Jadestone natural gas projects
Investment decisions

Jadestone’s natural gas projects

Jadestone is a well-known energy company, producing in several countries in Southern Asia and Australia. Jadestone could be considered an oil producer as >90% of its production is oil. However, their focus on natural gas is in crescendo. And it looks like is going to be the pillar for organic expansion in the coming years. The goal of this article is to gain a better understanding of the natural gas portfolio of Jadestone.

Jadestone has exposition to natural gas through three assets: Akatara (Lemang – Indonesia), Vietnam and Sinphuhorm (Thailand). Being the latest the only in production at the moment (detail about the acquisition on our blog).

Akatara (Lemang – Indonesia)

Jadestone acquired 90% of Lemang in Nov-2021 and it completed the other 10% later in 2022. Jadestone pay barely $10MM for it, including the $126MM of cost pool (it works as a tax pool, so it net taxes for ~ the first 2 years).

The Capex required to develop it is about $100MM, $60MM of them were spent in 2022 and the rest will be spent in 2023. We expect to have it in production at the end of 2023 or beginning of 2024.

The Akatara gas project has a quick payback as shown in the picture. It is estimated to contain 63.74 bcf gross 2C resource (pre-local government back-in right)

Daily contract quantity (“DCQ”) of 20.5 BBtu/d commencing in H1 2024 for a gas price of US$5.60/mmBtu.The annual take of pay contract is for 90% of the annual production. It is capped at 110% DCQ (daily). Jadestone anticipates that the Akatara gas field will deliver a gross plateau production of approximately 6.1 kboe/d, based on an estimated gas production rate of 18.8 mmscf/d gas (gross), plus associated condensate and LPG, for a duration of seven years.

We believe that this asset is a cornerstone for Jadestone in the coming years. Seven years of having more than $80MM stable revenue (including the first two paying almost 0 taxes) is an important boost in the company’s FCF. Furthermore, more than half of Capex is already spent and production should start in less than 12 months. The cherry on the cake is that is quite probable (management insisted on it several times) that there is 40% more natural gas that is modelled. If confirmed, this project would be a major milestone for Jadestone.


Jadestone has a portfolio of development assets in Vietnam consisting of 3 blocks (Block 46/07, Block 51 and Nam Du. However, Block 51 is suspended and the licence expires on June 23

At the moment, they are still in early-stage negotiations with the end-user of gas from Nam Du and U Minh. Currently targeting final investment decision in H2 2023. It will take two years from FID to first gas. The natural gas produced will go into a government-owned Industrial power Complex in southwest Vietnam with a capacity of 1.5 GW and a fertilizer plant close by – The price is expected to be 5-6$ MMBtu – Nam Du and U Minh have reserves of around 30 mmboe. Production is expected to be around 100mmcfd (17kboed) and the Capex required to develop it is about $200MM and it is expected to produce around.

It can be observed that Nam Du is an important project. We think that it could be financed by internal cash flows. But it will be more efficient to finance 2/3 with debt to leverage the return. This percentage is usual in this type of project and the positive impact on equity is huge. Jadestone already advanced that they will look for financing once Montara is open again to find more attractive proposals. We like a lot this opportunity, 17kboed… if this goes ahead along with the other opportunities they are working in, maybe by 2026 we are not talking about millions in the market cap of Jadestone

Sinphuhorm (Thailand)

Jadestone has recently acquired a non-operated 9.52% interest in the Sinphunhorm gas field. It will become the first producing gas asset for Jadestone (scheduled to close in February 2023)

Sinphunhorn gas field is producing 1600 boe/d net to Jadestone & 803 bcf 2P reserves. It consists of eleven wells across 3 well pads. Natural gas is sold through a take-or-pay gas agreement (to 2031). There is a project underway (compressor) to maintain long-term delivery (adding 9 mmcfd production).

Furthermore, infill drilling work is planned for 2023 and 2024 (2 wells in 2022, 1 in 2023 and 1 provisional in 2024). We can expect an increase in natural gas output in the near-term future and higher cash flows as Capex will diminish considerably from 2025.

Opex is estimated to be around $3/boe (including maintenance, logistics and G&A) and the net decommissioning cost is around $2MM (which is really low). The economics of the project are quite attractive, they guide for payback in 3.5 years, but our understanding is that the natural gas flow could be higher, so payback could be around 3 years.

This acquisition is also attractive it is possible that an additional equity stake will be available soon (we understand that it would be 10% Exxon ownership) 

Jadestone has also acquired a 27.2% interest in the Dong Mun undeveloped gas discovery. The 2C contingent resources are up to 56 bcf (gross). There would be a fast-track path to the first production. However, we do not believe that Dong Mun produce natural gas in the next 3 years.

Our thoughts about Jadestone natural gas portfolio

Jadestone will be producing circa 21000 boepd once Montara reopens in February. Only 1600 boepd of them will come from natural gas fields. However, this percentage will increase in the coming years due to Akatara and Vietnam coming online. Jadestone’s natural gas projects are tied to long-term contracts which will provide Jadestone with stable cash flows starting in 2024.

Moreover, these fields are in a much earlier stage than the oil ones. Consequently, it is expected they will have an elevated uptime record.

We are very positive in the near term for Jadestone as Montara’s reopening is confirmed to happen in only a few weeks (February). By then, we will have a company producing 21000 boepd with an EV of <$400MM, much cheaper than any of its peers. Besides, we believe that the organic growth and stable cash flows from natural gas projects will mean a tremendous upside for the share price in the medium term.

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Note 2: We are organising an investment thesis competition aiming to find talent in the community & move this project to its next stage. Send us your thesis before 19th February!