Jadestone Energy Inc. (JSE) ("Jadestone"), an independent oil and gas production company focused on the Asia Pacific region, is pleased to provide its guidance outlook for 2021.
The Company is returning to a phase of active investment into its assets, including drilling, well workovers, and pre-development activities relating to its gas projects in Indonesia and Vietnam.
Jadestone is maintaining a conservative approach to its capital structure, and remains focussed on preserving balance sheet strength to ensure resilience, provide for shareholder returns, and to facilitate future inorganic growth.
In all instances, the Company has prioritised sustainability as a key tenet of its ongoing business, whilst ensuring value generation throughout the portfolio.
Additionally, the Company is well placed to pursue further inorganic growth options, with a virtually debt free balance sheet and amidst a backdrop of a growing set of attractive opportunities.
2021 Guidance summary
Jadestone's 2021 guidance comprises:
- Average crude oil production between 11,500—13,500 bbls/d, assuming the successful drilling of H6 at Montara, two Skua well workovers and completion of the Company’s acquisition of a 69% operated interest in the Maari asset, offshore New Zealand, at the end of H1 2021;
- Maari’s contribution to the full year production guidance range is assumed to be 1,500 bbls/d on an annualised basis (i.e. 3,000 bbls/d average production in H2 2021), and with the completion of the MR6 workover in early May, there is scope for additional production upside. The effective date of the acquisition was 1 January 2019. Conditional on completion of the acquisition, the entire economic benefit from Maari barrels produced throughout 2021 accrue to Jadestone;
- Average unit production costs of US$25.50—29.50/bbl, a slight increase on 2020, reflecting approximately US$1.00/bbl of rephased costs from 2020 resulting from Project Clover and a stronger Australian dollar compared to 2020;
- Spending of US$85—95 million, including drilling the H6 infill well and conducting workovers on the Skua SK10 and SK11 wells at Montara;
- Commitment to pay a 2021 cash dividend, in keeping with the Company’s dividend policy, to maintain and grow dividends in line with underlying cashflow generation; and
- Ongoing adherence to our principles on environmental, social, and governance responsibilities, including enhanced sustainability reporting, maintaining our commitment to Target Zero with regards to deviations from safe operating parameters, and adopting the Quoted Companies Alliance corporate governance code.
Jadestone continues to collaborate with Petrovietnam regarding its planned gas development at Nam Du and U Minh, offshore Vietnam. The Company's approach is to agree a gas production profile for the development as a precursor to a gas sales contract and ultimately attaining government sanction for the field development. Concurrently, Jadestone is preparing to re-issue the related FPSO contract tender.
At Lemang, onshore Indonesia, the Company has made good progress integrating the asset into its portfolio and has begun planning for the Akatara field gas development. In accordance with Indonesian regulatory requirements, Jadestone is finalising a heads of agreement on gas sales, to be followed by a gas sales agreement with buyers before seeking formal field development sanction. The timeline for the Lemang development is highly flexible, and at Jadestone's discretion.
Paul Blakeley, President and CEO commented:
"With renewed optimism on both oil prices and the overall state of the global economy early in 2021, we are resuming the highest return investments in our portfolio. The measures we put in place to protect our balance sheet last year have set the stage for us to move forward with key projects, including drilling the H6 infill well at Montara and conducting well workovers to restore production capacity at the Skua field, where we have had two key wells offline due to identified problems within the well bores. The wells will be worked over utilising the same drilling rig that will drill H6. With the arrival of the Valaris 107 rig, expected in June 2021, we are anticipating a step change in production, weighted to the second half of the year.
"At the same time, we are working to complete our acquisition of a 69% operated interest in the Maari asset in H1, and for planning purposes, have assumed closing and transfer of operatorship at 30 June 2021. With the combination of our organic production growth plus Maari, we are forecasting a greater than 50% increase in production in H2 versus H1. Other acquisition opportunities remain in focus too, and with our strong starting net cash position of US$82.0 million, we are poised to continue adding value through inorganic growth this year. We have seen a marked increase in both the quality and quantity of potentially suitable inorganic opportunities coming to market which the team is evaluating against our strict acquisition screening criteria.
"On the cost side of the business, we are benefitting from the hard work done in 2020 through Project Clover, a significant portion of which has been rolled into our 2021 plan as structural changes to our cost base. At the same time, we are ever mindful of our responsibilities to maintain world class safety and asset integrity, so will increase expenditures on maintenance and facilities upgrades across the business, reflecting in general, a rephasing of spend from the worst part of the cycle in 2020, into this year.
"Following what was an extraordinary year on many fronts, I feel our strong financial position underscores the resiliency of our strategy. Our business remains fundamentally predisposed to generating distributable returns for shareholders, and I am pleased to confirm that we will pay the final 2/3 portion of our 2020 dividend payment as planned in May 2021, and we intend to declare a 2021 dividend in line with our stated dividend policy, to grow shareholder returns as we increase cash flow."