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Jadestone plays it safe in 2020 after record 2019
The Singaporean independent may have enjoyed a record-breaking year in 2019, but ongoing oil price volatility has convinced the company to play it safe this year
COMMENTARY
WHAT:
Jadestone intends to reduce its capex by 80% in 2020 to $30-35mn.
WHY:
The collapse in oil prices, which saw WTI enter negative territory this week, has encouraged a more cautious approach.
WHAT NEXT:
The company is looking to relaunch its drilling programme in 2021, when it hopes to sign discount service contracts.
SINGAPORE’S Jadestone Energy saw its pro- duction, revenue and profit skyrocket in 2019 as it finally managed to enjoy the fruits of its labour at the Montara oilfield offshore Australia. Despite the encouraging results, the company has announced plans to slash spending to the bone in the wake of the oil price collapse and continued global economic uncertainty amid the coronavirus (COVID-19) pandemic.
Jadestone said on April 23 that its net rev- enue had expanded nearly threefold in 2019 to $325.4mn from $113.4mn in 2018. It also posted a net profit of $40.5mn, a decent turna- round from the $31mn net loss it recorded the year before.
The company produced 4.5mn barrels (12,330 barrels per day) of oil from its Stag and Montara fields offshore Australia, with the latter contributing 3.83mn barrels (10,490 bpd). Oil production in 2018 amounted to 1.68mn barrels (4,600 bpd). Jadestone acquired Stag and Mon- tara in 2016 and 2018 respectively.
While confirming that it still planned to deliver upon its promised maiden dividend pay- ment later this year, with a targeted range of $7.5- 12.5mn, Jadestone said it would slash its capital expenditure budget.
Staying lean
The company intends to cut its spending for this
year by around 80% from $160-190mn to $30- 35mn in order to “insulate” its balance sheet. This is despite reducing its operating costs.
Jadestone said it had managed to reduce its unit operating costs by 20% year on year from $28.72 per boe in 2018 before workovers to $22.85 per boe in 2019.
The average realised price for the company’s oil production stayed roughly flat at $69.07 per barrel in 2019, compared with $69.39 per boe in 2018.
Jadestone said the fact that it had hedged half of the oil production from Montara, coupled with an increase in pricing premiums for oil from both Australian fields, had helped to offset declines in the price of international benchmark Brent crude.
International oil benchmarks have been on a rollercoaster ride this week, with West Texas Intermediate (WTI) plunging to -$37.63, while Brent slipped to $15 per barrel. Brent has remained far off the comparative highs of $75 per barrel seen last year and continues to lan- guish in the $20-30 per barrel range.
Jadestone president and CEO Paul Blakeley said half of Montara’s production had been sold at $72 per barrel through a capped swap in 2019, with “strong premiums on top”. He added: “This hedging programme will continue through to September this year and will be a major positive
Image: Jadestone Energy
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w w w . N E W S B A S E . c o m Week 16 23•April•2020