2021 Full Year Results and Recommended Final Dividend Announcement
6 June 2022—Singapore: Jadestone Energy plc (AIM:JSE) (“Jadestone” or the “Company”), an independent oil and gas production company and its subsidiaries (the “Group”), focused on the Asia-Pacific region, reports today its audited consolidated financial statements (the “Financial Statements”), as at and for the financial year ended 31 December 2021, and announces a recommended final dividend of USȼ1.34 per share. Management will host a conference call today at 9:00 a.m. UK time, details of which can be found in the release below.
Paul Blakeley, President and CEO commented:
“In a little over five years, we have transformed Jadestone from an exploration-led business into a leading independent Asia-Pacific upstream company with a significant production base, and material organic growth potential. We delivered 10% production growth in 2021, exiting the year at much higher rates, and have guided to a further 36% increase in the current year. This was on the back of a successful Montara activity programme and five months of initial contribution from the Peninsular Malaysia assets acquired during the year.
Our decision to remain unhedged has resulted in direct exposure to increasing oil prices and premiums, which are largely a consequence of structural under-investment in upstream capacity, although the distressing events in Ukraine this year are also having a clear impact. Our year-end 2021 cash position of c.US$118 million has continued to grow in the first half of 2022, with pro-forma cash balances of US$180 million at end-May 2022, which includes the proceeds for barrels lifted in May but not yet received. This cash position, and our forecast cash generation, places us in a strong position to execute our 2022 capital programme, take advantage of any high-quality additional M&A opportunities that we identify, and also to significantly increase shareholder returns. We are recommending a final dividend of US$6.25 million, a 25% increase on the second 2020 dividend, and we intend to return up to US$100 million of cash to shareholders over the next 12 months. This will be in the form of higher ordinary dividends, share buybacks and/or tender offers, starting with the recommended final 2021 dividend starting today. The actual level of shareholder returns will be influenced primarily by future oil pricing and premiums, as well as operational performance and business development activity, both organic and inorganic, over this period.
I’m very pleased to report that we have taken final investment decision on the Akatara gas field development onshore Indonesia, following necessary approvals by the Indonesian upstream regulator, with first gas on track for H1 2024. We have also seen positive signs of progress on Nam Du / U Minh in Vietnam, with potential end users of gas production from the fields being directed by the government to enter into commercial discussions with Jadestone. Progress towards completion of the Maari deal remains slow, however the New Zealand upstream regulator has confirmed that it has recommenced processing our application and we continue to respond promptly to any information requests, while working cooperatively with OMV, the seller.
Production in the first five months of 2022 has been impacted by the previously announced unplanned compressor outage at Montara and a temporary shut-in of the non-operated assets in Malaysia due to class recertification issues with the leased FPSO. As a result, production in the first part of this year has averaged c. 15,700 boe/d, although in May we have seen production rates return closer to 17,000 boe/d. We therefore still expect 2022 average production to be within the 15,500 – 18,500 boe/d guidance range, with the final outcome being influenced by ongoing activity to handle increased gas volumes at Montara (which longer-term may result in the installation of additional compression on the FPSO), the timing for production re-start from the non-operated Malaysia assets, and the outcome of the Stag infill drilling programme later this year. It is worth noting that as we continue to look for ways to further improve Montara performance, installing additional compression will not only increase oil production, but also allow for more gas to be reinjected into the Montara field, thereby reducing the amount being flared. Our unit operating expense and capital expenditure guidance are also unchanged at US$23.00-28.00/boe and US$90-105 million respectively.
We aim to marry further growth in our business with a focus on addressing our greenhouse gas profile. In early June 2022 we announced a commitment to Net Zero Scope 1 and 2 greenhouse gas emissions from our operated assets by 2040. Further detail on our asset decarbonisation pathways, with interim milestones, will be a key aspect of 2023 workstreams and we will release more news on this in due course. We believe that our corporate strategy is well-suited to the energy transition, delivering essential energy from existing discovered and producing fields, and as a responsible operator with a demonstrable track record of delivering asset performance to the highest standards, providing confidence to sellers and host governments alike.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
|USD’000 except where indicated||2021||2020|
|Realised oil price, US$/boe1||74.34||44.79|
|Operating costs per barrel of oil equivalent (US$/boe)3, 5||26.22||23.10|
|Loss after tax||(13,742)||(60,178)4|
|Loss per ordinary share: basic & diluted (US$)||(0.03)||(0.13)|
|Dividend per ordinary share (USȼ)||1.93||1.62|
|Operating cash flows before movement in working capital||96,622||86,883|
Operational and financial summary
- Full year production increased by 10% to 12,545 boe/d (2020: 11,438 bbls/d), in line with expectations and the guidance range. The increase year-on-year was due to:
- The acquisition of the Peninsular Malaysia assets (“PenMal Assets”) which contributed 2,539 boe/d (based on five month’s production from closing on 1 August 2021 averaged over the full year);
- Stag production being broadly flat year-on-year at 2,359 bbls/d in 2021 (2020: 2,394 bbls/d); and
- Montara production declining to 7,647 bbls/d (2020: 9,045 bbls/d), as natural field decline, downtime during the 2021 activity programme and an unplanned shutdown to replace critical defective valves offset the initial contribution from the successful H6 infill well;
- Revenue increased 56% to US$340.2 million (2020: US$217.9 million), a Group record, due to a 66% increase in realised prices and a 10% increase in lifted volumes;
- Jadestone’s average realised price in 2021 was US$74.34/bbl (2020: US$44.79/bbl), a 66% increase year-on-year. Average realised prices included an average premium over benchmark Dated Brent of US$3.39/bbl (2020: US$4.17/bbl);
- Total lifted volumes for 2021 were aligned with production and increased 10% to 4.6 mmboe (2020: 4.2 mmbbls). A total of 17 liftings (2020: 10) were achieved, including seven liftings for a total of 0.6 mmbbls and an additional 612 mcf of gas (equivalent to 0.1 mmboe) from the PenMal Assets;
- Total production costs of US$206.5 million, significantly higher from US$105.3 million in 2020, in large part due to the contribution of the PenMal Assets of US$24.5 million, plus, the exceptional Skua well workovers programme of US$47.2 million, normal well workovers at Stag and Montara of US$19.8 million (2020: US$21.7 million) and increased repairs and maintenance (“R&M”) following Project Clover of US$40.1 million (2020: US$22.5 million);
- Adjusted annualised unit operating costs5 for 2021 were US$26.22/boe, within the guidance range, but up 14% from US$23.10/bbl in 2020, primarily due to higher routine R&M and lower production at Montara;
- Adjusted EBITDAX improved 152% to US$157.9 million compared to US$62.6 million in 2020, predominately due to higher average realised prices in 2021 and the contributions from PenMal Assets since 1 August 2021;
- Net loss after tax of US$13.7 million (2020: US$60.2 million loss after tax), reflecting the Skua workover costs at Montara and higher R&M expenses at both Stag and Montara. During 2020, the net loss was due to lower realised prices and the US$50.5 million impairment of the SC56 licence offshore Philippines;
- Despite the Skua workovers, operating cash flow generation in 2021 was strong at US$96.6 million, before movements in working capital, up 11% compared to 2020 of US$86.9 million;
- Capital expenditure of US$56.0 million (2020: US$24.1 million) up 133% year-on-year, primarily due to the drilling of the H6 infill well at Montara;
- Total 2021 major spending (capital expenditure and the Skua-10 & 11 workovers), of US$12 million, within the guidance range;
- Cash balances of US$117.9 million at 2021-year end, 32% higher compared to 2020 at US$89.4 million, benefitting from favourable realised prices in the second half of the year. Jadestone has been debt free following the final scheduled repayment of the Group’s senior debt facility in Q1 2021;
- Proven and probable reserves at year-end 2021 totalled 44.7 mmboe, a 20% increase on the end-2020 figure of 37.1 mmbbls, reflecting the addition of the PenMal Assets offset by production during the year; and
- Recommended final dividend of USȼ1.34/share, equivalent to a distribution of US$6.3 million. This results in total dividends of US$9.0 million in respect of 2021.
- Completion of the acquisition of PenMal Assets from SapuraOMV on 1 August 2021, for a total cash consideration of US$20.0 million, comprising a headline price of US$9.0 million plus adjustments of US$11.0 million. With an economic effective date of 1 January 2021, and taking into account cash received on completion, the Group received a cash amount of US$9.2 million at closing, net of the US$20.0 million due to SapuraOMV. In January 2022, a further US$3.0 million was paid in recognition of a contingent payment triggered by Dated Brent averaging above US$65/bbl for 2021;
- On 24 November 2021, the Group executed a settlement and transfer agreement with DP Hexindo Gemilang Jaya to acquire the remaining 10% interest in the Lemang PSC, for US$0.5 million and a waiver of unpaid amounts related to the PSC. The transfer is subject to customary approvals and is expected to complete in the third quarter of 2022;
- Jadestone’s internal reorganisation completed on 23 April 2021, with Jadestone Energy plc becoming the parent company of the Group; and
- Work continued to try to close the Maari acquisition in parallel with the New Zealand Government’s legislative changes to the Crown Minerals Act. Both the seller and Jadestone remain fully committed in trying to close the transaction as soon as possible.
- Announced a commitment to Net Zero Scope 1 and 2 greenhouse gas (“GHG”) emissions from Jadestone’s operated assets by 2040;
- Production guidance of 15,500-18,500 boe/d maintained, which excludes any contribution from the pending Maari acquisition. The outcome will be determined by work to address current gas handling constraints at Montara, the timing of return of the Malaysia non-operated assets which have been offline since earlier this year, and the impact of the Stag infill programme in the second half of the year;
- 2022 guidance for unit operating costs (US$23.00 – 28.00/boe) and capital expenditures (US$90.0 – 105.0 million) maintained;
- Further inorganic growth opportunities in the Asia-Pacific region under active evaluation;
- Intention to return up to US$100.0 million of cash to shareholders over the next 12 months, in the form of ordinary dividends (including the final recommended 2021 dividend announced today), share buybacks and/or tender offers. The actual level of shareholder returns will be influenced primarily by future oil pricing and premiums, operational performance and business development activity over this period.
1 Realised price represent the actual selling price, before any impact from hedging.
2 Revenue in 2020 included hedging income of US$31.4 million, pursuant to the characterisation of the two-year capped swap programme as a cash flow hedge under IFRS 9 Financial Instruments. Losses realised from the 2021 swaps of US$4.6 million were recognised in other expenses, pursuant to the characterisation of the ad hoc 2021 six-month swap programme as derivative instruments measured at fair value through profit or loss. The 2021 swap programme covered a short time span (not exceeding a half yearly reporting period), whereas the capped swap programme crossed three annual reporting periods.
3 Operating costs per boe, adjusted EBITDAX, outstanding debt and net cash are non-IFRS measures and are explained in further detail below.
4 Loss after tax for 2020 included an impairment of US$50.5 million associated with capitalised intangible exploration costs at SC56, a deep-water exploration block associated with the previous management.
5 Unit operating costs per barrel of oil equivalent before workovers and movement in inventories but including net lease payments and certain other adjustments (see non-IFRS measures below).
|Jadestone Energy plc.|
|Paul Blakeley, President and CEO||+65 6324 0359 (Singapore)|
|Phil Corbett, Investor Relations Manager||+44 7713 687 467 (UK)|
|Stifel Nicolaus Europe Limited (Nomad, Joint Broker)||+44 (0) 20 7710 7600 (UK)|
|Callum Stewart / Jason Grossman / Ashton Clanfield|
|Jefferies International Limited (Joint Broker)||+44 (0) 20 7029 8000 (UK)|
|Tony White / Will Soutar|
|Camarco (Public Relations Advisor)||+44 (0) 203 757 4980 (UK)|
|Billy Clegg / Georgia Edmonds / James Crothersemail@example.com|
The information contained within this announcement is considered to be inside information prior to its release, as defined in Article 7 of the Market Abuse Regulation No. 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018.
Conference call and webcast
The management team will host an investor and analyst conference call at 9:00 a.m. (London), 4:00 p.m. (Singapore) today, Monday, 6 June 2022, including a question and answer session.
A live webcast of the presentation will be available at the below link. Dial-in details are provided below. Please register approximately 15 minutes prior to the start of the call.
The results for the period ended 31 December 2021 will be available on the Company’s web site at: www.jadestone-energy.com/investor-relations/ .
Webcast link: https://produceredition.webcasts.com/starthere.jsp?ei=1549084&tp_key=81f0d2a39b
Event title: Jadestone Energy Full-Year 2021 Results
Time: 9:00 a.m. (UK time) / 4:00 p.m. (Singapore time)
Date: 6 June 2022
Conference ID: 23923977
Dial-in number details:
|Canada (Toll free)||888-390-0546|
|United States (Toll free)||888-390-0546|
On 6 June 2022, the Directors recommended a final 2021 dividend of 1.34 US cents/share, equivalent to 1.07 GB pence/share based on the spot exchange rate of 0.7954, an increase of 25% compared to 2020 and equivalent to a total distribution of US$9.0 million in respect of 2021. The dividend will be paid on a gross basis, in US dollars. The timetable for the dividend payment is as follows:
- Ex-dividend date : 16 June 2022
- Record date: 17 June 2022
- Payment date: 5 July 2022
The Company’s growth-oriented strategy remains unchanged; the business model is highly cash-generative, and, as a result, is fundamentally pre-disposed to providing cash returns, after allowing for organic reinvestment needs, whilst maintaining a conservative capital structure, and not unduly limiting options for further inorganic growth. The Company intends to maintain and grow the dividend over time, in line with underlying cash flow generation. The Company does not offer a dividend reinvestment plan and does not offer dividends in the form of ordinary shares.
The Group’s robust financial position at the end of 2021 has strengthened further in 2022, with pro-forma cash balances of US$180.0 million at end-May 2022, which includes the proceeds for barrels lifted in May but not yet received, and no debt. After careful consideration and while remaining focused on the Group’s growth strategy, Jadestone’s directors believe this cash position allows for a significant increase in shareholder returns. As a result, Jadestone intends to return up to US$100.0 million of cash to shareholders over the next 12 months. This will be in the form of higher ordinary dividends, share buybacks and/or tender offers, starting with the recommended final 2021 dividend announced today. The actual structure of shareholder returns has not been finalised, while the final amount of shareholder returns will primarily depend on oil pricing and premiums going forward, as well as operational performance and business development activity, both organic and inorganic.