Jadestone Energy Share Discussion Threads

[mount teide] 26/11/2018 14:57

Energy Risk Asia awards, 2018 - Commodity finance house of the year: Societe Generale

'Standout financing deals reflect growing appetite for renewables and new approach to risk

Societe Generale (SG) takes the award for commodity finance house of the year on the back of a portfolio of standout deals in the region, across renewables and power, mining and metals and oil and gas, which combine capital-raising, structuring and risk management expertise.

One of the standout 'new approach' financial deals cited by the Awards Committee was Jadestone Energy, a Singapore-based oil and gas development and production firm, for which Societe Generale extended a 2.5-year, US$120 million reserve-based loan that allowed it to acquire the Montara oil field in Australia. Hedging “a meaningful portion of production” forward allowed Jadestone to maximise the debt it was able to raise.'

The icing on the cake for SG will be the $100m+ of cash that has already been returned to or generated by JSE since Montara's effective 1st Jan 2018 acquisition start date.


'UBS - May consider diluting equity interest NamDu/U-Minh upon final investment decision' - good spot Zen - the project is on schedule for FDP approval and FID during H2/2019

[zengas] 26/11/2018 14:16

UBS - May consider diluting equity interest NamDu/U-Minh upon final investment decision.

Results update tomorrow. (edit sorry Wednesday 28th).

M/cap at 37p = 39% of Montara/Stag 2P value.

M/Cap at 37p = 27% of Montara/Stag + Nam Du/U-minh conversion Q3/19 value.

[wanobi] 26/11/2018 13:12

just bought 10K shares as a starter position here, cheers Wan

[fozzie] 26/11/2018 12:42

I will second that, thanks for sharing info and your thoughts, top man.

[ifthecapfits] 26/11/2018 12:37

Great work MT.

[ifthecapfits] 26/11/2018 12:36

"In the opinion of two shipping industry colleagues and myself the present market value of the FPSO Montara Venture is close to the current market cap of JSE."

wow.

[mount teide] 26/11/2018 12:07

Interestingly, although Q4 will see Montara production drop from to an average 6.6 bopd from 10.3, as a result of the planned shutdown and extended maintenance programme - it will likely mean in a worst case scenario circa 80% of Q4 production will be underpinned by the $72 hedge.

[mount teide] 25/11/2018 15:05

Cost of FPSOs vary mostly according production handling performance and storage capacity. Capital expenditure for a high production purpose built FPSO for a large offshore field can exceed $700 million, with the hull costing $100 to 120 million, the topsides $500 to $600 million.

The Girassol FPSO, now operating off Angola, cost $756 million. The hull cost $150 million, topsides $520 million and project management and delivery comprised the balance.

A more recent project, the Erha FPSO being built for offshore Nigeria, carries a total contract price of $700 million, with the hull costing $110 million, topsides and delivery the balance.

At the other extreme, an FPSO for a 5 year contract for a low production marginal field utilising a small, converted oil tanker and fitted with a 25,000 b/d plant would entail a much lower capex. The operator of the Okwori field off Nigeria is planning to use an FPSO for production, but only if the total vessel topside capex for development is within $120 million.

[mount teide] 25/11/2018 13:36

Oil Price hedging - 50% of the Montara Field's production is hedged at an average swap strike of US$72/bbl, with upside protection via calls at US$80/bbl in 2019 and US$85/bbl in first 9 months of 2020.

The production performance of the Montara field between the effective transaction date of 1st Jan 2018 and the 28th September closing date resulted in the transfer to JSE of $92m of cash and crude oil.

During that nine month period the production averaged 10.3k bopd during Jan and Feb, 7.0k bopd during March to June (due to statutory facility shutdown in March/April and loss of production from the Skua and Swift/Swallow subsea tie-back wells being shut-in until June due to a failure of a subsea well communication umbilical, and 10.3k bopd during July -September.

Consequently, during Jan-Sept 2018 an average production rate of 8,830 bopd and an average Brent price of $73 was sufficient to generate a transfer of $92m of cash and oil on completion.

Operating Costs: Jan-Sept 2018
Operating costs in Q1,(excluding corporate G&A and legal fees which are for the account of the Seller) were US$22.8/bbl. Operating costs increased in Q2 and Q3 due to the routine annual shut down and non-routine activities referenced above - they are expected to return to circa US$22/bbl in Q4 2018 before declining further once Jadestone starts to implement its practices.

The current programme of maintenance and remediation work at Montara is expected to generate a 12% increase in uptime and circa 25% decrease in operating costs within 12 months of assuming the operatorship, which is expected in Q1/2019. Jadestone estimates this will increase annual production by circa 1.7k bbls/d in 2019.

In addition, a well intervention program is planned to reinstate gas lifting at the Swift 2 and Skua 11 wells, and also add a perforation in Swallow 1. This is expected to result in the restoration of peak production to approximately 5.6 mbbl/d from these wells.

The incredible 'hidden' value of the Montara Field acquisition is without doubt the gem that is the FPSO - having ownership of FPSO Montara Venture means that even at 10.3k bopd the field operating costs are just $22/bbl with the potential to reduce this by a further 25% to circa $17/bbl over the next 12 months.

Some technical information on the Montara FPSO: Montara Venture

The Montara Venture was converted from an oil tanker into an FPSO at the Juring Shipyard in Singapore and went into production operation on the Montara Field in 2013. It is designed to operate beyond 2030 without statutory dry-docking and is capable of handling a production capacity of 40,000 bopd and 60 million cubic feet a day of gas compression for re-injection/lift, and has a storage capacity of 900,000 barrels of oil.

Ownership of the FPSO Montara Venture was transferred to JSE on completion of the deal in September 2018 - the JSE management achieved an outstanding result by getting the FPSO asset included in the deal for a total price of $195m, considering the long term charter cost of a similar specification FPSO on the open market today.

By way of example, Premier Oil signed a 10 year contract with BW Shipping to charter an FPSO for their Catcher Field which recently went into production - the FPSO BW Catcher has a processing capacity of 60,000 b/d and an oil storage capacity of 650,000 bbl.

Like JSE's Montara Venture the BW FPSO has a design life of 20 years of uninterrupted operations, and will be moored using a submerged turret production system. Under the terms of the FPSO Charter Contract Premier Oil will pay a FIXED charter rate of $230m A YEAR during the 10 year initial period of charter - a rate of $630,000 A DAY FOR 10 YEARS! ( On the Montara field today such a charter rate would be equivalent to a $60/bbl cost just for the FPSO!).

JSE's production development plan for the Montara Field over the next 2-3 years is targeting circa 15,000 bopd - this would equate to a potential average field operating cost of just $13-$15/bbl.

In the opinion of two shipping industry colleagues and myself the present market value of the FPSO Montara Venture is close to the current market cap of JSE.


Data Source: Latest Presentation / AIM Listing Document / Lloyds List

AIMHO/DYOR

[mount teide] 21/11/2018 10:34

With the current volatility in oil pricing, commencing the planned one month extended Montara shutdown from 1st November when Brent was above $75 has been timely, particularly with the flexibility of 3 months of field production storage capacity (900,000 barrels) on the FPSO.

Following recommencement of field production at Montara - with an empty FPSO, that would mean the first production lifting from the FPSO would not need to occur until late February 2019 at the earliest.

[homebrewruss] 20/11/2018 10:00

fozzie agree.
I have RRE which has gone up well and stayed up due a Tender offer being fortuitously announced during the market volatility. However I'm now wondering if it might fall once the tender offer is over (even though it's still great value and is 50% gas).

I have bought some more HUR and a couple of small oilers with near term news flow but am wondering if that will make any difference in this current market.

[fozzie] 20/11/2018 09:52

I have about 10% cash ready to deploy but my oil porty is going down at 1-2% a day at the moment. Only SQZ has remained at its highs. TRIN in freefall, HUR from 60 to 40. I think i will wait awhile before adding to any of my oil plays. We may well be in a sweet spot when looking at the longer term but short term this fall may have further to go.

[mount teide] 20/11/2018 01:40

Brent has come back to circa 20% below its 10 year mean price over the last month.

Since it's almost impossible to time the bottom of a correction of a recovery stage cyclical market; with many oil equities back close to their Q1/2016 low when Brent hit $28, we've used the last few weeks to continue building up our holdings in JSE.

[fozzie] 19/11/2018 16:21

I am keeping my powder dry for now. Wholesale falls in the sector, my portfolio is almost completely red today. Capitulation?

[zengas] 15/11/2018 10:00

At 10,300 bopd over 12 months and no shut down it would have triggered a $10m payment to PTTEP. (3.75 - 3.95m bls).

Also cancels out the lesser $5m payment (3.55m - 3.75m bls).

335 days of approx 10,300 bopd = 3.45m bls.

Waiting to see the outcome of the Ogan Komering farm-in this quarter.

No reserves given or in JSEs current P2 but an indication of what's there in the June presentation.
Gross production was approximately 2800 - 3000 boepd (65% liquids).

The June presentation showed gross 100 Bcf gas for the Jantung Baru, North Meraska and Bandar Agung discoveries on Ogan Komering ie 16.6 mmboe.

Exploration upside 90 Bcf gas and 20 mmbls oil = 35 mmboe gross.

[mount teide] 15/11/2018 08:52

This voluntary planned shutdown was very well timed from JSE's perspective as it will avoid triggering some $5m - $10m of potential Montara acquisition 2018 Production Contingency payments.

It is effectively enabling JSE to use the payments that could have been been triggered to cover the cost of work to further the approval process for operator transfer, carry out outstanding maintenance and inspection activities and bring forward further maintenance work planned for 2019.

Collectively, this will push out the next planned maintenance shutdown to H2/2020 - allowing the Company to realise operational efficiencies and increase uptime through the course of next year and well into 2020.

Good that PTTEP have been willing to forgo any potential 2018 contractual contingency payments to allow this more comprehensive planned shutdown arrangement to proceed.

[zengas] 08/11/2018 11:22

Should get clarity on the December rig for Stag and 35 day drill.

Due to leave Vermilion around the 18th Dec if all on schedule. Vermilion have a further 2 well option. If exercised, not clear if that option is after or before Stag.

Perhaps some idea on the size of the Pertamina farm down on Ogan Komering.

[danieldanj] 08/11/2018 08:39

Upcoming key date for Jadestone Energy (JSE) shareholders

[mount teide] 08/11/2018 07:40

Q3 Financial Results - Analyst/Investor Presentation/Q&A - Conference Call/Live Webcast - Wednesday 28th November 2018

[zengas] 04/11/2018 22:03

Also interesting to note Pertamina have 7 other Indonesian PSCs seeking potential partners.

I think 19 coming up for renewal/divestment this coming year amongst other operators in Indonesia.

[zengas] 04/11/2018 22:00

Agree Spangle - open to debate. JSE farmed in for 50% at a cost of $5.8m in early 2017 taking over Repsols interest.

Seems to be existing producing field(s) of circa 3k boepd and 3 discoveries waiting development. I think they are just contributing pro-rata costs but see CC notes from August.

February 28, 2018

Production at Ogan Komering has continued at approximately 2,900 barrels of oil equivalent per day (gross), with approximately seventy percent oil and thirty percent gas. We are also delighted to work closely with Pertamina and continue as a partner of choice in the new twenty year Gross Split PSC which will be awarded within the six month transition extension announced by the Minister of Mines and Energy.”

May 20 2018

Paul Blakeley, President and Chief Executive Officer, “Together with Pertamina, we can add significant value in Ogan Komering through early development of the Jantung Baru and North Meraksa discoveries, together with ongoing well interventions and infill drilling on the existing producing fields.”

Notes from August 2018 conference call re 50% JSE interest

'Ogan Komering PSC generated $5.2m free cash flow for 14 months under prior contract and currently being renewed with Pertamina. This is upside that was not included in the CPR. Also in addition to current production - it has 3 undeveloped gas discoveries that they wish to move them with Pertamina to the approvals process and bring them to market.'

[mount teide] 04/11/2018 21:43

Zen - good spot - this would certainly help to explain the thinking behind maintaining the local Jadestone office and small management team post expiry of the previous PSC.

[spangle93] 04/11/2018 21:31

ZENGAS - good spot. I think completion of this farmout could be a strong short to mid-term of price, particularly as it really does address the supply to SE Asia, rather than just Australia.

Just to say that while on the face on it, I agree your interpretation is that most likely, it can be read differently, i.e. that they currently have 100% and they are seeking permission to farm (an unspecified amount) down. In other words, it just says they want to farm down their interest, which is currently 100%.

Question - on the basis that nothing comes for free, is there a cost to this farm in? Clearly JSE gets revenue from production, though potentially not reserves if it's a PSC, and will finance their share of costs, but is there a back in charge, or is this taken through taxes?

[mount teide] 02/11/2018 11:40

Current $73 Brent price is now back to the average price level during Jan - Sept 2018, which generated a $92 million cash transfer on completion of the Montara deal.

Providing very strong evidence as to the highly accretive nature of the acquisition and its future potential, particularly since this sum was generated with an average field uptime of just 72%; the JSE team now embedded into both the field and FPSO operations as the company progresses towards taking over the operator-ship of the Montara field and FPSO, is currently targeting an increase to at least 84% by 2019 and to over 90% in the medium term.