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(Alliance News) - Jadestone Energy PLC shares were struggling on Friday after the oil and gas development company lowered its annual guidance as it continues with repair works at its Monataro asset, offshore Australia.
Shares were down 9.0% at 91.00 pence on Friday morning in London.
Jadestone is a Perth-based oil and gas development company with assets in Australia, Malaysia, Indonesia, Vietnam and the Philippines.
It has decided to shut-in production at Monataro, as it has encountered continued delays to repair work. In June, it found a small leak in a crude oil tank, so embarked on permanent repair work but then found an additional internal defect in a water ballast tank.
"Over the past several weeks, the permanent repair to tank 2C has been developed, though delayed due to weather, manpower and logistics issues, further complicated while the facility remains in production operations," Jadestone said.
The company complained that the increased number of inspection and repair crews were hindering production operations.
As a result, it has shut production down at Monataro to complete the repair work. It expects production to be down during the remainder of August and potentially through September.
This, Jadestone said, will result in incremental costs of between USD2 million to USD4 million.
The temporary halt in production will hurt its annual production. It is now guiding for 2022 production to average between 13,000 and 14,000 barrels of oil per day, down from previous guidance of 15,500 barrels.
"The company is confident that by taking this approach at Montara, the necessary work required to deliver long-term asset integrity can be safely and efficiently completed. The impact is short-term and there is no reduction in reserves," Jadestone added.
In the first half, its production was 15,008 barrels of oil per day. It also noted revenue was USD225.6 million, increased from USD138.2 million the year prior, as its realised price of oil surged to USD109.5 per barrel from USD67.70 a year before.
"A temporary shut-in of Montara production, in order to replace production crews with maintenance and inspection teams, is the most practical solution which will allow us to apply the necessary additional manpower to accelerate key maintenance and repair activities and restore facility integrity," Chief Executive Paul Blakeley said.
"There can be no short cuts, and while we have made very significant progress in restoring the FPSO to the standard which we expect, the limited FPSO accommodation, as well as other factors such as Covid-19, have been impeding our progress. Our decision will reverse this trend. This represents production deferred, rather than barrels lost, and we are working hard to restore Montara production as soon as possible."
By Paul McGowan; paulmcgowan@alliancenews.com
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