Jadestone Energy Share Discussion Threads

[mount teide] 05/2/2019 11:38

2 x 500,000 and 1 x 100,000 buys at the full 39p ask price is encouraging.

[alamaison5] 05/2/2019 11:19

Huge volume today. Balancing the books for the rise?

[zengas] 04/2/2019 12:58

In reality, you have to consider the entire Montara opportunity. It didn't fit with PTTEPs plans because they have assets of much, much greater magnitude to deal with and it is considered non core. There's much greater potential in the fields over and above current CPR and 28mmbo P2. At the end of the day, this is only one of a multiple set of opportunities and worth bearing in mind what else is yet to come in terms of acquisitions in propelling JSE to significant growth.

[spangle93] 04/2/2019 12:23

Hi MT - good information

Still think that comparing a leased FPSO for a new field on plateau production in the North Sea versus an owned FPSO, incurring opex costs, in a mature field in commonwealth waters in Australia is a stretch, and that easier analogies to demonstrate the value of the deal could be made

[mount teide] 04/2/2019 11:45

Spangle - the Montara FPSO storage capacity versus that of the Catcher FPSO:

BW Catcher has only 10 days production storage capacity so will need an expensive shuttle tanker on permanent year round charter plus guaranteed access to a second(back up) shuttle tanker to ensure production off load operations can smoothly progress from BW Catcher on at least a weekly basis in order to avoid shuttering in field production.

Whereas the Montara FPSO has three months storage capacity for the current production level, so would need to only voyage charter a single tanker just 4-5 times a year to offload all Montara's annual production to market.

Over the last decade Shuttle tankers have routinely commanded US$30,000 plus a day charter rates for a 5-10 year charter period - so Premier's annual shuttle tanker charter cost would be circa $11m a year plus fuel, plus the charter fee for a guaranteed supply of a second tanker, which is likely to be close to another $11m. These shuttle tanker charter costs on Montara's current production level would be equivalent to $7 a barrel of additional operating cost. JSE's $2-3 premium to Brent generates many, many multiples of the current cost to voyage charter a large shuttle tanker 4-5 times a year.

[spangle93] 04/2/2019 11:09

MT - your point about the JSE acquisition being financially attractive is valid, but it's not a particularly strong analogy.

For instance the storage capacity is somewhat moot, since Catcher is 1/4 the distance from a supply base that Montara is, and Montara, which is already in late life, is producing at just 10 kboped. The concern at Montara isn't the oil handling capacity, which is well in excess of whatever the field could now deliver, it's water handling of 60 kbwpd, when water cut is already over 50% in the main field and 80% at Skua (i.e. for each barrel of oil they have to handle 5 of water).And JSE has wellhead decom cost liabilities, which the FPSO at Catcher doesn't, and maintenance and operations cost, which is part of BW's supply contract. Etc.

Conversely for balance in favour of JSE, you could have said that for the net $81MM they also get all the wells, subsea infrastructure, and platform, whereas the FPSO is only the process and export.

edit - Maybe a better picture is that the $81MM net is not much more than the cost of a single MODU-drilled well out in Comonwealth waters

[mount teide] 04/2/2019 10:16

base - if the management continue creating exceptional value, market greed over time will do the rest.

After the $92m cash transfer on completion of the $195m Montara deal in September 2018 and $22m for the subsequent maintenance shutdown - JSE has secured the purchase of the 10,000+ bopd Montara Asset and its FPSO vessel with 45,000 bpd processing and 900,000 barrels of storage capacity, currently generating $8-$10 million a month of cash flow for the almost unbelievable sum of $81m!

To put this in persecutive - Premier oil are paying BW Offshore a charter contract fee(10 year initial fixed duration) for the FPSO BW Catcher of $210m per annum. BW Catcher has a processing capacity of 60,000 bpd and a significantly smaller storage capacity of 650,000 barrels compared to JSE's Montara FPSO.

[fozzie] 04/2/2019 09:49

Thanks for that ;o)

[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.