Jadestone Energy Share Discussion Threads

[mount teide] 08/10/2018 14:17

The leverage effect on cash flow generation of rising oil prices/new commodity cycle on recession leaned largely fixed operating cost businesses(still rapidly falling in JSE's case):

Brent average Prices - since the recession low in H1/2016
$39.00 - H1/2016
$48.50 - H2/2016
$51.50 - H1/2017
$56.50 - H2/2017
$70.50 - H1/2018
$76.00 - Q3/2018
$82.50 - Q4/2018 to date
$84.00 - Current Spot Price


In H1/2017 the Stag Field under the previous operator saw the differential between the price of Brent and the operating cost per bbl average $8.00, rising to $24.00 in H2/2017 under Jadestone's operatorship, and then onto $42.50 in Q3/2018 (rounded to nearest 0.50 cents).

Inclusive of the $2.50 regional price premium to Brent - during Q4/2018 it will be averaging over $52.00 and at current spot circa $54.00

[zengas] 08/10/2018 10:37

Worth mentioning that Montara is described as a "deep value asset acquisition".

Stag and Montara producing 13,900 bopd with more to come from an upcoming Stag infill well. They have 10 exploration leads/prospects identified.

At Montara, there is the Tinglewood prospect.
Also a number of gas discoveries (not included) ie Pathaway/Billyara and Tahbilk which at some point might be developed. There's a possibility that other discoveries in the area might be linked to Montara as a hub.

At Stag there is the large Plantagenet prospect as well as Skua East and South, Updip Rowan and Skua North to the producing Skua wells.

Should have stated earlier that where the upcoming Stag infill well is estimated to do circa 1200 bopd, there is to be two additional infill wells at Montara on the existing P2.

There's a further 3 additional infill wells targeting additional resources estimated at an initial 3,000 bopd per well.

Page 15 September presentation:- Montara

"Spare capacity in FPSO allows nearfield discoveries to be quickly monetised at low cost".

"3D survey to define new prospects - 8 leads identified".

"Opportunity for an infrastructure hub for tie-back of shut in fields and stranded discoveries".

Page 16:- Stag

"2 near field exploration prospects identified".

In addition to above worth noting the 93.8 mmboe 2C which will convert in part next year to the 2 discoveries of Nam Du and U-Minh. Not counting the Tho Chu field there shows about 18 additional prospects.

Then the upcoming 'OK' producing PSC that is not included in the CPR.
On top of producing assets there appears in excess of 30 additional prospects and leads. Wouldn't srprise me if we also pick up some low cost stranded assets to link to Montara at some point.

Given the amount of prospects and leads above, some of those on a success case could be worth as much as, or a multiple to the $885m/£665m valuations given above for the Montara/Stag, NamDu and U-Minh 2P/2C ( 'OK' and SC56 not included).

[mount teide] 08/10/2018 09:10

Montara - the prospect of op costs savings of circa 20% combined with production increases from operational efficiency improvements(field uptime etc) has the potential to drive op cost per barrel down materially - which the two infill wells in 2019 should materially drive down further. Throw in a consensus average Brent price for 2019 of circa $80 plus JSE's $2.50 regional premium and the next 12 months should be very interesting from a cash flow perspective.

Likewise at Stag - the two infill wells will continue to drive down the the op cost per barrel from the 35% savings already made following transfer of the field operatorship to JSE last summer.


What's clear with respect to the Montara asset is that since the beginning of the year when it became apparent to the onboard Field and FPSO personnel that the assets were going to be sold - (physical surveys being carried out etc) - the production performance strongly suggests the personnel onboard the assets appear to have been largely going through the motions - resigned to the inevitable. The recent involvement of Jadestone's operational team working alongside the existing onboard teams is already delivering significant operational progress and this is likely to accelerate rapidly once they take over full operator-ship of the field/FPSO - currently expected within 2-3 months following completion.

[dorset64] 08/10/2018 09:02

Added a few more myself on Thursday and this morning. Nowhere near some of you guys but now my 3rd largest holding, behind ARS (1st) & UOG.

Given its also an O&G, anyone else here also in UOG?

[someuwin] 08/10/2018 08:57

All buys so far...

[mr. t] 08/10/2018 08:54

I bought more the last week and Jse is now my third largest holding. The economics look good.

[mount teide] 08/10/2018 08:31

L2: 6 v 5 / 44.0p v 46.0p

Advfn charts are notoriously slow at updating real time share price movements.

[highly geared] 08/10/2018 08:14

Basem, for starters, but Zengas posts articulates the value much better than I can and he is rightly looking at £2 in the not too distant future.

It’s all about the POO and where it will go in the coming months/years...

[zengas] 08/10/2018 07:59

Header valuation on the 4 assets (not including 'OK') = $885.7m = £655m @ £1/$1.35.
Based on $66,$67 & $68/barrel oil price for 2018, 2019 and thereafter.

Current 461m shares = 142p and doesn't include 'OK' producing PSC or SC56.

If 'OK' (which has production and discoveries and significant exploration) is as similar to Nam Du/U-minh at £238m = possible 51p. Nam Du/U-minh are not in production whereas 'OK' is - so 'OK' could be a surprise re value. That combination would put the underlying value up to near 200p level (ie 193p).

Additional cash from the higher oil price will also be making a difference and with the divestment programme by majors, it's not unreasonable to see the surplus cash being put to a further asset acquisition. At the last conference call, the acquisitions team confirmed they are looking at assets.

Also given that these ex Talisman people have created $6-$7 billion value in assets sales, i'm hoping that 200p will be exceeded in time.

[mount teide] 08/10/2018 07:42

HG - up 26% since listing on AIM less than 2 months ago - thread still as quiet as church mice - with the huge JSE 'value' story still in the foothills.

Been great for those who've done their 'homework' on this under-researched company by II community and its outstanding new management team - and want to build up large initial positions without the price running away.

Exactly the same scenario occurred at TXP last summer enabling two friends and I to build 1% initial positions in the open market at a price very close to the AIM Listing price(since up 170%)

[basem1] 08/10/2018 07:40

Realistic price target of ? £1 ??

[zengas] 08/10/2018 07:37

Montara 10,300 bopd.
Stag 3,600 bopod.

Total 13,900 bopd and at $80/b = $400m+ revenues.

Stag infill well this quarter with an estimated initial additional 1,200 bopd.

This quarter Ogan Kommering ('OK') PSC expected to complete.
Should add circa 1,000 bopd and 400 boepd gas if 'OK' on same terms as previous.

'Jadestone’s net 50% working interest share of production from the Ogan Komering PSC, held up until May 20, 2018, averaged approximately 1,500 boe/d and is weighted approximately 66% oil and 33% gas.'

'Jadestone, as the prior partner in the PSC with Pertamina, has been directed to proceed with direct negotiations for participation in the new Ogan Komering Gross Split PSC with Pertamina.'

'The 1,155 km2 Ogan Komering PSC is located onshore South Sumatra, Indonesia. This area benefits from extensive infrastructure and growing local energy demands.'

Above should lift oil production to 16,000 bopd + 4-500 boepd gas.'

If 'OK' proceeds as expected - it will also add an uplift in reserves and 2C as these were not in the CPR.
Contains 3 gas discoveries to develop and significant exploration upside.

Coming year 2 further infill wells at Stag and 2 at Montara.

All while progressing the Nam Du and U Minh gas fields to development next year.

September Presentation.

[highly geared] 08/10/2018 07:22

Hopefully the market is realising that with the share price at around 1/3 net present value ( based on POO at lower levels and without the operational efficiencies to be driven out by the JSE team) that there’s tremendous value here. The Aus assets are producing around 14,000bopd and should be at 15,000+ by year end. Other assets to be developed in 2019 into a buoyant oil and energy market. Timing is everything....

[mount teide] 08/10/2018 07:06

L2 - moving up: 2(20K) v 2(15k) / 44.0p v 45.0p

[mount teide] 05/10/2018 15:28

L2 strengthening: 2 v 1 / 43.4p v 44.0p (rest 45p or above)

[mount teide] 03/10/2018 08:11

someuwin - it was a first and very modest attempt at setting up a basic thread with charts.

You're clearly highly talented at setting up ADVFN threads with more than just the basic header and charts - how about you creating a new more detailed 'stock related' thread for us all using a copy of this threads header text etc?

[someuwin] 03/10/2018 07:37

MT - why not start a new thread and make it 'Stock Related' rather than 'commodities related' otherwise many people won't see this thread unless they have 'commodities' selected.

You can just copy the header text from this thread to the new one.

[spangle93] 03/10/2018 00:26

That excerpt wouldn't be from Linkedin wouldn't it, Mount T ;-)

If so, you missed off his OBE !!

If you dug through the various roles pre-Talisman, there's an eclectic mix, from geologist through drilling engineer to operations manager, to country manager.

No project management though - couldn't find one at Jadestone on LinkedIn or in their senior management on their website. I would bet that whoever it is would be ex-Talisman, who were very competent at executing projects, but odd that no names come up

[mount teide] 02/10/2018 23:49

Spangle - take your point.

Paul Blakeley's outstanding track record managing oil company businesses in the North Sea and SE Asia is what led JSE's three activist hedge fund shareholders to recruit him and his team from Talisman Energy. So he certainly came well regarded and its encouraging that the hedge funds went for someone with long experience of successfully turning around underperforming businesses/assets.

Blakeley's bio certainly reads well:

A business leader with thirty-five years in upstream oil & gas, and an extensive background and capability in all aspects of upstream operations and integrated processes.

Demonstrated track record of building and leading successful businesses, and delivering exceptional outcomes from organisations.

• Demonstrated track record of turning around underperforming businesses to become top performers in the industry.

• Consistent history in adding value, and has generated up to USD7 – 10 billion in net present value to an organisation.

• Built and lead large businesses up to USD5 billion in annual revenue, and 2000 employees, both across Europe and Asia Pacific/Australia, yet remains grounded to the details of technical excellence, cost and efficiency.

• Has an entrepreneurial style with a reputation for upstream knowledge and capability in both the industry and investment community, taking a strategic approach to decision-making and with a bias for results.

[spangle93] 02/10/2018 21:42

Mount T - ref your admissions doc

"cutting sustaining capital expenditure and stabilising production" - all well and good, but sustaining capital is typically the money that is spent on maintenance projects that keep offshore installations safe.

I would have preferred them to have written "cutting the cost of sustaining capital projects", or "executing sustaining capital projects more efficiently". Let's hope that's what they meant.

The E&P industry has a mixed track record of executing greenfield capital projects, usually not meeting its target at FID on at least one of cost, schedule, and producibility. Its record on modification projects is worse, and is only topped in the Dire tables by its performance on sustaining capital projects, which individually are much smaller in $$s but collectively account for a significant chunk of annual expense.

If they can indeed carry out such projects on time and on budget, they will be top quartile.

[basem1] 02/10/2018 18:33

Edit DGOC. Not DCOG

[basem1] 02/10/2018 18:30

Exciting times at present. Best oilers imo at present. Fully funded significant upside and not too reliant on exploration. GENL RRE DCOG JSE Higher risk MATD PMG and I3e

[highly geared] 02/10/2018 18:16

Interesting!

Even assuming a conservative 15,000BOPD, 300 days production and a $35 operating cost differential, this generates $157.5 million net revenue ( ex G&A) and assuming similar metrics for Montana.

So, c. £120 million net revenue.

They are likely to be at c 20,000BOPD by this time next year which will smash the above figures out of the park if Brent stays around current levels.

Seems a steal at current levels?

[wanobi] 02/10/2018 18:08

MT, think I'll have some of these too,,, many thanx, cheers Wan

[mount teide] 02/10/2018 16:38

The Admissions document highlights well the potential Montara holds to increase production and reduce operating costs once JSE takes over as operator - currently expected by year end.

However, JSE's material 2019 production growth and cost saving targets for Montara could well prove conservative if the very modest performance of the existing field and FPSO operator is a reliable guide. And with a 3-5 year asset development plan based on $55 oil the Montara acquisition timing looks inspired.

Admission Document - Montara

'The Company has already identified multiple operational improvements at the Montara Assets and believes it can execute these improvements to increase production, whilst also reducing fixed operating costs by up to 20%. The Company has already made significant cost savings at Stag, reducing fixed operating costs by 35%, cutting sustaining capital expenditure and stabilising production. The Company is now focused on increasing production at Stag through drilling infill wells over the next two years and completing well workovers.

The limited number of qualified offshore operators in Australia looking to deploy second phase specialisation, and Jadestone’s recently proven ability to obtain regulatory approvals, in particular approval as operator culminating in the transfer of operatorship of Stag in July 2017, proved a significant competitive advantage when engaging with the seller.

Reflecting on the savings obtained at Stag to date, the Company is confident of its ability to deliver significant additional value creation at the Montara Assets following a successful transition period and subject to the required investment by the Company.'


The analysis below of the trend between the price of Brent and the operating cost per bbl of the Stag Field gives some good insight of Montara's potential under JSE as operator.

In H1/2017 the Stag Field under the previous operator saw the differential average $8.00, rising to $24.00 in H2/2017 under Jadestone operatorship, and $43.50 in Q2/2018 (all rounded to nearest 0.50 cents). At current Brent pricing it will be close to $55.00 inclusive of the $2.50 regional price premium to Brent.

Brent average Prices
$39.00 - H1/2016
$48.50 - H2/2016
$51.50 - H1/2017 - Stag Op Cost/bbl: Q1($45.84)/(Q2/$41.23) - Previous Operator
$56.50 - H2/2017 - Stag: Q3($32.99)/Q4($32.15) - Jadestone as Operator
$66.75 - Q1/2018 - Stag: Q1($34.27)
$76.50 - Q2/2018 - Stag: Q2($33.09)
$85.00 - Current Spot Price


AIMHO/DYOR