Jadestone Energy (AIM:JSE) has secured an increases to its borrowing capacity, as focus turns to its Akatara gas project ahead of first output in mid-2024.
The company reported the results of its bi-annual redetermination process for a $200 million reserve-based lending (RBL) facility on Monday, with increases agreed to its borrowing capacity over the next 12 months.
From 1 October 2023 until its next redetermination date on next March, the group’s borrowing capacity has been set at $200 million, compared with a previously forecasted $190m.
For the subsequent six months during Q2-Q3 2024, the borrowing capacity will be the lower of the approved banking model as of 31 March 2024 or $150 million. The current model projects a borrowing capacity for this period of around $150 million, excluding capex add-back and subject to changes in model assumptions.
The increases in borrowing capacity result from the approval of the Company’s waiver request to raise the Akatara development cap from 40% to 60%, effective from 1 October 2023 to the September 2024 redetermination date.
The cap represents the maximum percentage contribution from Akatara to the total borrowing base prior to the asset’s completion test, after which Jadestone expects its borrowing base to return to $200m.
The increase in borrowing capacity over the Q2-Q3 2024 period means the company expects in increased liquidity over the period – in excess of $100m – including its undrawn $31.9 million working capital facility.
Jadestone raised $85m in financing earlier this year in order to ensure the delivery of its projects on time, most notably Akatara.
The development project onshore Sumatra is “now c.70% complete”, Jadestone said on Monday, having met its 65% progress target for the end of September.
“Long-lead time items continue to arrive at site on schedule and the project remains on track for commissioning in the first quarter of 2024 and first gas before mid-2024,” the company added.
Meanwhile, production at the Montara FPSO has averaged around 7,000 barrels per day, benefitting from some ongoing flush production and active management of the Montara H2, H3 and H4 wells to optimise oil-to-gas ratios.
It expects that average oil production rates will normalise back towards previous guidance in the 6,000 – 6,500 barrels per day range.
President and CEO Paul Blakeley said: “We always believed that, with time, we could resolve the temporary dip in the RBL borrowing base availability in mid-2024. The waiver approval shows the constructive working relationship we have with our RBL banks and demonstrates the banks’ confidence in Jadestone’s ability to deliver.
“I would like to thank the RBL banks and the wider Jadestone team for working together to deliver this successful outcome. As a result, Jadestone is projected to have significant liquidity prior to the Akatara field commencing production, after which our borrowing base availability is expected to increase further, as we move into a period of high cash generation, in turn supporting our growth ambitions.
“Recent operational performance across the business has been encouraging, with total production averaging c.17,000boepd during the month of September, and also continued progress at Akatara, where we remain on budget and schedule while meeting all key milestones.
“We are focused on sustaining this momentum over the remainder of 2023 and into 2024, underpinning our aim of significant production and cash flow growth in the near-term.”
