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Jadestone hit by Montara shutdown

The oil and gas group has managed to boost figures in spite of production slowdowns
April 18, 2019

Ongoing maintenance issues will always exert a disproportionate influence on junior oil & gas drillers, so although Jadestone Energy (JSE) more than doubled revenues through 2018 - albeit against a nine-month comparator – the Asia Pacific-focussed driller still booked a statutory loss due to increased production costs and inventory movements, with production held in check by a temporary shutdown at its recently-acquired Montara facility, and problems at the Stag operation.

IC TIP: Hold at 49.5p

Jadestone acquired the Australian Montara project from PTT Exploration and Production Public in September. It was subsequently placed into voluntary shutdown for maintenance in November, until 11 January. Jadestone averaged 5,215 barrels per day over its fourth quarter, only receiving contribution from Montara in October. But adjusting for the shutdown impact, the energy group claims that it would have averaged daily production at around 10,272 barrels for the quarter. This blow was softened by the $22m (£17m) cash contribution from the seller. And since reopening, “production from Montara has exceeded our expectations and should be around 11,000 barrels per day for the first quarter'', chief executive and president Paul Blakeley says.

Downhole pump failure at two of Stag’s biggest production wells, on the other hand, brought production below target to 2,644 barrels per day in the fourth quarter. Nevertheless, production rose by 69 per cent over the prior four months.

House broker Stifel forecasts adjusted pre-tax profits and EPS of $157m and 20.9¢ for 2019, rising to $205m and 27.2¢ in 2020.

JADESTONE ENERGY (JSE)  
ORD PRICE:49.5pMARKET VALUE:£228m
TOUCH:49.2-49.8p12-MONTH HIGH:51.8pLOW: 33.8p
DIVIDEND YIELD:NILPE RATIO:NA
NET ASSET VALUE:47p*NET DEBT:14%
Year to 31 MarTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
201734.4-34.6-26.0nil
Year to    TurnoverPre-taxEarnings Dividend
31 Dec ($m) profit ($m)per share (¢) per share (¢)
2017**52.0-20.4-7.0nil
2018113-21.5-10.0nil
% change+118%---
Ex-div:na   
Payment:na   
*Includes intangible assets of $95.6m or 21¢ per share **Nine months to 31 Dec, restated for change to financial year