2023 half-year results

19 September 2023—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 its unaudited condensed consolidated interim financial statements, as at and for the six-month period ended 30 June 2023 (the “financial statements”).

Management will host a conference call at 9:00 a.m. UK time today, details of which can be found in the announcement below.

Key updates:

Akatara development project on track to be 65% complete by end-September and remains on budget and schedule for first gas in H1 2024.
The first well in the four well East Belumut infill drilling programme offshore Malaysia has been drilled successfully and was brought onstream at 2,800 bbls/d gross, significantly ahead of expectations. The second well in the programme is now underway.
Montara production has averaged 6,250 bbls/d since early September, benefitting from the return to service of the second production separator and additional wells on the Montara field.
2023 production guidance from April to December narrowed to 13,500 – 15,000 boe/d from (13,500 – 17,000 boe/d) reflecting year-to-date production trends and the recent one month shut in at Montara.
2023 underlying operating costs guidance expected to come in at lower end of US$180.0 – 210.0 million range, reflecting year-to-date trends and close monitoring of activity levels.
2023 capital expenditure guidance is narrowed to US$110.0 – 125.0 million, (from US$110.0 – 140.0 million), primarily reflecting the Akatara development project and East Belumut drilling being on budget.
US$59.9 million loss after tax for the first half of 2023, consistent with earlier disclosures and reflective of Montara being shut in to late-March 2023 and the subsequent impact on first half liftings.
Net cash of US$7.8 million at 30 June 2023 reflects c.US$118.8 million of consolidated Group cash balances and US$111.0 million of debt drawn at 30 June 2023 under the Group’s reserves-based lending (“RBL”) facility.

Paul Blakeley, President and CEO commented:

“The first half of 2023 was impacted by the ongoing shut-in of Montara until late March, with few liftings and softer Brent pricing, coincident with a period of heavy investment at Akatara and elsewhere. We therefore acted decisively to maintain a robust balance sheet by finalising the RBL in May and by raising an additional gross $53 million of new equity in June. As a result of these actions, we ended the first half in a strong liquidity position which will support the business through Akatara first gas, followed by a rapid return to net cash, likely within the following 12 months period. Notwithstanding the more recent shut in at Montara, we expect a significantly better financial performance in the second half of 2023, based on our planned lifting schedule, the benefit of recent acquisitions and improved prevailing oil prices.

It was disappointing to see Montara shut in again in July, although we quickly identified the source of the defect in one of the FPSO’s tanks and restarted production, having implemented a key change to our inspection processes. This was an important step forward, correcting a small gap in our procedures and giving far greater confidence in the work we are doing to restore the FPSO’s condition, resulting in higher uptime reliability at Montara. It is also important that we take no short cuts, thereby ensuring that safety and structural risks and any potential for a hydrocarbon leak to sea are absolutely minimised. The provision of a small storage tanker in the near-term enables us to safely continue steady production operations during a period of limited tank capacity on the Montara FPSO, thereby sustaining current production from Montara at around 6,250 bbls/d.

I am very proud of the way in which the teams offshore and onshore have worked so tirelessly to restore the condition of the Montara Venture. We have chosen to adopt inspection levels and processes that are far above industry standards and we will never take short cuts on maintaining asset integrity.

The Akatara project has maintained progress to plan, with an acceleration in recent months as most civil works are now completed, storage tanks are well advanced and many of the long-lead items now arriving at site. We are on track to be 65% complete by the end of September, for commissioning activities to begin in the first quarter next year, and first gas to be delivered in first half of 2024, as promised.

The East Belumut infill drilling campaign commenced in August with pre-drill expectations that the four wells combined will deliver 2 – 2,500 bbls/d of gross production and an IRR of c.90%. The results of the first well have significantly exceeded our expectations, coming on stream in recent days at c.2,800 bbls/day of dry oil. We do expect water cut to develop soon and for rates to stabilise nearer 1,000 bbls/d of oil, but the early results are very encouraging.

While it has been a difficult few months, we are working hard to restore confidence in our operating model at Montara as well as deliver the growth projects in our portfolio for 2024 and beyond. The addition of new assets such as CWLH and Sinphuhorm, and new production at Akatara, will increasingly insulate us from one-off events at Montara, but I do believe we have significantly advanced the case for greater reliability across the whole portfolio into the future. We continue to assess further acquisition opportunities that are consistent with our ambition of delivering growth, ensuring we live within our means of cash flow and debt, and believe we are at a turning point to restore reliability, growth and a strong balance sheet.”

Paul Blakeley

EXECUTIVE DIRECTOR,

PRESIDENT AND CHIEF EXECUTIVE OFFICER

2023 FIRST HALF RESULTS SUMMARY

USD’000 except where indicated	H1 2023	H1 2022	FY 2022

Production, boe/day¹	12,339	15,008	11,487
Realised oil price per barrel of oil equivalent (US$/boe)²	86.15	109.52	103.85
Realised gas price per thousand standard cubic feet (US$/mscf)	1.41	2.03	1.63
Revenue	86,660	225,639	421,602
Production costs (restated³)	(90,650)	(92,983)	(250,700)
Adjusted unit operating costs per barrel of oil equivalent (US$/boe)⁴	40.27	25.71	37.49
Adjusted EBITDAX⁴(restated³)	(3,127)	130,930	161,929
(Loss)/Profit after tax (restated³)	(59,934)	43,545	8,522
(Loss)/Earnings per ordinary share: basic and diluted (US$) (restated³)	(0.13)	0.09	0.02
Operating cash flows before movement in working capital (restated³)	(24,179)	116,899	158,148
Capital expenditure	23,807	13,621	82,876
Net cash⁴	7,782	161,628	123,329

Operational and financial summary

Production decreased by 18% year-on-year during H1 2023 to 12,339 boe/d (H1 2022: 15,008 bbls/d), primarily due to the shut-in at Montara between August 2022 to March 2023 resulting in a decrease of 4,578 bbls/d, partly offset by the acquisitions of CWLH Assets adding 1,569 bbls/d and Sinphuhorm at 1,083 boe/d;
Oil liftings totalled 1.0 mmbbls in H1 2023 and were 51% lower year-on-year, primarily due to the shut-in at Montara and the later phasing of liftings from the PenMal Assets;
The average realised oil price¹ in H1 2023 was US$86.15/bbl, 21% lower than H1 2022, largely due to lower realised Brent prices year-on-year. The premium achieved in H1 2023 was US$8.87/bbl (H1 2022: US$6.99/bbl) due to relatively high proportion of Stag liftings during H1 2023;
H1 2023 revenue totalled US$86.7 million, a 62% decrease on H1 2022, reflecting lower lifted volumes and price realisations as described above;
At 30 June 2023, closing crude inventories totalled 421,720 bbls, and the Group had an underlift position of 117,318 bbls. Post reporting period end, Montara lifted 0.3 mmbbls in mid-July which generated US$24.3 million of revenues;
Production costs decreased by 3% in the period to US$90.7 million (H1 2022: US$93.0 million) predominately due to a credit for inventory changes and lower supplementary payments in Malaysia offsetting the inclusion of CWLH operating costs and higher tanker cost and fuel charges at Stag and Montara;
Adjusted EBITDAX decreased to a loss of US$3.1 million (H1 2022: profit of US$130.9 million), mostly due to lower revenues;
Net loss after tax in H1 2023 of US$59.9 million (H1 2022: US$43.5 million net profit);
Operating cash outflow before movements in working capital in H1 2023 of US$24.2 million (H1 2022: cash inflows of US$116.9 million), reflecting the trends described above;
Capital expenditure in H1 2023 of US$23.8 million, an increase of 75% compared to H1 2022 primarily due to the ramp up of activities at the Akatara development project onshore Indonesia; and
Net cash balance of US$7.8 million as at 30 June 2023 (H1 2022: US$161.6 million), reflecting the operating cash outflows during H1 2023, drawdown of the Group’s reserves-based loan and the proceeds from the equity placing and open offer in June 2023.

Significant events

On 19 January 2023, the Group executed a sale and purchase agreement with Salamander Energy (S.E. Asia) Limited (the “Seller”), an affiliate of PT Medco Energi Internasional Tbk, to acquire the Seller’s 9.52% non-operated interest in the producing Sinphuhorm gas field and a 27.2% interest in the Dong Mun gas discovery onshore northeast Thailand (the “Sinphuhorm Assets”);
On 17 February 2023, the Group closed a US$50.0 million debt facility (“Interim Facility”) with two international banks to provide additional liquidity prior to closing the reserves-based lending facility (“RBL”). The loan was fully repaid on 1 June 2023;
On 22 May 2023, the Group announced the closing of a US$200.0 million RBL facility with a group of four international banks (the “RBL Banks”). The first drawdown of US$111.0 million occurred in June and was used to repay the Interim Facility and to fund the Group’s operations and capital investment programme;
As required by the RBL facility, at 30 June 2023, the Group had entered into oil price swap contracts for 4.2 mmbbls, representing approximately 78% of the required hedging volumes, at a weighted average price of US$70.29/bbl. The hedging programme was subsequently completed in July 2023, with 5 mmbbls hedged over the Q4 2023 to Q3 2025 period at an overall weighted average price of US$70.57/bbl; and
On 6 June 2023, the Company raised US$51.1 million (net of costs) through an equity placing and open offer of 94,081,826 ordinary shares at a price of £0.45 per share. The offer was underwritten by Tyrus Capital Events S.a.r.l. (“Tyrus”), the Company’s largest shareholder. In connection with the underwriting, Tyrus received warrants for 30 million ordinary shares with an exercise price of £0.50 per share and exercisable any time within 36 months from the date of issue. In addition, the Company entered into a standby working capital facility agreement with Tyrus to provide financial flexibility and balance sheet resilience. The standby working capital facility closed at US$31.9 million and has an expiry date of 31 December 2024. The standby working capital facility remains undrawn.

2023 Guidance

Production: Guidance for the period April to December 2023 is narrowed to 13,500 – 15,000 boe/d (from 13,500 – 17,000 boe/d), reflecting year-to-date trends in production and the recent one month shut in at Montara. The revised range for April to December 2023 is equivalent to an annual 2023 guidance range of 12,600 – 13,700 boe/d;
Operating costs: Underlying operating costs are expected to come in at the lower end of the US$180.0 – 210.0 million guidance range, reflecting year-to-date trends and close monitoring of activity levels. As disclosed previously, underlying operating cost guidance excludes non-recurring items and certain costs such as workovers, transportation, and expenditure associated with non-producing assets offshore Malaysia. These excluded items are included in the reported production costs in the Group’s statement of profit or loss, and are expected to total US$65.0 – 75.0 million in 2023; and
Capital expenditure: Capital expenditure guidance is narrowed to US$110.0 – 125.0 million (from US$110.0 – 140.0 million), reflecting expenditure at the Akatara development project and the East Belumut drilling campaign progressing in line with plan, along with some rephasing of spend on projects across the Group’s portfolio. Capital expenditure guidance excludes abandonment expenditure associated with the PNLP Assets offshore Malaysia, which is expected to total c.US$15.0 million in 2023. This figure is expected to be partially recovered through existing cess funds in 2024.

¹ Production includes the Sinphuhorm Asset gas production in accordance with Petroleum Resource Management Systems guidelines, however in accordance with IAS 28 the investment is accounted for as an associated undertaking and only recognises dividends received. Accordingly, the revenue and production costs from the Sinphuhorm Assets are excluded from the Group’s financial results. Sinphuhorm production is included in the Group’s production figures.

²Realised oil price represents the actual selling price inclusive of premiums.

³Certain H1 2022 comparative information has been restated. Please refer to Note 25 in the unaudited condensed consolidated interim financial statements.

⁴Adjusted unit operating costs per boe, adjusted EBITDAX and net cash are non-IFRS measures and are explained in further detail on the Non-IFRS Measures section in this document.

Conference call and webcast

The Company will host an investor and analyst presentation at 9:00 a.m. (BST) on Tuesday, 19 September 2023, including a question-and-answer session, accessible through the link below:

Webcast link: https://www.investis-live.com/jadestone-energy/64e4883e0120c60d001e4a75/avdt

Event title: Jadestone Energy plc first-half 2023 results

Time: 9:00 a.m. (BST)

Date: 19 September 2023

To join the presentation by phone, please use the below dial-in details from the United Kingdom or the link for global dial-in details:

United Kingdom (Local): +44 20 3936 2999

United Kingdom (Toll-Free): +44 800 358 1035

Global Dial-In Details: https://www.netroadshow.com/events/global-numbers?confId=54821

Access Code: 399289

2023 half-year results statement (PDF)