Jadestone Energy Share Discussion Threads

[wanobi] 02/11/2018 11:36

Mount Teide - you ever looked at AMC? cheers Wan
Apols for O/T question... feel free to post answer on my thread if you wish.
thanx Wan

[fozzie] 02/11/2018 11:30

MT - Thanks for that.

[wanobi] 02/11/2018 11:28

MT, thanx again, that chart, wow, hope you don't mind, I just had to put it in my own thread header, all credit to you duly noted there, cheers Wan

[mount teide] 02/11/2018 11:26

As a longterm investor - short of a worldwide economic/financial collapse and decade long depression - imo the oil, copper and shipping market fundamentals over a 5 year view are as close to a one way bet as the equity markets throw up.

In the event of the US and Europe experiencing a period of softening growth over the next few years(similar to what SE Asia, China and the Pacific Rim has experienced during 2015-2018), then should the oil and mining sector keep capital investment close to the current decade lows it will only increase the likelihood of a massive future spike in the price of oil and copper.

The highly respected Nat Resources analysts at CRU(they were one of the few to correctly call the bottom in H1/2016) forecast that a huge(5 million Plus tonnes) copper market deficit over the next decade is still likely to occur even if capital investment returns to its pre recession level over the next few years - the inference being to meet future demand the price of copper will need to rise to a level that pushes capital investment to well above the peak of the last market cycle.

CRU's other concern is that the industry spent a serious amount of money looking for new copper resources during the last market cycle and failed to find very much by historical standards - and what they did find was at a much lower overall average grade.

This is the primary reason why the World's largest copper miner Codelco has decided to allocate nearly all its future capital investment to extending its operations at its existing mines into areas with very low grade ore(once deemed close to being uneconomic), since it is proving more cost effective than trying find or buy new copper resources. Codelco told its shareholders that it would be spending $25bn in production development capital investment between 2016 and 2021 - IN ORDER TO JUST MAINTAIN ITS CURRENT PRODUCTION LEVEL SUCH IS THE FALL OFF IN ORE GRADES NOT JUST AT ITS OWN GLOBALLY IMPORTANT MINES BUT AT MOST OF ITS PEERS TOO.

Research by Rystad Energy has documented a similar decade ahead for much the oil industry which will need to see a huge increase in production development over the next 5-7 years to avoids a supply crunch - regardless as to what the still heavily loss making US shale oil sector and its $300bn of losses and $1.3trn of debt baggage do.



Since 1980, 100% of the growth in the global consumption of Oil, Gas and Copper has come from the 88% of the population living outside of Europe and USA. Over 75% has come from SE Asia, China and the Pacific Rim. India now has the fastest growing demand for Copper and Oil.

Since 2015, despite softening economic growth across much of SE Asia, China and the Pacific Rim, their oil and copper consumption has continued to grow strongly. The 38 year oil consumption chart for this fast growing economic region is a straight line at a 45 degree angle - yet the Chinese Shanghai Composite Index since 2015 has dropped 46% peak to trough.

China's and much of SE Asia's economies and Stock Markets have already experienced the correction that US and European economies and markets are due.

As economic historian Niall Ferguson commented - far too many US and European economists and analysts continue to see only a very partial picture by not focusing the bulk of their economic/market research on the 4.2 billion population of China, SE Asia, India and the Pacific Rim - this is going to be their CENTURY not the West's which he believes will, in relative terms, experience managed decline.

As mentioned in the previous post, considering the relative stages of the global commodity cycle and the Western Economic cycle, i would expect to see over the next few years, as in the previous two commodity cycles, commodity prices rise while S&P 500 equities enter a period of sustained correction as a result of rising inflation and interest rates, after a very long positive run.

AIMHO/DYOR

Edit - i'm off to SE Asia, China and Australia for a nearly a month in late November - as a travelling holiday and to update my knowledge of the fast growing economies of this region and some of the investments I have there.

Latest market research by Nat Resource specialists Goehring & Rozencwajg is well worth a read;

Q3/2018 - Natural Resource Market Commentary

[mount teide] 02/11/2018 10:53

Fozzie - have repositioned the portfolio since the H1/2016 commodity/shipping sector recession low to over 80% oil, copper and shipping equities from below 15%.

Currently have 8 'tier one' holdings with very large weightings like CKN and 5 second tier holdings with more modest weightings like ATYM.

Would expect to stay with the current exposure for at least 3-5 years for the reasons I have posted many times before - perhaps best explained by the following chart:

I believe this could be the most important chart of 2018:

hxxps://goo.gl/images/VjCz8R


If current commodity market fundamentals and 50 years of stock market history is a reliable guide expecting commodities and their equities to follow any wider, major equity market correction or economic recession south is likely to be misinformed.

The S&P 500 during the 2000-2002 recession went down 46% and some 4 years later in 2006 was still in correction territory some 20% down. Copper and Oil which had both bottomed in 1999 following many years of falling prices from oversupply, actually went up by 498% and 250% respectively between 2000 and 2006 - A PERIOD DURING WHICH MUCH OF THE DEVELOPED WORLD experienced a serious and prolonged downturn.

How did the mining industry fare?

Rio Tinto bottomed in 1999 at $18 after a 5 year sector recession; by 2006 it has reached $83 DURING A BRUTAL 6 YEAR PERIOD OF HIGHLY MATERIAL LOSSES FOR THE S&P 500 AND, following two further years of boom phase topped out at $155 in May 2008.

Predictably, BHP also bottomed in 1999 at £10.90, by 2006 it had reached £11.68 and, £21.58 by 2008 and topped out at £26.10 in early 2010 - giving investors a 24 bagger plus dividends over a period that saw the S&P 500 return a 20% LOSS plus dividends!

The above link charts the third generational low in the commodities/equities relationship since the late 1960s. The previous 2 lows following mean reversion were eventually followed by generational highs.

Every low occurred after a general collapse in commodity prices due to excess supplies, NOT TO ECONOMIC RECESSIONS, sharply rising equity prices and a period of strengthening dollar.

After reaching the mean, commodities kept outperforming as equities completed their bear phase. In total, equities collapsed 46% in both 1973-74 and 2000-02 from peaks reached 11 and 8 months prior to the official start of a recession respectively.

The S&P Goldman Sachs Commodity / S&P 500 Index ratio bottomed at 0.89 last June and is now 0.95. A return to the mean of 4.1 would require the GSCI to multiply by 4.3 or the S&P 500 Index to crater 77% or as is most likely the case a relative combination of both.

Equities and commodities have been rising since mid-2016 with the latter strongly outperforming the former. Conditions are ripe for a strong commodity equity rally after a near 75% bear market over 9 years.

Production development budgets are still down nearly 60% from the previous cycle peak and exploration budgets have reduced to a statistical irrelevance, while inventory/stocks have declined to near decade lows. The oil market is very tight, copper market in its second year of deficit and shipping dry bulk market now close to neutral after 8 years of chronic overcapacity drove rates down an almost unbelievable 98.2% peak to trough. Many decades of consistently rising 2%-4% commodity and shipping market demand growth is increasingly now meeting many future years of limited supply growth - with highly predictable results for the pricing of the commodities and its equities.


AIMHO/DYOR

[wanobi] 02/11/2018 10:44

thanx MT, very insightful, I see your strategy clearly now, many thanx for that, I will be looking further into this approach, indeed... cheers Wan

[mount teide] 02/11/2018 10:06

wan - I continue to add to my oil, copper and shipping sector equity investments by cycling out of investments in other sectors - over the last 50 years new oil, copper and shipping market cycle recovery stages have come along once every 15-18 years and averaged 5-9 years in duration - the long term cyclical nature of these markets has been extremely reliable as a result of the industry's collective propensity to repeatedly follow boom and bust economics - from an equity investment perspective, long may it continue!

Historically, the key to achieving very high investment outperformance via these markets has been to take positions during the early years of the recovery stage in companies with high quality assets, run by management with a proven track record of success, particularly during previous market recovery stages.

Equities in these sectors over 50 years of stock market history, consistently lagged the price of the commodity for the first 2-3 years of cyclical price recovery before tightening supply/demand dynamics, as a result of a waterfall drop off in capital investment during the latter stages of the recession phase kicked in to generate a very strong flood tide of support over many years.


AIMHO/DYOR

[fozzie] 02/11/2018 10:01

MT - How many stocks do you hold in your portfolio? Do you only invest in commodity/resource stocks? Really enjoy reading your posts and have done for many years, thanks.

[marvelman] 02/11/2018 09:56

Yes indeed. MT is a breath of fresh air from the vitriolic outpourings from so many posters. Never a bad word and responds to criticism with facts and reason. One to follow for sure and to learn how to use these boards...not a sycophant rather an admirer of a class act.

[wanobi] 02/11/2018 09:17

well done MT, I must say I am impressed with your very focused approach, you must be very sure of your research to take such large positions in these stocks, or you are extremely wealthy an these positions are small to you so to speak.. either way, I read all you posts and have learned a lot from you so far, many thanx for that, most appreciated.... fingers crossed they all work out big for you... cheers Wan

[mount teide] 02/11/2018 09:00

Finished building a 600k holding.

[mount teide] 02/11/2018 08:21

New Company Presentation - October 2018 - link added to header.

Liquidity - Average daily transaction volume since listing on AIM in August is a healthy 647,526 - £260k a day

[mount teide] 01/11/2018 15:07

“Southeast Asia: regional players will play larger role as IOCs/Majors retreat”
“Regional NOCs are growing but there’s scope for other more nimble players”
Wood Mackenzie

The updated October presentation highlights that the company's focus on inorganic growth continues - with a number of opportunities under active evaluation after identifying the following high grade regional targets using strict screening criteria to identify high value investment opportunities where Jadestone's core capabilities can be leveraged for greatest impact:

3 Australian Producing Targets
12 SE Asian Producing Targets
5 SE Asian Development Targets

From which the following are now in the Data and Evaluation Stage Prior to Commercial Negotiation.

2 Australian Producing Targets
2 SE Asian Producing Targets
2 SE Asian Development Targets


With three value adding acquisitions completed in the first two years its good to see the new management clearly remain keen to continue taking advantage of the regional opportunities coming along as the IOC's and Majors retreat.

[zengas] 01/11/2018 13:44

Good work MT - much easier to find now.

[mount teide] 01/11/2018 13:17

Thread has been changed from a commodity specific(set up in error) to a stock specific thread - should now be appearing on many more radars.

[mount teide] 01/11/2018 09:51

MM - good to see you here - the mm's here for some reason have a habit of reporting even modest size transactions 1-2 hrs late or well after the close.

My purchase yesterday failed to show until after 5pm.

The potential for highly material field productivity/efficiency improvements at Montara over the next 12 months are considered outstanding by JSE and with good reason - they are well documented in the latest presentation.

The fact the previous owners ran the Montara Field FPSO for 8 months earlier this year Out of CLASS (within two months of JSE's small team joining the FPSO, they had rectified the maintenance issues and had got CLASS re-instated), together with the very low field and FPSO uptime statistics damningly highlight the increasingly poor historical management of the production infrastructure/FPSO as the field aged into mid life - suggesting very significant potential for production development improvement from a management that specialises in managing mid life and mature field operations.

Additionally, other than in the most exceptional of circumstances and usually only over a very short period, operating any vessel/offshore structure Out of Class generally invalidates the insurance cover as a result of increasing the risk beyond that considered acceptable for safe operation - it beggars belief how the Australian Energy sector regulators/compliance authority allowed such an arrangement to continue for so long(assuming of course that they were aware), considering the history of the management of the field under the previous owner.

[zengas] 01/11/2018 09:03

Existing 3 year debt facility of $120m should now be nearly covered by Montara cash, given there was $92.8m end of September and running at an average $10m/month.

Possibly now $100m which doesn't count anything from Stag which is roughly 30% of Montara production.

Cash possibly $120m by year end ?

[highly geared] 01/11/2018 09:00

Any thoughts on why this hasn’t moved up more in terms of the discount to NAV?

[marvelman] 01/11/2018 08:53

Well I chipped in 20,000 this morning not showing on ADVFN though as yet

[mount teide] 01/11/2018 08:17

Mr.T - After another 32.8k this morning following those big trades reported late yesterday, we've managed to clear out the seller and push up the bid.

[mount teide] 31/10/2018 17:44

1 x 325k, 400k and 500k all at 39.9p reported after the closing bell.

[mr. t] 31/10/2018 16:25

I bought 50k today too.

[mount teide] 31/10/2018 16:06

Added 41k this afternoon - pleased to have been given the chance to grab a few more under 40p.