Jadestone Energy Results for the Period Ending June 30, 2019
Record second quarter cash from operations and almost US$100 million cash from operations in the first six months of 2019
August 27, 2019—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 consolidated interim unaudited results, as at and for the three-month and six-month period ended June 30, 2019.
Financial highlights
• Net revenue during the second quarter of US$115.3mm, more than double Q1 2019 and nearly seven times Q2 2018. Net revenue for the six-month period to June 30, 2019 was US$171.7mm compared to US$35.8mm for H1 2018;
• Positive cash generated from operations of US$59.3mm, before changes in working capital, interest and taxes, in Q2 2019, a more than 60% jump on Q1 2019 cash from operations of US$36.7mm, and compared to US$0.1mm for the same quarter a year ago. Cash generated from operations over the six-month period to June 30, 2019 was US$96.4mm compared to a net outflow of US$0.3mm for H1 2018;
• Average price realisations of US$71.70/bbl, an increase of 6% over Q1 2019. Differentials at Montara and Stag continue to improve, with the latest liftings achieving total differentials to Dated Brent of US$4.32/bbl and US$10.60/bbl respectively;
• Operating costs of US$21.74/bbl, excluding non-routine opex, including the Montara riserless light well intervention (“RLWI”), decreased by 9% from the prior quarter of US$23.75/bbl, and down 34% from the same quarter a year ago of US$32.70/boe;
• Quarterly profit after tax of US$22.6mm, nearly a three-fold increase over Q1 2019 profit of US$8.4mm, and versus a loss of US$4.9mm in Q2 2018.Profit after tax for the six-month period to June 30, 2019 was US$30.9mm, compared to a loss of US$21.5mm for H1 2018;
• Gross debt of US$73.4mm, reduced from US$86.6mm at end March 2019, as the Company continues to pay down its reserve-based lending facility; and
• Gross cash and bank balances of US$66.4mm, excluding US$10.0mm cash deposited in support of a bank guarantee, resulting in a net debt position of US$7.0mm. Inclusive of restricted cash, the Company is in a net cash position.
Operational highlights
• Ongoing safe operations at all assets, with the Stag production facility achieving nearly seven years without a lost time injury1;
• Montara uptime was 82% in Q22, down slightly from 85% in Q1 due mainly to weather-related downtime in April, but materially ahead of the same period in 2018;
• Production for the quarter averaged 13,315 bbls/d,decreased 8% from production reported for the March 2019 quarter3, due to planned downtime associated with commencement of the RLWI programme at Montara and weather, but nearly a four-fold increase over the same period a year ago;
• Achieved three production liftings during the quarter, setting a new record of 1.6mm bbls sold, or a total of 2.3mm bbls for the six-month period to June 30, 2019, which compares to 0.6mm boe for H1 2018;
• Completed drilling the Stag 49H infill well, which targeted 1.2mm bbls of reserves, and was brought on production in late May at a rate of 1,400 bbls/d. 49H is continuing to produce in line with expectations;
• Completed the RLWI programme at Montara. This innovative programme, which would otherwise have required a significantly more expensive rig-based intervention, was completed on budget in mid-August, with all three accessed wells now contributing to the complex’s production;
• Signed a heads of agreement (“HoA”) for the Nam Du/U Minh project gas sales and purchase agreement between Petrovietnam and the Company’s wholly owned Vietnamese subsidiaries in April, 2019;
• Submitted the environmental impact assessment for the Nam Du/U Minh development project;
• Completed front end engineering design (“FEED”) studies for the Nam Du/U Minh development project’s offshore facilities and pipelines; and
• Finally, the Company’s safety case for the Montara assets was accepted by Australia’s offshore safety and environmental regulator, and operatorship of the asset was transferred to Jadestone on August 6, 2019.
Outlook
• Group production in the second half of the year will continue benefitting from the Stag 49H infill well, in addition to the successful RLWI programme at Montara, and continued optimisation of production operations across the business;
• Full year average group production guidance is reconfirmed at 13,500 – 14,500 bbls/d, within the larger range set out in Q1 2019;
• Opex guidance for the full year is maintained at US$21– 24/bbl, reflecting an acceleration in opex reduction initiatives at Montara, following the transfer of operatorship;
• Full year major spend remains on budget with the exception of the first infill well at Montara, where the tightening rig market in Australia will likely push the H6 infill well into H1 2020. This results in a reduction in full year major spend to within a range of US$73-88mm, but does not impact production guidance for this year;
• Award recommendations for the Nam Du/U Minh offshore facilities engineering, procurement, and construction contract and floating production, storage, and offload vessel contract are expected in Q3 2019;
• The Nam Du/U Minh field development plan is scheduled to be submitted to Petrovietnam and the Vietnam Government for approval, in late Q3 2019, leading to anticipated approval and final investment decision by end of 2019, as planned;
• Continuing positive discussions with Pertamina and Indonesian regulators relating to the Company re-establishing an interest in the Ogan Komering asset, with timing driven by Indonesian regulatory processes; and
• With Montara transition completed we are now starting to consider further inorganic opportunities to broaden the base, provide accretive value and grow the business, and subject to the Company’s strict evaluation criteria.
1 Lost time reporting for Montara will commence in Q3, post transfer of operatorship on August 6, 2019
2After excluding downtime due to well interventions
3 Montara production averaged across the period Jan 11, 2019 to Mar 31, 2019, equivalent to Group production of 13,059 bbls/d if averaged across the full 90 days of Q1 2019
Paul Blakeley, President and CEO commented:
“I’m very pleased to report Jadestone’s results to June 30, 2019, with record quarterly revenue, profits and cash generation, and providing almost US$100 million cash from operations for the first half of the year. We are building a material business that is strongly cash flow generative, while providing growth through organic investment, both within our existing producing assets in Australia, as well as the new gas developments in Vietnam.
“In Australia, we successfully completed the Stag 49H infill well, which came on production at 1,400 bbls/d in May and continues to produce in line with expectations. At Montara, we completed an innovative subsea well intervention campaign which has successfully restored gas lift to key subsea wells and accessed additional reservoir sands. Importantly, all work at Montara is now being conducted with Jadestone as operator, following our safety case acceptance earlier this month by Australia’s upstream regulator. This is an arduous process in one of the world’s most highly regulated regimes and I have absolute confidence in our team’s ability to uphold our high standards with regards to health, safety, and environmental stewardship in our operations.
“In addition, we’re continuing to make good progress with our gas commercialisation in Vietnam, with acceptance of our environmental impact assessment for the Nam Du/U Minh development, and completion of front end engineering and design work for offshore facilities and pipelines. We’re also advancing contracts for major project components and commercial gas sales negotiations, leading towards field development plan submission in late Q3 2019, and continue to work towards formal development sanction later this year.
“Our balance sheet is in excellent shape, with net debt effectively eliminated by mid-year, just nine months since we closed the Montara acquisition with a US$120 million RBL financing arrangement. 2019 is a transformational year for Jadestone and our forecast remains intact for organic cash flow to meet all ongoing re-investment plans, as well as generating distributable earnings for shareholders in the future.”
Operations update
Montara
Production at Montara (Jadestone 100%4, and operator) averaged 10,700 bbls/d for Q2 2019. Operations were affected by an unusually late cyclone season, resulting in weather-related downtime in April, and a partial shutdown of some subsea wells in June during the Company’s RLWI campaign.
Jadestone completed the RLWI campaign in mid-August, on budget. The Company expects to deliver 100% of the forecast reserves and production from the campaign, which includes protecting ongoing production by restoring gas lift and accessing additional reservoir sands. Completion of this innovative campaign was a critical milestone toward achieving the Company’s production volume guidance for the year.
The Company is preparing to replace the subsea umbilical from the Skua and Swift/Swallow subsea wells to the Montara owned FPSO, anticipated to be complete in Q3 2019. In addition, advanced planning continues for the Company’s first infill well at Montara, which will be drilled from an existing slot on the Montara wellhead platform, targeting 1.8mm bbls of unswept oil, with a target initial production rate of 3,000 bbls/d. Jadestone will be prepared to drill the H6 infill well in late 2019 and is actively canvassing the drilling rig market for a suitable jack-up rig to drill the well.
The Company is also progressing its plans to acquire new 3D seismic, to improve reservoir imaging, to more accurately target future infill wells beyond H6 and Skua-12, and to assess further exploration step-out potential. Timing and detailed planning will be influenced by vessel availability in the region.
There were two liftings from Montara in Q2 2019 of a total of 1.4mm bbls.
499% legal interest in the associated production licenses, subject to regulatory approval and held on trust by the seller.
Stag
Production at Stag (Jadestone 100%, and operator) averaged 2,615 bbls/d in Q2 2019. Production was negatively affected by unplanned downtime due to extreme weather activity in April and several wells requiring workovers over the reporting period, awaiting completion of 49H.
The Stag 49H infill well came on production in May and is contributing in line with expectations. Subsequent to quarter-end, all wells but one have been successfully worked over and production has been restored to approximately 4,000 bbls/d. One crude oil cargo was lifted from Stag in Q2 2019, for total sales of 0.2mm bbls.
Vietnam
The Company continues to make good progress on its Southwest Vietnam gas developments. In April, 2019, two Jadestone subsidiaries signed an HoA with Petrovietnam, relating to gas sales from the Nam Du and U Minh fields (Jadestone 70%5working interest, and operator). The HoA establishes key terms including the agreed daily contract quantity of 80mmscf/d, and stipulates other key commercial terms and principles, including a take-or-pay commitment by the buyer, and a plateau production period of 55 months.
The Company submitted its environmental impact assessment for the Nam Du/U Minh gas development in June, a milestone in environmental governance for the project, and a critical step toward achieving formal development sanction. In addition, the Company completed FEED for the offshore facilities and pipelines during Q2 2019.
Jadestone continues to progress tendering for major contracts, in addition to negotiating the remaining commercial terms and in accordance with its signed HoA. The project remains on track for a final investment decision and project sanction by end of 2019.
5Jadestone’s working interest will increase to 100%, following registration of Petrovietnam’s relinquishment of its 30% working interest in block 46/07 and block 51
Financial overview
Results for the quarter reflect a more than doubling of sales volume from 0.7mm bbls in Q1 2019 to 1.6mm bbls in Q2 2019. Meanwhile, realised prices also increased for the quarter, to US$71.70/bbl, an increase of 6% over Q1 2019. The Company reported record revenue of US$115.3mm, versus US$56.4mm in Q1 2019.
Production costs for the quarter were US$39.3mm, versus US$22.7mm in the prior quarter, reflecting an increase in well workover costs associated with the Montara RLWI and other maintenance costs, as well as increased lifting volumes of 1.6mm bbls compared to 0.7mm bbls in Q1 2019. After adjusting for non-routine opex including the Montara RLWI, this equates to US$21.74/bbl6, versus US$23.75/bbl in Q1 2019, and US$32.70/boe in Q2 2018.
Jadestone generated an adjusted positive EBITDAX of US$75.4mm for the quarter ended June 30, 2019, compared to US$23.7mm for the prior quarter, and US$0.3mm in the same quarter a year ago.
On an unadjusted basis, the Company reported a net profit before tax of US$34.0mm, compared to a net profit before tax of US$10.7mm in the prior quarter and a net loss before tax of US$3.9mm in the same quarter a year ago.
Net cash generated from operations before working capital, interest and tax was US$59.3mm, compared to US$36.7mm cash generated in Q1 2019, and US$0.1mm of cash used in Q2 2018.
Cash used in investing activities in Q2 2019 was US$27.7mm, including work on the Stag 49H infill well and the Montara RLWI campaign. This compares to US$9.8mm used in investing activities in Q1 2019, and US$0.2mm used in investing activities in Q2 2018.
Cash used in financing activities in Q2 2019 was US$11.9mm, which was primarily the result of a scheduled quarterly repayment of the outstanding RBL balance. This compares to cash used in financing of US$15.7mm in Q1 2019, and US$0.3mm used in Q2 2018.
At the end of the quarter, the Company had US$51.9mm cash, plus US$14.5mm of restricted cash, primarily related to its debt service reserve, and a further US$10.0mm of cash in support of a bank guarantee. Net debt was US$7.0mm, excluding the US$10.0mm of cash in support of the bank guarantee.
Additionally, the Company’s existing capped swap provides robust support for 2019 cash generation establishing, as it does, a floor benchmark crude oil price of US$71.72/bbl for 50% of planned 2PD production at Montara, before allowing for the realised premium, which in the most recent lifting wasUS$4.32/bbl above Dated Brent.
6This excludes the impact of workovers and repairs and maintenance at Stag given their unpredictable timing, and costs associated with the Montara RLWI which are opex related and will be tracked separately as per 2019 guidance
Selected financial information
The following table provides selected financial information of the Company, which was derived from, and should be read in conjunction with, the consolidated interim financial statements for the period ended June 30, 2019, available on SEDAR and the Company’s website at www.jadestone-energy.com/financial-results/.
| Quarterly comparison | Jun 2019 quarter | Jun 2018 quarter | Change (%) |
| Production, mboe7 | 1,211.7 | 325.9 | 271.8% |
| Sales, mboe7 | 1,589.4 | 270.7 | 487.1% |
| Avg realised liquids price, US$/boe7 | 71.70 | 71.46 | 0.3% |
| Sales revenue, US$mm | 115.3 | 17.5 | 558.9% |
| Capital expenditure8, US$mm | 23.1 | 0.3 | N/M |
| Quarterly comparison | Jun 2019 quarter | Mar 2019 quarter | Change (%) |
| Production, mbbls | 1,211.7 | 1,175.3 | 3.1% |
| Sales, mbbls | 1,589.4 | 748.9 | 112.2% |
| Avg realised liquids price, US$/bbl | 71.70 | 67.59 | 6.1% |
| Sales revenue, US$mm | 115.3 | 56.4 | 104.4% |
| Capital expenditure8, US$mm | 23.1 | 7.7 | 200.0% |
| Year-to-date comparison | H1 2019 | H1 2018 | Change (%) |
| Production, mboe7 | 2,387.0 | 695.0 | 243.5% |
| Sales, mboe7 | 2,338.2 | 603.7 | 287.3% |
| Avg realised liquids price, US$/boe7 | 70.39 | 65.15 | 8.0% |
| Sales revenue, US$mm | 171.7 | 35.8 | 379.6% |
| Capital expenditure8, US$mm | 30.8 | 0.8 | N/M |
7Production, sales volume and average realised prices are expressed on a barrels of oil equivalent basis as the underlying data includes gas production from Ogan Komering for the prevailing period based on Jadestone’s 50% participating interest up until May 19, 2018
8Payment for oil and gas property, plant and equipment and intangible exploration assets. Excludes acquisition related capital expenditure and lease payments that under IFRS16are included in cash used in investing activities
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 the same day, Tuesday, August 27, 2019, 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 June 30, 2019 will be available on the Company’s website at: www.jadestone-energy.com/investor-relations/.
Webcast link: https://event.on24.com/wcc/r/2052870/9B39318BD0B3417B45159AC8001E593E
Event conference title: Jadestone Energy Inc. – Second Quarter Results
Start time: 9:00 p.m. (Singapore), 2:00 p.m. (London), 9:00 a.m. (Toronto)
Date: Tuesday, August 27, 2019
Confirmation ID: 66806740
| Country | Dial-In Numbers |
| Australia | 1800076068 |
| Canada (Toronto) | 416 764 8609 |
| Canada (Toll free) | 888 390 0605 |
| France | 0800916834 |
| Germany | 08007240293 |
| Germany (Mobile) | 08007240293 |
| Hong Kong | 800962712 |
| Indonesia | 0078030208221 |
| Ireland | 1800939111 |
| Ireland (Mobile) | 1800939111 |
| Japan | 006633812569 |
| Malaysia | 1800817426 |
| Singapore | 8001013217 |
| Switzerland | 0800312635 |
| Switzerland (Mobile) | 0800312635 |
| United Kingdom | 08006522435 |
| United States (Toll free) | 888 390 0605 |
Area access numbers are subject to carrier capacity and call volumes.
— Ends —
Enquiries
| Jadestone Energy Inc. | +65 6324 0359 (Singapore) |
| Paul Blakeley, President and CEO | +1 403 975 6752 (Canada) |
| Dan Young, CFO | ir@jadestone-energy.com |
| Robin Martin, Investor Relations Manager | |
| Stifel Nicolaus Europe Limited (Nomad, Joint Broker) | +44 (0) 20 7710 7600 (UK) |
| Callum Stewart | |
| Nicholas Rhodes | |
| Ashton Clanfield | |
| BMO Capital Markets Limited (Joint Broker) | +44 (0) 20 7236 1010 (UK) |
| Thomas Rider | |
| Jeremy Low | |
| Thomas Hughes | |
| Camarco (Public Relations Advisor) | + 44 (0) 203 757 4980 (UK) |
| Billy Clegg | jadestone@camarco.co.uk |
| 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 a 100% legal and beneficial interest in the Montara assets, and a 99% legal, subject to regulatory approval, beneficial right, title, and interest in the associated production licences AC/L7 and AC/L8 (the “Montara Titles”). The remaining 1% legal interest in the Montara Titles is being held on trust by the seller, in favour of the Company, until Australian regulatory approvals relating to the transfer of operatorship of the Montara assets are obtained. 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 www.jadestone-energy.com.
Cautionary statements
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 target reserves volumes, production forecasts, cost projections, timing and results of exploration and development activities on both Stag and Montara, timing and results of the Montara replacement of subsea umbilical, expected costs, commodity prices and timing of the gas sales agreement for Nam Du and U Minh.
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. This announcement contains inside information 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 that Regulation.
The technical information contained in this announcement has been prepared in accordance with the March 2007 guidelines endorsed by the Society of Petroleum Engineers, World Petroleum Congress, American Association of Petroleum Geologists and Society of Petroleum Evaluation Engineers Petroleum Resource Management System.
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 17 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.
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.
Glossary
2PD proved and probable developed reserves
bbls barrels of oil
bbls/d barrels of oil per day
boe barrels of oil equivalent
EBITDAX earnings before interest, tax, depreciation, amortisation and exploration expenses
FPSO floating production, storage and offloading vessel
mbbl thousands of barrels of oil
mboe thousands of barrels of oil equivalent
mm bbls millions of barrels of oil
mmscf/d millions of standard cubic feet per day
PVEP Petrovietnam Exploration Production Co
