Higher dividend, lower production from Jadestone Energy

Jadestone Energy (JSE) is sometimes more a government lobbyist that also produces oil and gas than the other way around, given its seemingly endless work to get acquisitions and project permits approved. 

The company, which focuses on the Asia Pacific region, has again pushed back its deal completion deadline for the Maari project in New Zealand, to 31 December, and continues to push for permission from the Vietnamese government to take its gas licences into production. Jadestone first announced the Maari acquisition in 2019. 

It does have a significant win from this year on that front, however, completing the purchase of assets in Malaysia that produce 6,000 barrels of oil equivalent per day (boepd) within a few months. The deal had an economic effective date of 1 January, so the seller actually handed $9m (£6.5m) to Jadestone on completion in August. 

For the first half, production was 9,934 boepd, down on last year due to a shutdown at the Montara field in Australia and “natural field decline”. Jadestone said after a hiccup a development well would be tied in to the Montara infrastructure, helping production, although major maintenance is still required at two other wells and could hit future output. 

First-half revenue and cash profits climbed on higher oil and gas prices, however, with adjusted Ebitdax, or cash profits before exploration, almost doubling to $65m. The company raised the interim payout to 0.59¢ from 0.54¢ last year. 

Chief executive Paul Blakely said the company would try to keep increasing the dividend while looking for “significant organic and inorganic growth opportunities”. 

Broker Peel Hunt forecasts that Jadestone’s adjusted pre-tax profit will soar next year, climbing to $178m from $36m this year. While those hefty numbers are partly linked to completion of Maari – no sure thing – a consistent year would see investors reap the rewards while a gas producer in Asia is hot property right now. Speculative buy. 

Last IC View: Hold, 49p, 6 May 2020