Jadestone Energy Share Discussion Threads

[rimau1] 16/1/2024 17:39

IMO as another regional SE Asia producer VLE on a broadly similar marketcap and production profile to JSE is much cheaper with net cash of $150m and a $220m market cap and far less operational risk. VLE today is where i thought JSE would be 12 months ago.

[ashkv] 16/1/2024 17:33

Per my calcs 66% of the 2024 lower Opex figure can be attributed to the oil assets CWLH (including 2nd CWLH acquisition) 4,200-5,000 boe/d and Penmal 5,000-7,000 boe/d. Akatara 6,000 boe/d in regular production only from late Q2 2024 per guidance, Sphorm 1,100 - 1,500 boe/d..

Given CWLH recent acquisition is forecast to pay off its close to US$100mn abandonment costs in 2024 - one can estimate how much the prior acquired similar CWLH ownership stake is forecast to generate in profit...

Moreover, Penmal assets infil drilling success (Current production 7,000 boe/d 100% to JSE) has been a very welcome dose of good news for JSE.... That appears to be entirely overlooked by the market :(

As MT conveyed - spike in Opex for Stag and Montara in 2024 to set right the mismanagement of the early years of JSE operatorship.

Reassuring that production should continue if any Montara tank issues come to fore given a dedicated shuttle anchored to Montara....

[1ajm] 16/1/2024 16:49

Cheers Ash-
The shares I bought in the mid 20's were after montara shut in for the 2nd time with a view it wasn't a serious problem, but they were only a top up unfortunately bringing my average down. imagine simply entering at 25p

MT-
Thanks for the insight, that is a good sign also with DNV. they have opex $33.5/boe I think, again averaging down by mixing the akatara gas opex in with their oil assets. It's a bit misleading, as the revenue weighting isn't even.

King Suarez-
Yes it's annoying, slide 7 is almost laughable in the presentation. Like I said above it's misleading when the revenue value of comparable gas boe and oil boe are so different. They would maybe argue that profits per boe are closer but it makes working revenue/profit out a bit confusing.


If someone used slide 7 alone to work out financials how out would they be?

[bradvert] 16/1/2024 16:49

KS, Actually they did. The non Stag/Montara assets will have an opex of around $12 per barrel this year.This was helpfully provided on page 7 of yesterday's presentation.

[dunderheed] 16/1/2024 16:46

Yes KS I follow your points exactly and was concerned regarding obfuscation as well, because we also held other companies where at best that has happened (!) and whereas the experience profile significantly greater here, I have lost trust in the CFO and become paranoid that the full management team could be becoming similar to "elsewhere" as well!
Hopefully very wrong as there is very good diversification to fall back on whilst the weaker assets become irrelevant.
IMHO.

[king suarez] 16/1/2024 16:07

I feel that JSE quoting an opex/boe is farily meaningless as we are mixing oil, gas and NGLs - the lower opex/boe of the gas developments skew the metric downwards. JSE management can say, "Look y-on-y we've lowered OPEX per barrel aren't we efficient?" er no, your costs have gone up for the assets you have been managing, you've just acquired some lower cost and lower revenue/boe gas assets to dilute the opex/boe and offset this!

The reality is that Stag and Montara profitability has been revised downwards due to far higher costs (c$60/bbl?!) and we don't have a separate, clearly indentifiable, opex and revenue/boe metric for the 'non-Montara/Stag' assets to work out their respective profitability - at least not without some work to manually calculate (converting gas price/mmcf into boe etc).

Whether deliberate obfuscation or otherwise, it is annoying making things harder than neccessary to evaluate true value - anyone else feel the same?

[mount teide] 16/1/2024 15:12

1AJM - 'Do you believe JSE have changed their mindset on how they are going to operate and maintain their assets?'

With reference to the Montara Venture FPSO, this has been forced on them - Australian regulator NOPSEMA instructed Jadestone to appoint a high quality Classification Society surveyor to oversee the inspection and maintenance regime and, to assist JSE's onboard team to develop the future standard required to ensure the FPSO can be safely and efficiently operated through to the end of its commercial life.

That Jadestone appointed a DNV surveyor to carry out this role speaks highly as to their determination to put in place a much better inspection and maintenance regime - as DNV are one of the world's leading Classification Societies, and used by many of the leading shipping companies, as a result of their very strict interpretation of the rules and the high standards of compliance they expect from the ship owners who appoint them.

If you charter a ship that has the likes of DNV or Lloyd's Register as the Classification Society, you can rest assured it will have been inspected and maintained to a very high standard - such ships invariably command a premium charter rate. The likes of Shell and BP only charter ships with such provenance.

By 2025, Montara's current $60 opex/bbl should experience a step change drop, since the circa $6 opex/bbl shuttle tanker charter cost will fall away, as will most of the hefty FPSO inspection and maintenance costs incurred in 2024 to bring the remaining sea water ballast and cargo tanks back into an operational condition.

AIMHO/DYOR


Edit: Valeura Energy has given opex/bbl guidance for 2024 of $26. JSE's opex/bbl at $33.5 mid point is fairly reasonable by comparison considering it includes elevated contributions from Montara and Stag.

[sga64] 16/1/2024 15:02

Remember the core of PB and C Suite expertise is acquisition of O&G assets, so against the back drop of an underwhelming update if they can secure 1 or 2 decent transactions in 2024 (which we know they can) then things could improve considerably.

[1ajm] 16/1/2024 13:19

It would appear that way. Again the COO might feel the need for different actions/costs.

They should have RBL answers, akatara nearly online, hopefully four more months of production and a bit more regained trust by the time 2023 FY financials are released if same time as last year.

H1 $59mn loss iirc
H2 thoughts? decent end of year sales but problems still until september.

Things going right they can probably make 2024 update and hopefully successes compensate a little for the 2023 results. I would still expect it to be rough on the share price so will probably wait till then to top up or not.

JSE have now hopefully woken up to the reality in costs of operating these old assets. I have called them greedy for their old approach in recent weeks/months and maybe this is the reality of that and cost of correcting the poor decisions that MT pointed out.

Again all of this is still damage recovery, not a good place to be.

Will be interesting if they go for more gas acquisitions with lower revenue but higher margins after all this.

I am a bit apprehensive over the large ($200mn? cant remember exactly) upfront investment in Akatara paying off, I need to look again at what they expect the ROI to be and costs of maintaining production levels.

I did contemplate selling some shares that I picked up in the mid 20's when I needed about 20 minutes to come up with the positive points in my post after reeling off the negatives with no problems. But I've held, if I regret that or not we shall find out. I'm aware that with hindsight I should have sold out the second montara problems started, we live and learn.

Getting above 50p like those forecasters predict soon would be a dream it's just difficult to see without positive material changes. Do they offer comprehensive reasoning for their forecasts?

[ashkv] 16/1/2024 12:06

Don't the added costs to maintain the assets / aggressive preventive maintenance convey that JSE have imbibed the hard lessons?

Also yesterday's update mentioned hiring on COO is on track - to micromanage the operational aspects of JSE's 6 assets in multiple jurisdictions...

1AJM16 Jan '24 - 10:22 - 20669 of 20671
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I agree with what you are say MT. Interesting that thai ended up where JSE now are.

Do you believe JSE have changed their mindset on how they are going to operate and maintain their assets?

Still need to do more with regards to the team having the proper operational expertise?

[ashkv] 16/1/2024 11:36

For whatever it is worth ->

Mark Wilson at Jefferies has a 12 month target for JSE at 55p post Full Year Guidance on 15 Jan 24 (Down from 60p at start of 2024) [For context Mark Wilson who is uber conservative has an ENQ price target of 14p and TLW price target of 27p]

David Round at Stifel has a 12 month target for JSE at 70p post Full Year Guidance on 15 Jan 24 (Down from 85p at start of 2024)

Average of the above two updated target prices is more than 2x current price!!!

I had further averaged down at 34-35p... should have waited!!!

My money is where my mouth is!!!

Gut instinct is that JSE has kitchen sinked bad news - And market is overlooking Akatara imminent start, Penmal 7000 boed infill success YE 2023, CWLH second acquisition YE 2023 etc and focusing on 20% of YE 2024 JSE production Montara issues!!!

[nigelpm] 16/1/2024 11:33

Good summary -

In essence, Jadestone's diversification efforts, especially in Malaysia and Akatara, are key to offsetting some of the challenges. Also, I can see some further M&A activity coming this year. So maybe a good recovery story from here?

[1ajm] 16/1/2024 10:22

I agree with what you are say MT. Interesting that thai ended up where JSE now are.

Do you believe JSE have changed their mindset on how they are going to operate and maintain their assets?

Still need to do more with regards to the team having the proper operational expertise?

[xxnjr] 16/1/2024 10:08

Great post Mount Teide. Well IMHO we could do with a new CEO at the helm.

[mount teide] 16/1/2024 09:58

1AJM - your research, while useful, completely misses the key point - all the problems the company has experienced over the last 18 months were AVOIDABLE or could have been largely contained to a fraction of the pain that has subsequently been experienced.


'I note AET have scheduled FSO dry dock in 2028 for $130m capex - that’s the ballpark figure it would have cost JSE - plus loss of production . But it would have been back online much sooner' - Ian Croasdale

Montara Venture is a relatively small VLCC at circa 900,000 bbl oil capacity compared to AET's FSO Palanca's 2,200,000 bbls.

The cost to carry out all of the inspection and remedial work NOPSEMA want carried out on Montara Venture, together with additional work JSE would have scheduled to take advantage of from the docking opportunity, would probably have been somewhere in the region of $30-40m and have taken around 3-4 months max plus towage to/from a Singaporean shipyard. The cost to buy Montara Venture and convert the tanker into an FPSO, was $107m and took around a year.

The previous owners of Montara, the Thai National Oil Company, clearly failed from first production to inspect and maintain the FPSO and production infrastructure remotely close to the standard required under the rules - how do we know? They were repeatedly hit with General and Prohibition notices by NOPSEMA. Rather than directly dealing with the issues they worked around many, resulting in production falling to sub 7,000 bopd and the opex/bbl ballooning to circa $60 bbl, by the time JSE picked up the asset for a net circa $82m. It is a fact that within 18 months JSE had brought Montara's opex/bbl down to an astonishing circa $20 bbl, through operational efficiencies and raising production to circa 10,000 bopd.

However, the great unknown remained - how much high quality inspection and maintenance work had the Thai's actually carried out since the FPSO had been deployed at the field. JSE's failure to employ people with the professional shipping expertise capable of articulating to the Board the need to implement an enhanced level of inspection and maintenance on the FPSO, because of its age and problematic inspection and maintenance background eventually came home to roost.

Even then, the overwhelming majority of the financial issues that have since resulted, could have been avoided - if the JSE management had not disastrously underestimated the scale of and time required to carry out in situ, the inspection and remedial work NOPSEMA subsequently demanded.

Resulting, some 18 months later, of the work still not expected to be complete until H1/2024. And at a cost in terms of lost production, standby tankers and, highly expensive inspection and remedial work by small teams of Australian based specialists, limited by the onboard accommodation capacity, of now probably many, many times what it would have cost by using a specialist SE Asian shipyard to carry out the work in H2/2022.

In my view, all sadly avoidable - Paul Blakeley, in interview after interview, said our long track record of success, was down to "sticking to our knitting" - identifying and buying attractively priced, high quality second phase O&G assets with material reinvestment potential and operating then more efficiently. This is no doubt very true.

However, with the Montara acquisition, from the outset, Blakeley, should have accepted that inspecting, maintaining and operating highly sophisticated, tanker/FPSO conversions with 20 year plus statutory dry dock exemptions is well beyond his team's area of expertise/'knitting', and as suggested to him at the time, either employ shipping professionals capable of performing this task or, by selling and leasing back the FPSO to a shipping company like BW Offshore who specialise in converting oil tankers into FPSO's and operating them in the field - they have more than 40 such projects to their name and an exemplary industry reputation.

Sadly, hubris from the huge initial success of getting NOPSEMA to reinstate the full use of all Montara's production handling equipment immediately prior to completion of the purchase of the asset, and subsequently reducing the opex/bbl from over $60 to an astonishing $20 within 18 months, has led shareholders to where they find themselves today.

The management's extremely poor handling of the Montara FPSO issue has been entirely responsible for this state of affairs - it could have been so much different, as in almost every other respect (securing of high quality assets for peanuts etc) the management has performed extremely well.

Having said all this - on the balance of probabilities, I do today see a situation where the worse is now behind the company with respect to the impact that the legacy assets are likely to have on its future performance, and consider at this price point, the prospects for capital growth over the next 2 years offer very good risk/reward.


AIMHO/DYOR

[ashkv] 16/1/2024 09:42

Can I get some upvotes for my hardwork, fact based replies to the negative view... as else those who are not logged into ADVFN do not get to view the counter point!!!

Thanks

[ashkv] 16/1/2024 09:39

Are you serious!!! haha

As Tax/Royalties is included next to Opex figures lets just redefine Opex and include Carbon tax plus royalties? :) :)

It is called getting all the negatives out and starting with a clean slate!!!

I would very much invest in JSE at today's ridiculously low price!!!

1AJM16 Jan '24 - 09:37 - 20664 of 20664
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Why do you think they felt the need to mention royalties and carbon costs right next to the operational costs?

[1ajm] 16/1/2024 09:37

Why do you think they felt the need to mention royalties and carbon tax costs right next to the operational costs?

[ashkv] 16/1/2024 09:35

JSE has exceeded mid-year revised top guidance for 2023!!!

It is apparent to anyone with any insight on the firm that the guidance figures appear conservative - all depends on Akatara start per guidance.

With Montara currently producing at 7000 boe/d management conveyed on 15 Jan 24 call that Montara guidance of 5,000-6,000 boed takes into account declines and possible brief periods of being offline...

Lets see how Serica does....

SteMiS16 Jan '24 - 09:31 - 20662 of 20662
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The company can put out all the projections for 2024 it likes but, with it's history of overpromising and underachieving, the market simply isn't going to take them on trust. 2023 looks like another year in which JSE fails to deliver any real profit.

[stemis] 16/1/2024 09:31

The company can put out all the projections for 2024 it likes but, with it's history of overpromising and underachieving, the market simply isn't going to take them on trust. 2023 looks like another year in which JSE fails to deliver any real profit.

[ashkv] 16/1/2024 09:26

Since when is taxation an operating cost??

1AJM16 Jan '24 - 09:17 - 20657 of 20660
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the $30mn for royalties and carbon tax is a cost? thats where I got Operational costs to 300

shocking start to the share price Recovering currently atleast.

[ashkv] 16/1/2024 09:25

Current predicament benefits no one other than shorters... Per Euroclear substantial number of shares are borrowed out / likely shorted.

impossible12316 Jan '24 - 08:53 - 20653 of 20659
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Can anyone actually believe senior management esp Mr Blakeley not know more up-keep costs will be required for Montara and Stag in the future? These are old production wells, and in decline. If not, he ought not to lead JSE after calamity after calamity; the sharebacks and dividends - instead of conserving cash for increasing costs for Montara and Stag, and acquisitions - only have benefited the major shareholders and not retail or small investors.

I do not want to sound pessimistic. I think the share share price will do well if maintaining this level or above 25p until RBL renegotiation has been concluded.

A saviour for small shareholders would be a predator in the short term. Even then the major shareholders might not play ball; they could sequestrate JSE super-cheap.

[ashkv] 16/1/2024 09:23

JSE share price is irrationally low.

At 5,500 boe/d Montara is 20% of 2024 forecast exit production 26,000 per even 1AJM..

Share price is not reflecting Akatara or Penmal addional 3-4,000 boe/d production!!!

Though it would appear management is not factoring any additional barrels from the Montara drill in q4 2024 for 2024 guidance!!!

yasX16 Jan '24 - 08:27 - 20652 of 20656
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Montara continues to be a thorn in the side of JSE. Given the history, notwithstanding decreasing reliance on this asset, market will factor in the risk of montara surprising ince again to the detriment of JSE.

Overall the reaction to the update yesterday is overly severe presumably reflecting the aforementioned risk.

[nigelpm] 16/1/2024 09:18

Yes - clear buying below 30p - I'm stunned it's back here to be honest.