Good morning, ladies and gentlemen. Welcome to the Jadestone Energy plc first half of 2022 results conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. I'd like to remind everyone, today's call is being recorded September twentieth, 2022. I would now like to turn the conference over to Mr. Paul Blakeley. Please go ahead, sir.
Very good. Thank you very much indeed. Good morning, ladies and gentlemen. Welcome to you all to Jadestone Energy's first half 2022 results conference call. I hope you can hear me clearly. I'm Paul Blakeley, Jadestone's Chief Executive Officer. I'm joined on the call today from Singapore by our new CFO, Bert-Jaap Dijkstra, and alongside him, Derren Parsons, Group Finance Manager. In London by Phil Corbett, Investor Relations Manager. In this call, we'll take you through a presentation which was recently uploaded on our website at www.jadestone-energy.com. It's in the investor relations section, or you can view it via the link on the webcast. Then after that, let's open the call for a Q&A discussion.
To slide 2, which just outlines our standard disclaimers, in particular the cautionary remarks regarding forward-looking statements and non-IFRS measures used in this presentation. Now slide 3, which summarizes our first half performance and outlines recent developments in the business. The key headline is that we delivered record operational and financial performance in the first half of the year. Production increased by 51% compared to the first half 2021, driven by a full period of the Peninsular Malaysia assets acquired in August 2021, as well as the positive impact of the Montara Wells activity program from the second half of last year. Combined with record realizations driven by both strength in oil prices and in premiums, this delivered our highest ever half year revenues, adjusted EBITDAX and profit after tax.
As a result, we built an even stronger end of period cash position of $162 million, up 51% from the end of 2021. We made good progress on our growth strategy too, with FID of the Akatara gas project in Indonesia. Shareholder approval from the seller of our acquisition of the final 10% in the Lemang asset, which contains Akatara. An announced deal to acquire BP's 16.67% in the Cossack, Wanaea, Lambert, and Hermes fields in the North West Shelf oil assets in Australia. While our first half was strong, recent operational performance at Montara has been disappointing. With the field currently shut in as we progress a remediation plan to restore the condition of the FPSO's hull and tanks to the level required to ensure safe and reliable production.
I'll talk more about Montara and the way forward later in this presentation. Finally, from this introduction slide, and notwithstanding the current Montara shut-in, our strong debt-free balance sheet and growth profile have allowed us to increase the interim dividend by 10% to $3 million. In addition, we're executing the $25 million buyback program, which we discussed in our May conference. This program started in August, and we intend to complete it, market conditions permitting. With that introduction, I'll introduce you to Bert-Jaap Dijkstra, who has now been on board almost a month. Welcome, Bert, and I'm gonna let him take you through the financial review starting on slide 4.
Thank you, Paul, and good morning or afternoon to all of you. I'm very pleased to be speaking with you for the first time today. Of course, I'm looking forward to meeting all of you in person over the coming months. As Paul said, the first half of the year delivered record financial performance for Jadestone, which is illustrated by the four charts on this slide. Performance was underpinned by our highest ever half year production, combined with strong realized oil prices. The increase in production during the first half of 2022 compared to the same period last year was mostly driven by the addition of the Penmore assets, which were acquired in August 2021.
The record revenue of $226 million is the driver of the increase in operating cash flow before working capital movement, which more than doubled when comparing to the first half of 2021 to a total of $126 million. Our net cash position increased with $44 million to a total of $162 million at the end of June. We highlight our combined inventory and underlift position at the end of June with a total of almost 550,000 barrels. As the inventory is valued at cost in our financial statements, we wanted to provide a more realistic estimate of its value.
Based on actual listings since the end of June, we estimate the combined value of this inventory and underlift position at around $62 million. Finally, our OPEX per barrel for the first half of 2022 has decreased by 9% compared to the first half of 2021 due to the addition of the Penmore production, which has a lower operating cost than our Australian assets. As you know, we adjust our unit operating costs to exclude certain items to provide better comparability from period to period. Moving to slide 5. These charts illustrate how the strength in global crude benchmarks translated into the earlier mentioned record realizations for Jadestone in the first half. On average, for the first half of 2022, we realized total prices of almost $110 per barrel of oil.
Basis was average dated Brent of $102 per barrel. In addition, we realized a strong average premium of $7 per barrel, which was mostly driven by the Tapis premium to Brent, which forms the pricing basis for Montara and Penmore liftings. Tapis premium has increased due to strong crack spreads for jet oil and gas oil in Asia. Stag crude oil also continues to realize a strong premium, which is driven by high demand from the marine fuels industry, given the crude's low sulfur content, which makes it an attractive blending fuel. Recently sold cargo for a provisional premium of $22.5 per barrel confirmed this. On slide 6, you can see our usual cash waterfall setting out the main drivers of the increase in cash from the beginning of the year to 30 June 2022.
Revenue net of OPEX was the main contributor, where the addition of the Penmore assets, combined with better realized pricing, drove the increase compared to the first half last year. Acquisition of Penmore was also the reason for slightly higher staff costs this first half compared to the first half of 2021. DD&A and other costs for this period decreased compared to the same period last year, mostly due to lower one-off project-related expenditure. Capital expenditure in the first half of 2022 totaled $14 million, mainly on the Stag infill drilling program. As previously mentioned, our full year guidance applies. Our investment activity is weighted towards the second half of 2022 due to the timing of the Stag infill drilling and ramp up in activity on the Akatara development.
Tax paid in the period totaled $34 million, primarily reflecting higher taxable profits in Australia on the back of higher revenues, as well as a full period of payment of Malaysian petroleum income tax following the Penmore acquisition. Dividend reflects the final 2021 dividend. Working capital outflow compared to year-end 2021 position reflects the aggregate effect of higher inventory and underlift, offset by lower receivables, combined with a significant decrease in trade payables. In aggregate, cash balances increased with $44 million to a total of $162 million at the end of June 2022. Company remained debt-free. For illustration purposes, we added the earlier mentioned estimate for the value of the period and inventory and underlift position of $62 million. Going to slide 7 and shareholder returns.
Notwithstanding our current challenges, we wanted to take a step back and show the shareholder value that Jadestone has delivered since we listed on the AIM back in 2018. The execution of our growth strategy, and in particular the acquisition of Montara, we have generated a top quartile shareholder return of 109%. When looking at this year's shareholder returns, to date, we have paid a final 2021 dividend of $6 million. We have announced today an interim 2022 dividend of $3 million, and we have completed around 20% of our $25 million share buyback program that we announced in August this year. Market conditions permitting, we're also looking to complete the remaining part of the program, which will return another $20 million to our shareholders.
In total, based on our market capitalization on Friday's close, the shareholder returns just discussed generate a yield of around 9% in aggregate. Any additional shareholder returns on top of our dividend and the buyback program will be determined by the timing of production restart at Montara, wider operational performance, realized oil prices, and the timing and scale of inorganic growth opportunities going forward. Finally, we wanted to highlight the significance of our current share buyback program. Based on the shares repurchased to date and using the current sterling dollar rate and Friday's closing share price, our share buyback program has the potential to repurchase around 6% of the total issued share capital. On that, let me hand back to Paul to take you through the operational update.
That's great. Well done, Bert-Jaap, and thank you. Now we're on slide 8, where I'll get into an operational update starting with Montara. As I highlighted, the year started strongly with production up, following on from the drilling of Montara H6 and the subsea well activity on Skua 10 and 11. After the change out of the compressor motor in February, March, operations were again steady until June, when a leak of oil during a tank-to-tank transfer required a shutdown and temporary repair to small hole in the bottom of Tank 2C. A subsequent defect in water ballast tank 4S necessitated us to step back, and once again, you know, we recognized the need for a wide reassessment of the current hull condition on the Montara Venture.
This can only really be achieved with more personnel offshore dedicated to repair and maintenance. Therefore, it required us to demobilize production operations teams to make bed space available, and hence, production had to remain shut in. This is deeply frustrating for us, and I recognize that is how our shareholders must feel too. You know, as much as we've done over the last three years to restore the FPSO to a condition which we expect and which we want, we have now recognized the five-yearly tank and hull inspection process, which we conduct under our class certification process, needs to be redefined to ensure we stay ahead of corrosion issues. We've also learned that operating practices can be improved as a part of increasing uptime and providing long-term reliability.
Assessing all these things is part of a gap analysis, which we'll now conduct with an independent party reviewer. While this slide sets out the timeframe of events over recent months, I'd actually really like to focus on the forward remediation plans, which are part of the broader activity set to get Montara back to normal production operations. The immediate key activities are to carry out a permanent repair to Tank 2C, which I'll describe in a moment. To understand and correct the defect found in ballast Tank 4S, and have reentered adjacent Tank 5C to help understand the root cause. While we'll also correct a couple of other known defects, such as some cargo lines that pass through Tank 6C.
Working through these activities, as well as inspecting a number of other additional tanks, will help restore our own confidence in the work we've already done, the work we need to do, and to be sure that our operating practices with respect to the hull and tanks meet good industry practice. Now turn to slide nine, which is busy, but it sets out at a high level the work streams and sequencing of events which I just outlined and which we're implementing in our goal to achieve a safe and reliable restart of production at Montara. There is a lot of information here, but the key point is that we're aiming to progress several work streams in parallel, both procedural desktop work as well as physical activity offshore. We now have sufficient offshore maintenance crew that we can do all this.
We can now access and work productively on at least three work fronts simultaneously to ensure that we can get back to production operations as soon as possible, subject only to assurance and confirmation from the independent reviewer and of course our regulator, NOPSEMA. One key activity right now is to finalize the work scope, which will be given to an independent reviewer as a minimum requirement, and this is being finalized for NOPSEMA acceptance. We shortlisted at least two candidates to perform the independent reviewer role, both well-known and respected industry names who can start immediately. The work will begin with a gap analysis, followed by a review of processes and systems. While this is ongoing, we'll continue to progress the hull and tank inspections and repair program in parallel.
Applying a risk-based inspection assessment of the FPSO's hull and tanks is now a key consideration for us. As opposed to the more standard time-based approach involving periodic surveys, which we and the bulk of industry currently adopt. The risk-based method is both a qualitative and quantitative assessment and is the approach we already use for the topsides and key production infrastructure on the FPSO. Now, the lower half of this slide sets out the likely near-term and prioritized tank inspection and maintenance activity, some of which I've already outlined. This work scope with some additional tank inspections is likely the minimum requirement to restarting production. Until agreed, makes timing predictions very difficult.
While this is frustrating, a broad range of outcomes is best defined by a broad range in production guidance, which we've now given and which we'll update as the scope of the work plan becomes clearer. Moving to slide 10, I wanted to give you some additional detail on the tank 2C permanent repair. On the left-hand side is an illustration of how hull repairs offshore can be carried out using a cofferdam, which is essentially a metal box affixed to the hull externally, and which provides a watertight seal around an area of the hull, allowing a safe working environment internally to execute hull repairs. On the right-hand side, you can see a picture of the actual cofferdam we manufactured onshore and have mobilized offshore for the permanent repair.
This image was taken just yesterday and shows the round cofferdam, which is about one meter or slightly more in diameter, having just been installed over the temporary plug in the hull. It's common practice to install the cofferdam with divers, but we've devised a scheme with guide wires and an ROV to do this diver-less. This is a much safer process and also successful, having carried out three practice runs to ensure a smooth operation. The next steps for tank 2C will now be tank entry and cleaning, followed by inspection and then remedial work, starting with a full weld repair and a new steel plate at the point of failure in the bottom of the hole.
While this latter piece of work is an important part of our remediation program to get to first production, the full refurbishment of this tank 2C will not be a part of the requirement to restart production. Slide 11 gives a good sense of the scale of the tank repair and maintenance activity. The image on the left is the interior of crude oil tank 5C, which has been drained and cleaned and is currently undergoing inspection. This tank has already been subject to the Jadestone repair program as part of the five-year class inspection cycle. Re-entry now was purely precautionary to confirm no additional issues within this tank, given the defect that was found in the adjacent tank 4S.
In the middle of the image, you can see one of the crew rappelling down the wall of the tank at the point where the 4S starboard defect occurred, giving good context on the scale of this work. Importantly, what we have now confirmed is there are no new corrosion issues emerging. Frankly, this is an important verification process to our own work standards and certainly improves our confidence in the approach we've been taking so far. The right-hand side of the slide shows before and after images of the renewal of a steel support on the interior of the tank. The integrity of the support has been fully restored, coating applied to protect against future corrosion. It's an example to show how our overall maintenance strategy is not to take shortcuts, and we replace rather than fill and repair where necessary.
This is our philosophy around full field life integrity, because our business model almost always sees us extend field life through investments to add reserves and so on. This in turn relies on facility maintenance with the same approach to longevity. In the appendix to this presentation, when you have a moment, I recommend you take a look at what we've provided, which is a small sample of additional images showcasing this approach more broadly across the FPSO and the resulting turnaround in condition. We've made good progress in the three years as operator, notwithstanding the impact of travel restrictions due to COVID, and especially the limitations on bed space at Montara. This makes it difficult to work on a large number of work phases in parallel, but with careful planning, has been manageable to date.
To help in this regard, we also take advantage of new technology where applicable. One example being the use of drones for quicker and safer inspection, even internally within the tanks. The ability to provide baseline surveys and records in support of a risk-based approach to maintenance. You'll see this example in the images in the appendix. Now slide 12, which reinforces the key point about how significant the amount of value-creating activity there has been on Montara since operatorship transfer. The investment can be placed into a variety of buckets, including capital for reserves, growth and production, such as seismic and drilling activities. Facility upgrade capital such as umbilical replacement, new control systems, et cetera. Finally, the ongoing maintenance and repair activity year in, year out.
Assets like Montara can be transformed through investment, and we always view the ideal acquisition as likely to offer multiples of reinvestment dollars versus the acquisition cost to create the incremental value for shareholders. This is what sets our strategy apart in the region, and it leads to share price growth and returns, as highlighted by Bert Yap in the discussion on longer term shareholder value creation. I think it's important to now put in context the current perspective of Montara today as compared to the original view we took at the point of acquisition.
Slide 13 sets out the net present value that we identified at acquisition, set against the cumulative cash flow and value generation from Montara, which has been delivered since by a combination of the investments we've made to date, plus future value, which is projected from analyst consensus, which, by the way, in my view, is conservative. Reservoir performance and reserves have exceeded our original view, which is helpful since this is usually the most significant driver to value creation. Progress on costs, uptime, and outlook are broadly in line with the exception, of course, of the recent events. Though the past 3 months are disappointing and there are many lessons for us here, we are nonetheless on track to significantly exceed the original value proposition at Montara.
Since the acquisition, the field has already generated nearly 2 times the adjusted purchase price in free cash flow, and there's much more to come with planned wells at Skua. Further subsea tieback opportunity being evaluated post seismic and gas cap blowdown and the development of other discovered gas on the license via the Crux project. While I won't shy away from the disappointment of the current situation, what I do want is for investors to at least be reminded that Montara remains an excellent value accretive deal in our portfolio. Our job is now to put this behind us through focus on remediation and restoration of production. I'm sure there'll be some questions around this situation at Montara, which we can try to address later. Let's now move on to a quick review of the other assets. Turn to slide 14.
Year to date, the Peninsular Malaysia operated assets have averaged approximately 4,900 BOEs a day, over 20% ahead of expectations at the beginning of the year. This outperformance is a result of an extensive program of well reactivations, workovers, well interventions, repairs, and topside modifications. It's what we always hope to achieve. At the point of acquisition, with this asset, this is exactly what we've done. As a credit, I think to the team in Kuala Lumpur. Looking forward, we continue to progress planning for the 2023 East Belumut infill campaign on the PM-323 license. Of course, we'll provide more detail on this early next year. As previously announced, the non-operated Peninsular Malaysia assets have been offline since February this year due to a class suspension on the Bunga Kertas FPSO.
A subsequent serious safety incident led the operator to pause its repair program, and it is now assessing the full range of alternatives, which includes continuing with a comprehensive program of repairs, an option of asset disposition, or given that the OBO licenses expire in 2024 anyway, a potential move towards decommissioning the asset. At the end of 2021, the non-operated assets accounted for less than 1 million BOEs reserves and less than 10% of the booked 2P reserves for the Peninsular Malaysia acquisition. While unplanned, it has an immaterial impact to us and reinforces our original thesis of actually only wanting the operated assets, but of course having to take the whole package as part of the deal with SapuraOMV. Slide 15 provides a brief update on the North West Shelf oil acquisition, which we announced in late July.
We're making good progress on the approvals and processes required to complete the transaction in the fourth quarter this year. The assets have also outperformed so far this year, with average first half production of 13,300 barrels a day, a 30% increase year-on-year, and a 10% improvement on 2021 as a whole. This has been achieved from high well uptime and an optimization of production, focusing on wells with low water cuts. This positive performance likely means that the next equity lifting for the stake we're acquiring has moved forward significantly and will have a material positive impact on closing adjustments. Now turning to the Akatara gas project onshore Indonesia, where slide 16 provides an update to the civil works at the site following a final investment decision which we took earlier this year.
An aerial shot of the sites shows the progress made to establish a solid foundation for the production equipment which will be installed next year. This site sits on peatland barely 4 meters above sea level and shows a labor-intensive operation of layering a lattice of wood covered by a geotextile drainage membrane, which is then filled with soil. Progress is ahead of plan with over 200 workers on site, of which 60% are local, carrying out a fairly manual initial phase of activity prior to the commencement of piling to support the heavy equipment. Slide 17 shows the pre-existing well sites, which we plan to reutilize and sets out some high-level information on the well operations program planned for next year, which again, will maximize use of existing well stock.
Additional well intervention work on four of the existing wells has been identified to help increase reserves at very low incremental cost and is an addition to the planned two well workover, with only two new wells required. We'll define this more fully in the future, but it's exciting to know that what we see here is potential reserves upside. Safety performance has been good. Our environmental footprint is being minimized, and we're investing in maintaining the local environment with a program of mangrove replanting, while also investing in local labor for the production phase. Finally, the acquisition of the remaining 10% stake in the Lemang PSC has progressed with the selling shareholders approving the sale and, with government approval pending, is expected to complete in the fourth quarter this year.
Slide 17 provides a brief roundup of activity on the other assets in our portfolio. The Valaris 107 rig arrived at the Stag platform in August. With initial activity centered on the abandonment of the 2 donor wells, whose slots on the Stag platform will be utilized for the 50H and 51H wells. We currently expect that the drilling activity will complete in November, followed by running the electric submersible pumps with the work over unit so that we can release the rig early and reduce costs. If successful, each of the wells will have initial capacity approaching 1,000 barrels a day, but will be placed on production at a more sustainable rate in the range of around 500-800 barrels per day.
In recent months, there's been more positive news flow from Vietnam, where we've been engaging in early discussions with a potential end user of gas from the Nam Du and U Minh fields. However, being realistic about progress here, it will take some time for the buyer to reach a settlement on a gas sales agreement, given this is a new process for them. However, the initial interaction is good and the first face-to-face negotiations are progressing well. The clear logic for the development of our gas discoveries remains strong, underpinned by Vietnam's current energy shortfall and lack of options to deliver into a growing economy. Finally, on the acquisition of the Maari field offshore New Zealand.
Since the legislative changes to New Zealand's upstream regulatory framework were implemented at the end of 2021, we've been engaged with the New Zealand Government and with OMV to seek clarity on the processes, terms, and timelines that are needed to complete the Maari transaction. Despite these efforts with the government, there is still no clarity on under what circumstances and timeframe the completion of the transaction and transfer can occur. This is a growing source of frustration for us, but we're leaving no stone unturned in an attempt to get this deal over the line. Now slide 19. To just recap on guidance, where we lay out the potential range for production this year, especially given what's going on at Montara. While this is not what we planned, there are no lost barrels from Montara.
They are only deferred, and we do expect to pick them back up again next year. Further clarity on the production outlook and narrowing this range, even though it's late in the year, will be provided as soon as the remediation plan at Montara is better defined, and we can then determine more clearly the actions required prior to restart. Unit's OpEx guidance for the year has been adjusted up simply as a direct impact of the reduced production from Montara, which is then divided into relatively fixed operating expense. Total or absolute group OpEx actually hasn't changed materially at all, and at half year was running slightly lower than we'd planned. This is purely an arithmetic result of lower production.
We've chosen not to change the capital guidance at all, with the majority of CapEx being incurred now in the second half of the year, and of course, primarily on the Stag infill program and the Akatara gas development. With that, I'll now pause. While I know this has been a long call with a lot of detail, we felt it was important for investors to have this detail, and so I'd like to thank you for staying with us. Operator, we can please now open for Q&A.
Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star followed by the number two. Please stand by for your first question. Your first question will come from David Round of Stifel. Please go ahead, sir.
Morning, guys. Thanks for the presentation. On the review phase at Montara, I know you've said exact timing is hard to pin down, and I think that's probably understandable. Can you say what the next few months could look like? I suppose I'm thinking if further items are identified, for example, will you be able to fix things as you go. Can you bring forward any other maintenance during this time? Or do you just have to wait for the outcome of the review and then potentially fix things? Secondly, on financing, you've talked in the past about, you know, potentially up to two-thirds of Lemang CapEx being debt funded. Can we just get an update there, please? Whether that could free you up to expand your buyback program at all. Thank you.
Great. Thanks, David. I'll touch a little on your question around the review phase and remediation at Montara. I'm gonna ask Bert- Jaap if he'll provide a brief update on where we are with, you know, with potential debt financing. Not least of course, for the Lemang. First of all, the principal around a restart of Montara is broadly two strands of activity. There is a sort of, you know, a desktop phase which will be the focus of the independent reviewer. And that really is around an assessment of our current processes, practices. You know, with respect to ensuring tank and hull integrity at Montara.
Of course, you know, it is underpinned currently by processes that have been established, you know, over the long term and supported by the Class, Lloyd's Register, who have been chosen to verify vessel and hull integrity. You know, that process, which we'll start with, you know, a definition of a gap analysis and an agreed set of terms, is now just underway. That will be agreed with NOPSEMA, in parallel with us selecting an independent reviewer, and that process can move forward.
Separately, and in parallel along the lines that you've asked, David, is this whole business of, you know, what about, you know, integrity and you know, tank acceptance, if you like, ready for reuse and reintroduction of hydrocarbons. Well, of course, you know, many of the tanks currently in service have been inspected and verified by Jadestone during this sort of second half of the 5-year period of the current class inspection process. One example of that is 5C, and it's a really important example because in reentering it, and you can see from the photograph actually, you know, first of all, you know, condition excellent.
Secondly, on deeper inspection, particularly around the anomaly that was found in 4S starboard, there appears to be, you know, nothing here which signals the processes that we've adopted and carried out are in any way flawed. The tank condition is excellent. What we have to do to get this tank back in service, relatively simply, is to take care of the defect in 4S starboard, a tank which Jadestone has not been into up to this point. You know, what we've identified in 4S starboard is a defect that goes back all the way back to the shipyard conversion. It is on the one hand disappointing that it hasn't been picked up to date.
On the other hand, it's encouraging because, you know, it represents an isolated example and something that we know we can easily fix. You know, this gives a perspective that the tanks that we have already, if you like, recertified for the period, are not going to need very much, if any, work and perhaps only a visual inspection to reconfirm condition. With that in mind, there's quite a lot of readiness that won't take very long at all. What we're working on is a small number of tanks, an appropriate number. That doesn't mean just oil storage. That also means ballast and water storage and so on. Slops tanks. You know, we need a relatively small number to get back into operation. That will be a key focus for us.
You know how many, I simply can't answer because that will be an interactive process with the independent reviewer and with NOPSEMA, and will require some acceptance by them. It's, you know, it has the potential not to be so extensive. You know how extensive, we're just not yet in a position to be prepared to say. You know, be patient if possible and we'll, you know, and we'll fill the gap in that as soon as we possibly can. There are many things that we can do operationally that can, you know, limit the amount of of tank storage. We can, you know, short load offloads.
Currently we look to offload 400,000-450,000 barrels in a parcel. You know, we could do half size parcels and so on. There are many actions we can take to improve and potentially to shorten the time taken in the physical reassurance of the hull condition. You know, more broadly, we do have to satisfy ourselves that there is nothing more materially, at least visually available to us. You know, a lot of the next few weeks will be around accessing multiple tanks and just reassuring that the work we've done is holding up. Does that make sense?
I suppose I'm just thinking there's nothing elsewhere on the vessel that, you know, you can be using, you know, your time. Once, if it sounds like you're happy with the tanks or will get to a position where you're quite happy with the tanks, you know, is there anything else you can look at on the vessel just to make good use of your time over the next few weeks?
All, I mean, all I can say, David, is so far there's nothing that causes us alarm, so far. You know, one hopes that all the tanks that we've seen are representative of what we will see. To the other question, you know, given that the limited bed space, and it's one of the key reasons why we can't simultaneously take on this work and produce, we're really focusing the use of those beds for crews to work on tank inspection and restoration. Whereas during normal production operations, we're typically only able to access one tank at a time because of limited numbers of people.
We now have at least three available for activity at any given time because we have so much more crew available. Having said all of that, there is still some capacity to do more. Yes, in short, we've taken care of a number of shutdown activities that were planned for the end of this year, early next year, standard things that need to be done and are being done and will help for the future. Okay, great. Thanks, David.
Thanks for the question, David, on the facility. First of all, it's of course, it would be good to create a facility to support our current investment phase that the company is running through. You mentioned that we have a pretty significant CapEx in front of us, and that facility would bring, of course, flexibility. The team has looked at the Lemang facility only, but there are various advantages, among which, size, you know, facility size and flexibility to create a broader portfolio of assets and create a bit of a borrowing base. We're working with 4 international reputable banks at the moment. We're making good progress. We're trying to create a relatively flexible reserves-based facility with a decent size.
We're making good progress on all of that. With respect to the buyback program, of course we'll let you know if and when we can do further announcements around this. We're working hard to, of course, create this structure because it's logical given the phase the company is in. It would create more flexibility around our liquidity position, of course. At the same time, we won't be saying anything around, you know, taking further steps in shareholder returns. We're executing today the $25 million interim dividend with an increase. We're sitting at a 9% yield today as we presented earlier.
As I said in the script, I won't repeat it, but further shareholder returns really depends on the Montara restart, and of course, macro, realized oil prices and the inorganic growth opportunities we have in front of us. We all agree that a loan facility in place would certainly help us, creating flexibility for basically implementing and executing on our strategy.
Great. That's very clear. Thanks.
Your next question comes from Nathan Piper of Investec. Please go ahead, sir.
Thank you. Morning, everyone. Three questions from me and fairly straight ones, hopefully. How much of a distraction has this Montara issue been from a management point of view? You've obviously set up a subcommittee within the board to look at this. But given the context of Jadestone and where multiple deals were highlighted earlier this year, you know, how much management time has this absorbed, where you perhaps could have been spent building out the portfolio and executing this in the more longer term business plan? Second question is, and will we look back and laugh in January when you restate 2023 guidance, which will be along the lines of where guidance was at the start of this year? In the sense, is this a fairly short-lived phenomenon, do you think? Although you don't know precisely. Then last one is, does your enthusiasm for the subsurface at Montara remain just as high as it was before these incidents happened? Thanks.
Thank you, Nathan. Let's work our way through the questions. The first point about management's attention, of course, make no mistake, we are absolutely focused as a team, first and foremost, on a restoration of Montara to a safe and reliable producer. That has the focus of, you know, everybody who can provide support to that issue. As you point out, and as we say in our note, you know, including key members of the board to make sure that we're challenging ourselves to do all the right things and only the right things. You know, having said that, you know, the M&A activity sits, you know, largely outside of the operating teams.
I would say that we are, you know, we continue to be very active and haven't felt that this has taken away from the things that we want to do with respect to inorganic growth. I think, you know, yeah, we have to be honest about, you know, the broader question of how does this, you know, impact on the view of you know regulators around our capacity as an operator. Perhaps that's a more valid point to make. While, you know, it's impossible to be definitive around that.
At the end of the day, you know, what we are, what we have done and are doing at Montara, I think, you know, represents a very significant turnaround to, you know, what was an asset with significant challenges. I mean, you'll recall at the point of deal closing, we shut down for two and a half months to start, you know, the remediation process seriously. I think on the whole, in answer to your question, we're very focused on this. It has all the attention of all the right people, but M&A continues. Is it short-lived? The principle here, you know, this is a judgment.
In a simple sense, we could look to a process where we do just that amount of work which is required to regain confidence in production, get the operating crews back on board and then, you know, continue to work through, you know, one work face at a time. And maintain the Montara hull and tank conditions as we have done the last three years. It has worked over the last three years. But, you know, what we've discovered is when something goes wrong, there isn't sufficient berth space to do anything extra. To some extent, our judgment now is how far do we go to get ahead of the maintenance and remediation program here, while we can and before we restart production.
That's a live discussion right now, and I don't have the answer. Because of course, ultimately, the idea of, if you like, you know, deep remediation, the work that we're doing on the tanks and have done over the last three years, will ultimately lead to a period of time when, you know, on every new tank inspection, less remedial work is required because condition has been created for it to hold up, you know, in far better shape than it has in the past. You know, I mean, that's the way we want to take it, and that's the outlook of the processes that we're going through. You know, I'd like to think that's where we'll end up.
As a result, you know, higher uptime, less impact and cost on remediation because we've done a lot first time around, and we've done it right. On the subsurface, you know, Montara has outperformed from a reserves point of view. You know, H6 delivered what we expected. The evidence from the subsea fields, Swift, Skua, Swallow, there is more upside here, particularly Skua, where we're planning two more infill wells, significant upside. You know, it's one of the reasons why the value creation is looking so strong and better than at the point of acquisition. We're very happy with the reservoir story so far. Of course, something that wasn't planned originally is now the potential for value creation from the gas in the license as well, with the Crux development being FIDed close by. I think that part of the story is still really appealing.
That's helpful. Thanks. Just one slight follow-up, I suppose. So from the sound of things, your M&A activity remains relatively high level in the sense that the board is not considering anything in the short term. Is that the right way to think about how you answered that? In that you're continuing to look a lot of M&A, but yeah, it's in a separate team. Is that the right way to think about how you answered that?
You know, the way we carry out M&A is we use skills drawn from across the whole organization. You know, the biggest part of the value story in M&A is still reserves, as it is with everything we do. Of course, you know, the reservoir teams, the subsurface teams are not really engaged at all in what we're working on at the Montara FPSO right now. We haven't changed either our strategy or our modus operandi around M&A. You know, there's a lot of things to be looking at.
You know, I'm not gonna offer any predictions about, you know, when and what we might bring to, you know, to the market in the fullness of time. We're really busy and we're keen to grow. Notwithstanding the incident at Montara and the impact on the short-term cash flow, you know, we've put ourselves in a strong financial position and it should not impact on our ability to do the things that we'd like to do.
Understood. Thanks very much.
Great. Thanks a lot, Nathan.
Your next question comes from Matt Cooper of Peel Hunt. Please go ahead, sir.
Morning, guys. Yeah, thank you for the presentation. Two questions from me. First one is, when is the 2C tank repair expected to be completed? And also how long have similar third-party gap reviews and sign-off by NOPSEMA taken in the past? Second question is, I wonder if you could talk through the options to increase bed space on the vessel, including likely cost and timing of these. Thank you.
Thanks, Matt. The tank 2C repair, the permanent repair, is, you know, now a reasonably straightforward operation because we now have the cofferdam in place and it appears to be holding well. Therefore, that now allows us to enter the tank and start cleaning it in preparation for that permanent repair. The permanent repair itself is a relatively straightforward and simple task once the cofferdam is in place. You know, you identify your location, you cut out a piece of steel and you replace it with a new and you weld it and you're done. That aspect of it isn't really going to determine schedule at all.
The real determinant about when that is completed is the amount of cleaning that's required within tank 2C to get to the place where we need to do the repair. That we just simply don't know right now because this is a tank that we have never been into. While we expect the condition to look rather similar to the other tanks which we have been into, that is a bit of an unknown still. We'll get to the point where we can speak more intelligently about the timeframe. You know, I expect this is weeks. You know, it'll take a while to get the tank in a clean condition. The team are getting pretty good at it, nonetheless.
It'll take a few days for the actual permanent repair. Thereafter, a remediation of the tank, you know, across the board in order for it to be brought fully back into service, that will take longer, but it's not required to restart production. What we really only need and want is a permanent repair so that the whole condition, you know, can be declared sound. Okay?
Yeah. That's helpful.
Okay. On your question on the gap reviews and, you know, third party assessment. This, you know, the nature of this is really hard to define. And, you know, until we first of all agree the scope, discuss, agree, and award it to an independent third party, and then sit down and work through, you know, the schedule. You know, until we've done that, Matt, it really is, you know, hard to predict. Whilst, you know, your leading question was, well, you know, give us some examples elsewhere.
Mm-hmm.
You know, tell me what the scope is first, and then I might give you an answer. You know, it could take, you know, a few weeks, it could take a month, it could take longer. We need to just get, you know, we need to get that initial work done, and we'll keep the market informed. You know, it is being done in parallel with the offshore activities, physically on, you know, on tank inspection. At this point in time, I can't predict whether or not it'll be critical path. It may not be. In terms of bed space and what we could do in the future.
You know, of course, you know, for three years we've been working with the current number of bed space and managing the, you know, a very significant, and you can see that from the photographs, you know, a very significant remediation program across the whole of the FPSO. You know, while carrying out an elevated amount of work over the last three years, it hasn't been therefore seen as an absolute priority to do any more with respect to, you know, increasing accommodation.
I think this incident sort of implies that you know, for logical reasons, it would be good to take this action more seriously and to look at the potential and the options for increased accommodation for both short term, i.e., during you know, major planned outages or you know, maintenance programs, and for you know, long term, you know, simply being able to have more bodies applied to activities on the FPSO. And with that in mind, you know, for the short term, you know, we can apply the principles of floating accommodation, you know, flotels and that sort of thing. It's certainly one of the things that we are looking at right now.
For the longer term, we can and will look at the different ways in which we can expand the current accommodation unit, which of course is essentially, you know, tanker accommodation. You know, hence why the numbers are perhaps smaller than you would expect in a different type of, you know, production facility. It's not as straightforward as one would imagine, because not only is it about expanding the accommodation unit with some, you know, extra, you know, bedrooms and so on, but it also extends to life-saving appliances.
The vessel was designed and built with life-saving appliances for the amount of people on the facility. We'd have to expand those. All can be done, and a project is being kicked off to look at what are the options and the best ways to do it. I think long term, it's in our interest to find a way of expanding the accommodation, and it's quite likely that we'll do that. Okay?
Okay, thanks. Is it too early to give a kind of high level estimate of likely cost and, you know, earliest timing you could bring in that short term option in floating accommodation?
I mean, certainly, you know, in looking at a small amount of floating accommodation that might be available, you could, you know, you could charter for $20,000-$40,000 a day. You can access, you know, much larger flotels with, you know, walk to work facility for you know, two or three times that amount. It's a very broad range. It all depends on what your work scope is and the number of people that you want on site. There's a limit to the amount of work that we can carry out, you know, practically and efficiently. It's a broad spectrum. In terms of expanded accommodation for permanent purposes, I don't have a cost estimate right now, Matt.
Sorry, just in terms of how quickly you could bring in that floating accommodation, months or years?
Months.
Okay. Great. Okay. Thank you. Appreciate that.
Thanks a lot, Matt.
Your next question comes from Mark Wilson of Jefferies. Please go ahead, sir.
Hi. Good morning. Thanks for taking my questions. I am not gonna ask you about Montara inspection remediation. I think we've done that to death and good luck with the program there. However, what I would like to ask about, on slide 6, you give the usual clear cash bridge for the first half. If we include inventory, it looks like cash actually built by about $130 million in the first half of the year. What's interesting me is looking forward for the second half, immediately, you've got most of your CapEx, $90 million to come in the second half of the year, arguably, but production until Montara comes back on is about half of what it would be.
We can assume that cash, if we just take a rough, like for like cash build would be about half and has to cover the CapEx in the second half, with the variables being completion of the North West Shelf acquisition, which had an effective date of the first of January 2020, and any remaining share buyback you do in the second half of the year. Could I ask therefore, is there a possibility of remaining cash neutral through to the end of the year with those variables that I've just mentioned? Thank you.
Thanks a lot, Mark. You know, it's a complex question given there are so many variables to reflect on. The simple and short answer to the question is, you know, is there a set of circumstances where that could be the case? There are, but that might be unlikely. Because of the wide range of variables, you know, I'm not going to predict where we are. I mean, there is still, you know, a broad range of outcomes. Perhaps, you know, some of the things that we can rely on with reasonable certainty would be the amount of CapEx which you've highlighted and is, you know, is about right.
You know, the production and therefore revenue is the big variable on the positive side, which we just simply cannot assess since it's all about when Montara restarts. A third significant one which you touched on is the closing of CWLH acquisition. As we touched on in our notes, given the production over performance, we are seeing an advanced lifting for this interest. On CWLH, there are no shared liftings. They're all done individually for the participants. You know, the nomination of the lifting for, you know, notionally BP's share, let's call it, you know, has come forward quite a lot and that has a material short-term cash flow impact to the positive.
You know, the end of the year is just a single data point in time. Over the course of the next, you know, two or three quarters, we'll be looking at all of these things carefully. That's certainly a big positive. The introduction of the RBL which that Jaap talked about earlier is another factor that plays. My overriding comment to all of this, Mark, is, you know, notwithstanding what we're seeing at Montara, and all of those variables that we've touched on, we're not yet seeing the need to think any differently about our strategy in terms of investment, M&A, or indeed shareholder returns. You know, I think at this stage, we'll, you know, remain, you know, on course to the path that we established at the outset of the year.
Okay. No, that's great. Thank you. Just a few other points if I may then.
Yeah, sure.
The remaining share buyback, which you said you're gonna complete, is there a timeline we should consider, like, before the end of the year or is it as you see fit?
It's driven by the trading volume, to be honest, Mark. It's clear. It's fairly clearly defined, you know, the volume that we purchase, and we are, you know, planning to continue as we have done since it started.
One last point. Clearly production facilities and FPSOs in particular are things that one imagines we're all gonna be paying more mind to in M&A for the longer term performance. Montara obviously a situation, but also the Peninsular Malaysia non-operated FPSO. Could you remind us about the production facilities of the North West Shelf Oil Project? Clearly integrated oil company operated, but just remind us what those facilities are just in the context of what we've seen, obviously.
Yeah.
with Montara. Thanks.
Yeah. Yeah. No, thanks, Mark. That's fine. You know, unlike Montara, the North West Shelf asset is an entirely subsea development, so there's no wellhead platform. All the wells are subsea and tied back through flow lines to the FPSO, which is a replacement. This field has been in production for a long time. I mean, bear in mind, Montara has only been in production for 10 years. Whereas the North West Shelf asset is, you know, more approaching 20. The original FPSO at the point of first production on these licenses has been retired, and a more modern FPSO was built, designed and built, or converted, I should say, specifically for an asset which was moving past peak production.
Which is interesting because, you know, its capacities are more fit for a field that is in midlife, and that's particularly around water handling, which is a really important feature. So, you know, condition-wise, it's a much younger hull. It's a much newer facility. We have not been allowed offshore. At some point in time, once we're on license, we will. But from all of the assessments and third-party information, and you know, historical evidence, this is a facility that's in good condition.
Okay. That is enough for me. Thank you. I'll hand it over.
Thanks, Mark.
Your next question comes from Ashley Kelty of Panmure Gordon. Please go ahead.
Morning, gents. Just a couple of things. One was in the North West Shelf. Do you have any sort of details that you can give us on what the activity is going to be next year in terms of infill drilling? Or is it really gonna be a case of an update next year once the deal is completed? Secondly, in terms of the debt negotiations, are you looking into sizing those so that you could actually include funding for Vietnam in the event that you get a GSA signed sooner rather than later?
Great. Thanks. Thanks, Ashley. So I'm gonna have Bert- Jaap answer the question on our debt funding opportunity. I think to your question, importantly, Ashley, flexibility. I'm gonna have Bert- Jaap speak to that. The answer to the third part around North West Shelf, we don't anticipate, we don't believe, and we haven't seen any evidence that there'll be any significant capital activity on the North West Shelf oil assets next year.
So, yeah, capital spend is very low over the next couple of years. We'll see. We want to get onto the license and then see how, you know, how and what we can do to influence, you know, the thinking of the group. Of course, as you know, we have an aspiration to enlarge our stake there, if possible, for lots of reasons. You know, we like the asset a lot, and we think there's a lot of upside. Therefore, there are wells to be drilled, but the current partnership is not planning anything next year. Okay, thanks. Okay. Bert- Jaap?
Yeah, sure, on the loan facility, I mean, in effect, how we look at and our current work and hopefully the end result, if and when it comes in, is that it would be a strategic stepping stone. It should really be a facility that enables us to fulfill our strategy for organic and inorganic growth. What we're looking at, I mean, first things first, we need to have, of course, Montara starting up. We need to have the first facility or actually the second, because we have one already. The second RBL loan to be put in place, after which we can take a look at the, for example, an accordion option, and see how additional reserves through inorganic growth will come in.
Of course, you know, right in front of us, I would say is CWLH, so the Northwest Shelf acquisition, which is of course, as I said, right in front of us, so we're trying to feature that already, in the current structure. Vietnam would be a logical next step. Of course, we keep a very close eye, especially on the gas sales agreement, because, obviously that is going to be the key driver, for any reserves, to be added, and any, cash flow forecast to be having, let's say, you know, the reliability required for a banking model. We do see it as a strategic stepping stone. We are building the flexibility to increase. Of course, we're trying to have this instrumental, or this tool, supporting the Jadestone strategy going forward.
Okay. That, that's helpful. Thank you.
At this time, there are no further questions. I would like to turn the conference back to your host for closing remarks.
Very good. Thank you very much indeed. Ladies and gentlemen, thanks for the questions. You know, of course, it has been a difficult couple of months for us, and the events at Montara have overshadowed the progress that we've made with the business to date. While the scope and timing of the remediation plan is still uncertain, our number one priority is the remediation of known defects at the FPSO and the reestablishment of reliable and safe production operations with an ongoing plan for the integrity of the facilities through to the end of field life. Teams both onshore and offshore are working tirelessly to get us where we want to be, and I'm really, really proud of what's been achieved in difficult circumstances, working on multiple fronts with limited accommodation and with remote limited access.
This has undoubtedly overshadowed progress that we've made on the Akatara development, the operated assets in Malaysia, the newly announced acquisition from BP, and even some steps forward in Vietnam. Our balance sheet has grown impressively, and we're giving back to shareholders even while we push organic investment and work on a number of inorganic options which are under consideration. You know, we recognize the overriding importance of Montara on the business currently, and everything else that I've just described, and that we're doing will reduce that dependency over time. Our strategy over the mid to long term works well as we've demonstrated through our returns since 2018, and there's no oil-focused peer that's close to matching that.
We also know that greater reliability is fundamental to business success, and for us, that will come through improved facility uptime and also through more portfolio diversification, and we're working hard on both. This has been an especially disappointing period for me and for the team, but we're resolute. We're going to get back on top, and the opportunity to do so lies in front of us. Just like to say thank you once again for participating in the call, for your patience, and we hope we can fully restore your confidence in short order. Thank you very much.
Ladies and gentlemen, this does conclude your conference call for this morning. We would like to thank you all for participating, and you may now disconnect your lines.