Malcy’s Blog – Oil price, Jadestone Energy, Angus Energy & finally

WTI $63.53 +31c, Brent $66.88 -16c, Diff -$3.35 -47c, NG $2.78 -2c, UKNG (April)  40.24p -0.94p

By Malcolm Graham-Wood

Oil price

Even with this morning’s 50 cent fall oil is still nearly $4 up on the week so far and with markets spooked by bonds the asset class is more than holding its own. Indeed the very economic facts that are creating inflation fears in the US are those that fuel oil price rises, viz higher GDP and strong jobs data.

President Biden authorised US airstrikes against Iranian-backed militia facilities in Syria, this followed a call between him and the Saudi King which avoided talk about oil…

Jadestone Energy

Updated guidance today from Jadestone in which they state that they are ‘returning to Investment and Growth’. 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’.

So, average crude oil production is guided to 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.

Planned spending of US$85—95 million, including drilling the H6 infill well and conducting workovers on the Skua SK10 and SK11 wells at Montara which are considered to be ‘abnormal’ and thus not opex but in capex budget, no I don’t get it either!

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. This sort of ties in with the company’s reticence to confirm that some projects will run slower than expected and of course it looks like they are quite keen to make further acquisitions which they seem to be seeing plenty of.

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.”

This extensive statement pretty much tells the Jadestone tale, a fine portfolio of assets of which a number were put on hold last year to good effect. This means that the company can now accelerate away from the lights and start investing again be it in organic or inorganic opportunities.

With one of the best managements in the sector and a good portfolio of significant assets Jadestone should justify its spot in the Bucket List, the shares have exactly tripled since the low last spring but that still leaves plenty of upside.

Angus Energy

Yesterday I had the chance to interview Angus CEO George Lucan, I have spoken to him a couple of times recently and it looks like a very interesting play. Most important has been the interest in the ongoing loan marketing and they have seen significant interest in it.

We heard about the new news at Lidsey, which even I looked at with technical interest, the field seems to be having an increased lease of life and of course about Geothermal in the West Country. The link to the interview is below.

Core Finance CEO Interview: George Lucan, Angus Energy

And finally…

Last night in the Boropa Cup there were wins for the Gooners, Rangers who recorded an over two legs score of 9-5 and the Red Devils, the Foxes went out to Slavia Prague and the draw is at noon today.

In the Prem, Saturday sees the Noisy Neighbours hosting the Hammers, the Baggies entertain the Seagulls, Villa go to Leeds and the Magpies host the Wolves. On Sunday it’s a London derby with the Eagles hosting the Cottagers, the Gooners going to the Foxes, Spurs entertain Burnley, the Red Devils go to Stamford Bridge and Liverpool go to the Blades.

Back to the 6 Nations, or 5 Nations as France have 11 players down with Covid so their match with Scotland is postponed, they should not get away with this just when Scotland are on fire.. On Saturday Italy host Ireland and England go to Wales.

There is racing at Kempton and Newcastle as we get closer to Cheltenham.

(The opinions expressed here are those of the author, a columnist for Share Talk.)

Malcolm Graham-Wood

Source Link https://www.malcysblog.com/2021/02/oil-price-jadestone-angus-and-finally/

Website Link www.malcysblog.com

Disclaimer: Malcy’s Blog is provided for general information about the international oil and gas industry and the companies that operate within it. It does not constitute investment advice and Malcy does not buy or sell shares, warrants or bonds in any company written about within the blog. Information is taken from publicly available sources and any comment is that of the author who does not take any third party comment in the blog


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