Jadestone Energy Inc. Announces Results for the Period Ending September 30, 2018

Singapore / ACCESSWIRE / November 28, 2018 / Jadestone Energy Inc. ((JSEJSE ("Jadestone" or the "Company"), an independent oil and gas production company focused on the Asia Pacific region, reported today its condensed consolidated interim unaudited financial results for the three and nine months ended September 30, 2018.

Third quarter highlights

Operational

● Completed a transformational inorganic acquisition delivering material cashflow, reserves and production. The Montara Assets acquisition was completed on September 28, 2018 from certain subsidiaries of PTT Exploration and Production pcl ("PTTEP") adding 28.2 mmbbls of 2P reserves, as of January 2018, for a net cash consideration of US$133.1mm, after receipt from PTTEP of US$75.5mm of cash at closing, and other customary working capital adjustments;

● Successfully completed an over-subscribed placing and admitted for trading on the AIM Market of the London Stock Exchange. The Company issued 239.7mm new common shares on August 8, 2018, raising gross proceeds of approximately £83.9mm;

● Secured access to senior debt financing at LIBOR + 3%. Jadestone entered into a reserve-based loan ("RBL") agreement on August 2, 2018 borrowing US$120.0mm and, at the same time, simplified its balance sheet by redeeming the 2016 convertible bond facility for US$17.4mm;

● Hedged half of Montara's production for two years at an average price of $72/bbl. The Company entered into a capped swap covering the first 24 months of Montara's planned 2PD production, at swap prices significantly above current spot oil prices (US$78.26/bbl for Q4 2018, US$71.72/bbl for 2019, and US$68.45/bbl for the first three quarters of 2020). Additionally, approximately two thirds of the swapped barrels in 2019 and 2020 have upside price participation via purchased calls with strike prices set at US$80/bbl for 2019 and US$85/bbl for 2020;

● Achieved 100% facility uptime at Stag. Production operations at Stag continued safely throughout the third quarter, reaching another milestone of 2,297 days without a lost time incident. Under Jadestone, the asset has consistently operated within the parameters of its safety case, as agreed with NOPSEMA the Australian offshore regulator, and with zero enforcement notices;

● Increased Stag production by over 9%. Average production from Stag during Q3 was 3,080 bbls/d (Q2 2018: 2,814 bbls/d), mainly due to higher uptime;

Financial

● Locked in sales at higher oil prices achieving a circa 80% jump in revenue. During the third quarter, there were two Stag liftings, totalling 422,267 bbls, generating sales revenue of US$32.7mm in the third quarter, compared to US$18.3mm in the June quarter from one lifting of 200,890 bbls;

● Strong cash position of US$65.3mm inclusive of RBL debt service reserve, and with a maiden net profit before tax during the quarter of US$3.2mm. The previous quarter saw a net loss before tax of US$3.9mm and a net loss of US$3.6mm on Q3 2017;

● Continued cost vigilance giving rise to further reductions in per unit operating costs. Per unit production costs at Stag fell a further 9% to US$30.13/bbl before workovers and repair costs;

● Reported a record US$7mm of quarterly cash from operations. Jadestone reports record cash from operations arising from higher uptime, higher production, greater revenue, higher oil prices and lower costs.

Outlook

● As of November 1, 2018, Montara production was halted by the operator to undertake an inspection and maintenance shutdown, with a focus on clearing a backlog of inspection tasks. Work is progressing smoothly, and the Company anticipates the operator will restart production operations in early December;

● Infill drilling programme to commence in 2019. Based on the operators' latest rig availability schedule infill drilling at Stag will commence in Q1 2019, with infill drilling at Montara to begin following completion of regulatory approvals, which are anticipated in H1 2019;

● Continue to progress the FEED, FDP technical studies, and negotiation of the pertinent commercial agreements associated with the Nam Du/U Minh gas developments in Vietnam, targeting FID in H2 2019.

Paul Blakeley, President and CEO, commented:

"This was a transformational quarter for Jadestone, and one that represents great progress in adding significant value for our shareholders through deployment of our stated strategy. Our progress in Q3 has delivered a resilient business, with an even stronger balance sheet, low debt, and a steady stream of cash generation, backed by an attractive level of locked-in hedges.

"I am delighted to have completed our acquisition of the Montara Assets just before quarter end, which has resulted in a three-fold increase in the size of our business. Our ability to layer in high quality inorganic opportunities is a key strand in the Jadestone strategy, and Montara is testament to the deep opportunity set we see in the Asia Pacific region.

"The financing arrangements we completed during the quarter, including an oversubscribed equity placement, AIM admission, and senior secured debt facility, reflect market recognition of the high quality portfolio we are building. In just over two years, we have transformed the Company into a high value, cash generative business, with strong support from the capital markets, including both debt and equity investors.

"Production at Stag continued safely throughout the quarter and, with 100% uptime, is becoming a very steady and reliable cash generating asset. Stag's performance underscores our ability to efficiently operate second-phase offshore production assets, while containing costs and steadfastly working within the parameters of the safety case, as agreed with the Australian regulator NOPSEMA.

"We are now starting to exert similar early influence on the Montara Assets during the transitional phase while the seller PTTEP remains operator. Having seconded a number of key operational leaders from Jadestone into the current operation, we are now clearing a maintenance and inspection backlog at Montara which will mean that when we assume operatorship next year, we will inherit a high reliability facility that we can operate with confidence, with improved uptime performance and without a planned major maintenance shutdown until at least the second half of 2020."

Operations update

Stag Oilfield (shallow water, offshore Australia)

The Company had two crude oil liftings during the third quarter, for a total sales production of 422,267 bbls, which is more than double the sales volume from a single lifting in the June 2018 quarter. This has resulted in substantially higher revenue during the quarter, and although it has also resulted in an increase in production costs, on a per unit basis, Stag opex has fallen to US$30.13/bbl from US$33.09 in the June quarter.

Stag reported 100% uptime during the quarter, for the first time since Jadestone acquired the asset in Q4 2016. The Company is continuing to pursue opportunities to enhance value at Stag, including drilling its first infill well. The well location and drilling slot have been selected, and well design is in advanced planning stages. Based on the latest rig schedule information, the well is now expected to be drilled in the first half of 2019.

Montara (shallow water, offshore Australia)

As of the end of the quarter, Jadestone had owned the Montara asset for just three days. Production during that period was 7,585 bbls/d.

Prior to completing the Montara Assets acquisition on September 28, 2018, Jadestone had begun influencing the outcome of key issues, including reinstatement of the asset's FPSO class.

PTTEP continues to operate the field under an operator and transitional services agreement, until regulatory approvals and transfers are finalised. The Company expects this process to be complete in the first half of 2019, at which time Jadestone will become the operator. However, with senior secondees now in place, the transition to a Jadestone operating business is expected to be as seamless as possible.

As of November 1, 2018, Montara production was halted to undertake an inspection and maintenance shutdown, with a focus on clearing a backlog of inspection tasks. Work is progressing smoothly, and the Company anticipates the operator will restart production operations in early December. The decision to advance a 2019 shutdown to now, was made as a result of understanding the maintenance management backlog and a need to get Montara in a state of reliable and consistent operational delivery. The long-term value of the Montara Assets will likely be improved by the current maintenance and inspection work.

Nam Du/U Minh (shallow water, offshore Vietnam)

The Company has expanded the Nam Du/U Minh project management team and is progressing the FEED, FDP technical studies, and negotiation of the pertinent commercial agreements, including the life-of-field gas sales and purchase agreement. Jadestone anticipates that this work will culminate in a final investment decision in H2 2019.

Financial overview

Jadestone generated adjusted EBITDAX of US$11.9mm for the quarter ended September 30, 2018, compared to an adjusted EBITDAX of US$0.3mm in the second quarter, and a negative EBITDAX of US$2.9 mm in the same period a year earlier.

On an unadjusted basis, the Company reported its maiden net profit before tax of US$3.2mm, compared to a net loss before tax of US$3.9mm in the prior quarter, and a net loss of US$3.6mm in the third quarter of last year.

Both unadjusted earnings and adjusted EBITDAX were increased due to higher average realised prices, higher lifted volumes during the quarter, and lower per unit production costs.

Investing activities for the quarter amounted to a cash outflow of US$134.5mm, which is primarily due to the Montara Asset acquisition. This was more than offset by the US$185.8mm of net cash from financing activities arising from the US$110mm new equity issued in conjunction with the AIM admission, and the new US$120.0mm reserve based loan.

At the end of the quarter, the Company had US$45.7mm cash, plus a further US$28.6mm of debt service reserve cash and other restricted cash.

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SOURCE: Jadestone Energy Inc.