Jadestone Energy Share Discussion Threads

[mount teide] 25/8/2018 23:51

GMP Securities has upgraded Jadestone Energy from a speculative BUY rating to a BUY rating in a new research note following the Montana Oil Field Acquisition - the Canadian firm has a C$1.40/£0.84 target price on the stock, up from their prior target price of C$1.10/£0.66.

[mount teide] 25/8/2018 09:44

In the 12 months post the Stag acquisition off the Northern coast of Australia the management's operational performance in terms of raising production and reducing operating costs has been remarkable and bodes very well for the Montara assets which they believe also holds similar potential.

From the AIM Admission Document:

Stag

'Jadestone is the 100% owner and operator of the producing Stag oil field located offshore Western Australia in the Carnarvon Basin. Stag and its associated infrastructure were acquired by Jadestone on 11 November 2016 for a headline price of US$10 million plus customary working capital adjustments and potential contingent payments. At acquisition Stag had 2P reserves of 14.6 MMbbls oil and since that time Jadestone has increased 2P reserves to 17.1 MMbbls (gross and net), net of circa 1.6 MMbbls of production between the acquisition and 31 December 2017.

Since completing the Stag acquisition in November 2016 the focus of the Jadestone operating team has been to optimise production operations, reduce costs and identify and execute a work programme to increase production.

In executing these initiatives, Stag has seen production stabilise and then increase to a current level of 3.6 mbbls/d (up from an average of 2.6 mbbls/d in Q2 2017), operating costs (excluding workover) reduce from US$43/bbl (for the first half of 2017) to US$32/bbl (for the second half of 2017, following transfer of operatorship to the Company in July 2017) and workover and other sustaining capital costs reduce by circa 50 per cent.

The Company has been able to achieve these gains through a re-organisation of management structures and processes; incentivisation of the workforce towards safe production operations; re- negotiation of contracts; and a reduction in workover duration and cost.

The Company is now focused on increasing production and intends to drill five in-fill wells by the end of 2020 (being four producers and one water injector), targeting an average of 1.1 MMbbls of oil for each producing well, which also provides additional reserves from the field as a whole through field life extension. The initial production rate of each well is expected to be circa 1.2 mbbl/d before following a natural decline rate. The additional production derived from the first infill well to be drilled is expected to further reduce 2019 per unit operating costs (excluding workovers) to US$25.9/bbl and enhance cash flow resiliency, even at low oil prices.'

'Reflecting on the savings obtained at Stag to date, the Company is confident of its ability to deliver significant additional value creation at the Montara Assets following a successful transition period and subject to the required investment by the Company.'


Montara

'The Company has already identified multiple operational improvements at the Montara Assets and believes it can execute these improvements to increase production, whilst also reducing fixed operating costs by up to 20%. The Company has already made significant cost savings at Stag, reducing fixed operating costs by 35%, cutting sustaining capital expenditure and stabilising production. The Company is now focused on increasing production at Stag through drilling infill wells over the next two years and completing well workovers.

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 seller.

Reflecting on the savings obtained at Stag to date, the Company is confident of its ability to deliver significant additional value creation at the Montara Assets following a successful transition period and subject to the required investment by the Company.'

[dorset64] 24/8/2018 16:39

Many thanks MT, will take a look over the w/end & into next week. Cheers.

[mount teide] 24/8/2018 15:18

Brent rebounding strongly this week currently up a further 1.86% today to $76.52.

Jadestone with their South East Asian market $2-$3 premium to Brent will be getting close to $80.

[mount teide] 24/8/2018 14:03

Hi Dorset - the best info i could offer would be to point you in the direction of the very recent 25 minute Jadestone O&G Conference Presentation / latest website Presentation / AIM Listing Document / and Executive Chairman's Bloomberg Interview - links below.

[dorset64] 24/8/2018 12:21

Interesting one MT, I shall look into these over the coming days. Apart from the obvious, website/google etc and short cuts you have to info that explains concisely ?

[mount teide] 24/8/2018 11:36

The demand for energy in high population South East Asia is growing at 5%-7% a year - such is the level of demand Jadestone receives a $2-$3 PREMIUM to Brent for its current production as opposed to the other end of the oil industry spectrum where the Canadian shale oil drillers currently receive a $31 discount to WTI.

Market/sector timing is often everything with an investment - i am attracted to the long term highly cyclical oil market being in the early years of a new recovery stage and having Jadestone based in a maturing oil and gas regional industry where the majors are starting to dis-invest, offering opportunities to exploit for small/medium size companies with the relevant management skills and experience.

In this respect Jadestone's management has a track record second to none having done it before with Talisman in the mature oil and gas industries of the North Sea and Middle East, and so are ideally equipped/positioned with Jadestone to take early user advantage of another maturing energy industry in the early stage of dis-investment by the majors, in a region hungry for energy for which it is willing to pay top dollar.

AIMHO/DYOR

[mount teide] 24/8/2018 09:13

Spangle - 'any reason why it's shown as a green commodity, rather than a blue stock?'

Most probably my error when initially setting up the thread - on inspection it appears to be a one-off choice made during initial set-up that cannot be changed afterwards.

Having said that, its green coloured thread title text on the free BB listing page certainly gets it noticed against the sea of blue and black all around!

[spangle93] 24/8/2018 08:49

Mount Teide - thanks for the thread.

I shouldn't comment, cos I've no experience in setting up a thread, but any reason why it's shown as a green commodity, rather than a blue stock?

TIA

[highly geared] 24/8/2018 08:06

Looks a good prospect with NAV potential at 4x current market cap. Bought a few, let’s see how it goes.

[crooky1967] 23/8/2018 17:34

Watching as well, thanks MT for the heads up over at TXP.

[mount teide] 23/8/2018 13:57

New thread with charts - header text courtesy of Zengas.

This is a first attempt at creating an ADVFN thread so would appreciate being cut some slack on its initial appearance and content.

[spangle93] 23/8/2018 00:49

Thanks, LCwanderer - the link in the Jadestone website investor page is now similarly filled

Ref the Indonesian asset - it seems that the previous PSC in which JSE participated as a legacy Talisman asset just expired in Feb this year. It's my understanding from reading e.g. AIM admission that there is no value ascribed from this asset, no legacy cost, nothing, in the company financials?
"The carrying value of the Ogan Komering PSC under oil and gas properties on the Company’s balance sheet is fully depleted"

Going forward
"the Board expects to reach satisfactory binding terms during Q4 2018, with participation to be effective from the commencement of the new PSC on 20 May 2018. To the extent Jadestone participates in the PSC, it will not be the operator of Ogan Komering and it would have less than a 40 per cent interest in the PSC. However, until definitive documentation is entered into, there can be no assurance that Jadestone will be successful in its negotiations for participation in the PSC or the terms on which any such participation may be available to Jadestone."

If all is concluded satisfactorily, is there any significant cost to participation in the revised PSA, or merely just the resumption of payment as per the agreed equity for opex and capex.

[lcwanderer] 22/8/2018 21:13

Jadestone presentation from earlier today...


hxxp://www.theoilandgasconference.com/togc-webcast/jse/

[captainfatcat] 22/8/2018 18:07

Watching here as well.

[mount teide] 22/8/2018 17:37

Starting to get on a few more radars?

7.8 million transaction volume today - with two very large individual trades of 3.04m and 2.34m.

Today's volume was around 100 times the average daily volume over the preceding week.

[mount teide] 20/8/2018 23:13

Yes, thanks to Zengas and Spangle.


In the 12 months post the Stag acquisition the management's performance in terms of raising production and reducing operating costs is remarkable and bodes well for the Montara assets which the management believes holds similar potential.

'The Company has already identified multiple operational improvements at the Montara Assets and believes it can execute these improvements to increase production, whilst also reducing fixed operating costs by up to 20%. The Company has already made significant cost savings at Stag, reducing fixed operating costs by 35%, cutting sustaining capital expenditure and stabilising production. The Company is now focused on increasing production at Stag through drilling infill wells over the next two years and completing well workovers.

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 seller.

Reflecting on the savings obtained at Stag to date, the Company is confident of its ability to deliver significant additional value creation at the Montara Assets following a successful transition period and subject to the required investment by the Company.'


Stag

'Jadestone is the 100% owner and operator of the producing Stag oil field located offshore Western Australia in the Carnarvon Basin. Stag and its associated infrastructure were acquired by Jadestone on 11 November 2016 for a headline price of US$10 million plus customary working capital adjustments and potential contingent payments. At acquisition Stag had 2P reserves of 14.6 MMbbls oil and since that time Jadestone has increased 2P reserves to 17.1 MMbbls (gross and net), net of circa 1.6 MMbbls of production between the acquisition and 31 December 2017.

Since completing the Stag acquisition in November 2016 the focus of the Jadestone operating team has been to optimise production operations, reduce costs and identify and execute a work programme to increase production.

In executing these initiatives, Stag has seen production stabilise and then increase to a current level of 3.6 mbbls/d (up from an average of 2.6 mbbls/d in Q2 2017), operating costs (excluding workover) reduce from US$43/bbl (for the first half of 2017) to US$32/bbl (for the second half of 2017, following transfer of operatorship to the Company in July 2017) and workover and other sustaining capital costs reduce by circa 50 per cent.

The Company has been able to achieve these gains through a re-organisation of management structures and processes; incentivisation of the workforce towards safe production operations; re- negotiation of contracts; and a reduction in workover duration and cost.

The Company is now focused on increasing production and intends to drill five in-fill wells by the end of 2020 (being four producers and one water injector), targeting an average of 1.1 MMbbls of oil for each producing well, which also provides additional reserves from the field as a whole through field life extension. The initial production rate of each well is expected to be circa 1.2 mbbl/d before following a natural decline rate. The additional production derived from the first infill well to be drilled is expected to further reduce 2019 per unit operating costs (excluding workovers) to US$25.9/bbl and enhance cash flow resiliency, even at low oil prices.'

'Reflecting on the savings obtained at Stag to date, the Company is confident of its ability to deliver significant additional value creation at the Montara Assets following a successful transition period and subject to the required investment by the Company.'

[euclid5] 20/8/2018 12:09

can't find any broker note's on them in RT

[zengas] 20/8/2018 10:55

They are intent on picking up further assets.

One potential asset that is not in the numbers above is the 05-1B + C PSC.

There's a dispute with Teikoko where they were selling JSE 30% in the PSC blocks of 05-1B + C for $14.3m

"Block 05-1 holds significant appraised gas resource capable of being developed quickly and put onto production at high margins and with material value accretion within our portfolio.

The Block 05-1 PSC holds two fully appraised gas and condensate discoveries, Dai Nguyet and Sao Vang, in close proximity to the Nam Con Son gas transportation pipeline and existing production facilities. These gas discoveries are strategically located to supply gas to operating power generating complexes in the industrial center of Southeast Vietnam. Partners in the blocks are Idemitsu Oil and Gas Co. Ltd. (“IdemitsuR21;) and JX Nippon Oil & Gas Exploration Corporation each with a 35% working interest."

If this one doesn't go ahead, there are other opportunities. Given the price outlay, you can see what can potentially be picked up. Majors have diversified by diluting or selling interests.

Majors and IOCs have sold off 800 mmboe in the last 3 years (page 5) from mid life and mature fields.

Page 5 "The region holds 57 billion boe of discovered undeveloped resource, 40% of which is economic today (circa 23 billion boe).

"Jadestone is positioned to take full advantage of this maturing region today"

Natural gas demand forecast rise by 4.5% per annum to 2025 with supply declining post 2020.

1.9 bcf/day forecast supply gap in 2020 (ie 316,000 boepd supply gap alone while this figure forecast to rise to 780,000 boepd by 2025).

Oil demand growth to average 2.4% pa to 2025 with premium pricing.

[euclid5] 20/8/2018 10:17

Thanks for your posts Zengas & Spangle,

The NPV values at $885m / £697m (using $1.27 to the GBP) come to 151p

128% discount to NPV value

I shall check Research Tree to see if there is a BN issued

[zengas] 20/8/2018 09:12

Latest August Presentation.
45.3 mmboe P2 + 117.5 mmboe unrisked 2C .

30 mmboe moving to 2P in Q3 2019 with project sanction = 75 mmboe 2P

Just shy of 14,000 bopd Australia with ongoing infill drilling from Q3 2018 - Q3 2019 to lift production further.

Q4 2018 Ogan Komerang (OK) new PSC additional 1400 boepd net + new CPR with reserves/resources to come. Significant upside 1155 sq km PSC.

Montara NPV $479.5m (£355m).
Stag $84.2m (£62m).
Nam Du $226m (£167m).
U Minh $96m (£71m).

Total $885.7m (£655m). Excludes OK PSC. Using ex rate £1=$1.35.



461m shares @ 35p = £161m M/cap.

[zengas] 15/8/2018 15:52

Thanks Spangle

I look for production and assets that have a better chance of success than most and which i can get into that underpin my entry point/valuation. I look for companies like Savp/JSE that can make low risk discoveries on big potential reserve numbers etc that will be sold on/bought out rather than existing for years. Was fortunate enough in the likes of Cove in Mozambique which didn't have an oil/gas industry or much in discoveries and IEC in Russia that were gone in 2.5 and 3.5 years. 26-12 bagger for Cove depending where you got in at and IEC up to 50 bagger (which at one point was actually running at more than 70x upside). GKP also bfore it ran into difficulties with it's debt 3-4 years later. All low risk exploration potential. For Cove big discoveries lay adjacent in the Tanzanian side and geology knows no man made surface borders so was compelling for me to invest. Savp has equally compelling low risk acreage and evidenced so far with 4 out of 4 successes chasing 2.8 billion bls risked, since their drilling started at the beginning of April next to CNPC that have found over 1 billion bls P2 and built infrastructure, refinery and pipeline with more to come - so opening up for bigger players than Savp. I expect Savp will also be a t/over target as JSE at some point in the future. Huge investments continuing to pour into Nigeria especially for gas and Savp covered 90%+ for gas on investment grade customers via Accugas by World Bank guarantee. JSE are in the right markets. PTT of Thailand bought Cove and shows how energy hungry the region is where JSE operate. Danger in lots of smaller companies is that they are small chasing big dreams on higher risk projects and when they get hit for cash on poor news the reasons to invest don't become as compelling for upside no matter where in the world they are. Saw SQZ but haven't followed them other than a rough read over in the past.

[zengas] 15/8/2018 14:34

Hi Spangle, more exposure in the UK I believe rather than Canada listing. More Cos planning to list here. I've never bothered creating threads before and just wanted to get some discussion up and running so if anyone else appears and wants to create a thread with charts etc please do (Charts bit early at this stage imo). No broker note yet that I've come across. More assets/opportunities to come.

The very recent webcast was good but no link now as far as I can see which says new presentation to come shortly but it included the CPR for the 2P asset value on just some of their projects at $564m/£420m with 3P at $915m/£650m (page 16).

Great CEO in building value. Huge vote of confidence with significant institutional investor holdings at 66% for those above 3% which could mean a low free float if there are others that are in the up to 3% range. I expect this to get some fair decent coverage too which will raise the profile.

I used to be the same keeping my interest in companies to below £50m, and missed out on and realised that some of the larger ones at £100m-£200m range could still be 10-20 baggers and beyond because they were a lot further down the road with their operations. Depends what your timescale and ultimate target is but I think post September this could be on the move.