Jadestone Energy Share Discussion Threads

[mount teide] 18/9/2018 17:29

Late reported 200,000 buy at the full 40p ask price.

[mount teide] 18/9/2018 08:58

L2: 1 v 1 / 39.6p v 40.0p (1 on 41.4p and 41.6p, the rest on 42.6p to 44.0)

Possible to pick up further stock in decent quantities at the 39.8p mid price (someone happy to scalp 15% from the recent placing?).

[divmad] 14/9/2018 13:19

Zengas,

How does the undervaluation gap based on bopd of flowing oil/gas compare with SAVP at these prices?

[mount teide] 14/9/2018 12:49

L2: suggesting another move up; 2 v 1 / 39.6p v 40.0p (1 on 41.4p and 41.6p, the rest on 42.6p to 44.6p)

[mount teide] 12/9/2018 09:10

Breaking out on strong volume - 250k and 500k open market buys at 40.0p just gone through - a real statement of intent.

[mount teide] 12/9/2018 09:01

L2 - looking very strong: 2 v 1 / 39.4p v 40.4p ( 2 @ 41.4p, 1 @ 42.4p, 2 @ 44.0p)

[mount teide] 11/9/2018 08:51

The regional $2.30 premium to Brent JSE gets for its oil production is currently worth at circa 15,500 bopd(inclusive of Montara) some $12.6 million a year in additional revenue, to the $440 million of annual gross revenue that would be generated at the current circa $78 Brent.

[highly geared] 10/9/2018 13:32

Livermore had 6.92% on IPod but continue to add to their position in the open market.... Livermore clearly want more... I wonder why...?

[mount teide] 10/9/2018 08:55

David Neuhauser, Jadestone NED and MD of Livermore Partners continues to add to Livermore's shareholding with a further open market buy of 100,000 shares, increasing Livermore's holding to 6.98%.

[zengas] 10/9/2018 07:44

A further 100,000 director buy (same director/Livermore) at cdn64.2c/37.65p.

Added 60K and 5k myself this am at below mid.

[spangle93] 09/9/2018 22:20

Thanks for the link, MT

Montara acquisition must be very attractive to them, then, because it's certainly not gas ;-)

I like the interview though - the idea of an AIM company as a hedge through having fixed long-term prices is innovative and attractive, but with Montara it now needs more gas in the portfolio to achieve this aim.

Growth by acquisition and enhancing the value of the assets rather than organic growth was very much Tullow's model in the last decade... Energy Africa, Hardman Resources, Shell SNS etc. Whereas Tullow's assets were primarily company takeover of explorers to get access to what they (accurately) considered prime oily real estate of the future, JSE appears to be doing it by acquiring mature assets, or unloved discoveries in mature areas, and subjecting them to new life

[mount teide] 09/9/2018 00:09

David Neuhauser, Jadestone NED and MD of Livermore Partners, a US hedge fund which generated an astonishing +85% portfolio performance in 2016, specialises in the Energy, Commodity and Financial sectors. Livermore hold 6.96% of JSE.

In the following BNN Video David explains how he and two other Hedge Funds effectively took over the running of Mitre Energy(since renamed Jadestone Energy) in 2016, restructured the company, changed the business strategy and Management/Board, recruited Paul Blakeley and his team from Talisman (Asia) to run the company, and what the plans are going forward.





Part of an industry interview David gave in H2/2017 specifically relating to Jadestone Energy - well worth a read:

VW: One small cap you like is Jadestone Energy. What do you like about this business in particular?

DN: When we first took a position in Jadestone, we saw an opportunity to transform the company by replacing the management and board and using the business to acquire depressed operating assets others must sell to de-lever their balance sheets and focus on core basins. Producing assets (not exploration) with real cash flows and deep value.

We feel that we’ve made excellent progress on this. New management has been brought in, and the company has been transformed. New Jadestone is built on an “acquire and exploit” strategy not unfamiliar to some domestic E&P companies, whereby bringing operating capability and new capital to under-invested assets (or assets in the hands of super-majors for whom materiality in future activity is a concern to them), can add significant incremental value.

The difference with New Jadestone, compared to North American plays is that the company is focused on Asia Pacific opportunity where the returns are on average two or three times better than North America (IHS Herold annual performance reports), where the competition is very limited and therefore purchase price is very modest (often assets are sold on bilateral deals – no competition), and finally where opportunity options are on the increase.

These characteristics make the thesis almost unique (compared with North America for example where the competitive bidding is intense. What’s more, product pricing is favorable in Asia. Oil is usually sold at premiums to Brent and domestic gas is contracted in the range $7.50 – $8.50/mcf)

VW: The company just completed a refinancing to acquire assets from Stag Oilfield, what’s your view on this acquisition and the financing deal?

DN: Jadestone secured $68 million of new financing, by way of a (nonbrokered) placing for C$53 million (c$40 million) at C$0.40/sh and a $28 million convertible debt facility from Tyrus Capital to contribute towards further acquisition opportunities.

The convertible facility has a tenor of three years and carries a 7.5% coupon. The conversion price is C$0.50/sh. This additional financing will allow Jadestone to conclude the (previously announced) Stag asset acquisition, provide a LoC in respect of the Stag FSO and provide the capital to drill additional appraisal wells.

The Stag asset adds production of 3,750bopd and will generate cash that could be deployed elsewhere for the development of the portfolio. There are some additional acquisitions also in the pipeline. As described above, New Jadestone is built around an acquire and exploit strategy.

There is a growing number of M&A opportunities emerging with limited competition. Opportunities are increasingly being sold at distressed prices. The fundamental value proposition, however, is the reinvestment that follows M&A. We look for almost an order of magnitude of reinvestment potential compared to acquisition price which drives 3-6 times MOIC.

As the portfolio builds the ratio of organic capital increases giving optionality, diversity, and control. After the completion of Stag, Jadestone is now aiming to complete the purchase of two appraised gas fields in Blocks 05-1b and 05-1c offshore Vietnam in the Nam Con Son basin in the next two months and bring them on stream in 2019, as well as further development of its existing assets in Vietnam’s Malay Basin with the Nam Du and U Minh gas fields.

VW: If everything goes to plan how much do you think the company could be worth? Do you have a bear and bull valuation?

DN: We feel Jadestone can be worth $2.00+ a share. Perhaps much more over time as the company continues to roll-up assets. Timing is tough to determine, but today even with our capital raise, the shares are very cheap. Trading at only $15,000 a flowing barrel and a discounted 0.30 net asset value per share with no debt, $20 million of cash on the balance sheet and plenty of development opportunities in the pipeline this is a very compelling opportunity where we believe the downside is limited. Catalysts to further upside will be closing the two current acquisitions, adding two or three new acquisitions currently being targeted, delivering production and cash flow stability for the company for the first time since inception. Also, recognition in the market that the strategy of new management is working and value is being delivered, re-listing the stock on a more appropriate exchange, further delivered growth longer term.

VW: What do you think of the new management?
They’re very skilled and experienced. Each of the team has 15 to 30 years experience operating in the industry within the Asia Pacific region. The new team also has a longstanding relationship with the principal stakeholders and deep insight to many M&A opportunities. They’re credited with already creating one of the most successful independent E&P business in Asia Pacific, Talisman Energy, and we hope they can replicate this success at Jadestone.

VW: Are there any issues that could derail this thesis? Is the company highly sensitive to oil prices or is this a play on rising oil prices?

As Jadestone’s shares are already trading at a deep discount to the value of the company’s assets, we believe there’s a wide margin of safety here. The stock is not a direct play on oil but a play on management’s ability to buy distressed assets at attractive prices. Of course, as with all investments, there are risks; execution of the new management team, available opportunities, and of course financing risks but today the company has plenty of opportunities available to it and is fully funded.

So, we see much more upside as long as the current environment holds. On the topic of energy prices, I should point out that as part of the Asia Pacific upstream strategy, approx. 50% to 70% of the reserves and production will be domestic gas the majority of which is sold at long-term fixed prices with escalation clauses. This makes the business a natural hedge in a volatile price environment and takes away significant upstream investment risk.

[mount teide] 07/9/2018 07:35

Asia Braces For Much Tighter Oil Markets - OilPrice.com today



'Two months before the U.S. sanctions on Iranian oil exports go into effect, Asian refiners and traders are beginning to line up their purchases for cargo loadings for November.

On September 3, the crude oil trading cycle rolled to the month of November, and sentiment in the Middle East crude trade sharply changed. Asian buyers—whose oil purchases from the Middle East are priced off the Dubai and Oman benchmarks—are anticipating tighter supplies of medium and heavy sour crude grades from November onwards, when the U.S. sanctions are expected to stifle at least part of those Iranian barrels flowing to Asia.

The market’s expectations of reduced flows of both medium and heavy sour grades from Iran lifted the Middle East crude structure at the start of September, sending the November Dubai cash and swap spread surging. This spread between Dubai cash and Dubai swap—a monthly cash-settled swap based on the Platts daily assessment price for Dubai Crude—is generally viewed as an indicator of market sentiment in the Middle East sour crude market......

.....The market will lose “well over 1 million” bpd from Iran with the sanctions, and “that can’t be made up,” John Kilduff of Again Capital told CNBC on Tuesday, expecting WTI Crude prices at the end of this year to reach between $85 and $90 per barrel, with Brent Crude between $95 and $100.

RBC Capital Markets expects the losses of Iranian oil to exceed 1.2 million bpd in the first quarter of 2019, and Iran’s reaction to the U.S. sanctions in November could lead to some sort of “unintended military escalation,” which the markets are currently underestimating.'

[mount teide] 07/9/2018 06:44

David Neuhauser, Jadestone NED and MD of Livermore Partners, a US hedge fund specialising in the energy sector increases Livermore's shareholding by a further 183,900 shares to 32 million shares/6.96%.

Joined them earlier this week by adding to an initial position following further research.

[zengas] 07/9/2018 06:29

Further Director buy announced this am of 183,900 shares at cdn 60.7c/35.7p = £65,600.

Holds just shy of 7% and 32m shares.

[mount teide] 05/9/2018 06:52

The super-bear analysts at Barclays Bank throw in the towel and lift their average Brent price forecast by $25, saying in a new oil market report they expect oil prices to be consistently higher over the next few years than previously thought.


Say Goodbye to Cheap Oil......for now - OilPrice.com today


'Oil prices will be much higher over the next few years than previously thought, according to a new report from Barclays.

The investment bank significantly raised its pricing forecast for 2020 and 2025 in its annual medium-term oil report. Barclays expects Brent to average $75 per barrel in 2020, up from a previous estimate of $55, while prices may average $80 in 2025, up from $70 previously.

The bank noted that the market is dramatically different than it was at this point last year when it issued its previous medium-term report. U.S. shale drillers are maintaining capital discipline, which could lead to lower than expected production levels. OPEC and Russia have demonstrated resolve and laid the groundwork for long-term market management, which could keep supply off the market for years to come.

Also, the U.S. has deployed an aggressive sanctions campaign against Iran and even Venezuela, measures that should translate into more than a million barrels of per day of supply losses. And finally, “several key OPEC producers are at risk of being failed states,” Barclays concluded....

..One interesting conclusion from the report is that Barclays does not expect a boom-bust phenomenon to characterize the oil market over the coming decade, despite such a historic tendency. Short-cycle U.S. shale supply, steady demand growth, and other global supplies should keep oil prices stuck within a $15-per-barrel range. “Of course, a perfect storm of bullish factors would move prices in excess of $100/b if disruptions worsen, economic growth stays resilient, and Permian bottlenecks are not resolved,” Barclays cautions. “Yet we do not see such a price level as sustainable given government stockpiles, a more tenuous economic outlook, and Saudi Arabia and Russia’s stated willingness to keep prices rangebound by raising output.”

Barclays expects the adoption of electric vehicles to continue to scale up, reaching a cumulative 55 million units by 2025, which erases about 1 million barrels per day of oil demand. Gasoline demand could peak by 2030, the bank says.

Astute readers would note that while Barclays expects oil prices to average $80 per barrel in 2025, Brent is flirting with that price level right now in September 2018. The supply losses from Iran, unfolding faster than expected, have complicated the supply picture for the rest of 2018. Brent has gained nearly $9 per barrel since mid-August.'

[highly geared] 04/9/2018 18:33

Looking rather cheap at current levels...

[mount teide] 04/9/2018 10:11

Brent spot hits $79.20 that's means JSE will be getting $81.50 with their $2.30 regional premium.

With an operating cost per barrel currently at circa $33 - this means JSE should be generating circa $48.5/bbl of cash flow from current production = $265m / annum inclusive of the Montara Acquisition; due to close Sept/early October.

[mount teide] 03/9/2018 12:08

Brent up $0.63/0.81% this morning to $78.27 - JSE with their $2.30 regional premium to Brent will be getting over $80.50.

[mount teide] 31/8/2018 11:36

Over the past week or so there has been a large buyer active in the market soaking up any selling at prices between 36.75p and 37.25p.

[mount teide] 29/8/2018 18:18

Brent up $1.22/1.5% today - now back above $77.50.

JSE will be getting close to $80 a barrel for their 13,600 bopd(Stag + Montara) - a cool $1.09 million a day in gross revenue.


The rising oil price today was driven largely by a statement from the head of the IEA that "Robust demand and production uncertainty in some oil-producing countries are expected to tighten the oil markets as we approach the end of the year"

The IEA head continues to believe that oil demand growth will continue to be very strong, and coupled with the collapse in Venezuela and what he called the “fragility of production” in countries in the Middle East, the oil markets are set for tightening toward the end of this year.

Outside of war-induced outages, Venezuela is suffering the worst loss of oil production in history amid an unprecedented economic collapse, years of mismanagement and underinvestment in the oil industry, an aggravating humanitarian crisis, and a leader who is hell-bent on clinging to power. Venezuela’s inflation will surge to one million percent by the end of this year as the country with the world’s biggest oil reserves remains stuck in a profound economic and social crisis, the International Monetary Fund predicts.

According to OPEC’s secondary sources, Venezuela’s oil production in July dropped to below the 1.3 million bpd mark at 1.278 million bpd; plunging 47,700 bpd from June. Some analysts expect Venezuela’s production to fall to below 1 million bpd by the end of this year.

U.S. sanctions on Iran’s oil exports are expected to take around 1 million bpd or possibly even more off the market in Q4, which would further tighten the oil market if demand growth keeps its pace.

[mount teide] 29/8/2018 16:26

India is set to overtake China as the top driver of global oil demand growth according to research carried out by Wood Mackenzie - CNBC today


'India is set to overtake China as the biggest source of growth for oil demand by 2024, according to a forecast announced Monday by research and consultancy group Wood Mackenzie.

The country's oil demand is set to increase by 3.5 billion barrels per day from 2017 to 2035, which will account for a third of global oil demand growth. India's expanding middle class will be a key factor, as well as its growing need for mobility, according to Wood Mackenzie.

On the other hand, China — currently the second-largest oil consumer in the world — may soon need less oil. In 2017, it overtook the U.S. as the biggest importer of crude oil, but it's set to see a decline in oil demand growth from 2024 to 2035, Wood Mackenzie Research Director Sushant Gupta told CNBC.

That's due to two trends: Alternative energy sources such as electricity and natural gas are displacing the need for gasoline and diesel. And, a more efficient freight system and truck fleet will also result in sluggish road diesel demand, Gupta said.

For India, as demand grows, an oil shortage is already imminent. The country is only expected to add 400,000 barrels per day in firm refinery capacity out to 2023 — paling in comparison to demand growth — warned Wood Mackenzie.

"We think the most likely situation is that India would need between (3.2 million and 4.7 million barrels per day) of new capacity out to 2035 to remain self-sufficient in transport fuels. So we are talking about a future capacity which is 1.7 to 2.0 times the current. This is clearly an uphill task, unless domestic refiners can commit to their planned capacity additions," Gupta said in a Wood Mackenzie release accompanying the India demand projection.

With India's refinery yields still highly tilted toward diesel, Wood Mackenzie added that India needs to start focusing on increasing gasoline. However, with a global surplus of gasoline expected in the long run, India could consider importing the fuel, the research firm suggested.

India's fate has long been tied to oil prices, as it is a net oil importer, and rising prices are set to hit its economy. As a result, its currency could continue weakening, its current account and trade deficits are set to widen further, and its growth could be affected.

In the long run, the country could choose to switch its passenger transport sector — cars, vans and utility vehicles — to run on electricity instead, suggested Gupta.'

[mount teide] 29/8/2018 00:20

Spangle - ref Ogan Komering contract re-negotiation - although nothing specific was mentioned, Paul seemed quietly confident a new contract would be secured in the not too distant future and mentioned in the meantime the Board had taken the decision to keep the Company's local office and small specialist team in place to await developments.


Livermore Partners - a US hedge fund specialising in the energy sector had the following comment in its Q2/2018 Report regarding its investment in Jadestone Energy:

'With Jadestone (JSE), our thesis continues to manifest along with very strong returns for this exciting and growing oil producer. Jadestone successfully IPO'd in London in August under the symbol, JSE.

JSE executed a $200mm transformational Australian asset acquisition from Thailand giant, PTTEP. We hold a seat on the Board of Directors of JSE(Livermore CEO is a Non Exec), added to our equity position on the raise, and continue to focus hard on its growth trajectory.

Jadestone has a chance to be a true small cap champion and the potential to be a $1B company in the face of Brent oil's uplift near $75 a barrel. Adding to this are the strong free cash flows from the new Montara acquisition, which on a proforma basis, will allow $100mm of annual FCF for a company today trading at a large discount (1.5X EV/EBITDA for 2019) to any peers. We continue to feel Jadestone is in a great position to prosper in the years ahead thru both acquisition and organic growth and reflects the strength of an excellent management team. My hats off to CEO Paul Blakeley and his team!'

[spangle93] 28/8/2018 22:04

Thanks for feeding back your notes, Mount Teide. Great to hear about Vietnam project funding source - I know it must depend on prices and production being maintained, but at least it's indicative of not having to raise funds for this attractive development.

Did they have any timeline, cost, or percent confidence in completion, for Ogan Komering renegotiation? Would any deal be back-dated to the Pertamina 100% award date?