Oil and gas company Jadestone has agreed to acquire BP’s entire 16.67% working interest in the Cossack, Wanaea, Lambert and Hermes oilfields in the North Carnarvon Basin offshore northwestern Australia.

The fields, also known as the North West Shelf Oil Project, are operated by Woodside Energy. The project includes 13 subsea wells in production via the Okha FPSO vessel.

The FPSO was installed on the fields in 2011 and has an oil processing capacity of 60,000 bpd, as well as water treatment and gas treatment and reinjection facilities. The Cossack, Wanaea and Hermes fields are currently in production and are estimated to contain aggregate gross 2P reserves of 30.3 million barrels.

Gross average production from the fields in 2021 was 12,461 bpd, with first quarter 2022 production averaging 14,178 bpd gross.

The fields also produce associated gas, with the North West Shelf Oil project partners having the right to use the gas needed to supply the Okha FPSO, with the remainder used as feedstock in the North West Shelf LNG project.

All four fields are mid-life producing assets with significant native oil in place, which Jadestone estimates at approximately 890 million barrels, and which provides the opportunity for further investment to increase recovery factors.

The transaction is structured as an asset purchase, which includes BP’s 16.67% working interest in the Cossack, Wanaea, Lambert and Hermes fields, subsea infrastructure, FPSO and abandonment liabilities.

Jadestone will pay upfront cash consideration of $20 million based on an economic effective date of January 1, 2020. Additional consideration of up to $4 million in aggregate is payable to BP under certain upside scenarios. , which are linked to potential oil over the whole year. price results in 2022 and 2023. Upon completion of the transaction, Jadestone will make a payment of $41 million to the North West Shelf Oil Project Decommissioning Trust Fund.

Jadestone will make further payments to the Decommissioning Trust Fund via two equal installments of $20.5 million payable on or about December 31, 2022 and December 31, 2023.

Oil from the North West Shelf Oil Project is sold on an equity basis with a typical parcel size of 650,000 barrels. The last shipment of oil sold attributable to BP’s involvement dates back to January 2022.

The acquired assets generated EBITDA of approximately $20 million during the year ended December 31, 2021, based on a realized oil price of $56.28/bbl. The acquired assets are expected to generate EBITDA of approximately $40 million in 2023, based on a realized oil price of $100/bbl.

According to Jadestone, the acquisition will be funded from the company’s available cash and will not impact its ability to fund planned capital expenditures or shareholder returns.

It should be noted that the joint venture partners of the North West Shelf Oil project have waived their right of first refusal and given their consent in principle to the acquisition, thus reducing the conditionality of the transaction.

Completion of the acquisition is subject to customary closing conditions, including regulatory approvals from the National Offshore Petroleum Titles Administrator and the Foreign Investment Review Board. Jadestone expects the transaction to close during the fourth quarter of 2022.

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