Jadestone Energy Share Discussion Threads

[mount teide] 15/1/2022 12:02

Indeed.

Malaysia's Revenue Over Cost(ROC) PSC has a self-adjusting formula designed to provide operators with downside protection in the event of very low oil prices and, incentives to develop smaller O&G fields.

Plus, Decommissioning:
* Cost recoverable annual payment to cess fund for facilities
* Cost recoverable as incurred for wells

[mount teide] 15/1/2022 10:11

KS - thanks for reminding us of the profit share - forgot all about that.

[king suarez] 15/1/2022 09:52

Hi MT,

Whilst undoubtedly a great deal, I understand there is a profit sharing agreement associated with the Petronas assets, so the financials are not quite as good as you make out?

Slide 9 of the below presentation:



The effective take for JSE is illustrated at 55% - so 55% of your above figures for JSE?

Please correct me if I misunderstand..

[mount teide] 15/1/2022 09:10

Petronas Malaysia Assets - worth a look back at the incredible value of the deal and what was bought:

* Headline Asset Price: $9m. However, a net consideration payment of $9.2m was handed over to Jadestone Energy (along with the assets) when the transaction completed in July 2021

* Circa 6,500boe/d production with Opex below $18/boe - over 90% is oil; 12.5m bbls of P2 Reserves.

* Acquisition of 4 PSCs, 2 Operated, 2 Non-Operated.

* Operated PSCs account for 80% of reserves and 66% of production

* PSCs expire 2028 and 2031, extensions possible and highly likely if further investment made.

* Oil is referenced to TAPIS Benchmark, which currently attracts a premium of $4-$6 to Brent

* Decomissioning of platforms paid by Petronas. Decomissioning of wells for JSE's account. Decom costs are roughly split circa 2/3 platforms, 1/3 wells.

* Significant upside production growth potential through reservoir optimisation opportunities, additional infill wells and cost efficiencies - management believe these assets are an excellent fit with Jadestone’s capabilities and field operating philosophy.

PSC's

PM 323 - Operator
* three producing fields, 31 active wells, 8 idle wells
* Management is very upbeat about the East Belumut field - contains a number of high impact infill drilling opportunities.
* Heavy sweet oil similar to Stag
* Infill drilling campaign of 4 wells commencing in 2023 at a cost of circa $5m per well.

PM 329 - Operator
* high recovery factor expected
* 12 active wells, 2 gas wells

PM 318 - Non operator
* 4 active wells, 2 idle

AAKBNLP - Non operator
* 8 active wells, 4 idle wells
* Work-overs immediately prior to acquisition were very successful at boosting production.


Operating cash flow (pre Capex - estimated at $10-15m in 2022) at a $91/bbl oil sales price (current $86/bbl Brent PLUS $5/bbl Tapis Benchmark premium) is an astonishing $73/bbl / $173m/yr - for an asset bought just 6 months ago with a headline price of $9m.

AIMHO/DYOR

[thommie] 14/1/2022 22:27

I had a little 5k shares top up today. It was very hard to get them. No chance below 91p at all... But as always Im normally too impatient to wait for a better price after I made the decision to invest more after I didnt do it between 75-89p in the last weeks when I thought about it - ofc I had to pay more now :)I wasnt able to sell some txp shares when they hit 160p to buy shares in Jse. Would have been a good trade in hindsight :) I guess I fell in love with txp. So through good and bad times, isnt it? There are so many other shares I could have bought with far bigger potential share price wise, but this seems so well run, with less risk than many other shares and I expect it to rise sometime throughout the year by at least 50%. And if not, I dont fear to lose money here at all... Not at current oil price outlook...

[farnesbarnes] 14/1/2022 09:23

How many companies actually do that on their own website?

[affc21] 14/1/2022 08:45

Thanks for the calendar update Croasdalelfc (and for your previous informative postings), should be lot's to look forward to with the trading update.I also would like to thank Mount Teide, King Suarez and others for the excellent postings.All the best...

[croasdalelfc] 14/1/2022 07:57

27 January 2022Trading and Business UpdateWebsite calendar update:

[sunbed44] 13/1/2022 22:29

Btw it came close between here and ptal and this got my vote as i see it being in less risk jurisdictions

[sunbed44] 13/1/2022 22:26

Brilliant analogy fyi im starting to build a stake here atm although im struggling to set a realistic target price im thinking 150 in the short to medium term with the wind in the right direction

[fardels bear] 13/1/2022 21:25

And we all lived happily ever after.

[king suarez] 13/1/2022 21:18

Beautiful :)

[croasdalelfc] 13/1/2022 21:13

Something to sooth you before bedtime ;) . On a loop it is dreamy , but also reality xx hTTps://twitter.com/croasdale01/status/1481731717811560448?s=21

[irnbru4] 13/1/2022 19:57

I think the biggest short term risk is China shutting down and curtailing oil demand due to omicron infections and their zero covid policy. Don't get me wrong SE Asia has a lot to going for it driving oil demand forward but if it goes Pete Tong it could cause a severe if short term hit to the oil price.

[mount teide] 13/1/2022 17:16

FB - all previous commodity/shipping market cycles going back over 70 years have seen investment transitions from the wider markets into commodities on a highly material scale .....I strongly suspect because of the unprecedented scale of the peak to trough fall of the previous commodity market cycle this latest recovery stage has the potential to be highly significant in historic terms ...... as evidenced by the 50 Year Commodities to Equities Ratio Chart:

[mount teide] 13/1/2022 17:02

With production having doubled to over 20,000 bopd and OPEX reduced to circa $22.5/bbl, I suspect with Brent at $85/bbl and the regional and IMO price premiums pushing the average realised oil sales price above $90/bbl, the Jadestone management might describe the company at present as being on the 5th floor of a 38 storey office block under construction, just as they're about to introduce additional low cost arrangements(Maari Acquisition) to accelerate further the already explosive pace of construction(cash flow growth).

Having previously completed the successful construction of two 38 storey office blocks(the $6bn-8bn valued Talisman North Sea and Talisman SE Asia businesses), they clearly have the expertise, talent and know how, as specialist second phase operators in maturing O&G basins being vacated by the majors on an unprecedented scale to do it a third time ....... particularly when on this occasion they have the hurricane tail wind of the covid pandemic global economic rebound layered on top of the recovery stage of the oil market cycle, layered on top of the largest auction of priced to sell international oil company assets in the sector's long history and, a CEO who I suspect views his current shareholding and stock options as a low cost off-plan 38th floor penthouse suite retirement home.

AIMHO/DYOR

[fardels bear] 13/1/2022 16:51

I agree with your observations but surely in 2000 to 2006 there was a huge pile of money searching for a return during a period of correction in wider markets. This time we have the Greta in the woodpile. Let's not pretend that it's going to be the same supercycle this time round.

[mount teide] 13/1/2022 16:40

Today's equity markets have similar characteristics to the set up in the year 2000 - the main indexes (S&P 500 and FTSE100) - are on very high valuations at or close to all time highs, while the counter cyclical O&G, Industrial Metals and Shipping markets are in the early stages of surging off multi decade lows.

During 2000 to 2006 the main indexes remained permanently in correction territory between 20% and 50% down until late 2006.

During that period the counter cyclical oil and copper markets commenced a new cycle that saw the spot prices rise by 298% and 496% respectively by 2006, and by 460% and 650% respectively by the 2008/9 peak of the recovery stage of the new market cycle.

Rising Oil, Gas and Copper prices produced strongly increasing cash flow generation at the now super lean, low operating cost O&G and mining businesses that survived the long recession, spectacularly lifting the valuation of their equity; by way of example: BHP Billion went up 9 fold, Clarkson Shipbroker 11 fold, Premier Oil 17 fold, Talisman Energy 11 fold during the new commodity market cycle.

The remarkable growth performances of these and many other well run companies in these sectors were the result of a 6 year recession bottoming in 2000, which forced the management to take severe action to survive - they remorselessly drove down the cost base while increasing their operating and production efficiency. By 2000, the survivors were extremely efficient, low cost operators ready to benefit hugely from even a modest improvement in the price of their production assets.

$50 oil last year saw many crude oil producers generate strong operating cash flows - while at $70 oil they produced near record levels of cash flow by historic standards - by way of example JSE has produced circa $35/bbl and $55/bbl operating cash flow respectively at $50 and $70 Brent over the last 12 months(inclusive of regional oil price premiums).

In the O&G sector I continue to be a buyer of early stage, high quality small cap O&G equities, in addition to major holdings in Jadestone, Touchstone, Savannah Energy and Petrotal - and unless the story changes significantly for the worse expect to still be holding those positions in 2025 when I'm 65!

Having employment scars earned at the coalface from the last two commodity market/shipping cycle recessions etched deep in my back, I believe we're still in the infancy of this new market cycle recovery stage, which historically, have averaged between 6 and 9 years duration.

This latest commodity/shipping market cycle has the fundamentals to be one of the strongest on record as a result of the unprecedented global economic impact of the Covid Pandemic, which has generated massive government spending programmes worldwide on infrastructure development, which the high population emerging Nations of SE Asia and Africa are layering on top of their existing urbanisation programmes - modernisation, electrification and development of their cities, transport networks, ports and airports.

Like all previous commodity/shipping cycle recovery stages, as its commencing from a near 50 year low point, it will be characterised by high volatility, but if you've got the stomach for the ride it's likely to be a lot of fun and will see plenty of fortunes made.

My high conviction, diverse free, investment strategy specifically targeting the long, highly cyclical and often wildly volatile O&G, industrial metals and shipping markets during their once every 15-20 year recovery stage is perhaps not for all - so, never invest more than you feel comfortable with.

[bradvert] 13/1/2022 16:30

The big organic growth that doesn't seem to be discussed much recently would be the Vietnam assets coming online.
They could contribute 12-14k boepd within 24 months of projects being greenlit, according to JSE's 2019 CM presentation.

[fardels bear] 13/1/2022 16:01

Wasn't me. ;)

[king suarez] 13/1/2022 15:59

Has anyone thoughts on what long-term production growth could take us to (without further acquisitions)?

There are a lot of assets now at various stages of development and a lot of internal cash flow being generated to fund growth..

I don't have a feel for the decline rates, but hopefully not too severe given the fields we have are mature assets?

[mount teide] 13/1/2022 15:54

250,000 buy at the full 91p Ask price.

L2: 2 v 3 / 89p v 91p (rest between 92p and 95p)