MANILA, Philippines — Singapore-based oil and gas company Jadestone Energy Inc. has surrendered and terminated Service Contract (SC) 56 in the Sulu Sea as part of its strategy to avoid early phase greenfield exploration and meet its sustainability objectives.
In a statement on its website, Jadestone said its wholly owned subsidiary Mitra Energy (Philippines SC-56) Ltd, together with operator Total E&P Philippines BV, have notified the Department of Energy (DOE) of the voluntary surrender of their entire interest in, and termination of SC 56.
“We remain focused on our strategy of delivering value from producing fields and near-term developments in the Asia Pacific region, while avoiding early-phase greenfield exploration plays such as SC 56, requiring multi-year capital programs prior to production and cashflow,” Jadestone Energy president and chief operating officer Paul Blakeley said.
He said the major investments in new pipelines and facilities would also not fit the company’s sustainability objectives which include focus on maximizing use of existing infrastructure.
“SC 56 was a legacy asset inherited from the previous management and only had option value through a carried well. The decision not to drill the well now removes any interest for Jadestone to continue further new deep-water frontier exploration commitments,” Blakeley said.
He said new deep-water frontier exploration commitments would also not compete with its existing portfolio investment options, nor potentially some of the more interesting inorganic opportunities moving into the market in the coming 12 to 18 months.
“While we have appreciated great support and cooperation, and long association with the government and regulator in the Philippines, it is now time to relinquish our interest in SC 56, as we continue to deploy our production optimization and field-life extension skills across the region,”Blakeley said.
As a condition of the surrender and termination of SC 56, the partners will be subject to payment in respect of unfulfilled work commitments.
The company also anticipates it will record a one-time impairment charge of approximately $50.5 million, relating to historical capitalized exploration expenditures on SC 56 predominantly associated with previous management, with no associated cash impact or tax benefit.
Total is the operator of SC 56 with a 75 percent interest while Mitra holds the remaining 25 percent.