Jadestone Energy Share Discussion Threads

[fireplace22] 27/9/2024 05:18

KS, Naive and probably totally wrong maybe but I interpreted it as the whole resource, JSE finish with the oil, no way out (to them) for the gas, ultimately free decom by Shell?
Free of decom, if that were the case, why wouldn't they sell now if they could get $400M and get out of Montara?

[fardels bear] 26/9/2024 11:46

Seems like the bargain of the century.

[king suarez] 26/9/2024 10:57

OK - maybe I am mixing up measures here. Paul said "give me a dollar for it!".

I interpreted that to mean $1/MMBtu (not mmcf, sorry) - natural gas is heading towards $3 currently (Henry Bug) - obviously higher in Asia.

Paul wants to sell Montara gas to Shell, rather than develop it, so he's saying give me a dollar/MMBtu today for Montara gas and he's happy.

If am I right, and he can prove up 300-500bcf that is $300-$500m potentially? more than twice the current market cap - is that achievable by 2030 end of Montara life? who knows, half that would still be a stellar result with zero development risk?

[king suarez] 26/9/2024 08:17

"Did I not read also that he would sell Montara for £1 to Shell when the time comes?"

That was in reference to the gas - I presume he meant $1/mmcf for the resource!?

[fireplace22] 26/9/2024 06:38

Did I not read also that he would sell Montara for £1 to Shell when the time comes?

[king suarez] 26/9/2024 06:35

Paul did say to me he expects the next infill (sidetrack) well at Montara to be very productive and get production back closer towards the 10k the field has produced in the past. That remains to be seen I guess, but would help a lot!

[mount teide] 26/9/2024 00:02

Hi KS - 'It's essentially a 62% increase from 2021 to 2024, which then drops back somewhat - 2024 looking like a bit of an exception?'

Good of IR to confirm in some detail that due to the need to carry out a significantly enhanced level of inspection, maintenance and repairs on the FPSO over the past two years, this resulted in a major step change increase in OPEX/bbl.

And that the permanent uplift in the standard of Class inspection and maintenance on the FPSO and production platform from 2024 onwards, should see the OPEX/bbl in 2025 and beyond stabilise at around $50/bbl, twice that of 2021.....with the second most significant element of this cost increase per barrel being from production falling by around 33% to 5,000 bopd.

Getting OPEX back down down to an ongoing $95m a year in 2025 - would see OPEX/bbl drop to circa $52.2/bbl for 5,000 bopd, $49.7/bbl for 5,250 bopd and, $47.5/bbl for 5,500 bopd.

At $75 oil, still relatively expensive compared to CWLH and PENMAL but, it should enable the asset to continue to make a modest ongoing contribution through to the end of its commercial life in 2030.

Sadly, while the events of the last 2 years mean Montara's days of being the principle cash cow are now over, there is probably a reasonable prospect of receiving an offer from Shell for the asset during the next few years.....which would surely be the optimum exit solution for shareholders, battered and bruised from the poor management of the asset over the last two years.

[pughman] 25/9/2024 22:15

If only the opex for Stag was $60 a barrel. At least Montara is coming out of Intensive Care, whereas Stag is receiving the last rites. Company OPEX guidance for Stag in 24 was $70m, which for the 1921 bpd produced in H1 costs JSE $100 a barrel. 2025 onwards OPEX drops to $60m p/a. Management banging on about the great premium Stag receives disguises what a drag on group profitability its become.

[king suarez] 25/9/2024 21:50

Hi MT,

The way I'm reading it is IR are saying the following for Montara:

2021 - operating costs $74m
2022 - operating costs $95m
2023 - operating costs $95m
2024 - operating costs $120m
2025 onwards - operating costs $95m

It's essentially a 62% increase from 2021 to 2024, which then drops back somewhat - 2024 looking like a bit of an exception?

Is there anything else I can ask by way of further clarification?

Edit: just got an out of office, so we may not hear back until next week as Phil C is off till 30 Sept

[mount teide] 25/9/2024 21:08

KS - thanks for posting the reply.....and thanks to the company for responding very promptly.

Another way of looking Montara's OPEX pre and post the FPSO Class Inspection/Maintenance and structural breach issues can be found from in the results figures:

2020 - OPEX: $23.10/bbl Actual
Montara Production: 9,045 bbl/d - Est OPEX/bbl: $20
Stag Production: 2,359 bbl/d - Est OPEX/bbl: $32 Stag

2021 - OPEX: $26.22/bbl Actual
Montara Production: 7,647 bbl/d - Est OPEX/bbl: $23
Stag Production: 2,394 bbl/d - Est OPEX/bbl: $35

2022 - OPEX: $23-28/bbl Guidance inclusive of first PenMal production
H1/ Actual OPEX: $25.71/bbl - Montara Est OPEX/bbl: $24-25 for circa 7,000 bopd

2024- OPEX: $60/bbl Guidance for Montara's 5,500 bopd

2024 OPEX: $11/boe Guidance - Combined average for Peninsular Malaysia, Akatara, CWLH and Sinphuhorm production (circa: 70% oil) – all long life assets.

I remain to be convinced there has been anything other than a huge step change increase in Montara's OPEX/bbl pre and post the FPSO issues.

AIMHO/DYOR

[nigelpm] 25/9/2024 19:40

I'm not at all surprised by the quantum of the movement since 2021 - thanks for posting that KS (Mr. celebrity!) ;-)

[winnet] 25/9/2024 19:08

I'm not sure his answer, that inflation is the main cause of the 22/23 figures, is very cogent. Its a 20% increase. What have they been doing to mitigate these costs?

[kaos3] 25/9/2024 16:59

i extremely like the fact that they bother to communicate. always a very good sign

and thank you

[king suarez] 25/9/2024 16:39

"X,

Thanks again for bearing with us while we worked on an answer to your questions below.

Firstly, on the comparison with Hurricane, the rate which Hurricane paid for the Aoka Mizu FPSO is not comparable with Montara field operating costs, largely because it only references the contract day rate for the FPSO and excludes a significant amount of operational expense associated with the day-to-day operations at Lancaster.

The following is extracted from Hurricane’s 2022 results statement, which sets out Hurricane’s cash production costs for 2022 and 2021. Since Hurricane was solely producing from the Lancaster field at that point, the cash production costs of the business can only be attributed to Lancaster operations. This will include the cost of leasing the Aoka Mizu, and also the day-to-day costs of operations, including, but not limited to, manpower, maintenance, consumables, logistics (supply vessels and helicopters) and well operations and maintenance. As you can see, the cash production costs for the Lancaster field were roughly around US$90mm per annum in 2021 and 2022, though more like US$110 million including the unusual incentive tariff, specific to the contract with Bluewater.



For Montara, I don’t recognise the US$56mm operating cost figure you quote for 2021. Can you point me to its source?

Based on our internal figures, production costs for Montara in 2021 were c.US$74mm. This excludes the Skua workovers in the year, shuttle tankers and royalties. Hurricane does not go into any further detail on what is included in its cash production costs figures, although the US$74mm in 2021 should be broadly comparable with the figures in the table above.

On the same basis, production costs for Montara in 2022 and 2023 were c.US$95mm. The increase vs. 2021 can be explained by several factors:

2021 activity at Montara was still impacted by COVID restrictions, meaning reduced manning levels (and reduced logistics) focusing on essential activity only.
2022 and 2023 represented a post-COVID return to “normal” levels of activity on the Montara Venture FPSO, including higher levels of repair and maintenance activity to catch up post-COVID and also to address the tank issues we experienced from June 2022 to March 2023. Inflation has also had a meaningful impact, particularly on logistics (helicopters and supply vessels, onshore support). There has been significant inflation in the oil services industry, particularly since 2021, and we are not immune from that.

So, in summary, the increase in costs at Montara in recent years is much less pronounced than you suggest, mostly associated with a return to normal operations post-COVID, and on the basis of your Hurricane example, we are broadly in line with, if not even more competitive than, similar offshore FPSO settings in the North Sea.

Please let me know if you have any further questions or clarifications. I’m happy for you to share this answer on the ADVFN and LSE message boards.

Regards,

Phil"

What do you make of this?

[pogue] 25/9/2024 14:17

KS
just read the post re talking to them directly. I did speak to them directly at Proactive that is why I posted my views on the matter. They have broken down the different units and given the sources now but the way it was told to me it was all Chinese sourced skids. We were talking about the standard of equipment in general worldwide as well. I wont contact them as I said in my post as long as they do good preventative maintenance it should be fine. I seem to have worried a few people by the look of it though. Equipment nowadays in O&G is a lot lower standard that it used to be. Low cost centers do most of the manufacturing sadly even for the German companies.

[king suarez] 25/9/2024 12:48

Haha, thanks - 'fame' at last :)

Have had a response from IR on the Montara cost question - will post later this eve.

[king suarez] 24/9/2024 11:01

MT - thanks.

Agreed, it is a shocking increase in Opex without any transparency to explain so far. Let's see what the response to the question comes back with.

[mount teide] 24/9/2024 10:41

Ks - ref: Hurricane Energy - Aoka Mizu FPSO

The day rate quoted is for a bareboat charter - where Hurricane assumes responsibility for the management, operation & control of the ship for the period of the charter.

Bluewater, the owner is responsible for asset depreciation and capital cost amortisation (payment of capital and interest), and the owner usually bears the Class Survey costs of the ship.

Montara Venture is owned by Jadestone and was included in the net circa $82m completion price of the Montara asset.

Considering the huge recent uplift in operating cost of the Montara asset and its materially negative impact on the length of the remaining commercial life, it should be entirely reasonable for shareholders to request a cost breakdown/explanation as to how Montara's OPEX has risen by circa $40/bbl from 2021, when Paul Blakeley described Montara as Jadestone's primary 'Cash Cow' to fund future growth during this decade, and 2024.

[birotop] 24/9/2024 06:58

Thanks for that nigel + KS, much appreciated.

[king suarez] 24/9/2024 06:55

I had the same email from Phil Corbett - he also added:

"Please could I also ask that someone asks Pogue to get in touch directly (he has my contact details) if he wishes to discuss any aspect of the EPCI contract further."

In a separate email I have also had MTs question about Montara costs acknowledged:

"Please give me a bit of time to pull together some figures and analysis – in particular, I just want to ensure there is a like-for-like comparison with the Hurricane figures you refer to below."

[nigelpm] 24/9/2024 06:49

I reached out to IR regarding the recent posts and speculation - they provided a statement for issuing - I post verbatim:


The key components and units of the Akatara gas processing facility were sourced globally. Countries of origin include, but are not limited to, the USA, Canada, Germany, Italy, China, Japan and Korea. Only one of the project’s 34 main packages comes solely from China and none of the key units at the Akatara Gas Processing Facility were skid mounted in China.

The factory acceptance testing (FAT) for the key components and units took place in several locations, including the countries of origin listed above as well as in Singapore and Indonesia (for certain equipment) once the equipment and units arrived in region.

While the individual components of the refrigeration compressor (including its motor) were subject to an FAT before being delivered to site, it is not the industry standard to FAT the entire unit before it arrives on site, particularly if the individual components are being sourced from different countries/manufacturing hubs globally.

The EPCI contractor, JGC, is a reputable and financially strong contractor, which has successfully completed many projects in Indonesia, including gas processing plants. JGC was not solely selected on the basis of the bid price, but also its capability and reputation. JGC has Japanese leadership at site and also in Jakarta and is bringing its global expertise to bear on the project. JGC remains responsible (both in terms of activity and cost) for delivering a fully commissioned and functioning gas processing facility at Akatara and is fully committed to doing so.

As stated at the results last week, we have reached c.20mmscfd of raw gas input into the plant and c.14mmscfd of sales gas. Condensate production and sales have also commenced. The issues we have experienced with the export compressor and refrigeration compressor are teething issues and are normal for a plant of this scale and nature. The refrigeration compressor motor repairs are ongoing, and we remain confident this issue will be resolved shortly.

[upwego] 23/9/2024 17:59

Thanks for sharing KS & Pogue, appreciated.