Trading update for half-year ended 30 June 2024

Jadestone Energy PLC

29 July 2024

 

Trading update for the half-year ended 30 June 2024

29 July 2024 - Singapore: Jadestone Energy plc ("Jadestone", the "Group" or the "Company"), an independent upstream company focused on the Asia-Pacific region, provides a trading update for the half-year ended 30 June 2024. The financial information in this update has not been audited and may be subject to further review and change.

Key updates

l Akatara mechanical completion and gas-in achieved in June 2024. The export pipeline from the field has been successfully filled with on spec sales gas, with exports into the regional trunkline expected to commence imminently.

l Record H1 2024 Group production averaged 16,867 boe/d, higher than any prior six-month period and representing 37% growth on H1 2023.

l H1 2024 oil liftings more than doubled year-on-year, driving a 131% increase in proceeds from liftings to US$200.5 million. After reflecting hedging losses of US$15.4 million, revenues for H1 2024 totalled US$185.1 million.

l H1 2024 total production costs were flat compared to H1 2023, despite production increasing 37%, with increased CWLH opex as a result of the CWLH 2 acquisition offset by lower spend year-on-year at the non-producing SFA Cluster assets, Montara and Stag.

l Net debt of c.US$72.7 million and available liquidity of c.US$151.0 million at 30 June 2024 (net debt of US$3.6 million at 31 December 2023).

l Closed the CWLH 2 acquisition in February 2024, increasing the Company's interest to 33.33% in an outperforming asset. The final CWLH 2 Abandonment Trust Fund payment has reduced from US$37 million to c.US$19 million, to be paid on or before 31 December 2024.

l Award of the SFA Cluster PSC offshore Peninsular Malaysia in July 2024, adding another potentially significant growth opportunity to the Company's portfolio.

Guidance

l While Jadestone continues to see Group production for 2024 at c.20,000 boe/d, the annual production guidance range is adjusted to 18.5-21,000 boe/d, from 20-22,000 boe/d, reflecting year-to-date production after significant Q1 2024 weather impacts, and the revised timing of the start of Akatara commercial sales. The lower end of the range also incorporates a conservative assumption on Akatara production in the early stages of the processing facility's operating life, and a range of potential downside scenarios across the portfolio.

l Operating expenditure guidance for 2024 is narrowed to US$240-280 million (excluding forecast royalties and carbon taxes of c.US$30.0 million), from US$240-290 million, reflecting year-to-date performance.

l Capital expenditure guidance is unchanged at US$80-110 million and other cash expenditure for the year is revised down from c.US$77 million to US$62 million, primarily reflecting the finalisation of the CWLH Abandonment Trust Fund payments referenced above.

Paul Blakeley, President and CEO commented:

"We are starting to see solid growth feeding into the business and anticipate that the significant increases in production and revenue, coupled with flat production costs, will result in improving financial performance for the first half of 2024. We also expect that the second half will be even stronger, with Akatara capex behind us and production from this new, low cost, onshore asset ramping up in the coming weeks. 

The start of commercial sales at Akatara, which is imminent, will be a major milestone for Jadestone, delivering a complex development on a fast-track schedule just over two years since the original investment decision was made, and will help to underpin our confidence in the significant increase in production we will see this year.

It is a year of major investment in the growth and the diversification of our production base, with not just the completion of the Akatara development project, but also the addition of a second tranche of the outperforming CWLH asset, including the payment of its future decommissioning cost. We will see significant benefits in 2025 and beyond from the cash flows that these activities will deliver, while the diversification of the business is further bolstered with the addition of the recently announced SFA Cluster PSC offshore Malaysia, adding to our pipeline of near-term growth opportunities at lower cost and higher returns."

H1 2024 Operating Performance[1]

		H1 2024	H1 2023
Production
Group production	boe/d	16,867	12,339
- Montara	bbls/d	4,951	2,931
- Stag	bbls/d	1,921	2,879
- CWLH	bbls/d	2,951	1,569
- Peninsular Malaysia ("PenMal")	boe/d	5,455	3,878
- Sinphuhorm	boe/d	1,585	1,083
- Akatara	boe/d	3	-
Liftings
- Oil	mmbbls	2.2	1.0
- Gas	bcf	0.6	0.8

Group production for the first half of 2024 averaged 16,867 boe/d, a Group record for any six-month  period and representing 37% growth on H1 2023. This increase was due to higher production from PenMal following the successful drilling campaign in late 2023, a higher working interest in the CWLH asset following completion of the CWLH 2 acquisition in February 2024, a full period of production from Sinphuhorm, acquired in February 2023, and a full period of production from Montara, compared to H1 2023 when production was shut in for much of the first quarter.

The year-on-year increase was partially offset by lower production at Stag compared to the prior period, impacted by extensive weather-related downtime in Q1 2024, a planned maintenance shutdown and poorer performance from downhole pumps, which have required more frequent workovers than planned.

Uptime and performance at Montara continued to improve in the first half of 2024. The Montara Venture FPSO tank inspection and repair programme is progressing well. Two main central oil storage tanks are currently in service with effective capacity of 187,000 barrels.  Recent inspections of two further central oil storage tanks, and their associated water ballast tanks, found them to be in better condition than expected, providing confidence that further oil storage capacity will become available in the second half of 2024. This has already allowed Montara operations to continue without a shuttle tanker for most of July 2024 and, in line with previous guidance, the Company expects that the shuttle tanker operation will be phased out in Q4 2024. The H6 and Swift-2 wells at Montara are expected back online shortly after repair work which is currently in progress, and this should result in an increase in Montara production.  The Company expects that Montara will meet its production guidance between 5-6,000 bbls/d for 2024.

Akatara production in the first half relates to condensate production in late June 2024 following the introduction of reservoir gas into the facilities, averaged over the full period.

Oil liftings more than doubled year-on-year, primarily due to a lifting from the CWLH asset shortly after completion of the CWLH 2 acquisition, a full period of production at Montara and higher liftings associated with the increased production at PM323 offshore Malaysia. Gas liftings were lower due to natural declines at the PM329 asset offshore Malaysia. There were no gas or condensate sales from the Akatara field in the first half of the year.

H1 2024 Financial Performance[2]

		H1 2024	H1 2023
Average oil price realisation	US$/bbl	88.7	86.2
- Brent	US$/bbl	84.1	77.3
- Premium	US$/bbl	4.6	8.9
Mid-year inventory/lifting position
- Montara and Stag inventories	bbls	444,448	421,720
- CWLH and PenMal net underlift	boe	237,120	117,318
Revenues[3]	US$ million	185.1	86.7
Total production costs	US$ million	118.7	119.7
- Underlying operating expenses[4]	US$ million	111.9	112.9
- Royalties and carbon taxes	US$ million	6.8	6.8
Capital expenditure[5]	US$ million	51.0	23.8
		30 June 2024	31 Dec 2023
Net cash/(debt)	US$ million	(72.7)	(3.6)

The average oil price realisation for H1 2024 registered a 3% increase on H1 2023, with a higher underlying Brent price factored into liftings more than offsetting a reduction in the premium, with the latter explained by the Stag field (which commands the highest premium of Jadestone's portfolio) comprising a lower proportion of liftings in H1 2024 compared to H1 2023. Revenues in H1 2024 of US$185.1 million consisted of total proceeds from oil and gas liftings of US$200.5 million, offset by a US$15.4 million outflow from H1 2024 oil price hedging, which is required under the terms of the Group's reserves-based lending ("RBL") facility.

H1 2024 production costs of US$118.7 million decreased by 1% compared to H1 2023, despite production increasing 37% year-on-year.  An increase in costs resulting from the increased stake in the CWLH asset was primarily offset by a reduction in activity at the non-producing SFA Cluster assets and lower fuel and tanker costs at Montara and Stag, respectively. The H1 2024 production cost disclosures above are preliminary, subject to review and change, and in particular do not include any impacts from changes in inventory and lifting positions, which are expected to include a significant non-cash charge of c.US$46 million to the H1 2024 income statement reflecting the acquisition accounting associated with the CWLH 2 transaction.

H1 2024 capital investment totalled US$51.0 million compared to US$23.8 million in H1 2023.  Approximately US$45 million of the capex in the period was incurred on the Akatara development (including c.US$4 million of capitalised interest).

Net debt of US$72.7 million at 30 June 2024 reflects c.US$127.3 million of consolidated Group cash balances (restricted and unrestricted cash) and c.US$200 million of debt drawn under the Group's RBL facility. Available liquidity at 30 June 2024 totalled c.US$151.0 million, reflecting unrestricted cash balances and the undrawn working capital facility.

-ends-

For further information, please contact:

Jadestone Energy plc
Paul Blakeley, President and CEO	[phone] (Singapore)
Bert-Jaap Dijkstra, CFO Phil Corbett, Head of Investor Relations	[phone] (UK)
	[e-mail]
Stifel Nicolaus Europe Limited (Nomad, Joint Broker)	[phone] (UK)
Callum Stewart
Jason Grossman
Ashton Clanfield
Peel Hunt LLP (Joint Broker)	[phone] (UK)
Richard Crichton
David McKeown Georgia Langoulant
Camarco (Public Relations Advisor)	[phone] (UK)
Billy Clegg	[e-mail]
Andrew Turner Elfie Kent

About Jadestone Energy

Jadestone Energy plc is an independent upstream company focused on the Asia-Pacific region.  It has a balanced and increasingly diversified portfolio of production and development assets in Australia, Malaysia, Indonesia, Thailand and Vietnam, all stable jurisdictions with a positive upstream investment climate.

Led by an experienced management team with a track record of delivery, who were core to the successful growth of Talisman Energy's business in Asia-Pacific, the Company is pursuing a strategy to grow and diversify the Company's production base both organically, through developments such as at Akatara in Indonesia, Nam Du/U Minh in Vietnam and the SFA Cluster PSC offshore Malaysia, as well as through acquisitions that fit within Jadestone's financial framework and play to the Company's strengths in managing maturing oil assets. Jadestone delivers value in its acquisition strategy by enhancing returns through operating efficiencies, cost reductions and increased production through further investment.

Jadestone is a responsible operator and well positioned for the energy transition through its increasing gas production, by maximising recovery from existing brownfield developments and through its Net Zero pledge on Scope 1 & 2 GHG emissions from operated assets by 2040. This strategy is aligned with the IEA Net Zero by 2050 scenario, which stresses the necessity of continued investment in existing upstream assets to avoid an energy crisis and meet demand for oil and gas through the energy transition.

Jadestone Energy plc (LEI: 21380076GWJ8XDYKVQ37) is listed on the AIM market of the London Stock Exchange (AIM: JSE).  The Company is headquartered in Singapore.  For further information on the Company please visit www.jadestone-energy.com.

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 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018.

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[1] Totals may not add due to rounding. The Group's liftings do not include any contribution from the Sinphuhorm asset, which is treated as an investment in associate and hence equity accounted in the Group's consolidated financial statements.

[2] Totals may not add due to rounding. The Group's 2023 revenues, operational and capital expenditures do not include any contribution from the Sinphuhorm asset, which is treated as an investment in associate and hence equity accounted in the Group's consolidated financial statements.

[3] H1 2024 revenue represents total proceeds from oil and gas liftings of US$200.5 million, offset by US$15.4 million of hedging losses

[4] To allow for comparability with H1 2024 estimated production costs, H1 2023 figures exclude non-cash inventory and lifting adjustments which were included within production costs in Jadestone's H1 2023 financial results

[5] H1 2024 capital expenditure includes capitalised interest of US$4.3 million associated with the Akatara development project, and US$0.9 million capitalised overheads associated with Vietnam development activity.

 

END