Jadestone Energy Share Discussion Threads

[cashandcard] 29/12/2019 10:00

Absolutely astonishing if those prices are right. Cash

[mount teide] 28/12/2019 23:41

With 3 days to go for the IMO 2020 Low Sulphur Fuel Oil Regs to take effect, LSFO prices at Fujairah(Saudi) and Singapore are rising into the stratosphere!

New sales price records have been set virtually every day over the past few weeks.

LSFO at Fujairah, the largest ship bunkering facility in the Persian Gulf is currently averaging $117/bbl with prices up to $127/bbl paid for smaller sized orders. The spread with heavy(3.5% Sulphur) fuel oil reached an astonishing $71/bbl today.

At Singapore, LSFO is currently averaging a record $106/bbl with prices up to $110/bbl paid for small orders. The spread with heavy fuel oil also set a record $51/bbl today.

MGO is currently $104/bbl and $113/bbl respectively at Singapore and Fujairah.

[mount teide] 28/12/2019 18:56

How & where .. do ships get refuelled..? Is it at the ports of delivery .. or other 'Gas station' type facilities?

At large regional fuel oil bunkering ports - Fujairah(Saudi Arabia), Rotterdam, US Gulf Coast, Shanghai(China) - most major and medium size ports and, ports strategically located on major trade routes.

Singapore became the World's largest ship bunkering port as a result of being located at a pinch point on the World's busiest sea trade route between Europe, Africa and the Middle East to China, SE Asia and Japan via the Indian Ocean, Malacca Strait and South China Sea.

'Knock on effects to the Logistics & transport Industries ..(plus further disruption to Manufacturing & retail at either end)'

IMO 2020 will see a step change rise in sea freight costs - initially charged to vessel operators but then passed onto charterers, shippers and eventually customers. This will disadvantage container, oil, LNG and dry bulk shipments on longer global routes; such as the Brazil-China iron ore and coal trade route, and crude oil from Africa, the US Gulf Coast and Europe to SE Asia/China.

As mentioned in a previous post it will inevitably(where possible) lead to the greater use of regional suppliers. Australian iron ore and coal shipments to China already benefit from freight rates that are around half those on the Brazil-China route as a result of being 8,000 nautical miles closer to China; these shipments will gain a further material cost advantage in a low sulphur fuel oil world, when fuel costs rise from below 50% to over 60% of the vessel operating cost.

Dampier, Australia, to Qingdao, China, iron ore freight rates were assessed this week at $7.60/tonne for January 2020 loading, with Tubarao, Brazil, to Qingdao rates at $18.75/tonne. Bulk coal shipments are being quoted in a similar range, depending on vessel size.

I estimate under IMO 2020, Australian/Pacific Rim heavy and light sweet crude oil producers supplying the SE Asian market, will have a minimum $4-7/bbl delivery cost advantage over producers in the Middle East, US, West Africa, South America and Europe at the current oil price and vessel charter rates BUT:
it should be borne in mind that current vessel charter rates at this stage of the latest commodity market cycle are only one tenth(dry bulk carriers) and a half(oil tankers) of the peak rates(unadjusted for inflation) achieved at the 2008 peak of the last commodity/shipping market cycle.

So, the delivery cost(paid by the buyer) advantage to Australian oil and commodity producers exporting into the energy, industrial metal and food hungry 4.8 billion population Chinese, SE Asian and Indian markets over producers/suppliers located outside the region will likely increase still further over the next 2-3 years, in addition to the IMO 2020 Regs, which imo will not fully impact the market before Q2/2020 at the earliest.


AIMHO/DYOR

[k mon] 28/12/2019 13:18

.. Good stuff...

Worth considering also on what the knock on effects to the Logistics & transport Industries ..(plus further disruption to Manufacturing & retail at either end)
might be..

Ships being re-fitted with scrubbers & the like .. will drive up shipping prices ..

How & where .. do ships get refuelled..?

is it at the ports of delivery .. or other 'Gas station' type facilities.

Lots to consider.. & the entire requirement / alteration
.. could offer opportunities elsewhere also.

[mikeoxard] 28/12/2019 12:46

Bloody hell MT. you know your stuff.

[mount teide] 28/12/2019 11:47

vol - yes, amazing what you can do with an unlimited supply of other people's money for a decade!

With Wall Street and the market now keen to see what they can do without their money - the next decade strongly points to a much different story in terms of production growth.


IMO 2020 - We're in a 0.47% Sulphur Cap Fuel Oil World says one shipowner keen to avoid out of sulphur spec 'Low Sulphur Fuel Oil'.

This bodes well for Jadestone with its Stag, Montara and Maari production offering industry leading sulphur content of just 0.17%, 0.05% and 0.09% respectively for their respective grades.


Shipowners rush to de-bunker HSFO as IMO 2020 looms - S&P Global Platts - today

'With less than a week to go before the implementation of the global low sulfur regime for bunker fuels, a large number of shipowners in the race to be compliant are offloading the ineligible grades, market participants said.

At the moment, a large scale switch from HSFO to VLSFO is taking place. This transition is far from smooth as there are ships saddled with HSFO, which they will not be able to burn before the close of the year and cannot use from next Wednesday, a source with one of the owners said.

"It is a case of bad planning," the source said and pointed out that those in-charge of logistics made calculations on fuel consumption, which have gone awry.

Analysts said this is not surprising because the ships do not always travel at speeds based on which the calculations for bunker consumption are done and furthermore they are at the mercy of both the weather and port logistics.

Longer waiting time to get a berth and load or discharge cargoes means that voyages, which were to be completed well before the end of the month, will now spillover into early January.

De-bunkering is becoming increasingly commonplace not only because HSFO on board ships needs to be disposed quickly, but also due to low sulfur grades unable to meet the Imo 2020 quality standards.

"There have been several cases of LSFO being off spec because the actual sulfur content is above 0.5%," a chartering executive with a major clean and dirty tanker owner said. As a result, the ship had to be de-bunkered.

Charterers should aim to take ships from owners that have secured bunker contracts and oil majors, the source said. The bunker availability is very tight, because not all volumes, which are actually offered, are eligible for use, he said.

Off-spec bunkers are finding their way on board ships even though samples are drawn before loading.

One way an owner can avoid such a situation where off-spec bunkers have to be unloaded, is to order fuel a notch below the upper ceiling of 0.5%, a source with a clean tanker owner said. "Our tankers haven't faced this hassle of off-spec LSFO de-bunkering because we now buy fuel with 0.47% sulfur," the source said.

The problem arises when those in charge of making bunker purchases order fuel exactly with 0.5% sulfur, he said.

Unloading high sulfur fuels from a ship takes a few days and the ship could thus miss its next voyage. In some cases, owners insist that their fuel pumps should not be used to de-bunker because they are paranoid of contamination, which they fear, can affect the quality of the next load of fuel.

"These are minor issues, but can eventually make a lot of difference," a maritime consultant, who has handled such cases of de-bunkering, said.'


The early industry experience of refining and blending crude oil to meet the new IMO 2020 standards suggests heavy and light sweet crudes with the lowest sulphur content are likely to be in strongest demand and command a premium sales price from the oil refiners and processors.


AIMHO/DYOR

[volsung] 28/12/2019 10:51

Interesting MT. Who would have thought the US would be the world’s largest oil producer?

[mount teide] 28/12/2019 09:19

US Shale Oil industry bankruptcies this year blew through the previous record set in 2018 by Q3.

After bingeing on cheap debt, with Wall Street funding now turned off and investors stampeding for the exit door after a decade of disappointment, US shale oil industry analysts are forecasting a bankruptcy boom in 2020 for the industry - 'The Year Of The Oil Bankruptcies'.


2020: The Year Of The Oil Bankruptcies - Oilprice.com - today

'A bankruptcy boom has hit the oil and gas industry, and it’s just getting started. Investors have lost their appetite for shale, and energy debt has become among the least desirable in the market.

The industry has been teetering on the verge of mass hysteria for much of 2019 as a record number of energy companies folded.

According to Energy and Restructuring law firm Hayes and Boone’s, a grand total of 50 energy companies filed for bankruptcy during the first nine months of the year, including 33 oil and gas producers, 15 oilfield services companies and two midstream companies. In contrast, 43 oil and gas companies filed for bankruptcy for the whole of 2018.

The biggest oil and gas bankruptcy of the year was EP Energy, which filed for bankruptcy in October, unable to pay back some $5 billion in debt.

Now, analysts are warning that the shakeout will pick up serious momentum in 2020. During the latest shale boom, American drillers binged on mountains of readily available debt as they capitalised on investors and financiers willing to gamble on the premise that fracking operations could be significantly cheaper and more efficient than conventional drillers.

Before long, oil markets were flooded with a deluge of the commodity far outstripping demand. In what few could have foreseen, the US became the world’s largest oil producer, with its nearly 13 million b/d output turning it from a net importer to a net exporter of crude. Predictably, prices tanked by a sizable margin, dropping to levels well below the breakeven points of many drillers.

Suddenly, investors became wary of the shale industry and energy debt became anathema. They have good reason to be scared. Companies with junk-rated bonds have been defaulting on interest payments at record levels, while dozens of smaller drillers that had saddled themselves with too much debt have been dropping like flies.

Now analysts see this taking an even sharper turn, with more mergers and more debt restructurings required to get the industry back in shape.

As Ken Monaghan, Amundi Pioneer co-director of high yield, told CNBC: “We’re at the early stages of the shakeout. The problem is some of these companies still have a bit of rope to go. They don’t have [debt] maturities that are coming up in 2020 and 2021. They’re going to try to outrun the clock and hope that oil prices move higher.”

Michael Bradley, energy strategist with Tudor, Pickering, Holt, has expressed a similar sentiment, saying that the market is no longer rewarding energy companies with aggressive expansion schemes, preferring instead to see profits and money returned to shareholders. “Most people are saying we don’t want you to spend money on growth. We want you to give the money back because you guys are dummies.”

Monaghan says there are more distressed companies in the US Shale sector than in any other, with energy bonds only recently moving to the green after remaining in losing territory for much of the year thanks to the latest oil price mini-rally.

Bradley estimates that about $30 billion - $40 billion of high-yield energy debt [bonds] is now at risk. These companies have little choice but to seek bankruptcy protection and restructure if they hope to live to see another oil boom.

Shale drillers face a catch 22 situation because of the very nature of their business. Young shale wells decline at notoriously fast clips, with many depleting 70% to 75% of their reserves in the first year, forcing shale drillers to continue drilling new wells to replace lost supply. But with a freeze-out in debt and oil prices still low, they are bound to find it increasingly hard to keep up production.

Bradley sees many mid-cap oil companies resorting to mergers in order to survive with an estimated $2B-$7B in M&A deals over the next two years.

These won’t be the usual gilt-edged mergers with fat premiums, though, as the tie-up between WPX Energy and Felix Energy has proved. This was a smart and sober $2.5-billion tie-up that reflects the fact that investors have soured on the sector.

In other words, the consolidation wave that everyone seems to expect is going to focus on smart deals, or none at all.

Ultimately, the ongoing shakeout is likely to leave the industry in a much better patch, though not so much for the consumer who will have to contend with higher oil prices thanks to higher levels of production discipline.'

[mount teide] 27/12/2019 16:43

Thanks.

Evidence from marine oil traders and refiners of strong recent demand for NW Australian heavy sweet crude oil for blending into IMO 2020 compliant fuel oil.

IMO 2020 - Popular Middle East Oil Falls from Favour - Bloomberg / 23 Dec 2019

'Once a highly sought-after grade of oil from the Middle East, Abu Dhabi’s Murban is falling out of favor as the world’s top refiners seek out other types of crude ahead of a historic ship-fuel overhaul.

Murban is typically prized for its light and middle distillate yield but the grade’s price has dropped as Asian refiners focus on purchasing oil that produces more low-sulfur, high-viscosity marine fuels due to IMO 2020. Buying interest has also dimmed as rising supertanker rates made supplies from Russia’s Far East and the Asia-Pacific more attractive.

Ships are mandated to use fuels with 0.5% sulfur or less from Jan. 1 and rising demand for IMO-compliant products such as very-low sulfur fuel oil are prompting refiners to bid up crude that can yield more of such output. Grades such as Russia’s ESPO have become more favoured as a result, said four traders and refiners, while the increase in demand for blending into low-sulfur fuel oil is also pushing up prices for Australian heavy grades Van Gogh and Pyrenees.'

[fardels bear] 27/12/2019 16:25

Already in PTAL..

[graham86] 27/12/2019 14:08

MT - well done and thanks, because I, and others, will most certainly have benefited from your posts..thanks

[birotop] 27/12/2019 13:40

MT - well done and thanks, because I, and others, will most certainly have benefited from your posts..thanks

[mount teide] 27/12/2019 12:14

At the risk of appearing smug; 146% up on the initial 600k JSE position at an average of 35.5p and 121% up on the increased 890k position.

JSE is the best performing holding in the portfolio this year, which is up 61% due mostly to strong performances from JSE, TXP, PTAL, CKN and GYM - each delivered capital growth between 50% and 121%.

2020 - prospects look encouraging for another good year for the oil and shipping stocks, which are in highly cyclical sectors at still close to decade low valuations and, may well be the year the also highly cyclical and lowly rated industrial metal sector - copper and Zinc - performs strongly following the signing in January of the long awaited Trump/China Phase One Trade Deal, which has been a headwind for the sector (and three portfolio industrial metal holdings) throughout most of 2019.

[bmnsa] 27/12/2019 11:48

Bank interest rates are worthless.
Bullion has given a fantastic return over the past year,along with ancient collectable rare date coins.

[bmnsa] 27/12/2019 11:46

FB

PTAL is the safest option,if you do want to go down the route of TS IMO.

[dcarn] 27/12/2019 11:39

Banking profits????????

You gotta ride your winners, so much, much more to come here.

Hopefully be banking nice steady divi's from JSE (and SQZ)in 2020 onwards.

[fardels bear] 27/12/2019 11:29

LTH me. If I top slice I have to find somewhere else to put the profits, and I can't find anything.

[78steve] 27/12/2019 11:16

Hope you guys are banking the profits

[mr roper] 27/12/2019 11:15

Only 60%+ here for me.

[beeks of arabia] 27/12/2019 11:13

No-one likes a bragger FB :)

[fardels bear] 27/12/2019 11:13

JSE up 98% for me.

[volsung] 27/12/2019 11:10

Cheers Beeks. Great turnaround!

[beeks of arabia] 27/12/2019 11:07

Nice one Volsung!

I'd need to do the math however my performance was -40% for the year by June. Now +60%.

I don't have too much in the markets at the minute however JSE is a large part of what I do have.

[volsung] 27/12/2019 10:58

Just wanted to tell everyone JSE is now the best performing share in the SIPP +57%

[mount teide] 27/12/2019 10:04

L2: 4 v 4 / 86p v 89p (5 on 90p and above)