Jadestone Energy Share Discussion Threads

[alamaison5] 04/2/2019 09:11

JSE: Seller finished? Great, let's move up!

[mount teide] 01/2/2019 19:06

Tyrus Capitals's 8.5 million purchase reported on 24 January took them to 25.6% - when combined with Livermore Partners 7%, it means the two US activist Hedge Funds now hold close to a third of the company between them.

They also hold NED positions in JSE and were responsible for restructuring the Board and head hunting Paul Blakeley and his high flying Talisman Asia Pacific team.

Tyrus's recent purchase will have taken the notifiable positions close to 69%.

[zengas] 01/2/2019 15:38

Come on Spangle own up, you're over 3% !

[spangle93] 01/2/2019 14:31

Fozzie ;-) or they just don't declare

It states 31.74% shares not in public hands (146.3 MM of a total of 461.0 MM)

Also, I overlooked previously that the list in post 333 was dated Dec 4th 2018, so not too out of date at all

[fozzie] 01/2/2019 13:36

Thanks Spangle, approx 65%, obvs MT and Zengas will be just under the threshold for reporting ;o)

[spangle93] 01/2/2019 13:01

Fozzie - I think it's Mounte Teide and Zengas ;-)

Seriously there's a section under AIM Rule 26 on their website that covers significant shareholders, proportion outside public hands etc.



As stated there (with usual caveats about making the company aware, and no date) these are

Tyrus Capital S.A.M. 23.80%
Odey Asset Management 8.28%
Livermore Partners LLC 7.01%
Miton Asset Management Limited 6.43%
Ontario Teachers’ Pension Plan Board 4.20%
West Face Long Term Opportunities Global Master L.P. 3.42%
Fidelity International 3.25%
Baillie Gifford & Co 3.21%
Capital World Investors 3.18%
GLG Partners 3.04%

[fozzie] 01/2/2019 12:30

Who are the main shareholders here and what %'s do they hold. No info on Morningstar which is where i normally look.

[mount teide] 30/1/2019 19:21

What we do know is that:

The ten year average price of Brent is $80.

A $61 Brent oil price adjusted for inflation is just $47 in 2009 prices, when Brent peaked at $147

JSE has a balanced, low risk, full cycle, value accretive development portfolio forecast to deliver 43% CAGR between 2016 and 2023, and 25,000 - 30,000 mboe/d by 2021-23

The organic growth plan delivers forecast annual free cash flow every year through to 2024.

JSE has a proven in-region management team with an excellent track record of value creation and generating returns for shareholders - company currently trades at a deep discount to core NAV.

JSE headhunted the former Talisman Asia Pacific team who are second phase specialists and have a long history of optimising field operations to grow reserves, reduce costs and add value.

The growth plan is focusing on the low cost, high margin markets in Asia Pacific and is forecast to deliver robust cash flow generation at low oil prices. JSE's portfolio of high return quick payback investment opportunities includes 2019 infill drilling at Stag and Montara.

A growing oil and gas supply shortfall across Asia /Pacific is driving attractive pricing dynamics for regional producers. JSE's Montara and Stag production currently attracts a $2-$3 premium to Brent.

The SE Asian region is characterised by high growth, energy-hungry economies:
Natural gas demand is forecast to rise by circa 4.5% annually through to 2025, with supply in decline by 2020. A 1.9 bcf/d gas supply gap is forecast by 2020, rising to 4.7 bcf/d in 2025. Oil demand growth is forecast to average 2.4%pa through to 2025. The region is projected to consume 75% of the total global production of nat gas by 2040.

The Asia Pacific region has been responsible for the entire 34 million bopd increase in the global consumption of oil since 1975.

[alamaison5] 30/1/2019 15:34

Monte: do you really know what's the price of oil gona be in 2/3 years time?
Amasing!!!
Or is it just another ramp?

[mount teide] 29/1/2019 11:28

Added a further 40,953 this morning - the planned low risk organic growth alone should see multiples of the current valuation over a 2-3 year investment view.

[mount teide] 29/1/2019 00:06

Is The Permian Bull Run Coming To An End? - oilprice.com today

'The bad news coming out of the shale oil fields of America could all be put down to slumping oil prices. That is certainly a big factor. But as investment professionals like to say, when the tide goes out, we all find out who's been skinny-dipping.

The pattern of negative news from shale country is not just related to price, however. Oil production, it seems, is being overstated industry-wide by 10% and 50% in the case of some companies, according to The Wall Street Journal.

The CEO of one of the largest players in the industry, Continental Resources, predicted that growth in shale oil production could fall by 50 percent this year compared to last year. In reality, we should expect worse as the industry for obvious reasons tends to exaggerate its prospects.

The place where the damage to investors has become severe is in private equity firms who hold a large portion of the shale oil industry's high-yield debt. The plan for the firms was always to unload the debt on somebody else when better opportunities presented themselves. But the firms overstayed their welcome and are having a hard time even finding a bid in the market for these bonds.

With the big Wall Street players now questioning the value of their existing investments in shale oil, the industry is finding it hard to raise money. Not a single bond sale has come off since November in an industry which must continuously raise capital to survive.

To add to the problems, the future of U.S. shale oil production seems to be in the Permian Basin in Texas which has been providing the lion's share of oil production growth for the entire country. But ongoing drought in an already arid West Texas has raised doubts about whether the Permian will have enough water to meet all the demand for fracking new wells.

Because of the rapid declines in the rates of production from shale wells, companies must first drill enough new wells to offset the loss of production from previous wells—a task akin to walking up the down escalator.

This was not such a difficult task when the shale boom was just beginning. But with the huge increase in the number of operating wells, companies are having to spend more than half of their capital budgets on simply replacing lost production before drilling wells that add to production. That number is expected to reach 75 percent by 2021. At some point it could reach 100 percent. (For this reason some analysts refer to shale oil development as a Ponzi scheme.)

With rig counts dropping; capital expenditures likely to be cut in the face of low prices; and more and more of that budget being used simply to replace existing production, it's possible that the death spiral long anticipated by the industry's critics has arrived.

Shale players for years have been unable to finance their drilling programs out of operating revenues as free cash flow (operating cash flow minus capital expenditures) remains wildly negative for most companies. In other words, what companies spend on acquisition of leases and land; drilling and well completion; current operating expenses; and general and administrative expenses far exceeds the cash generated by their sales of petroleum and related products from existing wells.

That means the companies must borrow from investors (usually in the form of high-yield debt) or get them to buy new shares in order to raise the money needed not only to drill enough wells to make up for lost production from declining wells, but also to drill enough to grow production—something investors have been counting on to secure the value of their bonds and increase the value of their shares.

If the needed capital is not forthcoming, it means that companies will be faced with declining revenues from declining production. With lower operating cash flow and little access to additional capital, these companies will be unable to drill enough wells to offset declining ones. That means even lower revenues in the future which will mean even lower investment in new wells. That's what a death spiral looks like.

Of course, oil prices could revive and with it, investor interest. No one can know for sure. But the big question is this: The next time oil prices do rise, will investors risk getting caught during a subsequent downturn with shale oil company bonds that can't catch a bid in the market (or shares that could end up worthless)?

Of course, if the current downturn in oil prices continues, there might not be a next time for many shale operators.'

[mount teide] 28/1/2019 18:47

basem1 - yes and no - in that for those that did the research the highly compelling investment case when listing on AIM last summer has continued to materially strengthen, enabling two friends and I to build circa 600,000 positions at very close to the existing s/p.

In common with our two activist hedge fund shareholders who now jointly own over a third of the company, we are still buyers at these prices.


2018 Production

7,615 bopd over 10 months = 2.32 million barrels

We know Montara averaged circa 10,000 bopd during October 2018 = 0.31 million barrels for the month

Therefore, from 1st Jan to 28th September Montara will have produced 2.32m - 0.31m = 2.01 million barrels.

2.01m divided by 271 days = 7,453 bopd - which generated the transfer of $92m of cash and crude oil between the effective transaction date of 1st Jan 2018 and the 28th September closing date at an average Brent oil price of $71.5.

As Zengas stated current Montara production is probably circa 34% higher than the average figure for the Jan - Sept 2018 period.

With hedging the current Montara production should be realising circa $67.5 a barrel - this should be generating revenue circa 27% higher than during the first nine months of 2018 when Montara generated the transfer of £92m of cash and oil.


AIMHO/DYOR

[zengas] 28/1/2019 18:46

ERCE CPR "The total cost of abandonment is thus estimated to be 193 MM USD. The salvage value of the facilities is estimated to be 25 MM USD."

However the overall asset should have a much longer lifespan in terms of both production and reserves.

" There is significant upside associated with the Montara Assets, with ERCE’s 3P reserves case including an additional 10.2 MMbbls (gross and net) and an NPV10 uplift of US$313.3 million versus the 2P reserves case.

Furthermore, Jadestone has identified several different areas in which it believes it can potentially realise value in the future.

Such areas are not included in ERCE’s reserves case and include:

* further infill drilling, not included in ERCE’s reserves case, have been identified by Jadestone management in the Montara and Skua fields. This includes one further platform well on the Montara field which would be a sidetrack of H4, capturing remaining volume along the northern bounding fault, and two further subsea wells on Skua capturing volumes further north along the crest. Each of these wells would have an initial rate of 3 mbbl/d and targeting a combined rate of 5.3 mbbl/d;

* tie-back additional existing in-field and near-field discoveries as facilities become available, currently the well head facilities are either fully utilised or allocated to existing and near-term production;

* spare capacity in the FPSO means discoveries can be monetised quickly;

* the Company has identified further prospects in the blocks and intends to shoot 3D seismic surveys over the blocks. This is expected to help to further define the existing prospects and identify further prospects across the blocks which the Company may target in the future;

* in the blocks neighbouring the Montara Assets there are multiple oil and gas discoveries and previously suspended fields. Many of these discoveries are currently stranded as they are not of a size that can economically justify a standalone development. Currently the Montara Assets infrastructure is the only infrastructure in the area through which these discoveries could potentially be produced. The Company may in the future explore opportunities to
monetise these assets which may be through acquisition, farm-in or third party tariff arrangements;

and within the Company’s blocks, there are currently stranded discovered gas resources which are currently not of a size which would make commercialisation economic. However, within neighbouring blocks there are also other similarly stranded gas discoveries and the Company could in the future explore joint development solutions for these discoveries. This will, however, remain subject to pricing, technology and neighbouring activities."

[russiaguru] 28/1/2019 18:00

What are the decom costs for montara with the fpso included?

[zengas] 28/1/2019 17:53

Thanks Spangle, That appears even better. If they can build that sort of cash level on those barrel numbers over the course of 2018, then 10,000 bopd represents a near 33% increase in Montara production to add to the 3k from Stag.

[spangle93] 28/1/2019 17:25

Hi Zengas

I'm not sure I'm reading your post correctly.
"They say they averaged 7,615 bopd for 2018 = 2.78m barrels. With no Montara production for Nov and Dec the 2.78m barrels would mean 9,174 bopd for the 10 months."

But under Montara production, it says "This compares to average 2018 Montara production of 7,615 bbls/d (excluding downtime for the recent inspection and maintenance work)"

I read this to mean that average in the previous 10 months was 7,615 bopd?

[alamaison5] 28/1/2019 16:48

cos the 35p buyer is selling some of his steak, and a kidney and a pie with it, lol

[basem1] 28/1/2019 16:08

MT, you must be bloody frustrated with the price action here - any theories as to why it is such a laggard. ?

[zengas] 28/1/2019 14:01

Cash $74.3m reported at the end of November conference call.

Montara Production and shut down from 1st November 2018.

They say they averaged 7,615 bopd for 2018 = 2.78m barrels.
With no Montara production for Nov and Dec the 2.78m barrels would mean 9,174 bopd for the 10 months.

PTTEP paying $22m for this shutdown of which $4m was attributable to shut down work and production restarted 11th Jan 2019 and have had a higher flush production and are expected to decline and stabilise at 10,000 bopd.

This would be some 10% better than the overall 9,174 bopd.

Add in the 3,000 bopd region from Stag and the cash pile should be growing strongly.

Given they paid $195m for this asset with a date of 1/1/18 and the $22m from PTTEP, they now say that despite the lower oil prices payback is less than 2 years.

Also worth remembering that $120m was via debt financing which had a 2.5 year term in August 2018 and the rest in a capital raise, means we should have equal or more cash than debt at end of this quarter.

[alamaison5] 28/1/2019 13:28

Monte:
An idea: why don't you just copy the link instead of typing (lol) everything!

[captainfatcat] 28/1/2019 13:07

Solid update this morning.

[mount teide] 28/1/2019 12:56

Montara 2018

The production performance of the Montara field between the effective transaction date of 1st Jan 2018 and the 28th September closing date resulted in the transfer to JSE of $92m of cash and crude oil.

During that nine month period Montara production averaged circa 10.0k bopd during Jan and Feb, circa 7.0k bopd during March to June (due to statutory facility shutdown in March/April and loss of production from the Skua and Swift/Swallow subsea tie-back wells being shut-in until June due to a failure of a subsea well communication umbilical, and circa 10.0k bopd during July-September.

Consequently, an average production rate of circa 8,750 bopd during Jan-Sept 2018 at an average Brent price of $71.5, was sufficient to generate a transfer of US$92m of cash and oil on completion.

Operating Costs: Jan-Sept 2018
Operating costs in Q1,(excluding corporate G&A and legal fees which are for the account of the Seller) were US$22.8/bbl. Operating costs increased in Q2 and Q3 due to the routine annual shut down and non-routine activities referenced above - they are expected to return to circa US$22/bbl in Q4 2018 before declining further once Jadestone starts to implement its practices.

The current programme of maintenance and remediation work at Montara is expected to generate a 12% increase in uptime and circa 25% decrease in operating costs within 12 months of assuming the operatorship, which is expected in Q1/2019. Jadestone estimates this will increase annual production by circa 1.7k bbls/d in 2019.

In addition, a well intervention program is planned to reinstate gas lifting at the Swift 2 and Skua 11 wells, and also add a perforation in Swallow 1. This is expected to result in the restoration of peak production to approximately 5.6 mbbl/d from these wells.

Post the 28th September closing date for the purchase of Montara, the field shutdown in Nov/Dec to address regulatory and outstanding planned maintenance issues resulted in PTTEP Australasia, as seller of the Montara assets, agreeing to provide US$22m to Jadestone in relation to the shutdown of the facilities, including associated costs, of which approximately US$4 million was directly attributable to shutdown work scope'.

[mount teide] 28/1/2019 12:14

JSE's two year oil price hedge covering circa 50% of production at an average price of circa $72.5 looks extremely well timed with the cost of hedging expected to increase significantly in 2019 following the demise of a material percentage of the market as a result of huge losses in 2018.


'The decline in speculative interest in oil is creating a serious problem for some independent producers because these firms need to hedge some or all incremental output against price declines. Declining interest in oil will raise the cost of hedging, possibly putting it out of reach of some firms. This, it can be argued, is fracking’s Achilles’ heel.'

'The oil hedge data can be read as a warning that the capital expenditures of independent producers may be constrained in 2019. All these firms will meet with their bankers in the next two or three months. The bankers will likely demand to see the companies’ hedging plans. In some cases, the E&P firms will discover that the cost of hedging their next few wells will force them to curtail or even cancel their 2019 drilling programs.'

Trouble In Paradise For US Frackers - OilPrice.com