Jadestone Energy PLC (AIM:JSE) shares dropped in Monday’s early deals as the company reported the suspension of operations at the Montara field offshore Australia, after oil was observed on the surface of the sea adjacent to the floating production, storage and offloading (FPSO) vessel.
A leak was discovered, with a 30mm diameter hole found in the bottom of the tank. The company said it has controlled the release of oil and its next step will be to apply a temporary repair, before a further inspection and repair of the tank.
It noted that the released oil is estimated at three to five cubic metres, which was monitored and had fully dispersed by Sunday morning. Australia’s National Offshore Petroleum Safety and Environmental Management Authority was notified of the incident immediately and will initiate an onsite inspection of the Montara facilities on Tuesday.
Jadestone expects it will take around four weeks to complete the tank inspection and effect repairs sufficient to re-commence production at Montara. It noted that it has estimated the cost of securing the leak site and permanent repair of the crude oil tank at US$2mln-US$3mln.
As a result of downtime, it now expects full-year production for 2022 will be at the lower end of guidance (set previously at 15,500 to 18,500 barrels oil equivalent per day).
"Whilst we deeply regret this event, immediate and decisive action by the Jadestone team limited the quantity of oil released and made the facility safe, and I commend the work of both the offshore crew and the onshore operational staff for their quick response in managing this incident,” said chief executive Paul Blakeley.
“The integrity of our facilities is at the heart of our strategy and this oil tank was due for inspection within the next few weeks as part of our five-yearly maintenance cycle, which would have been the final key step in the significant inspection and repair plan that has been underway on the Montara Venture since we assumed operatorship in 2019.”
He added: “It's particularly frustrating for this event to occur so close to the planned inspection and repair activity, but our investment in the facilities to date is bearing fruit, with facility uptime now over 90% and with further improvements in the planning stage."
In London, Jadestone shares were down 16p or 16.8%, changing hands at 79p each.