RE: RE-RATE21 May 2026 14:31
First, 2025 did not “prove” JSE cannot generate returns at $70 oil. It proved that management prioritized deleveraging and balance sheet repair after years of operational instability. That is a capital allocation choice, not evidence the assets are uneconomic. Akatara materially changed the company’s cash flow profile, and the benefit is only partially reflected because 2025 still carries legacy drag from Montara and Stag. Second, the claim that shareholders need $80+ oil for appreciation is too simplistic. Small-cap E&Ps rerate when production stabilizes, leverage falls, asset mix improves, and free cash flow visibility increases. JSE is already moving along all four vectors. If Vietnam comes online as expected, the market may rerate the company before first production simply because the portfolio quality improves structurally.
“Australia is the wrong place for end-of-life assets” argument cuts both ways. Mature assets are unattractive operationally, but that is exactly why they were acquired cheaply. Blakeley’s strategy has never been about owning pristine Tier-1 assets; it is about buying unloved production at distressed valuations and extracting more value than the market expects. The question is not whether Montara and Stag are perfect assets. They clearly are not. But whether the market has over-discounted their decline and liabilities.
Also, it ignores that Akatara is gas-weighted and lowers exposure to pure oil-price volatility. The portfolio today is already less oil-sensitive, and materially less so if Vietnam proceeds.
No dividend or buyback “on the horizon” does not automatically mean no shareholder return. For a company trading at a deep discount to NAV and replacement value, balance sheet repair alone can create substantial equity upside. If net debt falls meaningfully while production remains stable, the equity could rerate well before formal shareholder distributions begin.
The bear case is valid if operations disappoint again, Vietnam slips materially, and/or oil collapses. But dependence on $80 oil understates how much value can be created simply by improving asset quality and reducing financial risk.
Sign In
Follow the stocks
