Jadestone Energy Share Discussion Threads

[mount teide] 10/3/2019 11:15

Montara Field:

Were Brent to average $65(below current consensus forecasts) during 2019 this should see JSE generate an average of circa $70.5/bbl for its forecast Montara production after taking into consideration the current regional price premium to Brent and 5,500 bopd of oil price hedging at an average 2019 price of circa $72/bbl($73.49/Q1 2019)

At an 84% field uptime target and forecast operating expenses of $20/bbl, this equates to Montara field annual production and cash flow estimates of:

@ 11,000 bopd - 3.37 million bbls / $170.3m c/f

@ 12,000 bopd - 3.68 million bbls / $185.7m c/f

@ 13,000 bopd - 3.98 million bbls / $201.0m c/f

At the current level of production (13,181 bopd) the Montara Field is presently producing at circa $20/bbl operating expenses, cash flow of $20.4 million/month.

Some 5 months after completing the acquisition of the Montara field and FPSO for a net cost of $82 million - the net purchase price is now equivalent to circa 4 months of current cash flow.

Not difficult to understand why Paul Blakeley said in a recent interview "Montara is as good an acquisition opportunity as i've seen in 25 years".

When JSE initiated a serious interest in Montara as a potential acquisition target in H2/2017(Brent averaged circa $55), while Montara had $50+/bbl field operating expenses; such was the scale of the extremely poor asset operating performance by the previous owners.

Including the astonishing revelation considering the history of the field, that they'd operated the FPSO out of CLASS for over 8 months due to a failure to carry out a large backlog of essential planned and breakdown maintenance. JSE's small team who joined the FPSO last summer in the run-up to the acquisition completion date, had the work carried out(all at the previous owners expense) and secured the re-instatement of CLASS(a prerequisite to securing and maintaining insurance cover) inside 2 months.

[zengas] 10/3/2019 10:33

Not in the very latest March presentation update, but in the February JSE presentation JSE shows the CRUX field approx 25km from Montara (page 8).

The Crux field discovered in 2000 has supposedly some 2 TCF of gas and 70 mmbls condensate reserves.

Shell have submitted a plan to develop it. "The project consists of the platform, five production wells with minimal processing and utility systems, and a 26 inch (660 mm) 165 km export pipeline back to Prelude."

"Shell, along with joint venture partners Seven Group Holdings and Osaka Gas, submitted a proposal to the National Offshore Petroleum Safety and Environmental Management Authority to develop the Crux field earlier this month."



In addition to that news, one of the partners Seven Group Holdings may look to potentially sell or farm down.

Whether or not it is of any bearing to JSE, it comes at a time when JSE have a good relationship with PTTEP and who have recently had success with Orchid on their 100% 3.5 TCF Cash Maple project above Montara of which Montara and some of the other cluster of gas fields could tie in as PTTEP planned to do.

[mount teide] 09/3/2019 18:04

Brent Average Prices US$:

$39.25 - H1/2016
$48.25 - H2/2016
$52.25 - H1/2017
$56.25 - H2/2017
$70.75 - H1/2018
$70.25 - H2/2018
$62.50 - Q1/2019 to date
$65.75 - Current Spot Price

$70.89 - Estimated realised price for Montara's current 13,181 bopd, after taking into consideration the circa $2.5 regional price premium to Brent and 5,500 bbls hedged at $72/bbl


At current production levels the Stag and Montana fields have circa 3 and 6 months FPSO storage capacity respectively - providing a degree of flexibility to ride out short term downside movements in the oil price.

[spangle93] 08/3/2019 11:58

ZENGAS - good find

I think that PTTEP website page is somewhat dated, however, as it still implies that PTTEP is the decision-maker for Montara.

Cash Maple is very much stranded. It was considering Floating LNG, but sources say that this option is now shelved. I understand it was one of the fields bidding to use the Darwin LNG facilities by building a pipeline across to Bayu-Undan but it was in competition with a number of other projects for limited capacity in the pipeline and plant.

Also, if, given as one of the reasons at the time of the sale to Montara, PTTEP is wishing to exit Australia, why is it spending money on more appraisal at Cash Maple?

Meanwhile
Asssociated Gas at Montara has to date been reinjected - it must have plenty of its own gas to export. However, usually ultimate production gas that's injected in a gas cap above a thin oil rim is the last phase of a field, cos if you start producing the gas, you drop the reservoir pressure which loses oil reserves. So it could (hopefully) be many years in the future

[zengas] 08/3/2019 11:10

More positive news today and fresh hopes for our future Montara gas (not included in the CPR) from PTTEPs 100% interest in Cash Maple. More reserves etc makes the development more likely and cost effective.

PTTEP makes new gas discovery in Orchid-1, offshore Australia

8 Mar 2019

Bangkok, March 8, 2019 – Phongsthorn Thavisin, President and Chief Executive Officer of PTT Exploration and Production Public Company Limited (PTTEP) disclosed that PTTEP Australasia (Ashmore Cartier) Pty Ltd (PTTEP AAA), a wholly owned subsidiary of PTTEP had made a successful discovery of gas and condensate at the Orchid-1, the first exploration well in Permit AC/P54 located in the Timor Sea, Australia.

Commenced in January this year, the drilling of the Orchid-1 was undertaken to a total depth of 2,925 metres. The well encountered gas and condensate with the net pay thickness around 34 metres. The result is in line with PTTEP’s expectation and will be incorporated into development planning of Cash-Maple field which contains 3.5 TCF of resources.

AC/P54 is an exploration permit under PTTEP Australasia project which comprises Permits AC/L3, AC/RL4, AC/RL5, AC/RL6, AC/RL7 (Cash-Maple field), AC/RL10, AC/RL12 and AC/P54 in the Timor Sea off northern Western Australia.



From PTTEP

Cash Maple is located approximately 680km west of Darwin, 700km northeast of Broome and 200km south of the Indonesian coastline.

The facility will produce gas from three groups of fields:

Cash Maple field
Southern group of fields comprising Padthaway, Bilyara, Tahbilk and Montara fields
Oliver field

[mount teide] 08/3/2019 11:02

From the admission document: 'The limited number of qualified offshore operators in Australia looking to deploy second phase specialisation, and Jadestone’s recently proven ability to obtain regulatory approvals, in particular approval as operator culminating in the transfer of operatorship of Stag in July 2017, proved a significant competitive advantage when engaging with the Montara Field's NOC owner/seller.'

Montara and Stag are now efficient, well run assets(and highly material cash cows) - this should help enormously in getting further acquisitions from first phase operators offloading non core Australian and SE Asian assets.

From the last conference call: 'The self financing economics of the 2-3 year asset development plan is based on $50 Brent.'

'The Business Development team is actively monitoring a number of other early stage opportunities, some of greater scale than Montara'


Jadestone Vietnam - Natural Gas Asset Development Plan

The long term growth potential for Natural Gas in SE Asia is huge and growing much faster than any other region in the world - the result of a move to clean energy sources to deal with appalling pollution issues, very high populations, and the rapid move towards urbanisation across the region.

As a result, the energy hungry but resource/production lite SE Asian region pays a very significant premium for its Natural Gas imports much of which is in form of very expensive LNG by sea.

Average Natural Gas pricing over the last 5 years in the various major consuming markets:
US$ per MMBtu
$3 - US
$6 - UK/Europe
$9 - Japan/SE Asia(peak period LNG spot cargoes can reach $15)

More than 50% of all LNG spot cargoes currently shipping into South East Asia are from the US - the current average profit margin per cargo is an astonishing $4 per MMBtu / 133% of the current US spot rate!

In common with Japan, most other SE Asian Nations are raising their consumption forecasts for natural gas for the decade ahead as a result of a planned shift from coal and Nuclear - this will help keep the region's huge "Nat Gas Price Premium" well underpinned.

South Korea, the world’s third-largest liquefied natural gas (LNG) importer behind Japan and China has previously forecast natural gas demand remaining static at around 34.65 million tonnes of LNG equivalent in 2029. However, after a public outcry over pollution levels, they recently revised this forecast upward to 40.49 million tonnes in 2031, to demonstrate a greater commitment to clean energy sources. In common with much of SE Asia the country has long been reliant on coal and nuclear power to produce electricity. The share of gas-fired power generation made up about 17% of the country’s total electricity needs in 2017 and is estimated to increase to 18.8% by 2031 - leaving plenty more potential for a further shift away from coal to cleaner energy.

The region has the World's three largest LNG importing Nations - Japan, China and South Korea - combined they currently import the majority of their Nat Gas via ships. This trend is not only set to continue but rapidly accelerate with all three committed to very large capital expenditure increases to massively expand their gas supply infrastructure, storage facilities and pipelines. Japan's new $40bn Ichthys LNG terminal is the latest to commence operations in the region this year.

However its viewed - the SE Asian region is planning to have a much greater reliance on Natural Gas imports for their energy needs in the future(the region is forecast to consume 75% of global nat gas production by 2030), and since much will increasingly be in the form of expensive LNG by sea, this will effectively maintain a permanent price premium for natural gas supplied by pipeline in the region.

Having a rising tide(commodity cycle, market and company fundamentals) gently flooding behind an industry significantly helps to minimise the investment downside risk. Similar to the LNG suppliers into the region, Jadestone expects to negotiate a long term fixed price gas supply contract for its Vietnam gas field production with the Vietnam Government and fertiliser industry, with annual fixed price uplifts.

The more two friends and i research Jadestone Energy the stronger our impression grows of a company being: "In the right place, at the right time, with the right product and management". We see Jadestone as an early stage 'Venture Production'(of North Sea second phase O&G field fame) of the SE Asian / Pacific Rim O&G Basins.


AIMHO/DYOR

[mount teide] 08/3/2019 10:04

Ensco 107 has been contracted to drill the Stag infill well

For those that it may interest - the Link below shows the current position of Ensco 107 - the Stag Platform is the anchor symbol on the chart around 16-17 nautical miles to the NW - circa 4hrs tow time.

- clicking on the map symbol and then increasing the map range brings the Stag Platform and its FPSO Dampier Spirit into range/view.

[homebrewruss] 08/3/2019 09:12

Looks like the JSE story is slowly getting a wider audience.
Still nice and quiet but (aside from other catalysts) I think if they announce a divi around September time that would really make people take notice.

AAZ (a cash flow rich gold miner) announced their maiden dividend last September and the price shot up.

[croasdalelfc] 08/3/2019 08:44

The 41.52 are my buys

[croasdalelfc] 08/3/2019 08:43

Stag infill is 12th on presentation

[someuwin] 08/3/2019 08:38

From yesterday's interview we know that the 'Stag do' (infill drill) spud is still anticipated for this month.

[fardels bear] 08/3/2019 08:25

Me too. But I kept my RRE. It reminds me of that too... Don't want the lot in UKCS. Need to spread it around a bit..

[croasdalelfc] 08/3/2019 08:22

Hi All bought in earlier this week and looking to add more. The story reminds me of RRE : I was lucky to get in that at 1.25 but sold way too early ! Question what do you think the cash position is and also the EV/2P reserves?TIA

[spangle93] 08/3/2019 07:48

"Run of the mill" - that's the kindest thing anyone has ever said about my contributions to ADVFN.

[fardels bear] 07/3/2019 23:16

Doesn't it make a lovely change to be in a place where run of the mill posters use the word criterion?Last time I saw that written down it was a Berni Inn in Chester...

[spangle93] 07/3/2019 23:03

MT - well, it depends on whether you consider opex/bbl as your main criterion, rather than say annual opex. If you then increase production through CAPEX spend (edit, including workovers of existing wells as he stated in his Vox piece), then opex/bbl will fall, even if opex stays the same

Personally, I just believe that gas to SE Asia, where demand is high and costs in general are lower (for reasons you outline) is the low hanging fruit, especially for gas.

But if an unmissable opportunity in Australia appears, just as he's considered Stag and (from what he alluded to) especially Montara, then it would be rude not to take it

[mount teide] 07/3/2019 19:47

spangle93 - some thoughts; while Jadestone may well be exploring the entire SE Asia/Pacific region for second phase M&A opportunities, i thought Blakeley seemed to infer that currently, offshore Australia is where the most competitively priced assets with the highest re-investment potential were to be found.

At Stag and Montara, that they were able to dramatically slash operating expenses while simultaneously increasing field uptime and production and raise safety standards, suggests that while operating offshore Australia may be expensive, a material element of the higher operating expenses of some producing assets is being generated as a result of low productivity/poor management.

To reduce so quickly operating expenses at Stag and Montara from $75/bbl and $50/bbl to circa $30 and circa $20 respectively, strongly suggests both had serious management issues that were not being addressed under the former owners.

Aussie Rupert Murdoch hated corporate bureaucracy, loathed committees, consultants and strategy. His greatest strengths were decision making and re-engineering businesses – intuiting that a bad decision was better than none at all. When he took over The Sun it was losing £200k a year, within 6 months it was making that a week.

Salaries in the oil and mining industries in Australia are extremely high(yet some Aussie mine operators still can't attract staff so have been employing US miners, routinely flown in on chartered jets on month on month off employment terms).

Consequently, if Jadestone has been able to halve the head count at Stag and still raise production and operating standards, why change a highly successful acquisition strategy that is bearing such rich fruit? - use oil field owners data rooms to identify more mid/late life Aussie oil fields with re-investment potential that in the current oil price environment are producing poor results largely from being very inefficiently operated with highly expensive staff.

[spangle93] 07/3/2019 18:02

Maybe with a developing cold? ;-)

Just watched the videolink - not sure I got the same view that Australia was his focus. Wish they'd asked him about Ogen Kamerang progress but these interviews are hardly deep or hard hitting

[fardels bear] 07/3/2019 17:49

Do you play the piano?

[langland] 07/3/2019 16:52

For comparison Venture 9 bagged between 2004 and 2009.

[meteors] 07/3/2019 15:08

Yeah, and They have quite a bit going on already. Good to hear that they are also fully funded to take on a new asset without the need to raise.

Possible they will announce a new asset before the end of the year? I only speculate this swell. Would be fantastic if something came to fruition! ;)

[mount teide] 07/3/2019 14:54

Venture came to AIM in 2002(the early years of the 2000-2008 recovery/boom stage of the last oil market cycle) via a £40m IPO, and quickly established itself as one of the pioneers of North Sea second phase O&G field operations, before being taken out some seven years later via a £1.3bn hostile takeover.

The last oil market decline/recession stage (2009-2016) bottomed in H1/2016 suggesting the market cycle timing is prescient for a highly experienced second phase operator to take advantage of the early stage retrenching of the Majors/IOC's from another globally important O&G production region with the World's highest energy consumption - one that has been responsible for the entire 34 million bopd increase in global oil consumption since 1980.

[mount teide] 07/3/2019 13:34

Reading between the comments made during the interview it would not surprise if JSE is closing in on another Australian shallow water Montara/Stag size oil field acquisition.