Singapore-headquartered independent Jadestone Energy and the local subsidiary of Austria’s OMV have agreed to pull the plug on Jadestone’s planned acquisition of a 69% operating stake in the Maari oilfield offshore New Zealand.
Jadestone on Thursday confirmed that following legislative changes to New Zealand’s upstream regulatory framework at the end of last year, it had been continually engaged with OMV New Zealand and the host government to seek clarity on the processes, terms and associated timeline required to complete the deal.
However, due to the lack of progress on regulatory approval, and resultant uncertainty over the timing of this approval for the transfer of interest and operatorship of Maari, Jadestone and OMV have now reluctantly reached a decision to terminate the transaction.
“Whilst disappointing, we have been signalling that the lack of progress on Maari was an increasing concern and today, almost twelve months after the new legislation came into effect, there is still little to no clarity on what is required from Jadestone to receive the necessary government approval to complete the acquisition,” said Jadestone chief executive Paul Blakeley.
“Nearly three years after the acquisition was first announced, and with an upcoming licence expiry in 2027, this leaves insufficient time to confidently invest in the asset and therefore, despite our best efforts, it is now time to move on.
“[We] cannot continue to spend time and resources on the Maari process, and we are firm in the belief that this decision is in the best interests of the company.”
Jadestone and OMV back in November 2019 had executed a US$50 million sale and purchase agreement for the latter's 69% interest in Maari. Earlier this year, the offshore field was producing 4600 barrels per day of oil.
Host government solely to blame
Ashley Kelty, director, research analyst, oil and gas, at Panmure Gordon, said it is “extremely unusual” for deals to take this long to complete and that his firm is of the opinion that the New Zealand government is “solely to blame”.
“The government changed the fiscal framework last year but failed to give clarity on processes and terms needed to complete the approvals and we can understand why OMV and Jadestone have given up,” said Kelty.
“We recognise that New Zealand has a small (oil and gas) sector and that officials might be inexperienced in dealing with (oil and gas) companies.
“However, in light of the energy crisis and energy security it is a surprise that the government could not see the benefits of Jadestone taking over as operator, given the field life extension and investment plans offered.”
Now that the touted acquisition has fallen through, the Maari partners remain operator OMV on 69%, Horizon Oil with 26% and Cue Energy Resources having 5%.
‘‘We are pleased to see that the Maari transaction process has been concluded. We look forward to further developing our already excellent working relationship with OMV and to continue the good work over the last three years of extracting value from the Maari asset,’’ said Horizon chief executive Richard Beament.
On a brighter note, Jadestone is making good progress on its Stag infill drilling programme offshore Australia, with the first well now at the completion stage and the second well soon to reach the reservoir interval.
The company is too hoping before the end of the year to complete the North West Shelf oil acquisition (also offshore Australia) from BP, plus the acquisition of the remaining 10% interest in the Lemang production sharing contract in Indonesia.
Updated to include comment from Maari partner Horizon.