TIDMJSE
RNS Number : 5765H
Jadestone Energy Inc.
04 December 2020
Jadestone Energy Inc.
Trading and Operations Update
December 4, 2020-Singapore: Jadestone Energy Inc. (AIM:JSE)
("Jadestone", the "Company", or the "Group"), an independent oil
and gas production company focused on the Asia Pacific region, is
pleased to provide a trading and operations update.
Highlights
-- Group production from January 1 through November 30, 2020 averaged 11,356 bbls/d;
-- The Group remains on track to deliver full year production guidance of 11,000-12,500 bbls/d,
-- Gross cash and bank balances of US$100.2 million as of November 30, 2020, versus US$99.4 million at December 31,
2019 as a result of continued profitable production throughout the year;
-- Net cash of US$82.6 million, versus US$39.3 million at December 31, 2019;
-- Maari acquisition progressing, but no longer expected to close before year end as a result of delays caused by
COVID-19 and New Zealand's recent general election. The Company anticipates the acquisition to close in H1 2021
with the effective date remaining January 1, 2019;
-- Lemang, Indonesia acquisition on track to close in Q1 2021 or earlier;
-- Valaris 107 drilling rig contracted for 2021 infill drilling and well workovers in Australia; and
-- Discussions with relevant authorities relating to the Vietnam Nam Du/U Minh gas fields development project are
ongoing, with preparations to issue the FPSO contract tender being made.
Paul Blakeley, President and CEO commented:
"Our primary focus during this extraordinary year has been to
strengthen our balance sheet and protect the Company from spending
inefficiently into the low oil price environment we've seen during
the course of the last two quarters. We have started to reinstate
investment which will restore production at both Stag and Montara
over the course of the next 12 months. This is aimed at taking
advantage of what we anticipate will be stronger pricing going
forwards, even as Brent edges up above $49/bbl today, the highest
level since March. We have already completed the first three
workovers at Stag, which were deferred during the second/third
quarter and are looking to complete three more between now and the
end of the year. At Montara, having encountered problems at the two
Skua subsea wells, we are planning well workovers which will either
be done via a subsea remote operated vehicle, or with the Valaris
107 drilling rig, which has been secured on contract commencing
late Q2 2021 and which, with the right economic environment, will
also drill the Montara H6 infill well.
Despite this, we still expect to deliver full year average
production, in line with our revised guidance for the year.
Similarly, with good progress on our Company-wide cost savings
initiatives, we also anticipate meeting the operating cost target
within our guidance range. Notably, we did not revise our unit cost
guidance upward this year, despite lower production, reflecting the
significant achievements made to reduce operating costs through
Project Clover, and we continue to work to lock in much of these
savings as permanent structural changes in our cost base. The
remaining elements of our guidance were also delivered, having
completed our maiden interim dividend distribution, and also
reducing our capital spending to within a range of US$30 to US$35
million.
We continue to make progress on our inorganic growth endeavours,
notwithstanding the additional challenges of the ongoing impact of
the COVID-19 pandemic, as well as the recent New Zealand general
election in the case of the Maari acquisition. As a result, we do
not anticipate closing Maari in 2020, and have pushed it back to H1
2021. The seller remains fully supportive of the transaction and we
have extended the long stop date to April 30, 2021, to provide
additional time to close. Meanwhile, the Indonesia Lemang
acquisition is progressing as planned, with Indonesian government
approvals granted, as expected.
Progress continues with the Vietnam development, and
Petrovietnam has now proposed gas sales profiles which meet
customer needs. These are being assessed to confirm our intended
production profiles for the Nam Du and U Minh fields. This is a key
step to finalising a gas sales contract, and attaining government
sanction for the field development.
In the meantime, our financial position is robust as our
business remained cash generative throughout the 2020 depressed oil
price environment, and has contributed to a growing net cash
position as we articulated back in March. We expect to be entirely
debt-free by the end of Q1 2021.
Finally, we are also investigating a number of new M&A
opportunities which are either on the market, or anticipated to be
brought to the market within the next 12 months. These include a
spectrum covering both high value but smaller tuck-in acquisitions
and larger, more material opportunities, and which could be
transformational for the Company. As ever, pursuing inorganic
growth is subject to our strict acquisition criteria."
Financial update
As of November 30, 2020, Jadestone's net cash position was
US$82.6 million, versus US$39.3 million at December 31, 2019,
comprising cash and bank balances of US$100.2 million, and gross
debt outstanding of US$17.6 million. Jadestone's remaining gross
debt comprises the final phase of repayments of the Company's
reserves-based loan ("RBL"), drawn to part fund the Montara
acquisition in August 2018. The Company expects to complete the
repayment of the RBL by the end of Q1 2021.
Ongoing cash generation remains strong, with the Company
anticipating a lifting of around 190,000 bbls of Stag crude oil
scheduled in December at a premium to Dated Brent of
US$9.20/bbl.
Through the Group's cost savings programme, Project Clover,
Jadestone expects to achieve US$33.0 million of cashflow savings in
2020 relative to plan. The Company estimates that around 25% of
these cashflow savings reflect structural changes in Jadestone's
cost base. In addition, a further US$6 million of additional cost
saving opportunities under Project Clover continue to be reviewed,
but not yet implemented.
Operations update
Production operations at the Montara and Stag assets have
continued safely throughout the year, with no significant
deviations from the Company's environmental or safety targets.
Jadestone is continuing to adhere to local requirements for
COVID-19 precautions, including social distancing and mandatory
pre-shift isolation periods.
Montara production operations have been adjusted to account for
two producer wells, Skua 10 and Skua 11, being offline while
workovers are planned. In both instances, these concerns were
identified by Jadestone as part of a routine inspection campaign.
Neither well poses an environmental or safety risk in their current
shut-in status.
Jadestone intends to repair the wells either using a subsea
remote operated vehicle or with the Valaris 107 jack-up drilling
rig, expected to come on contract in Q2 2021. In the meantime,
production volumes deferred from the Skua satellite field are being
substantially offset by increased rates from the Montara and
Swift/Swallow fields.
Jadestone is in the process of negotiating an enterprise
bargaining agreement with three labour unions representing much of
the Montara offshore workforce. While the Company cannot predict
the timeline for completing the EBA, nor can it control the
collective actions of union members, the Company continues to
negotiate in good faith. Jadestone believes that it will be able to
arrive at an agreement whereby workers are compensated equitably in
line with their industry peers and appropriate to the economic
circumstances.
Stag operations are progressing under the Company's new crude
oil offtake arrangements, whereby oil is loaded directly to shuttle
tankers, rather than via a floating storage and offloading vessel .
Following an initial trial period, the Company has a strong
preference for operating the Stag asset in this way, on an ongoing
basis. The Company is realising cost savings, in line with its
previous estimate of a 20% annual reduction.
As COVID-19 related restrictions are eased, the Company intends
to accelerate its programme of well workovers at Stag, primarily to
replace electric submersible pumps as they reach the end of their
useful life. At present, three production wells are in need of
workover, and these will be the subject of a workover campaign that
has now begun and will be completed by year end.
Development
Jadestone continues positive engagement with Petrovietnam in
respect of its Nam Du and U Minh gas fields development, offshore
southern Vietnam. Discussions are progressing with regard to key
components including the gas production profile. In the meantime,
critical path commercial work streams are progressing, including
preparations to issue the tender for a floating production storage
and offloading vessel, in support of the envisaged development.
Acquisitions
Jadestone remains committed to its acquisition of a 69% operated
working interest in the Maari asset (the "Maari Interest"),
offshore New Zealand. The transaction has achieved several key
milestones with regard to regulatory approvals, and the Company
continues to focus on securing the consent of New Zealand's
upstream industry regulator. Due to delays cascaded by the combined
effects of COVID-19 related restrictions and New Zealand's recent
general election, this approval process has been slower than
envisaged, and the Company now believes the deal will close in H1
2021.
Both Jadestone and the seller remain highly supportive of this
transaction, and have agreed to an extension of the long stop date
for the transaction, to April 30, 2021. Despite the longer period
to closing the deal, the effective date remains January 1, 2019,
meaning Jadestone will ultimately receive all economic benefits of
the Maari Interest from that date.
The Company continues to anticipate closing its acquisition of a
90% operated working interest in the Lemang asset, onshore
Indonesia, in Q1 2021, if not earlier. The Company has received the
necessary government approvals and has seconded Jadestone personnel
into the seller's organisation to oversee ongoing operations.
____________________________
For further information, please contact:
Jadestone Energy Inc. +65 6324 0359 (Singapore)
Paul Blakeley, President and CEO +44 7392 940 495 (UK)
Dan Young, CFO +1 403 975 6752 (Canada)
Robin Martin, Investor Relations Manager ir@jadestone-energy.com
Stifel Nicolaus Europe Limited (Nomad, +44 (0) 20 7710 7600 (UK)
J oint Broker)
Callum Stewart
Simon Mensley
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)
Georgia Edmonds j se @camarco.co.uk
Billy Clegg
James Crothers
About Jadestone Energy
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 and Vietnam.
The Company has a 100% operated working interest in the Stag
oilfield and the Montara project, both offshore Australia. Both the
Stag and Montara assets include oil producing fields, with further
development and exploration potential. The Company also has a 100%
operated working interest in two gas development blocks in
Southwest Vietnam.
In addition, the Company has executed a sale and purchase
agreement to acquire an operated 69% interest in the Maari Project,
shallow water offshore New Zealand, and anticipates completing the
transaction in H1 2021, upon receipt of customary approvals. The
Company has also executed an agreement to acquire an operated 90%
interest in the Lemang PSC, onshore Sumatra, Indonesia, and
anticipates completing the transaction in Q1 2021 or earlier, upon
receipt of customary approvals. The block includes the Akatara gas
field.
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 in the Asia Pacific
region.
Jadestone Energy Inc. is listed on the AIM market of the London
Stock Exchange. 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 securities
legislation. 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 quantum and timing of expected savings
under Project Clover, the Company's ability to deliver financial
and operating performance within its guidance ranges for 2020,
timing for completion of the Maari and Lemang acquisitions,
characteristics of the Company's future financial situation
including timing to become debt-free, timing of future Stag well
workovers, and the timing to conclude a gas sales and purchase
agreement for the Nam Du/U Minh gas development.
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. Whilst the Group
believes the expectations reflected herein to be reasonable in
light of the information available to them at this time, the actual
outcome may be materially different owing to factors beyond the
Group's control or within the Group's control where, for example,
the Group decides on a change of plan or strategy. Accordingly, no
reliance may be placed on the figures contained in such forward-
looking statements. 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 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 of oil
bbls/d barrels of oil per day
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