Jadestone Energy PLC

LSE:JSE

Earnings Call Analysis

Earnings Call Transcript 2023-Q4

[Operator]

Hello all, and welcome to Jadestone's 2023 Full Year Results Call. My name is Lydia, and I will be your operator today.[Operator Instructions]. I'll now hand you over to Paul Blakeley, Chief Executive Officer, to begin. Please go ahead.

[A. Paul Blakeley, executive]

That's great. Thank you, Lydia, and good morning or good afternoon, depending where you are, ladies and gentlemen, and welcome to Jadestone Energy's Full Year 2023 Results Conference Call. I'm Paul Blakeley, Jadestone's CEO, and I'm joined on the call today by CFO, Bert-Jaap Dijkstra; and by Phil Corbett, Investor Relations Manager. In this call, we'll take you through quite a full presentation, which was recently uploaded to the Investor Relations section of our website or you can view it via the link on the webcast. And after that, let's open the call for a Q&A discussion. Now slide 2, to outline our standard disclaimers and in particular, the cautionary remarks regarding forward-looking statements and non-IFRS measures used in this presentation. And with that, we can get started by turning to slide 3. I want to open by saying that we faced a number of challenges in 2023, but I believe that we've come out of it a far stronger business today. It was also a year of record investments as we continue to execute on our strategy to diversify the asset base towards higher quality, higher-margin assets and to set the foundations for exceptional shareholder value for the future. We added interest in Sinphuhorm. We increased our stake in CWLH, and we progressed the Akatara project on schedule towards first gas in 2Q this year, while also delivering a great outcome from our first drilling campaign in Malaysia. Through the second half of 2023, we worked hard to deliver higher reliability and better uptime at the Montara facilities, as we continue to focus on asset integrity following the difficulties we had faced in 2022. As a result, recent Montara uptime has improved significantly, approaching 90% this year and we're determined to maintain this. 2023 saw a huge progress at Akatara too, and by year-end, the project was beyond 90% complete, as final equipment arrived at site and pre-commissioning commenced. There's still a little bit of work to do to bring first gas into the processing plant next month and to achieve first commercial sales before the end of the second quarter as planned, but we're getting very close now. Our Vietnam assets have made progress too, with the signing of the heads of agreement for the initial phase of development in the Nam Du U Minh gas fields. Further steps in the commercialization process will take time, but the HOA represents a very important first step towards gas production. On Friday last week, we successfully closed the March 2024 redetermination of our RBL facility. We've agreed with our banks on a borrowing base of US$200 million for the next 6 months, providing ample financial liquidity to deliver the near-term activity program, and Bert-Jaap will talk to this later. Turning to slide 4, let's quickly revisit a slide we used earlier this year, which illustrates how the recent diversification of our asset base is bringing higher value and lower OpEx barrels into the business. Both the diversification of the portfolio and the addition of fixed price gas into the production-mix as well as the increased margins per boe, all provides for far greater underlying resilience as well as some insulation from any potential commodity price weakness. On the left of the slide, we've updated the unit net present value chart using final data from ERCE's independent year-end 2023 reserves report. The message is clear. As we continue to add newer assets into the portfolio, our margins improved materially. [ Sets ] do mature over time, and as a useful data point, by the time of acquisition of Montara back in 2018, Unit NPV10/2P boe was over $10. While oil price obviously has an impact, the end 2023 equivalent value was just under $8/boe, and it helps to show the impact of increasing maturity over time, notwithstanding some operational cost increases that we announced earlier this year. The chart on the right sets out 2024-unit operating costs on the basis of this year's budget and is weighted by production contribution. Noting the marked difference between the two legacy assets and the others in the portfolio, this is a function of several things: relative maturity, gross throughput rates, geography and offshore versus onshore location. However, we expect this to be a high watermark year for OpEx at both of these legacy assets. And when combined with investment in new production such as at Skua-11 or Stag 48-H and other new wells for example, this combination should lead to higher margins going forward. Slide 5 now, which sets out some more detail on the ongoing diversification of the group over the past couple of years, the end of 2019, Montara and Stag comprised a 100% of our reserves. But 4 years later, that's reduced to 33%. This is the result of business development success over that period with 8 successful transactions completed. To achieve this, it's also required significant investment, both organic and inorganic across the whole group, and particularly over the last 2 years. But with Akatara now close to completion, organic investments in the near term will likely reduce. Now turning to slide 6, just a quick highlight on our safety performance during 2023. This can sometimes be taken for granted, but it's worth emphasizing, it only comes with a lot of hard work and continuous improvement and goes straight to the very heart of our license to operate, benefiting all stakeholders, from employees and regulators to shareholders. We're particularly proud of delivering 6 million man-hours worked at the Akatara development site without a lost time injury. This is a fantastic achievement, given over 2,000 people at on-site at times and with up to 40% unskilled labor coming from local communities. We've also had zero lost time injuries in our Malaysia operations. In fact, this performance takes us right back to when we acquired the assets in 2021, another notable milestone. At the end of last year, we also set out greater detail on our Net Zero pathway and provided interim targets on how Jadestone can achieve Net Zero Scope 1 and 2 emissions by 2040. And so, with these highlights, I'm going to now hand over to Bert-Jaap to take you through the financials. Bert-Jaap?

[Bert-Jaap Dijkstra, executive]

Thank you, Paul. Good morning or afternoon to all of you. Over to slide 7, 2023 turned out to be a year of two halves again, just like 2022, but of course, now with the second half of the year being financially stronger compared to the first half. Full year '23 production came in at a Jadestone record with 13.8 thousand barrels of oil equivalent per day, translating into 5 million boe produced for the year compared to 4.2 million in 2022. This year-on-year increase was mostly driven by a full year contribution of CWLH 1. The Sinphuhorm acquisition was completed early in 2023 and the impact of the Stag Infill Drilling in late 2022, which together more than offset the decrease in Montara. Second half of 2023 was stronger than the first half, mostly due to Montara's startup in March and the successful Infill Drilling program in Belumut, towards the end of the year. Revenues decreased by $102 million compared to full year '22 to a full year '23 figure of $320 million before hedging and $309 million after taking into account the $10 million hedging cost. This year-on-year decrease was for roughly one-third explained by lower lifted oil volumes as we lifted 3.6 million barrels of oil in 2023 compared to 4 million in the prior year and for two-thirds by lower realized prices. We have included details on the realized oil prices, premiums and hedging in the appendix of this presentation. Within 2023, revenues were heavily weighted to the second half due to the downtime at Montara in the first half, but also due to the 2023 lifting sequence, which included our CWLH 1 lifting at the back end of the year. Operating cash flow before working capital and tax, decreased year-on-year from $158 million to $36 million in 2023, which is mainly caused by a decrease in revenues. Within the year, the operating cash flow in the second half was $60 million, which more than offset the negative $24 million operating cash flow in the first half. Jadestone then concluded the year with a net debt position of $4 million. This position came in a bit better than expected due to successful management of working capital, reflecting timing of cash proceeds from the December Montara lifting and other factors, including an increase in payables relating to the Akatara project and the Malaysian drilling program at year-end. On to slide 8, here the profit and loss statement is presented where we report a net loss of $91 million after tax for the full year 2023, compared to the $9 million profit in 2022. I will not take you through all the details but provide a high-level summary of the main year-on-year variances as follows. Revenues after hedging decreased [ with ] $112 million as stated, due to lower realized prices, lower lifted volumes and the hedging cost. Reported production costs decreased by $18 million, mostly due to a credit for inventory movements where 2022 included a significant charge to production costs. I will provide more detail on this shortly. $16 million higher impairment, which is caused by the $17 million impairment of Stag, the remainder of the full year 2023, a total impairment of $30 million was mostly caused by the full impairment of the PNLP assets offshore Malaysia. Finance costs then increased by $30 million, mostly due to accretion expenses from the abandonment liabilities and the RBL. Finally, the resulting loss before tax position created a tax credit of $11 million in 2023 compared to an expense of $54 million in 2022. With respect to operating costs on slide 9, we show the breakdown from reported total production costs to a comparable base production cost. To ensure that both 2022 and 2023 are comparable, we adjust for non-recurring OpEx, PNLP abandonment related cost and OpEx, royalties and supplementary payments, inventory movements as well as adjusting 2022 OpEx to reflect the full year's contribution of CWLH 1. The conclusion from this analysis is that on a like-for-like basis, the base cost is broadly flat year-on-year, which highlights our continuous effort to control production cost. It represents a good outcome, especially bearing in mind the [indiscernible] industry inflation. On slide 10, we present our usual cash flow waterfall chart. I think this provides a good summary of what you could call, an eventful year. Please note that compared to the financial statements, some items were recategorized to help illustrate the cash impact, such as the CWLH funding, which is shown here in investments and in working capital and the financial statements. From an operating point of view, despite the impact of Montara's downtime, revenues and other income was sufficient to cover operating expenses, G&A and tax for the year. After the $12 million of working capital [ was ] generated positive cash flow of $23 million. During the year, Jadestone invested almost $180 million on a cash basis. This included organic investment in capex, mostly in the Akatara project and the funding of two acquisitions, Sinphuhorm and the final CWLH 1 as explained. This significant investment program in 2023 was mainly funded by external capital. The equity raised in June 2023 generated $51 million and the RBL was drawn for $157 million at year-end. These movements resulted in a year-end cash balance of $153 million. Over to slide 11, which contains information about the liquidity in the RBL, first, now that we are almost one year into our RBL, I wanted to highlight how Jadestone has managed its debt capacity constructively with this RBL banks. In this period, our banks have approved 6 waivers. Some of these were minor, but some had significant impacts such as the one related to the development cap on Akatara, which increased our borrowing capacity. The chart on the left of this slide shows how the borrowing base with a 6-month period has improved from the initial forecast back in May 2023 to the actual situation today. In total, working with our banks, we have increased the available borrowing capacity over this 18-month period by more than a $120 million. This is evidence of the constructive attitude of our RBL banks towards Jadestone and their confidence in our capabilities and business model, and it demonstrates our ability to manage our debt profile over time. Second, the pie chart on this page illustrates a total available liquidity of $146 million at the end of March 2024, consisting of a $114 million in unrestricted cash balances, the $32 million working capital facility that we closed back in June 2023, which remains unused to date, and the RBL facility was fully drawn at $200 million. It's important to note here that the increase in net debt between the end of 2023 and 21st of March this year primarily reflects the timing of lifting receipts. During the first quarter of 2024, we had almost $160 million of revenues from liftings. Of this amount, $110 million is related to March liftings, with the proceeds subsequently received this month in April and therefore, was not reflected in the 31st of March net debt position. The end margin net debt position also reflected the payment of a net amount of [ $36 million ] to the abandonment trust fund account for CWLH 2, the first of 3 planned payments this year, and it reflects $35 million received from our prior JV partner on the PNLP assets in Malaysia; and that was the unwinding of working capital. I also want to highlight that we comfortably met our RBL financial covenants at year-end 2023. Our net debt over EBITDA came in at 0.14x, well below the required 3.5x. As we reported on Friday, the March 2024 redetermination has concluded, our borrowing base for the 6-month start in 1st of April, as Paul mentioned, is set at $200 million. This was achieved by removing Stag from the borrowing base calculations and by integrating CWLH 2 in the borrowing base. CWLH 2 has some conditions subsequent associated with this inclusion, which are mostly security and documentation related. We expect these to be generally administrative in nature, as Jadestone is already on title and because CWLH 2 is following the same process of CWLH 1, so there's a clear precedent. And importantly, we have already paid a significant portion of the decommissioning security. As a result, we expect these conditions to be met over the next few months. We believe that having the stable maximum borrowing capacity close to the point of completion of Akatara is a great outcome for Jadestone, which shows how we have been able to proactively manage our borrowing capacity and liquidity. Over to Paul for the operational update.

[A. Paul Blakeley, executive]

Great. Well, thank you very much. Okay. So, let's now move on to slide 12, and I'll provide some additional color across the portfolio, starting with Akatara. Recent activity has been focused on final construction and commissioning. All the key equipment has been delivered, installed and hooked up with connections and line welding in their final phase. I'll go into more detail on activity in a slide shortly, but the key message is that we're practically there and moving closer to mechanical completion, which will lead to flowing gas into the facility for final commissioning activities and then commercial gas sales by the end of the quarter. Well workover campaign is also nearly complete with 3 wells ready for production, a fourth well being tested and the fifth and final workover well underway. We already have more well delivery capacity than we need to satisfy contractual volumes and with significant redundancy, we will look to support some incremental production as plant capacity allows. Similarly, the gas sales pipeline has now been completed and successfully hydrotested. It's already been tied into the regional TGI trunkline and is now ready to take gas from the Akatara gas facility. We talked in the past about the potential for further gas sales beyond the existing GSA, given our confidence around the resource potential of Akatara. At the end of 2023, we booked an incremental net 3 million boe's of 2P reserves relating to a second gas sales agreement currently being finalized and likely starting production in 2026. There's also scope for further interruptible gas sales in the near term with no shortage of demand for the gas, subject to debottlenecking and minor plant expansion. Slide 13 provides a simple visual illustration of the progress made at Akatara over the past 12 months. From an early construction site in the middle of remote jungle to a complex but larger complete gas processing facility almost ready to produce, this is a fantastic achievement made possible through close cooperation with our main contractor, JGC, with support from local, regional and national agencies and from many other subcontractors and suppliers. The next slide, #14, provides some additional images across a variety of work sites. From the main generator shed, pipeline, metering station with [ tie-in site ], to the workover activity and operations personnel training venue, there's a lot of activities in the final weeks to first gas. Slide 15 provides some breakdown on key remaining activities at Akatara prior to starting commercial operations. Mechanical equipment installation, together with associated structural steel piping and cabling is now almost done, days away, in fact, and the pipeline is complete with just purging and drying ongoing today. [ Most ] effort has now moved to commissioning key equipment packages one-by-one and field instrumentation, which will be followed by leak-testing. This will shortly be combined into a declaration of mechanical completion at which point we'll introduce gas from [ well pad A ] for the final commissioning phase prior to commercial sales commencement. There's been a lot of innovation to maintain schedule with some minor cost impacts, all of which will be cost recoverable, and the team are highly motivated as they approach the final phase of this extraordinary project achievement. We'll keep the market informed over the coming weeks. Turning now to Malaysia and to slide 16, the success of the infill drilling campaign on the PM323 license at East Belumut was a key highlight of Jadestone's activities last year. We added 4.2 million barrels gross 2P reserves, equivalent to a 300% reserves replacement for this asset alone, with approximately 6 to 9 months payback and a greater than 100% IRR. The biggest surprise in the campaign was the discovery of an undrained high in the southwest of the East Belumut field, where we now estimate incremental oil in place of approximately 20 million barrels. The results of the campaign have already highlighted up to 7 further infill targets, some of which will be drilled in the next drilling campaign at the end of 2025, along with new wells at East Piatu in PM329. Following this success, we would very much like to expand our Malaysia business, having recently bid for the Puteri Cluster, which is a collection of non-producing assets, which we originally acquired with the Peninsula and Malaysia position back in 2021. Results of this bid are likely in late June, but we also secured the surrounding PM428 acreage in a prior license round on very modest initial terms. Slide 17 provides some color on the lessons learned from our recent Malaysia campaign, but importantly, also highlights the general location of the next tranche of infill wells for future growth in East Belumut. This activity has been a showcase for Jadestone's capabilities in second phase operatorship and the value we can bring through technical excellence and incremental investment. Now let's move to slide 18 for a brief update on our Australian assets. We completed the acquisition of a second [ 16 stake ] in fixed stake in CWLH in February after announcing the transaction in November last year. This was a pro rata deal to the original purchase from BP, and we're really happy with this purchase and with this asset. CWLH continues to perform ahead of expectations with much lower decline rate and good uptime. As a result, we now believe that the field life can be extended by a further 4 years out to 2035 without any new drilling. And as a result, we've added approximately 2.5 million barrels net of reserves. We've seen excessive weather downtime this year, however, impacting 2024 production, and exacerbated with a short delay in bringing one of the wells back on stream. But the facility is now back to capacity and close to 4,400 barrels per day net to [ Jadestone ]. At Montara, facility uptime is approaching 90% so far this year, excluding weather, and as a result of a very focused approach to operations excellence, the tank restoration program and compressor optimization. This is a big step forward for Montara. And with additional storage tank capacity now up to 130,000 barrels, for example, tank 5C is back in operation as well as continued inspection on the remainder of the cargo tanks, there is much greater stability and operating flexibility since restarting production. Year-to-date, production of around 5,300 barrels per day has been a bit below plan, but again, largely weather-related, and with recent performance has averaged over 6,000 barrels per day. We remain on track to redrill the Skua-11 well at the end of this year or early 2025, which should provide a good boost to production next year. We've also had extensive weather-related downtime at Stag, which combined with the planned maintenance outage has resulted in year-to-date production of only 1,900 barrels a day. We're currently producing around 2,400 barrels a day and expect this to increase following a pump change-out on well 37-H, which is now ongoing and a workover on 48-H later in the year. Premiums for Stag crude remained strong, however, with the latest cargo selling at around $16 per barrel premium to Brent. Slide 19, updates on our Vietnam and Thailand assets, where earlier this year, we signed a head of agreement for gas sales from the Nam Du and U Minh fields to [ PV ] gas. Since then, we've been negotiating with detailed GSPA and preparing an updated field development plan, hopeful to have both finalized during the course of this year, which would move us towards the final investment decision in 2025. The Sinphuhorm asset continues to be a very reliable producer for the group, an important asset within our RBL borrowing base. Strong demand from [ Nantong ] plant underpins production at or around 1,600 boe's per day net, and the booster compression project predicted to complete later this year, will help maintain that production at current levels. Slide 20, where we show that pulling together several strands covered in the slides, we've increased our 2P reserves in 2023 to 68 million boe's, representing a 164% 2P reserves replacement during the year. The main drivers of this were the booking of Sinphuhorm after the acquisition in early 2023, as well as additional gas sales bookings at Akatara, the positive impact of the Malaysia infill program and CWLH outperformance extending field life. This was offset to a degree by a reduction at Montara, where 2P reserves decreased by 3.5 million barrels, primarily as a result of revised cost estimates, which bring forward the end of field life to 2030. The end 2023 2P figure did not include the second CWLH interest completed earlier this year, and that would represent a further 6.7 million barrels, which will be booked this year. 2C resources were broadly unchanged year-on-year, but this chart highlights the scale of the resource base in Vietnam, where, as I just mentioned, there is now commercial momentum, and we hope to monetize a portion of this resource in the near term. Slide 21 updates guidance with the production range slightly narrowed to 20,000 to 22,000 boe's per day. This change to the upper end of guidance reflects the average first quarter group production performance of around 17,200 boe's per day, which, as we've discussed, was impacted by both planned and unplanned downtime across the portfolio, particularly at the offshore Australia assets relating to the recent cyclone season, which has had just over 750 barrels per day annualized impact. It also reflects a view of Akatara commercial gas sales commencing in June, albeit there remains a wide range of possible outcomes for 2024 production, principally based on the timing and nature of Akatara's ramp-up as well as initiatives underway to optimize production of the group's current producing assets. Production guidance will be kept under review, particularly in relation to first gas [indiscernible] Akatara, and further updates will be provided when appropriate. Both OpEx and capex guidance remain unchanged. And finally, turning to slide 22, it's worth reiterating the case for investing in Jadestone today where we firmly believe that Asia-Pacific remains a top pick region for energy demand growth and a range of opportunities to build out the portfolio will be available to companies who are well positioned there. Operating credentials are essential to differentiate the winners and a good track record with key regulators and other stakeholders gives an edge. This is not easy to replicate. While the sale process for Woodside's operated interest in the Pyrenees and Macedon fields did not proceed, it is worth reflecting that these represented excellent candidates to fit within the Jadestone portfolio, and we hope to see similar opportunities in the future. We have provided a very competitive and fully funded proposal without any recourse to equity, and we'll continue to adopt a similar approach to funding M&A in the near term. Notwithstanding new business, the current portfolio offers significant organic growth with Akatara on the threshold of first production, numerous infill drilling opportunities across the whole asset base and our very significant gas resource in Vietnam gaining momentum towards the first phase of development. We believe Jadestone represents a unique platform in the region, established in several key jurisdictions with production and cash flow as a major point of inflection. And our aim is to turn this pivotal moment into exceptional growth and returns into the future, to reward our very patient shareholders. And with that, I'll pause. I'd like to thank you for listening, and I'd like to hand back to Lydia, please, so we can open for Q&A. Thanks a lot.

[Operator]

[Operator Instructions]. Our first question today comes from David Round of Stifel.

[David Round, analyst]

Can I start with one on Akatara? Paul, you mentioned the comment around additional sales, obviously something, by the sound of it, you've already secured and maybe something else on top. I mean, are you able to give us a feel on how material those additional sales could be to production? And also, what you would need to spend on the facility to expand them?

[A. Paul Blakeley, executive]

David, thanks. So, there's sort of 2 [ tranches ] to think about in a way. The first one is that additional gas which we can produce through the existing facilities without any capital investment. [ Nameplate capacities ] squeezing a little bit here and can generate additional throughput. And so, if you think about the DCQ for the base contract at 20 million cubic feet today, 25 million cubic feet of wet gas, what we're looking at is the potential to take that up to something that might look like 30 million cubic feet a day. So, it gives you a sense of what incremental gas on an interruptible basis might be possible. And that's something that once we finish the work in assessing capacities, we could implement very quickly, in fact, immediately. And certainly, the market is there. The buyer has already signaled an interest in taking much more extra volume than that. So that's something that has really no cost to it at all. And in fact, any incremental sales under the contract would sell at a 20% premium to the base price. So very attractive on all counts. The second is the firm contract which we have negotiated and agreed and which would require some facilities' expansion, additional separation particularly. And that's a project that we're implementing and why I suggested that might be something that could start production in 2026, it will take us a little bit of time to do engineering, procure or rent equipment and that could add a further 8 million to 10 million cubic feet today potential over a shorter contract period of perhaps 3 to 4 years. And that's what we're looking at. I can't give you a sense of economic return. We need to do the engineering work and assess capital costs. But of course, they're going to be pretty modest as an expansion to the existing plant and not require further investment in utilities, pipelines and so on, or wells. So, it will be very, very attractive and something that we are very motivated to do.

[David Round, analyst]

And presumably, any costs are going to be cost recoverable here anyway.

[A. Paul Blakeley, executive]

Absolutely.

[David Round, analyst]

Okay. So right. Then second one, just on Malaysia. Obviously, I think we've seen the reserves step up at the end of this year. Is the revision we've seen a fair reflection of what you see and the potential you see from the asset? Or might there be more to come on top of that?

[A. Paul Blakeley, executive]

I'm an optimist around these things, David. I would say, certainly, that significant high to the Southwest, we've taken a pretty conservative view on reserves recovery and actually I think they're already in place. But there is ongoing work to try to refine that, and we'll report in due course. On the 4 wells that we drilled, on all 4, we saw significantly thicker oil columns at the beginning of the horizontal section that was closest to or underneath the platform. And so, we're pretty confident that we're going to find some significant incremental reserves there, and we're doing some saturation logging in nearby wells to help understand what sort of volumes there could be. But what you've seen on one of the slides is 7 wells targeted. I feel it is quite likely that we'll find more, but I can't predict any more than that.

[Operator]

[Operator Instructions]. Our next question comes from Mark Wilson of Jefferies.

[Mark Wilson, analyst]

I mean, excellent performance to get the Akatara facility to the state and the wells. So, if we could talk about the risks against getting to that final commercial sales in June, slide 15 versus and to bring [ Virgin ] for the financial, are there any, slide 11, are there any financial impacts if commercial sales are not made by the end of this quarter?

[A. Paul Blakeley, executive]

No, we're working very closely with the buyer. They understand very clearly the nature of the project, how close we are, whether or not it might slip a week or two or advance a week or two. And that's not unusual in the context of this type of activity. So, no penalties per se would apply. There would, however, be a small price reduction on the volume of gas, makeup gas there would be, of course, an impact on short-term revenue, but no material issues beyond that. I think to the sort of the more specific question of could it be delayed? I mean, it's hard to say, the motivation and the scheduling and the activity set look achievable, you don't know what you don't know. The most likely principle, however, I'd say, Mark, if I were to paint the downside scenario, all the major components are in place tested and good, what we would -- or what we might potentially find would be something where we just simply can't [ prosecute ] all of the small final things that need to be done. We've got sufficient gas already available from the wells. The export line and infrastructure into the trunkline is all done. The major components of plants and machinery are tested. So, around the fringes, there's a possibility of minor delays or minor accelerations, but I don't think it's much more than that.

[Bert-Jaap Dijkstra, executive]

And maybe to address the financials on page 11, if you will, which I think refers to the RBL, and of course, we're looking at Akatara closely. It has net cash flow, incremental net cash flow because of the full cost recovery from day 1. So, this is, of course, one of the main aspects for us being heavily interested in the starting point of Akatara. Secondly, on the RBL, timing-wise, we would look at when we do the redetermination, which is scheduled for the end of September. If Akatara comes, passing completion test before, all good, we will open into the redetermination at the scheduled [ one ]. And if it will be a couple of weeks later, I don't think that we would do a scheduled one and 2 weeks later, an interim one. So eventually, I think we will look at working with the banks [ that ] they have been constructively all along to go but into the 1-week termination, which is then this September one. And then, I mean, maybe a bit more technical, but with the Stag removal on the RBL, we actually derisked a bit the schedule on [ Leman ] because the constrained effect on the RBL has switched to long life, [ cooperations ], instead of project life, it's a bit technical. But in effect, it means that there is not a dramatic change if Akatara is roped in a bit later passing its completion test. So [ that be risky ] and I think is an important element here as well.

[Mark Wilson, analyst]

Yes, that's the crux of the matter really here. So, to be honest, the RBL only comes into it when you get to redermination in September and where you actually stand there. So that's a wonderful clarity for me.

[Operator]

[Operator Instructions] We have no further questions. So, I'll turn the call back over to you, Paul Blakely, for any closing remarks.

[A. Paul Blakeley, executive]

Thank you, Lydia and thank you, everyone, for your time today. ‘24 is going to be a very important year for us as Akatara first Gas will drive a significant increase in Jadestone's production and be a key step in our diversification strategy. Our organic growth options, particularly Vietnam and further infill drilling across the portfolio provides significant organic upside, and this could be bolstered by further accretive M&A. Cash flow generation is growing, and we will see a restoration and balance sheet strength towards a net cash position through next year on today's assumptions. We are moving back on to the front foot and I just want to thank all shareholders more time for their patience. Thank you very much.