Jadestone Energy, an independent oil and gas production company focused on the Asia Pacific region, today provided a trading and business update for the year ended December 31, 2020.

Paul Blakeley, President and CEO commented:
“Early in 2020, we responded to the combined impact of a drop in benchmark oil prices and the challenges posed by the COVID-19 pandemic.  Our primary focus was to preserve our balance sheet in the face of enormous uncertainty, with an oil price that fell below US$20/bbl, and not to be driven by short term targets.  We were quick in rescheduling capital investments with an eye on protecting project returns by deferring spending into a stronger price environment, and we were aggressive in challenging our cost base to ensure maximum efficiency across the portfolio. 

“Through our cost-saving programme, Project Clover, we have realised US$33.8 million in cashflow savings versus our original plan, and have locked in over a quarter of those savings as structural changes in the way we work going forward. At the same time, we have engaged in a modest hedging programme covering approximately 30% of our planned production volumes in the first quarter 2021, and are prepared to lock in more barrels in the short term with the sole aim of underpinning cashflow to support delivery of our capital programme this year.

“All in, our 2020 performance has met our revised guidance targets, and we have emerged from the year as a stronger company that will be debt free by the end of Q1 2021, US$89.4 million of cash on hand, and an exciting suite of investment projects ahead. Importantly, we have done so without compromising our commitment to sustainable operations, and have recorded no material deviations from our safe operating parameters.

“We are continuing to progress our growth ambitions too, with integration of the Indonesia Lemang asset now underway, the New Zealand Maari asset acquisition expected to complete in H1 of this year, and several additional opportunities in the Asia Pacific region under evaluation.

“We are also announcing today our intent to continue our pivot toward practices more typical of our UK-based peer group.  Following our recent adoption and implementation of the Quoted Companies Alliance Corporate Governance Code, it is our intention to effect a corporate reorganisation whereby our British Columbia incorporated parent company will be substituted for an England and Wales incorporated entity, targeted to be complete in the first half of 2021.”

2020 Performance

Jadestone achieved its revised 2020 production guidance target, with full year production averaging 11,438 bbls/d. The Company realised an average oil price of US$44.75/bbl in 2020, excluding hedging, and generated net revenue of US$217.9 million. Unaudited cash operating expenses for the full year were around US$23.24/bbl, after the customary adjustment for workover activities and for abnormal costs associated with damage from Cyclone Damien in Q1. Cashflow savings relating to Project Clover amounted to a US$33.8 million reduction from plan, and over 25% of the realised savings reflect structural changes in the Company’s operations and hence will be reflected in the Company’s outlook targets for 2021. Unaudited capital spending for the full year was approximately US$26 million.

Jadestone more than doubled its net cash balance in 2020.  As of December 31, 2020, the Company had a net cash balance of US$82.0 million, comprising cash and bank balances of US$89.4 million, and gross debt outstanding of US$7.4 million.  Jadestone’s remaining gross debt comprises the final repayment of the Company’s reserves-based loan (“RBL”), drawn to part fund the Montara acquisition in September 2018. The final RBL redetermination exercise was undertaken in December 2020 and was assessed at a level above the remaining drawn portion. Indeed, the Company’s drawn portion under the RBL facility has remained comfortably below each half yearly redetermination throughout the life of the loan, despite the 71 day shutdown in Q4 2018, the heavy offshore spending programme in 2019, and the oil price collapse in 2020.  The final scheduled repayment will be made at the end of Q1 2021.

Hedging

Jadestone has entered into an agreement to hedge approximately 30% of its production in Q1 2021.  The hedging programme entails crude oil swaps covering approximately 265,000 bbls of crude oil between January 1, 2021 and March 31, 2021, at a Dated Brent price of US$49.00/bbl, and before any sales premiums.  Jadestone is continually monitoring the level of crude oil swaps, and may add to this hedging programme in the lead up to its capital programme in 2021.

Inorganic growth

The Company remains committed to its acquisition of a 69% operated working interest in the Maari asset, offshore New Zealand, which is pending final government approval. The acquisition effective date remains January 1, 2019, meaning Jadestone will ultimately receive all economic benefits relating to its 69% interest accruing from that date forward.

Jadestone completed its acquisition of the Lemang asset, onshore Indonesia in December 2020, and work is now underway to integrate the asset into the Jadestone portfolio, including development planning.

Jadestone continues to pursue a number of M&A opportunities in the Asia Pacific region.  The Company’s management believes the investment climate remains favourable for Jadestone to add value both through inorganic growth and through follow-on investment, leveraging its unique capabilities and strong financial position.

KeyFacts Energy: Jadestone country profile:   Indonesia   l   Philippines   l   Vietnam   l   Australia   l   NZ

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