REG - Jadestone Energy PLC - Trading update for half-year ended 30 June 2024

Jadestone EnergyAnnouncement

29/07/2024 07:15

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RNS Number : 1754Y  Jadestone Energy PLC  29 July 2024

Trading update for the half-year ended 30 June 2024

 

29 July 2024 - Singapore: Jadestone Energy plc ("Jadestone", the "Group" or
the "Company"), an independent upstream company focused on the Asia-Pacific
region, provides a trading update for the half-year ended 30 June 2024. The
financial information in this update has not been audited and may be subject
to further review and change.

 

Key updates

 

l Akatara mechanical completion and gas-in achieved in June 2024. The export
pipeline from the field has been successfully filled with on spec sales gas,
with exports into the regional trunkline expected to commence imminently.

l Record H1 2024 Group production averaged 16,867 boe/d, higher than any prior
six-month period and representing 37% growth on H1 2023.

l H1 2024 oil liftings more than doubled year-on-year, driving a 131% increase
in proceeds from liftings to US$200.5 million. After reflecting hedging losses
of US$15.4 million, revenues for H1 2024 totalled US$185.1 million.

l H1 2024 total production costs were flat compared to H1 2023, despite
production increasing 37%, with increased CWLH opex as a result of the CWLH 2
acquisition offset by lower spend year-on-year at the non-producing SFA
Cluster assets, Montara and Stag.

l Net debt of c.US$72.7 million and available liquidity of c.US$151.0 million
at 30 June 2024 (net debt of US$3.6 million at 31 December 2023).

l Closed the CWLH 2 acquisition in February 2024, increasing the Company's
interest to 33.33% in an outperforming asset. The final CWLH 2 Abandonment
Trust Fund payment has reduced from US$37 million to c.US$19 million, to be
paid on or before 31 December 2024.

l Award of the SFA Cluster PSC offshore Peninsular Malaysia in July 2024,
adding another potentially significant growth opportunity to the Company's
portfolio.

 

Guidance

 

l While Jadestone continues to see Group production for 2024 at c.20,000
boe/d, the annual production guidance range is adjusted to 18.5-21,000 boe/d,
from 20-22,000 boe/d, reflecting year-to-date production after significant Q1
2024 weather impacts, and the revised timing of the start of Akatara
commercial sales. The lower end of the range also incorporates a conservative
assumption on Akatara production in the early stages of the processing
facility's operating life, and a range of potential downside scenarios across
the portfolio.

l Operating expenditure guidance for 2024 is narrowed to US$240-280 million
(excluding forecast royalties and carbon taxes of c.US$30.0 million), from
US$240-290 million, reflecting year-to-date performance.

l Capital expenditure guidance is unchanged at US$80-110 million and other
cash expenditure for the year is revised down from c.US$77 million to US$62
million, primarily reflecting the finalisation of the CWLH Abandonment Trust
Fund payments referenced above.

 

Paul Blakeley, President and CEO commented:

 

"We are starting to see solid growth feeding into the business and anticipate
that the significant increases in production and revenue, coupled with flat
production costs, will result in improving financial performance for the first
half of 2024. We also expect that the second half will be even stronger, with
Akatara capex behind us and production from this new, low cost, onshore asset
ramping up in the coming weeks.

 

The start of commercial sales at Akatara, which is imminent, will be a major
milestone for Jadestone, delivering a complex development on a fast-track
schedule just over two years since the original investment decision was made,
and will help to underpin our confidence in the significant increase in
production we will see this year.

 

It is a year of major investment in the growth and the diversification of our
production base, with not just the completion of the Akatara development
project, but also the addition of a second tranche of the outperforming CWLH
asset, including the payment of its future decommissioning cost. We will see
significant benefits in 2025 and beyond from the cash flows that these
activities will deliver, while the diversification of the business is further
bolstered with the addition of the recently announced SFA Cluster PSC offshore
Malaysia, adding to our pipeline of near-term growth opportunities at lower
cost and higher returns."

 

H1 2024 Operating Performance 1  (#_ftn1)

 

                                           H1 2024  H1 2023
 Production
 Group production                  boe/d   16,867   12,339
 - Montara                         bbls/d  4,951    2,931
 - Stag                            bbls/d  1,921    2,879
 - CWLH                            bbls/d  2,951    1,569
 - Peninsular Malaysia ("PenMal")  boe/d   5,455    3,878
 - Sinphuhorm                      boe/d   1,585    1,083
 - Akatara                         boe/d   3        -
 Liftings
 - Oil                             mmbbls  2.2      1.0
 - Gas                             bcf     0.6      0.8

 

Group production for the first half of 2024 averaged 16,867 boe/d, a Group
record for any six-month  period and representing 37% growth on H1 2023. This
increase was due to higher production from PenMal following the successful
drilling campaign in late 2023, a higher working interest in the CWLH asset
following completion of the CWLH 2 acquisition in February 2024, a full period
of production from Sinphuhorm, acquired in February 2023, and a full period of
production from Montara, compared to H1 2023 when production was shut in for
much of the first quarter.

 

The year-on-year increase was partially offset by lower production at Stag
compared to the prior period, impacted by extensive weather-related downtime
in Q1 2024, a planned maintenance shutdown and poorer performance from
downhole pumps, which have required more frequent workovers than planned.

 

Uptime and performance at Montara continued to improve in the first half of
2024. The Montara Venture FPSO tank inspection and repair programme is
progressing well. Two main central oil storage tanks are currently in service
with effective capacity of 187,000 barrels.  Recent inspections of two
further central oil storage tanks, and their associated water ballast tanks,
found them to be in better condition than expected, providing confidence that
further oil storage capacity will become available in the second half of 2024.
This has already allowed Montara operations to continue without a shuttle
tanker for most of July 2024 and, in line with previous guidance, the Company
expects that the shuttle tanker operation will be phased out in Q4 2024. The
H6 and Swift-2 wells at Montara are expected back online shortly after repair
work which is currently in progress, and this should result in an increase in
Montara production.  The Company expects that Montara will meet its
production guidance between 5-6,000 bbls/d for 2024.

Akatara production in the first half relates to condensate production in late
June 2024 following the introduction of reservoir gas into the facilities,
averaged over the full period.

 

Oil liftings more than doubled year-on-year, primarily due to a lifting from
the CWLH asset shortly after completion of the CWLH 2 acquisition, a full
period of production at Montara and higher liftings associated with the
increased production at PM323 offshore Malaysia. Gas liftings were lower due
to natural declines at the PM329 asset offshore Malaysia. There were no gas or
condensate sales from the Akatara field in the first half of the year.

 

H1 2024 Financial Performance 2  (#_ftn2)

 

                                                             H1 2024       H1 2023

 Average oil price realisation                  US$/bbl      88.7          86.2
 - Brent                                        US$/bbl      84.1          77.3
 - Premium                                      US$/bbl      4.6           8.9

 Mid-year inventory/lifting position
 - Montara and Stag inventories                 bbls         444,448       421,720
 - CWLH and PenMal net underlift                boe          237,120       117,318

 Revenues 3  (#_ftn3)                           US$ million  185.1         86.7
 Total production costs                         US$ million  118.7         119.7
  - Underlying operating expenses 4  (#_ftn4)   US$ million  111.9         112.9
  - Royalties and carbon taxes                  US$ million  6.8           6.8
 Capital expenditure 5  (#_ftn5)                US$ million  51.0          23.8

                                                             30 June 2024  31 Dec 2023
 Net cash/(debt)                                US$ million  (72.7)        (3.6)

 

The average oil price realisation for H1 2024 registered a 3% increase on H1
2023, with a higher underlying Brent price factored into liftings more than
offsetting a reduction in the premium, with the latter explained by the Stag
field (which commands the highest premium of Jadestone's portfolio) comprising
a lower proportion of liftings in H1 2024 compared to H1 2023. Revenues in H1
2024 of US$185.1 million consisted of total proceeds from oil and gas liftings
of US$200.5 million, offset by a US$15.4 million outflow from H1 2024 oil
price hedging, which is required under the terms of the Group's reserves-based
lending ("RBL") facility.

 

H1 2024 production costs of US$118.7 million decreased by 1% compared to H1
2023, despite production increasing 37% year-on-year.  An increase in costs
resulting from the increased stake in the CWLH asset was primarily offset by a
reduction in activity at the non-producing SFA Cluster assets and lower fuel
and tanker costs at Montara and Stag, respectively. The H1 2024 production
cost disclosures above are preliminary, subject to review and change, and in
particular do not include any impacts from changes in inventory and lifting
positions, which are expected to include a significant non-cash charge of
c.US$46 million to the H1 2024 income statement reflecting the acquisition
accounting associated with the CWLH 2 transaction.

H1 2024 capital investment totalled US$51.0 million compared to US$23.8
million in H1 2023.  Approximately US$45 million of the capex in the period
was incurred on the Akatara development (including c.US$4 million of
capitalised interest).

 

Net debt of US$72.7 million at 30 June 2024 reflects c.US$127.3 million of
consolidated Group cash balances (restricted and unrestricted cash) and
c.US$200 million of debt drawn under the Group's RBL facility. Available
liquidity at 30 June 2024 totalled c.US$151.0 million, reflecting unrestricted
cash balances and the undrawn working capital facility.

 

-ends-

( )

 

For further information, please contact:

 

 Jadestone Energy plc
 Paul Blakeley, President and CEO                      +65 6324 0359 (Singapore)
 Bert-Jaap Dijkstra, CFO

 Phil Corbett, Head of Investor Relations              +44 (0) 7713 687467 (UK)
                                                       ir@jadestone-energy.com (mailto:ir@jadestone-energy.com)

 Stifel Nicolaus Europe Limited (Nomad, Joint Broker)  +44 (0) 20 7710 7600 (UK)
 Callum Stewart
 Jason Grossman
 Ashton Clanfield

 Peel Hunt LLP (Joint Broker)                          +44 (0) 20 7418 8900 (UK)
 Richard Crichton
 David McKeown

 Georgia Langoulant

 Camarco (Public Relations Advisor)                    +44 (0) 203 757 4980 (UK)
 Billy Clegg                                           jse@camarco.co.uk (mailto:jse@camarco.co.uk)
 Andrew Turner

 Elfie Kent

 

About Jadestone Energy

 

Jadestone Energy plc is an independent upstream company focused on the
Asia-Pacific region.  It has a balanced and increasingly diversified
portfolio of production and development assets in Australia, Malaysia,
Indonesia, Thailand and Vietnam, all stable jurisdictions with a positive
upstream investment climate.

 

Led by an experienced management team with a track record of delivery, who
were core to the successful growth of Talisman Energy's business in
Asia-Pacific, the Company is pursuing a strategy to grow and diversify the
Company's production base both organically, through developments such as at
Akatara in Indonesia, Nam Du/U Minh in Vietnam and the SFA Cluster PSC
offshore Malaysia, as well as through acquisitions that fit within Jadestone's
financial framework and play to the Company's strengths in managing maturing
oil assets. Jadestone delivers value in its acquisition strategy by enhancing
returns through operating efficiencies, cost reductions and increased
production through further investment.

 

Jadestone is a responsible operator and well positioned for the energy
transition through its increasing gas production, by maximising recovery from
existing brownfield developments and through its Net Zero pledge on Scope 1
& 2 GHG emissions from operated assets by 2040. This strategy is aligned
with the IEA Net Zero by 2050 scenario, which stresses the necessity of
continued investment in existing upstream assets to avoid an energy crisis and
meet demand for oil and gas through the energy transition.

 

Jadestone Energy plc (LEI: 21380076GWJ8XDYKVQ37) is listed on the AIM market
of the London Stock Exchange (AIM: JSE).  The Company is headquartered in
Singapore.  For further information on the Company please visit
www.jadestone-energy.com (http://www.jadestone-energy.com) .

 

The information contained within this announcement is considered to be inside
information prior to its release, as defined in Article 7 of the Market Abuse
Regulation No. 596/2014 which is part of UK law by virtue of the European
Union (Withdrawal) Act 2018.

 1  (#_ftnref1) Totals may not add due to rounding. The Group's liftings do
not include any contribution from the Sinphuhorm asset, which is treated as an
investment in associate and hence equity accounted in the Group's consolidated
financial statements.

 2  (#_ftnref2) Totals may not add due to rounding. The Group's 2023 revenues,
operational and capital expenditures do not include any contribution from the
Sinphuhorm asset, which is treated as an investment in associate and hence
equity accounted in the Group's consolidated financial statements.

 3  (#_ftnref3) H1 2024 revenue represents total proceeds from oil and gas
liftings of US$200.5 million, offset by US$15.4 million of hedging losses

 4  (#_ftnref4) To allow for comparability with H1 2024 estimated production
costs, H1 2023 figures exclude non-cash inventory and lifting adjustments
which were included within production costs in Jadestone's H1 2023 financial
results

 5  (#_ftnref5) H1 2024 capital expenditure includes capitalised interest of
US$4.3 million associated with the Akatara development project, and US$0.9
million capitalised overheads associated with Vietnam development activity.

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