Jadestone Energy Results for the Period Ending March 31, 2019 – Strong Production Growth, Cash Flow Generation, and Profitability
May 29, 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 Q1 consolidated interim unaudited financial statements (the “Financial Statements”), as at and for the three-month period ended March 31, 2019.
Financial highlights
● Net revenue during the first quarter of US$56.4mm, 25% higher than Q4 2018, a second consecutive quarterly record for the Company, and nearly three times Q1 2018;
● Average price realisations of US$67.59/bbl, virtually unchanged from US$67.51/bbl in the December quarter, and increased 7% from the same quarter in 2018. Realised price reflects an average premium to Brent of US$3.56/bbl;
● Operating costs of US$23.75/bbl, excluding non-routine opex and Stag workovers, decreased by 18% from the prior quarter, and decreased 32% from the same quarter in 2018;
● US$22mm purchase price adjustment from the Montara seller, in connection with the Montara maintenance and inspection shutdown in Q4 2018, and effected via an abatement of cash calls resulted in a cash opex cost of around US$16/bbl for the quarter;
● Positive net cash generated from operations of US$36.7mm before changes in working capital, versus a US$6.3mm cash outflow in Q4 2018, before changes in working capital, and a US$0.5mm cash inflow in Q1 2018 like-for-like;
● Profit after tax of US$8.4mm, compared to a loss of US$6.6mm in the prior quarter, and a loss of US$16.6mm in Q1 2018; the first ever quarter of substantive positive after-tax profit for the Company;
● Gross debt of US$86.6mm, reduced from US$101.8mm at end December 2018, as the Company continues to pay down its reserve-based lending facility; and
● Gross cash and bank balances of US$74.8mm, excluding the US$10.0mm cash deposited in support of a bank guarantee, resulting in a net debt position of US$11.8mm.
Operational highlights
● Ongoing safe operations at all assets, with the Stag production facility over 6.5 years without an LTI1;
● Production during the first quarter averaged 14,449 bbls/d2, 2.5x the prior quarter, and a record for the Company;
● Completion of a major inspection and maintenance shutdown on the Montara asset, with production resuming on January 11, 2019;
● Montara uptime significantly improved to 85% since restart on January 11, 2019; and
● Drilling operations on the 49H infill well began at the Stag asset, and completed in May 2019.The pre-drill estimate of 1.2mm barrels of 2P reserves has been confirmed and the well came on stream at a rate of approximately 1,400 bbls/d.
1 Reporting for Montara will commence post transfer of operatorship
2 Montara production averaged across the period Jan 11, 2019 to Mar 31, 2019, equivalent to Group production of 13,059 bbls/d averaged across the 90 days of Q1 2019
Paul Blakeley, President and CEO commented:
“I am very pleased to report Jadestone’s Q1 2019 results, which include significantly higher production, strong cash flow generation, and a swing to profitability. Our finances are in excellent shape and as we look to H2 2019, with newly-added production volumes from our Stag infill well, we expect to strengthen our balance sheet even further, while delivering a comprehensive capital programme which will see further increases in production. Our guidance for 2019 remains very much in our sights. We also remain poised to tackle new investment opportunities consistent with our strategy when we identify them.
“While we maintain our focus on continuing safe operations at all our assets, our operational effort will accelerate at Montara as we look to begin the riserless light well intervention programme this quarter, followed by the subsea umbilical replacement. The overall scopes of work will enhance the reliability and predictability of outcomes at Montara, in addition to unlocking more production and reserves. We continue to exert our positive influence in ongoing operations at Montara as we progress toward the formal transfer of operatorship to Jadestone.
“Meanwhile, I am pleased to have signed a Heads of Agreement with Petrovietnam in respect of our Southwest Vietnam development. The HOA confirms many of the key terms required to ensure a strong return on this investment. Our team continues to make excellent progress on all work fronts, as we work to finalise a gas sales and purchase agreement later this year, concurrent with field development sanction.”
Operations update
Production at the Montara asset resumed on January 11, 2019 following an extensive shutdown to remedy a backlog of overdue maintenance and inspection tasks. Over the first quarter, the asset benefitted from production optimisation measures, in addition to strong well performance and a period of flush production following the shutdown. Total production at Montara during the quarter of just over 1mm bbls, resulting in average production of 12,508 bbls/d since the restart on January 11, 2019. with one crude oil lifting of 578,865 bbls in the quarter.
The Company is preparing for a substantial scope of work on the Montara complex in Q2 and Q3, including replacement of the subsea umbilical from the Skua and Swift/Swallow subsea wells to the Company’s owned FPSO, together with a riserless light well intervention (“RLWI”) programme that will restore gas lift to the Skua-11 and Swift-2 wells, perforate additional sands in the Swallow-1 well, and unlock new heel volumes in the Skua-11 well. The RLWI is targeting 3,200 bbls/d, including continued production from Swift-2 and Skua-11, in addition to the new incremental volumes.
Planning for the Company’s first infill well at the Montara field is progressing and is planned to be spudded late in 2019, subject to rig availability. The well will be drilled from an existing slot on the Montara wellhead platform to develop 1.8mm bbls of unswept oil. The Company is also progressing its plans to acquire a new 3D seismic survey in H2 2019, to improve reservoir imaging, to more accurately target future infill wells beyond the planned H6 well at Montara, and assess further exploration step-out potential.
Production at the Stag oilfield was below plan due to the combined impact of 16 days of cyclone-related downtime in the quarter, versus nine planned, and the deferral of three wells requiring workovers. Work to restore production from these wells was put on hold during drilling of the Company’s 49H infill well, and is planned to commence in June 2019. Stag’s production averaged 1,941 bbls/d in Q1 2019, with one crude oil lifting of 169,986 bbls.
The Company completed drilling operations on the Stag 49H infill well on May 6, 2019, and after allowing time for swell packers to expand and set, the Company completed hook-up operations and subsequently put the well on production. Initial results confirm the Company’s pre-drill estimates that the well will deliver 1.2 mmbbls of incremental 2P oil reserves. The well came on production at a rate of 1,400 bbls/d.
In Vietnam, the Company made excellent progress on its commercial work stream towards delivery of its Southwest Vietnam gas developments. In April, 2019, two Jadestone subsidiaries signed a Heads of Agreement (“HOA”) with Petrovietnam, relating to gas sales from the Nam Du and U Minh fields (Jadestone 70%3 working interest, and operator). The HOA establishes key terms relating to gas sales from the fields, including establishing 80 mmcf/d as the agreed daily contract quantity, targeting a minimum plateau period of 55 months. Work is progressing on all related work streams, including facilities front end engineering and design work, conducting technical and environmental studies, tendering for major contracts, in addition to negotiating the remaining commercial terms prior to formal development sanction, targeted for later this year.
3 Jadestone’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 an increase in production volumes of 2.5x, however a more modest increase in liftings of only 14% compared to the prior quarter, resulting in an increase in closing crude oil inventory of US$18.4mm. With price realisations relatively unchanged, revenue has increased to US$56.4mm, versus US$45.0mm in the prior quarter.
Production costs for the quarter were US$22.7mm, versus US$50.0mm in the prior quarter (prior quarter reflecting one-off costs associated with the Montara asset acquisition). After adjusting for non-routine opex including the RLWI as well as Stag workovers, repairs, and maintenance, this equates to US$23.75/bbl4, versus US$28.94/bbl4 in the last quarter, assuming October production at Montara had prevailed for the full quarter.
After incorporating the benefit of the US$22.0mm adjustment from the Montara seller, in connection with the Montara maintenance and inspection shutdown in Q4 2018, and effected via an abatement of cash calls, this resulted in a net cash opex cost of around US$16/bbl4 for Q1 2019.
Jadestone generated an adjusted positive EBITDAX of US$23.7mm for the quarter ended March 31, 2019, compared to an adjusted negative EBITDAX of US$1.7mm in the prior quarter, and positive EBITDAX of US$0.9mm for the same quarter a year ago.
On an unadjusted basis, the Company reported a net profit before tax of US$10.7mm, compared to a net loss before tax of US$4.9mm in the prior quarter and a net loss before tax of US$15.9mm in the same quarter a year ago.
Results were negatively impacted by the unplanned downtime at Stag due to poor weather during the tropical cyclone season, and three wells at Stag requiring workovers to restore production, but deferred due to drilling operations on the 49H infill well. Results were positively impacted by the early implementation of a number of production optimisation initiatives at Montara, good well performance and a period of flush production after the restart, following its extended maintenance and inspection shutdown.
Net cash generated from operations before working capital was $36.7mm compared to a cash outflow of US$6.3mm in the prior quarter,and US$0.5mm for the same quarter a year ago.
Cash used in investing activities in Q1 2019 was US$9.8mm including work on the 49H infill well. This compares to US$26.1mm used in investing activities in Q4 2018, and US$0.5mm in the same period a year ago.
Cash used in financing activities in Q1 2019 was US$15.7mm, the majority of which was a quarterly repayment of the outstanding RBL balance. This compares to cash used in financing of US$18.9mm in Q4 2018, and US$0.4mm in the same period a year earlier.
At quarter end the Company had US$58.5mm cash, plus US$16.3mm of debt service reserve cash and a further US$10.0mm of cash in support of a bank guarantee. Net debt was US$11.8mm, 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 was most recently US$3.77/bbl above Brent.
4 This excludes the impact of workovers and repairs and maintenance at Stag given their unpredictable timing, and costs associated with the Montara RLWI which are opex related and will be tracked separately as per 2019 guidance
Selected financial information
The following table provides selected financial information of the Company, which was derived from, and should be read in conjunction with, the consolidated interim financial statements for the period ended March 31, 2019, available on SEDAR and the Company’s website at www.jadestone-energy.com/financial-results/.
| Quarterly comparison |
Mar 2019 quarter |
Mar 2018 quarter |
Change (%) |
| Production, mboe1 | 1,175.3 | 369.1 | 218.4% |
| Sales, mboe1 | 749 | 333.0 | 124.9% |
| Avg realised liquids price2, US$/boe1 | 67.59 | 67.34 | 0.4% |
| Sales revenue1, US$mm | 56.4 | 21.0 | 168.4% |
| Capital expenditure3, US$mm | 7.7 | 0.5 | 1,440% |
| Quarterly comparison |
Mar 2019 quarter |
Dec 2018 quarter |
Change (%) |
| Production, mbbls | 1,175.3 | 479.8 | 145.0% |
| Sales, mbbls | 749 | 657.2 | 14.0% |
| Avg realised liquids price2, US$/bbl | 67.59 | 67.51 | 0.1% |
| Sales revenue2, US$mm | 56.4 | 45.0 | 25.3% |
| Capital expenditure3, US$mm | 7.7 | 7.5 | 2.6% |
1 Production, sales 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
2 Revenue was restated during Q4 2018, including prior periods, from a gross to net basis after deducting royalties, but including the effective gain on hedging contracts
3 Payment for oil and gas property, plant and equipment and intangible exploration assets. Excludes acquisition related capital expenditure and lease payments that under IFRS16 are included in cash used in investing activitie
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) today, Wednesday, May 29, 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.
Webcast link: https://event.on24.com/wcc/r/2008028/D574DBE420C93D2ACEA0541E8306FBCA
Event conference title: Jadestone Energy Inc. – First Quarter Results
Start time: 9:00 p.m. (Singapore), 2:00 p.m. (London), 9:00 a.m. (Toronto)
Date: Wednesday, May 29, 2019
Confirmation ID: 01228997
| 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 of Montara operator transfer, timing and results of exploration and development activities on both Stag and Montara, timing and results of the Montara light well intervention programme and 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
