Jadestone Energy Reports Results for the Period Ending March 31, 2020 Strong Ongoing Cash Flow Generation
May 28, 2020—Singapore: Jadestone Energy Inc. (AIM:JSE) (“Jadestone”, or the “Company”), an independent oil and gas production company focused on the Asia Pacific region, reported today its consolidated interim unaudited financial statements (the “Financial Statements”), as at and for the three-month period ended March 31, 2020. 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:
“I’m pleased to report another quarter of cash flow delivery and ongoing strengthening of our balance sheet. Prices realised for our production remain well above the Brent benchmark and are further bolstered by downside price protection through our hedging programme. At the same time, we have opted to utilise the substantial flexibility inherent in our 2020 spending plans, to reduce this year’s capex by 80%.
The combined effect is that we continue to strengthen our net cash position, which now stands at US$72 million and affords us the comfort to re-affirm plans to pay our first dividend later this year, as previously committed. We are building a business that is resilient on all fronts, and can continue to thrive even in a low price environment, with an operating cashflow break-even oil price for the remainder of the year reduced to US$20/bbl.
While the challenges presented by the Covid-19 pandemic, and related global economic slowdown, will impact everyone in some way, we are remaining vigilant in how we manage our operations and the welfare of our colleagues and, to this point, we have experienced no disruptions to offshore operations. We remain committed to operating within the guidelines and expectations set out by local authorities, but we are optimistic that the global measures taken to date, can now begin to be scaled back, and that both oil demand and prices will continue their early upward trend.
At the same time, we are also optimistic about the potential for new M&A opportunities to present themselves as a result of the current challenging environment. We will not deviate from our stringent approach to screening, nor our exclusive focus on the Asia Pacific region, but we are well positioned to leverage our strong financial position as an acquirer. As always, our focus is on identifying and acquiring assets which offer the potential for substantial value generation through incremental investment.”
● Net revenue for Q1 2020 was US$74.2 million, down 19% from Q4 2019, and up 32% on Q1 2019;
● Average realised oil price of US$64.09/bbl, 7% lower than Q4 2019, and 5% lower than Q1 2019. Realised prices reflect an average premium over Brent of ~US$11.50/bbl;
● Costs of production were US$26.5 million for Q1 2020, excluding non-recurring costs and workovers, remaining fairly stable compared to Q4 2019, and down US$1.9 million from Q1 2019;
● On a unit basis, cash opex increased to US$24.99/bbl1, up 27% from Q4 2019 due to weather downtime and increased maintenance in Q1 2020, and up 3% from Q1 2019;
● Positive cash generated from operations, before changes in working capital, of US$36.0 million in Q1 2020, compared to US$58.0 million in Q4 2019, and US$27.5 million in Q1 2019;
● Adjusted EBITDAX of US$30.92 million, 48% lower than Q4 2019, and 34% higher than Q1 2019;
● Gross cash and bank balances of US$119.43 million at March 31, 2020, versus US$99.43 million at December 31, 2019; and
● Net cash of US$72.14 million at March 31, 2020, versus net cash of US$39.34 million at December 31, 2019
● Implemented measures to protect the well-being of personnel and to mitigate the specific risks and challenges posed by the Covid-19 pandemic;
● Continued safe operations at all assets, with no significant recordable personnel or environmental incidents, and no disruptions to offshore operations due to the Covid-19 pandemic and response;
● Produced an average of 11,665 bbls/d, 21% lower than Q4 2019 due to weather downtime and increased maintenance in Q1 2020, and 11% lower than Q1 2019;
● 2020 production guidance of 12,000–14,000 bbls/d for the year;
● Successfully completed a 3D seismic acquisition across the Montara area; and
● Maari acquisition on track to complete in H2 2020.
● Reduced the Company’s planned 2020 spending guidance by 80% to US$30–35 million, by delaying the Nam Du and U Minh gas field developments, offshore Vietnam, and deferring the Australia infill drilling campaign into 2021;
● Initiated Project Clover, a Company-wide cost efficiency and capital savings programme, which has locked in 2020 savings of US$3/bbl to date, and targets a total of US$5/bbl of 2020 savings;
● Operating cashflow break-even oil price for the remainder of the year reduced to US$20/bbl;
● Re-affirmed the Company’s plans for its maiden dividend payment to shareholders for later in 2020, with a targeted range of US$7.5–12.5 million; and
● Published the Company’s maiden annual report and sustainability report.
Montara total production averaged 8,799 bbls/d in Q1 2020, compared to 11,118 bbls/d in Q1 2019, as a result of both maintenance activities and cyclone-related downtime, typical for this time of the year. In addition, Q1 2019 benefitted from flush production following the voluntary shutdown of the asset in Q4 2018 to address the legacy inspection and maintenance backlog. There was a single lifting during the quarter, resulting in sales of 512,575 bbls, compared to 578,865 bbls in the first quarter of 2019.
Jadestone completed a 3D seismic acquisition covering the Montara area in Q1 2020, with a view to improving reservoir imaging for future infill wells and to assessing further exploration step-out potential. The seismic data is expected to be available in Q4 2020.
Stag total production averaged 2,866 bbls/d, compared to 1,941 bbls/d in Q1 2019. The increase was due in part to production from the 49H infill well drilled last year. In addition, Q1 2020 saw increased uptime compared to the same quarter a year ago, reflecting the fact that Q1 2019 was adversely impacted by rig mobilisation and weather-related downtime. There were two liftings during the quarter, resulting in sales of 518,193 bbls, compared to a single lifting of 169,986 bbls in Q1 2019.
Work toward planning the Company’s infill well programme on both Montara and Stag has largely been completed, but with activity now on hold as part of the Company’s deferral of the programme to 2021. These measures are intended to ensure investing into new infill wells is timed to coincide with a stronger oil price environment, to maximise potential returns and payback.
In Vietnam, Jadestone has deferred its Nam Du and U Minh gas development project and has removed substantially all capital spending which had been planned for 2020 on this project. The Company remains engaged with the Vietnamese Government, including ongoing discussions relating to a gas sales and purchase agreement which it anticipates will be completed alongside the eventual field development plan approval.
Update to Covid-19 operational response
Jadestone has not experienced any disruptions to its offshore operations due to the Covid-19 pandemic, but precautionary measures remain in place. As local and international recommendations protecting the wellbeing of people begin to be relaxed, the Company will respond in step, but will remain vigilant with regards to mitigating risks to its colleagues and operations, including continuing to rely on the role of pandemic managers, designated at each location.
Jadestone has undertaken a thorough assessment of all aspects of its operations, and the specific risks and challenges posed by the Covid-19 pandemic. The Company will continue to revisit this assessment regularly to ensure appropriate mitigations are in place as the impact of the pandemic evolves. In all instances, and at a minimum, the Company will comply with local and international recommendations protecting the wellbeing of its people and, in turn, to minimise the impact on its operations.
Revenue in Q1 2020 was US$74.2 million, compared to US$91.2 million in Q4 2019 and US$56.4 million in Q1 2019. The variance to Q4 2019 is a combination of slightly lower lifting volumes and realised prices. Revenue in Q1 2019 reflects lower lifting volumes associated with the restart of operations from the Montara field following the voluntary shutdown in Q4 2018.
During Q1 2020, the Company recorded US$8.2 million in hedging income classified as profit. This compares to hedging income of US$3.5 million in Q4 2019 and US$5.8 million in Q1 2019, demonstrating the strong price protection from the Company’s hedging programme.
The Company continued to enjoy strong premiums for both its Montara and Stag liftings in 2020, most recently US$6.10/bbl and US$21.00/bbl, respectively, and averaged US$11.58/bbl in Q1 2020.
Production costs for the first quarter were US$26.5 million, net of non-recurring costs and workovers, versus US$26.6 million in Q4 2019 and US$28.4 million in Q1 2019. The decrease compared to Q1 2019 is predominately due to lower operator costs after the transfer of operatorship in August 2019.
On a per barrel basis, this results in Q1 2020 unit opex of US$24.99/bbl1, compared to US$19.63/bbl1 in Q4 2019 and US$24.17/bbl1 in Q1 2019. The increase compared to Q4 2019 is due predominately to lower production at Montara, as a result of maintenance activities and cyclone downtime.
Jadestone generated positive adjusted EBITDAX of US$30.9 million in Q1 2020, compared to US$59.9 million in Q4 2019 and US$23.1 million in Q1 2019. The variance to Q4 2019 is due to lower liftings and higher production costs, partially offset by increased hedging income.
The Company reported a net profit before tax of US$13.1 million, compared to US$27.1 million in Q4 2019 and US$10.7 million in Q1 2019.
Net cash generated from operations, before changes in working capital, was US$36.0 million in Q1 2020, compared to US$58.0 million in Q4 2019, and US$27.5 million for Q1 2019.
Cash used in investing activities in Q1 2020 was US$8.8 million, compared to US$5.1 million in Q4 2019 and US$7.5 million in Q1 2019. The majority of the Q1 2020 investment relates to intangible exploration expense associated with the Montara 3D seismic acquisition.
At March 31, 2020, the Company had total gross outstanding debt of US$37.34 million and total cash of US$119.4 million, including US$10.0 million of cash in support of a bank guarantee, or net cash of US$72.1 million. This compares to net cash of US$39.34 million at December 31, 2019, and net debt of US$13.44 million at March 31, 2019.
The Company’s existing capped swap hedging programme continues to provide robust support for ongoing cash generation, establishing a floor benchmark crude oil price of US$68.45/bbl for approximately one third of the Company’s production through to September 30, 2020, and excluding incremental oil price premia. The mark-to-market fair value on the capped swap as at March 31, 2020, was US$32.4 million.
Selected financial information
The following table provides selected financial information of the Company, which was derived from, and should be read in conjunction with, the consolidated unaudited financial statements for the period ended March 31, 2020.
|Quarterly comparison||Mar 2020 quarter||Mar 2019 quarter||Change (%)|
|Avg realised liquids price6, US$/bbl5||64.09||67.59||(5.2%)|
|Sales revenue, US$ million||74.2||56.4||31.6%|
|Capital expenditure7, US$ million||8.8||7.5||16.3%|
|Quarterly comparison||Mar 2020 quarter||Dec 2019 quarter||Change (%)|
|Avg realised liquids price6, US$/bbl5||64.09||69.24||(7.4%)|
|Sales revenue, US$ million||74.2||91.2||(18.6%)|
|Capital expenditure7, US$ million||8.8||5.1||71.4%|
Conference call and webcast
The management team will host an investor and analyst conference call at 4:00 p.m. (Singapore), 9:00 a.m. (London), and 4:00 a.m. (Toronto) today, Thursday, May 28, 2020, including a question and answer session.
The live webcast of the presentation will be available at the below webcast 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 March 31, 2020 will be available on the Company’s website at: www.jadestone-energy.com/investor-relations/.
Webcast link: https://produceredition.webcasts.com/starthere.jsp?ei=1324011&tp_key=b2bfd089cb
Event conference title: Jadestone Energy Inc. – First Quarter Results
Start time: 4:00 p.m. (Singapore), 9:00 a.m. (London), 4:00 a.m. (Toronto)
Date: Thursday, May 28, 2020
Conference ID: 60174148
|Canada (Toronto)||416 764 8688|
|Canada (Toll free)||888 390 0605|
|United States (Toll free)||888 390 0605|
Area access numbers are subject to carrier capacity and call volumes.
1 Unit opex excludes workovers for comparability quarter-to-quarter, and non-recurring opex.
2 EBITDAX is a non-GAAP financial measure which does not have a standardised meaning prescribed by IFRS. This non-GAAP financial measure is included because management uses this information to analyse financial performance, efficiency and liquidity and it may be useful to investors on the same basis. EBITDAX is a non-GAAP measure which should not be considered an alternative to, or more meaningful than, “net earnings (loss)” as determined in accordance with IFRS, as an indicator of financial performance. EBITDAX equals net earnings (loss) plus financial expenses (income), provisions for (recovery of) income taxes, and depletion, depreciation and amortisation and exploration expense. Because non-GAAP financial measures do not have a standardised meaning prescribed by IFRS, they are unlikely to be comparable to similar measures presented by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
3 Includes a US$10.0 million deposit in support of a bank guarantee.
4 Gross outstanding debt and net debt/cash are non-GAAP measures which do not have a standardised meaning prescribed by IFRS. These measures are included because management uses this information to analyse the liquidity and financial position of the group and it may be useful to investors on the same basis. Gross outstanding debt and net debt/cash are non-GAAP measures and should not be considered an alternative to, or more meaningful than ‘Net increase in cash and cash equivalents’ as determined in accordance with IFRS, as an indicator of liquidity and financial performance. Gross outstanding debt is defined as long and short term interest bearing debt, with effective interest method financing costs added back, and excludes derivatives. Net debt/cash includes cash and cash equivalents, including the Montara assets’ minimum working capital cash balance of US$15.0 million required to be maintained under the conditions of the reserve based lending facility and restricted cash of US$12.2 million (December 31, 2019: US$13.5 million) under the debt service reserve account, but excludes the US$10.0 million deposited in support of a bank guarantee to a key supplier. Because non-GAAP financial measures do not have a standardised meaning prescribed by IFRS, they are unlikely to be comparable to similar measures presented by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
5 Production, sales and average realised prices are expressed on a barrels of oil basis for the prevailing period.
6 Realised liquids price reflect actual sales price net of marketing costs, and excludes hedge income.
7 Payment for oil and gas property, plant and equipment and intangible exploration assets. In 2019 excludes the RLWI/major spend elements that are reported under opex. Also excludes acquisition related capital expenditure.
— Ends —
|Jadestone Energy Inc.||+65 6324 0359 (Singapore)|
|Paul Blakeley, President and CEO||+1 403 975 6752 (Canada)|
|Dan Young, CFO||+44 7392 940 495 (UK)|
|Robin Martin, Investor Relations Managerfirstname.lastname@example.org|
|Stifel Nicolaus Europe Limited (Nomad, Joint Broker)||+44 (0) 20 7710 7600 (UK)|
|BMO Capital Markets Limited (Joint Broker)||+44 (0) 20 7236 1010 (UK)|
|Camarco (Public Relations Advisor)||+44 (0) 203 757 4980 (UK)|
About Jadestone Energy Inc.
Jadestone Energy Inc. is an independent oil and gas company focused on the Asia Pacific region. It has a balanced, low risk, full cycle portfolio of development, production and exploration assets in Australia, Vietnam and the Philippines.
The Company has a 100% operated working interest in the Stag oilfield and the Montara project, both offshore Australia. Both the Stag and Montara assets include oil producing fields, with further development and exploration potential. The Company has a 100% operated working interest in two gas development blocks in Southwest Vietnam and is partnered with Total in the Philippines where it holds a 25% working interest in the SC56 exploration block. In addition, the Company has executed a sale and purchase agreement to acquire an operated 69% interest in the Maari Project, shallow water offshore New Zealand, and anticipates completing the transaction in H2 2020, upon receipt of customary approvals.
Led by an experienced management team with a track record of delivery, who were core to the successful growth of Talisman’s business in Asia, the Company is pursuing an acquisition strategy focused on growth and creating value through identifying, acquiring, developing and operating assets in the Asia Pacific region.
Jadestone Energy Inc. is listed on the AIM market of the London Stock Exchange. The Company is headquartered in Singapore. For further information on Jadestone please visit www.jadestone-energy.com.
Certain statements in this press release are forward-looking statements and information (collectively “forward-looking statements”), within the meaning of the applicable Canadian securities legislation, as well as other applicable international securities laws. The forward-looking statements contained in this press release are forward-looking and not historical facts.
Some of the forward-looking statements may be identified by statements that express, or involve discussions as to expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of phrases such as “will likely result”, “are expected to”, “will continue”, “is anticipated”, “is targeting”, “estimated”, “intend”, “plan”, “guidance”, “objective”, “projection”, “aim”, “goals”, “target”, “schedules”, and “outlook”). In particular, forward-looking statements in this press release include, but are not limited to statements regarding timing of the Nam Du and U Minh gas development project and the Australia infill drilling campaign, expected reductions to capital spending, 2020 average production, 2021 production growth and the timing and payment of the Company’s maiden dividend.
Because actual results or outcomes could differ materially from those expressed in any forward-looking statements, investors should not place undue reliance on any such forward-looking statements. By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predicted outcomes will not occur. Some of these risks, uncertainties and other factors are similar to those faced by other oil and gas companies and some are unique to Jadestone. The forward-looking information contained in this news release speaks only as of the date hereof. The Company does not assume any obligation to publicly update the information, except as may be required pursuant to applicable laws.
Henning Hoeyland of Jadestone Energy Inc., a Subsurface Manager with a Masters degree in Petroleum Engineering, who has been involved in the energy industry for more than 19 years, has read and approved the technical disclosure in this regulatory announcement.
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, and is disclosed in accordance with the Company’s obligations under Article 17 of those Regulations. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
bbls barrels of oil
bbls/d barrels of oil per day
EBITDAX earnings before interest, tax, depreciation, amortisation and exploration expenses
mbbls thousands of barrels of oil