Singapore-headquartered independent Jadestone Energy is boosted its upstream portfolio with the planned acquisition of assets in Thailand where small-scale liquefied natural gas and carbon capture and storage schemes are planned.
Jadestone has agreed to acquire stakes in the producing Sinphuhorm gas field and in the Dong Mun gas discovery, both onshore Thailand, via a US$32.5 million deal with Salamander Energy, an affiliate of Indonesia’s Medco Energi.
The deal will give Jadestone a 9.52% non-operated interest in PTTEP’s Sinphuhorm field and a 27.2% interest in the Dong Mun gas discovery onshore northeast Thailand.
The Sinphuhorm gas field was discovered in 1983 and commenced production in 2006.
The field has been developed with 11 wells, of which 10 are currently producing, drilled from three surface pads in the central and southern part of the field; and further development well locations have also been identified.
The field produced an average 97 million cubic feet per day of gas in 2022.
The Sinphuhorm well pads are tied back to a central gas plant with 140 MMcfd capacity and the ability to stabilise small amounts of condensate.
Gas from the onshore field is exported via a 64-kilometre pipeline to the Nam Phong power plant, the largest in northeast Thailand.
Sinphuhorm’s gas is contracted under a long-term take-or-pay gas sales agreement with Thailand’s PTT, which expires in March 2031. PTT also buys condensate produced at the field under a long-term contract.
Crtical role
A US$62 million project to boost compression at the field is under way and is expected to be operational in the third quarter of 2024, while further infill wells are planned this year and next.
Jadestone’s management estimates that as of 31 December 2021, the field contained gross proven plus probable reserves of 288 billion cubic feet of gas and 820,000 barrels of condensate.
“Natural gas from Sinphuhorm plays a critical role in meeting the increasing demand for cleaner-burning fuel as the Thailand energy market and economy transitions to a lower carbon future,” noted the Singapore company.
Operations at Sinphuhorm have a Scope 1 and Scope 2 greenhouse gas emissions intensity of around 7.5 kilogrammes of carbon dioxide equivalent per boe, which Jadestone said is “well below” the global upstream average.
PTTEP has said that it plans to explore the potential for a carbon, capture and storage project at the field, which could reduce absolute emissions and intensity even further.
LNG on the table
The Dong Mun field is an undeveloped discovery on Apico’s L27/43 concession, which is located approximately 80 kilometres southeast of Sinphuhorm.
Gas was tested in the PNK carbonate formation — the same reservoir setting as Sinphuhorm — with Apico estimating 56 Bcf of gross best estimate contingent resources for the discovery.
Apico is considering developing Dong Mun through a phased approach — initially through a compressed natural gas scheme and then as a small-scale LNG development, confirmed Jadestone.
Jadestone is acquiring proven plus probable reserves of 4.6 million barrels of oil equivalent at an effective date of 1 January, which based on the headline consideration of US$32.5 million, represents an acquisition costs of approximately US$7.1 per boe.
The company said it anticipates that, due to the effective date of 1 January 2022, the cash consideration on completion will be approximately US$26.4 million plus working capital.
“While modest in scale, this opportunistic tuck-in acquisition is low cost, low emissions intensity and very low decline production from the onshore Sinphuhorm gas field,” said Jadestone chief executive Paul Blakeley.
“The asset is an excellent addition to our portfolio, diversifying our existing production base, and is a first important step towards building a significant natural gas position within our portfolio as part of our energy transition strategy.
“Furthermore, these assets carry minimal abandonment liabilities and are administered under very attractive Thai I PSC terms with recent extensions to both the licence and the GSA.
“The asset is highly predictable and reliable, running at close to 100% uptime in 2022 and with a high take-or-pay to a regional power station for electricity generation.
“We see upside from further infill drilling within Sinphuhorm, with wells planned in 2023 and 2024, and the potential development of the Dong Mun gas discovery, which is 100% owned by Apico, and which represents upside beyond the consideration paid.
“Establishing a presence in Thailand, as well as re-engaging directly with PTTEP, will also leave us well-positioned to capitalise on further potential asset divestments that we see coming to market in the near-term,” he added.
The acquired assets will be managed from Jadestone’s existing Southeast Asia offices, with no incremental general and administrative expenses and there are very limited abandonment obligations — currently estimated at around US$2 million net — associated with the assets.
The acquisition is expected to close in February.
