Jadestone Energy Results for the Period Ending September 30, 2018
November 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 interim unaudited financial results for the three and nine months ended September 30, 2018.
Third quarter highlights
Operational
● Completed a transformational inorganic acquisition delivering material cashflow, reserves and production. The Montara Assets acquisition was completed on September 28, 2018 from certain subsidiaries of PTT Exploration and Production pcl (“PTTEP”) adding 28.2 mmbbls of 2P reserves, as of January 2018, for a net cash consideration of US$133.1mm, after receipt from PTTEP of US$75.5mm of cash at closing, and other customary working capital adjustments;
● Successfully completed an over-subscribed placing and admitted for trading on the AIMMarket of the London Stock Exchange. The Company issued 239.7mm new common shares on August 8, 2018, raising gross proceeds of approximately £83.9mm;
● Secured access to senior debt financing at LIBOR + 3%. Jadestone entered into a reserve-based loan (“RBL”) agreement on August 2, 2018 borrowing US$120.0mm and, at the same time, simplified its balance sheet by redeeming the 2016 convertible bond facility for US$17.4mm;
● Hedged half of Montara’s production for two years at an average price of $72/bbl. The Company entered into a capped swap covering the first 24 months of Montara’s planned 2PD production, at swap prices significantly above current spot oil prices (US$78.26/bbl for Q4 2018, US$71.72/bbl for 2019, and US$68.45/bbl for the first three quarters of 2020). Additionally, approximately two thirds of the swapped barrels in 2019 and 2020 have upside price participation via purchased calls with strike prices set at US$80/bbl for 2019 and US$85/bbl for 2020;
● Achieved 100% facility uptime at Stag. Production operations at Stag continued safely throughout the third quarter, reaching another milestone of 2,297 days without a lost time incident. Under Jadestone, the asset has consistently operated within the parameters of its safety case, as agreed with NOPSEMA the Australian offshore regulator, and with zero enforcement notices;
● Increased Stag production by over 9%. Average production from Stag during Q3 was 3,080 bbls/d (Q2 2018: 2,814 bbls/d), mainly due to higher uptime;
Financial
● Locked in sales at higher oil prices achieving a circa 80% jump in During the third quarter, there were two Stag liftings, totalling 422,267 bbls, generating sales revenue of US$32.7mm in the third quarter, compared to US$18.3mm in the June quarter from one lifting of 200,890 bbls;
● Strong cash position of US$65.3mm inclusive of RBL debt service reserve, and with a maiden net profit before tax during the quarter of US$3.2mm. The previous quarter saw a net loss before tax of US$3.9mm and a net loss of US$3.6mm on Q3 2017;
● Continued cost vigilance giving rise to further reductions in per unit operating costs. Per unit production costs at Stag fell a further 9% to US$30.13/bbl before workovers and repair costs;
● Reported a record US$7mm of quarterly cash from operations. Jadestone reports record cash from operations arising from higher uptime, higher production, greater revenue, higher oil prices and lower costs.
Outlook
● As of November 1, 2018, Montara production was halted by the operator to undertake an inspection and maintenance shutdown, with a focus on clearing a backlog of inspection tasks. Work is progressing smoothly, and the Company anticipates the operator will restart production operations in early December;
● Infill drilling programme to commence in 2019. Based on the operators’ latest rig availability schedule infill drilling at Stag will commence in Q1 2019, with infill drilling at Montara to begin following completion of regulatory approvals, which are anticipated in H1 2019;
● Continue to progress the FEED, FDP technical studies, and negotiation of the pertinent commercial agreements associated with the Nam Du/U Minh gas developments in Vietnam, targeting FID in H2 2019.
Paul Blakeley, President and CEO, commented:
“This was a transformational quarter for Jadestone, and one that represents great progress in adding significant value for our shareholders through deployment of our stated strategy. Our progress in Q3 has delivered a resilient business, with an even stronger balance sheet, low debt, and a steady stream of cash generation, backed by an attractive level of locked-in hedges.
“I am delighted to have completed our acquisition of the Montara Assets just before quarter end, which has resulted in a three-fold increase in the size of our business. Our ability to layer in high quality inorganic opportunities is a key strand in the Jadestone strategy, and Montara is testament to the deep opportunity set we see in the Asia Pacific region.
“The financing arrangements we completed during the quarter, including an oversubscribed equity placement, AIM admission, and senior secured debt facility, reflect market recognition of the high quality portfolio we are building. In just over two years, we have transformed the Company into a high value, cash generative business, with strong support from the capital markets, including both debt and equity investors.
“Production at Stag continued safely throughout the quarter and, with 100% uptime, is becoming a very steady and reliable cash generating asset. Stag’s performance underscores our ability to efficiently operate second-phase offshore production assets, while containing costs and steadfastly working within the parameters of the safety case, as agreed with the Australian regulator NOPSEMA.
“We are now starting to exert similar early influence on the Montara Assets during the transitional phase while the seller PTTEP remains operator. Having seconded a number of key operational leaders from Jadestone into the current operation, we are now clearing a maintenance and inspection backlog at Montara which will mean that when we assume operatorship next year, we will inherit a high reliability facility that we can operate with confidence, with improved uptime performance and without a planned major maintenance shutdown until at least the second half of 2020.”
Operations update
Stag Oilfield (shallow water, offshore Australia)
The Company had two crude oil liftings during the third quarter, for a total sales production of 422,267 bbls, which is more than double the sales volume from a single lifting in the June 2018 quarter. This has resulted in substantially higher revenue during the quarter, and although it has also resulted in an increase in production costs, on a per unit basis, Stag opex has fallen to US$30.13/bbl from US$33.09 in the June quarter.
Stag reported 100% uptime during the quarter, for the first time since Jadestone acquired the asset in Q4 2016. The Company is continuing to pursue opportunities to enhance value at Stag, including drilling its first infill well. The well location and drilling slot have been selected, and well design is in advanced planning stages. Based on the latest rig schedule information, the well is now expected to be drilled in the first half of 2019.
Montara (shallow water, offshore Australia)
As of the end of the quarter, Jadestone had owned the Montara asset for just three days. Production during that period was 7,585 bbls/d.
Prior to completing the Montara Assets acquisition on September 28, 2018, Jadestone had begun influencing the outcome of key issues, including reinstatement of the asset’s FPSO class.
PTTEP continues to operate the field under an operator and transitional services agreement, until regulatory approvals and transfers are finalised. The Company expects this process to be complete in the first half of 2019, at which time Jadestone will become the operator. However, with senior secondees now in place, the transition to a Jadestone operating business is expected to be as seamless as possible.
As of November 1, 2018, Montara production was halted to undertake an inspection and maintenance shutdown, with a focus on clearing a backlog of inspection tasks. Work is progressing smoothly, and the Company anticipates the operator will restart production operations in early December. The decision to advance a 2019 shutdown to now, was made as a result of understanding the maintenance management backlog and a need to get Montara in a state of reliable and consistent operational delivery. The long-term value of the Montara Assets will likely be improved by the current maintenance and inspection work.
Nam Du/U Minh (shallow water, offshore Vietnam)
The Company has expanded the Nam Du/U Minh project management team and is progressing the FEED, FDP technical studies, and negotiation of the pertinent commercial agreements, including the life-of-field gas sales and purchase agreement. Jadestone anticipates that this work will culminate in a final investment decision in H2 2019.
Financial overview
Jadestone generated adjusted EBITDAX of US$11.9mm for the quarter ended September 30, 2018, compared to an adjusted EBITDAX of US$0.3mm in the second quarter, and a negative EBITDAX of US$2.9 mm in the same period a year earlier.
On an unadjusted basis, the Company reported its maiden net profit before tax of US$3.2mm, compared to a net loss before tax of US$3.9mm in the prior quarter, and a net loss of US$3.6mm in the third quarter of last year.
Both unadjusted earnings and adjusted EBITDAX were increased due to higher average realised prices, higher lifted volumes during the quarter, and lower per unit production costs.
Investing activities for the quarter amounted to a cash outflow of US$134.5mm, which is primarily due to the Montara Asset acquisition. This was more than offset by the US$185.8mm of net cash from financing activities arising from the US$110mm new equity issued in conjunction with the AIM admission, and the new US$120.0mm reserve based loan.
At the end of the quarter, the Company had US$45.7mm cash, plus a further US$28.6mm of debt service reserve cash and other restricted cash.
Selected financial information
The following table provides selected financial information of the Company, which was derived from, and should be read in conjunction with, the consolidated unaudited financial statements for the period ended September 30, 2018.
| Quarterly comparison | Sept 2018 Qtr | Sept 2017 Qtr | Change (%) |
| Production1, mboe | 306.1 | 394.3 | (22.4%) |
| Sales, mboe | 422.3 | 406.8 | 3.8% |
| Avg realised liquids price, US$/bbl | 77.07 | 52.28 | 42.0% |
| Sales revenue, US$mm | 32.7 | 21.4 | 52.8% |
| Capital expenditure2, US$mm | 1.7 | 1.2 | 33.6% |
| Quarterly comparison | Sept 2018 Qtr | June 2018 Qtr | Change (%) |
| Production1, mboe | 306.1 | 325.9 | (6.1%) |
| Sales, mboe | 422.3 | 270.7 | 56.0% |
| Avg realised liquids price, US$/bbl | 77.07 | 71.46 | 7.9% |
| Sales revenue, US$mm | 32.7 | 18.3 | 78.2% |
| Capital expenditure2, US$mm | 1.7 | 0.3 | 523.8% |
| Year to date comparison | 9M 2018 | 9M 2017 | Change (%) |
| Production1, mboe | 1,001.1 | 1,023.8 | (2.2%) |
| Sales, mboe | 1,026.0 | 1,077.1 | (4.8%) |
| Avg realised liquids price, US$/bbl | 72.63 | 53.92 | 34.7% |
| Sales revenue, US$mm | 72.0 | 56.7 | 26.9% |
| Capital expenditure2, US$mm | 2.4 | 4.6 | (48.0%) |
1Current period includes three days of production from Montara at 7,585 bbls/d
2Payment 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 10:00 p.m. (Singapore), 2:00 p.m. (London), and 9:00 a.m. (Toronto) on Wednesday, November 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/1876344/74332A167F283F2557C34851A87C997E
Event conference title: Jadestone Energy Management Briefing
Start time: 10:00 p.m. (Singapore), 2:00 p.m. (London), 9:00 a.m. (Toronto)
Date: Wednesday, November 28, 2018
Confirmation ID: 07071726
| Participant ITFS Dial-In Numbers: | ||
| Australia | 1800 076 068 | |
| Canada | (+1) 888 390 0605 | |
| France | 0800 916 834 | |
| Hong Kong | 800 962 712 | |
| Indonesia | 001803 020 8221 | |
| Japan | 0066 3381 2569 | |
| Malaysia | 1800 817 426 | |
| New Zealand | 0800 453 421 | |
| Singapore | 800 101 3217 | |
| United Kingdom | 0800 652 2435 | |
| 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 completed the acquisition of a 100% working interest in the Montara project, offshore Australia, effective January 1, 2018, with operatorship to be transferred upon regulator approval. 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 restart of Montara production, transfer of Montara operatorship, timing of the Stag infill well, and final investment decision for Nam Du/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.
The technical information contained in this announcement has been prepared in accordance with the March 2007 SPE/WPC/AAPG/SPEE Petroleum Resources Management System.
Henning Hoeyland of Jadestone Energy Inc a Subsurface Manager with a Masters degree in Petroleum Engineering from Stavanger University, who has been involved in the energy industry for more than 17 years, has read and approved the exploration and appraisal disclosure in this regulatory announcement.
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 |
| FPSO | Floating production, storage and offloading vessel |
| mmbtu | Million British thermal units |
| NOPSEMA | National Offshore Petroleum Safety and Environmental Management Authority |
| PVEP | PetroVietnam Exploration Production Corporation |
