating cash flows before movement in working capital
Capital expenditure
Net (debt)/cash4
Benchmark commodity price and realised price
The actual average realised price in 2023 decreased in line with
the benchmark price, which decreased by 16% to US$87.34/bbl,
from US$103.85/bbl in 2022. The primary factor was the downturn
in the benchmark Brent price, which fell by 18% to US$82.64/bbl
compared to US$101.32/bbl in 2022. The average realised
premium for the year was US$5.58/bbl, compared to US$7.81/bbl
in 2022, generally following the lower average Brent price.
The Stag premium averaged US$13.03/bbl (2022: 22.78/bbl),
Montara premium was US$3.82/bbl (2022: US$4.70/bbl) and
PenMal operated assets premium came in at US$4.38/bbl
(2022: US$6.67/bbl).
Production and liftings
The Group achieved average production of 13,813 boe/d in 2023, an
increase from 11,487 boe/d in 2022. The overall increase was as a
result of the following key factors:
l Higher annualised production at the CWLH Assets of 1,896
bbls/d for the full year in 2023 compared to two months in 2022
of 383 bbls/d;
l Acquisition of the Sinphuhorm Assets in February 2023
contributing to annualised production of 1,303 boe/d; and
l Stag production increased by 496 bbls/d attributable to the
additional output from the successful drilling and completion of
50H and 51H wells in November 2022.
The increase was partly offset by:
l Lower production from Montara by 572 bbls/d as a result of
the facility constraints caused by the separator limitations from
March to July and tank tops arising from the limited storage
tank capacity on the FPSO ; and
2023
3,862,741
13,813
87.34
1.53
309,200
(232,772)
37.24
90,647
14.14
(29,681)
(102,766)
(91,274)
(0.18)
36,499
115,882
(3,596)
2022
Restated*
4,326,770
11,487
103.85
1.63
421,602
(250,300)
37.49
162,329
10.74
(13,534)
63,193
9,237
0.02
158,548
82,876
123,329
l Reduced production from the PenMal Assets by 414 bbls/d due
to higher unplanned downtime of the Chermingat platform
combined with natural field decline.
Throughout the year, the Group executed 19 liftings, a decrease
from the 22 liftings in 2022, leading to oil sales totaling 3.6 million
barrels (mmbbls), down from 4.0 mmbbls in 2022. This reduction
in lifted volumes was caused by lower production levels at the
Montara and PenMal Assets.
The Group recorded a sale of 1,366.5 mmscf of gas from the
PenMal Assets, compared to 1,791.1 mmscf of gas in 2022.
Revenue
The Group generated net revenue after the effect of hedging
of US$309.2 million in 2023, a decrease of 24% compared to
2022 of US$421.6 million. The decrease of US$112.4 million was
predominately due to:
l Lower average realised prices in 2023 of US$87.34/bbl
(2022: US$103.85/bbl), resulting in decreased revenue of
US$66.6 million;
l A hedging loss of US$10.3 million incurred from the commodity
swap contracts entered into following the execution of the RBL
facility;
l A reduction in lifted volumes by 0.4 mmboe year-on-year
resulting in decreased revenue of US$34.4 million; and
l PenMal Assets generating lower gas revenue of US$2.0 million
compared to US$3.1 million in 2022.
Production costs
Production costs decreased by 7% in 2023 to US$232.8 million, from US$250.7 million in 2022, amounting to a decrease of US$17.5 million.
The reduction was predominately due to the following factors:
Operating costs
Supplementary payments and royalties
Workovers
Logistics
Repairs and maintenance
Decommissioning expenses
Underlift, overlift and crude inventories movement
Tariffs and transportation costs
2023
USD’000
98,723
16,056
17,562
34,109
55,572
12,545
(9,267)
7,502
2022
Restated*
USD’000
74,283
26,381
10,190
31,895
60,174
-
39,036
8,341
232,772
250,300
Variance
USD’000
24,440
(10,323)
7,372
2,214
(4,602)
12,545
(48,333)
(839)
(17,526)
Note
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(i)
Overall operating costs increased by US$24.4 million to US$98.7 million in 2023, compared to US$74.3 million in 2022, due to:
n Operating costs at Montara and Stag increased by US$20.8 million (2023: US$77.0 million; 2022: US$56.2 million), primarily due to
US$14.3 million related to the hire of a crude tanker to compensate for reduced Montara FPSO tank capacity and US$1.0 million
incurred for the non-recurring disposal of NORMs (naturally occurring radioactive material). Stag tanker costs increased by US$5.8
million compared to 2022 reflecting higher tanker rates in 2023;
n A full year of operations at the CWLH Assets, compared to two months in 2022, resulted in an increase in operating costs by
US$13.6 million;
n Operating costs at the PenMal Assets decreased by US$10.0 million to US$5.2 million in 2023, down from US$15.2 million in
2022. This reduction was primarily due to reduced chemical consumption at the operated assets. Additionally, the decrease was
associated with the continued suspended production at the PNLP Assets in 2023;
(ii)
Supplementary payments and royalties decreased by US$10.3 million in 2023 totalling US$16.0 million, compared to US$26.4 million
in 2022. The supplementary payments at the PenMal Assets decreased by US$14.0 million to US$10.5 million (2022: US$24.5 million)
due to lower realised price compared to 2022, as the payments are based on the differential between the realised price and the
escalated PSC base price. The decrease was partly offset by higher royalties paid by the CWLH Assets for the levy on the wellhead
value for a primary production licence in 2023 of US$3.5 million (2022: US$0.8 million);
(iii) Workover costs rose by US$7.4 million to US$17.6 million compared to US$10.2 million in 2022. The increase was mainly due to
the completion of 10 workovers at Stag in 2023, including nine standard routine workovers and one complex well integrity repair,
compared to four standard routine workovers in 2022. The increase was partially mitigated by a decrease in workover costs of
US$2.4 million at Montara;
The increase of US$2.2 million in logistical costs was mainly driven by the PenMal Assets, which was attributable to cargo handling
charges resulting from a higher charge rate and higher frequency of personnel mobilisation/demobilisation and material/equipment
costs at the operated assets;
Repair and maintenance (“R&M”) costs decreased by US$4.6 million to US$55.6 million in 2023 compared to US$60.2 million in 2023.
Montara and Stag incurred higher R&M in 2022 by US$5.8 million mainly for Skua-11 repair works, solar engine change out and
emergency tank repairs. The year-on-year reduction at Montara and Stag was partly offset by higher R&M at the PenMal Assets of
US$1.2 million in 2023 for the repair of a gas turbine generator at the PM329 PSC;
The PenMal Assets incurred US$12.5 million cost, net to Jadestone’s share, for decommissioning work scope performed by the
previous operator of the PNLP Assets on the Bunga Kertas FPSO;
(iv)
(v)
(vi)
(vii) The variance of US$48.3 million is mainly driven by the first time recognition of the overlift position (US$34.0 million) in 2022.
The overlift at the CWLH Assets as at the end of 2023 generated a credit to production costs of US$0.4 million compared to a charge
of US$33.6 million in 2022 reflecting the first time recognition of overlift at acquisition in November 2022.
Montara and Stag ended the year with a combined increase in crude inventories of 120,580 bbls compared to the beginning of 2023,
generating a credit of US$6.2 million. In comparison, at the end of 2022, Montara and Stag had a lower combined inventories on
hand, resulting in a decrease of 183,422 bbls compared to beginning of 2022, generating a charge of US$3.4 million.
The underlift at the PenMal Assets created a credit to production cost of US$2.7 million compared to a charge of US$2.0 million as
a result of the overlift position at 2022 year end; and
(viii) Tariffs and transportation costs were incurred at Montara, Stag and the PenMal Assets. The year-on-year movement is not
significant.
Unit operating costs per barrel of oil equivalent (boe) at US$37.24/boe were largely unchanged in 2023 compared to US$37.49/boe in 2022
(refer to the Non-IFRS measures section below in this document).
Restatements explained in Note 50 of the Group’s consolidated financial statements.
Production includes the Sinphuhorm Asset gas production in accordance with Petroleum Resource Management Systems guidelines, however in accordance with IAS 28
the investment is accounted for as an associated undertaking and the Group only recognises dividends received. Accordingly, the revenue and production costs from the
Sinphuhorm Assets are excluded from the Group’s financial results.
Realised oil price represents the actual selling price inclusive of premiums.
Revenue in 2023 of US$309.2 million consist of a hedging loss of US$10.3 million from the commodity swap contracts entered into in support of the RBL facility.
Adjusted unit 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 in this
document.
*
1
2
3
4
3 8
*
Restatements explained in Note 50 of the Group’s consolidated financial statements.
3 9
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Depletion, depreciation and amortisation (“DD&A”)
DD&A charges were US$76.1 million during the year, compared to US$61.6 million in 2022, with the increase predominately due to the
higher production at Stag and a full year production at the CWLH Assets, resulting in an increase of US$8.1 million and US$3.0 million,
respectively. Additionally, the PenMal Assets recorded a higher DD&A charge by US$7.0 million compared to 2022 due to the drilling
campaign undertaken at PM323 PSC during the second half of 2023, resulting in an increase of production during Q4 2023. These increases
were partly offset by a crude inventory credit of US$4.2 million (2022: charge of US$2.9 million) as both Montara and Stag ended the year
with higher crude inventories on hand compared to beginning of 2023, whereas both assets had a lower crude inventory on hand at the
end of 2022 compared to beginning of year.
Depreciation of the Group’s right-of-use assets increased to US$15.3 million in 2023 from US$13.0 million in 2022, primarily due to the
extension of the Group’s helicopter lease and Montara warehouse lease for three years and two years, respectively, plus a two-year lease
for a Montara support vessel replacing an expired lease.
The depletion cost on a unit basis was US$14.14/boe in 2023 (2022: US$10.74/boe), due to higher combined depletion costs per unit at both
Montara and Stag in 2023 at US$21.68/bbl (2022: US$17.35/bbl), due to an increase in the asset retirement obligations (“ARO”) and the
addition of capital expenditure from drilling of the 50H and 51H wells at Stag in Q4 2022. The unit depletion costs in 2023 for the PenMal
Assets was US$6.40/boe compared to US$1.76 /boe in 2022, due to the drilling campaign undertaken at PM323 PSC during H2 2023.
Staff costs
Total staff costs in 2023 were US$56.2 million, comprising US$26.0 million (2022: US$26.1 million) in relation to offshore employees,
recorded under production costs, and US$30.2 million (2022: US$29.2 million) for office-based employees. The average number of
employees during the year was 409 (2022: 369), with the additional staff costs and headcount year-on-year mainly at Indonesia for the
ramp up of activities at the Akatara development project. The remaining increase come from the operations in Australia and Malaysia,
which have seen marginal expansion across the assets.
Other expenses
Other expenses decreased in 2023 to US$22.1 million (2022: US$22.3 million). The variance of US$0.2 million was predominately due to:
Non-recurring corporate costs
Recurring corporate costs and other expenses
Change in provision – Lemang PSC contingent payments
Allowance for slow moving inventories
Assets written off
Net foreign exchange loss
2023
USD’000
2022
USD’000
Variance
USD’000
Note
3,602
11,742
-
655
5,114
1,728
1,119
9,431
7,333
3,768
212
442
22,841
22,305
2,483
2,311
(7,333)
(3,113)
4,902
1,286
536
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(i)
(ii)
(iii)
(iv)
(v)
An increase in non-recurring costs by US$2.5 million compared to 2022. In 2023, the Group incurred non-recurring costs including
advisory and consulting fees for business development of US$2.2 million, an internal re-organisation for US$0.8 million, US$0.4
million for the equity fundraise in June 2023 and an aggregate of US$0.2 million for the Interim Facility, RBL facility and commodity
swap contracts. In comparison, the Group incurred total non-recurring costs of US$1.1 million in 2022 related to the acquisition of
CWLH Assets, business development and other one-off projects;
An increase in corporate costs and other expenses by US$2.3 million to US$11.7 million in 2023 (2022: US$9.4 million) across all
operating countries;
The 2022 costs included the recognition of additional contingent payments related to the future Dated Brent prices and Saudi CP
prices associated with the Lemang PSC of US$7.3 million. Following the 2023 year-end assessment, these contingent payments were
derecognised with the associated credit booked in other income (see ‘Other Income’ on following page). The Group did not recognise
new contingent payments in 2023;
The Group provided an allowance for slow moving inventories of US$0.7 million during the year, compared to US$3.8 million in 2022,
following the assessment performed.
Assets written off amounted to US$5.1 million in 2023 (2022: US$0.2 million), which included the write-off of the non-depletable
oil and gas properties at Montara for US$3.1 million following the cancellation of a capital project for the preparation of Skua-12
well, and the write-off of obsolete material and spares for US$2.0 million. In 2022, the Group wrote off US$0.2 million for plant and
equipment associated with its New Zealand operations following the withdrawal from Maari acquisition; and
(vi) Net foreign exchange loss of US$1.7 million in 2023 (2022: US$0.4 million) mainly arising from the Group’s receivables denominated
in Malaysian Ringgit (“MYR”) due to the volatility of MYR against USD towards the end of 2023.
Finance costs
Finance costs in 2023 were US$41.8 million (2022: US$11.4 million), an increase of US$30.4 million, predominately due to:
l Warrants expense of US$3.5 million arose from the warrants for 30 million ordinary shares received by Tyrus in connection with the
underwriting debt facility in support of the June 2023 equity placing;
l ARO accretion expense increased by US$11.9 million to US$20.2 million compared to US$8.3 million in 2022, resulting from an increase
in the ARO at Stag and Montara as assessed at year-end 2022;
l Upfront fees of US$2.7 million (2022: nil) and interest of US$1.0 million (2022: nil) were incurred in association with the equity
underwrite debt facility and committed standby working capital facility executed with Tyrus Capital Events S.a.r.l.;
l RBL accretion expense of US$5.5 million (2022: nil) reflecting the time value of money and RBL commitment fees of US$0.3 million
l
l
(2022: nil);
Interest expense and other finance costs increased by US$3.6 million to US$3.7 million compared to US$0.1 million in 2022, mainly
due to the interest expense and fees associated with the US$50.0 million Interim Facility (US$1.3 million) and relating to the RBL
facility (US$1.2 million). Additionally, the Group incurred accretion expense of US$0.6 million generated from an Australian Tax Office
repayment plan for corporate tax payments;
Interest on lease liabilities increased by US$2.0 million to US$2.8 million compared to US$0.8 million in 2022, following the lease
extensions for helicopters, vessel and warehouse at Montara; and
l Changes in fair value of contingent payments in 2023 of US$0.9 million, a US$1.0 million decrease compared to US$1.9 million in 2022.
Other income
The Group generated US$18.9 million of other income during 2023 compared to US$28.0 million in 2022, predominately due to:
l
Interest income from the CWLH Assets decommissioning trust fund of US$2.9 million (2022: US$0.1 million) and US$1.0 million
(2022: nil) from the placement of fixed deposits;
l Reversal of provisions associated with the Lemang PSC’s contingent payments in 2023 of US$7.7 million being the derecognition of
contingent payments associated with the Saudi CP and Dated Brent prices, as the trigger events are not expected to occur; and
In 2022, other income included insurance claim receipts of US$18.0 million compensating for the loss of production at Montara related
to drilling activities at the Skua-10/11 wells in 2021.
l
Share of result of associates
Since the acquisition of the Sinphuhorm Assets in February 2023, the Group recognised its share of profits amounting to US$2.6 million
for the period up to 31 December 2023.
Impairment
During the year, the Group made an impairment to the Stag’s oil and gas properties carrying value of US$17.4 million following the annual
impairment assessment , which identified that the recoverable amount of the operating asset is lower than its carrying amount.
Additionally, the Group recorded an impairment related to the PNLP Assets’ oil and gas properties of US$12.3 million resulting from a
revision of ARO estimates. The revised ARO is capitalised but immediately impaired because management does not currently anticipate
future economic inflows from the PNLP Assets, given the uncertainty regarding a potential restart of production. The Group fully impaired
the PNLP Assets’ oil and gas properties in 2022.
Taxation
The tax credit of US$11.5 million in 2023 (2022: US$54.0 million of tax charge) includes a current tax charge of US$10.8 million
(2022: US$27.1 million) and a deferred tax credit of US$22.3 million (2022: deferred tax charge of US$26.9 million).
During the year, tax payments comprised US$5.3 million (2022: US$18.5 million) for Australian corporate taxes and US$1.7 million
(US$1.1 million) for PRRT payments. Additionally, there were US$7.5 million (2022: US$15.7 million) in Malaysian petroleum income tax
(“PITA”) payments.
The weighted average effective tax rate for operating jurisdictions in Australia and Malaysia was negative 54% in 2023, reflecting losses
incurred during the period, compared to 56% in 2022, which was attributable to profits generated during that year. There was an increase
in the deferred tax asset during 2023, resulting from income tax credits as the trading losses are carried forward for offset against future
taxable profits.
4 0
41
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
USD’000
(Loss)/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 non-operated PSCs
Utilisation of PRRT credits
PRRT tax refund
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 (credit)/ expense for the year
2023
(102,766)
54%
(55,494)
13,975
10,060
17,795
1,735
-
-
399
2,155
(4,269)
2,152
2022
Restated*
63,193
56%
35,388
13,934
8,742
(21,661)
(1,121)
1,486
336
938
9,217
7,032
(335)
(11,492)
53,956
Australia taxes
The Australian corporate income tax rate is 30% and PRRT is 40%, with the latter being cash based and income tax deductible.
The combined standard effective tax rate is 58%, with the actual effective tax rate of 42% in 2023 (2022: 46%) being lower predominately
due to the utilisation of PRRT credits brought forward at Montara. Montara and the CWLH Assets have approximately US$3.8 billion
(2022: US$3.5 billion) and US$493.4 million (2022: US$535.5 million) of unutilised PRRT credits, respectively. Both assets are not expected
to incur any PRRT over their economic lives. There was an increase in the deferred tax asset during 2023, resulting from income tax credits
as the trading losses are carried forward for offset against future taxable profits.
Malaysia taxes
Malaysian PITA is a PSC based tax on petroleum operations at the rate of 38%. There are no other material taxes in Malaysia.
Reconciliation of cash
US$’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
Placement of decommissioning trust fund for CWLH Assets
Net tax paid
Investing activities
Purchases of intangible exploration assets, oil and gas properties,
and plant and equipment1
Cash paid on acquisition of Sinphuhorm Assets
Dividends received from associate
Cash received on acquisition of CWLH Assets
Cash paid for acquisition of 10% interest of Lemang PSC
Other investing activities
Financing activities
Net proceeds from issuance of shares
Shares repurchased
Repayment of lease liabilities
Total drawdown of borrowings
Repayment of borrowings
Repayment of costs and interests of borrowings
Other financing activities
Dividends paid
Total cash and cash equivalent at the end of year
309,200
6,574
(232,772)
(29,431)
(17,072)
2023
123,329
36,499
6,837
(41,000)
(14,461)
(109,524)
(27,853)
3,842
-
-
4,451
50,964
(2,084)
(14,400)
232,000
(75,000)
(13,260)
(6,936)
-
153,404
421,602
26,485
(250,300)
(28,247)
(10,992)
2022
Restated*
117,865
158,548
36,819
(41,000)
(33,130)
(82,628)
-
-
5,750
(500)
881
784
(16,070)
(13,914)
-
-
-
(860)
(9,216)
123,329
*
Restatements explained in Note 50 of the Group’s consolidated financial statements.
4 2
*
1
Restatements explained in Note 50 of the Group’s consolidated financial statements.
Total capital expenditure was US$115.9 million (2022: US$82.9 million), comprising total capital expenditure paid of US$109.5 million (2022: US$82.6 million), accrued capital
expenditure of US$4.0 million (2022: US$0.3 million) and capitalisation of borrowing costs of US$2.4 million (2022: nil).
4 3
Jadestone Energy | 2023 Annual Report
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 unit operating cost per barrel of oil equivalent (adjusted opex/boe), adjusted
EBITDAX, outstanding debt, and net cash.
The following notes describe why the Group has selected these non-IFRS measures.
Adjusted unit 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 based on total production cost and incorporates lease payments linked to operational activities, net of any income
derived from those right-of-use assets involved in production. The calculation excludes factors such as oil inventories movement, underlift/
overlift adjustments, inventory write-downs, workovers, and non-recurring repair and maintenance expenses, transportation costs,
supplementary payments associated with the PenMal Assets, expenses related to non-operating assets, and DD&A. This definition aims
to ensure better comparability between periods.
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 operational costs5
Non-recurring repair and maintenance6
Transportation costs
PenMal Assets supplementary payments and Australian royalties7
PenMal non-operated assets operational costs8
Adjusted production costs
2023
232,772
16,155
9,297
(17,562)
(6,375)
(19,654)
(1,773)
(7,502)
(16,056)
(19,273)
170,029
2022
Restated*
250,300
13,687
(39,036)
(10,190)
(5,030)
-
(13,761)
(8,341)
(26,381)
(4,056)
157,192
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 measure 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 and non-recurring expenses.
The calculation of adjusted EBITDAX is as follow:
USD’000
Revenue
Production cost
Administrative staff costs
Other expenses
Share of results of associate
Other income, excluding interest income
Other financial gains
Unadjusted EBITDAX
Non-recurring
Net loss from oil price and foreign exchange derivatives
Non-recurring opex1
Oil and gas properties written off
Change in provision – Lemang PSC contingent payments
Insurance claim receipts2
Fair value loss on contingent considerations
Others3
Adjusted EBITDAX
2023
309,200
(232,772)
(30,197)
(22,841)
2,640
14,404
-
40,434
10,395
40,700
3,067
(7,653)
-
-
3,704
50,213
90,647
2022
Restated*
421,602
(250,300)
(29,218)
(22,305)
-
27,152
1,904
148,835
-
20,534
-
7,333
(17,977)
1,920
1,684
13,494
162,329
Total production (barrels of oil equivalent)
4,566,060
4,192,618
Adjusted unit operating costs per barrel of oil equivalent
37.24
37.49
Net cash/debt
Net cash/debt is a non-IFRS measure which does not have a standardised definition prescribed by IFRS. Management uses this measure to
analyse the net borrowing position of the Group.
USD’000
Borrowings (principal sum)
Cash and cash equivalents
Net debt/(cash)
2023
2022
157,000
(153,404)
3,596
-
(123,329)
(123,329)
Net cash/debt is defined as the sum of cash and cash equivalents and restricted cash, less the outstanding principal sum of borrowings.
*
1
Restatements explained in Note 50 of the Group’s consolidated financial statements.
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 operational costs mainly related to costs incurred at Montara being interim tanker storage temporarily employed as a result of the repair work relating to the
storage tanks of the FPSO, diesel fuel consumption by the FPSO during production shutdown and to power the reinjection compressor during production start-up. The Group
also incurred charges associated with short lifting a cargo and delivery delays.
6 Non-recurring repair and maintenance costs in 2023 predominately related to the repair of a gas turbine generator at the PenMal Assets PM329 PSC. The costs during 2022
predominately related to Montara Skua-11 repair works, gas compressor solar engine change out and tank 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. The Australian royalties are related to local
decommissioning cost recovery levy plus royalties payable to the local state government arising previously from the acquisition of the CWLH Assets.
PenMal non-operated assets operational costs in 2023 refer to the operating costs incurred at the PNLP Assets, which are excluded as the costs incurred were mainly related to
the preservation of facilities and subsea infrastructure and do not contribute to production. The costs in 2022 predominately related to the costs incurred to repair the FPSO BUK
at the PNLP Assets following the suspension of class in February 2022.
7
8
4 4
On behalf of the Board
Bert-Jaap Dijkstra
Director
27 April 2024
Restatements explained in Note 50 of the Group’s consolidated financial statements.
*
1 Non-recurring opex in 2023 includes PenMal Assets’ PNLP operational costs and Montara interim tanker storage costs which was temporarily employed as a result of the repair
work relating to the storage tanks of the FPSO, diesel fuel consumption by the FPSO during production shutdown and to power the reinjection compressor during production
start-up. The Group also incurred charges associated with short lifting a cargo and delivery delays. Non-recurring opex in 2023 also includes repair and maintenance costs in
2023 predominately related to the repair of a gas turbine generator at the PenMal Assets PM329 PSC. The costs in 2022 included 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.
Represents proceeds of an insurance claim compensating for the loss of production from the Montara Skua-11 well in 2020. The 2021 insurance claim proceeds related to a well
control claim for the Montara Skua-11 well workover.
Includes business development costs, external funding sourcing costs, costs related to the termination of the Maari acquisition and internal reorganisation costs.
2
3
4 5
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Corporate
Governance Report
48 Chairman’s corporate governance statement
49 Principles of corporate governance
49 Application of QCA principles
54 Directors’ Report
58 Board of Directors
60 Audit Committee report
62 Remuneration Committee report
70 Governance and Nomination Committee report
72 HSEC Committee report
74 Montara Technical Committee report
75 Disclosure Committee report
4 6
47
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Chairman’s
corporate
governance
statement
In my role as the Chairman of Jadestone, I will
collaborate with my fellow Directors to instill a
commitment to strong corporate governance
within the Group, always striving for the highest
standards. Robust corporate governance forms
the foundation of a stable and thriving business,
and the Board endeavours to integrate these
principles seamlessly across all aspects of the
Group’s business, from executive leadership to
in-country operations.
Jadestone is dedicated to maintaining high standards of
governance and practicing responsible, social and ethical
behaviour. The Group has implemented a Code of Conduct Policy
applicable to all employees and contractors, outlining principles
for conducting business, interaction with colleagues, clients
and suppliers. The Code of Conduct Policy reflects Jadestone’s
commitment to fostering a culture rooted in honesty, integrity
and accountability. Jadestone has a set of core values: respect,
integrity, safety, results-orientated, sustainability and passion.
Each employee is expected to commit to these values, actively
contributing to safeguarding and elevating the Group’s reputation.
These core values not only guide Jadestone’s activities, but also
serve as the foundation for its Code of Conduct Policy.
The Group’s key governance documents, such as the Code of
Conduct Policy, other policies, and the Articles of Association, can
be accessed on Jadestone’s website at www.jadestone-energy.com.
Consistent with the AIM Rules, Jadestone adopted the Quoted
Companies Alliance Corporate Governance Code 2018 (the “QCA
Code”) in 2020. As a UK company, Jadestone Energy plc adheres to
the QCA Code. The Board acknowledges the value and importance
of maintaining high standards of corporate governance and
believes that the QCA Code offers a suitable framework for a
company of Jadestone’s size and stage of development. The Group
recognises that the QCA Code was updated in 2023. The Group’s
position on adopting and implementing the updated principles in
the QCA Code (2023) will be articulated in the 2024 annual report.
As described in the previous annual report, the Board
demonstrated its commitment to high corporate governance
standards, by initiating an independent effectiveness review
in 2022. Conducted by Socia Ltd (“Socia”), the assessment
encompassed the evaluation of the Board’s performance, its
committees, and each Director individually. Socia’s review involved
participating in Board and committee meetings, scrutinising
corporate governance policies and procedures, conducting one-on-
one interviews with all Directors and selected senior management.
Socia concluded that the Board earnestly upholds its governance
responsibilities, operates professionally, and aligns with the
principles of the QCA Code applicable to the business. The review
was completed in late 2022, since which point my predecessor
and members of the Governance and Nomination Committee
commenced the implementation of Socia’s recommendations.
The recent changes to the Board composition are one example.
The Board has proven effective in governing the organisation
and actively seeks to enhance its governance structures. The
Board, through the Governance and Nomination Committee, has
advanced other recommendations such as leadership succession
4 8
planning and reviewing the Group’s approach to staff diversity
and inclusion. Additional details regarding the steps the
Governance and Nomination Committee has taken based on
Socia’s recommendations can be found on pages 70 to 71.
The Group constantly endeavors to enhance its corporate
governance practices, aligning with the QCA Code. This
commitment is exemplified by the Board’s sustained emphasis
throughout 2023 on various ESG issues, covering key areas to
ensure appropriate standards are met in relation to health,
safety, environmental (including climate), social responsibility
and governance. The Board of Directors’ Charter acknowledges
the Board’s accountability for ESG-related matters. Committee
mandates, in particular related to HSEC Committee, Governance
and Nomination Committee and Audit Committee, include the
oversight and assurance of performance in 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 overseeing
its effective management and operation in pursuit of its objectives.
The Board maintains constant communication and meets regularly.
The Directors’ details, along with a summary of their current and
past experiences and skills, can be found on pages 58 to 59. Whilst
there is a formal schedule of matters specifically reserved for Board
consideration, as identified on page 52, the Executive Directors
bear specific responsibilities for functional aspects of the Group’s
affairs. Presently, the Board consists of nine Directors, with two
serving as executive and seven as non-executive. Gunter Waldner
assumed the role of a Non-Executive Director from 18 October
2023, while Joanne Williams was appointed as a Non-Executive
Director effective from 25 January 2024. Lisa Stewart and Robert
Lambert stepped down as Non-Executive Directors on 25 March
2024, while Dennis McShane stepped down as a Non-Executive
Director and Board Chairman on 27 March 2024.
The Board has established various committees, namely the Audit,
HSEC, Governance and Nomination, Remuneration and Disclosure
Committees, as set out on page 50. The terms of reference for each
committee are available on Jadestone’s website. In September
2022, the Board formed the Montara Technical Committee to offer
extra support and oversight to management during the Montara
Venture FPSO hull and tank remediation efforts. The Montara
Technical Committee remains operational. Refer to page 30
(Section 172 statement) for additional details.
The following report provides a high-level overview of how the
Group has applied the principles of the QCA Code throughout 2023.
I am pleased to report that the Group complies with the disclosure
requirements outlined in the QCA Code.
Jadestone regularly measures its corporate governance culture
against the QCA Code, and will communicate updates and
modifications to shareholders.
Jadestone publishes a joint Modern Slavery Statement on its
website, complying with both Section 54 of the UK Modern
Slavery Act 2015 and the Australian Modern Slavery Act 2018.
The statement outlines the measures Jadestone has taken and
continues to take, to prevent modern slavery or human trafficking
within its supply chains or business.
As we reflect on the achievements and challenges of 2023, 2024
will be a busy year for the Board and management as we continue
to review and improve our governance framework and operational
practices. I look forward to building upon our existing values,
ensuring our robust corporate governance remains grounded
in principles of respect and integrity.
Adel Chaouch
Chairman of the Board
27 April 2024
Principles
of corporate
governance
The Board fully endorses the importance of
effective 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 and recognised
governance framework 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
Jadestone stands out as a leading independent company in the
Asia-Pacific region, focusing on upstream oil and gas production
and development. The Group aims to grow primarily through
strategic acquisitions and is focused on creating value through
identifying, acquiring, developing and operating assets within
select areas of the Asia-Pacific region. Leveraging the extensive
experience and successful track record of its management team,
Jadestone seeks to maximise the value of its existing asset base
through production and cost optimisation. Additionally, the Group
aims to identify acquisitions that offer substantial value, both at
the time of purchase and through potential organic development
and revinvestment.
The Board is confident that this strategic approach aligns with
the energy transition and positions Jadestone as a responsible
operator. The Group can play a role in supplying oil and gas
demand from existing oil fields and gas discoveries during the
transition to a low-carbon energy system.
The Board is confident this strategy can generate, over time,
significant shareholder returns, primarily through capital growth.
Detailed information about the Group’s strategy and business
model (including key challenges in execution) can be found in
the Strategic Report on page 12. The Board regularly reviews
the Group’s strategy, assessing annual work plans, budgets, and
potential acquisitions in accordance with the strategic framework.
PRINCIPLE TWO
Seek to understand and meet shareholder needs and
expectations
Jadestone is committed to fostering effective communication and
engaging in constructive dialogue with its shareholders and the
investment community. Jadestone actively strives to understand
and meet the needs and expectations of its shareholders.
Jadestone endeavours to ensure members of the Board and the
executive team are highly accessible to shareholders. Direct lines of
access to the Chief Executive Officer and Chief Financial Officer are
provided. When required, shareholders can also reach out to the
Chairman and other Non-Executive Directors.
Moreover, Jadestone has designated spokespersons for investors,
which include an Investor Relations Manager, along with two
corporate brokers retained for specific mandates. These mandates
include coordinating corporate access for shareholders and
gathering feedback from the investment community regarding
corporate developments and news updates. The Investor Relations
Manager takes an active role in managing and enhancing the
shareholder communications plan, with guidance from the CEO,
CFO and Chairman.
In 2023, webcast presentations were incorporated into the
unveiling of financial results, the announcement of acquiring a
further interest in the CWLH oil fields development, details about
the RBL facility, and the disclosure of capital raising activities. These
webcast presentations featured live question and answer sessions,
providing participants with the opportunity to directly interact
with the CEO and CFO. A dedicated webcast presentation for retail
investors was also held during the year.
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/.
Shareholder feedback
Jadestone regularly engages with shareholders and potential
investors through, roadshows, and spontaneous individual
meetings. Through these interactions, comprising both one-on-
one and group sessions, the Board and executive team establish
and maintain relationships with investors. They also enable the
collection of valuable feedback from shareholders regarding the
Group’s strategy, execution and performance. Furthermore, with
two of the Non-Executive Directors directly connected to significant
shareholders, the Board regularly receives feedback on strategy
and performance from the shareholder perspective.
Information
Jadestone ensures consistent communication with shareholders
through the issuance of guidance announcements, operational
updates, and the publication of half-yearly and annual financial
and operating results. These updates aim to guide expectations
and allow for an assessment of performance in relation to those
expectations. In accordance with its continuous disclosure
obligations, Jadestone will provide updates when internal forecasts
differ materially from publicly disclosed expectations as well
announce price-sensitive business developments without delay.
4 9
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Shareholder advisory bodies
Jadestone maintains continuous engagement with various
shareholder advisory bodies. This engagement facilitates
the exchange of feedback on proposals either presented
to shareholders or intended for submission to shareholders
for voting at annual meetings.
Annual general meeting
The annual general meeting (“AGM”) serves as the primary
platform for communication between the Board and the
Company’s shareholders, and all shareholders are encouraged
to attend and participate. The 2023 AGM was attended by the
CEO, the Chairman, the CFO, several other NEDs and senior
management.
PRINCIPLE THREE
Take into account wider stakeholder and social
responsibilities and their implications for long-term
success
The Board acknowledges that the long-term success of the
Group is reliant upon the efforts of its employees, shareholders,
contractors, suppliers, regulators and other stakeholders. While
expanding its presence in the Asia-Pacific region, Jadestone
recognises the significance of implementing a robust stakeholder
management strategy to navigate and operate considerately within
a diverse range of countries.
Moreover, the Group interacts with its key stakeholders through
diverse channels tailored to the nature of each relationship,
and values the feedback received from these stakeholders.
For example, in 2023, Jadestone conducted an employee
engagement survey with 86% participation which assisted the
Group with gauging employee attitudes towards several matters.
The Group takes every opportunity to ensure that, whenever
feasible, the opinions of its stakeholders are taken into account and
acted upon, especially when believed to bring material advantages
for the success and integrity of the Group’s business activities.
Jadestone has published a combined Modern Slavery Statement on
its website, complying with Section 54 of the UK Modern Slavery Act
2015 and the Australian Modern Slavery Act 2018. This statement
outlines the measures Jadestone has implemented and continues
to undertake to prevent modern slavery or human trafficking
within its supply chains or business. A copy of Jadestone’s Modern
Slavery Statement can be found at https://www.jadestone-energy.
com/wp-content/uploads/2024/03/20240318-Jadestone-Group-
Modern-Slavery-Statement.pdf.
For disclosure on Jadestone’s key stakeholder consultation and
engagement activities in 2023, please refer to the Stakeholder
Management section in the 2023 Sustainability Report, which will
be published in mid-2024. The Section 172 statement contained
within the Strategic Report sets out how Jadestone’s Directors
considered stakeholders’ interests while fulfilling their statutory
obligation to enhance the Group’s success throughout 2023.
Additionally, the Sustainability Review within the Strategic Report
sets out the Group’s governance approach concerning climate
risks and opportunities.
PRINCIPLE FOUR
Embed effective risk management, considering both
opportunities and threats, throughout the organisation
The Board holds the ultimate responsibility for overseeing
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 an enterprise risk
register (ERR) and risk management framework which assists the
Board in understanding risks and either deciding to avoid, accept,
mitigate or transfer the risks faced by the Group to an acceptable
level. This framework undergoes continuous review, and necessary
actions are taken to reduce the risks to an acceptable level when
required. The Board undertakes regular assessments of the risks
and their potential impact on the existing business plan and the
long-term operational strategy.
Jadestone’s risk management processes address risk management
at three levels: business, facility and task. The Group’s risks are
detailed in the Audit Committee report and the “Risk management,
principal risks and uncertainties” section of the Strategic Report on
pages 31 to 34.
The Board holds at least one formal strategy review each year.
Furthermore, 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 Chairman
Board composition and independence
The composition of the Board underwent changes in 2023 and
early 2024. Gunter Waldner assumed the role of a Non-Executive
Director effective 18 October 2023. As at 31 December 2023,
the Board comprised of eleven Directors of which seven were
independent Non-Executive Directors.
Joanne Williams assumed the role of a Non-Executive Director
effective 25 January 2024. Effective 25 March 2024, Robert Lambert
and Lisa Stewart stepped down as Non-Executive Directors. Also
on 25 March 2024, Adel Chaouch was appointed as a Non-Executive
Director. On 27 March 2024, Dennis McShane stepped down as a
Non-Executive Director and Board Chairman, and was replaced
as Board Chairman by Adel Chaouch. Following these actions, the
Board comprised nine Directors.
As of March 2024, The Board comprised the Non-Executive
Chairman, the Group’s President and CEO, the Group’s CFO and
six additional Non-Executive Directors. In 2023, 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.
According to Board’s assessment, five out of the seven Non-
Executive Directors, (Adel Chaouch (Chairman), Jenifer Thien,
Iain McLaren, Cedric Fontenit and Joanne Williams) are deemed
independent. The remaining two Non-Executive Directors,
Gunter Waldner and David Neuhauser, are not considered to be
independent due to their managerial responsibilities with material
shareholders of the Company, specifically Tyrus Capital S.A.M. and
Livermore Partners LLC, respectively. As a result, a majority of the
Board is deemed independent, considering the independence of
the Non-Executive Chairman and four further independent Non-
Executive Directors.
The Non-Executive Directors bring diverse skills and experience
from various disciplines, contributing to the Board’s independent
oversight of the Group’s business. Detailed information about
the Directors’ relevant skills and experience can be found in their
biographies on pages 58 to 59.
Effective procedures are in place within the Group to monitor and
address 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 consulting
the Company Secretary. Furthermore, any Director may take
independent professional advice at the Group’s expense in the
furtherance of their duties.
The Board is supported by its committees, namely Audit,
Governance and Nomination, Remuneration, Health, Safety,
Environment and Climate, Montara Technical and Disclosure.
The Montara Technical Committee, established in 2022, remains in
existence to provide support, advice and challenge to management
with regard to the Montara Venture FPSO tank remediation work.
Both the Audit Committee and the Remuneration Committee
consist entirely of independent members. The Directors are all
individuals of high-calibre, with the majority possessing extensive
experience in the oil and gas industry. Details of Board and
committee meetings in 2023, along with Director attendance,
are disclosed in the Directors’ Report and the subsequent
committee reports.
The Board believes it possesses sufficient resources to fulfill its
statutory duties and comply with the QCA Code. Regular reviews
on the Board’s composition are conducted to ensure it maintains
the necessary skills and experience, especially in light of the
Group’s ongoing expansion. The appointment of Joanne Williams
in January 2024 not only increased the Board’s gender diversity,
but also enhanced its technical expertise. Adel Chaouch has led
upstream businesses globally, including in C-suite positions, as
well as having significant experience of project management,
particularly major projects in the oil and gas sector.
The Non-Executive Directors are informed that, at the time of their
appointment, they are expected to allocate sufficient time, given
their individual circumstances, to ensure the effective performance
of their duties. This commitment is expected to be no less than three
days per month, and includes 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 further advised that this time
commitment may increase if they take on committee roles or chair
positions, or if additional responsibilities are assigned to them.
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 necessary
for an independent upstream oil and gas production and
development company. These competencies include expertise in
financial, legal, operational, technical and sustainability matters,
as well as experience in risk management and growth within
both the independent E&P sector and public capital markets.
Specifically, starting from 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. In January 2024, Joanne Williams was appointed to the
Board. Ms Williams brings strong a technical background and
significant upstream experience to Jadestone’s Board. In March
2024, Adel Chaouch was appointed to the Board. Dr Chaouch
brings international experience, having led upstream businesses
globally, and will provide strong technical insight in support of
Board decisions going forward.
The Board believes that its current mix of skills represents a
comprehensive range of commercial and professional expertise
across geographies and industries. Further, each Director
possesses experience in public markets, with detailed information
about their backgrounds and areas of expertise outlined on pages
58 to 59.
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.
Each Director, whether executive or non-executive, brings
substantial experience and demonstrates skills that are
complementary and independent to sufficiently to cover the
requirements of the Board. As the Group continues to grow its
asset base, the Governance and Nomination Committee will
continue to assess the composition of the Board to ensure that
it maintains an appropriate mix of experience, skills, personal
qualities and capabilities. This includes a commitment to
diversity where possible. As at 31 December 2023, the female
representation on the Board was 20%. As at the date of this report,
as Joanne Williams has joined the Board and Lisa Stewart has left,
the female representation on the Board was 22%.
Jadestone has a highly qualified effective Board made up of diverse
and experienced members. The nine Board members comprise of
seven different nationalities, bringing a wide range of perspectives.
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 the option to receive independent legal
advice. The Board has considered the guidelines under the QCA
Code with regard to the essential responsibilities of a Senior
Independent Director (“SID”). This consideration takes into account
various factors, including the role of the Board Chairman, the
Board’s size, the number of independent Non-Executive Directors,
and the communication channels among the Company’s Executive,
Non-Executive Directors and shareholders. In light of these
considerations, the Board has concluded that the appointing
a SID is currently unnecessary, though the matter is subject to
regular review.
PRINCIPLE SEVEN
Evaluate Board performance based on clear and
relevant objectives, seeking continuous improvement
The Board utilises a matrix to guide the assessment of the
Directors’ skills and diversity, identifying potential skill gaps
for resolution. The Board recognises the importance of its
effectiveness and the individual performance of Directors in
achieving the Group’s success. The Board conducts an annual
internal review led by the Governance and Nomination Committee.
The Board conducts internal reviews led by the Governance and
Nomination Committee to review leadership succession planning,
contingency planning for critical roles in the business and the
Board’s composition. Recent appointments to the Board reflect
findings from internal reviews, such as an increased focus on
sustainability as well as feedback from shareholders”. In 2022, 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 70 to 71.
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 beyond a nine-year term).
Both internal and external reviews indicated that the Board’s
governance aligns with the principles outlined in the QCA Code as it
applies to the specific responsibilities of the Board. Additionally, the
external review acknowledged the Board’s proactive involvement
in enhancing its corporate governance structures to align with the
needs of Jadestone’s evolving business. Notably, no significant
areas of concern related to compliance were identified during
the external review.
5 0
51
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Governance Processes
In 2022, the Group engaged Control Risks, an external specialist
firm, to conduct a review of Jadestone’s business ethics and
compliance policies. The primary focus was to identify gaps and
areas for improvement, particularly from a UK market perspective.
The Group implemented a majority of the 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 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, in 2023 the Group has improved its approach in
identifying and assessing risks of modern slavery by engaging
a third-party to conduct a human rights risk assessment and
strengthen the Group’s supply chain due diligence. The Group
subsequently updated its annual modern slavery statement for
2023 to comply with UK and Australia legislation requirements.
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 transparent and timely communication
with shareholders and other stakeholders, emphasising the
significance it attributes to the perspectives of all stakeholders.
The Group’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 pose
questions. The outcomes of votes cast by shareholders at the
AGM will be disclosed in a clear, transparent and timely manner.
Shareholders vote to fix the number of Directors and elect
Directors who will 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
engages in discussion with them about shareholders’ concerns.
The Board holds the perspective that, if there is a resolution passed
at a general meeting of shareholders with 20% votes against, the
Group will seek to understand the reasons behind the result and,
where appropriate, take suitable action.
Moreover, the Company has set out its Section 172 disclosures
in the Strategic Report on page 30. The Section 172 statement
describes how the Directors, in line with their statutory duties, have
taken into account the interests and potential impacts of decisions
on the Group’s employees, suppliers, customers, community and
the environment.
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 14 of this report and the
2023 Sustainability Report, which will be published in mid-2024.
The Group’s values of respect, integrity, safety, results-oriented,
sustainability and passion foster a culture that prioritises
accountability, efficiency and innovation. This culture aligns with
the Group’s mission and promotes a corporate culture based
on ethical behaviours and conduct. These values are explicitly
outlined in written policies and operation procedures, 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
characterised by 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 included the Anti-Bribery and
Anti-Corruption, Human Rights and Whistleblower policies, which
can be accessed through Jadestone’s website. Further details on
this review can be found under Principle Nine below.
A culture of openness is actively promoted throughout 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 them to the Board when necessary. The Board receives
regular written updates from the senior management team, which
include workforce related matters.
As stipulated 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.
After the aforementioned policy review, the Group retained an
independent service provider to establish a reporting mechanism
for concerns or complaints related to ethical matters (i.e., a
whistleblower line). This offers a further avenue for employees
to communicate concerns, with an ability to ensure confidentiality
of the information shared. No issues were reported during 2023.
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
l
setting the Group’s purpose, values and standards;
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 mentioned aspects, the Board has
approved a set of financial delegations of authority to ensure clarity
across 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 operates under Board-approved
terms of reference which describe the committee’s responsibilities
and the framework for fulfilling those responsibilities. The terms
of reference for each committee were last reviewed and updated
in 2023 to align with the QCA Code. Throughout the calendar year
2023, the Board maintained the following committees: Audit,
Governance and Nomination, Remuneration, Health, Safety,
Environment, and Climate, Montara Technical and Disclosure.
A summary of the roles, responsibilities, composition and
2023 activities of each of these committees can be found at
pages 60 to 75.
The Board establishes temporary committees on ad-hoc basis.
The Montara Technical Committee, which was established in
Q3 2022, remains active throughout 2023 (please refer to page
74 for the committee report). This committee was primarily
mandated to ensure the allocation of adequate resources for
the safe completion of repairs and other essential activities to
resume production at Montara. The committee received weekly
updates from, and met up to two times per month with, personnel
managing the activities. The committee subsequently reported
back to the Board on the progress of repairs and other activities
at Montara.
5 2
5 3
Jadestone Energy | 2023 Annual Report
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 consolidated financial statements of
Jadestone Energy plc for the year ended
31 December 2023.
Incorporation and listing
Jadestone Energy plc was incorporated 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 AIM 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 financial year 2023.
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. The Group prepares a corporate
governance statement annually to explain the way in which 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.
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’ objective is to create a leading
independent Asia-Pacific-focused upstream oil and gas company
that generates significant value through share price appreciation
and returns to shareholders.
Business review and future developments
A review of the business and the future developments of the Group
is included in the Strategic Report (including the Chief Executive
Officer’s Statement, Business Model and Strategy, Financial
Review and Operational Review) and Chairman’s Statement (all of
which, together with the Corporate Governance Statement, are
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, 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
5 4
GHG emissions and underlying global energy use. These SECR
disclosures for 2023 have been included within the Sustainability
Review of the Strategic Report, on page 18.
Dividend
From 2020 until 2022, the Board of the Group parent company
provided direct returns to shareholders by way of a dividend, on
a biannual basis. The Board, recognises its duty to consider the
financial position of the Group, including underlying cash flow
generation, when weighing the declaration of a dividend.
With the Group’s cash balances having declined significantly in
the first quarter of 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 any dividend, interim or final, for 2023.
The dividend policy reflects the Group’s current and expected
future cash flow generation potential. The Board may further revise
the Group’s dividend policy from time to time in line with the actual
results and financial position of the Group.
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 “2022 AGM”). Stifel Nicolaus Europe Limited
conducted the Programme and repurchased the Company’s
ordinary shares of £0.001 each on the Company’s behalf. Shares
were last repurchased under the Programme on 18 January 2023
by which point 20.2 million ordinary shares had been purchased
for an aggregate consideration of US$17.9 million. The authority to
repurchase ordinary shares was initially included on the agenda
of the Company’s 2023 Annual General Meeting (“2023 AGM”).
However, the Board decided to withdraw the matter from the
agenda prior to the 2023 AGM. As such, the Company does not
currently hold the authority to repurchase its ordinary shares.
Equity fundraise
The Company raised gross proceeds of US$53.0 million in June
2023 pursuant to (i) a placing of new ordinary shares to existing
and new institutional shareholders (including entities affiliated to
certain directors); and (ii) a subscription of new ordinary shares by
certain directors (and affiliated entities) and certain other parties.
This equity fundraise was underwritten by a US$50 million equity
underwrite facility provided by Tyrus Capital S.A.M. and funds
managed by it (“Tyrus”). In consideration of the support provided
to the Company under the equity underwrite facility, Tyrus was
granted 36 month warrants representing 30 million ordinary shares
at an exercise price of 50 pence per share.
The equity fundraise also included an open offer up to €8 million,
primarily to allow non-institutional shareholders to participate in
the equity fundraise.
Share capital
Details of shares issued by the Company during the period are set
out in note 31 to the Consolidated Financial Statements.
Suspension of trading
On 13 February 2024, the ordinary shares of the Company were
suspended from trading following media reports of the Company’s
involvement in the proposed sale by Woodside Energy Group
Ltd. (“Woodside”) of its participating interests in the Macedon
and Greater Pyrenees Projects offshore Western Australia (the
“Proposed Acquisition”). Had Jadestone been selected as the
preferred bidder and reached agreement with Woodside on
acquisition terms, the Proposed Acquisition would have been
classified as a reverse takeover transaction in accordance with
AIM Rule 14, and accordingly, the Company’s ordinary shares
were suspended from trading on AIM on 13 February 2024.
On 11 April 2024, Woodside cancelled the sale of its participating
interests in those assets. With the possibility of the Proposed
Acquisition ceasing, the Company’s ordinary shares resumed
trading on AIM on 11 April 2024.
Financial instruments
The Group entered into a US$50.0 million debt facility on 17 February 2023. The Group signed a US$200.0 million reserve based lending
facility on 19 May 2023. The Interim Facility was repaid in full on 1 June 2023 from the RBL Facility. On 6 June 2023, the Group entered
into a committed standby working capital facility with Tyrus of up to US$35.0 million (“the Working Capital Facility”). The Working Capital
Facility was finalised at US$31.9 million after deductions from the total gross funds from the equity placing and open offer described above.
Further details on the Interim Facility, the RBL Facility and the Working Capital Facility can be found at Note 38 to the Consolidated Financial
Statements.
The Group’s financial risk management objectives and policies are discussed in Note 44 to the consolidated financial statements.
2023 Board and committee attendance
The table below summarises the Directors’ attendance at Board and committee meetings for the period from 1 January 2023 to 31
December 2023.
Audit
Committee
Governance
and Nomination
Committee
Remuneration
Committee
HSEC
Committee
Disclosure
Committee
Montara
Technical
Committee
Name and positions
held in the Company
A. Paul Blakeley
Director, President and CEO
Bert-Jaap Dijkstra
Director and CFO
Dennis McShane
Director and Chairman
Board
12 of 12
12 of 12
12 of 12
N/A
N/A
N/A
Robert Lambert
Director and Deputy Chairman
12 of 12
6 of 6
Iain McLaren
Director
David Neuhauser
Director
Cedric Fontenit
Director
Lisa A. Stewart
Director
Jenifer Thien
Director
Gunter Waldner1
Director
12 of 12
6 of 6
12 of 12
12 of 12
N/A
N/A
12 of 12
6 of 6
12 of 12
2 of 2
N/A
N/A
1 of 1
N/A
1 of 1
N/A
1 of 1
N/A
1 of 1
N/A
1 of 1
N/A
N/A
N/A
6 of 7
N/A
7 of 7
N/A
7 of 7
N/A
7 of 7
N/A
3 of 3
N/A
N/A
3 of 3
N/A
N/A
N/A
3 of 3
3 of 3
N/A
1 of 1
1 of 1
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
10 of 10
7 of 10
10 of 10
8 of 10
N/A
N/A
N/A
10 of 10
8 of 10
N/A
The Directors who held office at the end of the 2023 financial year
had the following interests in the ordinary shares of the Company:
Director
Interest at
1 January 2023 or
date of appointment
Interest as at
31 December 2023
A. Paul Blakeley
4,232,798
4,893,422
Bert-Jaap Djikstra
Dennis McShane
Robert Lambert
Iain McLaren
Nil
453,651
153,919
169,564
71,556
732,540
265,188
191,786
David Neuhauser
31,393,094 (a)
32,040,316 (a)
Cedric Fontenit
Lisa A. Stewart
Jenifer Thien
Gunter Walder
200,000 (b)
533,333 (b)
Nil
Nil
Nil
178,889
89,444
143,005,575 (c)
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 Chairman)1
l A. Paul Blakeley (Executive Director, President and CEO)
l Bert-Jaap Djikstra (Executive Director and CFO)
l Robert Lambert (Independent Non-Executive Deputy Chairman)2
l Cedric Fontenit (Independent Non-Executive Director)
l
Iain McLaren (Independent Non-Executive Director)
l Lisa A. Stewart (Independent Non-Executive Director)3
l
Jenifer Thien (Independent Non-Executive Director)
l David Neuhauser (Non-Executive Director)
l Gunter Waldner (Non-Executive Director)
l
l Adel Chaouch (Independent Non-Executive Chairman)5
Joanne Williams (Independent Non-Executive Director)4
1 Stepped down as Non-Executive Chairman on 27 March 2024.
2 Stepped down as Non-Executive Director on 25 March 2024.
3 Stepped down as Non-Executive Director on 25 March 2024.
4 Appointed as a Non-Executive Director on 25 January 2024.
5 Appointed as Non-Executive Director on 25 March 2024, and
elected as Non-Executive Chairman on 27 March 2024.
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
financial year.
During calendar year 2023, no Directors, including Executive
Directors, received any awards under the Group’s long-term
incentive plans.
(a) 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.
(b) Mr. Fontenit owns 200,000 ordinary shares of the Company directly and 333,333 ordinary shares of the Company are held under an externally managed pension vehicle. In
addition, Mr. Fontenit holds indirect beneficial interests in the Company through his interest in 424.6337 units of a fund managed by Tyrus Capital S.A.M. (the “Tyrus Fund”).
However, Mr. Fontenit does not exercise control or direction over the shares of the Company held by the Tyrus Fund.
(c) Mr. Waldner does not own any ordinary shares of the Company directly but, as Co-Chief Investment Officer of Tyrus Capital S.A.M. (“Tyrus”), the Company’s largest shareholder,
exercises control or direction over the ordinary shares beneficially owned by Tyrus. He also holds indirect beneficial interests in the Company through his interest in 2,276.04
units of a fund managed by Tyrus holding an interest in the ordinary shares of the Company.
5 5
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Directors’ indemnities
As permitted by the Articles of Association, the Directors have the
benefit of an indemnity, which is a qualifying third-party indemnity
provision as defined by Section 234 of the Companies Act 2006.
The indemnity is currently in force. The indemnity, which was
updated in 2023, reflects terms consistent with those granted
by peer companies. 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 Company and their private interests
and/or other duties, nor any arrangements or understandings with
any of the shareholders of the Company, customers, suppliers
or others pursuant to which any Director was selected to be a
Director. The Company tests regularly to ensure awareness of any
future potential conflicts of interest and related party transactions.
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.
Related party transactions
The Company executed a US$50.0 million equity underwrite facility
with Tyrus on 6 June 2023 (“Equity Underwrite Facility”). However,
the Equity Underwrite Facility was extinguished because the
associated June 2023 equity fundraise raised in excess of US$50.0
million. As part of the underwritten placing of additional ordinary
shares, the Company also entered into a warrant instrument with
Tyrus for 30 million ordinary shares at an exercise price of 50 pence
per share (“Warrants”), see Note 49 to the financial statements.
Also on 6 June 2023, the Company entered into the Working Capital
Facility. Further details on the Equity Underwrite Facility, the
Warrants and the Working Capital Facility can be found at Note 49
to the consolidated financial statements. Apart from the Equity
Underwrite Facility, the Warrants and the Working Capital Facility,
there were no related party transactions to which the Group was a
party during the period, save for compensation to key management
personnel and directors, the details of such as disclosed in Note 49
of the Consolidated Financial Statements.
Substantial shareholders
The following table sets out, to the best of the Group’s knowledge,
its significant shareholders as at 29 February 2024.
Shareholder
Number
of ordinary
shares as at
29 February 2024
% interest
as at
29 February 2024
Tyrus Capital
143,005,575
26.44
Fidelity International
Baillie Gifford
Livermore Partners
Hargreaves Lansdown,
stockbrokers
Canaccord Genuity
Wealth Management
Premier Miton
Investors
52,529,526
38,780,919
32,040,316
19,159,049
17,900,000
17,840,069
9.71
7.17
5.92
3.54
3.31
3.30
Share dealing code
The Company 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, Anti-Bribery and Anti-
Corruption, Whistleblower, Climate, ESG and Human Rights
policies. 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 31 to 34 of this report.
Stakeholder engagement
Please see the section 172 statement on page 30 of this report
for how the Company’s Directors had regard to the interests of
employees, suppliers, customers and other stakeholders during
the year.
Annual general meeting
The Company’s AGM will be held in London, England on 13 June
2024. Full details of the proposals to be addressed at the AGM
will be set out in a separate Notice of the 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 the AGM. The Notice of the AGM and the Proxy Form will
be available on the Group’s website at https://www.jadestone-
energy.com/aim/notices/.
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 at the end of this report and 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 re-appointed. Deloitte has
expressed its willingness to be re-appointed as auditor. A resolution
to re-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 48 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 up to 31 December 2025. The financial position
of the Group, its cash flow, liquidity position and borrowing
facilities are described in the Financial Review on pages 38 to 45.
In addition, Note 44 to the financial statements on page 128
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 the
Group’s 2024 work plan and budget and three year plan.
The Board regularly reviews the updated liquidity projections
of the Group. The detailed going concern and viability analysis,
including sensitivity analysis and stress testing, was presented
to the Audit Committee and the Board in April 2024. 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 49 to 53.
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 Company’s auditors are unaware; and
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
Company’s auditors are aware of that information.
l
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 27 April 2024.
On behalf of the Board
A. Paul Blakeley
Executive Director
President and Chief Executive Officer
27 April 2024
Board meetings:
2023
1. 14-15 March
2023
2. 23 May
2023
3. 28 May
2023
June
4. 21
2023
July
5. 4
2023
July
6. 12
July
7. 31
2023
September 2023
8. 14
9. 27
September 2023
2023
October
10. 2
11. 10 November 2023
December 2023
12. 7
Audit Committee meetings:
2023
February
1. 6
2023
April
2. 3
2023
3. 17
April
2023
4. 22 May
5. 11
September 2023
6. 14 November 2023
Governance and Nomination
Committee meetings:
Montara Technical Committee
meetings:
1. 23 November 2023
February
Remuneration Committee
meetings:
2023
1. 9
2023
2. 14 March
April
2023
3. 3
June
2023
4. 16
2023
July
5. 19
6. 11
September 2023
7. 23 November 2023
January
1. 20
2023
February
2. 2
2023
February
3. 16
2023
July
4. 24
2023
August
5. 9
2023
6. 16
August
2023
7. 23 August
2023
8. 30 August
2023
2023
9. 12 October
10. 30 November 2023
HSEC Committee meetings:
1. 29 November 2023
Disclosure Committee meeting:
2023
1. 3 March
2. 28 August
2023
3. 30 November 2023
5 6
5 7
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Board of Directors
Adel Chaouch
INDEPENDENT CHAIRMAN OF THE BOARD
A. Paul Blakeley OBE
EXECUTIVE DIRECTOR, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
APPOINTED: NON-EXECUTIVE DIRECTOR ON 25 MARCH 2024 | ELECTED:
NON-EXECUTIVE CHAIRMAN ON 27 MARCH 2024
COMMITTEE MEMBERSHIPS: GOVERNANCE AND NOMINATION
COMMITTEE, REMUNERATION COMMITTEE AND HSEC COMMITTEE
APPOINTED: EXECUTIVE CHAIRMAN 7 JUNE 2016 / PRESIDENT AND CEO 15
JUNE 2017 BY JADESTONE ENERGY INC. | EXECUTIVE DIRECTOR, PRESIDENT
AND CEO 22 JANUARY 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.
CURRENT EXTERNAL ROLES: NONE.
Jenifer Thien
INDEPENDENT NON-EXECUTIVE DIRECTOR
APPOINTED: 7 APRIL 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,
AEON Co. (M) Berhad, Olam Agri Holdings Ltd, Malaysian Pacific
Industries Berhad and Sime Darby Plantation 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 programs 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 | OLAM AGRI HOLDINGS LTD | MALAYSIAN PACIFIC INDUSTRIES
BERHAD | SIME DARBY PLANTATION BERHAD
Dr Chaouch has 30 years of experience in the energy and
infrastructure sectors internationally, inclusive of South-East
Asia. He presided over sizeable oil and gas assets in challenging
geopolitical environments, and successfully conducted several
M&A transactions as well as capital raises in complex settings.
Dr Chaouch was Executive Director and Chief Executive Officer
of ShaMaran Petroleum Corp., part of the Lundin Group of
Companies, operating in the Kurdistan Region of Iraq. , and prior
to that he led Marathon Oil Company’s interests in the Middle East
and North Africa. He was also responsible for the creation of a gas
hub in Equatorial Guinea.
Prior to working for Marathon, Dr Chaouch held positions of
increasing responsibility for Raytheon E&C company, primarily on
major projects largely in the oil and gas sector. He holds a Masters
and a Ph.D. in Engineering from Texas A&M University.
CURRENT EXTERNAL ROLES: BILATERAL CHAMBER OF COMMERCE | BLUE
CREST VENTURES, LLC
Bert-Jaap Dijkstra
EXECUTIVE DIRECTOR AND
CHIEF FINANCIAL OFFICER
APPOINTED: EXECUTIVE DIRECTOR AND CFO 22 AUGUST 2022 BY THE
COMPANY
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 8
Iain McLaren
INDEPENDENT NON-EXECUTIVE DIRECTOR
Cedric Fontenit
INDEPENDENT NON-EXECUTIVE DIRECTOR
APPOINTED: 21 APRIL 2015 BY JADESTONE ENERGY INC. | 23 APRIL 2021
BY THE COMPANY
APPOINTED: 7 JUNE 2016 BY JADESTONE ENERGY INC. | 23 APRIL 2021
BY THE COMPANY
COMMITTEE MEMBERSHIPS:
AUDIT COMMITTEE (CHAIR), GOVERNANCE AND NOMINATION COMMITTEE,
AND REMUNERATION COMMITTEE
Iain McLaren has signalled his intention to step down as a Non-Executive Director and
Chair of the Audit Committee at the completion of the 2023 audit process.
Iain has significant experience in the oil and gas sector and is
currently a Director of Ecofin Global Utilities and Infrastructure
Trust Plc. Iain is a past Director of Wentworth Resources Plc, as
well as past Senior Independent Director for Cairn Energy Plc and a
number of other companies. Iain was the President of the Institute
of Chartered Accountants of Scotland, and was a partner in KPMG
for 28 years until 2008, bringing extensive experience in public
company audit, internal control and risk management.
CURRENT EXTERNAL ROLES: ECOFIN GLOBAL UTILITIES AND
INFRASTRUCTURE TRUST PLC
COMMITTEE MEMBERSHIPS: REMUNERATION COMMITTEE, AUDIT
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: AMAVIA CAPITAL | TALL MOUNT SAS
Joanne Williams
INDEPENDENT NON-EXECUTIVE DIRECTOR
APPOINTED: 25 JANUARY 2024 BY THE COMPANY
COMMITTEE MEMBERSHIPS: HSEC COMMITTEE (CHAIR) AND AUDIT
COMMITTEE
Joanne is a reservoir engineer with more than 25 years’ experience
in technical and executive roles with Woodside Petroleum, Newfield
Exploration, Gulf Canada, Clyde Petroleum, Nido Petroleum and
Blue Star Helium. Currently, Joanne is a Non-Executive Director
of Buru Energy Limited, an Australian onshore explorer for oil,
gas and natural hydrogen; a Non-Executive Director of 88 Energy
Limited, an oil company with oil exploration and production assets
in Alaska, Texas and Namibia, and a Non-Executive Director of
Pinnacle Exploration Pte Ltd, which focusses on shallow water
Gulf of Mexico oil opportunities. Previously, Joanne was Managing
Director and Chief Executive Officer of Blue Star Helium Limited,
an explorer for helium in the USA and a Director at Sacgasco
Limited with oil and gas exploration and production assets in
California, Canada and the Philippines.
CURRENT EXTERNAL ROLES: BURU ENERGY LTD | 88 ENERGY LTD |
PINNACLE EXPLORATION PTE LTD
David Neuhauser
NON-EXECUTIVE DIRECTOR
APPOINTED: 7 JUNE 2016 BY JADESTONE ENERGY INC. | 23 APRIL 2021 BY
THE COMPANY
COMMITTEE MEMBERSHIPS: NONE
David has extensive capital markets and mergers and acquisitions
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.
Gunter Waldner
NON-EXECUTIVE DIRECTOR
APPOINTED: 18 OCTOBER 2023 BY THE COMPANY
COMMITTEE MEMBERSHIPS: NONE
Gunter was nominated to Jadestone’s Board as a non-executive
director by the Company’s largest shareholder, Tyrus Capital S.A.M.
and funds managed by it (“Tyrus”), pursuant to the relationship
agreement entered into by Jadestone and Tyrus in November
2018. An Austrian national, Gunter has over 25 years of corporate
finance and investment management experience and is currently
Head of Private Equity and Co-Chief Investment Officer of Tyrus
having joined the firm in 2012. Prior to Tyrus Capital, Gunter spent
five years in senior positions at AlpInvest Partners and 10 years in
investment banking at Lehman Brothers. Gunter holds a Master’s
degree in Business Administration and Economics from the Vienna
University of Economics and Business Administration.
CURRENT EXTERNAL ROLES: NONE.
59
Audit Committee
report
Committee members and meeting attendance
Iain McLaren* (Chair)
In 2023 the Audit Committee comprised:
l
l Robert Lambert
l Lisa Stewart
All of whom were independent.
Meeting attendance:
l
Iain McLaren
l Robert Lambert
l Lisa Stewart
6 out of 6
6 out of 6
6 out of 6
Meetings:
6 February 2023 | 3 April 2023 | 17 April 2023 | 22 May 2023 |
11 September 2023 | 14 November 2023
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.
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Letter from the Committee Chair
Welcome to the Audit Committee Report for the
year ended 31 December 2023.
Governance
There were no changes in the composition of the Audit Committee
during 2023. 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 also 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 Chairman.
In 2023, the Committee met on six 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 generally aligned with the Group’s financial reporting
calendar.
During 2023, additional meetings were organised to monitor
and assess the Group’s existing and forecasted liquidity position
as it progressed towards closing its RBL Facility in parallel with the
prolonged shut-down of Montara which negatively impacted the
Group’s liquidity position.
Summary of responsibilities
The Committee’s detailed responsibilities are described in its
terms of reference 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 four of the six
Audit Committee meetings during the year (17 April, 22 May,
11 September and 14 November 2023).
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.
*
Iain McLaren has signalled his intention to step down as a Non-Executive Director
and Chair of the Audit Committee at the completion of the 2023 audit process.
Financial reporting
During 2023, the Audit Committee 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 2023, along with the Group’s
unaudited condensed interim financial statements for the six-
month period ended 30 June 2023.
The Audit Committee has remained focused on reviewing
material matters affecting the risks and financial position of the
Group. Specific focus continued to be given to the circumstances
of the Montara shut-in from August 2022 to March 2023, and
subsequently during August 2023, and the impact of these shut-
ins on the Group’s financial position. The Committee reviewed
recommendations relating to the suspension of dividend payout in
connection with the Company’s equity raise in June 2023. The risks
and financial impacts on the Group from the continued volatility in
oil prices also continued to be assessed.
The Audit Committee also reviewed the external auditor’s planning
report for the 2023 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.
The Committee 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 2023.
This included review and challenge of the financial statements as
well as the significant financial reporting issues and judgements,
and a detailed discussion with the auditor of their 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. All members of the Audit
Committee during 2023 had significant experience of reserves
evaluation.
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 2023
reserves on page 152.
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 31 to 34.
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 2023.
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
2023. The Group continued to engage 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 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 the new
ultimate holding company of the Group in 2021, the Group
completed the final phase of this reorganisation in 2023.
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 moved its business activities from Canadian
sub-holding entities to a Singapore registered entity. The Audit
Committee endorsed the project’s execution plan and reviewed the
project’s objectives and key elements. This internal reorganisation
also resulted in a Group entity structure that supports the security
arrangements under the Group’s loan RBL facility. For more
information see the Liquidity Risk disclosures on page 131 of
this report.
The relevant transactions were executed at arm’s length valuations
using third-party expert advice.
External Auditor
Under cl. 8.6.2(b) of the Committee’s Terms of Reference, the
Company is required to tender out the Group’s audit services
contract at least once every ten years. This helps to ensure that
the auditors are truly independent and 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 2022 Annual Report, the Audit Committee has
decided to postpone a formal tender until 2025, when the current
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 2023,
as it was in prior years, with no non-audit services provided and
no non-audit fees paid to the auditors. Total fees paid to the
auditors were as follows:
US$’000
Year ended
31 December 2022
Year ended
31 December 2023
Total audit fees
Non audit fees paid to
auditors
Total fees paid to
auditors
934
-
934
1,017
-
1,017
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
27 April 2024
6 0
61
Remuneration
Committee report
Committee members and meeting attendance
Jenifer Thien (Chair)
In 2023 the Remuneration Committee comprised:
l
l Cedric Fontenit
l Dennis McShane
Iain McLaren
l
Meeting attendance:
l
Jenifer Thien
l Cedric Fontenit
l Dennis McShane
Iain McLaren
l
7 out of 7
7 out of 7
6 out of 7
7 out of 7
Meetings:
9 February 2023 | 14 March 2023 | 3 April 2023 | 16 June 2023 |
19 July 2023 | 11 September 2023 | 23 November 2023 |
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Role of the Committee
The Remuneration Committee (the “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 personnel to ensure the long-term
success of the Group.
Key roles and responsibilities
Responsibilities of the Remuneration Committee include (but are
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; and
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
employment and discrimination law, company law and relevant
regulations as well as the effect of any changes to tax law or
rates of tax.
Letter from the Committee Chair
Dear shareholder,
As we reflect on the events and milestones of
the past financial year, it is both an honor and
a responsibility to provide you with insights
and perspective on our approach to executive
remuneration and significant decisions
undertaken by the Remuneration Committee.
The Remuneration Committee remains dedicated to ensuring
that the level and framework of remuneration for both the Board
and key management personnel are not only appropriate but also
commensurate with the performance and value creation of the
Group. Our primary goal is to attract and retain highly talented
individuals, while ensuring alignment of interests with shareholders
and the generation of shareholder value.
2023 was indeed a challenging year for the Group and the
Remuneration Committee has worked to ensure the right balance
between achieving annual targets and recognising performance,
always mindful of the remuneration framework and philosophy
of the Group as well as interests of shareholders. For the overall
2023 performance, we have approved an overall 35% achievement
of set KPIs for the majority of employees. The CEO will receive
a reduced performance bonus based on 15% achievement of set
KPIs, payment of which will be subject to milestones defined
over 2024/25.
The Remuneration Committee remained focused on ensuring that
the Long Term Incentive (“LTI”) programme aligns the interests of
senior leaders of the organisation to the interests of shareholders,
while at the same time is effective in retaining and incentivising 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.
To this end, given the development of Jadestone’s share price,
the Remuneration Committee suspended Performance Share
grants in 2023. Until conditions allow us to reinstate the
Performance Share Plan, we have approved a Deferred Cash Plan
(DCP) for the 2023 – 2026 LTI cycle (awarded in October 2023)
as well as for the 2024 – 2027 LTI cycle (awarded in April 2024).
Selected senior and key personnel were included in the DCP LTI
programme. The CEO did not receive the DCP LTI grant in 2023
and 2024; while the CFO was not included in the 2023 DCP LTI
programme. The development of the interim DCP LTI programme
(the framework is detailed further in section i) was supported by
Mercer with the competitive peer set remaining largely unchanged,
as well as the performance measure which is Total Shareholder
Return (TSR).
The Remuneration Committee has also reviewed the 2021 – 2023
LTI Programme cycle, the outcome of which resulted in 0% vesting
for the Performance Shares awarded in 2021.
Finally, we have reviewed and approved recommendations for
salary adjustments for 2024, which considers the impact of
inflation and market wage movements across the region.
In the course of our work, the Remuneration Committee was
supported by Mercer and PwC; which provided independent advice
on governance and tax framework, best practices, and external
benchmarks.
Your feedback is invaluable to us, and I welcome any input from
investors regarding our remuneration framework. Thank you for
your continued trust in Jadestone Energy plc.
Yours sincerely
Jenifer Thien
Non-Executive Director and
Chair of the Remuneration Committee
27 April 2024
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
maximises the likelihood of 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
Base salary
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
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
Long-term incentive
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.
6 2
6 3
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
d. Total remuneration
The following table sets out the total remuneration, including the
value of LTI awards, for both the Executive Directors and Non-
Executive Directors for 2023, as compared to 2022 and 2021.
Name and position
Year
Executive Directors
A. Paul Blakeley1
President and
Chief Executive Officer
Bert-Jaap Dijkstra6
Chief Financial Officer and
Chairman of Disclosure
Committee
Non-Executive Directors
Dennis McShane
Board Chairman and
Chairman of Governance
and Nomination Committee
Robert Lambert
Deputy Board Chairman
and Chairman of HSEC
Committee
Iain McLaren
Chairman of Audit
Committee
Jenifer Thien
Chairman of Remuneration
Committee
Lisa Stewart
Cedric Fontenit
David Neuhauser
Gunter Waldner8
2023
2022
2021
2023
2022
2023
2022
2021
2023
2022
2021
2023
2022
2021
2023
2022
2023
2022
2021
2023
2022
2021
2023
2022
2021
2023
Pension
allowance
(10%
of base
salary)
Perform-
ance pay
(US$)2
Committee
or meeting
fees
(US$)
Value of
overseas
allowance
support4
(US$)
Salary or
fees (US$)
LTI3
(US$)
Other
benefits5
Total fixed
remun-
eration
Total
variable
remun-
eration
Total
remun-
eration
600,000
650,000
625,000
65,000
65,000
62,500
146,2507
341,250
492,375
370,000
130,435
37,000
13,043
168,350
59,348
150,000
150,000
150,000
80,000
80,000
80,000
80,000
80,000
80,000
80,000
58,681
80,000
80,000
80,000
80,000
80,000
80,000
80,000
80,000
80,000
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
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
5,000
5,000
5,000
15,000
15,000
15,000
25,000
25,000
25,000
20,000
12,335
20,000
20,000
10,000
5,000
10,000
15,000
Nil
Nil
Nil
Nil
280,000
280,000
356,708
Nil
502,254
347,763
36,635
34,470
29,219
981,635
1,029,470
1,073,427
146,250
843,504
840,138
1,117,885
1,872,974
1,913,565
185,000
87,291
Nil
250,638
9,345
3,217
601,345
233,986
168,350
309,986
769,901
543,972
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
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
155,000
155,000
155,000
95,000
95,000
95,000
105,000
105,000
105,000
100,000
71,016
100,000
100,000
90,000
85,000
90,000
95,000
80,000
80,000
80,000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
155,000
155,000
155,000
95,000
95,000
95,000
105,000
105,000
105,000
100,000
71,016
100,000
100,000
90,000
85,000
90,000
95,000
80,000
80,000
80,000
Nil
1
2
3
In 2023, an amount of US$30,000 was paid out to Mr. Blakeley as part of the relocation expenses due from 2021/2022.
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. The amounts
shown in 2023 reflect performance pay paid in 2024 with respect to 2023 performance.
LTI represents the market value of the share awards during the year. No LTI was awarded to the CEO and CFO in 2023. 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 commenced employment with Jadestone on 20 August 2022.
7 Mr. Blakeley’s 2023 performance pay will be paid in two tranches, 50% in October 2024 and 50% in April 2025, subject to successful achievement of associated KPIs defined for
2024 and 2025.
8 Mr. Waldner was appointed on 18 October 2023 and he does not receive any fees.
e. 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.
f. Other benefits
The CEO and CFO are provided with private medical insurance and
are covered under Group insurance plans (Group term life, long-
term disability, personal accident and business travel).
g. Comparison of fixed and variable remuneration
The following charts illustrate the 2023 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.
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 Group, as well as being able to
interact directly 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.
6 5
Mr. Dijkstra is also entitled to 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
Position
Detail
2023 base salary
Pension
allowance
Performance pay
Long-term
incentive
CEO
CFO
CEO
CFO
CEO
CFO
CEO
CFO
Annual salary of US$650,0002
Annual salary of US$400,0003
10% of base salary
10% of base salary
0 – 150%
0 – 130%
95% of base salary
80% of base salary4
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 and 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
Mr. Blakeley is also entitled to an amount equivalent to
US$550,0001 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
and one (1) times the annual performance pay target. The annual
performance pay target amount is based on the date of notice:
If the date of notice precedes the date upon which such
l
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
Increased from US$500,000 to US$550,000 with effect from 1 January 2020.
1
2 Mr. Blakeley waived his entitlement to the Restricted Share Units of approximately US$50,000 in 2023, which is contractually part of his base salary. Starting 1 January 2024, the
US$50,000 Restricted Share Component in his base salary will cease and his annual base salary will be US$650,000 in cash.
Effective 1 October 2023.
3
4 Mr. Blakeley voluntarily decided not to receive any LTIP grants in 2023 and 2024. Also, no LTIP grants were made to Mr. Dijkstra in 2023.
6 4
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
CEO – 2023 remuneration mix, at target (not actual), in thousands
of US dollars1
Fixed2
100%
1,032
Target3
Maximum4
48%
32%
23%
29%
2,137
30%
38%
3,242
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Fixed
STI
LTI5
CFO – 2023 remuneration mix, at target (not actual), in thousands
of US dollars1
Fixed2
100%
668
Target3
54%
20% 26% 1,248
Maximum4
37%
28%
35%
1,828
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Fixed
STI
LTI5
h. Performance pay
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.
The following table summarises the KPIs in the CEO’s performance
contract and were used to determine performance pay in respect
of 2023 and paid in 2024.
Performance measure6
Weighting
Assessed
overall 2023
performance
Achieve 2023
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%
29.5%
24.2%
8.5%
7.8%
35%6
LTI awards (Performance Shares)
i.
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 the 2021-2023 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 dividends, 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.
The charts below illustrate the relationship between absolute and
relative TSR and vesting outcome.
Relative TSR vs. peer group1,2 (70% of 2021 awards)
)
t
n
e
m
e
e
f
o
%
l
(
g
n
i
t
s
e
V
200%
150%
100%
50%
0%
50th
60th
80th
Jadestone’s 3-year average1 TSR ranking vs peer group2
Absolute TSR1 (30% of 2021 awards)
These charts illustrate annual remuneration mix at target value and does not reflect actual payout during the year.
Fixed pay comprises base salary (including US$50,000 for CEO paid as RSUs), pension allowance, overseas allowance, and other benefits.
Target pay comprises fixed pay plus performance pay at target (CFO at 65% and CEO at 75%) and assumed LTI value.
1
2
3
4 Maximum pay comprises fixed pay plus performance pay at maximum pay-out (CFO at 130% and CEO at 150%) and assumed LTI value.
5
Values for performance shares and stock options are based on the independently verified values at the time of the grant. Maximum award to achieve 200% performance
outcome requires Jadestone Energy to be at the 80th percentile or higher within Jadestone Energy’s peer group for relative TSR and should achieve an absolute TSR of 40%
or higher.
The outcome 35% is against 50% as on target.
6
6 6
Performance measure 2: relative TSR (weighting: 70%)
Jadestone’s TSR as measured against the TSR of its peer companies.
The size of the payout is based on Jadestone’s ranking against the
TSR outcomes of its peer group.
g
n
i
t
s
e
V
Jadestone peer group for 2021-2023 performance cycle
Horizon Oil
Gulf Keystone
Senex Energy
Energean
EnQuest
Serica Energy
Transglobe Energy
Genel Energy
Tullow Oil
Pharos Energy
Premier Oil
Cooper Energy
Parameters for the final assessment of the 2021-2023
performance cycle
10%
25%
40%
Jadestone’s 3-year average1 TSR
Mercer was commissioned to review Jadestone’s relative and
absolute TSR performance, in order to provide assessment of the
2021-2023 performance cycle LTI award.
Final assessment: TSR calculation and outcome of the
absolute performance measure
1 January 2021 to 31 December 2023
TransGlobe Energy
Full Performance
Period
Performance
Testing Date
% of performance
period elapsed
100%
31 December 2023
)
t
n
e
m
e
e
f
o
%
l
(
200%
150%
100%
50%
0%
Company
Horizon Oil
Gulf Keystone
Serica Energy
Energean
EnQuest
Tullow Oil
Pharos Energy
Senex Energy
Jadestone Energy
Genel Energy
Premier Oil
Cooper Energy
TSR
135.5%
74.8%
58.9%
47.2%
24.4$
23.7%
21.2%
19.6%
17.6%
-3.0%
-3.9%
-6.6%
-30.5%
Jadestone’s 3-year average TSR was -3.0%, placing it below the 50th
percentile of the peer group.
1
2
3-year average TSR is calculated as the average annual TSR over 3 years.
Assumed vesting curve based on interpolation between threshold, target and
superior performance.
6 7
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Final assessment outcome
Actual performance to 31 December
57.5%
(12.2)%
(54.4)%
(3.0)%
Below threshold
0%
Year 1
TSR
(2021)
Year 2
TSR (2022)
Year 3
TSR (2023)
3-year
average TSR
Absolute
TSR vesting
outcome
Absolute
TSR vesting
outcome
Absolute TSR element
Relative TSR element
Overall result
Vesting outcome
0.0%
0.0%
0.0%
Weight
30%
70%
LTI Programme: 2023 – 2025
In view of the performance of the Group in 2023 and the resulting
share price, the Remuneration Committee suspended Performance
Share grants in 2023. In consultation with Mercer, the Board (as
recommended by the Remuneration Committee) approved a
Deferred Cash Plan (DCP) for the 2023 - 2026 LTI cycle (awarded in
October 2023). This was done to ensure that the LTI programme
aligns the interests of senior leaders of the organisation to
the interests of shareholders, and is effective in retaining and
incentivising top talent. As there are no shares granted under
this LTI programme, the possibility of any windfall gains from the
current share price is avoided.
A total of 42 eligible employees received a Deferred Cash grant,
with a total grant amount of USD 2,337,084. No Executive Directors
participated in the DCP. The DCP carries similar performance
conditions to those of the Performance Share plan with the
competitive peer set remaining largely unchanged, shown as
table below, as well as the performance measure which is Total
Shareholder Return (TSR).
Peer group set:
Horizon Oil
Gulf Keystone
Beach Energy
Energean
EnQuest
Serica Energy
Hibiscus Petroleum
Genel Energy
Tullow Oil
Pharos Energy
Harbour Energy
Cooper Energy
The DCP has a vesting period of three years and will be vested
in October 2026. The precondition for vesting to occur is for the
volume weighted average price per share to be at least GBP 0.50 or
above for each of the three consecutive moths immediately prior
to the vesting month (October 2026). The payout of the DCP ranges
from 25% of grant to 200% of grant, based on the company’s TSR
performance, with a weighting of 70% from the Relative TSR and
30% weighting from the Absolute TSR. The below chart illustrates
the relationship between TSR and vesting.
200%
150%
100%
50%
0%
Threshold
Target
Maximum
Jadestone's three-year average TSR
If performance exceeds
expectations, payout
is a max. of 200%
If target is met, payout
will be 100%
Even if threshold is not met,
there is a min. payout of 25%
)
t
n
e
m
e
e
f
o
%
l
(
g
n
i
t
s
e
V
6 8
j. Statement of the Board’s shareholding interests
Directors are encouraged to acquire a meaningful shareholding
interest in the Company; however the Company 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
2023 are set out in the table below. The number of shares held
by Directors as at 1 January 2023 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 Chairman
Robert Lambert
Director and Deputy
Chairman
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
4,893,422
5,999,521
71,556
250,0001
732,540
420,000
265,188
425,000
191,786
32,040,3162
533,3333
178,889
89,444
525,000
275,000
125,000
125,000
Nil
Nil
Gunter Waldner
Director
143,005,5754
k. CEO’s 2024 KPIs
The details of CEO’s 2024 KPIs will be finalised in Q2 2024.
1 Mr. Dijkstra was granted 250,000 Restricted Share Units on joining Jadestone. These
RSUs are subject to a vesting period of three years.
2 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.
3 Mr. Fontenit owns 200,000 ordinary shares of the Company directly and 333,333
ordinary shares of the Company are held under an externally managed pension
vehicle. In addition, Mr. Fontenit holds indirect beneficial interests in the Company
through his interest in 424.6337 units of a fund managed by Tyrus Capital S.A.M.
(the “Tyrus Fund”). However, Mr. Fontenit does not exercise control or direction
over the shares of the Company held by the Tyrus Fund.
4 Mr. Waldner does not own any ordinary shares of the Company directly but, as
Co-Chief Investment Officer of Tyrus Capital S.A.M. (“Tyrus”), the Company’s largest
shareholder, exercises control or direction over the ordinary shares beneficially
owned by Tyrus. He also holds indirect beneficial interests in the Company through
his interest in 2,276.04 units of a fund managed by Tyrus holding an interest in the
ordinary shares of the Company.
6 9
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Governance
and Nomination
Committee report
Committee members and meeting attendance
In 2023 the Governance and Nomination Committee comprised:
l Dennis McShane* (Chair)
l Cedric Fontenit
Iain McLaren
l
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
Meeting:
23 November 2023
1 out of 1
1 out of 1
1 out of 1
1 out of 1
1 out of 1
Note: Changes with respect to succession planning and recruitment
were concentrated in the latter half of 2023. Consequently, it was
decided that only one Governance and Nomination Committee
meeting was required during the year, which took place in
November 2023.
Role of the Committee
The Governance and Nomination Committee (the “Committee)
exercises general oversight with respect to the Group’s corporate
governance practices. It ensures that 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. The Committee 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
l The Committee discussed the Chief Operating Officer
recruitment process, including the suitability of candidates.
l The Committee discussed the status of recruitment for two
NEDs who would replace Iain McLaren and Robert Lambert,
and the suitability of candidates in the process.
l The Committee continued to review leadership succession
planning, contingency planning for critical roles in the business,
and the overall Board composition.
Letter from the Committee Chair
Dear shareholder,
It is my pleasure to present the Committee
Report for the year ended 31 December 2023.
The report summarises the objectives and responsibilities of the
Committee, the work carried out during 2023, and plans for 2024.
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;
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
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 Committee are reviewed annually
and aligned with the QCA guidelines.
Governance
The Board Chairman’s Corporate Governance Statement and
Compliance Statement to the QCA Code Principles can be found on
pages 48 to 53.
Board changes
Jadestone’s Board saw a number of changes during 2023 and the
first quarter of 2024, with the longer-term objective to ensure that
the Board is sized appropriate to the Group’s scale and ambition,
while maintaining appropriate capabilities and adhering to
corporate governance standards.
On 18 October 2023, the Company announced the appointment
of Gunter Waldner as a Non-Executive Director. Mr. Waldner was
nominated as a Non-Executive Director by the Company’s largest
shareholder, Tyrus, pursuant to the relationship agreement entered
into by the Company and Tyrus in November 2018. Mr. Waldner will
stand for election at the Company’s 2024 Annual General Meeting,
and brings significant knowledge of and experience in corporate
finance and acquisition strategy.
On 25 January 2024, the Company announced the appointment
of Joanne Williams as an independent Non-Executive Director.
Ms. Williams is a reservoir engineer with more than 25 years’
experience in technical and executive roles. Ms. Williams is Chair
of both the HSEC Committee and the Montara Technical
Committee, and a member of the Audit Committee.
On 25 March 2024, the Company announced the appointment
of Adel Chaouch as an independent Non-Executive Director.
Dr. Chaouch possesses significant upstream operations and
executive experience. On 25 March 2024, the Company also
announced the resignation of (i) Lisa Stewart as an independent
Non-Executive Director and (ii) Robert Lamber as an independent
Non-Executive Director.
On 27 March 2024, the Company announced the resignation of
Dennis McShane as an independent Non-Executive Director and
Chair of the Board.
Also on 27 March 2024, the Company announced the election of
Adel Chaouch as Chairman of the Board. Dr. Chaouch is Chairman
of the Governance and Nomination Committee, a member of the
Remuneration Committee, the Montara Technical Committee, and
a member of the HSEC Committee. Iain McLaren has signalled his
intention to step down as a Non-Executive Director and Chair of the
Audit Committee after the completion of the 2023 audit process.
Diversity and inclusion
The 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. Further
details can be found within the Group’s Diversity Policy which is
accessible at https://www.jadestone-energy.com/wp-content/
uploads/2023/11/20231122-Diversity-Policy.pdf.
Succession planning
The 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.
These considerations were evident in recent Board changes
detailed above. 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.
Yours sincerely,
Adel Chaouch
Non-Executive Director, Chairman of the Board and
The Committee Chairman
27 April 2024
70
71
*
Effective 27 March 2024, Dennis McShane stepped down as a Non-Executive
Director, Chair of the Board and Chair of the Governance and Nomination
Committee. Adel Chaouch was appointed as Chair of the Governance and
Nomination Committee effective 27 March 2024.
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Health, Safety, Environment
and Climate Committee report
Committee members and meeting attendance
In 2023, the Health, Safety, Environment and Climate Committee
comprised:
l Robert Lambert* (Chair)
l Lisa Stewart
l A. Paul Blakeley
Jenifer Thien
l
Meeting Attendance:
l Robert Lambert
l Lisa Stewart
l A. Paul Blakeley
Jenifer Thien
l
3 out of 3
2 out of 3
2 out of 3
3 out of 3
Meeting:
3 March 2023 | 28 August 2023 | 30 November 2023
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
l
l
engagement in industry HSSEC initiatives;
reviewing and recommending changes to the HSSEC framework
management system annually; and
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 Montara
Technical Committee established in response to the Montara tank
integrity program, with ten meetings held in 2023.
*
Replaced by Joanne Williams as Chairman effective 27 March 2024.
7 2
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 2023.
When my appointment took effect on 25 January 2024, I assumed
the role of Chair of the Committee. Consequently, I was not present
at the Committee meeting in November 2023, but I am providing
this report in my capacity as the current Chair of the Committee.
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.
During 2023, the Committee held four 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 risk identification
and mitigation assessments, safe execution of work through
permit- to-work applications, providing competency training and
awareness sessions, asset integrity, management of change and
assurance and verification 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. There were six high potential (HiPo) events during
the year with five of the six associated with dropped objects.
Dropped objects and the implementation of the International The
International Association of Oil & Gas Producers (IOGP) life saving
rules will be a focus in 2024. There was one Tier I process safety
event on the Chermingat Alpha platform where gas was released
at 3,000kg/hour for two hours due to a failure of a electronic flow
meter. There were no injuries or property damage associated with
this event. Pleasingly there were no lost workday cases in 2023 and
we improved our recordable injury numbers by 20%, with only four
separate events injuring workers, all of whom made a full recovery.
In February 2023, the General Direction associated Montara tank
integrity program was closed by NOPSEMA. NOPSEMA’s Prohibition
Notice remains open until all tanks with the ability to hold
hydrocarbons have been inspected and Technical File Notes issued
to NOPSEMA. Currently six hydrocarbon tanks have successfully
been removed from the Prohibition Notice. The NOPSEMA Level 4
investigation into the 2C loss of containment is ongoing.
At the Committee’s meeting in June 2023, the Board approved
enhancements to understanding and management of enterprise
risk. A single enterprise risk register was created collating country,
group, and functional risks in one location, ensuring a consistent
approach to how risks are understood, accepted, mitigated or
eliminated. Risks at the country, CEO / leadership team and
HSEC Committee levels are reviewed quarterly. Heat maps have
also been produced to ensure cumulative risks are known and
understood. As part of this initiative the corporate risk matrix
was also updated to align with IOGP and is now used consistently
across Jadestone.
The Group’s management and workforce operate within both
challenging onshore and offshore environments over multiple
jurisdictions. In 2023, focus transitioned from COVID-19 response
to health and wellbeing of the workforce. Programmes are being
developed for each month of the year to address the physical,
social, mental and spiritual well-being of our workforce. Ideas are
being shared across locations such as the RuOK Day in September
which is an Australian mental wellbeing programme that was
adopted in Malaysia, Indonesia and Singapore. Australia also
conducted a psychosocial safety survey with the results shared
with the HSEC Committee.
Safe execution of construction activities at Akatara was a key focus
for the HSEC Committee in 2023. Four of the six high potential
events were associated with Akatara, with each one being
investigated, and the results shared with the Board. A project
health check was completed in November 2023 and shared at
the November 2023 HSEC committee Meeting. Key focus areas
before first gas are permit to work/energy isolation, emergency
preparedness and simultaneous operations.
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. In 2023, Jadestone made further improvements with
regard to the adoption of interim GHG reduction targets as well as
evaluation of physical impacts of climate on operations. These are
set out in the “Sustainability at Jadestone” section of this report.
In summary, Jadestone remains committed to strong performance
in safety management and high health, safety, social,
environmental and climate standards.
Accomplishments during 2023
l No life altering events or lost workday cases;
l No major accident events;
l Achieved high standards of environmental performance with
no major environmental harm;
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;
The Committee also addressed several prioritised topics which
included:
Stakeholder Consultation – Significant time and resources were
directed to stakeholder consultation with relevant persons for
both the Stag and Montara five year revisions of the respective
Environmental Plans (EP). This was in response to the Australian
Federal Court ruling in late 2022, where it was determined an
operator did not effectively consult and as such approvals were not
granted. During 2023, there was greater clarity on what constitutes
an effective consultation, and as a result, the threat of the Stag
or Montara five year EP submission being rejected was greatly
reduced.
Australian Safeguard Mechanism - Changes were enacted
into law and took effect 1 July 2023, introducing a reduction in
emissions below baseline of 4.9% per annum through to 2030.
This impacts Jadestone’s Montara and CWLH operations (the latter
albeit minimally, proportional to Jadestone’s interest) and the
HSEC Committee reviewed options to minimise the impacts whilst
complying with the requirements. This will be further refined in
2024 when the reforms start impacting the sites directly.
Net Zero interim targets – Following the announcement of
the Net Zero by 2040 pledge, progress of Net Zero roadmap
development was reviewed by the HSEC Committee each
quarter. This led to an approval of the interim GHG reduction
targets to 2030 as part of the Net Zero roadmap, including the
communications and stakeholder engagement strategy in the
December Board meeting.
The 2023 Sustainability Report (available through the Group’s
website in mid-2024) will detail the Group’s 2023 ESG performance,
covering key areas of impact across environmental management,
climate change and greenhouse gas emissions, occupational health
and safety and critical incident risk management.
Planned enhancements for 2024
l Support the safe start up of the Akatara gas development
l Develop key Jadestone Energy HSE standards including
Implementation of the IOGP Life Saving Rules focusing on
critical controls
l Develop and implement a Jadestone HSE Culture – What
Matters Most
l A continued review of the Group’s process safety and personal
l Reviewed serious and potential serious, incidents and near
safety performance;
misses investigations, then followed up on lessons learned; and
l Evaluation of the processes and tools to manage the Group’s
l Provided oversight of Net Zero workstreams, resulting in the
finalisation of the Net Zero roadmap and the announcement of
interim GHG reduction targets in December 2023.
Key activities during the year
During 2023, 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.
HSE performance against internal metrics, regulatory
requirements and industry standards; and
l Monitoring of the execution of the Net Zero implementation
plan and tracking against interim targets.
Yours sincerely,
Joanne Williams
Non-Executive Director and Chair of the Health, Safety,
Environment and Climate Committee
27 April 2024
7 3
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Disclosure
Committee report
Committee members and meeting attendance
In 2023 the Disclosure Committee comprised:
l Bert-Jaap Dijkstra (Chair)
l A. Paul Blakeley
l Neil Prendergast
Meeting attendance:
l Bert-Jaap Dijkstra
l A. Paul Blakeley
l Neil Prendergast
Meeting:
29 November 2023
1 out of 1
1 out of 1
1 out of 1
Role of the Disclosure Committee (the “Committee”)
The primary responsibility of the Committee is to ensure the
maintenance of adequate disclosure procedures, systems, and
controls. This is essential for the Group to effectively fulfill its legal
and regulatory obligations concerning the timely and accurate
identification and disclosure of information as outlined in 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. Additionally, the Committee 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 measures
to establish and maintain adequate procedures, systems and
controls. This is aimed at ensuring compliance with its obligations
and oversees the appropriateness of disclosures within 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 2023.
The Committee assumed responsibility for and supervised the
following actions and evaluations throughout the year:
l Funding and capital updates including disclosure of the Interim
Facility in February 2023, the RBL Facility in May 2023 and the
June 2023 equity financing (“Financing Activities”);
l Ensuring compliance with the timelines and obligations under
MAR in connection with the Financing Activities, 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 with FCA for the exercise
of share options, vesting of performance shares and restricted
shares, 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;
l Submitting reports on AIM block listing for share options
award, and the vesting of performance shares and restricted
shares awards;
l Ensuring timely disclosure of Montara restart, inspection and
repair updates; and
l Ensuring that all relevant policies and procedures remained
in compliance and up-to-date with MAR, and the AIM Rules.
With respect to the 2024 reporting year, the Committee has
identified the following priorities:
l Ongoing evaluation and guidance on controls and procedures
related to the disclosure of ESG data, encompassing climate-
related disclosures and the Modern Slavery Statement.
l Review of legislative changes and QCA Code updates, and
modifications to internal procedures, systems and controls
to maintain compliance.
l Productive engagement with stakeholders, including regulators
and lenders, with regard to the Group’s disclosure procedures.
On 13 February 2024, trading in the Company’s shares was
suspended following an announcement that Jadestone was
participating in a bidding process that, if successfully closed, could
have resulted in a reverse takeover transaction. The Company’s
shares were restored to trading on 11 April 2024 when Jadestone’s
participation in the bid process concluded. During this period
of share suspension, the Group continued to follow its existing
disclosure policy and managed public disclosures consistent with
applicable law.
Yours sincerely,
Bert-Jaap Dijkstra
Executive Director and
Chair of the Disclosure Committee
27 April 2024
75
Montara Technical
Commitee report
Committee members and meeting attendance
In 2023, the Montara Technical Committee comprised:
l Lisa Stewart* (Chair)
l Dennis McShane
l Robert Lambert
Jenifer Thien
l
l A. Paul Blakeley
l Bert-Jaap Dijkstra
Meeting attendance:
l Lisa Stewart
l Dennis McShane
l Robert Lambert
l
Jenifer Thien
l A. Paul Blakeley
l Bert-Jaap Dijkstra
10 out of 10
10 out of 10
8 out of 10
8 out of 10
10 out of 10
7 out of 10
Meetings:
20 January 2023 | 2 February 2023 | 16 February 2023 |
24 July 2023 | 9 August 2023 | 16 August 2023 | 23 August 2023 |
30 August 2023 | 12 October 2023 | 30 November 2023
Role of the Montara Technical Committee (the
“Committee”)
The primary responsibility of the Committee is to support the
inspection and repair activities at the Montara FPSO. Additionally,
the Committee coordinates with management to review events
at the Montara FPSO, with the view to identifying corrective
actions and appropriate changes to processes and organisational
oversight.
*
Replaced by Joanne Williams as Chairman effective 27 March 2024.
74
Letter from the Committee Chair
Dear shareholder,
I am pleased to present the Montara Technical
Committee Report for the year ended 31
December 2023.
The Committee supervised the following actions throughout
the year:
l Received regular reports from management with regard to the
progress on the inspection and repair activities at Montara;
l Reviewed engagement plans with stakeholders, including
regulators, and the timely disclosure of Montara restart,
inspection and repair updates; and
l Assessed the organisational processes and structure to identify
and implement improvements.
2024 Priorities
l Ongoing evaluation of the inspection and repair plan with
a view to increasing the storage capacity of the Montara FPSO
in a safe and efficient manner.
l Assessing longer term capital investments at the Montara
FPSO.
l Productive engagement with stakeholders, including regulators
and lenders, with respect to the management and performance
of the Montara FPSO.
Yours sincerely,
Joanne Williams
Non-Executive Director and
Chair of the Montara Technical Committee
27 April 2024
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Consolidated and
Company Financial
Statements
For the year ended 31 December 2023
78 Directors’ responsibilities statement
79
Independent auditor’s report
88 Consolidated statement of profit or loss
and other comprehensive income
89 Consolidated statement of financial position
90 Consolidated statement of changes in equity
91 Consolidated statement of cash flows
92 Notes to the consolidated financial statements
141 Company’s statement of financial position
142 Company’s statement of changes in equity
143 Notes to the Company financial statements
76
7 7
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Confirmation 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 confirmation statement was approved by the Board of
Directors on 27 April 2024 and is signed on its behalf by:
Bert-Jaap Dijkstra
Director
27 April 2024
Directors’
responsibilities
statement
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 Financial Reporting Standard 101 Reduced
Disclosure Framework has 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 Standards 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
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 2023 and of the Group’s loss 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
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
l
l
l
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 50, including the accounting policy information as set out in note 2 to the Group 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 the accounting policy information as set out in note 3 to the parent company 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 United Kingdom, 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.
7 8
7 9
3. Summary of our audit approach
5. Key audit matters
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Key audit matters
The key audit matters that we identified in the current year were:
Impairment assessment of certain oil and gas properties
n
Impairment assessment of intangible exploration assets
n
Within this report, key audit matters are identified as follows:
Increased level of risk
Newly identified
!
7
6 Similar level of risk
8
Decreased level of risk
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.
Impairment assessment of certain oil and gas properties 6
5.1.
Key audit matter
description
Materiality
Scoping
The materiality that we used for the Group financial statements was US$7,500,000 which was determined by
using 1.4% of the total value 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 US$2,362,500 which was
determined on the basis of 1% of the selected benchmark being net assets which was capped at component
materiality.
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.
The audit work covered 26 components, of which 10 were deemed significant components. These were
subject to full scope audits with the remaining components subject to analytical procedures, plus substantive
testing of specific account balances to ensure appropriate coverage at an account balance and class of
transaction level.
Significant changes in
our approach
There has been a change in the components in scope in the current year to include Jadestone Energy
(Malaysia) Pte Ltd, as this component met the characteristics of a significant component from our
considerations in the current year.
Key audit matters considered in the prior year were broadly aligned with the items identified above however
the key audit matter in relation to the Cossack, Wanaea, Lambert, and Hermes (CWLH) acquisition has been
removed in the current year as the acquisition was completed in the prior year.
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;
How the scope of our
audit responded to the
key audit matter
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
n
checking the clerical accuracy of the cash flow forecast model;
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.
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 retrospective review 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
n
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.
This key audit matter is in relation to the Group financial statements.
As at 31 December 2023, oil and gas properties had a carrying value of US$457,202k which represents approximately
42% of the Group’s total assets. These assets relate to Montara, Stag, Peninsular Malaysia, Lemang PSC and the
Cossack, Wanea, Lambert and Hermes oil field development (“CWLH assets”). A number of developments occurred
in the year that impacted the assets:
l At Montara, following an oil leak identified in June 2022, production resumed on 21 March 2023;
l Also at Montara, on 29 July 2023, a gas alarm was triggered within ballast water tank 4S, indicating possible
communication with one of the adjacent tanks within the FPSO. As a precautionary measure production ceased
until 1 September 2023;
l
The project at Lemang PSC is progressing well and expected to derive first gas in the second quarter of 2024,
subject to government approval; and
l Management announced to the market on 15 January 2024 that life-of-field costs at Montara and Stag will be
higher than previously expected, primarily due to increases in repair and maintenance costs to maintain both
facilities in an appropriate condition.
There is a risk of impairment in respect to the Montara oil and gas properties with a balance of US$188,715k at
the current year end owing to the commercial viability of the field including such matters as production outages
experienced and increased forecast costs. There is a risk of impairment in respect to the Stag oil and gas properties
with balances of US$95,772k at the current year end as a result of increased forecasted costs. There is a risk of
impairment in respect to the Lemang PSC oil and gas properties with balances of US$122,623k at the current year
end owing to the field not yet being brought into production at the current 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, particularly in relation to the key assumptions of the impairment assessment. This area
also involved a significant allocation of audit resources, and directing effort, of the audit engagement team.
Please refer to note 2 (Impairment of oil and gas properties, plant and equipment, right of use assets and intangible
exploration assets), note 3 (Impairment of oil and gas properties) and note 22 to the Group financial statements for
further information.
The procedures we performed, included:
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 the IFRSs.
l Reviewed the internal and external factors set out in IAS 36 Impairment of assets, and used by management, to
determine impairment indicators.
l Obtained management’s impairment assessment and performed the following procedures on the assessment:
a) Assessed the competence, capability and objectivity of management’s expert involved in the preparation of
the reserve reports underlying management’s impairment assessment;
b) Challenged the assumptions used by management in the cash flow projections, including consistency with
the cash flows included in the forecast model used in the assessment of going concern;
c) 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;
d) Challenged management’s oil and gas 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;
e) Challenged management’s discount rate used to discount cash flows in the impairment assessment,
including assignment of an internal valuation specialist; and
f) 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.
Key observations
We are satisfied that the managements’ assessment of no impairment of the Lemang PSC oil and gas properties is
required, is appropriate, based on assessment of the impairment indicators.
We are satisfied that the managements’ assessment of no impairment of the Montara oil and gas properties is
required, is appropriate, following the impairment assessment performed by management.
We are satisfied that the managements’ assessment of impairment of the Stag oil and gas properties of US$17,409k
is required, is appropriate, following the impairment assessment performed by management.
We have identified that the discount rate initially used by management lay outside the reasonable range determined
by our internal valuation specialists but was subsequently amended in the updated impairment assessments.
We identified a control deficiency which we have separately reported to the Audit Committee on the precision of
the management review controls in respect to the determination of the discount rate and the preparation of the
impairment model.
8 0
81
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
5.2. Impairment assessment of intangible exploration assets 6
Key audit matter
description
How the scope of our
audit responded to the
key audit matter
This key audit matter is in relation to the Group financial statements.
As at 31 December 2023, the Group recorded US$79,564k of intangible exploration assets, which represents
approximately 7% of the Group’s total assets. These assets relate to the Montara seismic study in Australia and
two Vietnamese PSCs: Block 46/07 and Block 51. Development of the Vietnamese site is dependent on government
approval and should approval not be granted these assets would be impaired and thus there is a significant risk of
impairment.
We have identified 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 audit resources, and directing effort, of the audit
engagement team.
Please refer to note 2 (Impairment of oil and gas properties, plant and equipment, right of use assets and intangible
exploration assets), note 3 (Impairment of intangible exploration assets) and note 21 to the Group financial
statements for further information.
The procedures we performed, included:
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 the IFRSs.
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 resource 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 future 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 the work budget for the current year and current year 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 finance department to corroborate management’s ability and
intent to carry out plans that are relevant to developing the estimate of the valuation of intangible exploration
assets.
l Reviewed correspondence with government agencies and held discussions with management to ensure no
issues have been identified in respect to government approvals.
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 the impairment assessment of intangible exploration
assets.
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$7,500,000 (2022: US$6,775,000)
US$2,362,500 (2022: US$2,134,125)
Basis for determining
materiality
1.4% of the total value of 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 between the future
economic performance of the Group and total value
of intangible exploration assets and oil and gas
properties, which is a primary focus of the users of
the financial statements. Key users of the financial
statements include investors, shareholders and
banking institutions. 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. Key users of the financial
statements include investors, shareholders and
banking institutions.
Combined intangible exploration assets
and oil and gas properties US$536,766k
Combined intangible exploration assets
and oil and gas properties
Group materiality
US$7,500k
Component materiality range
US$2,363k to US$3,413k
Clearly trivial reporting threshold US$375k
6.2. Performance materiality
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.
Group financial statements
Parent company financial statements
Performance materiality
70% (2022: 70%) of Group materiality
70% (2022: 70%) of parent company materiality
Basis and rationale
for determining
performance materiality
In determining performance materiality, we considered of the following factors:
a) our understanding of the entity and its environment and the impact of various macro-economic factors;
b)
c)
the nature of the business, which has remained consistent to that of the prior year;
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 reserve based lending, hedging and
warrants;
e)
f)
the nature, volume and size of corrected and uncorrected misstatements in the prior year audit;
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.
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$375,000 (2022:
US$338,750), 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.
8 2
8 3
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
7. An overview of the scope of our audit
Identification and scoping of components
7.1.
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 26 components with a presence in 10 jurisdictions. There has been
a change in the components in scope in the current year to include Jadestone Energy (Malaysia) Pte Ltd. as the component met the
characteristics of a significant component from our considerations in the current year.
Ten components were deemed significant components and subject to full scope audits based on financial significance by considering key
benchmarks. The key benchmarks utilised were revenue, profit/loss before tax, net assets and total value of oil and gas properties and
intangible exploration assets.
Jadestone Energy plc;
1.
Jadestone Energy (Australia) Pty Ltd;
2.
3.
Jadestone Energy (Eagle) Pty Ltd;
4. Mitra Energy (Vietnam Nam Du) Ltd;
5. Mitra Energy (Vietnam Tho Chu) Ltd;
Jadestone Energy (Lemang) Pte Ltd;
6.
Jadestone Energy (PM) Inc;
7.
Jadestone Energy Holdings Limited;
8.
9.
Jadestone Energy (CWLH) Pty Ltd. and
10. Jadestone Energy (Malaysia) Pte Ltd.
These significant components are located in the United Kingdom, Australia, Vietnam, Indonesia and Malaysia and the component
materialities ranged from US$2,362,500 to US$3,412,500.
Four components were subject to an audit of specific account balances completed by the group audit team:
1.
2.
3.
4.
Jadestone Energy (Thailand) Pte Ltd;
Jadestone Energy Inc.;
Jadestone Energy Services Sdn Bhd; and
Jadestone Energy Pte Ltd.
The scope covered full scope audits of significant components and components subject to an audit of specific account balances completed
by the group audit team and is 100% of the Group’s revenue, 97% of the Group’s loss before tax and 100% of the Group’s net assets.
At the parent company 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 specific account balances.
2%
3%
16%
Revenue
Loss before tax
Net assets
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 13 to 28. 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 31 to 34. There is a risk that the management’s assessment of the impact of climate change is not complete and accurate and that
appropriate financial statement disclosures are not included in the financial statements.
As part of our risk assessment process, we performed the following procedures:
l Obtained an understanding of management’s process and relevant controls in considering the impact of climate risks; and
l Assessed 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 3 to the Group financial statements. 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. Our internal sustainability specialists were
engaged to assess the climate-related disclosures and evaluate the consistency of these 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 13 to 28.
7.4. Working with other auditors
Appropriate direction and supervision was provided to the significant component auditors involved in the audit engagement through
a combination of the following procedures:
l The issuance of group referral instructions;
l Organisation of meetings with all component teams including risk assessment discussions;
l Co-ordinating discussions with internal reserves and valuation specialists where relevant;
l Co-ordinating regular progress calls and involvement in the relevant responses to the significant risk areas;
l Organising visits to revenue-generating components and participation in meetings with management at significant components and
the significant component auditors; and
l Completing 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.
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.
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.
100%
95%
84%
Full audit scope
Specified audit procedures
Review at Group level
We have nothing to report in this regard.
9. Responsibilities of Directors
7.2. Our consideration of the control environment
We have not relied upon the 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.
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.
8 4
8 5
10. Auditor’s responsibilities for the audit of the financial statements
Report on other legal and regulatory requirements
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
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.
l
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
the strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.
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
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
l any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to:
identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
n
n detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
n
the matters discussed among the audit engagement team including significant component audit teams and relevant internal
specialists, including reserves specialists, valuation specialists and sustainability specialists regarding how and where fraud might
occur in the financial statements and any potential indicators of fraud.
l
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 and parent company 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 the jurisdictions in which the Group and parent company operates.
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 Audit response to risks identified
As a result of performing the above, we did not identify any key audit matters related to the potential risk of fraud or non-compliance with
laws and regulations.
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 audit committee and in-house 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
l
due to fraud;
reading minutes of meetings of those charged with governance and reviewing correspondence with relevant regulatory authorities
including the National Offshore Petroleum Safety and Environmental Management Authority (“NOPSEMA”);
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
the parent company financial statements are not in agreement with the accounting records and returns.
l
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 parent 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 parent 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 parent company and the parent 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
27 April 2024
l understanding the direct and indirect effects of identified areas of non-compliance including making enquiries of legal advisors;
l
in addressing the risk of fraud in revenue recognition, obtaining an understanding of the process and related controls for ensuring
appropriate recognition of revenue, evaluating the design and determining the implementation as well as operating effectiveness of
the controls relating to revenue recognition and assessing the appropriateness of the revenue recognition criteria for each revenue
stream with reference to IFRS 15 Revenue from Contracts with Customers and selected a statistical sample of sales transactions to
ensure each performance obligation is satisfied before the allocated revenue is 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.
l
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.
8 6
8 7
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Consolidated statement of profit or loss and other comprehensive income
for the year ended 31 December 2023
Consolidated statement of profit or loss
Continuing operations
Revenue
Production costs
Depletion, depreciation and amortisation
Administrative staff costs
Other expenses
Impairment of oil and gas properties
Share of results of associate
Other income
Finance costs
Other financial gains
(Loss)/Profit before tax
Income tax credit/(expense)
(Loss)/Profit for the year
(Loss)/Profit per ordinary share
Basic and diluted (US$)
Consolidated statement of other comprehensive income
(Loss)/Profit for the year
Other comprehensive (loss)/income
Items that may be reclassified subsequently to profit or loss:
Loss on unrealised cash flow hedges
Hedging loss reclassified to profit or loss
Tax credit relating to components of other comprehensive loss
Other comprehensive loss
Notes
4 & 45
5
6
7
10
12
25
13
14
15
16
17
36
4 & 36
16
2023
USD’000
309,200
(232,772)
(76,141)
(30,197)
(22,841)
(29,681)
2,640
18,855
(41,829)
-
(102,766)
11,492
(91,274)
(0.18)
(91,274)
(30,509)
10,322
(20,187)
6,056
(14,131)
2022
Restated*
USD’000
421,602
(250,300)
(61,562)
(29,218)
(22,305)
(13,534)
-
28,033
(11,427)
1,904
63,193
(53,956)
9,237
0.02
9,237
-
-
-
-
-
Total comprehensive (loss)/income for the year
(105,405)
9,237
Consolidated statement of financial position
as at 31 December 2023
Notes
31 December 2023
USD’000
31 December 2022
Restated*
USD’000
1 January 2022
Restated*
USD’000
Assets
Non-current assets
Intangible exploration assets
Oil and gas properties
Plant and equipment
Right-of-use assets
Investment in associate
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
Hedging reserve
Accumulated losses
Total equity
Non-current liabilities
Provisions
Borrowings
Lease liabilities
Other payables
Derivative financial instruments
Deferred tax liabilities
Total non-current liabilities
Current liabilities
Borrowings
Lease liabilities
Trade and other payables
Derivative financial instruments
Warrants liability
Provisions
Tax liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
21
22
23
24
25
29
27
30
28
29
16
30
31
31
33
34
35
36
37
38
39
41
42
27
38
39
41
42
43
37
79,564
457,202
10,462
31,099
26,651
141,860
26,774
1,008
774,620
33,654
124,379
4,085
152,396
314,514
1,089,134
456
51,827
146,270
27,673
24
(14,131)
(158,349)
53,770
503,170
147,313
18,746
16,966
6,708
65,829
758,732
7,260
14,118
113,979
17,977
3,469
108,525
11,304
276,632
1,035,364
1,089,134
77,928
433,645
7,318
8,193
-
90,590
22,843
676
641,193
19,644
19,635
9,725
122,653
171,657
812,850
339
983
146,270
26,907
21
-
(64,991)
109,529
510,945
-
2,880
-
-
90,206
604,031
-
6,227
73,352
-
-
703
19,008
99,290
703,321
812,850
93,241
353,592
8,963
13,852
-
48,500
23,866
852
542,866
23,299
32,578
9,367
117,013
182,257
725,123
358
201
146,270
25,936
-
-
(48,942)
123,823
410,697
-
4,504
-
-
77,562
492,763
-
11,161
70,107
-
-
930
26,339
108,537
601,300
725,123
Certain 2022 comparative information has been restated. Please refer to Note 49.
*
All comprehensive income is attributable to the equity holders of the parent.
8 8
Bert-Jaap Dijkstra
Director
8 9
*
Certain 2022 and 2021 comparative information has been restated and reclassified between line items. Please refer to the affected notes to consolidated financial statements
and Note 50.
The financial statements were approved by the Board of Directors and authorised for issue on 27 April 2024. They were signed on its
behalf by:
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Consolidated statement of changes in equity
for the year ended 31 December 2023
Consolidated statement of cash flows
for the year ended 31 December 2023
Share
capital
USD’000
Share
premium
account
USD’000
Merger
reserve
USD’000
Share-
based
payments
reserve
USD’000
Capital
redemption
reserve
USD’000
Hedging
reserve
USD’000
Accumulated
losses
USD’000
Total
USD’000
(48,942)
123,823
9,237
9,237
(9,216)
(9,216)
-
-
971
784
(16,070)
(16,070)
Operating activities
(Loss)/Profit before tax
Adjustments for:
Depletion, depreciation and amortisation
Finance costs
Impairment of oil and gas properties
Assets written off
Share-based payments
Allowance for slow moving inventories
(Reversal of)/Change in provision
Interest income
Share of results of associate
Unrealised foreign exchange (gain)/loss
Accretion income on Australian tax repayment plan
(25,286)
(23,531)
Reversal of impairment of amount due from joint arrangement partner
(64,991)
109,529
(Increase)/Decrease in trade and other receivables
Operating cash flows before movements in working capital
1 January 2022
(Restated)*
Profit for the year,
representing total
comprehensive income
for the year
Dividends paid (Note 32)
Share-based payments
(Note 8)
Shares issued (Note 31)
Share repurchased
(Note 31)
Total transactions
with owners,
recognised directly in
equity
As at 31 December
2022 (Restated)*
As at 1 January 2023
(Restated)*
Loss for the year
Other comprehensive
loss for the year
Loss for the year,
representing total
comprehensive income
for the year
Share-based payments
(Note 8)
Transaction costs
associated with issuance
of shares (Note 31)
Share repurchased
(Note 31)
Total transactions
with owners,
recognised directly in
equity
As at 31 December
2023
358
201
146,270
25,936
-
-
-
2
(21)
(19)
339
-
-
-
782
-
782
-
-
-
-
-
-
-
-
971
-
-
971
983
146,270
26,907
339
983
146,270
26,907
-
-
-
-
-
-
-
-
-
(3)
(2,002)
-
117
50,844
-
-
-
-
-
-
-
-
-
-
-
766
-
-
-
766
Shares issued (Note 31)
120
52,846
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21
21
21
21
-
-
-
-
-
-
3
3
(64,991)
(91,274)
109,529
(91,274)
(14,131)
-
(14,131)
(14,131)
(91,274)
(105,405)
-
-
-
-
-
-
-
-
766
52,966
(2,002)
(2,084)
(2,084)
(2,084)
49,646
456
51,827
146,270
27,673
24
(14,131)
(158,349)
53,770
Increase in inventories
Increase/(Decrease) in trade and other payables
Cash generated from operations
Net tax paid
Net cash (used in)/generated from operating activities
Investing activities
Cash paid for acquisition of Sinphuhorm Assets
Cash received from acquisition of CWLH Assets
Cash paid for acquisition of 10% interest of Lemang PSC
Payment for oil and gas properties
Payment for plant and equipment
Payment for intangible exploration assets
Dividends received from associate
Interest received
Net cash used in investing activities
Financing activities
Net proceeds from issuance of shares
Shares repurchased
Dividends paid
Total drawdown of borrowings
Repayment of borrowings
Interest on borrowings paid
Borrowings costs paid
Commitment fees of borrowings paid
Repayment of lease liabilities
Interest on lease liabilities paid
Other interest and fees paid
Net cash generated from/(used in) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
Notes
6
14
12
10
7
10
10 / 13
13
25
10 / 13
15
13
25
19
20
22
23
21
25
13
31
31
32
40
40
40
40
40
40
40
30
2023
USD’000
(102,766)
76,141
41,829
29,681
5,114
766
655
(7,653)
(4,451)
(2,640)
(177)
-
-
36,499
(80,900)
(15,655)
62,392
2,336
(14,461)
(12,125)
(27,853)
-
-
(107,500)
(516)
(1,508)
3,842
4,451
(129,084)
50,964
(2,084)
-
232,000
(75,000)
(5,007)
(7,595)
(658)
(14,400)
(2,771)
(4,165)
171,284
30,075
123,329
153,404
2022
Restated*
USD’000
63,193
61,562
11,427
13,534
212
971
3,768
7,333
(881)
-
245
(1,904)
(912)
158,548
519
(1,829)
(2,871)
154,367
(33,130)
121,237
-
5,750
(500)
(78,938)
(356)
(3,334)
-
881
(76,497)
784
(16,070)
(9,216)
-
-
-
-
-
(13,914)
(769)
(91)
(39,276)
5,464
117,865
123,329
91
*
Certain 2022 and 2021 comparative information has been restated and reclassified between line items. Please refer to the affected notes to consolidated financial
statements and Note 50.
*
Certain 2022 comparative information has been restated and reclassified between line items. Please refer to Note 50.
9 0
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Notes to consolidated the financial statements
for the year ended 31 December 2023
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 and an
associate (the “Group”). These consolidated financial statements have been prepared for the Jadestone Group and reflect the full financial
year ended 31 December 2023 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, Indonesia and
Thailand. 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, the East Piatu, East Belumut, West Belumut and Chermingat fields, located
in shallow water in offshore Peninsular Malaysia, and in the Sinphuhorm gas field onshore north-east Thailand.
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
The Directors are required to assess the availability of financial resources to meet the Group’s financial liabilities for the foreseeable future,
which for the going concern assessment is the period up to 31 December 2025 (the “Review Period”).
As at 31 December 2023, the Group had available liquidity of c.US$220.0 million, consisting of cash and cash equivalents (excluding
restricted cash) of US$144.2 million, undrawn RBL facility capacity of US$43.0 million and the undrawn committed standby working capital
facility of US$31.9 million (the “Working Capital Facility”), from Tyrus Capital Event S.à.r.l (“Tyrus”), the Group’s largest shareholder, which
expires on 31 December 2024
From the period 1 January 2024 to 31 March 2024, the Group’s available unrestricted cash has ranged from US$81.5 million to
US$136.6 million, with a balance of US$113.6 million as at 31 March 2024. Other than funding the Group’s planned operational and capital
expenditures during the first quarter of 2024, the Group also received a payment of US$35.3 million from the previous operator of the
PNLP Assets for its share of future well preservation activities and decommissioning costs when it exited two PSCs during 2023, and made
a net payment of US$35.7 million for the acquisition of the second 16.67% interest in the CWLH Assets, which comprised of a placement
of US$42.0 million into the CWLH abandonment trust fund and a receipt of US$6.3 million from the seller of the interest, reflecting the
accumulated economic benefits of the CWLH assets for the period from the effective date of 1 July 2022 to completion.
The March 2024 RBL redetermination has been finalised, setting a borrowing base of US$200.0 million for the six-month period ending
30 September 2024. The available borrowing base is projected at US$200.0 million and US$169.2 million for the six-month periods ending
31 March 2025 and 30 September 2025, respectively.
The Group closely 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 and liquidity forecasts reflect the outcome of the March 2024 RBL redetermination and the availability of the
Working Capital Facility for the period up to 31 December 2024. This represents a ‘base case’ which includes the Group’s current financial
position and reflects the expected trading performance of the Group’s operations based on the current portfolio of assets, excluding any
future business/asset acquisitions.
The Group’s forecasts and scenario analyses are, among other factors, based on commodity prices per the current forward curve taking
into account the downside risks and the associated impacts. Additionally, the Group’s latest liquidity forecasts include the ongoing hedging
arrangements entered into as required under the RBL facility.
Various risking scenarios, such as lower oil prices (US$70/bbl flat nominal from July 2024 onwards), unplanned downtime at Montara and
CWLH Assets and a potential delay to the Akatara project coming onstream have been modelled. Where liquidity over the Review Period is
reduced under these scenarios, the Directors believe that several potential mitigating factors exist in order to increase liquidity, including
but not limited to, i) an extension or refinancing of the Group’s existing working capital facility, ii) RBL capacity increases from capex add-
back or incremental hedging iii) shortening payment terms for liftings from the Group’s Australian assets, iv) prepayments for the Group’s
oil sales and/or v) reducing or deferring the Group’s planned capital expenditure.
The Directors have assessed that, based on the cash projections for the Review Period, the Group will have sufficient liquidity in place
throughout the Review Period, and also after taking into consideration 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 Review Period. Accordingly, they adopted the going concern basis in preparing these audited consolidated 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 amendments that are effective from the beginning of the year and is relevant to its
operations. The adoption of these amendments has not resulted in changes to the Group’s accounting policies, except as noted below.
Amendments to IAS 1 and IFRS Practice Statement 2
Amendments to IAS 8
Amendments to IAS 12
Amendments to IAS 12
Amendments to IAS 4
Disclosure of Accounting Policies
Definition of Accounting Estimates
International Tax Reform – Pillar Two Model Rules
Deferred Tax related to Assets and Liabilities arising from a Single Transaction
Extension of the Temporary Exemption from Applying IFRS 9
The Group’s accounting policy has been changed as a result of the adoption of the Amendments to IAS 12 Deferred Tax related to Assets and
Liabilities arising from a Single Transaction. The amendments introduce a further exception from the initial recognition exemption. Under
the amendments, an entity does not apply the initial recognition exemption for transactions that give rise to equal taxable and deductible
temporary differences. Depending on the applicable tax law, equal taxable and deductible temporary differences may arise on initial
recognition of an asset and liability in a transaction that is not a business combination and affects neither accounting profit nor taxable profit.
Following the amendments to IAS 12, an entity is required to recognise the related deferred tax asset and liability, with the recognition of
any deferred tax asset being subject to the recoverability criteria in IAS 12. See Note 50 for further details on the prior year restatements
resulting from the adoption of amendments to IAS 12.
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 11
Amendments to IAS 11
Amendments to IAS 11
Amendments to IAS 7 and IFRS 71
Amendments to IAS 212
Amendments to IFRS 162
Amendments to IFRS 161
Classification of Liabilities as Current or Non-current
Classification of Liabilities as Current or Non-current – Deferral of Effective Date
Non-current Liabilities with Covenants
Supplier Finance Arrangements
Lack of exchangeability
Covid-19-Related Rent Concessions beyond 30 June 2021
Lease Liability in a Sale and Leaseback
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.
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
l Has the ability to use its power to affect its returns.
Is exposed, or has rights, to variable returns from its involvement with the investee; and
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.
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.
1
2
Effective from 1 January 2024.
To be announced by IASB.
92
93
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
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.
Invesment in associates
An associate is an entity over which the group has significant influence and that is neither a subsidiary nor an interest in a joint venture.
Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint
control over those policies.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the
joint 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.
The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting.
Under the equity method, an investment in an associate or a joint venture is recognised initially in the consolidated statement of financial
position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the
associate. When the Group’s share of losses of an associate exceeds the Group’s interest in that associate (which includes any long-term
interests that, in substance, form part of the group’s net investment in the associate), the Group discontinues recognising its share of
further losses. Additional losses are recognised only to the extent that the Group has incurred legal or constructive obligations or made
payments on behalf of the associate.
An investment in an associate is accounted for using the equity method from the date on which the investee becomes an associate.
On acquisition of the investment in an associate, any excess of the cost of the investment over the Group’s share of the net fair value of the
identifiable assets and liabilities of the investee is recognised as goodwill, which is included within the carrying amount of the investment.
Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after
reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired.
If there is objective evidence that the Group’s net investment in an associate is impaired, the requirements of IAS 36 are applied to
determine whether it is necessary to recognise any impairment loss with respect to the Group’s investment. When necessary, the entire
carrying amount of the investment (including goodwill) is tested for impairment in accordance with IAS 36 as a single asset by comparing its
recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised
is not allocated to any asset, including goodwill that forms part of the carrying amount of the investment. Any reversal of that impairment
loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.
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.
9 4
9 5
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
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 Malaysian cess payment amount is assessed
based on the estimated future decommissioning expenditures on oil and gas facilities, excluding wells. The Indonesian cess payment
amount is assessed based on the estimated future decommissioning expenditures of all facilities. 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
exploration assets
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 (“VIU”). In assessing VIU, 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.
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.
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.
9 6
9 7
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
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.
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.
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
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.
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.
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;
It is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
l
l The disappearance of an active market for that financial asset because of financial difficulties.
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.
The Group’s trade and other receivables are primarily with counterparties to oil and gas sales, joint arrangement partners and non-trade
related parties.
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.
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.
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
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.
l
9 8
9 9
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
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.
Derivative financial instruments
The Group enters into a variety of derivative financial instruments to manage its exposure to commodity price and foreign exchange risks.
Derivatives are initially recognised at fair value on the date the contract is entered into, and are subsequently remeasured to fair value as at
each reporting date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as
a hedging instrument, in which case the timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a
financial liability. Derivatives are not offset in the financial statements unless the Group has both a legally enforceable right and intention to
offset. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than 12
months and it is not due to be realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.
Hedge accounting
All hedges are classified as cash flow hedges, which hedges exposure to the variability in cash flows that is either attributable to a particular
risk associated with a recognised asset or liability, or a component of a recognised asset or liability, or a highly probable forecasted
transaction.
At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged item,
along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of
the hedge and on an ongoing basis, the Group documents whether the hedging instrument is effective in offsetting changes in fair values
or cash flows of the hedged item attributable to the hedged risk, which is when the hedging relationships meet all of the following hedge
effectiveness requirements:
l
l
l
there is an economic relationship between the hedged item and the hedging instrument;
the effect of credit risk does not dominate the value changes that result from that economic relationship; and
the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually
hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio, but the risk management
objective for that designated hedging relationship remains the same, the Group adjusts the hedge ratio of the hedging relationship (i.e.
rebalances the hedge), so that it meets the qualifying criteria again.
The Group designates the full change in the fair value of a forward contract (i.e. including the forward elements) as the hedging instrument,
for all of its hedging relationships involving forward contracts. The Group designates only the intrinsic value of option contracts as a
hedged item, i.e. excluding the time value of the option. The changes in the fair value of the aligned time value of the option are recognised
in other comprehensive income and accumulated in the cost of hedging reserve. If the hedged item is transaction related, the time value
is reclassified to profit or loss when the hedged item affects profit or loss. If the hedged item is time period related, then the amount
accumulated in the cost of hedging reserve is reclassified to profit or loss on a rational basis; the Group applies straight line amortisation.
Those reclassified amounts are recognised in profit or loss in the same line as the hedged item. If the hedged item is a non financial item,
then the amount accumulated in the cost of hedging reserve is removed directly from equity and included in the initial carrying amount of
the recognised non financial item. Furthermore, if the Group expects that some or all of the loss accumulated in cost of hedging reserve will
not be recovered in the future, that amount is immediately reclassified to profit or loss.
Note 42 sets out details of the fair values of the derivative instruments used for hedging purposes.
Movements in the hedging reserve in equity are detailed in Note 36.
Cash flow hedges
The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated and qualify
as cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve,
limited to the cumulative change in fair value of the hedged item from inception of the hedge. The gain or loss relating to the ineffective
portion is recognised immediately in profit or loss in either “other financial gains” (Note 15) or “finance costs” (Note 14) line item.
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods
when the hedged item affects profit or loss, in the same line as the recognised hedged item. If the Group expects that some or all of the
loss accumulated in the cash flow hedging reserve will not be recovered in the future, that amount is immediately reclassified to profit
or loss.
The Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria
(after rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised.
The discontinuation is accounted for prospectively. Any gain or loss recognised in other comprehensive income and accumulated in
cash flow hedge reserve, at that time, remains in equity and is reclassified to profit or loss when the forecast transaction occurs. When a
forecast transaction is no longer expected to occur, the gain or loss accumulated in cash flow hedge reserve is reclassified immediately
to profit or loss.
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.
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.
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.
10 0
101
Jadestone Energy | 2023 Annual Report
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 37.
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.
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, Directors 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
The following are the critical judgements, apart from those involving estimates (see below) that the Directors have 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.
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 the acquisition of the CWLH Assets have been set out in Note 19.
102
10 3
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
b) Impairment of oil and gas properties
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 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.
c) Impairment of 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. Additionally, the Group performed recoverability assessment
for the expenditures incurred based on their cost recoverability in accordance to the terms of the relevant production sharing
contracts.
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) Reserves estimates
The Group’s estimated reserves are management assessments, and are independently assessed 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, a 5% decrease in the reserves
estimates would result to a further impairment charge of US$60.0 million and a 5% increase in the reserves estimates would reduce the
impairment charge by US$17.4 million. The Directors consider 5% movements to the existing reserves a reasonable assumption based
on the historical technical adjustments during the annual reserves assessment performed by an independent third party and also in
view of the mature assets that the Group owns with long production history and therefore less volatility in reserves estimates
is anticipated.
b) Impairment of oil and gas properties and intangible exploration assets
For the impairment assessment of oil and gas properties, the Directors assess the recoverable amounts using the VIU 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. The post-tax estimated future cash flows also included the carbon
costs estimates of each asset, where applicable. The inclusion of carbon cost estimates of each asset is based on the Directors’ best
estimate of any expected applicable carbon emission costs payable. This requires Directors’ best estimate of how future changes
to relevant carbon emission cost policies and/or legislation are likely to affect the future cash flows of the Group’s applicable CGUs,
whether enacted or not. Future potential carbon cost estimates of each asset were included to the extent the Directors have sufficient
information to make such estimates.
The Directors further take into consideration the impact of climate change on estimated future commodity prices with the application
of price assumptions based on economic modelling in scenarios in which the goals of the COP 21 Paris agreement are reached (“Paris
aligned price assumptions”, see below).
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 climate change and the 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 ARO 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 (IEA’s NZE by 2050). The Group’s current oil price assumption for internal planning
purposes is broadly in line with the IEA’s STEPS case, which in turn is underpinned by climate policies and targets already announced
by governments. The Group has assessed the potential impacts of climate change and the transition to a lower carbon economy in
preparing the consolidated financial statements. This is achieved by running the IEA’s NZE scenario through the Group’s financial
models and assessing the impact on profitability, cash flow and asset values. The IEA’s NZE by 2050 case predicts global oil demand
will fall from US$97 mb/d in 2022 to US$78 mb/d by 2030 and US$24/mb/d by 2050. Prices fall to US$40/bbl in 2030 and trend lower
thereafter. The oil price differential between STEPS and NZE becomes significant from 2030 onwards. The Group monitors energy
transition risks and, through its annual risk reviews, challenges its base case assumptions on a regular basis.
The Directors will continue to review various global and regional energy transition developments and their impacts on price
assumptions, including Paris aligned scenario price assumptions and demand in line with the scenarios based on decrease to
emissions as the energy transition progresses and will continue to take these into consideration in the future impairment assessments.
See further disclosures under the Sustainability Review section from pages 13 to 29.
Sensitivity analyses
The Directors assess 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 the Directors. The forecasted price assumptions are
US$78.5/bbl in 2024, US$79.0/bbl in 2025, US$79.7/bbl in 2026, US$81.2/bbl in 2027 and an average of US$89.8/bbl from 2028 onwards.
The Directors are 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 the Directors. Based on the analysis
performed, the Directors concluded that a 10% price reduction in isolation under the various scenarios would result to a further
impairment charge of US$141.9 million and a 10% price increase in isolation would reduce the impairment charge by US$17.4 million.
The oil price sensitivity analyses above do not, however, represent the Directors’ 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.
The Directors also tested the impact of a 5% (2022: 5%) change to the post-tax discount rate used of 10.50% (2022: 10%) for impairment
testing of oil and gas properties, and concluded that a 5% increase in the post-tax discount rate would result to a further impairment
charge of US$3.4 million and a 5% decrease in the post-tax discount rate would reduce the impairment charge by US$3.5 million.
The Directors assessed the impact of the change in cash flows used in impairment testing arising from the application of the oil price
assumptions under the Net Zero Emissions by 2050 Scenario plus the inclusion of carbon cost estimates as disclosed below. The oil
prices under the Net Zero Emissions by 2050 Scenario for each asset are as follows:
Montara
Stag
CWLH Assets
PenMal Assets – PM323 PSC
PenMal Assets – PM329 PSC
Lemang PSC
2024
US$/bbl
2025
US$/bbl
2026
US$/bbl
2027
US$/bbl
2028
US$/bbl
2029 onwards
US$/bbl
81.6
81.6
81.6
81.6
81.6
81.6
77.3
77.3
77.3
77.3
77.3
77.3
75.6
75.6
75.6
75.6
75.6
75.6
69.0
69.0
69.0
69.0
69.0
69.0
62.4
62.4
62.4
62.4
62.4
62.4
51.3
49.3
49.8
-
51.3
49.3
Based on the analysis performed, the reduction in operating cash flows under the Net Zero Emissions by 2050 Scenario would result to
a further impairment charge of US$196.8 million to the Group’s oil and gas properties. The assumptions under the Net Zero Emissions
by 2050 Scenario do not reflect the existing market conditions and are dependent on various factors in the future covering supply,
demand, economic and geopolitical events and therefore are inherently uncertain and subject to significant volatility and hence
unlikely to reflect the future outcome.
c) 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 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 the Directors to make
judgments regarding the removal date, the extent of restoration activities required and future costs and removal technologies.
The carrying amounts of the Group’s ARO is disclosed in Note 37 to the financial statements.
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$46.0 million and a 1% increase
in discount rate would decrease the liability by US$41.3 million. A 1% increase in the inflation rate would increase the liability by
US$46.3 million and a 1% decrease in inflation rate would decrease the liability by US$42.3 million. A 10% increase in current estimated
costs would increase the liability by US$61.2 million and a 10% decrease in current estimated costs would decrease the liability by
US$61.2 million. A one year deferral to the estimated decommissioning year of each asset as disclosed in Note 37 would decrease
the liability by US$30.8 million and an acceleration of one year to the estimated decommissioning year as disclosed in Note 37 would
increase the liability by US$7.6 million. The Directors consider the 1% movement to the discount rate and inflation 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.
10 4
10 5
4 Revenue
7 Administrative staff costs
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
As part of the RBL, during the year, the Group entered into commodity swap contracts to hedge approximately 50% of its forecasted
planned production from October 2023 to September 2025. The commodity swap contracts were measured using hedge accounting.
See Note 42 for the details of the commodity swap contracts.
8 Staff numbers and costs
The average number of employees (including Executive Directors) was:
The compensations of Directors and key management personnel are included in the above and disclosed separately in Notes 9 and 48,
respectively.
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
Hedging loss (Note 36)
Gas revenue
2023
USD’000
317,469
(10,322)
307,147
2,053
309,200
2022
USD’000
418,483
-
418,483
3,119
421,602
5 Production costs
Operating costs
Workovers
Logistics
Repairs and maintenance
Tariffs and transportation costs
Decommissioning expenses
Underlift, overlift and crude inventories movement
2023
USD’000
114,779
17,562
34,109
55,572
7,502
12,545
(9,297)
232,772
2022
Restated*
USD’000
100,664
10,190
31,895
60,174
8,341
-
39,036
250,300
Operating costs predominately consists of offshore manpower costs of US$26.0 million (2022: US$26.1 million), chemicals, services,
supplies and other production related costs for a total of US$49.3 million (2022: US$38.3 million), Malaysian supplementary payments
totalled US$10.1 million (2022: US$24.5 million), insurance of US$4.9 million (2022: US$4.8 million) and non-operated assets production
costs of US$16.0 million (2022: US$3.3 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 a credit of US$9.3 million (2022: US$39.0 million charge), mostly related to
higher inventories on hand at Montara and Stag at year end compared to beginning of the year.
Workovers in 2023 and 2022 were recurring in nature. The Group carried out a higher number of workovers at Stag in comparison of 2022.
Repairs and maintenance in current year include Montara storage tank repairs, FPSO maintenance and fabric maintenance costs at both
Montara and Stag. In 2022, the costs included Montara Skua-11 repairment works, solar engine change out and emergency tank repairs.
During the year, the previous operator of the PenMal Assets’ non-operated PSCs (the “PNLP Assets”) has completed the decommissioning
works of the FPSO. The decommissioning costs were partially funded by the cess abandonment fund, with the remainder portion of
US$12.5 million, net to Jadestone, was funded by the Group’s working capital and expensed to profit or loss when incurred.
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
2023
USD’000
64,575
494
15,251
(4,179)
76,141
2022
Restated*
USD’000
45,016
616
13,015
2,915
61,562
Wages, salaries and fees
Staff benefits in kind
Share-based compensation
Production
Technical
Administration
Management
2023
USD’000
24,729
4,702
766
30,197
2022
USD’000
24,825
3,422
971
29,218
2023
Number
2022
Number
162
236
2
9
409
152
206
2
9
369
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
2023
USD’000
2022
USD’000
47,940
212
3,655
766
52,573
3,606
56,179
45,548
199
3,573
971
50,291
4,976
55,267
2023
USD’000
2022
USD’000
2,496
300
102
2,898
1,028
210
65
1,303
2,805
-
341
78
3,224
1,236
-
271
65
1,572
Number
Number
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 2023, the adjustment was for 211,261 bbls of crude inventories at the end of 2023 compared to
90,681 bbls at the end of 2022, mostly due to the restart of production at Montara since March 2023, resulting in a total depletion credit of
US$8.2 million.
*
Certain 2022 comparative information has been restated. Please refer to Note 50.
10 6
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
The Non-Executive Directors were not granted any options/shares under the Company’s long term incentive plans.
-
2
-
2
-
2
-
2
10 7
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
10 Other expenses
13 Other income
Corporate costs
Change in provision – Lemang PSC contingent payments
Allowance for slow moving inventories
Assets written off
Net foreign exchange loss
Other expenses
2023
USD’000
2022
USD’000
14,179
-
655
5,114
1,728
1,165
22,841
10,405
7,333
3,768
212
442
145
22,305
Interest income
Reversal of provisions – Lemang PSC contingent payments
Net foreign exchange gain
Insurance claims
Other income
2023
USD’000
4,451
7,653
322
-
6,429
18,855
2022
USD’000
881
-
341
17,977
8,834
28,033
Corporate costs include recurring general and administration expenses such as professional fees, office and travelling costs of US$10.5
million (2022: US$8.8 million) and non-recurring costs such as business development costs of US$2.2 million (2022: US$0.8 million),
professional fees in relation to internal reorganisation of US$0.8 million (2022: US$0.1 million), equity fundraising of US$0.4 million (2022:
nil) and external funding sourcing of US$0.2 million (2022: US$0.2 million).
The change in provision in 2022 was 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. The
provision for these contingent payments were reversed in 2023 (Note 13).
Assets written off in 2023 represents the write off of Montara non-depletable oil and gas properties of US$3.1 million following the
cancellation of a capital project for the preparation of Skua-12 well development and written off of obsolete material and spares for US$2.0
million. In 2022, the Group has written off the office equipment located in the New Zealand office following the termination of the Maari
acquisition in October 2022.
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
2023
USD’000
2022
USD’000
600
417
1,017
544
390
934
No fee was paid to the Group’s auditor for non-audit services for either the Group or the Company in 2022 or 2023.
The audit fee in prior year represented the actual finalised fee agreed with the auditor.
12 Impairment of assets
Impairment of oil and gas properties (Note 22)
2023
USD’000
29,681
2022
USD’000
13,534
The impairment expense in 2023 consists of US$17.4 million for the impairment of Stag’s oil and gas properties, which is treated as a single
cash-generating unit. The impairment is made following the annual impairment assessment performed by the Directors and identified
that the VIU of the operating asset, determined based on the post-tax discount rate used of 10.50% (2022: FVLCOD approach was adopted,
using post-tax discount rate of 8.99%), is lower than the carrying amount. The impairment was made to reduce the carrying amount of
Stag’s oil and gas properties to its recoverable amount of US$95.8 million. The key assumptions used in determining the VIU are disclosed
Note 3(b). The impairment is made in relation to the producing asset of the Group located in Australia as disclosed in Note 45.
Additionally, the Group also provided impairment of US$12.3 million associated with the adjustment to the ARO estimates for the PNLP
Assets (Note 37) that underwent retendering during the year after ceasing production in 2022, following the class suspension of the FPSO,
as disclosed on page 36. The revision of ARO estimates reflects the change on assumptions used for the estimation of the decommissioning
costs.
In 2022, the impairment expense was provided in full for the oil and gas properties of the PNLP Asset, which are treated as a single cash-
generating unit. The impairment was made following the previous operator’s decision to shut in production after FPSO class suspension in
February 2022. Accordingly, the VIU of the non-operated PSCs is valued at nil as at the end of 2022.
The impairments for the PNLP Assets in 2023 and 2022 were made in relation to the producing asset of the Group located in Southeast Asia
as disclosed in Note 45.
10 8
Interest income consists of US$2.9 million (2022: US$0.1 million) generated from the CWLH Assets abandonment trust fund and US$0.9
million (2022: nil) generated from the Group’s fixed term deposits. The abandonment trust funds generates average interest rate of 4.5%
(2022: 3.6%) and the fixed term deposits generate average interest rate of 4.5% (2022: nil).
The reversal of provisions associated with the contingent payments for Lemang PSC in 2023 represents the derecognition of contingent
payments associated with the Saudi CP and Dated Brent prices due to the trigger events as disclosed on Note 37 are not expected to occur
based on the specialist’s consensus on Dated Brent prices and the historical correlation between Dated Brent prices and Saudi CP.
Other income mainly consists of rental income from a helicopter rental contract (a right-of-use asset) to a third party of US$6.4 million
(2022: US$5.0 million). The other income in 2022 also consisted of an income of US$0.9 million related to amount recognised for previously
unrecognised amount due from a joint arrangement partner.
In 2022, insurance claims were made to compensate for loss of production following the drilling of two wells at the Montara field wells in
2020. These claims were resolved and the cash was received in Q4 2022.
For the purpose of the consolidated statement of cash flows, the net foreign exchange gain reported above in 2023 included a net
unrealised gain of US$0.2 million (2022: nil).
14 Finance costs
Interest expense
Accretion expense for:
Asset restoration obligations (Note 37)
RBL (Note 38)
Non-current Lemang PSC VAT receivables
Interest expense on lease liabilities
Warrants expense
Upfront fees on financing facilities
Interest expense on financing facilities
Changes in fair value of:
Lemang PSC contingent payments (Note 37)
CWLH Assets contingent payment (Note 37)
PenMal Assets contingent payment (Note 37)
RBL commitment fees
Fair value loss on derivative liability (Note 42)
Other finance costs
2023
USD’000
2022
Restated*
USD’000
2,710
20,201
5,517
1,182
2,771
3,469
2,656
953
868
60
-
349
73
1,020
41,829
5
8,333
-
314
769
-
-
-
349
-
1,571
-
-
86
11,427
The interest expense primarily consists of US$1.3 million (2022: nil) from the US$50.0 million debt facility (“Interim Facility”) obtained and
repaid during the year and US$1.2 million (2022: nil) from the RBL facility (Note 38).
Warrants expense represents the fair value of the warrant instrument entered into by the Group with Tyrus Capital S.A.M. and funds
managed by it, in June 2023.
The Group incurred upfront fees of US$2.7 million (2022: nil) and interest of US$1.0 million (2022: nil) in relation to the equity underwrite
debt facility and committed standby working capital facility executed with Tyrus Capital Events S.a.r.l. during the year, see Notes 38 and 49
for further details.
The changes in fair value of the provision associated with the contingent payments for Lemang PSC of US$0.9 million (2022: US$0.3 million)
represents fair value adjustments reflecting the effect of the time value of money.
In 2022, the second contingent payment arising from the acquisition of the PenMal Assets was recognised in full for US$3.0 million as at 31
December 2022 (Note 37), resulted in an increase in the provision of US$1.6 million. The amount was recognised as an accrual as at 2022
year end, paid in January 2023.
Other finance costs includes accretion expense of US$0.6 million (2022: nil) generated from an Australian Tax Office (“ATO”) repayment plan
for corporate tax payments. The repayment schedule is between September 2023 to October 2024.
*
Certain 2022 comparative information has been restated. Please refer to Note 50.
10 9
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
15 Other financial gains
Accretion income from Australian tax repayment plan
2023
USD’000
-
2022
USD’000
1,904
17 (Loss)/Profit per ordinary share
The calculation of the basic and diluted loss per share is based on the following data:
Accretion income in 2022 was generated from the ATO 2019 repayment plan due to early settlement by the Group in May 2022.
(Loss)/Profit for the purposes of basic and diluted per share, being the net (loss)/profit for the year
attributable to equity holders of the Company
16 Income tax (credit)/expense
Current tax
Corporate tax (credit)/charge
Underprovision in prior years
Australian petroleum resource rent tax (“PRRT”)
Malaysian petroleum income tax (“PITA”)
Deferred tax
Corporate tax
PRRT
PITA
2023
USD’000
(3,403)
2,051
(1,352)
1,735
10,377
10,760
(20,138)
(4,269)
2,155
(22,252)
(11,492)
2022
Restated*
USD’000
15,656
666
16,322
(1,121)
11,899
27,100
14,087
7,032
5,737
26,856
53,956
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.
As at year end, Montara and the CWLH Assets have US$3.8 billion (2022: US$3.5 billion) and US$493.4 million (2022: US$535.5 million) of
unutilised carried forward PRRT credits, respectively. Based on Directors’ 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.
During the year, Stag recorded a net PRRT credit of US$2.5 million (2022: US$5.9 million of PRRT expense).
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.
PenMal Assets recorded PITA expense of US$12.5 million during the year (2022: US$17.6 million).
The tax recoverable of US$4.1 million as at year end includes of a PITA receivable of US$3.3 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 (loss)/profit differs from the amount that would arise using the standard rate of income tax applicable in
the countries of operation as explained below:
(Loss)/Profit 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 (credit)/expense
Underprovision in prior year
Tax (credit)/expense for the year
2023
USD’000
(102,750)
(27,543)
4,003
12,112
(2,115)
2,051
(11,492)
2022
Restated*
USD’000
63,193
20,488
9,255
10,778
12,769
666
53,956
In addition to the amount charged to the profit or loss, the following amounts relating to tax have been recognised in other comprehensive
income.
2023
USD’000
2022
USD’000
2023
USD’000
(91,258)
2023
Number
2022
Restated*
USD’000
9,237
2022
Number
461,959,228
3,876,548
334,163
202,823
Weighted average number of ordinary shares for the purposes of basic EPS
499,480,437
Effect of diluted potential ordinary shares – share options
Effect of diluted potential ordinary shares – performance shares
Effect of diluted potential ordinary shares – restricted shares
-
-
-
Weighted average number of ordinary shares for the purposes of dilutive EPS
499,480,437
466,372,762
In 2023, 2,493,421 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 2023, 79,326 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 2023, 344,225 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.
In 2023, 17,095,890 of weighted average contingently issuable shares under the Company’s warrants instrument were excluded from the
calculation of diluted EPS, as they are anti-dilutive in view of the loss for the year.
(Loss)/Profit per share (US$)
- Basic and diluted
2023
(0.18)
2022
0.02
18 Acquisition of the remaining 50% interest in the PNLP assets
18.1 Effective Date and Acquisition date
On 14 April 2023, Jadestone assumed operatorship of the PNLP Assets following the decision of the previous operator to withdraw from the
licences. As part of the takeover, the previous operator paid the Group a sum representing its share of future wells preservation activities
and decommissioning costs. The effective date of the takeover is 14 April 2023.
18.2 Asset acquisition
The Directors have concluded that the acquisition of the remaining 50% interest in the PNLP Assets is an asset acquisition as the PNLP
Assets does not come with an organised workforce due to the PNLP Assets being shut-in since February 2022 as a result of the class
suspension of the Bunga Kertas FPSO which served the PNLP Assets. Additionally, the Group does not take over any process in the form
of a system, protocol or standards to contribute to the creation of outputs. Hence, the acquisition does not fall within the definition of a
business acquisition under IFRS 3. The value of the assets acquired and liabilities assumed in the acquisition of the remaining 50% interest
in the PNLP Assets were allocated on the basis of their relative fair values at the date of acquisition based on sum received from the
previous operator.
18.3 Assets acquired and liabilities assumed at the date of acquisition
The value of the identifiable assets and liabilities, acquired and assumed as at the date of acquisition, were allocated on the basis of their
relative fair values as follows:
Asset
Non-current asset
Other receivables (Note 29)
Liability
Non-current liability
Provision for asset retirement obligations (Note 37)
Net identifiable liability acquired
USD’000
28,176
28,176
48,430
48,430
(20,254)
111
Other comprehensive income - deferred tax
Income tax credit related to carrying amount of hedged item
(6,056)
-
*
Certain 2022 comparative information has been restated. Please refer to Note 50.
*
Certain 2022 comparative information has been restated. Please refer to Note 50.
110
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
19 Acquisition of interest in CWLH joint operation
19.1 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. Both contingent payment
materialised and were paid in January 2023 and 2024, respectively. The second contingent payment was recognised as a payable at 2023
year end.
In addition to the total consideration and as part of this transaction, the Group was required 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 in November 2022 and two further payments of US$20.5 million each were paid after approval by the
Offshore Petroleum & Greenhouse Gas Storage Act (2006) title registration during 2023.
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, the Directors
have assessed the fair value of the assets and liabilities associated with the CWLH Assets as at the Acquisition Date.
On 14 November 2023, the Group executed a sale and purchase agreement with Japan Australia LNG (MIMI) Pty Ltd, to acquire additional
interests of 16.67% in the CWLH Assets. See Note 48 for further details.
19.2 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.
19.3 Fair value of consideration
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
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)*
USD’000
20,000
(26,953)
(6,953)*
3,940
(3,013)
* For the purpose of the consolidated statement of cash flows, the Group received US$5.8 million from BP on the Acquisition Date, with
the remaining US$1.2 million recognised as a receivable as at 2022 year end. This cash amount was received in February 2023.
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 and non-distressed 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.
19.4 Assets acquired and liabilities assumed at the date of acquisition
During the year, the Group has completed the purchase price assessment (“PPA”) to determine the fair values of the net assets acquired
within 12 months from the Acquisition Date. A PPA adjustment was made in relation to the ARO provision and recognition of deferred
tax asset associated with the provision for asset restoration obligations following additional information obtained subsequent to the
acquisition of the CWLH Assets. The adjusted fair values of the identifiable assets and liabilities have been reflected in the consolidated
statement of financial position as at 31 December 2022.
Below are the effects of the final PPA adjustments in accordance with IFRS 3:
Provisional PPA
USD’000
Adjustments
USD’000
Final PPA
USD’000
Asset
Non-current asset
Oil and gas properties (Note 22)
Deferred tax assets
Current asset
Trade and other receivables
Liabilities
Non-current liabilities
Provision for asset restoration obligations (Note 37)
Deferred tax liabilities
Current liability
Trade and other payables
Net identifiable liabilities assumed
41,976
-
27,870
69,846
60,158
12,593
108
72,859
(3,013)
(21,307)
19,390
-
(1,917)
4,475
(6,392)
-
(1,917)
-
20,669
19,390
27,870*
67,929
64,633
6,201
108
70,942
(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.
Please refer to Note 50 for a summary of the adjustment of comparative figures.
19.5 Impact of acquisition on the results of the Group
The Group’s 2022 results included US$56.6 million of revenue and US$9.3 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 prior year, 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.
112
113
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
20 Acquisition of 10% interest in Lemang PSC
22 Oil and gas properties
20.1 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 29) 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).
20.2 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:
Cost
As at 1 January 2022
Changes in asset restoration obligations (Note 37)
Acquisition of CWLH Assets (Note 19)
Acquisition of 10% interest in Lemang PSC (Note 20)
Additions
Written off
Transfer
USD’000
As at 31 December 2022 (Restated)*
Asset
Non-current asset
Oil and gas properties (Note 22)
VAT receivables
Current asset
Trade and other receivables
Inventories
Liabilities
Non-current liabilities
Provision for asset restoration obligations (Note 37)
Current liability
Trade and other payables
Net identifiable liabilities assumed
1,414
1,338
15
26
2,793
337
598
935
1,858
The provision for ARO 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.
21 Intangible exploration assets
Cost
As at 1 January 2022
Additions
Transfer
As at 31 December 2022
Additions
As at 31 December 2023
Impairment
As at 1 January 2022 and 1 January 2023
Additions (Note 12)
As at 31 December 2023
Carrying amount
As at 1 January 2022
As at 31 December 2022
As at 31 December 2023
USD’000
93,241
3,582(a)
(18,895)(b)
77,928
1,636(a)
79,564
-
-
-
93,241
77,928
79,564
Production
assets
USD’000
Development
assets
USD’000
595,494
18,680
20,669
-
62,319
(3,704)
-
693,458
7,150
32,058
48,430
(3,067)
-
7
-
1,414
16,619
-
18,895
36,935
-
81,672
-
-
778,029
118,607
241,902
45,016
13,534
(3,704)
296,748
64,575
78,111
439,434
353,592
396,710
338,595
-
-
-
-
-
-
-
-
-
36,935
118,607
Total
USD’000
595,494
18,687
20,669
1,414
78,938*
(3,704)**
18,895
730,393
7,150(a)
113,730(b)(e)
48,430(d)
(3,067)
896,636
241,902
45,016
13,534
(3,704)(c)
296,748
64,575
78,111(d)
439,434
353,592
433,645
457,202
Changes in asset restoration obligations (Note 37)
Additions
Transfer of 50% interest in PNLP Assets
Written off
As at 31 December 2023
Accumulated depletion, amortisation and impairment
As at 1 January 2022
Charge for the year
Impairment
Written off
As at 31 December 2022 (Restated)*
Charge for the year
Impairment
As at 31 December 2023
Carrying amount
As at 1 January 2022
As at 31 December 2022
As at 31 December 2023
(a) The changes in ARO in Note 37 of US$19.4 million includes the increase in ARO of the PNLP Assets of US$24.5 million while the changes
in ARO of US$7.2 million in this note includes the increase in ARO of the PNLP Assets of US$12.3 million, being 50% of the working
interests owned by the Group. The remaining 50% for the increase in ARO of the PNLP Assets of US$12.3 million is offset against the
non-current other payable (Note 41) due to the costs are to be funded from the cash advances receivable from the Malaysian joint
arrangement partner for its share future decommissioning costs on the PNLP Assets when it withdrew from the licences in 2023.
(b) The additions in 2023 and 2022 represents cash paid for the Group’s capital expenditure projects. The additions in 2023 includes the
capitalisation of borrowing costs of US$2.4 million.
(c) The written off amount in 2022 represented the fully depreciated oil and gas properties associated with the Indonesian Ogan Komering
PSC of which the PSC had expired in 2018.
(d) On 14 April 2023, Jadestone assumed operatorship of the PNLP Assets following the decision of the previous operator to withdraw.
Accordingly, the Group has assumed the previous operator’s share of decommissioning liabilities of US$48.4 million following the
transfer of operatorship, with a corresponding increase to the oil and gas properties balance. The Directors have assessed the
recoverable amount of the oil and gas properties acquired following the takeover to be zero using the VIU approach. Accordingly, the
oil and gas properties were fully impaired and offset against the non-current other payable (Note 41) for the reason as explained in (a)
above, due to the uncertainty in respect to a potential restart date for production under the PSCs and as a result there is no certainty
of future cash flows from the oil and gas properties. On 31 October 2023, MPM invited Jadestone to participate in the bidding for the
renamed PNLP assets, which is now referred to as the “Puteri Cluster PSC,” through Malaysia Bid Round Plus (“MBR+”). The Group
submitted its bid in January 2024, with results of the bidding anticipated in May 2024. The Directors are reasonably confident that the
bid will be successful but there is no certainty of success and future cash flows from the assets.
The remaining impairment amount consists of the impairment of Stag’s oil and gas properties for US$17.4 million and PNLP Assets’ oil
and gas properties for US$12.3 million as further disclosed in Note 12.
(e) For the purpose of the consolidated statement of cash flows, current year expenditure on oil and gas properties of US$3.8 million
remained unpaid as at 31 December 2023 (2022: nil).
(a) For the purpose of the consolidated statement of cash flows, current year expenditure on intangible exploration assets of US$0.1 million remained unpaid as at 31 December
2023 (2022: US$0.3 million).
(b) The transfer relates to the Lemang PSC in Indonesia. In June 2022, the final investment decision was taken following regulatory approval to award the engineering, procurement,
construction and installation (“EPCI”) contract which established commercial viability. The capitalised cost of US$18.9 million was transferred to development assets as disclosed
in Note 22.
114
Certain 2022 comparative information has been restated. Please refer to Note 50.
*
1 Malaysia Petroleum Management (“MPM”) is entrusted to act for and on behalf of PETRONAS in the overall management of Malaysia’s petroleum resources.
115
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
23 Plant and equipment
Computer
equipment
USD’000
Fixtures and
fittings
USD’000
Materials and
spares
USD’000
Total
USD’000
Cost
As at 1 January 2022
Additions
Written off
Transfer
As at 31 December 2022
Additions
Transfer
As at 31 December 2023
Accumulated depreciation
As at 1 January 2022
Charge for the year
Written off
As at 31 December 2022
Charge for the year
As at 31 December 2023
Carrying amount
As at 1 January 2022
As at 31 December 2022
As at 31 December 2023
3,554
204
(313)
-
3,445
280
-
3,725
1,959
450
(101)
2,308
347
2,655
1,595
1,137
1,070
1,571
152
(14)
-
1,709
236
-
1,945
1,412
166
(14)
1,564
147
1,711
159
145
235
7,209
-
-
(1,173)
6,036
-
3,122
9,158
-
-
-
-
-
-
7,209
6,036
9,158
12,334
356
(327)
(1,173)(a)
11,190
516
3,122(a)
14,828
3,371
616
(115)
3,872
494
4,366
8,963
7,318
10,462
(a) 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$1.7 million (2022: US$2.7 million).
24 Right-of-use assets
Transportation
and logistics
USD’000
Buildings
USD’000
Total
USD’000
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
2023
USD’000
2022
USD’000
15,252
2,771
36,680
44
13,015
769
16,028
68
As at 31 December 2023, the Group is committed to US$3.9 million of short-term leases (2022: US$3.0 million).
The total cash outflow in 2023 relating to leases was US$53.9 million (2022: US$30.8 million).
25 Investment in associate
At beginning of year
Acquisition of 9.52% non-operated interest in Sinphuhorm Assets
Dividends received during the year
Share of profit of the associate
At end of year
2023
USD’000
-
27,853
(3,842)
2,640
26,651
2022
USD’000
-
-
-
On 19 January 2023, the Group executed a sale and purchase agreement with Salamander Energy (S.E. Asia) Limited, an affiliate of PT
Medco Energi Internasional Tbk, to acquire its 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 north-east Thailand. The acquisition included
a 27.2% interest in APICO LLC, which operates the Sinphuhorm concessions (E5N and EU1) and Dong Mun (L27/43). The acquisition was
completed on 23 February 2023, for a cash consideration of US$27.9 million. The acquisition has an economic effective date of 1 January
2022, which meant the Group was entitled to net cash generated since effective date to completion date.
APICO LLC is limited liability company incorporated in the State of Delaware, United States of America. Its primary business purpose is
the acquisition, exploration, development and production of petroleum interests in the Kingdom of Thailand. Its principal activities are
currently exploration in operated concessions and gas production in non-operated concessions.
The Group has applied equity accounting for the investment in associate. The summarised financial information in respect of the associate,
APICO LLC, since the date of acquisition of 23 February 2023 is set out below. The summarised financial information below represents
amounts in associates’ financial statements which holds a 35% interest in the Sinphuhorm gas field. The APICO LLC’s financial statements
are prepared in accordance with IFRS Accounting Standards.
Cost
As at 1 January 2022
Additions
Written off*
As at 31 December 2022
Additions
Written off*
As at 31 December 2023
Accumulated depreciation
As at 1 January 2022
Charge for the year
Written off*
As at 31 December 2022
Charge for the year
Written off*
As at 31 December 2023
Carrying amount
As at 1 January 2022
As at 31 December 2022
As at 31 December 2023
43,545
6,701
(4,146)
46,100
36,926
(39,673)
43,353
31,408
12,224
(4,146)
39,486
14,390
(39,673)
14,203
12,137
6,614
29,150
4,823
655
(1,835)
3,643
1,231
-
4,874
3,108
791
(1,835)
2,064
861
-
2,925
1,707
1,579
1,948
48,368
7,356
(5,981)
49,743
38,157
(39,673)
48,227
34,516
13,015
(5,981)
41,550
15,251
(39,673)
17,128
13,852
8,193
31,099
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Revenue
Profit before tax
Profit after tax, representing total comprehensive income for the year
Proportion of the Group’s ownership interest in the associate
Share of profit of the associate
Dividends received from the associate during the year
* This represents the write off of expired leases.
Most of the Group’s right-of-use assets are contracts to lease assets including helicopters, a supply boat, logistic facilities for the Montara
field and buildings. The average lease term is 2.7 years. The additions to right-of-use assets during the year mainly consist of the extension
of the Group’s helicopter lease and Montara warehouse lease for three years and two years, respectively, plus a two-year lease for Montara
vessel to replace an expired lease.
The maturity analysis of lease liabilities is presented in Note 39.
116
2023
USD’000
39,027
133,037
27,048
6,902
59,504
26,412
9,705
27.2%
2,640
(3,842)
117
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
26 Interests in operations
Details of the operations, of which all are in production except for 46/07 and 51 which are in the exploration stage while the Lemang PSC is
in the development stage, are as follows:
Contract Area
Date of expiry
Held by
Place of
operations
Group effective working
interest % as at
31 December
2023
2022
28 Inventories
Materials and spares
Less: allowance for slow moving (Note 10)
Crude oil inventories
2023
USD’000
23,242
(7,010)
16,232
17,422
33,654
2022
Reclassified*
USD’000
18,969
(6,334)
12,635
7,009
19,644
100
100
70
60
100
100
17
17
17
17
100
100
100
10
10
27
Montara oilfield
Stag Oilfield
PM329
PM323
PM318
AAKBNLP
WA-3-L
WA-9-L
WA-11-L
WA-16-L
46/07
51
Lemang
Indefinite
Jadestone Energy (Eagle) Pty Ltd
25 August 2039
Jadestone Energy (Australia) Pty Ltd
8 December 2031
Jadestone Energy (Malaysia) Pte Ltd
14 June 2028
24 May 2034
24 May 2024
Indefinite
15 July 2033
Jadestone Energy (Malaysia) Pte Ltd
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
Australia
Australia
Malaysia
Malaysia
Malaysia
Malaysia
Australia
Australia
Australia
Australia
29 June 2035
10 June 2040
Mitra Energy (Vietnam Nam Du) Pte Ltd
Vietnam
Mitra Energy (Vietnam Tho Chu) Pte Ltd
Vietnam
17 January 2037
Jadestone Energy (Lemang) Pte Ltd
Sinphuhorm concessions (E5N)
15 March 2031
Jadestone Energy (Thailand) Pte Ltd
Sinphuhorm concessions (EU1)
2 June 2029
Jadestone Energy (Thailand) Pte Ltd
Dong Mun (L27/43)
24 September 20171
Jadestone Energy (Thailand) Pte Ltd
Singapore
27 Deferred tax
The following are the deferred tax liabilities and assets recognised by the Group and movements thereon.
Indonesia
Thailand
Thailand
Australian
PRRT
USD’000
Malaysian
PITA
USD’000
Tax
depreciation
USD’000
Derivative
financial
instruments
USD’000
As at 1 January 2022 (Restated)*
Charged to profit or loss (Note 16)
Acquisition of CWLH Assets (Note 19)
As at 31 December 2022 (Restated)*
Charged to profit or loss (Note 16)
Credited to OCI
As at 31 December 2023
14,546
(7,032)
(6,201)
1,313
4,269
-
5,582
7,342
(5,737)
-
1,605
(2,155)
-
(550)
(75,584)
(14,087)
19,390
(70,281)
20,138
-
(50,143)
-
-
-
-
-
6,056
6,056
The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
100
100
70
60
50
50
17
17
17
17
100
100
100
-
-
-
Total
USD’000
(53,696)
(26,856)
13,189
(67,363)
22,252
6,056
(39,055)
Deferred tax liabilities
Deferred tax assets
31 December 2023
USD’000
31 December 2022
Restated*
USD’000
1 January 2022
Restated*
USD’000
(65,829)
26,774
(39,055)
(76,481)
9,118
(67,363)
(77,562)
23,866
(53,696)
The Group’s deferred tax assets predominately arising from its Australian operations and PenMal Assets. Deferred tax assets are
recognised as the Directors believe there will be sufficient taxable profits from its Australian and Malaysian producing assets to offset
against the available future deductions based on the estimated future cash flows prepared.
The Group has unutilised PRRT credits of approximately US$3.8 billion (2022: US$3.5 billion; 2021: US$3.4 billion) and US$493.4 million
(2022: US$535.5 million; 2021: nil) 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 the Directors’ 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$3.8 billion (2022: US$3.5 billion; 2021: US$3.4 billion) and US$493.4 million (2022: US$535.5
million; 2021: nil) with respect to Montara and the CWLH Assets are not expected to be utilised and are therefore not recognised as a
deferred tax asset.
1
*
The application for the extension to the license is currently ongoing and managed by the associate, APICO LLC.
Certain 2022 comparative information has been restated. Please refer to Note 50.
118
The cost of inventories recognised as an expense during the year for lifted volumes, is calculated by including production costs excluding
workovers, Malaysian supplementary payments and tariffs and transportation costs, plus depletion expense of oil & gas properties, and
plus depreciation of right-of-use assets deployed for operational use. In 2023, this cost totalled US$274.4 million (2022: US$260.4 million).
29 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
VAT receivables
2023
USD’000
12,533
5,947
88,005
12,911
3,539
1,444
124,379
127,730
14,130
141,860
266,239
2022
Reclassified*
USD’000
6,332
3,119
4,126
4,268
107
1,683
19,635
83,192
7,398
90,590
110,225
Trade receivables arise from revenues generated from the Group’s respective sole customer in Australia and Malaysia. The average credit
period is 30 days (2022: 30 days). All outstanding receivables as at 31 December 2023 and 2022 have been recovered in full in 2024 and
2023, respectively.
The current other receivables as at 31 December 2023 mainly represent the accumulated cess payment paid to the Malaysian regulator
for the PenMal PNLP Assets and an amount due from a joint arrangement partner for its share of future wells preservation activities and
decommissioning costs when it exited two PSC licences during 2023. The receivable was received in January 2024.
Amount due from joint arrangement partners 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 January 2024.
The underlift crude oil inventories represent entitlement imbalances at year end of 54,079 bbls at the PenMal operated assets. The
underlift position is measured at cost of US$18.75/bbl. The 2023 underlift position will unwind in 2024 based on the subsequent net
productions entitled to the Group. The Group was in overlift position at 2022 year end which unwound in 2023 based on actual production
entitlement during the year. The underlift crude oil inventories also consist of 32,411 bbls at the PNLP Assets being the underlift position
inherited by the Group following the assumption of operatorship of the PNLP Assets from the previous operator. The underlift position is
measured at fair value of US$77.91/bbl in view of there was no production at the PNLP Assets during the year.
Non-current other receivables represent the accumulated cess payment paid to the Malaysian and Indonesian regulators for the operated
licences and an abandonment trust fund set up following the acquisition of the CWLH Assets. The Malaysian PSCs and Lemang PSC 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.
The increase of non-current other receivables during the period represents additional payments of US$41.0 million into the CWLH
abandonment trust fund. Additionally, the total accumulated cess payment paid to the Malaysian regulator and the ARO provision for the
PNLP Assets are now presented on a gross basis following the reallocation of the CESS funds when the licenses and operatorship were
transferred to the Group in April 2023, in line with the Group’s accounting policies. In 2022, the total accumulated cess payment paid and
the ARO provision was presented on a net basis to reflect the PSCs were non-operated, in line with the Group’s accounting policies. See
Note 37 for further details.
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 44.
*
Certain 2022 comparative information has been reclassified between line items. Please refer to Note 50.
119
30 Cash and bank balances
32 Dividends
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Cash and bank balances, representing cash and cash equivalents in the consolidated statement of
cash flows, presented as:
Non-current
Current
2023
USD’000
2022
USD’000
1,008
152,396
153,404
676
122,653
123,329
The non-current cash and cash equivalents represents the restricted cash balance of US$0.7 million (2022: US$0.4 million) and US$0.3
million (2022: US$0.3 million) in relation to a deposit placed for bank guarantee with respect to the PenMal Assets and Australian office
building, respectively. These bank guarantees are expected to be in place for a period of more than twelve months.
Current cash and cash equivalents include a bank guarantee of US$0.5 million placed by the Group during the year with respect to the
construction of the Lemang PSC gas pipeline facilities. This bank guarantee expired in February 2024.
As part of the RBL facility, the Group must retain an aggregate amount of principal, interest, fees and costs payable for the next two
quarters in the debt service reserve account (“DSRA”). An amount of US$8.2 million was deposited into the DSRA during 2023 and it is
classified as a current asset.
31 Share capital and share premium account
Issued and fully paid
As at 1 January 2022, at £0.001 each
Issued during the year
Share repurchased
As at 31 December 2022
Issued during the year
Share repurchased
As at 31 December 2023
No. of shares
Share capital
USD’000
Share premium
account
USD’000
465,081,238
1,446,108
(18,173,683)
448,353,663
94,463,933
(2,051,022)
540,766,574
358
2
(21)
339
120
(3)
456
201
782
-
983
50,844
-
51,827
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.
On 19 January 2023, the Company suspended its share buyback programme. For the year ended 31 December 2023, the Company had
acquired 2.3 million shares at a weighted average cost of GB£0.75 per share, resulting in total expenditure of US$2.1 million. The total
nominal value of the shares repurchased was US$2,485. All shares repurchased were cancelled. Since the launch of the share buyback
programme, a total of 20.4 million shares had been acquired for a total accumulated expenditure of US$18.1 million, with total nominal
value of the shares repurchased was US$23,778.
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. The Programme expired on 30 June 2023 in
conjunction with the Company’s 2023 annual general meeting (“AGM”) and was not renewed at the 2023 AGM.
On 6 June 2023, the Company completed an equity fundraising, creating an additional 94,081,826 ordinary shares at GB£0.45 per share,
which comprised of a placing and subscription of 92,312,691 new ordinary shares to existing and new institutional shareholders and a
placing and subscription of 1,769,135 new ordinary shares to the Directors of the Company. Total gross proceeds were US$53.0 million, with
net proceeds of US$51.0 million. The Group incurred total costs of US$2.0 million associated with the equity fundraising and these costs
were accounted as a deduction to the equity.
On 9 June 2023, the Company launched an open offer of up to 14,887,039 new ordinary shares, at GB£0.45 per share, to raise additional
proceeds of up to EUR8.0 million1 (up to US$8.6 million). The open offer closed on 28 June 2023, raising a total gross and net proceeds of
US$42,009 by issuing 73,557 new shares.
During the year, employee share options of 128,160 were exercised and issued at an average price of GB£ 0.56 per share (2022: 1,446,108;
GB£0.42 per share). Additionally, 79,327 shares were issued during the year to satisfy the Company’s obligations with regards to the
performance shares and 101,063 shares were issued to meet the obligations with regards to the restricted shares.
The Company has one class of ordinary share. Fully paid ordinary shares with par value of GB£0.001 per share carry one vote per share
without restriction, and carry a right to dividends as and when declared by the Company.
The parent 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. The dividends declared in 2022 were in compliance with the Act.
The Company did not declare any dividend during the year.
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.
33 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.
34 Share-based payments reserve
The total expense arising from share-based payments of US$0.8 million (2022: US$1.0 million) was recognised as ‘administrative staff costs’
(Note 7) in profit or loss for the year ended 31 December 2023. The share-based payment expense arise from share options, performance
shares and restricted shares awarded from 2020 to 2022. In view of the performance of the Group in 2023, the Remuneration Committee
suspended performance share grants in 2023. In consultation with an external advisor, the Remuneration Committee approved a Deferred
Cash Plan (“DCP”) for the 2023 - 2026 Long-Term Incentive (“LTI”) cycle, which was awarded in October 2023 (Note 41). This was done to
ensure that the LTI programme aligns the interests of the senior leaders of the Group to the interests of shareholders, and is effective in
retaining and incentivising our top talents.
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.
34.1 Share options
The Directors have applied the Black-Scholes option-pricing model, with the following assumptions, 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
Options granted on
9 March 2022
1.34% to 1.38%
5.5 to 6.5 years
63.0% to 66.7%
GB£ 1.01
GB£ 0.92
1.96%
34.2 Performance shares
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 payout 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.
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:
Performance shares granted on
9 March 2022
Risk-free rate
Expected volatility1
Share price
Exercise price
Expected dividends
Post-vesting withdrawal date
Early exercise assumption
1.39%
53.1%
GB£ 1.01
N/A
1.71%
N/A
N/A
1
The open offer was quoted in Euro of 8.0 million to meet the applicable regulation issued by the European Union regarding to the quantum of open offer.
1
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.
12 0
121
33.3 Restricted shares
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:
37 Provisions
Asset
restoration
obligations
(a)
USD’000
Contingent
payments
(b)
USD’000
Employees
benefits
(c)
USD’000
Others
USD’000
Total
USD’000
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Risk-free rate
Share price
Expected dividends
Restricted shares granted on
22 August 2022
9 March 2022
1.73%
GB£ 0.90
1.73%
1.39%
GB£ 1.01
1.71%
The following table summarises the options/shares under the LTI plans outstanding and exercisable as at 31 December 2023:
As at 1 January 2022
New options/share awards issued
Vested during the year
Accelerated vesting during the year
Exercised during the year
Cancelled during the year
As at 31 December 2022
Vested during the year
Exercised during the year
Expired unexercised during the year
Cancelled during the year
As at 31 December 2023
Performance
shares
Restricted
shares
Number of
options
1,486,893
1,406,956
151,633
293,655
21,166,802
1,030,366
-
-
-
(147,906)
-
-
-
-
-
-
(1,446,108)
(1,012,124)
2,745,943
445,288
19,738,936
(79,327)
(101,063)
-
(449,513)
-
-
-
-
-
(128,160)
-
(344,655)
2,217,103
344,225
19,266,121
The weighted average share price on the exercise date is GB£0.83 (2022: GB£0.86).
0.45
0.92
0.50
0.46
0.42
0.50
0.45
0.44
0.56
-
0.60
0.48
Shares Options
Weighted
average
exercise
price GB£
Weighted
average
remaining
contract life
Number
of options
exercisable
11,409,854
-
2,010,007
1,354,702
(1,446,108)
(1,012,124)
12,316,331
4,665,000
(128,160)
-
(344,655)
7.15
9.19
6.27
6.45
-
-
7.15
6.32
-
-
-
5.37
16,508,516
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 2022
12,316,331
0.26 - 0.99
Share options exercisable as at 31 December 2023
16,508,516
0.26 - 0.99
0.41
0.41
5.46
4.92
35 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 31).
36 Hedging reserve
At beginning of the year
Loss arising on changes in fair value of hedging instruments during the year
Income tax related to loss recognised in other comprehensive income
Net loss reclassified to profit or loss (Note 4)
Income tax related to amounts reclassified to profit or loss
At end of the year
2023
USD’000
-
30,509
(9,153)
(10,322)
3,097
14,131
2022
USD’000
-
-
-
-
-
-
The hedging reserve represents the cumulative amount of gains and losses on hedging instruments deemed effective in cash flow hedges.
The cumulative deferred gain or loss on the hedging instrument is recognised in profit or loss only when the hedged transaction impacts
the profit or loss. See Note 42 for further details on the hedging arrangements.
As at 1 January 2022
Charged/(Credited) to profit or loss
Acquisition of CWLH Assets (Note 19)
Acquisition of 10% interest in Lemang PSC (Note 20)
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 (Restated)*
Charged/(Credited) to profit or loss
Accretion expense (Note 14)
Changes in discount rate assumptions (Notes 12 and 22)
Payment/Utilised
Fair value adjustment – Lemang PSC (Note 14)
Fair value adjustment – CWLH Assets (Note 14)
Acquisition of 50% interest in PNLP Assets
Gross Up (Note 29)
Reclassification
As at 31 December 2023
As at 31 December 2022
Current
Non-current
As at 31 December 2023
Current
Non-current
404,401
-
64,633
337
8,333
18,687
-
-
-
-
-
496,391
-
20,201
19,420
(8,589)
-
-
48,430
28,176
(127)
603,902
-
496,391
496,391
102,811
501,091
603,902
6,179
-
1,940
-
-
-
-
7,333
349
1,571
(3,000)
14,372
(7,653)
-
-
-
868
60
-
-
(2,000)
5,647
-
14,372
14,372
5,000
647
5,647
844
122
-
-
-
-
(81)
-
-
-
-
885
149
-
-
-
-
-
-
-
-
202
(202)
-
-
-
-
-
-
-
-
-
-
1,112
-
-
-
-
-
-
-
-
411,626
(80)
66,573
337
8,333
18,687
(81)
7,333
349
1,571
(3,000)
511,648
(6,392)
20,201
19,420
(8,589)
868
60
48,430
28,176
(2,127)
1,034
1,112
611,695
703
182
885
714
320
1,034
-
-
-
-
1,112
1,112
703
510,945
511,648
108,525
503,170
611,695
(a) The Group’s 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, PenMal Assets and CWLH
Assets remains largely unchanged from 2022. 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
2023
2.55%
2.30%
2.24%
2.09%
2.58%
2022
3.01%
2.62%
2.93%
2023
3.99%
4.08%
6.09%
2022
3.97%
4.01%
6.43%
2.46% - 2.48%
3.52% - 3.80%
3.48% - 4.02%
3.05%
4.03%
3.94%
Estimated
decommissioning year
2031
2036
2036
2024 onwards
2035
12 2
*
Certain 2022 comparative information has been restated. Please refer to Note 50.
12 3
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
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. 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 ARO
liability. The Malaysian abandonment cess fund only covers the decommissioning costs related to the oil and gas facilities, excluding
wells. The Indonesian cess fund covers the decommissioning costs related to all 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 cash contribution paid into the trust fund is classified as non-current receivable
as the amount is reclaimable by the Group in the future following the commencement of decommissioning activities.
(b) The fair value of the contingent payments payable to Mandala Energy Lemang Pte Ltd for the Lemang PSC acquisition are valued at
US5.6 million as at 31 December 2023 (2022: US$12.4 million) for the trigger events as disclosed below. The decrease in provision
represents the derecognition of contingent payments associated with the Saudi CP and Dated Brent prices due to the trigger events are
not expected to occur based on the specialist’s consensus on Dated Brent prices and the historical correlation between Dated Brent
prices and Saudi CP.
No.
Trigger event
Consideration
Directors’ 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 Block as at the Closing
Date, exceeding an aggregate amount of US$6.7
million on a gross basis.
US$5.0 million
This contingent payment is virtually certain as it will be payable
when gas production in the Lemang PSC is commenced.
US$0.7 million
The Directors 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
Not payable as the trigger event has expired. First gas is
scheduled in first half of 2024.
Based on the status of the Akatara Gas Project as at 2023
year end, the actual “close out” costs set out in the AFE(s)
has exceeded the “close out” development costs set out in
the approved revised plan by more than 2%. As such, the
consideration trigger will not be met.
The average Saudi CP is not 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 not 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 not 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 not 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.
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
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.
(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.
38 Borrowings
Non-current secured borrowings
Reserve based lending facility
Current secured borrowings
Reserve based lending facility
2023
USD’000
147,313
7,260
154,573
2022
USD’000
-
-
-
On 17 February 2023, the Group closed a US$50.0 million Interim Facility with two international banks to provide additional liquidity prior
to closing the RBL facility in support of the acquisition of the Sinphuhorm Assets. In February 2023, US$28.5 million was utilised to fund
the acquisition of the Sinphuhorm Assets. A second drawdown of US$21.5 million occurred in May 2023 primarily to fund the US$20.5
million payment into the CWLH abandonment trust fund. The Interim Facility was repaid on 1 June 2023 from the RBL facility obtained by
the Group in May 2023. The Group had incurred interest expense of US$1.3 million from the Interim Facility, which was recorded as finance
costs in Note 14.
On 19 May 2023, the Group signed a US$200.0 million RBL facility with a group of four international banks (“the RBL Banks”). The facility
tenor is four years, with the final maturity date being the earlier of 31 March 2027 and the projected reserves tail (which is expected later).
As at 31 December 2023, the borrowing base is secured over the Group’s main producing assets being Montara, Stag, CWLH, Sinphuhorm
Assets, the PenMal Assets’ PM323 and PM329 PSCs and the Group’s development asset being the Lemang PSC. The borrowing base as at
31 December 2023 was US$200.0 million. The facility incorporates standard terms and conditions, including a parent company financial
covenant for a maximum total debt of 3.5 times annual EBITDAX, tested bi-annually on 30 June and 31 December, and to deliver the
required information to the RBL Banks on a timely basis.
The RBL facility pays interest at 450 basis points over the secured overnight financing rate, plus the applicable credit spread. The Group
also pays customary arrangement and commitment fees.
As at 31 December 2023, the Group has a net drawdown sum of US$157.0 million. The loan incurred costs of US$7.1 million and the fair
value of the loans at drawdown had an amortised carrying value of US$149.9 million. For the year ended 31 December 2023, the Group had
incurred interest expense of US$8.1 million and US$0.3 million of commitment fees, which were recorded as finance costs in Note 14.
On 6 June 2023, the Company entered into a committed standby working capital facility with Tyrus Capital Events S.a.r.l. for a facility size
of up to US$35.0 million. The standby working capital facility was finalised at US$31.9 million, after deduction of US$3.1 million of excess
funds from the total gross funds of US$53.1 million raised from the equity placing and open offer (Note 31). The facility will mature 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 standby working capital facility was not utilised during 2023 and remained undrawn as at 31 December 2023. See Note 49
for further details.
For the year ended 31 December 2023, the Group had incurred interest expense of US$3.6 million, which was recorded as finance costs in
Note 14.
39 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
2023
USD’000
2022
USD’000
18,746
14,118
32,864
17,357
14,662
3,674
-
-
(2,829)
32,864
2,880
6,227
9,107
6,649
2,261
426
334
-
(563)
9,107
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.
12 4
1
Reserves tail date refers to the last day of the quarter immediately preceding the quarter in which the remaining borrowing base reserves are forecast to be 25 per cent (or less)
of the initial approved borrowing base reserves.
12 5
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
40 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.
Borrowings
USD’000
Lease liabilities
USD’000
As at 1 January 2022
Financing cash flows
New lease liabilities
Interest paid
Non-cash changes - interest
As at 31 December 2022
Financing cash flows
New borrowings
New lease liabilities
Borrowings costs paid
Interest paid
RBL commitment fees paid
Interest expense
RBL commitment fees
Non-cash changes - interest
Capitalisation of borrowing costs
As at 31 December 2023
41 Trade and other payables
Current
Trade payables
Other payables
Accruals
Contingent payments
Malaysian supplementary payment payables
Amount due to joint arrangement partner
Overlift crude oil inventories
GST/VAT payables
Non-current
Other payable
Accrual
-
-
-
-
-
-
(75,000)
232,000
-
(7,595)
(5,007)
(658)
2,571
349
5,518
2,395
154,573
2023
USD’000
36,056
9,100
56,534
2,000
2,152
1,252
6,004
881
113,979
16,917
49
16,966
130,945
15,665
(13,914)
7,356
(769)
769
9,107
(14,400)
38,157
-
(2,771)
-
-
-
2,771
-
32,864
2022
Restated*
USD’000
13,606
8,643
36,757
5,000
855
1,269
6,957
265
73,352
-
-
-
73,752
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 (2022: 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.
The contingent payment in 2023 relates to the final contingent payment payable to BP which arose from the acquisition of the CWLH Assets
(Note 19) as the annual average Brent crude price in 2023 exceeded US$60/bbl. The payment was made in January 2024. The contingent
payments in 2022 represented the final contingent payment of US$3.0 million payable to SapuraOMV as the annual average Brent crude
price in 2022 exceeded US$70/bbl (Note 37). The payment was made in January 2023. In addition, the Group was obliged to pay to a
contingent payment of US$2.0 million to BP which arose from the acquisition of the CWLH Assets (Note 19) as the annual average Brent
crude price in 2022 exceeded US$50/bbl. The payment was made in January 2023.
The overlift crude oil inventories represent entitlement imbalances at year end of 195,698 bbls at the CWLH Assets (2022: CWLH Assets:
205,510 bbls; PenMal Assets: 31,076 bbls). The overlift liabilities are measured at cost of US$30.68/bbl (2022: CWLH Assets: US$32.92/bbl;
PenMal Assets: US$19.07/bbl). The PenMal Assets are in an underlift position as at 2023 year end (Note 29).
The non-current other payable represents future activities which are operational in nature for which cash advances are to be received from
the Malaysian joint arrangement partner for its share of future wells preservation activities and decommissioning costs on the PNLP Assets
when it withdrew from the licences in 2023 (Note 29). The Group received the payment in January 2024.
*
Certain 2022 comparative information has been restated. Please refer to Note 50.
126
The non-current accrual represents the DCP plan granted during the year as disclosed in Note 34. The DCP has a duration of three years
and will be settled by cash on different payout rates at the end of three years subject to the performance of the Group. The performance
measures for DCP is similar to the performance shares as disclosed in Note 34.2. The DCP is measured at fair value as at 31 December
2023.
42 Derivative financial instruments
Derivative financial liabilities
Designated as cash flow hedges
Commodity swap
Measured at fair value though profit or loss
Foreign exchange forward contracts
Analysed as:
Current
Non-current
2023
USD’000
2022
USD’000
24,612
73
24,685
17,977
6,708
24,685
-
-
-
-
-
-
The following is a summary of the Group’s outstanding derivative contracts:
Contract quantity
Type of
contracts
Terms
Contract price
Hedge
classification
Fair value asset at
31 December 2023
USD’000
Fair value asset at
31 December 2022
USD’000
Contracts designated as cash flow hedges
50% of Group’s
planned 2PD
production
Commodity swap:
swap component
Oct 2023 - Sep
2025
Weighted
average price of
US$70.57/bbl
Cash flow
Contracts that are not designated in hedge accounting relationships
To hedge MYR162.5
million by selling
MYR for USD
Foreign exchange
forward contracts
Execution date:
2 February
2024
USD/MYR: 4.60
FVTPL
(24,612)
(73)
-
-
The Group’s October 2023 to September 2025 commodity swap programme was designated as a cash flow hedge. Critical terms of the
commodity swap (i.e., the notional amount, life and underlying oil price benchmark) and the corresponding Group’s hedged sales are
highly similar. The Group performed a qualitative assessment of the effectiveness of the commodity swap contracts and concluded that
the commodity swap programme is highly effective as the value of the commodity swap and the value of the corresponding hedged items
will systematically change in opposite directions in response to movements in the underlying commodity prices.
In August 2023, the Group entered into a foreign exchange forward contract with a bank based in Malaysia to hedge MYR162.5 million
(approximately US$35.4 million), being the receivable sum at 2023 year end due from the joint arrangement partner of PNLP Assets for
its share of future decommissioning costs when it exited two PSC licences. The forward contract is to secure the receipts in USD in view of
volatility of MYR against USD towards the end of 2023. The forward contract matured on 2 February 2024 following the receipts of the sum
from the joint arrangement partner in January 2024.
The following tables detail the commodity swap contracts outstanding at the end of the year, as well as information regarding their
related hedged items. Commodity swap contract assets are included in the “derivative financial instruments” line item in the consolidated
statement of financial position.
Hedging instruments – outstanding contracts
Oil volumes
bbls
Notional value
USD’000
Change in fair value
used for calculating
hedge ineffectiveness
USD’000
Fair value
USD’000
2023
Cash flow hedges
Commodity swap component
4,531,720
317,629
-
20,187
The following table details the effectiveness of the hedging relationships and the amounts reclassified from hedging reserve to profit or
loss:
Current period
hedging gain/(loss)
recognised in OCI
USD’000
Amount of hedge
ineffectiveness
recognised in profit
or loss
USD’000
Line item in
profit or loss
in which hedge
ineffectiveness is
included
Amount reclassified
to profit or loss due to
hedged item affecting
profit or loss
USD’000
Line item in profit
or loss in which
reclassification
adjustment is
included
2023
Cash flow hedges
Forecast sales
(20,187)
-
Other expenses
(10,322)
Revenue
12 7
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
43 Warrants liability
On 6 June 2023, in consideration of the support provided to the Company under the equity underwrite debt facility and committed
standby working capital facility, the Company entered into a warrant instrument with Tyrus Capital S.A.M. and funds managed by it, for 30
million ordinary shares at an exercise price of 50 pence sterling per share. The warrants are exercisable within 36 months from the date of
issuance, with an expiry date of 5 June 2026.
The Directors have applied the Black-Scholes option-pricing model, with the following assumptions, to estimate the fair value of the
warrants as at 31 December 2023:
Risk-free rate
Expected life
Expected volatility1
Share price
Exercise price
Expected dividends
3.77%
2.5 years
54.5%
GB£ 0.37
GB£ 0.50
0%
44 Financial instruments, financial risks and capital management
Financial assets and liabilities
Current assets and liabilities
The Directors consider 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
Borrowings
Contingent consideration for Lemang PSC acquisition
Contingent consideration for CWLH Assets acquisition
Contingent consideration for PenMal Assets acquisition
Derivative financial instruments designated as cash flow hedges
Derivative financial instrument carried at FVTPL
2023
USD’000
2022
Restated*
USD’000
241,179
153,404
394,583
122,060
32,864
154,573
5,647
2,000
-
24,612
73
97,918
123,329
221,247
61,130
9,107
-
12,432
3,940
3,000
-
-
341,829
89,609
Fair values are based on the Directors’ 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. As part of the RBL, the Group entered into commodity swap contracts to hedge
50% of its forecasted production from October 2023 to September 2025 (Note 42).
Commodity price sensitivity
The results of operations and cash flows from oil and gas production can vary significantly with fluctuations in the market prices of oil and/
or natural gas. These are affected by factors outside the Group’s control, including the market forces of supply and demand, regulatory and
political actions of governments, and attempts of international cartels to control or influence prices, among a range of other factors.
The table below summarises the impact on (loss)/profit before tax, and on equity, from changes in commodity prices on the fair value of
derivative financial instruments. The analysis is based on the assumption that the crude oil price moves 10%, with all other variables held
constant. Reasonably possible movements in commodity prices were determined based on a review of recent historical prices and current
economic forecasters’ estimates.
Gain or loss
Increase by 10%
Decrease by 10%
Effect on the
result
before tax for the
year ended
31 December 2023
USD’000
Effect on other
comprehensive
income before tax
for the year ended
31 December 2023
USD’000
Effect on the
result
before tax for the
year ended
31 December 2022
USD’000
Effect on other
comprehensive
income before tax
for the year ended
31 December 2022
USD’000
-
-
(33,861)
33,861
-
-
-
-
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 and British Pound Sterling.
The Group manages its foreign currency risk by monitoring the fluctuations of material foreign currencies against USD and potentially
entering into foreign currency forward contract to hedge against the currency fluctuations if and when considered appropriate.
In August 2023, the Group entered into a foreign exchange forward contract with a bank based in Malaysia to hedge MYR162.5 million
(approximately US$35.4 million), being the receivable sum at 2023 year end due from the joint arrangement partner of PNLP Assets for its
share of future decommissioning costs when it exited two PSCs’ licences. The forward contract was entered to secure the receipts in USD in
view of volatility of MYR against USD towards the end of 2023. The forward contract was matured on 2 February 2024 following the receipts
of the sum from the joint arrangement partner in January 2024.
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
2023
USD’000
2022
Restated*
USD’000
4,777
8,533
250
42,672
33,250
59,113
11,086
5,336
1,966
4,269
34,036
12,422
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 decreasing/increasing by
approximately US$3.5 million (2022: US$2.4 million), and which would be charged/credited to the consolidated statement of profit or loss.
Interest rate risk
The Group’s interest rate exposure arises from its cash and bank balances, CWLH Assets abandonment trust fund and borrowings. The
Group’s other financial instruments are non-interest bearing or fixed rate, and are therefore not subject to interest rate risk. The Group
continually monitors its cash position and places excess funds into fixed term deposits as necessary.
As at 31 December 2023, the Group held US$82.0 million (2022: US$41.0 million) in the CWLH Assets abandonment trust fund operated by
the joint venture operating partner. The abandonment trust funds generates average annual interest rate of 4.5% (2022: 3.6%).
As at 31 December 2023, the Group held US$55.0 million (2022: nil) in fixed term deposits. The fixed term deposits generate average annual
interest rate of 4.5% (2022: nil).
On 19 May 2023, the Group signed a US$200.0 million RBL facility with a group of four international banks (“the RBL Banks”). The facility
tenor is four years, with the final maturity date being the earlier of 31 March 2027 and the projected reserves tail (which is expected later).
The borrowing base is secured over the Group’s main producing assets being Montara, Stag, CWLH, Sinphuhorm Assets, the PenMal
PM323 and PM329 PSCs and the Group’s development asset being the Lemang PSC. The borrowing base as at 31 December 2023 was
US$200.0 million.
The RBL facility pays interest at 450 basis points over the secured overnight financing rate, plus the applicable credit spread. The Group
also pays customary arrangement and commitment fees.
As at 31 December 2023, the Group has a net drawdown sum of US$157.0 million. The loan incurred costs of US$7.0 million.
Based on the carrying value of the CWLH Assets abandonment trust fund, fixed term deposits and RBL as at 31 December 2023, if interest
rates had increased/decreased by 1% and all other variables remained constant, the Group’s net loss before tax would be increased/
decreased by US$0.1 million (2022: profit before tax increased/decreased by US$0.4 million).
*
1
Certain 2022 comparative information has been restated. Please refer to Note 50.
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.
*
1
Certain 2022 comparative information has been restated. Please refer to Note 50.
Reserves tail date refers to the last day of the quarter immediately preceding the quarter in which the remaining borrowing base reserves are forecast to be 25 per cent (or less)
of the initial approved borrowing base reserves.
12 8
12 9
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
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
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)
Reclassified*
USD’000
Loss
allowance
USD’000
Net carrying
amount
Reclassified*
USD’000
2023
Cash and bank balances
Trade receivables
Other receivables and deposits
Amount due from joint arrangement
partners (net)
Non-current other receivables
2022 (Reclassified)*
Cash and bank balances
Trade receivables
Other receivables
Amount due from joint arrangement
partners (net)
Non-current other receivables
** The amount is negligible.
30
29
29
29
29
30
29
29
29
29
n.a
A2
n.a
n.a
n.a
n.a
A2
n.a
n.a
n.a
Performing
12m ECL
(i)
(i)
(i)
(i)
Lifetime ECL
12m ECL
12m ECL
12m ECL
153,404
12,533
88,005
12,911
127,730
Performing
12m ECL
123,329
(i)
(i)
(i)
(i)
Lifetime ECL
12m ECL
12m ECL
12m ECL
6,332
4,126
4,268
83,192
-**
-**
-**
-**
-**
-**
-**
-**
-**
-**
153,404
12,533
88,005
12,911
127,730
123,329
6,332
4,126
4,268
83,192
(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 2023, total trade receivables amounted to US$12.5 million (2022: US$6.3 million). The balance in 2023 and 2022 had
been fully recovered in 2024 and 2023, 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 and CWLH trust fund is limited because counterparties are banks with high credit ratings
assigned by international credit rating agencies.
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 loss after tax for the year was US$91.3 million (2022: profit after tax of US$9.2 million). Operating cash flows before
movements in working capital and net cash used in operating activities for the year ended 31 December 2023 was US$36.5 million and
US$12.1 million (2022: US$158.5 million and net cash generated of US$121.2 million) respectively. The Group’s net current asset remained
positive at US$37.9 million as at 31 December 2023 (2022: US$72.4 million).
On 19 May 2023, the Group signed a US$200.0 million RBL facility with a group of four international banks (“the RBL Banks”). The facility
tenor is four years, with the final maturity date being the earlier of 31 March 2027 and the projected reserves tail1 (which is expected later).
The borrowing base is secured over the Group’s main producing assets being Montara, Stag, CWLH, Sinphuhorm Assets, the PenMal
Assets’ PM323 and PM329 PSCs and the Group’s development asset being the Lemang PSC. The borrowing base as at 31 December 2023
was US$200.0 million.
The Group is required to maintain a parent company financial covenant of consolidated net debt below 3.5 times annual EBITDAX and to
deliver the required information to the RBL Banks on a timely basis. As at 31 December 2023, the Company’s financial covenant was 0.14.
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.
On 6 June 2023, the Company completed an equity fundraising, creating an additional 94,081,826 ordinary shares at GB£0.45 per share,
which comprised of a placing and subscription of 92,312,691 new ordinary shares to existing and new institutional shareholders and a
placing and subscription of 1,769,135 new ordinary shares to the Directors of the Company. Total gross proceeds were US$53.1 million, with
net proceeds of US$51.1 million.
On 9 June 2023, the Company launched an open offer of up to 14,887,039 new ordinary shares, at GB£0.45 per share, to raise additional
proceeds of up to EUR8.0 million2 (up to US$8.6 million). The open offer closed on 28 June 2023, raising a total of US$42,009 by issuing
73,557 new shares.
In support of the equity fundraising, the Company entered into an up to US$50.0 million equity underwrite debt facility agreement with
Tyrus. The equity underwrite facility was reduced to zero as funds raised from the equity fundraising exceeded US$50.0 million.
In addition, the Company entered into a committed standby working capital facility with Tyrus for a facility size of up to US$35.0 million.
The standby working capital facility was finalised at US$31.9 million, after deduction of US$3.1 million, being the amount in excess of
US$50.0 million, following a total gross funds of US$53.1 million raised from the equity placing and open offer. 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 standby working capital facility was undrawn as at 31 December 2023.
Further details are disclosed in the Going Concern section in Note 2.
Derivative and non-derivative financial liabilities
The following table details the expected contractual maturity for derivative and 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 amount is negligible.
*
Certain 2022 comparative information has been reclassified between line items. Please refer to Note 50.
13 0
1
2
Reserves tail date refers to the last day of the quarter immediately preceding the quarter in which the remaining borrowing base reserves are forecast to be 25 per cent (or less)
of the initial approved borrowing base reserves.
The open offer was quoted in Euro of 8.0 million to meet the applicable regulation issued by the European Union regarding to the quantum of open offer.
131
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
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, capital redemption reserve and hedging reserve, as disclosed in Notes 31, 33, 34, 35 and 36, 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.
The Directors review 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 2023.
The Group is not subject to externally imposed capital requirements.
Gearing ratio
Borrowings
Cash and cash equivalents
Net debt/(cash)
Equity
Net debt to equity ratio
2023
USD’000
154,5731
(153,404)
1,169
53,770
2%
2022
USD’000
-
(123,329)
(123,329)
109,529
N/M
The Group’s overall strategy towards its capital structure remained unchanged from 2022.
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).
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
Total
USD’000
2023
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
Derivative financial instruments designated as cash flow
hedges
Derivative financial instrument carried at FVTPL
Fixed interest rate Instrument
Lease liabilities
Variable interest rate instrument
Borrowings
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
Lease liabilities
-
-
-
-
-
9.660
11.084
-
-
-
-
6.031
105,094
5,000
2,000
17,904
73
16,966
647
-
6,708
-
14,118
18,746
7,260
151,449
61,130
-
2,000
3,000
6,227
72,357
147,313
190,380
190,380
-
12,432
1,940
-
2,880
17,252
-
-
-
-
-
-
-
-
-
-
-
-
-
-
122,060
5,647
2,000
24,612
73
32,864
154,573
341,829
341,829
61,130
12,432
3,940
3,000
9,107
89,609
(a) US$15.6 million of the total amount is within one year and US$23.0 million is within two to five years.
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.
Weighted
average effective
interest rate
%
On demand or
within 1 year
Reclassified*
USD’000
Within
2 to 5 years
USD’000
More than
5 years
USD’000
Total
Reclassified
USD’000
2023
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
2022 (Reclassified)*
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
(a) The effect of interest is not material.
-
-(a)
-
-(a)
113,449
127,730
152,396
1,008
265,845
128,738
14,726
83,192
122,653
676
137,379
83,868
-
-
-
-
-
-
241,179
153,404
394,583
97,918
123,329
221,247
*
Certain 2022 comparative information has been reclassified between line items. Please refer to Note 50.
13 2
1
The borrowings of US$154.6 million represents the fair value of the balance. The gross outstanding balance as at 31 December 2023 is US$157.0 million, which generates a net
debt to equity ratio of 7%.
13 3
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Financial
assets/
financial
liabilities
Fair value (USD’000) as at
2023
2022
Assets
Liabilities
Assets
Liabilities
Fair
value
hierarchy
Valuation
technique(s)
and key input(s)
Significant
unobservable
input(s)
Relationship of
unobservable
inputs to fair
value
Derivative financial instruments
1) Commodity
swap contracts
(Note 42)
2) Foreign
forward
contracts
(Note 42)
-
-
24,612
73
-
-
-
-
Level 2
Level 2
Third party valuations
based on market
comparable information.
Third party valuations
based on market
comparable information.
-
-
-
-
45 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
Others - contingent consideration from Lemang PSC acquisition
3) Contingent
consideration
(Note 36)
-
5,647
-
12,432
Levels 1
and 3
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.
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 (H1 2024),
forecasted
Dated Brent oil prices of
US$76.00/bbl in 2024 and
US$74.45/bbl in 2025 and
Saudi CP prices of
US$615.98/MT in 2024 and
US$603.42/MT in 2025,
estimated future
recoverability of VAT
receivables 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.
A one year deferral to the estimated gas production date would decrease the liability by US$0.7 million.
Others - contingent consideration from CWLH Assets acquisition
4) Contingent
consideration
(Notes 19, 37
and 41)
-
2,000
-
3,940
Level 1
Others - contingent consideration from PenMal Assets acquisition
5) Contingent
consideration
(Note 41)
-
-
3,000
Level 1
Based on the actual average
Dated Brent prices in 2023
of US$82.64/bbl.
Based on the actual average
Dated Brent prices in 2022
of US$101.32/bbl.
-
-
-
-
A one year deferral to the estimated gas production date would decrease the liability by US$0.7 million. A 10% increase/decrease in the
future VAT receivables will not affect the recognition of the Lemang contingent payment associated with the future reimbursements of VAT
receivables.
2023
Revenue
Liquids revenue
Gas revenue
Production cost
DD&A
Administrative staff costs
Other expenses
Impairment of assets
Share of results of associate
Other income
Finance costs
240,630
-
240,630
(185,039)
(65,204)
(14,550)
(12,652)
(17,410)
-
9,990
(22,611)
66,517
2,053
68,570
(47,733)
(10,397)
(5,060)
(3,363)
(12,271)
2,640
192
(6,565)
Profit/(Loss) before tax
(66,846)
(13,987)
Additions to non-current assets
Non-current assets
2022 (Restated)*
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
86,403
346,281
54,576
191,550
328,863
-
328,863
(188,641)
(57,563)
(13,839)
(8,872)
-
24,226
(6,717)
1,904
79,361
110,405
400,894
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
-
-
-
-
(248)
(1,773)
(2,319)
-
-
7,684
(2,274)
1,070
90,611
209,373
-
-
-
-
(235)
(2,020)
(8,188)
-
965
(903)
-
(10,381)
23,266
115,390
-
-
-
-
(292)
(8,814)
(4,507)
-
-
989
(10,379)
(23,003)
703
642
-
-
-
-
(359)
(9,286)
(3,368)
-
124
(1,774)
-
(14,663)
69
231
307,147
2,053
309,200
(232,772)
(76,141)
(30,197)
(22,841)
(29,681)
2,640
18,855
(41,829)
(102,766)
232,293
747,846
418,483
3,119
421,602
(250,300)
(61,562)
(29,218)
(22,305)
(13,534)
28,033
(11,427)
1,904
63,193
134,322
618,350
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 so they can be sold to other buyers, if
required.
13 4
*
Certain 2022 comparative information has been restated. Please refer to Note 50.
13 5
46 Financial capital commitments
48 Events after the end of the reporting period
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Acquisition of additional interest in the CWLH oil fields
On 14 November 2023, the Group has executed a sale and purchase agreement with Japan Australia LNG (MIMI) Pty Ltd (the “Seller”), to
acquire the Seller’s non-operated 16.67% working interest in the Cossack, Wanaea, Lambert, and Hermes (“CWLH”) oil fields development,
offshore Western Australia, for a total initial cash consideration of US$9.0 million, and certain subsequent Abandonment Trust Payments
(the “Acquisition”).
The Acquisition was completed on 14 February 2024, with a net receipt to the Group from the Seller of US$6.3 million, reflecting the
accumulated economic benefits of the CWLH assets for the period from the effective date of 1 July 2022 to completion. As a result, the
Group’s non-operated working interest in the CWLH assets increased to 33.33%, from 16.67%.
Redetermination of the borrowing base under the reserves-based lending facility
On 26 April 2024, the RBL Banks finalised a routine redetermination of the borrowing base under the RBL, with the revised borrowing
capacity of US$200.0 million. Stag has been removed from the borrowing base assets and replaced with the second acquisition of 16.67%
of the CWLH assets, acquired on 14 February 2024. The next scheduled redetermination is scheduled to complete by 30 September 2024.
Suspension and restoration of trading on AIM
On 13 February 2024, the ordinary shares of the Company were suspended from trading pursuant to a proposed sale by Woodside Energy
Group Ltd. (“Woodside”) of its participating interests in the Macedon and Greater Pyrenees Projects offshore Western Australia (the
“Proposed Acquisition”). Had Jadestone been selected as the preferred bidder and reached agreement with Woodside on acquisition terms,
the Proposed Acquisition would have been classified as a reverse takeover transaction in accordance with AIM Rule 14, and accordingly, the
Company’s ordinary shares were suspended from trading on AIM on 13 February 2024. On 11 April 2024, Woodside cancelled the sale of its
participating interests in those assets. With the possibility of the Proposed Acquisition ceasing, the Company’s shares resumed trading on
AIM on 11 April 2024.
Change in Board of Directors
On 25 January 2024, the Company announced the appointment of Joanne Williams as an independent non-executive director. Ms. Williams
is Chair of both the HSEC Committee and the Montara Technical Committee, and a member of the Audit Committee.
On 25 March 2024, the Company announced the appointment of Adel Chaouch as an independent non-executive director. On the same
day, the Company announced the resignation of (i) Lisa Stewart as an independent non-executive director and (ii) Robert Lambert as an
independent non-executive director.
On 27 March 2024, the Company announced the resignation of Dennis McShane as an independent non-executive director and Chair
of the Board. On the same day, the Company announced the election of Adel Chaouch as Chair of the Board. Mr. Chaouch is Chair of the
Governance and Nomination Committee, and a member of both the Remuneration Committee and the Montara Technical Committee.
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
2023
USD’000
10,400
9,284
2,619
22,303
2022
USD’000
400
19,284
3,016
22,700
The SEA portfolio PSC operational commitments as at 31 December 2023 amounted to US$17.3 million (2022: US$ 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$5.0 million (2022: US$5.4 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. On 25 January 2024, the Group signed a gas sales heads of
agreement (“HoA”) with Petrovietnam Gas Joint Stock Corporation (‘PV Gas’). The HoA enables the submission of an updated Nam Du/U
Minh Field Development Plan for approval, which is required before a final investment decision and commercialisation of this potential
resource. To align the timing of the commitment well with the Nam Du/U Minh project schedule, the Group submitted a request to
Petrovietnam to extend the drilling deadline to June 2026.
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 (2022: 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:
Not later than one year
One to five years
2023
USD’000
28,489
2,570
31,059
2022
USD’000
67,487
9,147
76,634
The capital commitments of US$31.1 million as at 2023 year end predominately arose from the Lemang PSC’s engineering, procurement,
construction and installation (“EPCI”) contract awarded to design and build the gas processing facility. The project at the year end was
approximately 91% complete with first gas scheduled for the first half of 2024. The gross contractual amount under the EPCI contract was
US$99.9 million. The Group is expected to spend US$26.7 million in 2024.
The Group also contracted for US$1.2 million which is associated with Stag drilling campaign being deferred to 2024 and US$0.5 million for
phase 2 subsea control system upgrade and Skua-11 satellite communication system upgrade at Montara. In 2022, the Group contracted
for US$0.3 million which was associated with the installation of produced water treatment unit and phase 1 subsea control system upgrade
at Montara.
47 Contingent liabilities
Montara Venture FPSO investigation
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
2024. It is too early to reliably estimate the outcome of the investigation and if any prosecution will eventuate.
13 6
13 7
49 Related party transactions
Compensation of Directors
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Placement of additional shares and issue of warrants
On 6 June 2023, the Company completed an equity fundraising, creating an additional 94,081,826 ordinary shares at GB£0.45 per share,
which comprised of a placing and subscription of 92,312,691 new ordinary shares to existing and new institutional shareholders and a
placing and subscription of 1,769,135 new ordinary shares to the Directors of the Company. Tyrus has subscribed to 24,883,387 of new
ordinary shares under the equity fundraising for a consideration of US$13.9 million.
The placing and subscription of 1,769,135 new ordinary shares to the Directors of the Company as follows:
A. Paul Blakeley
Bert-Jaap Dijkstra
Dennis McShane
Iain McLaren
Robert Lambert
Cedric Fontenit
Lisa Stewart
David Neuhauser
Jenifer Thien
Number of shares
Consideration paid
USD’000
336,311
71,556
178,889
22,222
111,269
333,333
178,889
447,222
89,444
1,769,135
188
40
100
12
62
186
100
250
50
988
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. The equity underwrite facility reduced to zero following the total funds raised from the equity fundraising and the open offer
exceeded US$50.0 million. The Group incurred upfront fee of US$2.15 million and interest of US$27,778 from the equity underwrite facility,
which was recorded as finance costs in Note 14.
As part of the underwritten placing of additional ordinary shares, the Company has also entered into a warrant instrument with Tyrus
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, with an expiry date of 5 June 2026.
Committed standby working capital facility
On 6 June 2023, the Company entered into a committed standby working capital facility with Tyrus for a facility size of up to US$35.0 million.
The standby working capital facility was finalised at US$31.9 million, after deduction of US$3.1 million of excess funds from the total gross
funds of US$53.1 million raised from the equity placing and open offer. The facility will mature 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 standby working
capital facility was not utilised during 2023 and remained undrawn as at 31 December 2023. For the year ended 31 December 2023, the
Group had incurred interest expense of US$3.6 million, which was recorded as finance costs in Note 14.
Compensation of key management personnel
Short-term benefits
Other benefits
Share-based payments
2023
USD’000
7,934
566
556
9,056
2022
USD’000
7,492
2,029
810
10,331
The total remuneration of key management members in 2023 (including salaries and benefits) was US$9.1 million (2022: US$10.3 million)
and recognised as part of the Group’s administrative staff costs as disclosed in Note 7.
2023
A. Paul Blakeley
Bert-Jaap Dijkstra
Dennis McShane
Iain McLaren
Robert Lambert
Cedric Fontenit
Lisa Stewart
David Neuhauser
Jenifer Thien
Gunter Waldner(b)
2022
A. Paul Blakeley
Bert-Jaap Dijkstra
Dennis McShane
Iain McLaren
Robert Lambert
Cedric Fontenit
Lisa Stewart
David Neuhauser
Jenifer Thien
Daniel Young
Short-termbenefits(a)
USD’000
Other benefits(a)
USD’000
Share-based
payments
USD’000
Total compensation
USD’000
1,093
785
155
105
95
85
100
80
100
-
2,598
1,236
268
155
105
95
90
100
80
71
229
2,429
-
-
-
-
-
-
-
-
-
-
-
23
-
-
-
-
-
-
-
353
376
210
84
1
1
1
1
1
1
-
-
300
271
35
6
4
4
4
13
4
-
-
341
1,303
869
156
106
96
86
101
81
100
-
2,898
1,507
326
161
109
99
94
113
84
71
582
3,146
(a) Short-term benefits comprise salary, director fee as applicable, performance pay, pension and other allowances. Other benefits
comprise benefits-in-kind.
(b) Mr. Waldner was appointed as the Non-Executive Director of the Company as a direct obligation under a 2018 Relationship Agreement
between Tyrus and the Company. Both parties agreed that Mr. Waldner will not receive director fee but is reimbursable for reasonable
and documented expenses incurred in performing the Non-Executive Director duties.
13 8
13 9
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
50 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 year and to better reflect the nature of the respective items
in the Group’s consolidated financial statements.
As disclosed in Note 2, the prior year restatements were made following the adoption of Amendments to IAS 12 Deferred Tax Related
to Assets and Liabilities Arising from a Single Transaction in 2023 which require the deferred tax assets and deferred tax liabilities to be
presented separately in the balance sheet rather than offsetting against each other with additional exclusions have been added to the
initial recognition exemption by the IASB. The adoption of Amendments to IAS 12 has impacted the Group’s recognition of deferred tax
assets and liabilities associated with the oil and gas properties and ARO provision. The restatements were also required to be made on
the beginning of the preceding period as at 1 January 2022. The restatements had resulted to an increase in the accumulated losses
and deferred tax liabilities by US$13.9 million and reduced the net assets as at 1 January 2022 by US$13.9 million. The third consolidated
statement of financial position as at the beginning of the preceding period is not presented due to the restatements do not materially
impact the information in the consolidated statement of financial position at the beginning of the preceding period.
Additionally, the finalisation of the PPA for the acquisition of the CWLH Assets in accordance with IFRS 3 (Note 19) generated associated
impacts to the oil and gas properties, accumulated losses, ARO provision and overlift balances. The adjustments to the PPA values of the
CWLH Assets’ oil and gas properties and ARO provision on the acquisition date of 1 November 2022 resulted to the adjustment to the
depletion charges and ARO accretion expense recognised in 2022 subsequent to the acquisition in the consolidated statement of profit
or loss.
As previously reported
USD’000
Restatements
USD’000
As restated
USD’000
Consolidated statement of profit or loss and other comprehensive income
for the year ended 31 December 2022
Production costs
Depletion, depreciation and amortisation
Finance costs
Income tax expense
Consolidated statement of financial position as at 31 December 2022
Oil and gas properties
Deferred tax assets
Accumulated losses
Provisions – non-current
Deferred tax liabilities
Trade and other payables
Consolidated statement of financial position as at 1 January 2022
Deferred tax assets
Accumulated losses
Deferred tax liabilities
Consolidated statement of cash flows for the year ended 31 December 2022
Profit before tax
Depletion, depreciation and amortisation
Decrease in trade and other payables
(250,700)
(61,834)
(11,408)
(54,018)
456,768
9,118
(51,787)
508,539
88,406
73,752
26,389
(35,023)
(66,166)
62,540
61,834
(2,471)
400
272
(19)
62
(250,300)
(61,562)
(11,427)
(53,956)
(23,123)
13,725
(13,204)
2,406
1,800
(400)
(2,523)
(13,919)
(11,396)
653
(272)
(400)
433,645
22,843
(64,991)
510,945
90,206
73,352
23,866
(48,942)
(77,562)
63,193
61,562
(2,871)
The reclassification made in the consolidated statement of financial position is related to inventories in transit which are reclassified
from trade and other receivables to inventories. The reclassification does not have impact on the net assets balance in the consolidated
statement of financial position and consolidated statement or profit or loss and other comprehensive income.
The reclassification impacts the following items:
As previously
reported
USD’000
Reclassification
USD’000
As reclassified
USD’000
Consolidated statement of financial position as at 31 December 2022
Inventories
Trade and other receivables
Consolidated statement of cash flows for the year ended 31 December 2022
(Increase)/Decrease in trade and other receivables
Increase in inventories
18,911
20,368
(214)
(1,096)
733
(733)
733
(733)
19,644
19,635
519
(1,829)
As a result of the finalisation of the PPA for the acquisition of the CWLH Assets during the year in accordance with IFRS 3, certain line items
have been amended in the statement of financial position and related notes to the financial statements.
Company statement of financial position
(Company Registration Number: 13152520)
as at 31 December 2023
Notes
2023
USD’000
2022
USD’000
Assets
Non-current assets
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
Warrant liability
Total current liabilities
Total liabilities
Total equity and liabilities
5
7
8
8
10
11
12
27,598
217,112
244,710
105,875
1,910
56,588
164,373
409,083
456
51,827
61,068
27,673
24
235,842
376,890
1,455
27,269
3,469
32,193
32,193
26,838
252,485
279,323
32,521
20
18,814
51,355
330,678
339
983
61,068
26,907
21
232,984
322,302
851
7,525
-
8,376
8,376
409,083
343,563
During the year, the Company made a profit after tax of US$4.9 million (2022: US$48.1 million loss after tax).
The items were adjusted as follows:
Oil and gas properties
Deferred tax assets
Provision for asset restoration obligations
Deferred tax liabilities
14 0
Provisional PPA
USD’000
Adjustments
USD’000
Final PPA
USD’000
The financial statements were approved by the Board of Directors and authorised for issue on 27 April 2024.
They were signed on its behalf by:
41,976
-
60,158
12,593
(21,307)
19,390
4,475
(6,392)
20,669
19,390
64,633
6,201
Bert-Jaap Dijkstra
Director
141
Company statement of changes in equity
for the year ended 31 December 2023
Notes to the financial statements
for the year ended 31 December 2023
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
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
Total
USD’000
As at 1 January 2022
Share-based compensation:
Company
Subsidiaries
Dividend paid (Note 9)
Shares issued (Note 8)
Shares repurchased (Note 8)
Total transactions with owners
Loss and total comprehensive
income for the year
As at 31 December 2022
Share-based compensation:
Company
Subsidiaries
Shares issued (Note 8)
Transaction costs associated with
issuance of shares (Note 31)
Shares repurchases
Total transactions with owners
Profit and total comprehensive
income for the year
As at 31 December 2023
358
201
-
-
-
2
(21)
(19)
-
339
-
-
120
-
(3)
117
-
456
-
-
-
782
-
782
-
983
-
-
52,846
(2,002)
-
50,844
-
51,827
-
-
-
-
-
21
21
-
21
-
-
-
-
3
3
-
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)
(48,138)
(48,138)
26,907
61,068
232,984
322,302
6
760
-
-
-
766
-
-
-
-
-
-
-
-
-
-
-
-
(2,084)
6
760
52,966
(2,002)
(2,084)
(2,084)
49,646
4,942
4,942
24
27,673
61,068
235.842
376,890
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 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 profit 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 of 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;
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);
l paragraph 38 of IAS 1 Presentation of Financial Statements - the requirement to disclose comparative information in respect of:
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).
IAS 7 Statement of Cash Flows;
l
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 allowance 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 Directors are 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 Directors have 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.
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 Directors exercised judgement in estimating the future profitability of the oil and gas operations held by
the JEHL’s subsidiaries.
14 2
14 3
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
In estimating the future profitability of the JEHL’s subsidiaries, Directors 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. Directors
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 as disclosed in Note 3 of the consolidated financial statements.
Directors 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. Directors further take 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, Directors estimate 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
Share-based compensation at subsidiaries during the year
At end of year
Details of the direct and indirect investments the Company holds are as follows:
2023
USD’000
-*
26,838
760
27,598
27,598
2022
USD’000
-*
25,905
933
26,838
26,838
Place of
incorporation
% voting rights
and ordinary
shares held
2023
% voting rights
and ordinary
shares held
2022
England and Wales
Australia
Australia
Australia
Australia
Canada
Canada
Singapore
Bermuda
Singapore
New Zealand
New Zealand
Canada
England and Wales
Bahamas
Singapore
Singapore
Malaysia
Singapore
England and Wales
Singapore
Bermuda
BVI
Singapore
Singapore
Singapore
Delaware
100
100
100
100
100
100
-
100
100
100
-
-
-
100
100
100
100
100
100
100
-
100
-
-
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
-
100
-
100
100
-
100
100
100
100
100
100
100
-
Nature of business
Investment holdings
Production of oil & gas
Investment holdings
Production of oil & as
Production of oil & gas
Investment holdings
Investment holdings
Exploration
Investment holdings
Production of oil & gas
Production of oil & gas
Investment holdings
Production of oil & gas
Investment holdings
Production of oil & gas
Investment holdings
Investment holdings
Administration
Investment holdings
Administration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Investment holdings
Name of the company
Direct
Jadestone Energy Holdings Ltd (1)
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) (a)
Jadestone Energy (Lemang) Pte Ltd (4)
Jadestone Energy Ltd (5)
Jadestone Energy (Malaysia) Pte Ltd (4) (b)
Jadestone Energy (New Zealand) Ltd (6) (c)
Jadestone Energy (New Zealand Holdings) Ltd (6) (d)
Jadestone Energy (Ogan Komering) Ltd (7) (e)
Jadestone Energy (PHT GP) Limited (1) (f)
Jadestone Energy (PM) Inc. (9)
Jadestone Energy Pte Ltd (4) (g)
Jadestone Energy (Singapore) Pte Ltd (4)
Jadestone Energy Sdn Bhd (10)
Jadestone Energy (Thailand) Pte Ltd (4) (h)
Jadestone Energy UK Services Ltd (1)
Jadestone Energy (Vietnam) Pte Ltd (4) (i)
Mitra Energy (Philippines SC- 56) Ltd (5)
Mitra Energy (Philippines SC- 57) Ltd (8) (j)
Mitra Energy (Vietnam 05-1) Pte Ltd (4) (k)
Mitra Energy (Vietnam Nam Du) Pte Ltd (4)
Mitra Energy (Vietnam Tho Chu) Pte Ltd (4)
PHT Partners LP (11) (l)
*
Rounded to the nearest thousand.
14 4
10th Floor, 595 Howe St., Vancouver BC, V6C 2T5, Canada
3 Anson Road #13-01, Springleaf Tower, Singapore 079909
3rd Floor - Par la Ville Place, 14 Par la Ville Road, Hamilton HM08, Bermuda
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)
(4)
(5)
(6) Bell Gully, 171 Featherston Street, Wellington Central, Wellington, 6011, New Zealand
(7)
(8)
(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
(11) CT Corporation, 1209 Orange St, Wilmington, DE 19801, United States
29 Tuscany Hills Bay NW, Calgary, Alberta, T3L2G5, Canada
TMF (BVI) Ltd, Palm Grove House, P.O. Box 438, Road Town, Tortola, British Virgin Islands
(a)
Jadestone Energy International Holdings Inc. was amalgamated with Jadestone Energy Inc. on 16 May 2023 as part of the Company’s
internal reorganisation.
Jadestone Energy (Malaysia) Pte Ltd was incorporated on 19 January 2023 for production of oil and gas operations.
(b)
Jadestone Energy (New Zealand) Ltd was dissolved on 30 August 2023.
(c)
Jadestone Energy (New Zealand Holdings) Ltd was dissolved on 27 October 2023.
(d)
Jadestone Energy (Ogan Komering) Ltd was dissolved on 10 March 2023.
(e)
Jadestone Energy (PHT GP) Limited was acquired by the Group from the acquisition of interest in Sinphuhorm gas field.
(f)
Jadestone Energy Pte Ltd was incorporated on 16 January 2023 for investment holdings purposes.
(g)
Jadestone Energy (Thailand) Pte Ltd was incorporated on 19 January 2023 for investment holdings purposes.
(h)
(i)
Jadestone Energy (Vietnam) Pte Ltd was dissolved on 6 November 2023.
(j) Mitra Energy (Philippines SC- 57) Ltd was dissolved on 30 October 2023.
(k) Mitra Energy (Vietnam 05-1) Pte Ltd was dissolved on 9 March 2023.
(l)
PHT Partners LP was acquired by the Group from the acquisition of interest in Sinphuhorm gas field.
6 Staff number and costs
The Company had one employee at the beginning of the year. The employee was transferred to a subsidiary during the year. The Company
had one employee in 2022.
The aggregate remuneration comprised:
Wages and salaries
Social security costs
Defined contribution pension costs
2023
USD’000
2022
USD’000
9
-
-
9
141
38
-
179
7 Related party transactions
The Company did not enter into new loan with its subsidiary during the year
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
Repayment during the year
Unrealised foreign exchange differences
At end of the year
Subsidiaries
Advances
Repayment received
Payment on behalf by
Repayment made
2023
USD’000
252,485
(52,865)
17,492
217,112
41,608
(33,583)
65,328
7,525
2022
USD’000
365,598
(68,284)
(44,829)
252,485
31,971
(4.200)
(61)
-
14 5
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Placement of additional shares and issue of warrants
On 6 June 2023, the Company completed an equity fundraising, creating an additional 94,081,826 ordinary shares at GB£0.45 per share,
which comprised of a placing and subscription of 92,312,691 new ordinary shares to existing and new institutional shareholders and a
placing and subscription of 1,769,135 new ordinary shares to the Directors of the Company. Tyrus has subscribed to 24,883,387 of new
ordinary shares under the equity fundraising for a consideration of US$13.9 million.
The placing and subscription of 1,769,135 new ordinary shares to the Directors of the Company as follows:
On 9 June 2023, the Company launched an open offer of up to 14,887,039 new ordinary shares, at GB£0.45 per share, to raise additional
proceeds of up to EUR8.0 million1 (up to US$8.6 million). The open offer closed on 28 June 2023, raising a total of US$42,009 by issuing
73,557 new shares.
During the year, employee share options of 128,160 were exercised and issued at an average price of GB£ 0.56 per share (2022: 1,446,108;
GB£0.42 per share). Additionally, 79,327 shares were issued during the year to satisfy the Company’s obligations with regards to the
performance shares and 101,063 shares were issued to meet the obligations with regards to the restricted shares.
Number of shares
Consideration paid
USD’000
The Company has one class of ordinary share. Fully paid ordinary shares with par value of GB£0.001 per share carry one vote per share
without restriction, and carry a right to dividends as and when declared by the Company.
A. Paul Blakeley
Bert-Jaap Dijkstra
Dennis McShane
Iain McLaren
Robert Lambert
Cedric Fontenit
Lisa Stewart
David Neuhauser
Jenifer Thien
336,311
71,556
178,889
22,222
111,269
333,333
178,889
447,222
89,444
1,769,135
188
40
100
12
62
186
100
250
50
988
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. The equity underwrite facility reduced to zero following the total funds raised from the equity fundraising and the open offer
exceeded US$50.0 million. The Company incurred upfront fee of US$2.15 million and interest of US$27,778 from the equity underwrite
facility, which was recorded as finance costs in Note 14 of the consolidated financial statements.
As part of the underwritten placing of additional ordinary shares, the Company has also entered into a warrant instrument with Tyrus
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, with an expiry date of 5 June 2026.
Committed standby working capital facility
On 6 June 2023, the Company entered into a committed standby working capital facility with Tyrus for a facility size of up to US$35.0 million.
The standby working capital facility was finalised at US$31.9 million, after deduction of US$3.1 million of excess funds from the total gross
funds of US$53.1 million raised from the equity placing and open offer. The facility will mature 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 standby working
capital facility was not utilised during 2023 and remained undrawn as at 31 December 2023. For the year ended 31 December 2023, the
Company had incurred interest expense of US$3.6 million, which was recorded as finance costs in Note 14 of the consolidated financial
statements.
8 Share capital and share premium account
Issued and fully paid
As at 1 January 2022, at £0.001 each
Issued during the year
Share repurchases
As at 31 December 2022
Issued during the year
Share repurchases
As at 31 December 2023
No. of shares
Share capital USD’000
Share premium account
USD’000
465,081,238
1,446,108
(18,173,683)
448,363,663
94,463,933
(2,051,022)
540,766,574
358
2
(21)
339
120
(3)
456
201
782
-
983
50,844
-
51,827
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 was not to exceed 46,574,528 ordinary shares.
On 19 January 2023, the Company suspended its share buyback programme. For the year ended 31 December 2023, the Company had
acquired 2.3 million shares at a weighted average cost of GB£0.75 per share, resulting in total expenditure of US$2.1 million. The total
nominal value of the shares repurchased was US$2,485. All shares repurchased were cancelled. Since the launch of the share buyback
programme, a total of 20.4 million shares had been acquired for a total accumulated expenditure of US$18.1 million, total nominal value of
the shares repurchased was US$23,778.
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. The Programme expired on 30 June 2023 in
conjunction with the Company’s 2023 annual general meeting (“AGM”) and was not renewed at the 2023 AGM.
On 6 June 2023, the Company completed an equity fundraising, creating an additional 94,081,826 ordinary shares at GB£0.45 per share,
which comprised of a placing and subscription of 92,312,691 new ordinary shares to existing and new institutional shareholders and a
placing and subscription of 1,769,135 new ordinary shares to the Directors of the Company. Total gross proceeds were US$53.0 million, with
net proceeds of US$51.0 million. The Group incurred total costs of US$2.0 million associated with the equity fundraising and these costs
were accounted as a deduction to the equity.
9 Dividends
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. The dividends declared were in compliance with the Act.
The Company did not declare any dividend during the year.
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.
10 Share-based payments reserve
The total expense arising from share-based payments of US$0.8 million (2022: US$0.1 million) was recognised in profit or loss for the
year ended 31 December 2023. The share-based payment expense arise from share options, performance shares and restricted shares
awarded from 2020 to 2022. In view of the performance of the Group in 2023, the Remuneration Committee suspended performance
share grants in 2023. In consultation with an external advisor, the Remuneration Committee approved a Deferred Cash Plan (“DCP”) for the
2023 - 2026 Long-Term Incentive (“LTI”) cycle, which was awarded in October 2023 (Note 40 to the consolidated financial statements). This
was done to ensure that the LTI programme aligns the interests of the senior leaders of the Group to the interests of shareholders, and is
effective in retaining and incentivising our top talents.
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
The Directors have applied the Black-Scholes option-pricing model, with the following assumptions, 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
Options granted on
9 March 2022
1.34% to 1.38%
5.5 to 6.5 years
63.0% to 66.7%
GB£ 1.01
GB£ 0.92
1.96%
10.2 Performance shares
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 payout 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.
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:
Performance shares granted on
9 March 2022
Risk-free rate
Expected volatility1
Share price
Exercise price
Expected dividends
Post-vesting withdrawal date
Early exercise assumption
1.39%
53.1%
GB£ 1.01
N/A
1.71%
N/A
N/A
1
The open offer was quoted in Euro of 8.0 million to meet the applicable regulation issued by the European Union regarding to the quantum of open offer.
1
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.
14 6
147
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
10.3 Restricted shares
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
1.73%
GB£ 0.90
1.73%
1.39%
GB£ 1.01
1.71%
The following table summarises the options/shares under the LTI plans outstanding and exercisable as at 31 December 2023:
As at 1 January 2022
New options/share awards issued
Vested during the year
Accelerated vesting during the year
Exercised during the year
Cancelled during the year
As at 31 December 2022
Vested during the year
Exercised during the year
Performance
shares
Restricted
shares
Number of
options
1,486,893
1,406,956
151,633
293,655
21,166,802
1,030,366
-
-
-
(147,906)
2,745,943
-
-
-
-
-
-
(1,446,108)
(1,012,124)
445,288
19,738,936
(79,327)
(101,063)
-
-
(128,160)
-
(344,655)
-
-
-
Expired unexercised during the year
(449,513)
Cancelled during the year
-
As at 31 December 2023
2,217,103
344,225
19,266,121
The weighted average share price on the exercise date is GB£0.83 (2022: GB£0.86).
Shares Options
Weighted
average
exercise
price GB£
Weighted
average
remaining
contract life
Number
of options
exercisable
11,409,854
-
2,010,007
1,354,702
(1,446,108)
(1,012,124)
12,316,331
4,665,000
(128,160)
-
(344,655)
7.15
9.19
6.27
6.45
-
-
7.15
6.32
-
-
-
5.37
16,508,516
0.45
0.92
0.50
0.46
0.42
0.50
0.45
0.44
0.56
-
0.60
0.48
Share options exercisable as at 31 December 2022
12,316,331
0.26 - 0.99
Share options exercisable as at 31 December 2023
16,508,516
0.26 - 0.99
0.41
0.41
5.46
4.92
Number of
options
Range of
exercise
price
GB£
Weighted
average
exercise
price GB£
Weighted
average
remaining
contract life
11 Other payables
Other payables
Accruals
2023
USD’000
563
892
1,455
2022
USD’000
456
395
851
Other payables and accruals principally comprise amounts outstanding for on-going business expenditures. The average credit period
is less than 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 Company has financial risk management policies in place
to ensure that all payables are settled within the pre-agreed credit terms.
12 Warrants liability
On 6 June 2023, in consideration of the support provided to the Company under the equity underwrite debt facility and committed
standby working capital facility, the Company entered into a warrant instrument with Tyrus Capital S.A.M. and funds managed by it, for 30
million ordinary shares at an exercise price of 50 pence sterling per share. The warrants are exercisable within 36 months from the date of
issuance, with an expiry date of 5 June 2026.
The Directors have applied the Black-Scholes option-pricing model, with the following assumptions, to estimate the fair value of the
warrants as at 31 December 2023:
Risk-free rate
Expected life
Expected volatility1
Share price
Exercise price
Expected dividends
3.77%
2.5 years
54.5%
GB£ 0.37
GB£ 0.50
0%
13 Events after the end of the reporting period
Acquisition of additional interest in the CWLH oil fields
On 14 November 2023, the Group has executed a sale and purchase agreement with Japan Australia LNG (MIMI) Pty Ltd (the “Seller”), to
acquire the Seller’s non-operated 16.67% working interest in the Cossack, Wanaea, Lambert, and Hermes (“CWLH”) oil fields development,
offshore Western Australia, for a total initial cash consideration of US$9.0 million, and certain subsequent Abandonment Trust Payments
(the “Acquisition”).
The Acquisition was completed on 14 February 2024, with a net receipt to the Group from the Seller of US$6.3 million, reflecting the
accumulated economic benefits of the CWLH assets for the period from the effective date of 1 July 2022 to completion. As a result, the
Group’s non-operated working interest in the CWLH assets increased to 33.33%, from 16.67%.
Redetermination of the Borrowing Base under the Reserves-Based Lending Facility
On 26 April 2024, the RBL Banks finalised a routine redetermination of the borrowing base under the RBL, with the revised borrowing
capacity of US$200.0 million. Stag has been removed from the borrowing base assets and replaced with the second acquisition of 16.67%
of the CWLH assets, acquired on 14 February 2024. The next scheduled redetermination is scheduled to complete by 30 September 2024.
Suspension and restoration of trading on AIM
On 13 February 2024, the ordinary shares of the Company were suspended from trading pursuant to a proposed sale by Woodside Energy
Group Ltd. (“Woodside”) of its participating interests in the Macedon and Greater Pyrenees Projects offshore Western Australia (the
“Proposed Acquisition”). Had Jadestone been selected as the preferred bidder and reached agreement with Woodside on acquisition terms,
the Proposed Acquisition would have been classified as a reverse takeover transaction in accordance with AIM Rule 14, and accordingly, the
Company’s ordinary shares were suspended from trading on AIM on 13 February 2024. On 11 April 2024, Woodside cancelled the sale of its
participating interests in those assets. With the possibility of the Proposed Acquisition ceasing, the Company’s shares resumed trading on
AIM on 11 April 2024.
Change in Board of Directors
On 25 January 2024, the Company announced the appointment of Joanne Williams as an independent non-executive director. Ms. Williams
is Chair of both the HSEC Committee and the Montara Technical Committee, and a member of the Audit Committee.
On 25 March 2024, the Company announced the appointment of Adel Chaouch as an independent non-executive director. On the same
day, the Company announced the resignation of (i) Lisa Stewart as an independent non-executive director and (ii) Robert Lambert as an
independent non-executive director.
On 27 March 2024, the Company announced the resignation of Dennis McShane as an independent non-executive director and Chair
of the Board. On the same day, the Company announced the election of Adel Chaouch as Chair of the Board. Mr. Chaouch is Chair of the
Governance and Nomination Committee, and a member of both the Remuneration Committee and the Montara Technical Committee.
14 8
1
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.
14 9
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Additional
Information
152 Oil and gas reserves and resources
152 Licence interests
153 Report on payments to governments
154 Glossary
155 Contact information
15 0
151
Jadestone Energy | 2023 Annual Report
Strategic Report
Corporate Governance
Financial Statements
Additional Information
Oil and gas reserves and resources
Total proved plus probable reserves1 (net, mmboe)
AUSTRALIA
MALAYSIA
INDONESIA2
THAILAND3
VIETNAM
TOTAL GROUP
Opening balance, 1 January 2023
Acquisitions
Transfer from 2C resources
Revisions
Production
Ending balance, 31 December 2023
35.6
-
2.4
(3.4)
(3.0)
31.6
8.9
-
-
1.9
(1.6)
9.2
20.3
-
3.0
-
-
23.3
0.0
4.2
-
0.2
(0.5)
3.9
0.0
-
-
-
-
0.0
64.8
4.3
5.4
(1.4)
(5.0)
68.0
As at 31 December 2023, the Group had proved plus probable oil reserves (“2P Reserves”) of 68.0 mmboe, a 5% increase compared
with 31 December 2022 and representing 164% 2P Reserves replacement during the year. 2P Reserves of 4.2 mmboe were booked on
completion of the Sinphuhorm interest acquisition in February 2023. There was a positive reserve revision at the CWLH fields offshore
Australia due to better than expected asset performance during the year, in turn extending asset life from 2031 to 2035. 2P Reserves also
increased at the PM323 field offshore Malaysia on the back of the successful infill drilling campaign in the second half of 2023. A further
3.0 mmboe of 2P Reserves were booked at the Akatara field, representing the volumes committed under an additional gas sales agreement
negotiated during the year. These positive moves were balanced by a 3.5 mmboe net reduction in 2P Reserves at Montara, due to forecast
higher operating costs over the life of the field, and a small negative revision at the PM329 asset offshore Malaysia. Jadestone completed
the acquisition of a further 16.67% interest in the CWLH fields, adding a further 6.7 mmboe of 2P Reserves at closing, after the period end
and was therefore not included in end-2023 2P Reserves calculation.
ERCE independently evaluated the Group’s year-end 2023 2P Reserves.
Total 2C contingent resources4 (net, mmboe)
AUSTRALIA
MALAYSIA
INDONESIA
THAILAND
VIETNAM
TOTAL GROUP
Opening balance, 1 January 2023
Acquisitions
Transfer to 2P reserves
Technical revisions
Ending balance, 31 December 2023
6.5
-
(1.4)
1.1
5.1
0.0
-
-
1.2
1.2
3.9
-
(3.0)
-
0.9
0.0
2.5
-
1.9
4.4
93.9
-
-
-
93.9
104.3
2.5
(5.4)
4.2
105.6
The Group’s best case Contingent Resources (“2C Resources”) increased slightly from 104.3 mmboe at 31 December 2022 to 105.6 mmboe
at 31 December 2023. The part reclassification of Akatara and CWLH contingent resources to 2P Reserves was offset by positive revisions
associated with potential life extensions at CWLH and Sinphuhorm, potential infill wells in Malaysia and the Group’s share of 2C Resources
associated with the Dong Mun discovery onshore Thailand (acquired with the interest in the Sinphuhorm field).
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 2023.
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:
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.
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 2023 based on the principles above. All figures are in US dollars.
Licence interests
Country/licences
Acreage
AUSTRALIA
Field/discovery
Region
Location
Water depth
Operator
Working
interest
US$
AC/L7, ACL8
672km2
Montara, Swift/
Swallow, Skua
Timor Sea
Offshore
77 metres
Jadestone
100%
WA-15-L
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%5
MALAYSIA
PM323 PSC
1,304km2
East Belamut,
Chermingat, West
Belamut
Malay Basin
Offshore
72 metres
Jadestone
60%
PM329 PSC
387km2
East Piatu
PNLP Assets6
1,698km2
North Lukut, Penara
and Puteri
PM428
6,695km2
-
Malay Basin
Malay Basin
Malay Basin
Offshore
63 metres
Jadestone
70%
Offshore
70 metres
Jadestone
100%
Offshore
40-80 metres
Jadestone
60%
INDONESIA
Lemang PSC
743km2
Akatara
South Sumatra
Onshore
n/a
Jadestone
100%7
THAILAND
THAILAND
EU5, EU-1
L27/43
VIETNAM
232km2
Sinphuhorm
32km2
Dong Mun
Khorat Basin
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
Block 51 PSC
887km2
U Minh, Tho Chu
Malay /Tho Chu Basin
Offshore
48 metres
64 metres
Jadestone
Jadestone
100%
100%
1
2
3
4
5
6
7
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.
Assumes oil equivalent conversion factor of 6,000 scf/boe.
Assumes oil equivalent conversion factor of 5,740 scf/boe.
2C Resources based on Jadestone estimates, ERCE reports dated 31 December 2022 and 31 December 2017 (for Vietnam).
Jadestone’s interest in the CWLH fields was 16.67% at 31 December 2023 and increased to 33.33% on 14 February 2024, following the acquisition of a former joint venture
partner’s interest.
Jadestone is licensee and operator of the AAKBNLP and PM318 PSCs (i.e., the PNLP Assets) while these licences are in ‘shut-in’ mode. Through the Malaysia Bid Round Plus
(“MBR+”), Jadestone is currently applying for the Puteri Cluster PSC (the renamed PNLP Assets). The results of the MBR+ are anticipated in May 2024.
Pre local government back-in right of up to 10%.
15 2
Total AUSTRALIA
Total MALAYSIA
Total INDONESIA
Total VIETNAM
Totals
Taxes
Royalties
Stag
Montara
CWLH
Non-project related
PM323
PM329
Lemang PSC
Block 46/07
Block 51
Fees
632,291
1,291,095
-
-
1,923,385
-
-
-
200,215
200,215
200,000
200,000
400,000
280,714
1,148,064
157,424
6,571,006
8,157,208
651,810
5,189,105
5,840,914
-
-
-
-
-
-
-
3,900,782
-
Totals
913,005
2,439,159
4,058,206
6,571,006
3,900,782
13,981,375
2,454,537
5,312,527
7,767,064
3,106,346
10,501,632
13,607,978
-
-
-
-
-
200,215
200,215
200,000
200,000
400,000
2,523,600
13,998,122
11,667,846
28,189,569
15 3
Jadestone Energy | 2023 Annual Report
Interim
Facility
IPIECA
ISO
IT
Jadestone or
Jadestone plc
KPIs
LPG
LTI
LTIP
MACC
MAR
MBR+
mmcf
M&A
a US$50 million debt facility closed in February 2023
originally the “International Petroleum Industry Environmental
Conservation Association”
International Organisation for Standardisation
information technology
Jadestone Energy plc
key performance indicators
liquified petroleum gas
long-term incentive
long-term incentive plan
marginal abatement cost curve
Market Abuse Regulation
Malaysia Bid Round Plus
million standard cubic feet of natural gas
mergers and acquisitions
mmbbls/d
million barrels per day
mmbbls
mmboe
million barrels of oil
millions of barrels of oil equivalent
mmscf/d
million standard cubic feet per day
MYR
NED
Net Zero
Malaysian Ringgit
Non-Executive Director
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
NZE
OCF
OPEC
the Paris
Agreement
PenMal Assets
IEA Net Zero Emissions scenario
operating cash flow
Organisation of Petroleum Exporting Countries
a legally binding international treaty on climate change
collectively, the assets offshore Peninsular Malaysia acquired by
Jadestone in 2021
PETRONAS
Petroliam Nasional Berhad
PITA
petroleum income tax (Malaysia)
produced
water
PRRT
PSC
PV Gas
QCA
water produced from the reservoir with crude oil
Petroleum Resource Rent Tax
production sharing contract
Petrovietnam Gas Joint Stock Corporation
Quoted Companies Alliance
RBL Facility
a US$200 million reserves based loan facility closed in May 2023
R&M
RSU
Repair and Maintenance
restricted stock unit
SapuraOMV
SapuraOMV Upstream Sdn. Bhd.
scf
standard cubic feet of gas
Scope 1, 2
and 3 GHG
emissions
direct operational emissions (Scope 1), indirect emissions
from purchased energy (Scope 2) and remaining indirect GHG
emissions emitted across the value chain (Scope 3)
SECR
Streamlined Energy and Carbon Reporting
Section 172
Section 172 of the Companies Act 2006
SID
STEPS
TCFD
TSR
senior independent director
IEA Stated Policies scenario
Task Force on Climate-Related Financial Disclosures
total shareholder return
UN SDGs
UN Sustainable Development Goals
US$
WEO
United States dollar
IEA World Energy Outlook
Glossary
2C resources,
2C
2P reserves, 2P
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
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
ACCU
AIM
Australian carbon credit unit
Alternative Investment Market
the AIM Rules
the AIM Rules for Companies 2021
AGM
APAC
API
APS
ARO
bbl
bbls/d
bcm
annual general meeting
Asia-Pacific
American Petroleum Institute gravity
Announced Pledges Scenario
asset retirement obligation
barrel
barrels per day
billion cubic meters
the Board
the board of directors of Jadestone Energy plc
boe
boe/d
barrel of oil equivalent
barrels of oil equivalent per day
carbon dioxide
equivalent
(or CO2-e)
CCSC
CCWG
CEO
CFO
standard unit used to compare and account for emissions from
various GHGs based on their global warming potential
Climate Change Steering Committee
Climate Change Working Group
Chief Executive Officer
Chief Financial Officer
the Company
Jadestone Energy plc
COO
Chief Operating Officer
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 Group facilities
the Directors
the directors of Jadestone Energy plc
E&P
EBITDAX
exploration and production
earnings before interest tax, depreciation, amortisation and
exploration expense
emissions
intensity
a measurement of GHG emissions intensity, commonly
expressed as kilograms of CO2-e emitted per boe
EPCI
ERCE
ESG
FID
FPSO
engineering, procurement, construction
and installation
ERC Equipoise Limited
environmental, social and governance
final investment decision
floating production storage and offloading vessel
fugitive
emissions
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
Heads of Agreement
health, safety and environment
health, safety, environment and climate
health, safety, social, environmental and climate
International Accounting Standards
International Energy Agency
International Financial Reporting Standards
energy generated offsite and purchased by the Group
HoA
HSE
HSEC
HSSEC
IAS
IEA
IFRS
indirect
energy
15 4
Contact information
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
Peel Hunt LLP
100 Liverpool Street
London, UK, EC2M 2AT
Phone (UK): +44 (0) 20 7418 8900
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
Phone (UK): +44 (0)370 702 0000
Auditors
Deloitte Ireland 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
Phone (UK): +44 (0) 20 8256 1150
www.jadestone-energy.com