Jadestone Energy Regulatory News (JSE)

Jadestone Energy Inc. 

Jadestone Energy Reports Results for the Period Ending March 31, 2020

Strong Ongoing Cash Flow Generation

May 28, 2020-Singapore: Jadestone Energy Inc. (AIM:JSE) ("Jadestone", or the "Company"), an independent oil and gas production company focused on the Asia Pacific region, reported today its consolidated interim unaudited financial statements (the "Financial Statements"), as at and for the three-month period ended March 31, 2020. Management will host a conference call today at 9:00 a.m. UK time, details of which can be found in the release below.

Paul Blakeley, President and CEO commented:

"I'm pleased to report another quarter of cash flow delivery and ongoing strengthening of our balance sheet. Prices realised for our production remain well above the Brent benchmark and are further bolstered by downside price protection through our hedging programme. At the same time, we have opted to utilise the substantial flexibility inherent in our 2020 spending plans, to reduce this year's capex by 80%.

The combined effect is that we continue to strengthen our net cash position, which now stands at US$72 million and affords us the comfort to re-affirm plans to pay our first dividend later this year, as previously committed. We are building a business that is resilient on all fronts, and can continue to thrive even in a low price environment, with an operating cashflow break-even oil price for the remainder of the year reduced to US$20/bbl.

While the challenges presented by the Covid-19 pandemic, and related global economic slowdown, will impact everyone in some way, we are remaining vigilant in how we manage our operations and the welfare of our colleagues and, to this point, we have experienced no disruptions to offshore operations. We remain committed to operating within the guidelines and expectations set out by local authorities, but we are optimistic that the global measures taken to date, can now begin to be scaled back, and that both oil demand and prices will continue their early upward trend.

At the same time, we are also optimistic about the potential for new M&A opportunities to present themselves as a result of the current challenging environment. We will not deviate from our stringent approach to screening, nor our exclusive focus on the Asia Pacific region, but we are well positioned to leverage our strong financial position as an acquirer. As always, our focus is on identifying and acquiring assets which offer the potential for substantial value generation through incremental investment."

Financial highlights

Operational highlights

Corporate highlights

Operations update

Montara total production averaged 8,799 bbls/d in Q1 2020, compared to 11,118 bbls/d in Q1 2019, as a result of both maintenance activities and cyclone-related downtime, typical for this time of the year. In addition, Q1 2019 benefitted from flush production following the voluntary shutdown of the asset in Q4 2018 to address the legacy inspection and maintenance backlog. There was a single lifting during the quarter, resulting in sales of 512,575 bbls, compared to 578,865 bbls in the first quarter of 2019.

Jadestone completed a 3D seismic acquisition covering the Montara area in Q1 2020, with a view to improving reservoir imaging for future infill wells and to assessing further exploration step-out potential. The seismic data is expected to be available in Q4 2020.

Stag total production averaged 2,866 bbls/d, compared to 1,941 bbls/d in Q1 2019. The increase was due in part to production from the 49H infill well drilled last year. In addition, Q1 2020 saw increased uptime compared to the same quarter a year ago, reflecting the fact that Q1 2019 was adversely impacted by rig mobilisation and weather-related downtime. There were two liftings during the quarter, resulting in sales of 518,193 bbls, compared to a single lifting of 169,986 bbls in Q1 2019.

Work toward planning the Company's infill well programme on both Montara and Stag has largely been completed, but with activity now on hold as part of the Company's deferral of the programme to 2021. These measures are intended to ensure investing into new infill wells is timed to coincide with a stronger oil price environment, to maximise potential returns and payback.

In Vietnam, Jadestone has deferred its Nam Du and U Minh gas development project and has removed substantially all capital spending which had been planned for 2020 on this project. The Company remains engaged with the Vietnamese Government, including ongoing discussions relating to a gas sales and purchase agreement which it anticipates will be completed alongside the eventual field development plan approval.

Update to Covid-19 operational response

Jadestone has not experienced any disruptions to its offshore operations due to the Covid-19 pandemic, but precautionary measures remain in place. As local and international recommendations protecting the wellbeing of people begin to be relaxed, the Company will respond in step, but will remain vigilant with regards to mitigating risks to its colleagues and operations, including continuing to rely on the role of pandemic managers, designated at each location.

Jadestone has undertaken a thorough assessment of all aspects of its operations, and the specific risks and challenges posed by the Covid-19 pandemic. The Company will continue to revisit this assessment regularly to ensure appropriate mitigations are in place as the impact of the pandemic evolves. In all instances, and at a minimum, the Company will comply with local and international recommendations protecting the wellbeing of its people and, in turn, to minimise the impact on its operations.

Financial update

Revenue in Q1 2020 was US$74.2 million, compared to US$91.2 million in Q4 2019 and US$56.4 million in Q1 2019. The variance to Q4 2019 is a combination of slightly lower lifting volumes and realised prices. Revenue in Q1 2019 reflects lower lifting volumes associated with the restart of operations from the Montara field following the voluntary shutdown in Q4 2018.

During Q1 2020, the Company recorded US$8.2 million in hedging income classified as profit. This compares to hedging income of US$3.5 million in Q4 2019 and US$5.8 million in Q1 2019, demonstrating the strong price protection from the Company's hedging programme.

The Company continued to enjoy strong premiums for both its Montara and Stag liftings in 2020, most recently US$6.10/bbl and US$21.00/bbl, respectively, and averaged US$11.58/bbl in Q1 2020.

Production costs for the first quarter were US$26.5 million, net of non-recurring costs and workovers, versus US$26.6 million in Q4 2019 and US$28.4 million in Q1 2019. The decrease compared to Q1 2019 is predominately due to lower operator costs after the transfer of operatorship in August 2019.

On a per barrel basis, this results in Q1 2020 unit opex of US$24.99/bbl1, compared to US$19.63/bbl1 in Q4 2019 and US$24.17/bbl1 in Q1 2019. The increase compared to Q4 2019 is due predominately to lower production at Montara, as a result of maintenance activities and cyclone downtime.

Jadestone generated positive adjusted EBITDAX of US$30.9 million in Q1 2020, compared to US$59.9 million in Q4 2019 and US$23.1 million in Q1 2019. The variance to Q4 2019 is due to lower liftings and higher production costs, partially offset by increased hedging income.

The Company reported a net profit before tax of US$13.1 million, compared to US$27.1 million in Q4 2019 and US$10.7 million in Q1 2019.

Net cash generated from operations, before changes in working capital, was US$36.0 million in Q1 2020, compared to US$58.0 million in Q4 2019, and US$27.5 million for Q1 2019.

Cash used in investing activities in Q1 2020 was US$8.8 million, compared to US$5.1 million in Q4 2019 and US$7.5 million in Q1 2019. The majority of the Q1 2020 investment relates to intangible exploration expense associated with the Montara 3D seismic acquisition.

At March 31, 2020, the Company had total gross outstanding debt of US$37.34 million and total cash of US$119.4 million, including US$10.0 million of cash in support of a bank guarantee, or net cash of US$72.1 million. This compares to net cash of US$39.34 million at December 31, 2019, and net debt of US$13.44 million at March 31, 2019.

The Company's existing capped swap hedging programme continues to provide robust support for ongoing cash generation, establishing a floor benchmark crude oil price of US$68.45/bbl for approximately one third of the Company's production through to September 30, 2020, and excluding incremental oil price premia. The mark-to-market fair value on the capped swap as at March 31, 2020, was US$32.4 million.

Selected financial information

The following table provides selected financial information of the Company, which was derived from, and should be read in conjunction with, the consolidated unaudited financial statements for the period ended March 31, 2020.

Conference call and webcast 

The management team will host an investor and analyst conference call at 4:00 p.m. (Singapore), 9:00 a.m. (London), and 4:00 a.m. (Toronto) today, Thursday, May 28, 2020, including a question and answer session.

The live webcast of the presentation will be available at the below webcast link. Dial-in details are provided below. Please register approximately 15 minutes prior to the start of the call. The results for the period ended March 31, 2020 will be available on the Company's website at: www.jadestone-energy.com/investor-relations/.

Webcast link: https://produceredition.webcasts.com/starthere.jsp?ei=1324011&tp_key=b2bfd089cbEvent conference title: Jadestone Energy Inc. - First Quarter ResultsStart time: 4:00 p.m. (Singapore), 9:00 a.m. (London), 4:00 a.m. (Toronto)Date: Thursday, May 28, 2020Conference ID: 60174148

Area access numbers are subject to carrier capacity and call volumes. 

1 Unit opex excludes workovers for comparability quarter-to-quarter, and non-recurring opex.

2 EBITDAX is a non-GAAP financial measure which does not have a standardised meaning prescribed by IFRS. This non-GAAP financial measure is included because management uses this information to analyse financial performance, efficiency and liquidity and it may be useful to investors on the same basis. EBITDAX is a non-GAAP measure which should not be considered an alternative to, or more meaningful than, "net earnings (loss)" as determined in accordance with IFRS, as an indicator of financial performance. EBITDAX equals net earnings (loss) plus financial expenses (income), provisions for (recovery of) income taxes, and depletion, depreciation and amortisation and exploration expense. Because non-GAAP financial measures do not have a standardised meaning prescribed by IFRS, they are unlikely to be comparable to similar measures presented by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.3 Includes a US$10.0 million deposit in support of a bank guarantee.

4 Gross outstanding debt and net debt/cash are non-GAAP measures which do not have a standardised meaning prescribed by IFRS. These measures are included because management uses this information to analyse the liquidity and financial position of the group and it may be useful to investors on the same basis. Gross outstanding debt and net debt/cash are non-GAAP measures and should not be considered an alternative to, or more meaningful than 'Net increase in cash and cash equivalents' as determined in accordance with IFRS, as an indicator of liquidity and financial performance. Gross outstanding debt is defined as long and short term interest bearing debt, with effective interest method financing costs added back, and excludes derivatives. Net debt/cash includes cash and cash equivalents, including the Montara assets' minimum working capital cash balance of US$15.0 million required to be maintained under the conditions of the reserve based lending facility and restricted cash of US$12.2 million (December 31, 2019: US$13.5 million) under the debt service reserve account, but excludes the US$10.0 million deposited in support of a bank guarantee to a key supplier. Because non-GAAP financial measures do not have a standardised meaning prescribed by IFRS, they are unlikely to be comparable to similar measures presented by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.

5 Production, sales and average realised prices are expressed on a barrels of oil basis for the prevailing period.

6 Realised liquids price reflect actual sales price net of marketing costs, and excludes hedge income.

7 Payment for oil and gas property, plant and equipment and intangible exploration assets. In 2019 excludes the RLWI/major spend elements that are reported under opex. Also excludes acquisition related capital expenditure.

- Ends -

Enquiries

About Jadestone Energy Inc.

Jadestone Energy Inc. is an independent oil and gas company focused on the Asia Pacific region. It has a balanced, low risk, full cycle portfolio of development, production and exploration assets in Australia, Vietnam and the Philippines.

The Company has a 100% operated working interest in the Stag oilfield and the Montara project, both offshore Australia. Both the Stag and Montara assets include oil producing fields, with further development and exploration potential. The Company has a 100% operated working interest in two gas development blocks in Southwest Vietnam and is partnered with Total in the Philippines where it holds a 25% working interest in the SC56 exploration block. In addition, the Company has executed a sale and purchase agreement to acquire an operated 69% interest in the Maari Project, shallow water offshore New Zealand, and anticipates completing the transaction in H2 2020, upon receipt of customary approvals.

Led by an experienced management team with a track record of delivery, who were core to the successful growth of Talisman's business in Asia, the Company is pursuing an acquisition strategy focused on growth and creating value through identifying, acquiring, developing and operating assets in the Asia Pacific region.

Jadestone Energy Inc. is listed on the AIM market of the London Stock Exchange. The Company is headquartered in Singapore. For further information on Jadestone please visit www.jadestone-energy.com.

Cautionary statements

Certain statements in this press release are forward-looking statements and information (collectively "forward-looking statements"), within the meaning of the applicable Canadian securities legislation, as well as other applicable international securities laws. The forward-looking statements contained in this press release are forward-looking and not historical facts.

Some of the forward-looking statements may be identified by statements that express, or involve discussions as to expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of phrases such as "will likely result", "are expected to", "will continue", "is anticipated", "is targeting", "estimated", "intend", "plan", "guidance", "objective", "projection", "aim", "goals", "target", "schedules", and "outlook"). In particular, forward-looking statements in this press release include, but are not limited to statements regarding timing of the Nam Du and U Minh gas development project and the Australia infill drilling campaign, expected reductions to capital spending, 2020 average production, 2021 production growth and the timing and payment of the Company's maiden dividend.

Because actual results or outcomes could differ materially from those expressed in any forward-looking statements, investors should not place undue reliance on any such forward-looking statements. By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predicted outcomes will not occur. Some of these risks, uncertainties and other factors are similar to those faced by other oil and gas companies and some are unique to Jadestone. The forward-looking information contained in this news release speaks only as of the date hereof. The Company does not assume any obligation to publicly update the information, except as may be required pursuant to applicable laws.

Henning Hoeyland of Jadestone Energy Inc., a Subsurface Manager with a Masters degree in Petroleum Engineering, who has been involved in the energy industry for more than 19 years, has read and approved the technical disclosure in this regulatory announcement.

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, and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Glossary

bbls barrels of oilbbls/d barrels of oil per dayEBITDAX earnings before interest, tax, depreciation, amortisation and exploration expensesmbbls thousands of barrels of oil 

Jadestone Energy Inc.

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

for the financial period ended March 31, 2020

* Certain 2019 comparative information has been restated, as a result of reclassifications between line items. Please refer to Note 37.

All comprehensive income is attributable to the equity holders of the parent.

The accompanying notes are an integral part of the consolidated financial statements.

Jadestone Energy Inc.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at March 31, 2020

The accompanying notes are an integral part of the consolidated financial statements.

Jadestone Energy Inc.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the financial period ended March 31, 2020

The accompanying notes are an integral part of the consolidated financial statements.

Jadestone Energy Inc.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

for the financial period ended March 31, 2020

* Certain 2019 comparative information has been restated, as a result of reclassifications between line items. Please refer to Note 37.

The accompanying notes are an integral part of the consolidated financial statements.

Jadestone Energy Inc.

EXPLANATION NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

for the financial period ended March 31, 2020

1. CORPORATE INFORMATION

Jadestone Energy Inc. (the "Company" or "Jadestone") is an oil and gas company incorporated in Canada.

The Company's ordinary shares are listed on AIM, a market by the London Stock Exchange. The Company trades under the symbol "JSE". The Company was listed on the TSX-V, but delisted on March 25, 2020.

The financial statements are expressed in United States Dollars ("US$" or "USD").

The Company and its subsidiaries (the "Group") are engaged in production, development, exploration and appraisal activities in Australia, Vietnam and the Philippines. The Company's current producing assets are in the Vulcan (Montara) and Carnarvon (Stag) basins, offshore Western Australia.

On November 18, 2019, the Group executed a sale and purchase agreement ("SPA") with Österreichische Mineralölverwaltungs Aktiengesellschaft New Zealand ("OMV New Zealand") to acquire an operated 69% controlling interest in the Maari project for a total consideration of US$50.0 million, and subject to customary working capital adjustments. The transaction is subject to regulatory approvals and joint venture partners' acceptance. Following these approvals, the transaction will close and control of the Maari project will transfer to the Group. The economic benefits from January 1, 2019 until the closing date will be adjusted in the final consideration price. The Group anticipates to complete the acquisition in second half of 2020

The Company's head office is located at 3 Anson Road, #13-01 Springleaf Tower, Singapore 079909. The registered office of the Company is 10th Floor, 595 Howe Street, Vancouver, British Columbia V6C 2T5, Canada.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

STATEMENT OF COMPLIANCE

These unaudited condensed interim financial statements (the "financial statements") are prepared in accordance with International Accounting Standard IAS 34 Interim Financial Reporting, on a going concern basis under the historical cost convention. They do not contain all disclosures required by International Financial Reporting Standards ("IFRS") for annual financial statements and should be read in conjunction with Jadestone's audited consolidated financial statements for the year ended December 31, 2019.

These financial statements were approved for issuance by the Company's Board of Directors on May 28, 2020, on the recommendation of the Audit Committee.

3. BASIS OF PREPARATION

These financial statements have been prepared on an historical cost basis, except for financial instruments classified as financial instruments at fair value, which are stated at their fair values, and operating leases which are stated at the present value of future cash payments.

In addition, these financial statements have been prepared using the accrual basis of accounting.

Adoption of new and revised standards

New and amended IFRS standards that are effective for the current period

The Group has applied the following standards and amendments for the first time with effect from January 1, 2020.

· Amendments to IFRS 3 Business Combinations;

· Amendments to IAS 1 and IAS 8 Definition of Material; and

· Amendments to References to the Conceptual Framework in IFRS Standards.

All amendments are effective for annual periods beginning on January 1, 2020 and generally require prospective application.

Amendments to IFRS 3 Business Combinations

The amendments clarify that while businesses usually have outputs, outputs are not required for an integrated set of activities and assets to qualify as a business. To be considered a business, an acquired set of activities and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs.

Additional guidance is provided that helps to determine whether a substantive process has been acquired. The amendments introduce an optional concentration test that permits a simplified assessment of whether an acquired set of activities and assets is not a business. Under the optional concentration test, the acquired set of activities and assets is not a business, if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar assets.

Amendments to IAS 1 and IAS 8 Definition of Material

The amendments are intended to make the definition of material in IAS 1 easier to understand and are not intended to alter the underlying concept of materiality in IFRS Standards. The concept of 'obscuring' material

information with immaterial information has been included as part of the new definition.

The threshold for materiality influencing users has been changed from 'could influence' to 'could reasonably be expected to influence'.

The definition of material in IAS 8 has been replaced by a reference to the definition of material in IAS 1. In addition, the IASB amended other Standards and the Conceptual Framework that contain a definition of material or refer to the term 'material' to ensure consistency.

Amendments to References to the Conceptual Framework in IFRS Standards

Together with the revised Conceptual Framework, which became effective upon publication on March 29, 2018, the IASB has also issued Amendments to References to the Conceptual Framework in IFRS Standards. The document contains amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32.

Not all amendments, however, update those pronouncements with regard to references to and quotes from the framework so that they refer to the revised Conceptual Framework. Some pronouncements are only updated to indicate which version of the Framework they are referencing to (the IASC Framework adopted by the IASB in 2001, the IASB Framework of 2010, or the new revised Framework of 2018) or to indicate that definitions in the Standard have not been updated with the new definitions developed in the revised Conceptual Framework.

New and revised IFRS's on issue but not yet effective

The Group has not applied the following new and revised IFRS that is relevant to the Group, and was issued, but not effective:

· Amendments to IAS 1 Classification of Liabilities as Current or Non-Current.

The amendment is effective for annual periods beginning on or after January 1, 2022, and generally require prospective application. The Group is currently performing an assessment of the impact of this amendment and does not anticipate a material impact on the financial statements of the Group in future periods

4. REVENUE

The Group derives its revenue from contracts with customers for the sale of oil and gas products. Revenue is presented net of royalties.

5. PRODUCTION COSTS

6. DEPLETION, DEPRECIATION AND AMORTISATION ("DD&A")

7. STAFF COSTS

The above staff cost includes director's and non-executive directors' salaries and fees.

8. OTHER EXPENSES

9. OTHER INCOME

10. FINANCE COSTS

During the current period, the Group paid interest of US$0.7 million (2019: US$1.5 million) related to the reserve based loan ("RBL").

11. OTHER FINANCIAL GAINS

12. INCOME TAX EXPENSE

The Australian corporate income tax rate is applied at 30%. PRRT is calculated at 40% of sales revenue less certain permitted deductions and is tax deductible for Australian corporate income tax purposes.

The above movement in deferred tax balances relates to temporary differences between the tax base of an asset or liability, and its carrying amount in the statement of financial position.

The Company is a resident in the Province of British Columbia and pays no Canadian tax; the Group has no operating business in Canada. Subsidiaries are resident for tax purposes in the territories in which they operate.

The tax expense on Group profit differs from the amount that would arise using the standard rates of income tax applicable in the countries of operation as explained below:

* The Indonesian tax rate is based on the effective rate after taking into account the corporate tax rate of 35% and the branch profit tax of 20%.

In addition to the amount charged to the profit and loss, the following amounts relating to tax have been recognised in other comprehensive income.

13. PROFIT PER ORDINARY SHARE

The calculation of the basic and diluted profit per share is based on the following data:

The calculation of diluted EPS for the three months ended March 31, 2020 includes 3,622,443 of weighted average dilutive ordinary shares available for exercise from in-the-money vested options (three months ended March 31, 2019: 931,349). Additionally, 665,160 of weighted average potential ordinary shares available for exercise, are excluded as they are out-of-the-money (three months ended March 31, 2019: 607,821).

14. INTANGIBLE EXPLORATION ASSETS

For the purpose of the consolidated statement of cash flows, intangible exploration assets of US$8.4 million remained unpaid as at March 31, 2020 (March 31, 2019: US$1.7 million).

15. OIL AND GAS PROPERTIES

16. PLANT AND EQUIPMENT

17. RIGHT-OF-USE ASSETS

The Group leases several assets including the Stag FSO, helicopters, a supply boat, logistics facilities for the Montara field, and buildings. The average lease term is 4 years.

* Due to figure rounded to nearest thousand.

18. DEFERRED TAX

The following are the deferred tax liabilities and assets recognised by the Group and movements thereon during the current reporting period.