WTI $32.81 -$1.54, Brent $34.74 -$1.43, Diff -$1.93 +11c, NG $1.72 -7c
Crude fell yesterday, the ongoing problems between the US and China exacerbated by the Hong Kong dispute unsurprisingly worsened and continue today. After the Russians euphoria of earlier in the week they overdid it yesterday suggesting that ‘the market may re-balance by June or July’, maybe they meant 2021…
The API stats out after the close were a mixed bag, a big build of 8.7m barrels wasn’t expected a small draw was but it was softened by a draw of stocks at Cushing of 3.4m b’s while gasoline and distillates both built by 1.1m and 6.9m respectively.
Genel has announced payments from the KRG for oil sales in April 2020. Taq Taq partners have received a gross payment of $1.9m, net to Genel of $1.1m whilst Tawke partners received $8.5m with Genel’s net share is $2.1m. Also it should be noted that Genel stock is XD 10c per share today, a meaningful yield by any standards.
A strategy update from Slovenia today from Ascent who announce a dual pronged strategy to advance both legal and industrial routes over the next three months. This will be achieved through a number of routes, they will accelerate asset development in anticipation of receipts of permits by the end of 2020 and are assembling a new technical team to design a stimulation programme.
In assessing all the aspects in Slovenia the new board has seen material upside in the tight gas project noting 2021/22 gas futures already at €13/15 MWh nicely above what is needed for positive cash flow. The new board also see the opportunity to restructure and simplify the JV to be more in-line with industry standards and with a cost effective structure. Finally they are advancing towards notice of dispute against the Republic of Slovenia under the Energy Charter Treaty.
All this is part of what is likely to be a new period of enhanced news flow from the Slovenia and Cuba interests at Ascent.
There is a lot to like about Jadestone and as it delivers 1Q figures when the fan was well and truly hit, the resilience of the company already started to show through. The company is strengthening the balance sheet and will end 2020 in a strong financial position mainly due to its capex flexibility aided by Vietnam falling into its lap. With this figure down 80% it is no doubt ‘nimble’ as it shows significant cost optimisation and lower cost debt and Project Clover has already delivered $18m of savings with another $15m targeted. The growth story remains intact for shareholders too as the much vaunted dividend is still on the cards, $7.5-12.5m appears to have been earmarked.
The Maari acquisition is still very much in the plan, with its strong metrics it is expected to close in 2H 2020, the company is as keen as ever on it. Indeed whilst there appear to be ‘fewer’ assets on the market that situation isn’t expected to last and Jadestone will be ready should opportunities arise. Further growth will come from infill wells in Australia next year and of course Vietnam where the company says a dialogue has opened up for fixed price agreeable gas contracts.
All these mean that capex should be able to increase next year, hopefully when increased prices make spending money more profitable. Revenue in the quarter was $74.2m down 19% on the previous quarter on production of 11,665 b/d at $64.09 pb at a premium to Brent of $11.50 /bbl with cash opex/barrel for Q1 of $24.99 up due to weather and maintenance activities. Guidance for 2020 is 12-14,000 b/d and cash was $119.4m at the period end, net cash being $72.1m.
Jadestone is handling this very well, it has an excellent management team and a portfolio of assets which look good every which way you look and it has elected to continue with the Maari deal perhaps helped by Vietnam. Like most it is brutally attacking costs but it has resilience to lower prices and will still generate FCF this year even after Maari and the upcoming dividend are accounted for. Jadestone is a keeper all right…