Jadestone Energy Results for the Period Ending June 30, 2018
August 28, 2018—Singapore: Jadestone Energy Inc. (AIM:JSE, TSXV:JSE) (“Jadestone” or the “Company”), an independent oil and gas production company focused on the Asia Pacific region, reported today its condensed consolidated unaudited financial results for the three and six months ended June 30, 2018.
Second quarter highlights
• Total liquids production of 299,601 bbls, and natural gas production of 157,799 mmbtu, for a total of 4,239 boe/d(1) for the quarter, an increase of over 4% the same quarter a year ago, and over 3% up from the prior March 2018 quarter.
• Production from Stag of 256,077 bbls for the quarter, an increase of more than 9% over the same quarter a year ago and more than 6% up from March 2018 quarter, reflecting improved uptime and notwithstanding planned maintenance activities which caused the deferral of approximately 38,000 bbls (or 417 bbls/d for the quarter);
• Sales revenue of US$18.3 million, increased slightly from US$18.1 million in the same quarter a year ago, as increased benchmark prices more than offset the impact of lower aggregate production volumes given the expiry of the Ogan Komering license on May 19, 2018;
• Production costs of US$10.7 million in the quarter, down 52% from US$22.2 million in the same period a year ago, due to lower operating costs at Stag including workover costs;
• Positive cash from operations (before changes in working capital) of US$0.1 million, despite the lower production, and additional costs arising from the Stag turn-around, compared to cash used in operating activities of US$11.1 million in the same quarter a year ago;
• The Stag Oilfield reached a safety milestone of six years without a lost-time incident, and conducted a major planned maintenance turn-around to ensure ongoing facilities integrity;
• Jadestone obtained approval for the Nam Du and U Minh outline development plan from Vietnam’s Ministry of Industry and Trade (“MOIT”) on May 21, 2018, and work on front-end engineering design (“FEED”), field development plan studies, and the early phases of gas sales agreement negotiations have begun;
• A new gross split PSC covering the Ogan Komering working area in Indonesia was awarded to Pertamina effective May 20, 2018, and the Company began direct business-to-business negotiations with Pertamina to formalise the Company’s participation in the new licence.Concurrently, Indonesia’s Minister of State Owned Enterprises has established a principal agreement to govern the mechanism by which Pertamina can confer an interest in the new licence and Pertamina’s corporate guidance for asset divestitures is being finalised.
(1) Net working interest and based on production at Ogan Komering averaged across the 49 days of Jadestone participation in the license during the quarter (April 1, 2018 through to May 19, 2018), plus the full quarter’s average share of production at Stag
Material developments
Subsequent to the end of the quarter, the Company also announced several material developments:
• A definitive sale and purchase agreement (“SPA”) with certain subsidiaries of PTT Exploration and Production Public Company Limited (“PTTEP”), to acquire a 100% interest in the Montara oil project (the “Montara Oil Project” or the “Montara Assets”), offshore Australia via an asset acquisition;
• Funded by a$110 million (gross) oversubscribed equity placing, upsized from an initial target of US$95 million;
• An underwritten secured reserve-based loan facility of US$120 million from Commonwealth Bank of Australia and Société Générale and;
• Admission and first day of dealings on the AIM Market of the London Stock Exchange on August 8, 2018.
Paul Blakeley, President and CEO, commented:
“Operations during the second quarter were executed safely, and according to plan. I am pleased with the performance of our turn-around team in conducting major maintenance work at Stag in late April, which included planned production vessel repairs and integrity-focussed inspection work. While the downtime resulted in deferring production of 38,000 bbls into Q3, the positive impact of our operating philosophy on facility uptime has more than offset the deferral, meaning we are still able to show quarter-on-quarter growth from Stag and generate positive cash from operations. With the maintenance turnaround behind us, and the next one not expected until 2022, I am increasingly confident that Stag will remain a safe and predictable source of cash flow and value creation.
“Also during the second quarter, we have made significant progress toward executing our Vietnam growth strategy in respect of our proposed Nam Du and U Minh gas field development, with the MOIT approvals, and with FEED, gas sales agreement negotiations, and engineering procurement construction discussions now fully underway.
“In addition, the transactions we announced after the end of the quarter demonstrate our team’s capacity to layer transformative inorganic opportunities into our portfolio.
“The Montara acquisition marks a step change in our business by adding 10.3 mbbls/d of production and 28.1 mmbbls of 2P reserves. We are working with PTTEP toward closing the asset acquisition within September/October 2018, at which time, the economic benefits of the asset, dating back to the effective date of January 1, 2018, will be reflected in our financial statements by way of a closing adjustment to the purchase price. Accordingly, we have started working within the Montara organisation to ensure a seamless transfer of operatorship to Jadestone, and ongoing safe production operations.
“In addition, our new financing arrangements will not only fund the acquisition, but have allowed us to repay the convertible debt facility we had with Tyrus Capital Event S.à r.l., which had been drawn to US$15 million. These steps simplify our balance sheet and establish the Company’s self-funded growth platform, with the capacity to generate annual free cash flow for many years, whilst simultaneously growing production.”
Operations update
Stag Oilfield (offshore Australia)
Crude oil production at Stag totalled 256,077 bbls during the quarter to June 30, 2018, an increase of approximately 9% from the same quarter a year ago, and up 6% from the prior quarter. This primarily reflects increased uptime, which more than offset the impact of approximately 38,000 bbls of deferred production due to a planned 12-day maintenance turnaround in April, concluded 1 day ahead of schedule.
Following the planned maintenance event, which was completed on May 3, 2018, production volumes have returned to approximately 3,300 bbls/d. Average production for the quarter was 2,814 bbls/d.
The Company continues to pursue opportunities to enhance value at Stag, and is in advanced planning stages for its first infill well on the asset, expected to be drilled in the fourth quarter of 2018.
Ogan Komering (onshore Indonesia)
Production at the Ogan Komering PSC, under the terms of a temporary cooperation contract, totalled 68,823 boes, reduced by 47% compared to the prior quarter due to expiry of the cooperation contract on May 19, 2018, or 49 days into the quarter.
On a daily rate basis, average Ogan Komering production over the 49 days was 1,425 boe/d, decreased by just 2% from the prior quarter, as the partners continued their efforts to arrest natural declines of the producing fields.
Jadestone is engaged in direct business-to-business negotiations with Pertamina to formalise the Company’s participation in the new licence for the Ogan Komering working area, which was granted to Pertamina on May 20, 2018. The Companyexpects to reach satisfactory binding terms during the fourth quarter of 2018, with participation to be effective from the commencement of the new licence on May 20, 2018.
Financial overview
Jadestone generated adjusted EBITDAX of US$0.3 million for the quarter ended June 30, 2018, compared to a negative adjusted EBITDAX of US$11.5 million in the same period a year earlier. On an unadjusted basis, the Company reported a net loss before tax of US$3.9 million, compared to a net loss before tax of US$14.0 million for the same period a year earlier.
Both unadjusted earnings and adjusted EBITDAX were increased due to higher average realised prices, generating increased revenue despite lower overall production and sales. In addition, operating costs at Stag have fallen substantially, down 52% as compared to Q2 2017, a period before the Company took over operatorship. The Company continues to realise additional operating cost efficiencies throughout its operations at Stag.
The Company reported total book costs of production of US$10.7 million during the quarter, or just under US$32.70/boe production.
In connection with the Company’s commodity hedges, during the three months ended June 30, 2018, total non-cash charges of US$1.1 million were booked to the income statement and US$2.8 million to other comprehensive income to reflect current market values at June 30, 2018. In the same period a year earlier, the Company had no commodity hedges.
Investing activities for the quarter amounted to a cash outflow of US$0.2 million, comprised mainly of payments for oil and gas properties.
At the end of the quarter, the Company had US$6.6 million cash, plus a further US$10.0 million of cash in support of a bank guarantee, and another US$13.0 million undrawn on the Company’s convertible bond facility.
Selected financial information
The following table provides selected financial information of the Company, which was derived from, and should be read in conjunction with, the consolidated unaudited financial statements for the period ended June 30, 2018.
| Quarterly comparison | June 2018 Qtr | June 2017 Qtr | Change (%) |
| Production, mboe | 325.9 | 369.4 | (11.8%) |
| Sales, mboe | 270.7 | 363.0 | (25.4%) |
| Avg realised liquids price, US$/bbl | 71.46 | 50.64 | 41.1% |
| Sales revenue, US$mm | 18.3 | 18.1 | 1.1% |
| Capital expenditure1, US$mm | 0.3 | 0.7 | (61.9%) |
| Quarterly comparison | June 2018 Qtr | Mar 2018 Qtr | Change (%) |
| Production, mboe | 325.9 | 369.1 | (11.7%) |
| Sales, mboe | 270.7 | 333.0 | (18.7%) |
| Avg realised liquids price, US$/bbl | 71.46 | 67.34 | 6.1% |
| Sales revenue, US$mm | 18.3 | 21.0 | (12.7%) |
| Capital expenditure1, US$mm | 0.3 | 0.5 | (46.8%) |
| Year to date comparison | H1 2018 | H1 2017 | Change (%) |
| Production, mboe | 695.0 | 629.4 | 10.4% |
| Sales, mboe | 603.7 | 670.4 | (9.9%) |
| Avg realised liquids price, US$/bbl | 69.09 | 53.60 | 28.9% |
| Sales revenue, US$mm | 39.3 | 35.3 | 11.3% |
| Capital expenditure1, US$mm | 0.8 | 3.4 | (77.6%) |
1Payment for oil and gas property, plant and equipment and intangible exploration assets. Excludes acquisition related capital expenditure.
Conference call and webcast
The management team will host an investor and analyst conference call at 9:00 p.m. (Singapore), 2:00 p.m. (London), and 9:00 a.m. (Toronto) on Tuesday, August 28, 2018, 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.
Webcast link: https://event.on24.com/wcc/r/1821936/9FCEC286A9137A20C910628826C70497
Event conference title: Jadestone Energy Management Briefing
Start time: 9:00 p.m. (Singapore), 2:00 p.m. (London), 9:00 a.m. (Toronto)
Date: Tuesday, 28 August 2018
Confirmation ID: 81408196
| Participant ITFS Dial-In Numbers: | ||
| Australia | 1800076068 | |
| Canada | (+1) 888 390 0605 | |
| France | 0800916834 | |
| Hong Kong | 800962712 | |
| Indonesia | 0018030208221 | |
| Japan | 006633812569 | |
| Malaysia | 1800817426 | |
| New Zealand | 0800453421 | |
| Singapore | 8001013217 | |
| United Kingdom | 08006522435 | |
| United States | (+1) 888 390 0605 | |
| Other International (Canada toll) |
|
Area access numbers are subject to carrier capacity and call volumes.
— ends —
For further information, please contact:
| Jadestone Energy Inc. | +65 6342 0359 |
| Paul Blakeley, President and CEO | |
| Dan Young, CFO | |
| Investor Relations Enquiries | +1 403 975 6752 |
| ir@jadestone-energy.com | |
| Nomad and Joint Broker | |
| Stifel Nicolaus Europe Limited: | +44 (0) 20 7710 7600 |
| Callum Stewart | |
| Nicholas Rhodes | |
| Ashton Clanfield | |
| Joint Broker | +44 (0) 20 7236 1010 |
| BMO Capital Markets Limited: | |
| Thomas Rider | |
| Jeremy Low | |
| Thomas Hughes | |
| Public Relations Advisor | |
| Camarco: | + 44 (0) 203 757 4980 |
| Georgia Edmonds | jadestone@camarco.co.uk |
| Billy Clegg | |
| James Crothers |
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 Stag, offshore Australia, and has announced a definitive Sale and Purchase Agreement to acquire a 100% operated working interest in the Montara project, offshore Australia, effective January 1, 2018. Both the Stag and Montara assets include oil producing fields, with further development and exploration potential. The Company has a 100% operated working interest (subject to registration of PVEP’s withdrawal) 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.
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 throughout the Asia-Pacific region.
Jadestone Energy Inc. is currently listed on the TSXV and AIM. The Company is headquartered in Singapore. For further information on Jadestone please visit http://www.jadestone-energy.com.
Cautionary statements
A barrel of oil equivalent (“boe”) is determined by converting a volume of natural gas to barrels using the ratios of six thousand cubic feet (“mcf”) to one barrel. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 boe is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilising a conversion on a 6:1 basis may be misleading as an indication of value.
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 the ODP revision for Nam Du/U Minh to reflect a standalone development and the early stages of FEED and related work, and Jadestone’s continuing discussions with its partners and the regulators on a new contract for Ogan Komering.
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.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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.
Glossary
| bbls | Barrels |
| bbls/d | Barrels per day |
| boe | Barrels of oil equivalent |
| boe/d | Barrels of oil equivalent per day |
| EBITDAX | Earnings before interest, tax, depreciation, amortization and exploration expenses |
| FEED | Front-end engineering and design |
| mmbtu | Million British thermal units |
| MOIT | Ministry of Industry and Trade |
| PSC | Production sharing contract |
[1]Net working interest and based on production at Ogan Komering averaged across the 49 days of Jadestone participation in the license during the quarter (April 1, 2018 through to May 19, 2018), plus the full quarter’s average share of production at Stag
