Jadestone Energy Share Discussion Threads

[meteors] 26/2/2019 20:48

Does breakout mean an increase in share price and also how do you know from that chart? (obvious noob here)

Thanks

[someuwin] 26/2/2019 20:34

Chart looks better on the TSX imo - close to breakout...

[mount teide] 26/2/2019 19:26

Malcy's take on US activist hedge fund Tyrus Capital clearing out an 8.5 million line of stock recently to go above 25%

'I have had a number of questions about the increasing holding of Tyrus Capital on the shareholder register at Jadestone which recently went above the 25% level. I am told on good authority that not only are Tyrus friendly and supportive but have held a large position in the company for many years, indeed the recent addition was an ‘opportunistic’ one as they cleared a line of stock up in the Toronto market. With a lock up in place since the admission over here I don’t see them bidding for Jadestone any time soon.'

And with Montara coming back on at 10,000b/d against an average of 7,615b/d in 2018: 'With no further maintenance required before the end of 2020 things are set up nicely for JSE for the foreseeable future.'

[mount teide] 26/2/2019 17:52

US sanctions on the Venezuelan oil industry look to be bearing significant fruit - there are now 16 VLCC's loaded with Venezuelan heavy crude anchored off the coast unable to find buyers. The crude had to be loaded onto ships to free up storage space at the upgraders that convert the crude into liquid that can be utilised in refineries.

Even with the move, the upgraders are operating at much reduced production rates with buyers for the backlog few and far between.

This has coincided with OPEC cutting heavy oil production as part of its agreement to rebalance the market(raise prices). Canada, for its part, is still struggling with a lack of export infrastructure and has materially curbed production in an effort to maintain a reasonable price level for its heavy crude. As a consequence, the global supply of heavy crude is dwindling much faster than expected.

This is resulting in significant price anomalies, likely to create a shortage of heavy crude as demand for these grades picks up later in the year, ahead of the fast approaching January 2020 start up date for the new shipping industry low-sulfur emission rules set by the International Maritime Organisation.

Data from Lloyds List

[mount teide] 26/2/2019 17:28

Wall Street is finally calling time on the loss making shale industry.


Wall Street Loses Faith In Shale - OilPrice.com

'To Wall Street, the shale industry has lost a lot of its allure. A decade’s worth of promises have failed to materialize, and Big Finance is cutting some of its ties with smaller shale drillers who have not delivered.

The Wall Street Journal reports that the shale industry only saw $22 billion in new bond and equity deals, down by more than half from 2016 levels, which was a much worse time for the market.

The steep decline in new debt and equity issuance is a sign that major investors are no longer rushing to finance unprofitable shale drilling. It’s worth noting that this is a new development. For years Wall Street financed unprofitable drilling, holding out on the promise that rapid production growth would eventually pay off.

Shale wells suffer from precipitous decline rates, with as much as three quarters of a well’s total lifetime production coming out in the first year or two. After an initial burst of output, shale wells enter a steep decline.

Of course, this has been known since the beginning and Wall Street has long been fully aware. But major investors hoped that shale companies would scale up, achieve efficiencies and lower breakeven prices to the point that they could turn a profit.

However, that has not been the case. While there are some drillers that are profitable, taken as a whole the industry has been cash flow negative essentially since its beginning in the mid-2000s. For instance, the IEA estimates that the shale industry posted cumulative negative free cash flow of over $200 billion between 2010 and 2014.

The red ink has narrowed since then, but so too has the patience from Wall Street. In 2018, even as oil prices hit their highest levels in years, new debt and equity issuance plunged. That makes it harder for small and even medium-sized companies to finance growth. It’s not all that surprising, then, that a wave of spending cuts have cropped up in the last few months.

The WSJ notes that the credit environment also worsened when the market hit its nadir in 2016. Regulators tightened lending requirements, raising the cost of capital for indebted drillers. That, of course, made it even more difficult for these drillers to turn a profit.

To top it off, all of these pesky investors are much more demanding than they used to be, calling on companies to stop spending so much and instead return cash to shareholders. That leaves less capital available to inject back into the ground. Earlier this month Barclays issued a double-downgrade to Occidental Petroleum, lowering it from Overweight to Underweight, citing the company’s deficit after dividends at a time when the driller still expected to aim for an aggressive production target.But some companies are between a rock and a hard place. The WSJ notes that CNX Resources has lost over 20 percent since late January when it announced that it was bowing to investor pressure to cut spending. That led to speculation that the company wouldn’t meet its production target. It’s a no-win situation for some.

What to make of all of this? As Liam Denning of Bloomberg Opinion put it, “[t]the prevailing financial model for many frackers has hit a wall.” Denning points out that the shale industry has not posted a return on capital above 10 percent any year since 2006, which says is a “feature of shale, not a bug.”

According to Rystad Energy, the 33 largest publicly-traded shale companies, accounting for 39 percent of U.S. shale output, will struggle to please shareholders while also trimming debt. “Shale E&Ps struggle to please equity investors and reduce leverage ratios simultaneously. Despite a significant deleverage last year, estimated 2019 free cash flow barely covers operator obligations, putting E&Ps on thin ice as future dividend payments remain in question,” Rystad Energy senior analyst Alisa Lukash said in a statement.

Taking a step back, explosive shale growth was only possible because in the context of the post-2008 financial crisis and the response by the Federal Reserve to drop interest rates close to zero, something Bethany McLean argues in her book, “Saudi America.” Cheap money financed the debt-fueled shale revolution.

Rystad finds that over half of the total debt pile for the 33 companies it analyzed is due within the next seven years. Ultimately, the industry may have to erase $4 billion in promised dividend payments. “The obvious gap in expected versus likely dividend payments confirms the industry’s inability to deliver sustained investors’ payback while simultaneously deleveraging,” Lukash said.

That doesn’t mean that production is going to fall off of a cliff. These days, the shale drilling frenzy is being pushed along increasingly by the oil majors, who have gobbled up smaller companies. ExxonMobil and Chevron, for instance, can take a long view, and put mountains of cash into drilling. Investor pressure is different for these multinationals and, in any event, they are much more profitable than smaller shale companies due to various assets in refining, chemicals, offshore and otherwise conventional production.

As such, production growth will continue for a while longer. But the go-go days are over.'

[mount teide] 26/2/2019 11:10

L2: 40.0p v 41.0p - 40.99p currently being paid.

[someuwin] 26/2/2019 08:32

Will let me buy £4K but not £5k

[zengas] 25/2/2019 19:21

Possibility of a 2nd Jadestone well according to latest Ensco fleet status report 5 days ago.

Ensco 107
Jadestone Energy contracted for one well (estimated duration Mar 2019-April 2019).
Plus one 1-well option.



According to JSE Feb 2019 presentation -
Montara drilling was pencilled in for Q3.
Stag 2nd infll well pencilled in for Q4.

If the 1st infill well is a success could they bring forward the one scheduled for Q4 and perhaps on preferential terms, back to back ?

Cash pile has been building substantially.

[mount teide] 25/2/2019 16:37

Looking encouraging for tomorrow - MM's were willing to pay mid price (40.0p) for stock into the close. (L2: 39.6p v 40.4p)

[spangle93] 25/2/2019 12:10

@Zengas - ref Workovers. I can't find information on whether there is a permanent rig on Montara? Given its age and distance from infrastructure, there probably is,in which case there may not be a need for an RNS about any workovers. If there isn't, such that a temporary facility has to be installed, then they are more likely to do a campaign and RNS it

[mount teide] 25/2/2019 11:39

If not before, then by the end of March there should be news on:

* Transfer of operatorship of Montara to JSE

* Spudding of Stag Infill well

[someuwin] 25/2/2019 11:21

News to come before end of March.

28 January 2019:

"...The Company will provide additional corporate guidance, covering its intended work programme and value delivery across the business for 2019, later this quarter."

[someuwin] 25/2/2019 11:02

Think it'll move up soon. Can't even buy £1k worth online.

[meteors] 25/2/2019 10:47

Nam Du and OK are exciting ventures that should hopefully cause a bit of stink on AIM and push this share price closer to its worth. Have to wait until Q3 for this


February Presentation
hxxps://www.jadestone-energy.com/wp-content/uploads/2019/02/Corporate-Update-Feb-2019.pdf

[someuwin] 25/2/2019 10:35

Hugely undervalued imo.

[mount teide] 23/2/2019 22:57

Energy Sector Research Data - Weekly 'Numbers Report' - OilPrice.Com Subscription Article so just a few snippets:


'OPEC+ cuts could push market into deficit:

* OPEC produced around 30.8 million barrels per day in January, down 880,000 bpd from a month earlier and down 1.5 mb/d from the November peak, according to Standard Chartered.
* Saudi Arabia has pledged to cut another 0.5 mb/d by March. That alone should be enough to eliminate the surplus.
* “We forecast that the oil market will move into a deficit of over 500kb/d in February and March, with the call on OPEC crude rising while output falls,” Standard Chartered concluded.
* Standard Chartered sees Brent prices moving back to $70 per barrel in the relatively near future.

Oil supply outages at highest level in years:

* Not only are the OPEC+ cuts slated to erase the supply surplus, but a series of unplanned outages are also tightening the oil market.
* Libya, Nigeria, Venezuela and Iran have all seen unscheduled outages. Canada cut production to rescue prices in the face of midstream bottlenecks. The volume of unexpected supply disruptions is arguably at its highest rate in years.
* “Angola and Mexico continue to over-comply due to lack of investments causing natural decline,” JP Morgan added in a report.
* These latest supply outage figures do not even include the unfolding rapid declines in Venezuela, nor do they include the deteriorating situation in Iran.
* JP Morgan argues that the markets are “not pricing in the risk premiums associated with such events fairly.” '

[someuwin] 22/2/2019 13:15

Can get an online buy quote for £3k. But not for £4k.

[mount teide] 22/2/2019 11:31

Brent now at $67.5 - with JSE's Montara oil price hedge and regional $2.5/bbl premium to Brent; they should currently be averaging 72.25/bbl on Montara's 10,000 bopd production.

With Montara's operating cost around $22/bbl - by my maths the Montara field should currently be generating $50+/bbl of operating cash flow / $15 million /month.

Applying a target of 84% field uptime rate for 2019 - that suggests a potential annual operating cash flow of $151.2 million at $67.5 Brent and average production of 10,000 bopd - not too shabby for an asset that cost $81 million net!

[mount teide] 22/2/2019 10:08

Further to the rig contract announcement for the Stag infill well:

'....Ensco Australia Pty Limited has agreed to provide the Ensco 107 jack-up drilling rig to Jadestone, after completion of its current operation in Dampier, Western Australia. Jadestone intends to drill the Stag-49H well from the Stag wellhead platform, as a horizontal oil producer, targeting unswept pay in the Stag reservoir southwest of the platform. The well will target approximately 1.2 mmbbl of incremental oil reserves from the field.

The Company is planning to spud the Stag-49H well in early March 2019 and drilling operations are expected to take approximately 34 days.'


The total sea distance from the Ensco 107's present contract position off Dampier to the Stag Field is just 16 nautical miles - so about 3-4 hrs tow time.

[spangle93] 20/2/2019 17:39

MT - it's not to say there aren't opportunities in Australia, and ultimately investment decisions would be based on some holistic parameters (NPV, IRR)

It's just that costs are so much higher in the Australian state and commonwealth waters relative to SE Asia, so margin on production should be greater elsewhere.

[mount teide] 20/2/2019 17:29

Spangle - Ref Asia-Pac over Australia - would largely agree, particularly with regard to gas over oil - however, if JSE were to find/negotiate another oil deal with Montara type margin potential off the Aussie coast, it would be difficult to believe the board would turn it down.


Interesting to note that Vietnam is set to experience a material nat gas deficit by 2020 according to their Ministry of Industry and Trade, and become increasingly reliant on highly expensive imported LNG to make up the gas shortfall for its fast growing clean energy generation needs and fertiliser industry.

Suggests JSE's proposed development plan for their Nam Du and U Minh shallow water gas projects(sanction target date H2/2019 with first gas in 2021), looks well timed and should be capable of securing strong sales prices (Vietnam is currently paying Nat Gas Import prices similar to the EU).


Viet Nam to face gas shortage in 2020:Ministry of Industry and Trade (MoIT) - Viet Nam News

'Viet Nam may have to import gas from 2020 to produce electricity for the country’s socio-economic development, according to the Ministry of Industry and Trade (MoIT).

Nguyen Quyet Thang, director of market division at the PetroVietnam Gas Corporation, told a conference on Wednesday that domestic gas supply is on decline but demand keeps increasing.

A MoIT report on the mining industry performance in the first half of 2018 showed natural gas output was estimated at 5.3 billion cubic metres, a yearly increase of 1 per cent, and liquefied gas production was estimated at 437,600 tonnes, up 18.5 per cent year on year.

Meanwhile, gas consumption in 2016-20 is estimated at 11-15 billion cubic metres each year and 13-27 cubic metres for 2021-25. Annual gas import is planned at 1-3 billion cubic metres for 2021-25 and 6-10 billion cubic metres for 2026-35.

By 2020, the percentage of gas used in power production accounts for 16 per cent of the country’s total gas production and it will reach 19 per cent by 2025.

Therefore, Việt Nam is expected to encounter a shortage of gas supply from 2020, Thắng said, adding the country needs to purchase liquefied gas from overseas exporters.

There are now 19 liquefied gas exporters, led by Qatar and Australia. The world’s total liquefied gas production is at 266 million tonnes per year and will reach 360 million during 2020-30.

The International Energy Agency (IEA) on Tuesday reported natural gas will replace coal to be the second largest energy source in the world in 2030 due to countries’ commitment to lessen environment pollution.

Global gas demand will rise 1.6 per cent annually until 2040 and it will be 45 per cent higher than the current demand.

According to Thắng, Việt Nam needs to invest in its storing infrastructure first. The country is building two gas storehouses Thị Vải in Vũng Tàu Province and Sơn Mĩ in Bình Thuận Province, which are scheduled to complete in 2020 and 2023, respectively.

Ngô Thúy Quỳnh, MoIT’s head of oil, gas and coal department, told the conference the gas industry has been well developing to meet the market demand and requirements.

Clean energies such as renewable energy and gas-based power are the new trend of the world and Việt Nam is a part of that trend in the context that thermal power production is facing limitations and challenges regarding environmental policies and financial requirements, she said.'

[mount teide] 20/2/2019 16:45

Brent through $67 today - with JSE's regional $2+ price premium to Brent and Montara production oil hedge contract; JSE should be achieving circa $72.25/bbl for all of its current 10,000 bopd Montara production.

$72.25/bbl is almost identical to the average Brent price($73) between Jan-Sept 2018 - period when Montara averaged circa 7,600 bopd of production and, generated $92 million in cash and oil on completion of the acquisition on 28th September 2018.