Jadestone Energy Share Discussion Threads

[mount teide] 12/6/2024 14:49

How Jacinda Ardern left New Zealand on the brink of blackouts - Telegraph

Fallout from country’s oil ban offers dire warning for a Labour-run Britain

Starmer is dangerous and untrustworthy, and cast in the same mould - Energy policy is the one and only reason needed NOT to vote Labour.

System resilience needs base load and renewables don’t offer that and they need expensive back up. If CO2 is an issue, which is debatable, we need far more nuclear.

Moral of the story: Go woke - go cold and dark !

'Sir Keir Starmer is standing by a pledge to ban new drilling in the North Sea, despite New Zealand abandoning a similar policy amid blackout fears.

Labour’s manifesto, due out on Thursday, will feature a pledge to block all new licensing for oil and gas as one of its key energy policies.

The party “will not be issuing licences to explore new [oil and gas] fields as we accelerate to clean power”, a Labour spokesman confirmed on Tuesday.

It follows last weekend’s announcement that New Zealand’s government was lifting a ban on new oil and gas exploration.

The ban was announced by former prime minister Jacinda Ardern in 2018. “The world has moved on from fossil fuels,” Ardern proclaimed at the time.

New Zealand’s trailblazing policy, which was the first of its kind, became a key inspiration for the Labour Party’s own plan.

However, some in the party are now questioning the commitment after New Zealand resources minister Shane Jones last weekend denounced its own ban as a disaster – and revoked it.

It followed three years of rising energy prices that have left 110,000 households unable to warm their homes, 19pc of households struggling with bills and 40,000 of them having their power cut off due to unpaid bills, according to Consumer NZ.

Since April the situation has further deteriorated: Transpower, the equivalent of our National Grid, warned that the nation was at high risk of blackouts.

New Zealand’s shift to renewables meant it no longer had the generating power to keep the lights on during the cold spells that mark the Antipodean winter, said Transpower, as it begged consumers to cut their electricity consumption.

The threat to New Zealand’s energy security comes despite the fact that geologists have discovered billions of cubic metres of natural gas in the seabeds around the country.

Sean Rush, a leading New Zealand barrister specialising in petroleum licensing law and climate litigation, called the oil and gas ban “economic vandalism at its worst in exchange for virtue signalling at its finest”.

Rush warned Labour off a copycat policy, saying: “There will be no benefits to UK energy security by banning new exploration drilling. You will simply disown an industry in which the UK has been world-leading.”;

Jones said last week: “Natural gas is critical to keeping our lights on and our economy running, especially during peak electricity demand and when generation dips because of more intermittent sources like wind, solar and hydro.”

Such warnings are echoed by energy experts in the UK, where over 75pc of total energy consumed still comes from oil and gas.

Half comes from UK waters – but it too will drop off a cliff if Labour implements a ban on new drilling, warns the industry.

Offshore Energies UK (OEUK), a trade body, says there are about 280 active oil and gas fields in UK waters – of which 180 are due to shut down by 2030.

Without new ones to replace them, UK gas production is predicted to more than halve by the end of the decade.

Jenny Stanning, director of external affairs at OEUK, says exploration is essential to simply slowing the decline in output.

“The New Zealand experience shows how important it is for countries to carefully manage energy transition and energy security. We will need oil and gas for decades to come so it makes sense to back our own industry rather than ramping up imports from abroad.”

The scale of the UK’s reliance on oil and gas is huge: the nation consumes 77 billion cubic metres of gas a year. That’s equivalent to 1,100 cubic metres per person, or 14 double decker buses’ worth in terms of volume.

About 40pc goes to generate electricity while much of the rest is burned in the 25 million homes that rely on gas boilers for warmth and hot water. We also consume about 61 million tonnes of oil – just under a tonne per person – most of it used to power our 32 million cars.

Claire Coutinho, the Conservative energy secretary, claims that the New Zealand example shows the risks of Labour’s cavalier attitude to the North Sea.

“Labour’s energy policy is a mess,” she said in a tweet. “Their proposal to ban new oil and gas licences was tried in New Zealand. They struggled to keep the lights on and have now had to reverse it. Climate policy can’t come at the cost of our energy security or it will fail.”

Sir Keir Starmer has, however, repeatedly made clear his party’s determination to move on from fossil fuels. The end of oil and gas extraction “has to happen eventually” and the “moment for decisive action is now” he said in a speech last year.

Green groups are pushing Labour to stick to that commitment. Tessa Khan, executive director at Uplift, an environmental group that campaigns to shut down UK oil and gas production, says it is “laughableR21; to blame New Zealand’s energy problems on the ban on new exploration licences.

“The real lesson for the UK from New Zealand’s experience is the need to accelerate the roll-out of homegrown renewable energy,” Khan says.

“Banning new licensing provides a clear signal to the oil and gas industry that the UK government is serious about the transition and that companies now need to deliver on their long-advertised clean energy promises.”

Others disagree. Russell Borthwick, chief executive of Aberdeen & Grampian Chamber of Commerce – the region that lies at the heart of the UK offshore industry – says the UK needs a managed and nuanced transition to low carbon energy.

“The New Zealand experience is a salutary lesson in why it’s so important to devise a better approach to energy policy,” he says.

“Oil and gas will still make up 50pc of our energy requirements by the mid 2030s and will even provide over 20pc of our energy as we reach net zero by 2050.”

The UK should prioritise the North Sea as long as it needs oil and gas, believes Brendan Long, an energy analyst with WH Ireland Capital Markets.

“The resources of the UK can be produced with lower emissions than elsewhere in the world – reflecting the engineering acuity of the UK’s energy industry and their willingness to invest in low carbon strategies.”

New Zealand’s experience suggests much of the UK industry would not survive a ban on new drilling.

“Back in 2018, at the time of the ban, there were 20 international and five local companies engaged in exploration and production in New Zealand,” says John Carnegie, chief executive of Energy Resources Aotearoa, the local industry trade body.

“Since then, exploration has fallen dramatically. We only have nine remaining investors, seven international and two local. The rest have left.”

The same may already be happening in the UK. Offshore operators such as Serica, Harbour and Deltic have announced that the “chilling effect” of Labour’s pledges was prompting them to move their investments abroad.

Robin Allan, chairman of Brindex, which represents the UK’s independent offshore companies, says: “New Zealand’s ban was a politically motivated decision which ignored data on oil and gas demand, the advantages of domestic production and a realistic pace of decarbonisation.

“The Labour Party should see what is happening in front of their eyes in another island nation which has already implemented a poorly reasoned policy – and think again.”

Last night a Labour spokesman said the UK would do better than New Zealand.

“Unlike this government, we will have a proper plan to take advantage of our North Sea resources in carbon capture, hydrogen and offshore wind, to deliver for our coastal communities and workers.

“Labour’s plan to make the UK a clean energy superpower will reduce the UKs dependence on imported energy, as we increase the percentage of British renewable and nuclear power in our energy mix.” '

[neo26] 12/6/2024 12:06

This year im assuming they will have some questions to answer. Its the turnaround year with diversified assets.

[fardels bear] 12/6/2024 11:25

Normally over by the time you have chewed your last cornflake.

[neo26] 12/6/2024 10:12

Agm is tomorrow, will we get a surprise?

[mount teide] 12/6/2024 08:44

pughman - thanks.


Warren Buffet continues to see excellent value in the O&G upstream sector, by increasing his stake in Occidental Petroleum this week - averaging up at a price some SIX times what he paid for stock close to the covid lows.

Berkshire Hathaway upped its stake in Occidental Petroleum by purchasing 2.6 million shares to lift its shareholding to 250.6 million shares/$15bn - a 28% interest in the U.S. energy company.

[neo26] 11/6/2024 15:49

"The project remains on schedule for gas into the Facility in approximately two weeks time and for commercial gas, LPG and condensate sales following shortly thereafter."With jse producing 17k plus bopd and Akatara very close to production very undervalued. Cant understand why there is no interest here.

[pughman] 10/6/2024 21:12

MT, thanks for your reply. Best wishes.

[mrscruff] 10/6/2024 18:13

I do think going forward the share price will reflect the move away from problematic old assets so it would be of no great loss when Stag is gone. I presume Akatara is included in production guidance for 2024 20-22,000 boe/d and this figure should have been "equivalent oil"?

The 200-day average direction could see a welcome change in the month or possibly two ahead, after what has been over 560 days of a decline. That is plenty of time for legacy investors to be out. A good narrative and we could see impressive long term growth.

[mount teide] 10/6/2024 17:31

pughman - Stag Field: In late 2020 the Company developed a new operating strategy, utilising tankers to directly offload Stag crude oil, in place of the existing long term leased FSO. They booked a 20% cost saving in 2020/2021 as a result of contracting a high quality doubled hulled tanker when time charter rates were close to decade lows.

However, average tanker time charter rates have since more than doubled. I strongly suspect this is the main contributing factor behind the surge in OPEX/bbl.

Other contributing factors:

* The medium term production performance of the two wells drilled in late 2022 have fallen short of expectation.

* The last two cyclone seasons have seen well above average activity - particularly this year, and is the most likely explanation for the poor Q1 production performance.

The current stage of the oil tanker market cycle is unlikely to offer much help, in terms of cheaper charter rates over the next two years (see sector heavyweight Scorpio Tankers - share price up 10 fold since JSE retired the Stag FSO).

However, provided oil stays in the $80-$85 range and the premium around its current level of $16/bbl, the Stag asset will probably make a modest positive cash flow contribution in 2024 with average production in the 2,250 to 2,500 bopd range.

With a similar performance in 2025, as a result of the field decline rate being offset by the forecast drop in operating costs already guided for next year.

So, no, I'm not overly concerned about the performance of Stag - as despite it being an old lady in her twilight years I see little to suggest it's likely to become a loss making liability before the next two infill wells are drilled on it.

However, the days of Stage performing like it did in the early years when JSE were able to bring the OPEX/bbl down from circa $65/bbl to high 30's are now in the rear view mirror.

Wrote this post in 2021 with reference to Stag's performance since Jadestone bought the field from Santos in late 2016:

'The Stag Oil Field was acquired for a net $6m in a highly distressed sale in 2017. Within 18 months, with Brent at $75, the asset was producing around $8m a MONTH of operating cash flow. The asset has generated around $175m (around 29 times the net purchase price) of operating cash flow during Jadestone's ownership. The field is currently generating around $100/bbl of operating cash flow / $90m a year (15 times the net purchase price....ie its currently generating gross operating cash flow equivalent to the net purchase price every 3 weeks!)


AIMHO/DYOR

[pughman] 10/6/2024 15:11

MT, what are your views on Stag. You posted numbers for production in 24 at Stag, 2500bpd with an opex at $76 a barrel. Q1 24 production was 1900bpd which raises the cost of production at $101 a barrel, all figures on stated opex of $70m for 24. With 40% of production hedged at $70 a barrel, should shareholders be concerned, with the apparent solution another $50m infill on the way, two years after the last $60m infill that promised production of 4000bpd, but never reached 3000bpd.

[neo26] 10/6/2024 13:58

Rise back up.. Getting closer and closer to news.

[mount teide] 10/6/2024 13:37

Probably just a few impatient traders - 400k/£120k traded today pushes the stock down 5%.

If the share-price were to drop by 5% for every £120k of transactions, the market cap would hit zero for a total outlay of £2.4m!

Current market cap: £147m

[fardels bear] 10/6/2024 13:14

This is getting boring

[mount teide] 10/6/2024 11:24

FB - yes, a sister ship - a VLCC conversion.

The Maari FPSO 'Roroa' has performed very well since commencing commercial operations at the field in 2009 - other than beefing up the mooring arrangements in 2013 to deal with the long term impact of riding out Southern Ocean storms, there has been no reportable structural integrity issues.

[yasx] 10/6/2024 09:39

I rather think they would want to avoid going back there - once is misfortune, twice is carelessness.

[fardels bear] 10/6/2024 09:32

Doesnt Maari also have an attendant FPSO built at the same yard as you know what?

[nigelpm] 10/6/2024 08:30

No - stitched Jadestone right up. What I wouldn't know is where there's any chance of a legal claim. Might be one for them to consider.

[gerihatrick] 10/6/2024 07:54

Does this NZ announcement give JSE any chance of getting back to Naara?

[nigelpm] 09/6/2024 17:09

Agreed - utter waste of time.

[tim000] 09/6/2024 12:45

Oilman Jim reads a bit like Simply Wall Street to me - computer-written text. Does any real person write in such a boring style? Is Oilman Jim a real person?

[mount teide] 09/6/2024 12:00

npm - yes, although that's what much of his 'research' seems to largely consist of.

Malcy at least 'dresses them up' a little by often concluding with some thoughts of his own.

[nigelpm] 09/6/2024 11:45

Nothing of value - just summarising the RNS no?

[cat33] 09/6/2024 10:47

Good summary of the latest https://oilman.beehiiv.com/p/oilman-jims-letter-june-9-2024Worth reading