19th Mar 2020 14:30
(Alliance News) - Jadestone Energy Inc on Thursday said it has opted to delay the Nam Du and U Minh gas field developments project so as to maintain its balance sheet.
The oil and gas production firm, which focuses on the Asia Pacific region, said it chose to delay the developments "in the absence of the receipt of Vietnamese government approvals" for its field development plan.
Substantially all of the capital spending intended to go towards the project has been removed, cutting Jadestone's 2020 capital expenditure in half, a drop of around USD90 million to between USD80 million and USD95 million.
The remaining expenditure is discretionary and is for infill drilling at its Montara and Stag projects.
The approvals had been expected in the first quarter of the year and, given it has not been received, first gas should occur no sooner than late 2022.
At the end of January, Jadestone's cash balance was USD116.0 million and it expects to remaining operating cash flow positive even if the oil price falls below USD30 a barrel because of its downside price protection.
President & Chief Executive Paul Blakely said: "We are committed to maintaining capital discipline through the current uncertain environment. While the level of economic turmoil is unprecedented, I am pleased that we retain substantial flexibility and will remain nimble, and course correct as necessary, to ensure ongoing value add to our shareholders.
"Nam Du and U Minh are an important domestic gas resource for Vietnam, which will ultimately contribute to generating clean power and essential fertiliser for the ongoing development of the Southwest Vietnam economy. But, with ongoing Vietnamese Government delays to the FDP approval process, there is a short-term option for us to defer our spending commitments on the project, which we've decided to take. Vietnam currently has the potential to take temporarily cheap competitor piped gas, which is oil price linked and benefitting from the current market dislocation, and the Nam Du and U Minh fields can be developed when investment conditions improve."
Shares in Jadestone were down 8.8% at 29.00 pence in London on Thursday afternoon.
By Anna Farley; [email protected]
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