Steady Production, Montara Operatorship Transferred, One-off Capital Completed and First Dividend Announced
Jadestone Energy, an independent oil and gas production company focused on the Asia Pacific region, has reported its consolidated interim unaudited financial statements, as at, and for the three-month and nine-month period ended September 30, 2019.
- Net revenue for the quarter of US$62.5mm, 46% lower than Q2 2019 primarily due to one less lifting at Montara, which occurred post period end in October. Net revenue for the nine-month period to September 30, 2019 of US$234.2mm;
- Lower liftings in the quarter increased crude oil inventory by 307.6mbbls to 494.8mbbls, which would equate to US$32.3mm of revenue at average realised oil prices in the quarter;
- Adjusted EBITDAX of US$29.6mm1, down from US$75.4mm1 in the prior quarter;
- Cash generated from operations was US$23.5mm2, down from US$59.3mm2 in Q2 2019 due in part to fewer liftings as well as significant non-routine opex. Cash generated from operations over the nine-month period to September 2019 was US$119.0mm2;
- Unadjusted quarterly profit after tax of US$0.02mm, down from US$22.6mm in Q2 2019 and profit after tax for the nine-month period of US$30.1mm;
- Average price realisations of US$65.36/bbl, a decrease of 9% from the June quarter
- Montara and Stag continue to enjoy strong differentials to Dated Brent, with the most recent sales, locking in a margin of US$4.56/bbl and US$11.40/bbl, respectively;
- Pre-tax hedging gains of US$4.2mm, included in revenue for Q3 2019, compared to US$1.4mm in Q2 2019;
- Capex and non-routine opex of US$25.7mm in the quarter, including for the riserless light well intervention (“RLWI”) project (US$11.8mm) and umbilical replacement (US$13.3mm) at Montara;
- Operating costs of US$20.43/bbl, excluding non-routine opex, such as Stag workovers, down 6% from the prior quarter;
- Gross debt of US$60.8mm, reduced from US$73.4mm at end June 2019, as the Company continues to pay down its reserve-based lending (“RBL”) facility;
- Gross cash of US$65.0mm, excluding US$10.0mm cash deposited in support of a bank guarantee, net cash position of US$4.2mm, or US$14.1mm inclusive of restricted cash; and
- The adoption of a dividend policy, targeting a 2020 maiden full year dividend in the range of US$7.5mm and US$12mm.
The revenue, EBITDAX1, profit and operating cashflow results reflect the periodic nature of revenue recognition for Jadestone: there were single liftings at Stag and Montara during the quarter compared to two Montara liftings and a Stag lifting in the previous quarter, and a sole Stag lifting in the same quarter in the previous year. Conversely, inventory built up on the Balance Sheet to a market value of US$32.3mm by quarter end3.
- Continued safe operations at all assets with no recordable personnel or environmental incidents;
- Production in line with full year guidance averaged 13,036 bbls/d for the quarter, a 2% decrease from Q2 2019.
- Production marginally lower due to planned downtime at Montara, for the umbilical replacement project, RLWI programme, and repairs to the gas lift compression system, partly offset by increased production from Stag following the 49H infill well;
- Achieved two production liftings during the quarter, resulting in sales of 0.9mm bbls, compared with 1.6mm bbls from three liftings in Q2 2019, or 3.2mm bbls for the nine-month period. In addition, crude oil inventory increased by 307.6mbbls during the quarter;
- Completed transfer of operatorship of the Montara oil project, including acceptance of the Company’s safety case and transfer of the remaining 1% interest in the Montara titles;
- Completed all outstanding remedial works on the Montara asset which have resulted in gas lift operations to the subsea wells resuming;
- Finished the first major investment programmes on Montara on time in mid-August and on budget;
- Signed an agreement to participate in a multi-client 3D seismic acquisition covering 1,487 km2, including the Montara blocks and surrounding area, now targeted to begin in Q1 2020; and
- Formally submitted a field development plan (“FDP”) for the Nam Du and U Minh gas fields, offshore southwest Vietnam, to Vietnam Oil and Gas Group (“Petrovietnam”) in October, 2019.
Acquisition of a 69% operated interest in Maari
Announced, in November, 2019, the acquisition of the Maari Project, offshore New Zealand, from OMV for a headline cash consideration of US$50mm, subject to satisfaction of conditions.
- Full year average group production guidance is reconfirmed within the range 13,500–14,500 bbls/d;
- 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;
- Guidance on major spend for the full year of US$66-81mm, down US$7mm as the Montara 3D seismic shoot is now expected to commence in Q1 2020;
- Major spending of US$25.7mm in the quarter comprised both capex and non-routine opex, mainly for the RLWI project (US$11.8mm) and the Montara umbilical replacement (US$13.3mm). This compares to US$12.2mm in the previous quarter;
- Approval of the FDP for the Nam Du/U Minh gas project in southwest Vietnam is anticipated before year end or shortly thereafter; and
- The Maari project transition phase will continue throughout Q4 2019 and into 2020, including obtaining New Zealand Government approvals relating to title transfer and change of operatorship and other customary conditions, leading to anticipated completion in H2 2020.
Paul Blakeley, President and CEO commented:
'I’m pleased to report Jadestone’s third quarter 2019 results, with steady and safe production operations, slightly impacted by both the RLWI programme and the umbilical replacement at Montara. The quarter’s financial results were also impacted by crude liftings schedules which saw an inventory build of over 300,000 bbls from the previous quarter, and a delayed cash receipt for one lifting in the quarter. The ongoing cash generation of the business is strong, our Balance Sheet is improving with each quarter, and we’re increasingly cash positive, just 14 months after closing our acquisition of Montara, which included a US$120mm reserves-based loan facility.
'At the same time, we completed the transfer of operatorship of Montara in the third quarter, completing all outstanding remedial works on the asset that had been identified during the acquisition, including the subsea well interventions, umbilical replacement and recommissioning of the gas lift compressor, and have begun to demonstrate the impact of our operating philosophy on minimising waste and further driving down operating costs.
'We’re also continuing to pursue value accretive inorganic growth elsewhere in our core region, announcing earlier this month that we will acquire an operated 69% interest in the Maari project, in shallow water offshore New Zealand, for a headline consideration of US$50mm. The project will increase the Company’s production by approximately 30% and 2P reserves by 33%, and is immediately accretive on an operating cashflow per share and free cashflow per share basis.
'In Vietnam, we’re making good progress toward commercialising our southwest Vietnam gas project at the Nam Du and U Minh fields. The formal field development plan has been submitted to Petrovietnam, and we’re still aiming to achieve field development sanction by the end of the year.
'The Jadestone strategy is definitely working with building momentum, and we remain on track to generate distributable earnings for shareholders, as promised in our announced dividend policy, which will result in our maiden dividend next year.'
Source: Jadestone Energy