Jadestone Energy Share Discussion Threads

[captainfatcat] 10/10/2018 12:34

lol I thought it was a bit quiet on Zengas's JSE thread. Just catching up here again.

MT thanks for setting up the new bb its always nice to have the daily and long term charts etc.

[zeusfurla] 10/10/2018 12:22

Buying opportunity at 43.66p again below mid-price. Just topped up.

[mount teide] 10/10/2018 08:56

I think many analysts in the O&G industry are overlooking or simply underestimating what 5 years of savage cost cutting has done to what was a very bloated high cost industry during the long period when oil was over $100.

For many the returns today at $80-$85 oil will be similar to what they were getting at $100.

Many are asking can oil go back to $100 - some of us would say in terms of returns its already there.

$80 oil is the NEW $100 oil! (And you can bet the industry will not be promoting that !)

Its typical commodity cycle behaviour - though it should be borne in mind the last downturn/recession stage was the longest in more than 70 years of commodity cycle history - so the potential of this new once every 15-18 year cycle recovery stage is exceptional since it's starting from a record low point in relative terms of the drop in the price of oil peak to trough (79%) and a half decade of savage industry cost cutting to survive.


When O&G sector historians and analysts look back in a decade's time it would not surprise me in the slightest (in fact it would surprise me if it were not the case) if they conclude that the sector fundamentals during the period from late 2016 through to 2019 had been staring the market in the face as the optimum time in decades to take exposure to high quality O&G sector equities.

[mount teide] 10/10/2018 08:32

Spangle - its worth bearing in mind that the huge long term potential of the Montara Field under JSE future Operatorship has already started to reveal its hand via the field performance from the effective acquisition date of 1st Jan 2019 to the late September completion:


The $92 million cash and inventory transfer on completion gives a very strong indication as to the highly accretive nature of the acquisition and its commercial potential, particularly in today's $85 Brent oil price environment(JSE get a $2.5 premium to Brent) - since this sum was generated with:

* An average Brent price of circa $73 Jan-Sept 2018)

* Field uptime of 72%,
which JSE in 2019 is targeting an increase to 84% and over 90% in the medium term:

In 2019 under JSE's expected operatorship the plan is to:

* Increase annual production by circa 1.7 mbbl/d

* Reducing operating costs by circa 20% and corporate charges and overheads by >50%.


At the current Brent price the £92 million of cash and inventory transferred on completion would have seen a further circa $28 million(less taxes/royalties) added to it - suggesting the end of 2019 payback time could well come forward if the POO remains at/close to its current level in 2019 - which latest consensus forecasts are strongly suggesting.


AIMHO/DYOR

[spangle93] 10/10/2018 07:54

Thanks Zen

I would think that JSE are in a strong position to take on some kind of SQZ-BP format deal, where a mature field is handed over to them, and the cost is taken out of future revenue. Maybe they can acquire some gas production via this novel route.

According to the last presentation, Nam Du comes before U Minh, but regardless, it will be take some effort to deliver them before the end of 2021 if they are only in FEED now.

[zengas] 10/10/2018 07:44

It's from an earlier presentation pre listing, not the Aim doc and none of these are in the value chain. I'm expecting further acquisitions and first gas at Uminh is 24 months away and doesn't take away from the fact there will be a significant movement to 2P in the next 9 months. 'OK' isn't expected until some time in Q4 and we are only 10 days into that. Likewise the Montara acquisition took the full expected time flow to come through. No shortage of opportunities and we have major exploration potential already. Their ideal is not to move away from oil dependence otherwise they wouldn't be making oil acquisitions. It's taking advantage of a mix of both oil and gas in energy hungry markets with excellent pricing as MT points out. As for gas being produced, that's the case from current oil production but there are totally separate gas fields in the Stag/Montara group that at some point may be developed.

[spangle93] 10/10/2018 01:03

Page 26 of which document, Zengas? This page in the AIM doc is all about takeover protocol.


I think their intent is commendable, but right now, JSE is pretty much entirely dependent on the oil market.
- Stag and Montara both produce oil into tankers, and as far as I can see, the gas is disposed into the reservoirs.
- Vietnam's 2 fields will not produce until 2021 and 2023 respectively at the earliest, dependent on ullage in the host facilities
- the revised PSC for Ogen Kamerang remains unsigned


You mentioned the Teikoku opportunity doesn't look promising: elsewhere Block 127 Vietnam is relinquished, JSE was stepping away from Bone, and the Philippines SC-56 is in limbo if Total is not pursuing its obligations. At least, none of these AIM admission assets appears in company presentations, so they can't carry much weight in current valuations.

To me, Ogen Kamerang therefore becomes is critical to their strategy, at least in the short term, plus I think if they are true to the ideal of moving away from oil dependence, any further farm-ins or acquisitions have to be gas opportunities.

[mount teide] 09/10/2018 18:05

2.15 million of transaction volume from yesterday reported after the closing bell today.

Circa 1.15 million of buys at average price of 45.6p
Circa 1.00 million of sells at average price of 44.6p

[mount teide] 09/10/2018 16:09

Zen -'The gas prices are around $8/mcf or $56/boe average so a great hedge against being fully oil dependent re any future volitivity and the oil price costings are on $67/b (2019) and $68/b thereafter.'

Its not just light oil that sells for a premium to Brent in Nat Gas hungry SE Asia and the Pacific Rim where the average Nat Gas price since 2014 has been $9.2/mcf or circa $60boe - in the US Nat Gas prices have averaged $2.72/mcf over the last 4 years / $20/boe.

The huge Nat Gas price premium in SE Asia is the reason why the US is now converting former LNG import terminals into export terminals at huge cost($2 billion per terminal) to sell LNG directly into the SE Asian market.

[zengas] 09/10/2018 12:42

One positive is that JSE won't be a company that's at the mercy of oil price swings.

If you read their mission statement they hope to consolidate other opportunities.

Current development assets are targetting 30,000 boepd over next 5 years but this does not take account of acquisitions or consolidating other opportunties. "Well positioned to take advantage of the retrenchment by majors and independents in the region"

They state their development portfolio is fully funded which comprises a significant gas resource and this was before the oil price increase.

Typically long term fixed price and fixed escalation take or pay contracts providing support against oil price volativity (Page 26).

The gas prices are around $8/mcf or $56/boe average so a great hedge against being fully oil dependent re any future volitivity and the oil price costings are on $67/b (2019) and $68/b thereafter.

Asia Gas market deficit forecast of over 300,000 boepd in just over a year and expected to widen to near 800,000 boepd in next 5 years with a forecast 2.4% increase in regional oil demand.

If they are fully funded for their existing projects then I believe they'll add via the acquisition trail.

The Teikoku (Japanese Inpex Corp) farm in seems to have hit the skids and as far as I know this recently entered production. JSE were farming in for circa 30 mmboe for a cost of $14.3m + 2 possible future payments of $9.8m & $5.9m. These were fully appraised and were ready for tie in. If they have missed on this they may be looking elsewhere given the very strong cash flow now and big build in reserves.

( On February 22, 2018, Teikoku delivered to Jadestone a purported notice of termination of the SPA, despite Teikoku having received a waiver from PVN, of its statutory pre-emption rights, held under Vietnamese law. The Company has not accepted Inpex’s alleged termination, and views the obligations of both parties under the SPA as continuing. The Company maintains its rights under the SPA and is assessing its options, including remedies available through legal action.
)

[mount teide] 09/10/2018 11:59

HG - according to my calculator:

300 days field uptime
$50.00 Op cost differential to circa $80 Brent + $2.50 regional premium
15,000 bopd

Should generate net annual revenue of circa £170m

JSE could not have better timed the purchase of the Montara acquisition - into a fast recovering oil price market the huge cash flow potential should be totally transformative for the Company and its growth prospects - as, unlike the previous Montara owners, JSE specialises in optimising production processes and facilities management in mid life and mature fields.

[highly geared] 09/10/2018 11:12

MT; with net backs around $50 based on current Brent, what gross profit do you reckon , ex G&A?

[mount teide] 09/10/2018 11:03

L2: 2 v 1 / 44.4p v 44.6p (2 @ 46.0p rest 46.4p or above)

[mount teide] 09/10/2018 09:42

There is currently a line of stock available below mid-price - took a few myself at 44.58p.


At current production levels and Brent price JSE is generating gross revenue of $1.27m a day / circa $9m a week.

[mount teide] 08/10/2018 15:17

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 11:37

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 10:10

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 10:02

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 09:57

All buys so far...

[mr. t] 08/10/2018 09:54

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

[mount teide] 08/10/2018 09:31

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 09:14

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 08:59

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 08:42

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 08:40

Realistic price target of ? £1 ??