Jadestone Energy Inc. (JSE) (Jadestone) reported its consolidated interim unaudited financial statements (the Financial Statements), as at and for the three-month period ended March 31, 2020. Management will host a conference call today at 9:00 a.m. UK time, details of which can be found in the release below.
Paul Blakeley, President and CEO commented:
“I’m pleased to report another quarter of cash flow delivery and ongoing strengthening of our balance sheet. Prices realised for our production remain well above the Brent benchmark and are further bolstered by downside price protection through our hedging programme. At the same time, we have opted to utilise the substantial flexibility inherent in our 2020 spending plans, to reduce this year’s capex by 80%.
The combined effect is that we continue to strengthen our net cash position, which now stands at US$72 million and affords us the comfort to re-affirm plans to pay our first dividend later this year, as previously committed. We are building a business that is resilient on all fronts, and can continue to thrive even in a low price environment, with an operating cashflow break-even oil price for the remainder of the year reduced to US$20/bbl.
While the challenges presented by the Covid-19 pandemic, and related global economic slowdown, will impact everyone in some way, we are remaining vigilant in how we manage our operations and the welfare of our colleagues and, to this point, we have experienced no disruptions to offshore operations. We remain committed to operating within the guidelines and expectations set out by local authorities, but we are optimistic that the global measures taken to date, can now begin to be scaled back, and that both oil demand and prices will continue their early upward trend.
At the same time, we are also optimistic about the potential for new M&A opportunities to present themselves as a result of the current challenging environment. We will not deviate from our stringent approach to screening, nor our exclusive focus on the Asia Pacific region, but we are well positioned to leverage our strong financial position as an acquirer. As always, our focus is on identifying and acquiring assets which offer the potential for substantial value generation through incremental investment.”
? Net revenue for Q1 2020 was US$74.2 million, down 19% from Q4 2019, and up 32% on Q1 2019;
? Average realised oil price of US$64.09/bbl, 7% lower than Q4 2019, and 5% lower than Q1 2019. Realised prices reflect an average premium over Brent of ~US$11.50/bbl;
? Costs of production were US$26.5 million for Q1 2020, excluding non-recurring costs and workovers, remaining fairly stable compared to Q4 2019, and down US$1.9 million from Q1 2019;
? On a unit basis, cash opex increased to US$24.99/bbl1, up 27% from Q4 2019 due to weather downtime and increased maintenance in Q1 2020, and up 3% from Q1 2019;
? Positive cash generated from operations, before changes in working capital, of US$36.0 million in Q1 2020, compared to US$58.0 million in Q4 2019, and US$27.5 million in Q1 2019;
? Adjusted EBITDAX of US$30.92 million, 48% lower than Q4 2019, and 34% higher than Q1 2019;
? Gross cash and bank balances of US$119.43 million at March 31, 2020, versus US$99.43 million at December 31, 2019; and
? Net cash of US$72.14 million at March 31, 2020, versus net cash of US$39.34 million at December 31, 2019
? Implemented measures to protect the well-being of personnel and to mitigate the specific risks and challenges posed by the Covid-19 pandemic;
? Continued safe operations at all assets, with no significant recordable personnel or environmental incidents, and no disruptions to offshore operations due to the Covid-19 pandemic and response;
? Produced an average of 11,665 bbls/d, 21% lower than Q4 2019 due to weather downtime and increased maintenance in Q1 2020, and 11% lower than Q1 2019;
? 2020 production guidance of 12,000–14,000 bbls/d for the year;
? Successfully completed a 3D seismic acquisition across the Montara area; and
? Maari acquisition on track to complete in H2 2020.
? Reduced the Company’s planned 2020 spending guidance by 80% to US$30–35 million, by delaying the Nam Du and U Minh gas field developments, offshore Vietnam, and deferring the Australia infill drilling campaign into 2021;
? Initiated Project Clover, a Company-wide cost efficiency and capital savings programme, which has locked in 2020 savings of US$3/bbl to date, and targets a total of US$5/bbl of 2020 savings;
? Operating cashflow break-even oil price for the remainder of the year reduced to US$20/bbl;
? Re-affirmed the Company’s plans for its maiden dividend payment to shareholders for later in 2020, with a targeted range of US$7.5–12.5 million; and
? Published the Company’s maiden annual report and sustainability report.
Montara total production averaged 8,799 bbls/d in Q1 2020, compared to 11,118 bbls/d in Q1 2019, as a result of both maintenance activities and cyclone-related downtime, typical for this time of the year. In addition, Q1 2019 benefitted from flush production following the voluntary shutdown of the asset in Q4 2018 to address the legacy inspection and maintenance backlog. There was a single lifting during the quarter, resulting in sales of 512,575 bbls, compared to 578,865 bbls in the first quarter of 2019.
Jadestone completed a 3D seismic acquisition covering the Montara area in Q1 2020, with a view to improving reservoir imaging for future infill wells and to assessing further exploration step-out potential. The seismic data is expected to be available in Q4 2020.
Stag total production averaged 2,866 bbls/d, compared to 1,941 bbls/d in Q1 2019. The increase was due in part to production from the 49H infill well drilled last year. In addition, Q1 2020 saw increased uptime compared to the same quarter a year ago, reflecting the fact that Q1 2019 was adversely impacted by rig mobilisation and weather-related downtime. There were two liftings during the quarter, resulting in sales of 518,193 bbls, compared to a single lifting of 169,986 bbls in Q1 2019.
Work toward planning the Company’s infill well programme on both Montara and Stag has largely been completed, but with activity now on hold as part of the Company’s deferral of the programme to 2021. These measures are intended to ensure investing into new infill wells is timed to coincide with a stronger oil price environment, to maximise potential returns and payback.
In Vietnam, Jadestone has deferred its Nam Du and U Minh gas development project and has removed substantially all capital spending which had been planned for 2020 on this project. The Company remains engaged with the Vietnamese Government, including ongoing discussions relating to a gas sales and purchase agreement which it anticipates will be completed alongside the eventual field development plan approval.
Update to Covid-19 operational response
Jadestone has not experienced any disruptions to its offshore operations due to the Covid-19 pandemic, but precautionary measures remain in place. As local and international recommendations protecting the wellbeing of people begin to be relaxed, the Company will respond in step, but will remain vigilant with regards to mitigating risks to its colleagues and operations, including continuing to rely on the role of pandemic managers, designated at each location.
Jadestone has undertaken a thorough assessment of all aspects of its operations, and the specific risks and challenges posed by the Covid-19 pandemic. The Company will continue to revisit this assessment regularly to ensure appropriate mitigations are in place as the impact of the pandemic evolves. In all instances, and at a minimum, the Company will comply with local and international recommendations protecting the wellbeing of its people and, in turn, to minimise the impact on its operations.