Jadestone Energy Share Discussion Threads

[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.

[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