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(Alliance News) - Jadestone Energy Inc reassured on Tuesday that it remains financially strong amid the recent dramatic fall in oil prices.
Shares in Jadestone were 8.7% higher on Tuesday morning in London at 50.00 pence each, but they closed last week at 59.90p.
Energy firms have been battered this week by a fall in the oil price. Brent was quoted USD37.94 on Tuesday, hitting nearing USD30 overnight on Sunday, amid the coronavirus outbreak and a failure by major oil producing nations to agree production cuts.
Asia Pacific-focused Jadestone, which is headquartered in the Western Australia city of Perth, said it has "significant downside protection" in place.
Half of production from the Montara field off the western coast of Australia is hedged at an average price of USD68.45 per barrel through to the end of September this year. This results in a blended realised price of around USD60 per barrel based on current oil prices, Jadestone said.
Realised pricing is also at a "significant" premium to the Brent price, it continued. The Stag field, also off Australia, achieved a premium of USD21 per barrel most recently and Montara USD7.60 per barrel.
Jadestone still expects positive operating cash flow in 2020, even if the oil price were to fall below the USD30 per barrel mark. It had net cash of nearly USD50 million at the end of 2019, and the cash balance has risen to USD116 million at the end of January.
Jadestone also said its capital programme is flexible. It currently plans to drill two infill wells this year, one at Stag and one at Montara, which can be postponed if need be at little cost.
The company is developing the Nam Du/U Minh project in Vietnam. Any spending in 2020 will take into account the macroeconomic environment, Jadestone added.
Chief Executive Paul Blakeley said: "As a specialist second phase operator, with a meticulous focus on costs, and entering the year with a robust balance sheet and strong downside oil price protection, I'm extremely confident of Jadestone's ability to withstand medium or longer-term oil price pressures.
"We have the added benefit of Asia Pacific oil production selling at a significant premium to Brent and, in Stag's case, a premium of over USD20 per barrel, and from a production base that generates positive cash flow even at low oil prices. Finally, with our strong net cash position and positive ongoing cash flow generation, we are well positioned to take advantage of inorganic growth opportunities, should the right asset(s) emerge for Jadestone."
By George Collard; georgecollard@alliancenews.com
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