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Jadestone Energy Inc (JSE)

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Tuesday 27 August, 2019

Jadestone Energy Inc

Results for the Period Ending June 30, 2019

RNS Number : 2297K
Jadestone Energy Inc.
27 August 2019
 

Jadestone Energy Inc.
 

Jadestone Energy Results for the Period Ending June 30, 2019
Record second quarter cash from operations and almost US$100 million cash from operations in the first six months of 2019

 

August 27, 2019-Singapore: Jadestone Energy Inc. (AIM:JSE, TSXV:JSE) ("Jadestone" or the "Company"), an independent oil and gas production company focused on the Asia Pacific region, reported today its consolidated interim unaudited results, as at and for the three-month and six-month period ended June 30, 2019.

 

Financial highlights

 

·    Net revenue during the second quarter of US$115.3mm, more than double Q1 2019 and nearly seven times Q2 2018.  Net revenue for the six-month period to June 30, 2019 was US$171.7mm compared to US$35.8mm for H1 2018;

·    Positive cash generated from operations of US$59.3mm, before changes in working capital, interest and taxes, in Q2 2019, a more than 60% jump on Q1 2019 cash from operations of US$36.7mm, and compared to US$0.1mm for the same quarter a year ago.  Cash generated from operations over the six-month period to June 30, 2019 was US$96.4mm compared to a net outflow of US$0.3mm for H1 2018;

·    Average price realisations of US$71.70/bbl, an increase of 6% over Q1 2019.  Differentials at Montara and Stag continue to improve, with the latest liftings achieving total differentials to Dated Brent of US$4.32/bbl and US$10.60/bbl respectively;

·    Operating costs of US$21.74/bbl, excluding non-routine opex, including the Montara riserless light well intervention ("RLWI"), decreased by 9% from the prior quarter of US$23.75/bbl, and down 34% from the same quarter a year ago of US$32.70/boe;

·    Quarterly profit after tax of US$22.6mm, nearly a three-fold increase over Q1 2019 profit of US$8.4mm, and versus a loss of US$4.9mm in Q2 2018.  Profit after tax for the six-month period to June 30, 2019 was US$30.9mm, compared to a loss of US$21.5mm for H1 2018;

·    Gross debt of US$73.4mm, reduced from US$86.6mm at end March 2019, as the Company continues to pay down its reserve-based lending facility; and

·    Gross cash and bank balances of US$66.4mm, excluding US$10.0mm cash deposited in support of a bank guarantee, resulting in a net debt position of US$7.0mm. Inclusive of restricted cash, the Company is in a net cash position.

 

Operational highlights

 

·    Ongoing safe operations at all assets, with the Stag production facility achieving nearly seven years without a lost time injury1;

·    Montara uptime was 82% in Q22, down slightly from 85% in Q1 due mainly to weather-related downtime in April, but materially ahead of the same period in 2018;

·    Production for the quarter averaged 13,315 bbls/d, decreased 8% from production reported for the March 2019 quarter3, due to planned downtime associated with commencement of the RLWI programme at Montara and weather, but nearly a four-fold increase over the same period a year ago;

·    Achieved three production liftings during the quarter, setting a new record of 1.6mm bbls sold, or a total of 2.3mm bbls for the six-month period to June 30, 2019, which compares to 0.6mm boe for H1 2018;

·    Completed drilling the Stag 49H infill well, which targeted 1.2mm bbls of reserves, and was brought on production in late May at a rate of 1,400 bbls/d. 49H is continuing to produce in line with expectations;

·    Completed the RLWI programme at Montara.  This innovative programme, which would otherwise have required a significantly more expensive rig-based intervention, was completed on budget in mid-August, with all three accessed wells now contributing to the complex's production;

·    Signed a heads of agreement ("HoA") for the Nam Du/U Minh project gas sales and purchase agreement between Petrovietnam and the Company's wholly owned Vietnamese subsidiaries in April, 2019;

·    Submitted the environmental impact assessment for the Nam Du/U Minh development project;

·    Completed front end engineering design ("FEED") studies for the Nam Du/U Minh development project's offshore facilities and pipelines; and

·    Finally, the Company's safety case for the Montara assets was accepted by Australia's offshore safety and environmental regulator, and operatorship of the asset was transferred to Jadestone on August 6, 2019.

 

Outlook

 

·    Group production in the second half of the year will continue benefitting from the Stag 49H infill well, in addition to the successful RLWI programme at Montara, and continued optimisation of production operations across the business;

·    Full year average group production guidance is reconfirmed at 13,500 - 14,500 bbls/d, within the larger range set out in Q1 2019;

·    Opex guidance for the full year is maintained at US$21- 24/bbl, reflecting an acceleration in opex reduction initiatives at Montara, following the transfer of operatorship;

·    Full year major spend remains on budget with the exception of the first infill well at Montara, where the tightening rig market in Australia will likely push the H6 infill well into H1 2020.  This results in a reduction in full year major spend to within a range of US$73-88mm, but does not impact production guidance for this year;

·  Award recommendations for the Nam Du/U Minh offshore facilities engineering, procurement, and construction contract and floating production, storage, and offload vessel contract are expected in Q3 2019;

·   The Nam Du/U Minh field development plan is scheduled to be submitted to Petrovietnam and the Vietnam Government for approval, in late Q3 2019, leading to anticipated approval and final investment decision by end of 2019, as planned;

·   Continuing positive discussions with Pertamina and Indonesian regulators relating to the Company re-establishing an interest in the Ogan Komering asset, with timing driven by Indonesian regulatory processes; and

·   With Montara transition completed we are now starting to consider further inorganic opportunities to broaden the base, provide accretive value and grow the business, and subject to the Company's strict evaluation criteria.

 

1 Lost time reporting for Montara will commence in Q3, post transfer of operatorship on August 6, 2019

2 After excluding downtime due to well interventions

3 Montara production averaged across the period Jan 11, 2019 to Mar 31, 2019, equivalent to Group production of 13,059 bbls/d if averaged across the full 90 days of Q1 2019

 

 

 

Paul Blakeley, President and CEO commented:

 

"I'm very pleased to report Jadestone's results to June 30, 2019, with record quarterly revenue, profits and cash generation, and providing almost US$100 million cash from operations for the first half of the year.  We are building a material business that is strongly cash flow generative, while providing growth through organic investment, both within our existing producing assets in Australia, as well as the new gas developments in Vietnam.

 

"In Australia, we successfully completed the Stag 49H infill well, which came on production at 1,400 bbls/d in May and continues to produce in line with expectations.  At Montara, we completed an innovative subsea well intervention campaign which has successfully restored gas lift to key subsea wells and accessed additional reservoir sands.  Importantly, all work at Montara is now being conducted with Jadestone as operator, following our safety case acceptance earlier this month by Australia's upstream regulator.  This is an arduous process in one of the world's most highly regulated regimes and I have absolute confidence in our team's ability to uphold our high standards with regards to health, safety, and environmental stewardship in our operations.

 

"In addition, we're continuing to make good progress with our gas commercialisation in Vietnam, with acceptance of our environmental impact assessment for the Nam Du/U Minh development, and completion of front end engineering and design work for offshore facilities and pipelines.  We're also advancing contracts for major project components and commercial gas sales negotiations, leading towards field development plan submission in late Q3 2019, and continue to work towards formal development sanction later this year.

 

"Our balance sheet is in excellent shape, with net debt effectively eliminated by mid-year, just nine months since we closed the Montara acquisition with a US$120 million RBL financing arrangement.  2019 is a transformational year for Jadestone and our forecast remains intact for organic cash flow to meet all ongoing re-investment plans, as well as generating distributable earnings for shareholders in the future."

 

Operations update

 

Montara

 

Production at Montara (Jadestone 100%4, and operator) averaged 10,700 bbls/d for Q2 2019.  Operations were affected by an unusually late cyclone season, resulting in weather-related downtime in April, and a partial shutdown of some subsea wells in June during the Company's RLWI campaign. 

 

Jadestone completed the RLWI campaign in mid-August, on budget.  The Company expects to deliver 100% of the forecast reserves and production from the campaign, which includes protecting ongoing production by restoring gas lift and accessing additional reservoir sands.  Completion of this innovative campaign was a critical milestone toward achieving the Company's production volume guidance for the year.

 

The Company is preparing to replace the subsea umbilical from the Skua and Swift/Swallow subsea wells to the Montara owned FPSO, anticipated to be complete in Q3 2019.  In addition, advanced planning continues for the Company's first infill well at Montara, which will be drilled from an existing slot on the Montara wellhead platform, targeting 1.8mm bbls of unswept oil, with a target initial production rate of 3,000 bbls/d.  Jadestone will be prepared to drill the H6 infill well in late 2019 and is actively canvassing the drilling rig market for a suitable jack-up rig to drill the well.

 

The Company is also progressing its plans to acquire new 3D seismic, to improve reservoir imaging, to more accurately target future infill wells beyond H6 and Skua-12, and to assess further exploration step-out potential.  Timing and detailed planning will be influenced by vessel availability in the region.

 

There were two liftings from Montara in Q2 2019 of a total of 1.4mm bbls. 

 

4 99% legal interest in the associated production licenses, subject to regulatory approval and held on trust by the seller.

 

Stag

 

Production at Stag (Jadestone 100%, and operator) averaged 2,615 bbls/d in Q2 2019.  Production was negatively affected by unplanned downtime due to extreme weather activity in April and several wells requiring workovers over the reporting period, awaiting completion of 49H. 

 

The Stag 49H infill well came on production in May and is contributing in line with expectations.  Subsequent to quarter-end, all wells but one have been successfully worked over and production has been restored to approximately 4,000 bbls/d.  One crude oil cargo was lifted from Stag in Q2 2019, for total sales of 0.2mm bbls. 

 

Vietnam

 

The Company continues to make good progress on its Southwest Vietnam gas developments.  In April, 2019, two Jadestone subsidiaries signed an HoA with Petrovietnam, relating to gas sales from the Nam Du and U Minh fields (Jadestone 70%5 working interest, and operator).  The HoA establishes key terms including the agreed daily contract quantity of 80mmscf/d, and stipulates other key commercial terms and principles, including a take-or-pay commitment by the buyer, and a plateau production period of 55 months. 

 

The Company submitted its environmental impact assessment for the Nam Du/U Minh gas development in June, a milestone in environmental governance for the project, and a critical step toward achieving formal development sanction.  In addition, the Company completed FEED for the offshore facilities and pipelines during Q2 2019.   

 

Jadestone continues to progress tendering for major contracts, in addition to negotiating the remaining commercial terms and in accordance with its signed HoA.  The project remains on track for a final investment decision and project sanction by end of 2019.

 

5 Jadestone's working interest will increase to 100%, following registration of Petrovietnam's relinquishment of its 30% working interest in block 46/07 and block 51

 

Financial overview

 

Results for the quarter reflect a more than doubling of sales volume from 0.7mm bbls in Q1 2019 to 1.6mm bbls in Q2 2019.  Meanwhile, realised prices also increased for the quarter, to US$71.70/bbl, an increase of 6% over Q1 2019.  The Company reported record revenue of US$115.3mm, versus US$56.4mm in Q1 2019.

 

Production costs for the quarter were US$39.3mm, versus US$22.7mm in the prior quarter, reflecting an increase in well workover costs associated with the Montara RLWI and other maintenance costs, as well as increased lifting volumes of 1.6mm bbls compared to 0.7mm bbls in Q1 2019.  After adjusting for non-routine opex including the Montara RLWI, this equates to US$21.74/bbl6, versus US$23.75/bbl in Q1 2019, and US$32.70/boe in Q2 2018. 

 

Jadestone generated an adjusted positive EBITDAX of US$75.4mm for the quarter ended June 30, 2019, compared to US$23.7mm for the prior quarter, and US$0.3mm in the same quarter a year ago.

 

On an unadjusted basis, the Company reported a net profit before tax of US$34.0mm, compared to a net profit before tax of US$10.7mm in the prior quarter and a net loss before tax of US$3.9mm in the same quarter a year ago. 

 

Net cash generated from operations before working capital, interest and tax was US$59.3mm, compared to US$36.7mm cash generated in Q1 2019, and US$0.1mm of cash used in Q2 2018.

 

Cash used in investing activities in Q2 2019 was US$27.7mm, including work on the Stag 49H infill well and the Montara RLWI campaign.  This compares to US$9.8mm used in investing activities in Q1 2019, and US$0.2mm used in investing activities in Q2 2018. 

 

Cash used in financing activities in Q2 2019 was US$11.9mm, which was primarily the result of a scheduled quarterly repayment of the outstanding RBL balance.  This compares to cash used in financing of US$15.7mm in Q1 2019, and US$0.3mm used in Q2 2018. 

 

At the end of the quarter, the Company had US$51.9mm cash, plus US$14.5mm of restricted cash, primarily related to its debt service reserve, and a further US$10.0mm of cash in support of a bank guarantee.  Net debt was US$7.0mm, excluding the US$10.0mm of cash in support of the bank guarantee. 

 

Additionally, the Company's existing capped swap provides robust support for 2019 cash generation establishing, as it does, a floor benchmark crude oil price of US$71.72/bbl for 50% of planned 2PD production at Montara, before allowing for the realised premium, which in the most recent lifting was US$4.32/bbl above Dated Brent. 

 

6 This excludes the impact of workovers and repairs and maintenance at Stag given their unpredictable timing, and costs associated with the Montara RLWI which are opex related and will be tracked separately as per 2019 guidance

 

Selected financial information

 

The following table provides selected financial information of the Company, which was derived from, and should be read in conjunction with, the consolidated interim financial statements for the period ended June 30, 2019, available on SEDAR and the Company's website at www.jadestone-energy.com/financial-results/.

 

Quarterly comparison

Jun 2019 quarter

Jun 2018 quarter

Change (%)

Production, mboe7

1,211.7

325.9

271.8%

Sales, mboe7

1,589.4

270.7

487.1%

Avg realised liquids price, US$/boe7

71.70

71.46

0.3%

Sales revenue, US$mm

115.3

17.5

558.9%

Capital expenditure8, US$mm

23.1

0.3

N/M

Quarterly comparison

Jun 2019 quarter

Mar 2019 quarter

Change (%)

Production, mbbls

1,211.7

1,175.3

3.1%

Sales, mbbls

1,589.4

748.9

112.2%

Avg realised liquids price, US$/bbl

71.70

67.59

6.1%

Sales revenue, US$mm

115.3

56.4

104.4%

Capital expenditure8, US$mm

23.1

7.7

200.0%

Year-to-date comparison

H1 2019

H1 2018

Change (%)

Production, mboe7

2,387.0

695.0

243.5%

Sales, mboe7

2,338.2

603.7

287.3%

Avg realised liquids price, US$/boe7

70.39

65.15

8.0%

Sales revenue, US$mm

171.7

35.8

379.6%

Captial expenditure8, US$mm

30.8

0.8

N/M

7 Production, sales volume and average realised prices are expressed on a barrels of oil equivalent basis as the underlying data includes gas production from Ogan Komering for the prevailing period based on Jadestone's 50% participating interest up until May 19, 2018
8 Payment for oil and gas property, plant and equipment and intangible exploration assets.  Excludes acquisition related capital expenditure and lease payments that under IFRS16 are included in cash used in investing activities

 

 

Conference call and webcast

The management team will host an investor and analyst conference call at 9:00 p.m. (Singapore), 2:00 p.m. (London), and 9:00 a.m. (Toronto) on the same day, Tuesday, August 27, 2019, including a question and answer session.

The live webcast of the presentation will be available at the below webcast link.  Dial-in details are provided below.  Please register approximately 15 minutes prior to the start of the call.  The results for the period ended June 30, 2019 will be available on the Company's website at: www.jadestone-energy.com/investor-relations/.

Webcast link: https://event.on24.com/wcc/r/2052870/9B39318BD0B3417B45159AC8001E593E
Event conference title: Jadestone Energy Inc. - Second Quarter Results
Start time: 9:00 p.m. (Singapore), 2:00 p.m. (London), 9:00 a.m. (Toronto)
Date: Tuesday, August 27, 2019
Confirmation ID: 66806740

 

Country

Dial-In Numbers

Australia

1800076068

Canada (Toronto)

416 764 8609

Canada (Toll free)

888 390 0605

France

0800916834

Germany

08007240293

Germany (Mobile)

08007240293

Hong Kong

800962712

Indonesia

0078030208221

Ireland

1800939111

Ireland (Mobile)

1800939111

Japan

006633812569

Malaysia

1800817426

Singapore

8001013217

Switzerland

0800312635

Switzerland (Mobile)

0800312635

United Kingdom

08006522435

United States (Toll free)

888 390 0605

Area access numbers are subject to carrier capacity and call volumes.

 

- Ends -

 

Enquiries

Jadestone Energy Inc.

+65 6324 0359 (Singapore)

Paul Blakeley, President and CEO

+1 403 975 6752 (Canada)

Dan Young, CFO

[email protected]

Robin Martin, Investor Relations Manager

 

 

 

Stifel Nicolaus Europe Limited (Nomad, Joint Broker)

+44 (0) 20 7710 7600 (UK)

Callum Stewart

 

Nicholas Rhodes

 

Ashton Clanfield

 

 

 

BMO Capital Markets Limited (Joint Broker)

+44 (0) 20 7236 1010 (UK)

Thomas Rider

 

Jeremy Low

 

Thomas Hughes

 

 

 

Camarco (Public Relations Advisor)

+ 44 (0) 203 757 4980 (UK)

Billy Clegg

[email protected]

James Crothers

 

 

 

About Jadestone Energy Inc.

 

Jadestone Energy Inc. is an independent oil and gas company focused on the Asia Pacific region. It has a balanced, low risk, full cycle portfolio of development, production and exploration assets in Australia, Vietnam and the Philippines.

 

The Company has a 100% operated working interest in Stag, offshore Australia, and a 100% legal and beneficial interest in the Montara assets, and a 99% legal, subject to regulatory approval, beneficial right, title, and interest in the associated production licences AC/L7 and AC/L8 (the "Montara Titles"). The remaining 1% legal interest in the Montara Titles is being held on trust by the seller, in favour of the Company, until Australian regulatory approvals relating to the transfer of operatorship of the Montara assets are obtained. Both the Stag and Montara assets include oil producing fields, with further development and exploration potential. The Company has a 100% operated working interest (subject to registration of PVEP's withdrawal) in two gas development blocks in Southwest Vietnam and is partnered with Total in the Philippines where it holds a 25% working interest in the SC56 exploration block.

 

Led by an experienced management team with a track record of delivery, who were core to the successful growth of Talisman's business in Asia, the Company is pursuing an acquisition strategy focused on growth and creating value through identifying, acquiring, developing and operating assets throughout the Asia- Pacific region.

 

Jadestone Energy Inc. is currently listed on the TSXV and AIM. The Company is headquartered in Singapore. For further information on Jadestone please visit www.jadestone-energy.com.

 

Cautionary statements

 

Certain statements in this press release are forward-looking statements and information (collectively "forward-looking statements"), within the meaning of the applicable Canadian securities legislation, as well as other applicable international securities laws. The forward-looking statements contained in this press release are forward-looking and not historical facts.

 

Some of the forward-looking statements may be identified by statements that express, or involve discussions as to expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of phrases such as "will likely result", "are expected to", "will continue", "is anticipated", "is targeting", "estimated", "intend", "plan", "guidance", "objective", "projection", "aim", "goals", "target", "schedules", and "outlook"). In particular, forward-looking statements in this press release include, but are not limited to statements regarding target reserves volumes, production forecasts, cost projections, timing and results of exploration and development activities on both Stag and Montara, timing and results of the Montara replacement of subsea umbilical, expected costs, commodity prices and timing of the gas sales agreement for Nam Du and U Minh.

 

Because actual results or outcomes could differ materially from those expressed in any forward-looking statements, investors should not place undue reliance on any such forward-looking statements. By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predicted outcomes will not occur. Some of these risks, uncertainties and other factors are similar to those faced by other oil and gas companies and some are unique to Jadestone. The forward-looking information contained in this news release speaks only as of the date hereof. The Company does not assume any obligation to publicly update the information, except as may be required pursuant to applicable laws. This announcement contains inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of that Regulation.

 

The technical information contained in this announcement has been prepared in accordance with the March 2007 guidelines endorsed by the Society of Petroleum Engineers, World Petroleum Congress, American Association of Petroleum Geologists and Society of Petroleum Evaluation Engineers Petroleum Resource Management System.

 

Henning Hoeyland of Jadestone Energy Inc., a Subsurface Manager with a Masters degree in Petroleum Engineering who has been involved in the energy industry for more than 17 years, has read and approved the technical disclosure in this regulatory announcement.

 

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, and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

 

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

 

Glossary

 

2PD                 proved and probable developed reserves

bbls                  barrels of oil
bbls/d               barrels of oil per day
boe                  barrels of oil equivalent
EBITDAX        earnings before interest, tax, depreciation, amortisation and exploration expenses
FPSO               floating production, storage and offloading vessel
mbbl                thousands of barrels of oil

mboe               thousands of barrels of oil equivalent

mm bbls           millions of barrels of oil

mmscf/d          millions of standard cubic feet per day

PVEP               Petrovietnam Exploration Production Corporation

 

 

 

 

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

for the three and six months ended June 30, 2019

 

 

 

 

 

 

 

Notes

 

Three months

ended

June 30,

2019

USD'000

 

Three months

ended

June 30,

2018

USD'000

 

 

Six months

ended

June 30,

2019

USD'000

 

 

Six months

ended

June 30,

2018

USD'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated statement of profit or loss

 

 

 

 

 

 

 

 

 

Revenue

4

 

115,341

 

17,496

 

171,707

 

35,783

Production costs

5

 

(39,337)

 

(10,657)

 

(62,057)

 

(23,465)

Depletion, depreciation and amortisation

7

 

(33,222)

 

(2,264)

 

(45,114)

 

(5,064)

Staff costs

 

 

(5,112)

 

(3,780)

 

(8,890)

 

(6,805)

Other expenses

8

 

(2,171)

 

(2,952)

 

(5,037)

 

(5,397)

Impairment of assets

9

 

-

 

-

 

-

 

(11,902)

Other income

10

 

1,939

 

154

 

2,098

 

166

Finance costs

11

 

(4,944)

 

(1,863)

 

(10,016)

 

(3,077)

Other financial gains

12

 

1,458

 

-

 

1,936

 

-

Profit/(loss) before tax

 

 

33,952

 

(3,866)

 

44,627

 

(19,761)

 

 

 

 

 

 

 

 

 

 

Income tax expense

13

 

(11,368)

 

(1,046)

 

(13,683)

 

(1,742)

 

 

 

 

 

 

 

 

 

 

Profit/(loss) for the period

 

 

22,584

 

(4,912)

 

30,944

 

(21,503)

 

 

 

 

 

 

 

 

 

 

Profit/(loss) per ordinary share

 

 

 

 

 

 

 

 

 

Basic and diluted (US$)

14

 

0.05

 

(0.02)

 

0.07

 

(0.10)

 

 

 

 

 

 

 

 

 

 

Consolidated statement of comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit/(loss) for the period

 

 

22,584

 

(4,912)

 

30,944

 

(21,503)

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

Items that may be reclassified subsequently to profit or loss

 

 

 

 

 

 

 

 

 

Gain/(loss) on unrealised cash flow hedges

23

 

3,105

 

(3,933)

 

(29,691)

 

(4,916)

Hedging gain reclassified to profit or loss

23

 

(1,376)

 

-

 

(7,128)

 

-

 

 

 

1,729

 

(3,933)

 

(36,819)

 

(4,916)

Tax income/(expense) relating to components of other comprehensive income

13,23

 

(519)

 

1,180

 

11,046

 

1,475

Other comprehensive income/(loss)

 

 

1,210

 

(2,753)

 

(25,773)

 

(3,441)

Total comprehensive income/(loss) for the period

 

 

23,794

 

(7,665)

 

5,171

 

(24,944)

 

 

 

 

 

 

 

 

 

 

 

All comprehensive income is attributable to the equity holders of the parent.

 

 

The accompanying notes are an integral part of the consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at June 30, 2019

 

 

 

 

June 30,

 

December 31,

 

 

2019

 

2018

 

Notes

USD'000

 

USD'000

 

 

 

 

 

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

Intangible exploration assets

15

99,894

 

               95,607

Oil and gas properties

16

419,616

 

            415,365

Plant and equipment

17

1,884

 

                 1,709

Right of use assets

18

69,303

 

                          -

Derivative financial instruments

30

2,738

 

               15,339

Restricted cash

21

18,493

 

               23,561

Deferred tax assets

13

21,198

 

               21,287

 

 

633,126

 

572,868

Current assets

 

 

 

 

Inventories

19

32,257

 

               29,831

Trade and other receivables

20

68,113

 

               32,800

Derivative financial instruments

30

11,251

 

               35,985

Restricted cash

21

6,006

 

                 5,083

Cash and cash equivalents

21

51,880

 

               52,981

 

 

169,507

 

156,680

TOTAL ASSETS

 

802,633

 

729,548

 

 

 

 

 

EQUITY AND LIABILITIES

 

 

 

 

Equity

 

 

 

 

Share capital

22

466,573

 

            466,562

Share based payments reserve

24

23,066

 

               22,375

Hedging reserves

23

9,707

 

               35,480

Accumulated losses

 

(278,212)

 

          (309,156)

 

 

221,134

 

215,261

Non-current liabilities

 

 

 

 

Provision for asset restoration obligations

25

299,069

 

            277,697

Borrowings

28

25,277

 

               49,420

Lease liability

27

50,929

 

                          -

Other payables

26

6,703

 

               10,351

Deferred tax liabilities

13

72,339

 

               92,468

 

 

454,317

 

429,936

Current liabilities

 

 

 

 

Borrowings

28

48,124

 

               52,393

Lease liability

27

19,430

 

                          -

Trade and other payables

29

30,130

 

               30,674

Provision for taxation

13

29,498

 

                 1,284

 

 

127,182

 

84,351

Total liabilities

 

581,499

 

514,287

TOTAL EQUITY AND LIABILITIES

 

802,633

 

729,548

 

 

 

 

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

for the three and six months ended June 30, 2019

 

 

 

 

Share

 

 

 

 

 

 

 

 

 

based

 

 

 

 

 

 

 

Share

 

payments

 

Hedging

 

Accumulated

 

 

 

capital

 

reserve

 

reserves

 

losses

 

Total

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

 

At January 1, 2018

364,466

 

21,855

 

-

 

(278,123)

 

108,198

 

 

 

 

 

 

 

 

 

 

Loss for the period, representing total comprehensive loss

                   -

 

                     -

 

                     -

 

(21,503)

 

(21,503)

Other comprehensive income for the period

-

 

-

 

(3,441)

 

-

 

(3,441)

Total comprehensive loss for the period

                     -

 

                     -

 

(3,441)

 

(21,503)

 

(24,944)

 

 

 

 

 

 

 

 

 

 

Share-based compensation, representing transaction with owners, recognised directly in equity

                      -

 

273

 

                     -

 

-

 

273

 

 

 

 

 

 

 

 

 

 

At June 30, 2018

       364,466

 

22,128

 

(3,441)

 

(299,626)

 

83,527

 

 

 

 

 

 

 

 

 

 

At January 1, 2019

466,562

 

22,375

 

         35,480

 

(309,156)

 

215,261

 

 

 

 

 

 

 

 

 

 

Profit for the period, representing total comprehensive profit

                   -

 

                     -

 

-

 

30,944

 

30,944

Other comprehensive loss for the period

-

 

-

 

(25,773)

 

-

 

(25,773)

Total comprehensive income/(loss) for the period

                     -

 

                      -

 

(25,773)

 

30,944

 

5,171

 

 

 

 

 

 

 

 

 

 

Shares issued

11

 

-

 

-

 

-

 

11

Share-based compensation, representing transaction with owners, recognised directly in equity

-

 

691

 

-

 

-

 

691

 

 

 

 

 

 

 

 

 

 

At June 30, 2019

466,573

 

23,066

 

9,707

 

(278,212)

 

221,134

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

for the three and six months ended June 30, 2019

 

 

 

 

 

 

 

Notes

 

Three months

ended

June 30,

2019

USD'000

 

Three months

ended

June 30,

2018

USD'000

 

 

Six months

ended

June 30,

2019

USD'000

 

 

Six months

ended

June 30,

2018

USD'000

 

 

 

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

 

 

 

 

Profit/(loss) before tax

 

 

 33,952

 

(3,866)

 

44,627

 

(19,761)

Adjustments for

 

 

 

 

 

 

 

 

 

 -Interest income

10

 

(275)

 

(32)

 

(578)

 

(66)

 -Loss on ineffective hedge recycled to profit or loss

 

 

70

 

-

 

514

 

-

 -Interest expense

11

 

1,285

 

-

 

2,747

 

-

 -Other finance costs

11

 

1,843

 

1,674

 

5,289

 

2,468

 -Unrealised foreign exchange gain

10

 

(96)

 

(73)

 

(93)

 

(175)

 -Change in fair value of contingent payments

12

 

(1,458)

 

-

 

(1,936)

 

-

 -Depletion, depreciation and amortisation

7

 

23,436

 

2,264

 

45,113

 

5,064

 -Share based payments

 

 

573

 

127

 

691

 

273

 -Impairment of intangible exploration assets

 

 

-

 

-

 

-

 

11,902

 

 

 

59,330

 

94

 

96,374

 

(295)

Changes in working capital

 

 

 

 

 

 

 

 

 

 -(Increase)/decrease in trade and other receivables

 

 

(55,574)

 

43

 

(36,013)

 

1,181

 -(Increase)/decrease in inventories

 

 

17,602

 

(2,288)

 

(1,049)

 

(4,007)

 -Increase /(decrease) in trade and other payables

 

 

6,697

 

99

 

(1,130)

 

1,664

Cash generated from operations

 

 

28,055

 

(2,052)

 

58,182

 

(1,457)

Interest paid

11

 

(1,285)

 

-

 

(2,747)

 

-

Tax (paid)/refund

 

 

6,243

 

(531)

 

6,243

 

(1,049)

Net cash generated from operating activities

 

 

33,013

 

(2,583)

 

61,678

 

(2,506)

 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

 

Payment for oil and gas properties

 

 

(20,113)

 

(182)

 

(26,078)

 

(389)

Net payment for plant and equipment

 

 

(276)

 

13

 

(370)

 

11

Payment for intangible exploration assets

 

 

(2,680)

 

(69)

 

(4,287)

 

(358)

Lease payments

27

 

(4,952)

 

-

 

(7,372)

 

-

Interest received

 

 

275

 

32

 

578

 

66

Net cash used in investing activities

 

 

(27,746)

 

(206)

 

(37,529)

 

(670)

 

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

 

Proceeds from issuance of shares

 

 

-

 

-

 

11

 

-

Repayment of borrowings

 

 

(13,653)

 

(276)

 

(29,406)

 

(645)

Restricted cash transfers

 

 

1,776

 

-

 

4,145

 

-

Payment of bond facility and stand-by fees

 

 

-

 

(32)

 

-

 

(64)

Net cash used in financing activities

 

 

(11,877)

 

(308)

 

(25,250)

 

(709)

 

 

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

 

 

(6,610)

 

(3,097)

 

(1,101)

 

(3,885)

Cash and cash equivalents at start of the period

 

 

58,490

 

9,662

 

52,981

 

10,450

Cash and cash equivalents at end of the period

21

 

51,880

 

6,565

 

51,880

 

6,565

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

for the three and six months ended June 30, 2019

 

1.    CORPORATE INFORMATION

 

Jadestone Energy Inc. (the "Company" or "Jadestone") is an oil and gas company incorporated in Canada.

 

The Company's ordinary shares are listed on the TSX Ventures Exchange ("TSX-V") and the London AIM market. The Company trades on both markets under the symbol "JSE".

 

The financial statements are expressed in United States Dollars ("US$" or "USD").

 

The Company and its subsidiaries (the "Group") are engaged in production, development, exploration and appraisal activities in Australia, Vietnam and the Philippines.  The Company's current producing assets are in the Carnarvon and Vulcan basins, offshore Western Australia.

 

During the comparative periods for the three and six months ended June 30, 2018, the Company had a participating interest in the Ogan Komering PSC in Indonesia.  The terms of the PSC expired in May 19, 2018, after which the Company no longer held an interest in the PSC.

 

The Company's head office is located at 3 Anson Road, #13-01 Springleaf Tower, Singapore 079909.  The registered office of the Company is 10th Floor, 595 Howe Street, Vancouver, British Columbia V6C 2T5, Canada.

 

 

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

STATEMENT OF COMPLIANCE

 

These unaudited condensed interim financial statements (the "Financial Statements") are prepared in accordance with International Accounting Standard IAS 34, Interim Financial Reporting, on a going concern basis under the historical cost convention.  They do not contain all disclosures required by International Financial Reporting Standards ("IFRS") for annual financial statements, and should be read in conjunction with Jadestone's audited consolidated financial statements for the year ended December 31, 2018.

 

These Financial Statements were approved for issuance by the Company's Board of Directors on August 27, 2019 on the recommendation of the Audit Committee.

 

 

3.    BASIS OF PREPARATION

 

These Financial Statements have been prepared on an historical cost basis, except for financial instruments classified as financial instruments at fair value, which are stated at their fair values, and operating leases which are stated at the present value of future cash payments.

 

In addition, these Financial Statements have been prepared using the accrual basis of accounting.

 

Adoption of new and revised standards

New and amended IFRS standards that are effective for the current period

 

The Group has applied the following standards and amendments for the first time with effect from January 1, 2019.

 

-       IFRS 16 Leases.

 

IFRS 16 Leases

General impact of application of IFRS 16 Leases

 

The Group, for the first time, has applied IFRS 16 Leases (as issued by the IASB in January 2016) as at January 1, 2019.

 

IFRS 16 introduces new or amended requirements with respect to lease accounting.  It introduces significant changes to lessee accounting, by removing the distinction between operating and finance lease.  IFRS 16 requires the recognition of a right of use asset and a lease liability, at commencement for all leases, except for short-term leases and leases of low value assets. Details of the new requirements are described in note 18, right of use assets.  The impact of the adoption of IFRS 16 on the Group's consolidated financial statements is described below.

 

The Group has applied IFRS 16 using the "modified retrospective" approach, and has elected not to restate comparatives. 

 

Impact of the new definition of a lease

 

The Group has made use of the practical expedient available on transition to IFRS 16 not to reassess whether a contract is or contains a lease.  Accordingly, the definition of a lease in accordance with IAS 17 and IFRIC 4 will continue to be applied to those leases entered or modified before January 1, 2019.

 

The change in definition of a lease mainly relates to the concept of control.  IFRS 16 determines whether a contract contains a lease, on the basis of whether the customer has the right to control the use of an identified asset for a period of time, in exchange for consideration.

 

The Group applies the definition of a lease and related guidance set out in IFRS 16 to all lease contracts entered into or modified on, or after, January 1, 2019 (whether it is a lessor or a lessee in the lease contract).  In preparation for the first-time application of IFRS 16, the Group has carried out an implementation project.  The project has shown that the new definition in IFRS 16 will not change significantly the scope of contracts that meet the definition of a lease for the Group.

 

Impact on lessee accounting

 

On adoption, IFRS 16 changed how the Group accounts for leases previously classified as operating leases.  The impact to the Group accounts are:

 

-       Recognises right of use assets and lease liabilities in the consolidated statement of financial position, initially measured at the present value of future lease payments;

 

-       Recognises depreciation of right of use assets and interest on lease liabilities in the consolidated statement of profit or loss; and

 

-       Separates the total amount of cash paid into a principal portion (presented within financing activities) and interest (presented within operating activities) in the consolidated statement of cash flows.

 

Under IFRS 16, right of use assets are tested for impairment in accordance with IAS 36 Impairment of Assets.  This replaces the previous requirement to recognise a provision for onerous lease contracts.

 

Financial impact of initial application of IFRS 16

 

The recognition of the present value of the minimum lease payments resulted in an additional US$38.0 million (note 18) of right of use assets and associated lease liabilities.  The Company has recognised the lease liabilities in relation to lease arrangements, previously disclosed as operating lease commitments under IAS 17, that meet the criteria of a lease under IFRS 16.

 

Upon recognition, the Company's weighted average incremental borrowing rate used in measuring lease liabilities was 6% percent.

 

The nature of the Company's leasing activities includes vessels, helicopters, buildings and the Stag FSO, all of which are used in producing and storage of hydrocarbons where the Company has a right to substantially all of the economic benefits.

 

The Company's lease contracts may contain termination, renewal, and/or purchase options, residual value guarantees, or a combination thereof, all of which are evaluated by the Company on a quarterly basis.  The Company accounts for such contract options when the Company is reasonably certain that it will exercise one of these options.

 

New and revised IFRS's on issue but not yet effective

 

The Group has not applied the following new and revised relevant IFRS that have been issued, but not yet effective:

 

-       Amendments to IFRS 3 Business Combinations.

 

The amendments are effective for annual periods beginning on, or after, January 1, 2020, and generally require prospective application.  The Group is currently performing an assessment of the standard, and does not anticipate a material impact on the financial statements of the Group in future periods, with the exception of the item listed below.

 

Amendments to IFRS 3 Business Combinations

 

The definition of a business has been amended under IFRS 3, on October 22, 2018, clarifying that to be considered a business, rather than an asset sale or purchase, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to create outputs.  The definition of the term outputs is narrowed to focus on goods and services provided to customers, generating investment income and other returns.  The amended definition will be applied to reporting period's beginning on, or after, January 1, 2020 prospectively.

 

 

4.    REVENUE

 

The Group derives its revenue from contracts with customers for the sale of oil and gas products.  Revenue is presented in the consolidated statement of profit or loss, net of royalties.

 

 

 

Three months ended

June 30,

2019

USD'000

 

 

Three months ended

June 30,

2018

USD'000

 

 

 

Six months ended

June 30,

2019

USD'000

 

 

 

Six months ended

June 30,

2018

USD'000

 

 

 

 

 

 

 

 

Liquids revenue - after hedging

 

 

 

 

 

 

 

Montara

100,455

 

-

 

145,377

 

-

Stag

14,886

 

14,523

 

26,330

 

28,608

Ogan Komering

-

 

2,812

 

-

 

7,965

 

 

 

 

 

 

 

 

Gas revenue

 

 

 

 

 

 

 

Ogan Komering

-

 

998

 

-

 

2,759

 

115,341

 

18,333

 

171,707

 

39,332

 

 

 

 

 

 

 

 

Royalties

-

 

(837)

 

-

 

(3,549)

Total revenue derived from contracts with customers

115,341

 

17,496

 

171,707

 

35,783

 

All royalties included in the comparative period ended June 30, 2018, relate to production entitlement in Indonesia.  The Ogan Komering PSC expired on May 19, 2018, and hence no revenue or royalties arose in the current period.

 

 

5.    PRODUCTION COSTS

 

 

 

Three months ended

June 30,

2019

USD'000

 

 

Three months ended

June 30,

2018

USD'000

 

 

 

Six months ended

June 30,

2019

USD'000

 

 

 

Six months ended

June 30,

2018

USD'000

 

 

 

 

 

 

 

 

Operating costs

12,996

 

8,385

 

28,491

 

17,075

Workovers

7,131

 

2,106

 

10,278

 

5,536

Logistics

3,967

 

1,090

 

12,031

 

2,345

Repairs and maintenance

6,731

 

1,214

 

11,219

 

1,979

Movement in inventory

8,512

 

 (2,138)

 

 38

 

 (3,470)

 

39,337

 

10,657

 

62,057

 

23,465

 

6.    ACQUISITION OF MONTARA ASSETS

 

On September 28, 2018 (the "acquisition date"), Jadestone Energy (Eagle) Ltd, a wholly owned subsidiary of the Company, closed the acquisition of the Montara Assets, obtaining control and 100% of the legal ownership from PTTEP Australasia (Ashmore Cartier) Pty Ltd ("PTTEP Australia"), apart from interest in the associated licenses. The Company received 99% interest in the Montara titles on May 30, 2019, and following transfer of the Montara operatorship to Jadestone on August 6, 2019, the Company has now requested transfer of the final 1%.

 

6.1  Fair value of consideration transferred

 

The consideration for the Montara Assets on the acquisition date comprised a cash payment of US$133.1 million, as set out below.

 

 

 

 

 

 

 

USD'000

 

 

 

 

 

 

 

 

 

Asset purchase price

 

 

 

 

 

            195,000

 

Crude inventory value

 

 

 

 

 

                6,657

 

Capital charge

 

 

 

 

 

                6,982

 

Net income adjustment (from January 1, 2018 to the date of acquisition)

             (75,547)

 

Cash payment on acquisition date

 

 

 

 

 

133,092

 

 

In addition to the upfront cash consideration set out above, there are deferred contingent payments payable, depending on the outcome of a number of trigger events.  The trigger events relate to future Dated Brent prices in 2019 and 2020, production from the infill well drilling scheduled for 2019, and any future final investment decision for developments with significant 2P reserves.  The Group has reviewed all the contingent payment trigger events and recognised the following two potential payments, based on current and future anticipated potential prices of Dated Brent crude oil.

 

-       Annual average Dated Brent crude price exceeding US$80/bbl in 2019: US$20.0 million; and

 

-       Annual average Dated Brent crude price exceeding US$80/bbl in 2020: US$10.0 million.

 

Management has assessed the fair value of the above deferred contingent consideration using a Monte Carlo option simulation model, which considered inputs such as spot Dated Brent oil prices at the completion date, the prevailing risk-free rate, volatility of oil prices, and the period of time over which the contingent payment will apply.  At the date of acquisition, the Company recognised a fair value of US$15.8 million for the two contingent payments.  This amount was reduced to US$3.8 million at December 31, 2018, and at June 30, 2019 the revised fair value is US$1.8 million (Note 26).

 

The maintenance and inspection shutdown that occurred at Montara between November 1, 2018 to January 11, 2019, resulted in a deferral of production and revenue during that period of time, as well as an increase in costs due to overheads still being incurred and additional maintenance and inspection work required to rectify the safety issues.  As a result, on January 7, 2019, PTTEP Australia and the Group agreed that PTTEP Australia would fund cash calls capped at US$22.0 million.  Management believes that the shutdown was a result of facts and circumstances that existed as at the acquisition date.  As such, the US$22.0 million has been adjusted against the consideration transferred for the Montara Assets.

 

Since the date of acquisition, the Company has been reviewing the fair value of the assets and liabilities acquired in accordance with IFRS 3 Business Combinations.  This assessment has resulted in the restatements below.

 

 

June 30, 2019

USD'000

 

 

Restatement

USD'000

 

December 31,2018

USD'000

 

 

 

 

 

 

Asset purchase price

195,000

 

-

 

195,000

Crude inventory value

6,657

 

-

 

6,657

Capital charge

6,982

 

-

 

6,982

Net income adjustment

(75,547)

 

-

 

(75,547)

Cash payment on acquisition date

133,092

 

-

 

133,092

 

 

 

 

 

 

Deferred contingent consideration

15,805

 

-

 

15,805

Prepaid asset for future cash calls

(22,000)

 

-

 

(22,000)

Working capital adjustment

1,816

 

819

 

997

Total fair value consideration on acquisition date

128,713

 

819

 

127,894

 

 

6.2 Assets acquired and liabilities assumed at the date of acquisition

The fair value assessment of the Montara identifiable assets and liabilities, acquired as at the date of acquisition, have been reviewed in accordance with IFRS 3 Business Combinations.  The provisional fair value of the identifiable assets and liabilities of Montara, as at the acquisition date, were:

 

 

 June 30,

2019

USD'000

 

 

Restatement

USD'000 

 

December 31, 2018

USD'000

 

 

 

 

 

 

Assets

 

 

 

 

 

Non-current assets

 

 

 

 

 

Oil & gas properties

354,625

 

819

 

353,806

Current assets

 

 

 

 

 

Inventory - oil

17,195

 

-

 

17,195

Inventory - materials

18,178

 

-

 

18,178

Prepayments

4,917

 

-

 

4,917

Total assets

394,915

 

819

 

394,096

 

 

 

 

 

 

 

 

 June 30,

2019

USD'000

 

Restatement

 

USD'000 

 

December 31, 2018

USD'000

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

             (4,314)

 

-

 

             (4,314)

Non-current liabilities

 

 

 

 

 

Provision for asset restoration obligations

        (183,020)

 

-

 

        (183,020)

Deferred tax liabilities

           (78,437)

 

-

 

           (78,437)

Other provisions

                (431)

 

 

 

                (431)

Total liabilities

      (266,202)

 

-

 

      (266,202)

 

 

 

 

 

 

Net identifiable assets acquired

128,713

 

819

 

127,894

             

 

The provisional values continue to be assessed and as a result, their final values and associated calculations, which include the tax effects, may be different from the provisional determination.  Pursuant to IFRS 3, the review of the fair values as at September 28, 2018 of the assets and liabilities acquired, will be completed within 12 months of the acquisition date.

 

 

7.    DEPLETION, DEPRECIATION AND AMORTISATION ("DD&A")

 

 

Three months ended

June 30,

2019

USD'000

 

 

Three months ended

June 30,

2018

USD'000

 

 

 

Six months ended

June 30,

2019

USD'000

 

 

 

Six months ended

June 30,

2018

USD'000

 

 

 

 

 

 

 

 

Depletion, depreciation and amortisation

 

 

 

 

 

 

 

Montara

18,097

 

-

 

36,136

 

-

Stag

2,248

 

2,166

 

3,778

 

4,210

Ogan Komering

-

 

-

 

-

 

657

 

20,345

 

2,166

 

39,914

 

4,867

Depreciation of plant and equipment (Note 17)

100

 

98

 

195

 

197

Right of use assets (Note 18)

4,368

 

-

 

6,382

 

-

Movement in inventory

8,409

 

-

 

(1,377)

 

-

 

33,222

 

2,264

 

45,114

 

5,064

 

 

 

 

 

 

 

 

The Ogan Komering DD&A charge is based on a units of production basis, during the comparable period.  The PSC expired on May 19, 2018, and the Group no longer holds an interest in the PSC.

 

The right of use assets relate predominately to operating leases previously included in production costs.  Since the implementation of IFRS 16 Leases, these expenses are now recognised as right of use assets, and are capitalised and depreciated over the life of the lease.

 

 

 

 

8.    OTHER EXPENSES

 

 

Three months ended

June 30,

2019

USD'000

 

 

Three months ended

June 30,

2018

USD'000

 

 

 

Six months ended

June 30,

2019

USD'000

 

 

 

Six months ended

June 30,

2018

USD'000

 

 

 

 

 

 

 

 

Professional fees/consultancies

 1,148

 

 1,110

 

 2,615

 

 2,009

Office costs

 462

 

 269

 

 959

 

 882

Travel and entertainment

 134

 

 14

 

 271

 

 331

Other expenses

427

 

 1,559

 

1,192

 

 2,175

 

2,171

 

2,952

 

5,037

 

5,397

 

 

 

 

 

 

 

 

 

9.    IMPAIRMENT OF ASSETS

 

 

Three months ended

June 30,

2019

USD'000

 

 

Three months ended

June 30,

2018

USD'000

 

 

 

Six months ended

June 30,

2019

USD'000

 

 

 

Six months ended

June 30,

2018

USD'000

 

 

 

 

 

 

 

 

Impairment of intangible exploration assets

-

 

-

 

-

 

11,902

 

The impairment booked in the comparable period relates to the relinquishment of deepwater Block 127 in Vietnam.

 

 

10.  OTHER INCOME

 

 

Three months ended

June 30,

2019

USD'000

 

 

Three months ended

June 30,

2018

USD'000

 

 

 

Six months ended

June 30,

2019

USD'000

 

 

 

Six months ended

June 30,

2018

USD'000

 

 

 

 

 

 

 

 

Interest income

275

 

66

 

578

 

66

Net foreign exchange gain

219

 

44

 

75

 

44

Miscellaneous income (Note 26)

1,445

 

44

 

1,445

 

56

 

1,939

 

154

 

2,098

 

166

 

Miscellaneous income for the six and three months ended June 30, 2019 of US$1.4 million arises from a reduction in estimated Stag FSO redundancy payments.
 

 

11.  FINANCE COSTS

 

 

Three months ended

June 30,

2019

USD'000

 

 

Three months ended

June 30,

2018

USD'000

 

 

 

Six months ended

June 30,

2019

USD'000

 

 

 

Six months ended

June 30,

2018

USD'000

 

 

 

 

 

 

 

 

Interest

1,285

 

 280

 

2,747

 

 558

Accretion - asset retirement obligations (Note 25)

1,516

 

 346

 

3,286

 

 524

Accretion - lease payments (Note 27)

 1,277

 

 -

 

2,046

 

 -

Accretion - RBL (Note 28)

448

 

 -

 

994

 

 -

Fair value loss on derivative liability - convertible bond

 -  

 

 982

 

-

 

 1,293

Accretion - convertible bond

 -  

 

 285

 

-

 

 560

Facility fees - convertible bond

 -  

 

-

 

-

 

 64

Other finance costs

418

 

 (30)

 

943

 

 78

 

4,944

 

1,863

 

10,016

 

3,077

 

During the current reporting period, the Company paid interest of US$1.3 million (2018: US$0.3 million) related to the reserve based loan ("RBL"), which was drawn down in Q3 2018.  The comparable quarter interest paid relates to the convertible bond, which was repaid in August 2018.

 

The lease accretion reflects the finance charge on operating leases due to the adoption of IFRS 16; previously lease payments were treated as a production cost. 

 

 

12.  OTHER FINANCIAL GAINS/(LOSS)

 

 

Three months ended

June 30,

2019

USD'000

 

 

Three months ended

June 30,

2018

USD'000

 

 

 

Six months ended

June 30,

2019

USD'000

 

 

 

Six months ended

June 30,

2018

USD'000

 

 

 

 

 

 

 

 

Change in provisions - contingent payments (Note 6)

(1,458)

 

-

 

(1,936)

 

-

 

 

13.  INCOME TAX (EXPENSE)/CREDIT

 

 

Three months ended

June 30,

2019

USD'000

 

 

Three months ended

June 30,

2018

USD'000

 

 

 

Six months ended

June 30,

2019

USD'000

 

 

 

Six months ended

June 30,

2018

USD'000

 

 

 

 

 

 

 

 

Current tax

 

 

 

 

 

 

 

  Corporate tax

18,143

 

468

 

28,214

 

784

  Petroleum resource rent tax (PRRT)

(2,442)

 

-

 

(5,536)

 

-

 

15,701

 

468

 

22,678

 

784

 

 

 

 

 

 

 

 

 

 

 

Three months ended

June 30,

2019

USD'000

 

 

Three months ended

June 30,

2018

USD'000

 

 

 

Six months ended

June 30,

2019

USD'000

 

 

 

Six months ended

June 30,

2018

USD'000

 

 

 

 

 

 

 

 

Deferred tax

 

 

 

 

 

 

 

  Corporate tax

(4,182)

 

389

 

(9,409)

 

497

  Petroleum resource rent tax (PRRT)

(151)

 

189

 

414

 

461

 

(4,333)

 

578

 

(8,995)

 

958

Total tax charge for the period

11,368

 

1,046

 

13,683

 

1,742

 

The Company is a resident in the Province of British Columbia and pays no Canadian tax; the Group has no operating business in Canada.  Subsidiary companies are resident for tax purposes in the territories in which they operate.

 

The Australian corporate income tax rate is applied at 30%.  PRRT is calculated at 40% of sales revenue less certain permitted deductions and is tax deductible for Australian corporate income tax purposes.  The Indonesian corporate income tax rate is applied at 35%, and branch profits tax is applied at 20%.

 

The tax (expense)/credit on Group profit/(loss) differs from the amount that would arise using the standard rate of income tax applicable in the countries of operation as explained below.

 

INCOME TAX RECONCILIATION

 

Three months ended

June 30,

2019

USD'000

 

Three months ended

June 30,

2018

USD'000

 

 

Six months ended

June 30,

2019

USD'000

 

 

Six months ended

June 30,

2018

USD'000

 

 

 

 

 

 

 

 

Profit/(loss) before tax on continuing operations

33,952

 

(3,865)

 

44,627

 

(19,761)

 

 

 

 

 

 

 

 

Tax expense/(credit) calculated at the domestic tax rates applicable to the profit/(loss) in the respective countries (Canada 27%, Australia 30%, Indonesia 48% and Singapore 17%)

10,731

 

(407)

 

14,113

 

(2,856)

Effect of non-deductible tax expense

2,577

 

1,813

 

4,646

 

4,135

Others

653

 

(552)

 

46

 

-

Tax expense for the period

13,961

 

854

 

18,805

 

1,279

 

 

 

 

PRRT TAX RECONCILIATION

 

 

Three months ended

June 30,

2019

USD'000

 

 

Three months ended

June 30,

2018

USD'000

 

 

 

Six months ended

June 30,

2019

USD'000

 

 

 

Six months ended

June 30,

2018

USD'000

 

 

 

 

 

 

 

 

Profit/(loss) before tax on continuing operations

33,952

 

(3,864)

 

44,627

 

(19,761)

 

 

 

 

 

 

 

 

Add back losses from operations before tax for activities outside of Australia

1,818

 

3,165

 

6,391

 

17,576

Non PRRT assessable profits

(11,976)

 

2,057

 

(16,673)

 

5,477

Profit before taxation for activities in Australia

23,794

 

1,358

 

34,345

 

3,292

 

 

 

 

 

 

 

 

PRRT expense calculated at 28%

6,662

 

380

 

9,616

 

922

Utilisation of PRRT credits

(9,120)

 

(411)

 

(14,846)

 

(856)

Other

(135)

 

220

 

107

 

395

Tax expense/(credit) for the period

(2,593)

 

189

 

(5,123)

 

461

 

 

 

 

 

 

 

 

 

DEFERRED TAX INCOME STATEMENT RECONCILIATION

 

 

Three months ended

June 30,

2019

USD'000

 

 

Three months ended

June 30,

2018

USD'000

 

 

 

Six months ended

June 30,

2019

USD'000

 

 

 

Six months ended

June 30,

2018

USD'000

 

 

 

 

 

 

 

 

Income tax

 

 

 

 

 

 

 

Timing differences

(3,621)

 

(360)

 

(14,674)

 

(422)

Hedging - unrealised loss

(386)

 

258

 

(154)

 

-

Prepayments

(220)

 

-

 

(439)

 

-

Losses

-

 

490

 

5,812

 

919

Other

45

 

-

 

46

 

-

 

(4,182)

 

389

 

(9,409)

 

496

 

 

 

 

 

 

 

 

PRRT

 

 

 

 

 

 

 

Unused tax credits

(286)

 

411

 

521

 

856

Provisions

135

 

(221)

 

(107)

 

(395)

 

(150)

 

190

 

414

 

461

 

(4,332)

 

578

 

(8,995)

 

958

 

The above movement in deferred PRRT credits relates to Stag.  The Group has unused PRRT tax credits of approximately US$2.9 billion available for offset against future PRRT taxable profits generated from the Montara field.  No deferred tax asset is recognised, in respect of the Montara PRRT credits, pursuant to IAS12 and LIFO principles, as future augmentation of existing PRRT credits is expected to more than offset any future PRRT tax otherwise due.

 

DEFERRED TAX BALANCE SHEET RECONCILIATION

 

 

 

June 30,

2019

USD'000

 

 

December 31,

2018

USD'000

 

 

 

 

 

Current tax

 

 

 

 

Corporation tax on fixed asset timing differences

 

(66,065)

 

(75,473)

PRRT tax on fixed asset timing differences

 

19,084

 

19,498

 

 

(46,981)

 

(55,975)

Other comprehensive income - deferred tax

 

 

 

 

Income tax related to carrying amount of hedged item

 

(4,160)

 

(15,206)

 

 

(51,141)

 

(71,181)

 

 

 

 

 

 

The deferred tax balances in the statement of financial position are based on the following split.

 

 

 

June 30,

2019

USD'000

 

December 31,

2018

USD'000

 

 

 

 

 

Deferred tax liabilities

 

(72,339)

 

(92,468)

Deferred tax assets

 

21,198

 

21,287

 

 

(51,141)

 

(71,181)

 

 

 

14.  PROFIT/(LOSS) PER ORDINARY SHARE

 

The calculation of the basic and diluted profit/(loss) per share is based on the following data

 

 

Three months ended

June 30,

2019

USD'000

 

 

Three months ended

June 30,

2018

USD'000

 

 

 

Six months ended

June 30,

2019

USD'000

 

 

 

Six months ended

June 30,

2018

USD'000

 

 

 

 

 

 

 

 

Profit/(loss) for the purposes of basic and diluted per share, being the net profit/(loss) for the quarter attributable to equity holders of the Company

22,584

 

(4,912)

 

30,944

 

(21,503)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

June 30,

2019

USD'000

 

 

Three months ended

June 30,

2018

USD'000

 

 

 

Six months ended

June 30,

2019

USD'000

 

 

 

Six months ended

June 30,

2018

USD'000

 

 

 

 

 

 

 

 

Weighted average number of ordinary shares for the purposes of basic earnings per share

461,042,811

 

221,298,004

 

461,038,759

 

221,298,004

Effect of dilutive potential ordinary shares

 

 

 

 

 

 

 

- Share options

2,531,524

 

-

 

1,763,991

 

-

Weighted average number of ordinary shares for the purposes of diluted earnings per share

461,045,343

 

221,298,004

 

462,802,750

 

221,298,004

 

Earnings per share (US$)

 

 

Three months ended

June 30,

2019

USD'000

 

 

Three months ended

June 30,

2018

USD'000

 

 

 

Six months ended

June 30,

2019

USD'000

 

 

 

Six months ended

June 30,

2018

USD'000

 

 

 

 

 

 

 

 

-  Basic

0.05

 

(0.02)

 

0.07

 

(0.10)

 

 

 

 

 

 

 

 

-  Diluted

0.05

 

(0.02)

 

0.07

 

(0.10)

 

 

The calculation of diluted earnings per share for the six months ended June 30, 2019 includes 1,763,991 of weighted average dilutive ordinary shares available for exercise from in-the-money vested options (six months ended June 30, 2018: 119,137 of weighted average potential ordinary shares available for exercise from in-the-money vested options are excluded as they are non-dilutive given the Group's loss from operations).  Additionally, 607,821 of weighted average potential ordinary shares available for exercise are excluded as they are out-of-the-money (six months ended June 30, 2018: 485,116). 

 

The calculation of diluted earnings per share for the three months ended June 30, 2019 includes 2,531,524 of weighted average dilutive ordinary shares available for exercise from in-the-money vested options (three months ended June 30, 2018: 239,737 of weighted average potential ordinary shares available for exercise from in-the-money vested options are excluded as they are non-dilutive given the Group's loss from operations).  Additionally, 607,821 of weighted average potential ordinary shares available for exercise are excluded as they are out-of-the-money (three months ended June 30, 2018: 561,065).

 

Additionally, the calculation of diluted earnings per share for the six months ended June 30, 2018 excludes 65,074,378 and for the three months ended June 30, 2018 excludes 61,865,100 respectively, of weighted average potential ordinary shares eligible for conversion under the secured convertible bond as they are non-dilutive, given the interest and other costs on the bond per share exceed basic loss per share in each respective reporting period.  The secured convertible bond was fully repaid on August 15, 2018. 

 

 

 

 

15.  INTANGIBLE EXPLORATION ASSETS

 

 

Total
USD'000

 

 

Cost

 

 

At January 1, 2019

95,607

Additions

4,287

Disposal of exploration assets

-

At June 30, 2019

99,894

 

 

Net book value

 

At December 31, 2018

95,607

 

 

At June 30, 2019

99,894

 

 

Exploration additions for the period were US$4.3 million (December 31, 2018: US$1.8 million), predominantly related to activities on the Nam Du and U Minh assets in Vietnam.

 

 

16.  OIL AND GAS PROPERTIES

 

 

 

 

 

Total

 

 

 

 

USD'000

 

 

 

 

 

Cost

 

 

 

 

At January 1, 2019

 

 

 

442,990

Changes in asset restoration obligations (Note 25)

 

 

 

18,086

Additions

 

 

 

26,078

At June 30, 2019

 

 

 

487,154

 

 

 

 

 

Accumulated depletion and amortisation

 

 

 

 

At January 1, 2019

 

 

 

(27,625)

Depletion and amortisation for the quarter (Note 7)

 

 

 

(39,913)

At June 30, 2019

 

 

 

(67,538)

 

 

 

 

 

Net book value

 

 

 

 

At December 31, 2018

 

 

 

415,365

 

 

 

 

 

At June 30, 2019

 

 

 

419,616

 

 

 

17.  PLANT AND EQUIPMENT

 

 

 

At January 1, 2019

 

Additions

 

Impairment & disposals

 

At  June 30,

 2019

 

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

 

 

 Computer equipment

 

2,372

 

362

 

                    -

 

2,734

 Fixtures and fittings

 

1,269

 

12

 

 (4)

 

1,277

Total

 

3,641

 

374

 

                 (4)

 

4,012

 

 

 

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

 

 

 

 Computer equipment

 

991

 

                      163

 

 -

 

1,154

 Fixtures and fittings

 

941

 

                      32

 

 -

 

973

Total

 

1,932

 

                  195

 

                    -

 

2,127

 

 

 

 

 

 

 

 

 

Carrying amount

 

1,709

 

 

 

 

 

1,884

 

 

 

 

 

 

 

 

 

 

18.  RIGHT OF USE ASSETS

 

The Group leases several assets including an FSO, helicopters, and buildings, among others.  The leases are under fixed terms of between 12 months to 6 years.

 

 

 

Production assets

 

Transportation and logistics

 

Other

 

Total

 

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

January 1, 2019

 

 

 

 

 

 

 

 

Initial recognition

 

30,226

 

4,893

 

2,901

 

38,020

Total

 

30,226

 

4,893

 

2,901

 

38,020

 

 

 

 

 

 

 

 

 

Additions

 

                         -

 

             37,664

 

                         -

 

37,664

Depreciation

 

             (3,058)

 

                 (3,126)

 

                 (199)

 

             (6,382)

 

 

 

 

 

 

 

 

 

June 30, 2019

 

27,168

 

39,432

 

2,702

 

69,303

 

 

Right of use additions predominately relates to a helicopter transportation contract that has been recognised as a lease.  The contract has an undiscounted commitment of US$42.4 million over four years, and results in a discounted right of use asset and lease liability (Note 27) of $37.7 million upon initial recognition.

 

 

 

19.  INVENTORIES

 

 

 

 

 

June 30,

 

December 31,

 

 

 

 

2019

 

2018

 

 

 

 

USD'000

 

USD'000

 

 

 

 

 

 

 

Materials and spares

 

 

 

23,886

 

22,964

Crude oil inventory

 

 

 

8,371

 

6,867

 

 

 

 

32,257

 

29,831

 

 

20.  TRADE AND OTHER RECEIVABLES

 

 

 

 

 

June 30,

 

December 31,

 

 

 

 

2019

 

2018

 

 

 

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables

 

 

 

50,222

 

57

Prepayments

 

 

 

14,093

 

26,831

Other receivables and deposits

 

 

 

2,513

 

4,857

PRRT receivables (Note 13)

 

 

 

                 -

 

700

GST/VAT receivables

 

 

 

1,284

 

355

 

 

 

 

68,113

 

32,800

 

Trade receivables increased to US$50.2 million due to the latest Montara lifting being finalised on June 30, 2019. The receivable was settled on July 31, 2019.  Prepayments includes US$12.4 million of cash held by PTTEP under the transitional operational arrangements for Montara until transfer of operatorship which subsequently occurred on August 6, 2019.

 

 

21.  CASH AND BANK BALANCES

 

 

June 30,

 

December 31,

 

2019

 

2018

 

USD'000

 

USD'000

 

 

 

 

Current assets

 

 

 

  Cash and bank balances

               57,886

 

58,064

  Less: restricted cash

               (6,006)

 

             (5,083)

  Cash and cash equivalents

51,880              

 

52,981

 

 

 

 

Non-current assets

 

 

 

Cash and bank balances

18,493

 

23,561

  Less: restricted cash

          (18,493)

 

          (23,561)

Cash and cash equivalents

-

 

-

 

 

 

 

Cash and cash equivalents in the statement of cash flows

51,880

 

52,981

 

The restricted cash balance includes US$14.5 million of cash held in a debt service reserve account related to the RBL facility.  The current balance of restricted cash of US$6.0 million represents principal and interest that will be released over the next 12 months, with the remainder included in the non-current balance and to be released later in 2020 and in 2021.

 

The Group retains US$10.0 million (December 31, 2018: US$10.0 million) in support of a bank guarantee to a key supplier in respect of Stag's FSO vessel.  This deposit is kept in a specific bank account that has in place certain restrictions that does not allow for the cash to be used for normal operations.

 

 

22.  SHARE CAPITAL

 

Authorised share capital

 

Unlimited number of ordinary voting shares with no par value.

 

 

 

 

 

No. of shares

 

USD'000

 

 

 

 

 

 

 

Issued and fully paid

 

 

 

 

 

 

As at January 1, 2019

 

 

 

461,009,478

 

466,562

Issued during the period

 

 

 

33,333

 

11

As at June 30, 2019

 

 

 

461,042,811

 

466,573

 

The Company has one class of ordinary share.  Fully paid ordinary shares carry one vote per share without restriction, and carry a right to dividends as and when declared by the Company.

 

During the six months ended June 30, 2019, employee share options of 33,333 were exercised and issued at a price of CAD 0.47 per share.

 

 

23.  HEDGING RESERVES

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

USD'000

 

 

 

 

 

 

 

As at January 1, 2019

 

 

 

 

 

        (35,480)

Loss arising on changes in fair value of hedging instruments during the quarter

 

              29,691

Income tax related to gain recognised in other comprehensive income

 

           (11,046)

Gain reclassified to profit or loss

 

 

 

 

 

              7,128

Income tax related to amounts reclassified to profit or loss

 

 

 

           -

As at June 30, 2019

 

 

 

 

 

          (9,707)

 

There was no hedging reserve, or movement, in the comparative period ended June 30, 2018.

 

 

24.  SHARE BASED PAYMENTS RESERVE

 

The total expense arising from share based payments recognised for the six months ended June 30, 2019 was US$0.7 million (June 30, 2018: US$0.3 million) .

 

The Black-Scholes option-pricing model, with the following assumptions, was used to estimate the fair value of the options at the date of grant.

 

 

 

 

Options granted on

 

March 29, 2019

 

July 29,
2018

 

March 29, 2018

 

December 10, 2017

 

 

 

 

 

 

 

 

Risk-free rate

1.46% to 1.47%

 

2.23% to 2.26%

 

1.99% to 2.04%

 

1.68% to 1.72%

Expected life

5.5 to 6.5 years

 

5.5 to 6.5 years

 

5.5 to 6.5 years

 

5.5 to 6.5 years

Expected volatility

42.3% to 39.9%

 

44.7% to 43.2%

 

43.1% to 44.1%

 

43.2% to 43.9%

Share price

C$0.85

 

C$0.61

 

C$0.43

 

C$0.42

Exercise price

C$0.85

 

C$0.61

 

C$0.50

 

C$0.45

Expected dividends

Nil

 

Nil

 

Nil

 

Nil

 

The following table summarises the share options outstanding and exercisable as at June 30, 2019:

 

 

Share options

 

 

 

Weighted

 

Weighted

 

 

 

 

 

average

 

average

 

Number of

 

Number of

 

exercise

 

remaining

 

options

 

options

 

price, C$

 

contract life

 

exercisable

 

 

 

 

 

 

 

 

As at January 1, 2019

12,132,821

 

0.56

 

8.52

 

3,232,809

Vested during the period

 

 

0.48

 

7.97

 

3,216,652

Exercised during the period

(33,333)

 

0.47

 

-

 

(33,333)

Cancelled during the period

(306,667)

 

0.48

 

-

 

(113,333)

New options granted

8,000,000

 

0.85

 

9.75

 

-

As at June 30, 2019

19,792,821

 

0.68

 

8.71

 

6,302,795

 

 

 

 

 

 

 

 

 

25.  PROVISION FOR ASSET RESTORATION OBLIGATIONS

 

 

 

 

 

June 30,

 

December 31,

 

 

 

 

2019

 

2018

 

 

 

 

USD'000

 

USD'000

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

January 1,

 

 

 

         277,697

 

          84,728

Acquisition of Montara

 

 

 

                          -

 

            183,020

Accretion expense

 

 

 

3,286

 

                3,632

Changes in discount rate and FX assumptions

 

18,086

 

                6,353

Other

 

 

 

                    -

 

                   (36)

June 30, and December 31,

 

 

 

         299,069

 

        277,697

 

The Group's asset restoration obligations ("ARO") result from the future estimated costs to decommission each of the Stag and Montara assets.

 

In accordance with IAS37, the carrying value of the ARO provision comprises the discounted present value of the estimated future costs.  The present value of the future estimated ARO costs for each of the Stag and Montara assets, has been calculated based on blended risk free rates of 1.65% and 1.80% respectively (December 31, 2018: Stag - 2.49%, Montara - 2.58%).

 

Management expects decommissioning expenditures to be incurred from 2032 onwards.

 

 

26.  OTHER PAYABLES

 

 

 

 

 

June 30,

 

December 31,

 

 

 

 

2019

 

2018

 

 

 

 

USD'000

 

USD'000

 

 

 

 

 

 

 

Stag FSO redundancy payments (Note 10)

 

 

 

5,233

 

6,603

Montara contingent payments (Notes 6, 29 & 34)

 

 

 

1,470

 

3,748

 

 

 

 

6,703

 

10,351

 

 

27.  LEASE LIABILITIES

 

 

June 30,

Statement of financial position

2019

 

 

Current lease liabilities

19,430

Non-current lease liabilities

 

70,359

Reconciliation to operating lease commitments

 

 

Operating leases included in commitments as at December 31, 2018

44,447                           

Discounting

(6,427)                         

Additional lease liabilities recognised on January 1, 2019 due to the adoption of IFRS 16

                  38,020

 

 

 

 

 

 

 

 

 

 

Six months ended

Statement of profit or loss

 

 

 

 

 

 

 

June 30, 2019

 

 

 

 

 

 

 

 

 

Interest expense on lease liabilities

 

 

 

 

 

 

 

                         722

Expense relating to short term leases

 

 

 

 

 

 

 

                      1,324

Accretion lease payment (Note 11)

 

 

 

 

 

 

 

2,046

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended

Statement of cashflows

 

 

 

 

 

 

 

June 30, 2019

 

 

 

 

 

 

 

 

 

Total cash flow used for leases

 

 

 

 

 

 

 

7,372

 

 

 

 

28.  BORROWINGS

 

 

 

 

 

June 30,

 

December 31,

 

 

 

 

2019

 

2018

 

 

 

 

USD'000

 

USD'000

 

 

 

 

 

 

 

Non-current secured borrowings

 

 

 

 

 

 

 Reserve based lending facility

 

 

 

25,277

 

49,420

 

 

 

 

25,277

 

49,420

 

 

 

 

 

 

 

Current secured borrowings

 

 

 

 

 

 

 Reserve based lending facility

 

 

 

48,124

 

51,114

Current unsecured borrowings

 

 

 

 

 

 

 Other

 

 

 

-

 

1,279

 

 

 

 

48,124

 

52,393

 

On August 2, 2018, the Company entered into an RBL agreement to borrow US$120.0 million to partly fund the Montara acquisition (Note 6).  The loan is secured against the Montara Assets, and is repayable in quarterly tranches from December 31, 2018 until March 31, 2021.  The loan incurs interest at 3% above LIBOR.

 

 

29.  TRADE AND OTHER PAYABLES

 

 

 

 

 

June 30,

 

December 31,

 

 

 

 

2019

 

2018

 

 

 

 

USD'000

 

USD'000

 

 

 

 

 

 

 

Trade payables

 

 

 

6,156

 

7,178

Other payables

 

 

 

12,230

 

8,173

Accruals

 

 

 

6,702

 

5,484

Provision for long service leave

 

 

 

769

 

722

Other provisions

 

 

 

4,273

 

9,117

 

 

 

 

30,130

 

30,674

 

These amounts are non-interest bearing.  The Group believes that the carrying amount of trade payables approximates their fair value. Included in the other payables is the current balance of the Montara contingent payment of US$0.3 million.

 

 

30.  DERIVATIVE FINANCIAL INSTRUMENTS

 

The Group uses derivatives to manage its exposure to oil price fluctuations.  Oil price hedges are undertaken using swaps and call options using fixed price sales contracts.  All contracts are hedged using Dated Brent oil price benchmarks.  The Group has designated the Montara capped swap as a cash flow hedge of highly probable sales.

 

 

 

 

 

 

June 30,

 

December 31,

 

 

 

 

2019

 

2018

 

 

 

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Designated as cash flow hedges

 

 

 

 

 

 

Commodity capped swap

 

 

 

13,989

 

51,324

 

 

 

 

 

 

 

Analysed as:

 

 

 

 

 

 

Current

 

 

 

11,251

 

35,985

Non-current

 

 

 

2,738

 

15,339

 

 

 

 

13,989

 

51,324

 

 

 

 

 

 

 

 

Contract quantity

 

Type of contract

 

 

Term

 

Contract price

Hedge classification

 

 

 

 

 

 

 

 

 

Swaps cover 50% of Montara's planned 2PD production

 

Calls cover 66% of swapped volumes

 

Commodity capped swap

 

Oct 2018 - Sep 2020

 

Swap component: US$74.22/bbl in January 2019 through to US$66.62/bbl in September 2020

 

Call component: US$80.00/bbl from January 2019 to September 2019, US$85/bbl from October 2019 to September 2020

 

Cash flow

 

 

 

 

 

 

 

 

 

 

During the six month period ended June 30, 2019, the fair value of the capped swap declined by US$37.3 million. This decline was largely due to the decrease in future Dated Brent oil prices, over the term of the swap.  US$29.7 million of the decline was directly due to the revaluation of hedge contracts and was recorded in other comprehensive income (Note 23).  US$0.5 million was due to the ineffective portion of the capped swap and was recorded in finance cost (Note 11).  US$7.1 million of the decline was related to hedge contracts settled in the period, and included in revenue (Note 4).

 

 

31.  BUSINESS RISKS AND UNCERTAINTIES

 

The Company has processes and systems in place designed to identify the principal risks of the business and has established what is considers reasonable mitigation strategies wherever possible.

 

For detailed analysis of how the Company manages its business risks and uncertainties see the Company financial statements for the year ended December 31, 2018. 

 

The operational and environmental risks have not materially changed since December 31, 2018.

 

 

32.  FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENTS

 

For a detailed analysis on how the Company manages its financial instruments, financial risks and capital management, see the annual financial statements for the year ended December 31, 2018.

 

The financial risks, instruments and capital market strategies have not materially changed since December 31, 2018.

 

 

 

Capital management

 

The Group manages its capital structure and makes adjustments to it, based on the funds available to the Group, in order to support the acquisition, exploration and development of resource properties and the ongoing operations of its producing assets.

 

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Group, is reasonable.  There were no changes in the Group's approach to capital management during the six month period ended June 30, 2019.

 

 

 

 

 

June 30,

 

December 31,

 

 

 

 

2019

 

2018

Gearing ratio

 

 

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt (Note 28)

 

 

 

               73,401

 

            101,813

Cash and cash equivalents (Note 21)

 

 

 

            (51,880)

 

            (52,981)

Restricted cash

 

 

 

(14,499)

 

            (18,644)

Net debt

 

 

 

           7,022

 

          30,188

Equity

 

 

 

             221,134

 

            215,261

Net debt to equity ratio

 

 

 

3%

 

14%

 

Debt is defined as long and short-term borrowings (excluding derivatives) as defined in Note 28.  Cash and cash equivalents includes the Montara Assets' minimum working capital cash balance of US$15.0 million required under the RBL, while restricted cash comprises the US$14.5 million in the RBL debt service reserve account as at June 30, 2019.  Restricted cash, as shown here, excludes the US$10.0 million deposited in support of a bank guarantee to a key supplier in respect of the Stag FSO.  Equity includes all capital and reserves of the Group that are managed as capital.

 

 

33.  SEGMENT INFORMATION

 

Revenue and balance sheet information is based on the geographical location of assets as follows:

 

 

Six months ended June 30, 2019

 

Producing assets

 

Exploration

 

 

 

 

 

Australia

 

SEA

 

SEA

 

Corporate

 

Total

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

 

Revenue

171,707

 

-

 

-

 

-

 

171,707

 

 

 

 

 

 

 

 

 

 

Production cost

(62,057)

 

-

 

-

 

-

 

(62,057)

DD&A

(44,885)

 

-

 

-

 

(229)

 

(45,114)

Staff costs

(3,775)

 

(670)

 

(517)

 

  (3,928)

 

(8,890)

Other expenses

(4,404)

 

(79)

 

(150)

 

(404)

 

(5,037)

Other income

2,134

 

-

 

-

 

(36)

 

2,098

Finance costs

(9,987)

 

-

 

-

 

(29)

 

(10,016)

Other financial gain

1,936

 

-

 

-

 

-

 

1,936

Profit/(loss) before tax

50,669

 

(749)

 

(667)

 

(4,626)

 

44,627

 

 

 

 

 

June 30, 2019

 

Producing assets

 

Exploration

 

 

 

 

 

Australia

 

SEA

 

SEA

 

Corporate

 

Total

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

 

Additions to non-current assets

26,181

 

-

 

4,287

 

23

 

30,491

 

 

 

 

 

 

 

 

 

 

Total assets & liabilities

 

 

 

 

 

 

 

 

 

Current assets

167,983

 

72

 

-

 

1,452

 

169,507

Non-current assets

532,094

 

-

 

99,894

 

1,138

 

633,126

Current liabilities

(122,401)

 

(73)

 

-

 

(4,708)

 

(127,182)

Non-current liabilities

(453,480)

 

-

 

-

 

(837)

 

(454,317)

Net assets

124,196

 

(1)

 

99,894

 

(2,955)

 

221,134

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended June 30, 2018

 

Producing assets

 

Exploration

 

 

 

 

 

Australia

 

SEA

 

SEA

 

Corporate

 

Total

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

 

Revenue

28,608

 

7,175

 

-

 

-

 

35,783

 

 

 

 

 

 

 

 

 

 

Production cost

(20,704)

 

(2,761)

 

-

 

-

 

(23,465)

DD&A

(4,356)

 

(657)

 

-

 

(51)

 

(5,064)

Staff costs

(1,978)

 

(1,143)

 

(344)

 

(3,340)

 

(6,805)

Other expenses

(2,853)

 

-

 

-

 

(2,544)

 

(5,397)

Other income

114

 

-

 

-

 

52

 

166

Impairment of asset

-

 

-

 

(11,902)

 

-

 

(11,902)

Finance costs

(1,467)

 

-

 

-

 

(1,610)

 

(3,077)

Profit/(loss) before tax

(2,636)

 

2,614

 

(12,246)

 

(7,493)

 

(19,761)

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

Producing assets

 

Exploration

 

 

 

 

 

Australia

 

SEA

 

SEA

 

Corporate

 

Total

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

 

Additions to non-current assets

360,774

 

-

 

1,835

 

1

 

362,610

 

 

 

 

 

 

 

 

 

 

Total assets & liabilities

 

 

 

 

 

 

 

 

 

Current assets

147,358

 

345

 

417

 

8,560

 

156,680

Non-current assets

476,981

 

-

 

95,607

 

280

 

572,868

Current liabilities

(79,867)

 

(93)

 

(737)

 

(3,654)

 

(84,351)

Non-current liabilities

(429,936)

 

-

 

-

 

-

 

(429,936)

Net assets

114,536

 

252

 

95,287

 

5,186

 

215,261

 

 

 

 

 

 

 

 

 

 

                       

Non-current assets include oil and gas properties, intangible exploration assets and property plant and equipment used in corporate offices.

 

 

34.  CONTINGENT LIABILITIES

 

Stag

The Group may be responsible for certain contingent payments of up to US$10 million linked to future expansion of the Stag Oilfield.  At this time, Jadestone's management does not consider it probable that the conditions necessary to trigger the contingent payments will occur.  Accordingly, as at June 30, 2019, no provision has been recognised in the financial statements.

 

Montara

The Group may be responsible for certain contingent payments of up to US$130 million linked to oil price appreciation, and/or volumes of production from the first infill well in its first year, and/or future expansion of the Montara Assets (see also Note 6).  At this time, Jadestone's management only considers the contingent payments of up to US$30.0 million linked to oil price appreciation above US$80/bbl in 2019 and/or in 2020 as probable, while also noting the uncertain nature of future changes in oil prices; in this case future prices of Dated Brent.  Accordingly, the fair value of the two oil price linked contingent payments of up to US$30.0 million is recognised as a payable, and the remaining US$100.0 million of contingent payments has not been recognised in the financial statements.

 

 

35.  RELATED PARTY TRANSACTIONS

 

During the period, the Group entities did not enter into transactions with related parties, other than the following:

 

Compensation of key management personnel

 

Six months ended

 

Six months ended

 

June 30,

 

June 30,

 

2019

 

2018

 

USD'000

 

USD'000

 

 

 

 

Short-term benefits

2,159

 

1,796

Other benefits

503

 

255

Share based payments

369

 

124

 

3,032

 

2,175

 

 

 

 

The total remuneration of members of key management for six months ended June 30, 2019 (including salaries and benefits) was US$3.0 million (June 30, 2018: US$2.2 million).

 

 

36.  EVENT AFTER THE REPORTING PERIOD

 

Transfer of Montara Operatorship

The transfer of operatorship at Montara was completed on August 6, 2019, following the acceptance by NOPSEMA, the safety regulator in Australia, of the Company's safety case.  The Company has now requested that NOPTA, the Australian title administrator, approve transfer of the final 1% interest in the Montara titles. The Company received 99% interest in the Montara titles on May 30, 2019.  The Company is in the process of closing out the Operator and Transitional Services Agreement with the previous Montara operator.


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