3rd Quarter Results

RNS Number : 9664U
Jadestone Energy Inc.
28 November 2019
 

Jadestone Energy Inc.
 

Jadestone Energy Results for the Period Ending September 30, 2019
Steady Production, Montara Operatorship Transferred, One-off Capital Completed and First Dividend Announced

 

November 28, 2019-Singapore: Jadestone Energy Inc. (AIM:JSE, TSXV:JSE) ("Jadestone" or the "Company"), an independent oil and gas production company focused on the Asia Pacific region, is pleased to report today its consolidated interim unaudited financial statements (the "Financial Statements"), as at, and for the three-month and nine-month period ended September 30, 2019.

 

Financial highlights

 

●     Net revenue for the quarter of US$62.5mm, 46% lower than Q2 2019 primarily due to one less lifting at Montara, which occurred post period end in October.  Net revenue for the nine-month period to September 30, 2019 of US$234.2mm;

●     Lower liftings in the quarter increased crude oil inventory by 307.6mbbls to 494.8mbbls, which would equate to US$32.3mm of revenue at average realised oil prices in the quarter;

●     Adjusted EBITDAX of US$29.6mm1, down from US$75.4mm1 in the prior quarter;

●     Cash generated from operations was US$23.5mm2, down from US$59.3mm2 in Q2 2019 due in part to fewer liftings as well as significant non-routine opex.  Cash generated from operations over the nine-month period to September 2019 was US$119.0mm2;

●     Unadjusted quarterly profit after tax of US$0.02mm, down from US$22.6mm in Q2 2019 and profit after tax for the nine-month period of US$30.1mm;

●     Average price realisations of US$65.36/bbl, a decrease of 9% from the June quarter

-    Montara and Stag continue to enjoy strong differentials to Dated Brent, with the most recent sales, locking in a margin of US$4.56/bbl and US$11.40/bbl, respectively;

●     Pre-tax hedging gains of US$4.2mm, included in revenue for Q3 2019, compared to US$1.4mm in Q2 2019;

●     Capex and non-routine opex of US$25.7mm in the quarter, including for the riserless light well intervention ("RLWI") project (US$11.8mm) and umbilical replacement (US$13.3mm) at Montara;

●     Operating costs of US$20.43/bbl, excluding non-routine opex, such as Stag workovers, down 6% from the prior quarter;

●     Gross debt of US$60.8mm, reduced from US$73.4mm at end June 2019, as the Company continues to pay down its reserve-based lending ("RBL") facility;

●     Gross cash of US$65.0mm, excluding US$10.0mm cash deposited in support of a bank guarantee, net cash position of US$4.2mm, or US$14.1mm inclusive of restricted cash; and

●     The adoption of a dividend policy, targeting a 2020 maiden full year dividend in the range of US$7.5mm and US$12mm.

 

The revenue, EBITDAX1, profit and operating cashflow results reflect the periodic nature of revenue recognition for Jadestone: there were single liftings at Stag and Montara during the quarter compared to two Montara liftings and a Stag lifting in the previous quarter, and a sole Stag lifting in the same quarter in the previous year.  Conversely, inventory built up on the Balance Sheet to a market value of US$32.3mm by quarter end3

 

Operational highlights

 

●     Continued safe operations at all assets with no recordable personnel or environmental incidents;

●     Production in line with full year guidance averaged 13,036 bbls/d for the quarter, a 2% decrease from Q2 2019.

●     Production marginally lower due to planned downtime at Montara, for the umbilical replacement project, RLWI programme, and repairs to the gas lift compression system, partly offset by increased production from Stag following the 49H infill well;

●     Achieved two production liftings during the quarter, resulting in sales of 0.9mm bbls, compared with 1.6mm bbls from three liftings in Q2 2019, or 3.2mm bbls for the nine-month period.  In addition, crude oil inventory increased by 307.6mbbls during the quarter;

●     Completed transfer of operatorship of the Montara oil project, including acceptance of the Company's safety case and transfer of the remaining 1% interest in the Montara titles;

●     Completed all outstanding remedial works on the Montara asset which have resulted in gas lift operations to the subsea wells resuming;

●     Finished the first major investment programmes on Montara on time in mid-August and on budget;

●     Signed an agreement to participate in a multi-client 3D seismic acquisition covering 1,487 km2, including the Montara blocks and surrounding area, now targeted to begin in Q1 2020; and

●     Formally submitted a field development plan ("FDP") for the Nam Du and U Minh gas fields, offshore southwest Vietnam, to Vietnam Oil and Gas Group ("Petrovietnam") in October, 2019.

 

Acquisition of a 69% operated interest in Maari

 

●     Announced, in November, 2019, the acquisition of the Maari Project, offshore New Zealand, from OMV for a headline cash consideration of US$50mm, subject to satisfaction of conditions.

 

Outlook

 

●     Full year average group production guidance is reconfirmed within the range 13,500-14,500 bbls/d;

●     Opex guidance for the full year is maintained at US$21- 24/bbl, reflecting an acceleration in opex reduction initiatives at Montara following the transfer of operatorship;

●     Guidance on major spend for the full year of US$66-81mm, down US$7mm as the Montara 3D seismic shoot is now expected to commence in Q1 2020;

●     Major spending of US$25.7mm in the quarter comprised both capex and non-routine opex, mainly for the RLWI project (US$11.8mm) and the Montara umbilical replacement (US$13.3mm).  This compares to US$12.2mm in the previous quarter;

●     Approval of the FDP for the Nam Du/U Minh gas project in southwest Vietnam is anticipated before year end or shortly thereafter; and

●     The Maari project transition phase will continue throughout Q4 2019 and into 2020, including obtaining New Zealand Government approvals relating to title transfer and change of operatorship and other customary conditions, leading to anticipated completion in H2 2020.

 

1 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.

2 Before changes in working capital, interest and taxes

3 Based on average price realisation in the quarter

 

Paul Blakeley, President and CEO commented:

 

"I'm pleased to report Jadestone's third quarter 2019 results, with steady and safe production operations, slightly impacted by both the RLWI programme and the umbilical replacement at Montara.  The quarter's financial results were also impacted by crude liftings schedules which saw an inventory build of over 300,000 bbls from the previous quarter, and a delayed cash receipt for one lifting in the quarter. The ongoing cash generation of the business is strong, our Balance Sheet is improving with each quarter, and we're increasingly cash positive, just 14 months after closing our acquisition of Montara, which included a US$120mm reserves-based loan facility.

 

"At the same time, we completed the transfer of operatorship of Montara in the third quarter, completing all outstanding remedial works on the asset that had been identified during the acquisition, including the subsea well interventions, umbilical replacement and recommissioning of the gas lift compressor, and have begun to demonstrate the impact of our operating philosophy on minimising waste and further driving down operating costs.  

 

"We're also continuing to pursue value accretive inorganic growth elsewhere in our core region, announcing earlier this month that we will acquire an operated 69% interest in the Maari project, in shallow water offshore New Zealand, for a headline consideration of US$50mm.  The project will increase the Company's production by approximately 30% and 2P reserves by 33%, and is immediately accretive on an operating cashflow per share and free cashflow per share basis.

 

"In Vietnam, we're making good progress toward commercialising our southwest Vietnam gas project at the Nam Du and U Minh fields. The formal field development plan has been submitted to Petrovietnam, and we're still aiming to achieve field development sanction by the end of the year.

 

"The Jadestone strategy is definitely working with building momentum, and we remain on track to generate distributable earnings for shareholders, as promised in our announced dividend policy, which will result in our maiden dividend next year."

 

Operations update

 

Montara

 

Production at the Montara asset (Jadestone 100%, and operator) averaged 9,235 bbls/d during the quarter.  Production was affected by planned downtime associated with the RLWI programme and the umbilical replacement project, in addition to work on the gas lift compressor to address high temperatures on the compressor's exhaust stack.  Although this resulted in 72% uptime during the quarter, down from 82% in the prior quarter, completion of these activities addressed a number of reliability issues and accessed new reserves, which should underpin higher uptime performance and increased production going forward. 

 

All work was completed during the quarter as planned.  The regulator's prohibition notice, issued to the prior operator in relation to the compressor, has been withdrawn, and gas-lift resumed.  At the end of the quarter, production at Montara was over 12,000 bbls/d.  

 

One crude oil cargo was lifted from Montara in Q3 2019, for total sales of 592,028 bbls.  The next lifting occurred in October, meaning the Company recorded a substantial increase in crude oil inventory for the quarter.

 

The Company has also made progress toward its plan to acquire new 3D seismic in the Montara area, and has joined a multi-client survey to be conducted by Polarcus, which will include acquiring approximately 1,487 km2 of 3D seismic including full coverage of the block area, starting in Q1 2020. This seismic acquisition is part of Jadestone's plan to improve reservoir imaging, to more accurately target future infill wells, and to assess further exploration step-out potential.

 

In addition, the Company is finalising well planning for its first infill well at Montara, which will be drilled from an existing slot on the Montara wellhead platform, targeting 1.8mm bbls of unswept oil, with a target initial production rate of 3,000 bbls/d.  The Company has identified a preferred drilling rig and negotiations with the contractor are in the final stages.  Critical path long lead items are already being procured.

 

Stag

 

Production at the Stag oilfield (Jadestone 100%, and operator) averaged 3,801 bbls/d in Q3 2019, reflecting the positive impact of ongoing production from the Stag 49H infill well which came on production in May, and continues to contribute as expected.  In addition, Stag uptime averaged 92%, compared to 75% in Q2 2019.  One crude oil cargo was lifted from Stag in Q3 2019, for total sales of 299,616 bbls. 

 

Vietnam

 

Having completed the formal FDP for Nam Du/U Minh during the quarter, the Company reached a key milestone, post period end in October, by formally submitting the FDP to Petrovietnam for their endorsement and Government approval.  The FDP is in the final stages of the review process, with formal approval anticipated before year end, or shortly thereafter.

 

Separately, the Company has received revised investment licences for Block 46/07 and Block 51, confirming that the Company's working interest has been formally registered as 100%.

 

Upon formal development sanction, the Company anticipates completing a gas sales and purchase agreement in accordance with the heads of agreement ("HOA") executed earlier this year.  The HOA established key terms including the agreed daily contract quantity of 80mmscf/d, and other commercial terms and principles including a take-or-pay commitment by the buyer and a minimum plateau production period of 55 months. 

 

Financial overview

 

Results for the quarter reflect a decrease in production volumes of 2% over the prior quarter, but due to the timing of crude oil liftings, a more significant decrease in sales volumes of 44%.  At the same time, realised prices also decreased for the quarter, to US$65.36/bbl, a decrease of 9% from Q2 2019, partially mitigated by our existing hedge programme.  The Company reported revenue of US$62.5mm, versus US$115.3mm in Q2 2019.

 

Production costs for the quarter were US$32.0mm, versus US$39.3mm in the prior quarter, reflecting an increase in well workover costs associated with the RLWI programme at Montara (US$9.7mm), but offset by a negative movement of inventory associated with the timing of crude oil liftings and reduced costs under Jadestone operatorship at Montara. 

 

After adjusting for non-routine opex including the RLWI and other workovers, repairs and maintenance, this equates to US$20.43/bbl4, versus US$21.74/bbl4 in the prior quarter.

 

Jadestone generated an adjusted EBITDAX of US$29.6mm for the quarter, compared to US$75.4mm for Q2 2019.

 

On an unadjusted basis, the Company reported a net profit before tax of US$2.8mm, compared to a net profit before tax of US$34.0mm in Q2 2019.  Profit before tax, excluding the RLWI and non-routine well workovers would have been an estimated US$15.5mm, notwithstanding the lower lifting volumes in the quarter.

 

Net cash generated from operations was US$23.5mm compared to US$59.3mm in the prior quarter.

 

Cash used in investing activities in Q3 2019 was US$25.1mm, including the subsea umbilical replacement, final amounts related to the Stag 49H infill well and the capex elements of the Montara RLWI campaign.  This compares to US$27.7mm used in investing activities in the prior quarter. 

 

Cash used in financing activities in Q3 2019 was US$13.0mm, which was the result of a scheduled quarterly repayment of the outstanding RBL balance, compared to cash used in financing of US$11.9mm in Q2 2019.

 

At the end of the quarter, the Company had US$50.8mm cash, plus US$14.1mm of restricted cash, primarily related to its debt service reserve, and a further US$10mm of cash in support of a bank guarantee.  Net cash was US$4.2mm, excluding the US$10mm of cash in support of the bank guarantee, or US$14.2mm including the bank guarantee. 

 

Additionally, the Company's existing capped swap continues to provide robust support for 2019 cash generation, establishing a floor benchmark crude oil price of US$71.72/bbl for 50% of planned 2PD production at Montara in 2019, before allowing for the realised premium, which was most recently US$4.56/bbl above Brent. 

 

4 This excludes the impact of workovers and repairs and maintenance at Stag given their unpredictable timing, and costs associated with the Montara RLWI which are opex related and will be tracked separately as per 2019 guidance

 

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 interim financial statements for the period ended June 30, 2019, available on SEDAR and the Company's website at www.jadestone-energy.com/financial-results/.

 

 

Quarterly comparison

Sep 2019 quarter

Sep 2018 quarter

Change (%)

Production5, mboe

1,199.3

306.1

291.8%

Sales5, mboe

891.6

422.3

111.1%

Avg realised liquids price5, US$/boe

65.36

77.37

(15.5%)

Sales revenue, US$mm

62.5

32.7

91.1%

Capital expenditure6, US$mm

20.9

134.8

(84.5%)

Quarterly comparison

Sep 2019 quarter

Jun 2019 quarter

Change (%)

Production, mbbls

1,199.3

1,211.7

(1.0%)

Sales, mbbls

891.4

1,589.4

(43.9%)

Avg realised liquids price, US$/bbl

65.36

71.70

(8.8%)

Sales revenue, US$mm

62.5

115.3

(45.8%)

Capital expenditure6, US$mm

20.9

23.1

(9.5%)

Year-to-date comparison

9M to Sep 30, 2019

9M to Sep 30, 2018

Change (%)

Production5, mbbls

3,586.3

1,001.1

258.2%

Sales5, mbbls

3,229.9

1,026.0

214.8%

Avg realised liquids price5, US$/bbl

69.00

70.18

(1.7%)

Sales revenue, US$mm

234.2

68.5

241.9%

Capital expenditure6, US$mm

50.9

135.5

(62.4%)

5 Production, sales and average realised prices are expressed on a barrels of oil equivalent basis as the underlying data includes gas production from Ogan Komering for the prevailing period based on Jadestone's 50% participating interest up until May 19, 2018
6 Payment for oil and gas property, plant and equipment and intangible exploration assets.  Excludes acquisition related capital expenditure and lease payments that under IFRS16 are included in cash used in investing activities

 

Conference call and webcast

The management team will host an investor and analyst conference call at 5:00 p.m. (Singapore), 9:00 a.m. (London), and 4:00 a.m. (Toronto) on the same day, Thursday, November 28, 2019, 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 September 30, 2019 will be available on the Company's website at: www.jadestone-energy.com/investor-relations/.

Webcast link: https://event.on24.com/wcc/r/2110781/32ED0FFF54FF4F9CCE429834F9ACC57A
Event conference title: Jadestone Energy Inc. - Third Quarter Results
Start time: 5:00 p.m. (Singapore), 9:00 a.m. (London), 4:00 a.m. (Toronto)
Date: Thursday, November 28, 2019
Conference ID: 49825848

 

Country

Dial-In Numbers

Australia

1800076068

Canada (Toronto)

416 764 8609

Canada (Toll free)

888 390 0605

France

0800916834

Germany

08007240293

Germany (Mobile)

08007240293

Hong Kong

800962712

Indonesia

0078030208221

Ireland

1800939111

Ireland (Mobile)

1800939111

Japan

006633812569

Malaysia

1800817426

Singapore

8001013217

Switzerland

0800312635

Switzerland (Mobile)

0800312635

United Kingdom

08006522435

United States (Toll free)

888 390 0605

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

 

- Ends -

 

Enquiries

Jadestone Energy Inc.

+65 6324 0359 (Singapore)

Paul Blakeley, President and CEO

+1 403 975 6752 (Canada)

Dan Young, CFO

ir@jadestone-energy.com

Robin Martin, Investor Relations Manager

 

 

 

Stifel Nicolaus Europe Limited (Nomad, Joint Broker)

+44 (0) 20 7710 7600 (UK)

Callum Stewart

 

Nicholas Rhodes

 

Ashton Clanfield

 

 

 

BMO Capital Markets Limited (Joint Broker)

+44 (0) 20 7236 1010 (UK)

Thomas Rider

 

Jeremy Low

 

Thomas Hughes

 

 

 

Camarco (Public Relations Advisor)

+ 44 (0) 203 757 4980 (UK)

Billy Clegg

jadestone@camarco.co.uk

James Crothers

 

 

 

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.

 

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 throughout the Asia Pacific region.

 

Jadestone Energy Inc. is currently listed on the TSXV and AIM. 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 reserves volumes, production guidance and forecasts, opex and capital spending guidance, the financial benefits of the Maari acquisition and timing to completion, the payment and timing of the Company's maiden dividend, timing for and results of the Montara 3D seismic acquisition and the H6 infill well, timing for approval of the Nam Du/U Minh FDP and gas sales and purchase agreement.

 

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.

 

The technical information contained in this announcement has been prepared in accordance with the March 2007 guidelines endorsed by the Society of Petroleum Engineers, World Petroleum Congress, American Association of Petroleum Geologists and Society of Petroleum Evaluation Engineers Petroleum Resource Management System.

 

Henning Hoeyland of Jadestone Energy Inc., a Subsurface Manager with a Masters degree in Petroleum Engineering who is a member of the Society of Petroleum Engineers and who has been involved in the energy industry for more than 18 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.

 

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

 

Glossary

 

bbls                  barrels of oil
bbls/d                barrels of oil per day
boe                   barrels of oil equivalent
EBITDAX        earnings before interest, tax, depreciation, amortisation and exploration expenses
mbbls                thousands of barrels of oil

mboe                thousands of barrels of oil equivalent

mm bbls            millions of barrels of oil

mmscf/d           millions of standard cubic feet per day

 

 

 

 

Jadestone Energy Inc.

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the three and nine months ended September 30, 2019

 

 

 

 

 

 

 

Notes

 

 

Three months ended September 30, 2019

USD'000

 

Three months ended September 30, 2018

USD'000

 

Nine months ended September 30, 2019

USD'000

 

Nine months ended September 30, 2018

USD'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated statement of profit or loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

4

 

62,500

 

32,669

 

234,206

 

68,452

 

Production costs

 

5

 

(31,965)

 

(16,870)

 

(94,022)

 

(40,337)

 

Depletion, depreciation and amortisation

 

8

 

(17,126)

 

(2,780)

 

(63,415)

 

(7,844)

 

Staff costs

 

 

 

(4,496)

 

(2,812)

 

(13,386)

 

(9,617)

 

Other expenses

 

9

 

(2,812)

 

(6,314)

 

(7,850)

 

(11,709)

 

Other income

 

10

 

308

 

180

 

2,406

 

291

 

Impairment of assets

 

11

 

-

 

-

 

-

 

(11,902)

 

Finance costs

 

12

 

(4,513)

 

(841)

 

(14,527)

 

(3,864)

 

Other financial gains

 

13

 

871

 

-

 

2,807

 

-

 

Profit/(loss) before tax

 

 

 

2,767

 

3,232

 

46,219

 

(16,530)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

14

 

(2,748)

 

(6,187)

 

(16,078)

 

(7,929)

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit/(loss) for the period

 

 

 

19

 

(2,955)

 

30,141

 

(24,459)

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit/(loss) per ordinary share

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted (US$)

 

15

 

0.00

 

(0.01)

 

0.07

 

(0.09)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated statement of comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit/(loss) for the period

 

 

 

19

 

(2,955)

 

30,141

 

(24,459)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

Items that may be reclassified subsequently to profit or loss

 

 

 

 

 

 

 

Gain/(loss) on unrealised cash flow hedges

 

  24

 

8,837

 

2,020

 

(20,854)

 

(2,896)

 

Hedging gain/(loss) reclassified to profit

or loss

 

24

 

(4,226)

 

-

 

(11,354)

 

-

 

 

 

 

 

4,611

 

2,020

 

(32,208)

 

(2,896)

 

Tax income/(expense) relating to components of other comprehensive income

 

14,24

 

 

(1,384)

 

 

(606)

 

 

9,662

 

 

868

 

Other comprehensive income/(loss)

 

 

 

3,227

 

1,414

 

(22,546)

 

(2,028)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income/(loss) for the period

 

3,246

 

(1,541)

 

7,595

 

(26,487)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                 

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 September 30, 2019

 

 

 

 

 

 

September 30,

 

December 31,

 

 

2019

 

2018*

 

Notes

USD'000

 

USD'000

 

 

 

 

 

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

Intangible exploration assets

16

104,132

 

               95,607

Oil and gas properties

17

420,475

 

            430,193

Plant and equipment

18

1,870

 

                 1,709

Right of use assets

19

65,582

 

                          -

Derivative financial instruments

31

1,127

 

               15,339

Restricted cash

22

20,440

 

               23,561

Deferred tax assets

14

21,420

 

               21,287

 

 

635,046

 

587,696

Current assets

 

 

 

 

Inventories

20

27,491

 

               15,822

Trade and other receivables

21

56,503

 

               32,800

Derivative financial instruments

31

17,356

 

               35,985

Restricted cash

22

3,686

 

                 5,083

Cash and cash equivalents

22

50,839

 

               52,981

 

 

155,875

 

142,671

TOTAL ASSETS

 

790,921

 

730,367

 

 

 

 

 

EQUITY AND LIABILITIES

 

 

 

 

Equity

 

 

 

 

Share capital

23

466,573

 

            466,562

Share based payments reserve

25

23,456

 

               22,375

Hedging reserves

24

12,934

 

               35,480

Accumulated losses

 

(279,015)

 

          (309,156)

 

 

223,948

 

215,261

Non-current liabilities

 

 

 

 

Provision for asset restoration obligations

26

291,087

 

            277,697

Borrowings

29

17,306

 

               49,420

Lease liability

28

47,692

 

                          -

Other payables

27

6,191

 

               10,351

Deferred tax liabilities

14

70,958

 

               92,468

 

 

433,234

 

429,936

Current liabilities

 

 

 

 

Borrowings

29

43,445

 

               52,393

Lease liability

28

20,122

 

                          -

Trade and other payables

30

35,293

 

               31,493

Provision for taxation

14

34,879

 

                 1,284

 

 

133,739

 

85,170

TOTAL LIABILITIES

 

566,973

 

515,106

 

 

 

 

 

TOTAL EQUITY AND LIABILITIES

 

790,921

 

730,367

 

 

 

 

 

 

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

 

* The comparative information has been restated as a result of an IFRS3 adjustment to the purchase price allocation of the Montara asset acquisition (Note 6)

 

 

 

Jadestone Energy Inc.

CONDENSED CONSOLIDATED STATEMENT OF EQUITY

for the three and nine months ended September 30, 2019

 

 

 

Share

 

 

 

 

 

 

 

 

 

based

 

 

 

 

 

 

 

 

Share

 

payments

 

Hedging

 

Accumulated

 

 

 

 

capital

 

reserve

 

reserves

 

losses

 

Total

 

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

 

 

 

At January 1, 2018

364,466

 

21,855

 

-

 

(278,123)

 

108,198

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the period, representing total comprehensive loss

                   -

 

                     -

 

                     -

 

(24,459)

 

(24,459)

 

Other comprehensive income for the period

-

 

-

 

(2,028)

 

-

 

(2,028)

 

Total comprehensive loss for the period

                     -

 

                     -

 

(2,028)

 

(24,459)

 

(26,487)

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued

102,096

 

-

 

-

 

-

 

102,096

 

Share-based compensation, representing transaction with owners, recognised directly in equity

                      -

 

468

 

                     -

 

-

 

468

 

 

 

 

 

 

 

 

 

 

 

 

At September 30, 2018

       466,562

 

22,323

 

(2,028)

 

(302,582)

 

184,275

 

 

 

 

 

 

 

 

 

 

 

 

At January 1, 2019

466,562

 

22,375

 

         35,480

 

(309,156)

 

215,261

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period, representing total comprehensive profit

                   -

 

                     -

 

-

 

30,141

 

30,141

 

Other comprehensive loss for the period

-

 

-

 

(22,546)

 

-

 

(22,546)

 

Total comprehensive income/(loss) for the period

-

 

-

 

(22,546)

 

30,141

 

7,595

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued (Note 23)

11

 

-

 

-

 

-

 

11

 

Share-based compensation, representing transaction with owners, recognised directly in equity (Note 25)

-

 

1,081

 

-

 

-

 

1,081

 

 

 

 

 

 

 

 

 

 

 

 

At September 30, 2019

466,573

 

23,456

 

12,934

 

(279,015)

 

223,948

 

 

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

 

 

Jadestone Energy Inc.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

for the three and nine months ended September 30, 2019

 

 

 

 

 

 

 

Notes

 

Three months

ended

September 30,

2019

USD'000

 

Three months

ended

September 30,

2018

USD'000

 

Nine months

ended

September 30,

2019

USD'000

 

Nine months

ended

September 30,

2018

USD'000

 

 

 

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

 

 

 

 

Profit/(loss) before tax

 

 

2,767

 

3,232

 

46,219

 

(16,530)

Adjustments for

 

 

 

 

 

 

 

 

 

 -Interest income

10

 

(383)

 

(224)

 

(961)

 

(291)

 -Other financial gain

 

 

(13)

 

-

 

(1,004)

 

-

 -Interest expense

12

 

1,010

 

-

 

3,756

 

-

 -Other finance costs

12

 

2,887

 

841

 

8,411

 

3,864

 -Unrealised foreign exchange loss

10

 

561

 

189

 

840

 

43

 -Change in fair value of contingent payments

13

 

(871)

 

-

 

(2,807)

 

-

 -Depletion, depreciation and amortisation

8

 

17,126

 

2,780

 

63,415

 

7,844

 -Share based payments

25

 

389

 

195

 

1,081

 

468

 -Impairment of intangible exploration assets

11

 

-

 

-

 

-

 

11,902

 

 

 

23,473

 

(7,013)

 

118,950

 

7,300

Changes in working capital

 

 

 

 

 

 

 

 

 

 -(Increase)/decrease in trade and other receivables

 

11,610

 

(23,323)

 

(25,228)

 

(22,142)

 -Increase in inventories

 

 

(2,462)

 

(12,079)

 

(3,510)

 

(16,733)

 -Increase in trade and other payables

 

5,503

 

16,165

 

4,610

 

17,919

Cash generated from/(used in) operations

 

 

38,124

 

(12,224)

 

94,822

 

(13,656)

Interest paid

12

 

(1,010)

 

-

 

(3,756)

 

-

Tax refund/(paid)

14

 

-

 

-

 

6,243

 

(1,050)

Net cash generated from/(used in) operating activities

 

37,114

 

(12,224)

 

97,309

 

(14,706)

 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

 

Payment for oil and gas properties

17

 

(16,588)

 

(134,356)

 

(41,847)

 

(134,745)

Net payment for plant and equipment

18

 

(95)

 

(112)

 

(473)

 

(126)

Payment for intangible exploration assets

16

 

(4,238)

 

(277)

 

(8,525)

 

(635)

Lease payments

28

 

(4,593)

 

-

 

(11,653)

 

-

Interest received

18

 

383

 

224

 

961

 

291

Net cash used in investing activities

 

 

(25,131)

 

(134,521)

 

(61,528)

 

(135,215)

 

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

 

Proceeds from issuance of shares

23

 

-

 

107,888

 

11

 

107,888

Payments for share listing

 

 

-

 

(5,792)

 

-

 

(5,792)

Proceeds from loans

 

 

-

 

120,000

 

 

 

120,000

Repayment of borrowings

29

 

(13,024)

 

(184)

 

(42,430)

 

(829)

Restricted cash transfers

 

 

-

 

(18,634)

 

4,496

 

(18,634)

Payment of bond facility and stand-by fees

 

 

-

 

(17,450)

 

-

 

(17,514)

Net cash from/(used in) financing activities

 

 

(13,024)

 

185,828

 

(37,923)

 

185,119

 

 

 

 

 

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

 

 

(1,041)

 

39,083

 

 

(2,142)

 

35,198

 

Cash and cash equivalents at start of period

 

 

51,880

 

 

6,565

 

52,981

 

10,450

Cash and cash equivalents at end of period

22

 

50,839

 

45,648

 

50,839

 

45,648

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

Jadestone Energy Inc.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

for the three and nine months ended September 30, 2019

 

 

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 the London AIM market and the TSX Ventures Exchange ("TSX-V"). The Company trades on both markets under the symbol "JSE".

 

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 Carnarvon and Vulcan basins shallow water offshore Western Australia.

 

During the comparative periods for the nine months ended September 30, 2018, the Company had a participating interest in the Ogan Komering PSC in Indonesia.  The terms of the PSC expired in May 19, 2018, after which the Company no longer held an interest in the PSC.

 

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, 2018.

 

These Financial Statements were approved for issuance by the Company's Board of Directors on November 28, 2019, 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, 2019.

 

-    IFRS 16 Leases.

 

IFRS 16 Leases

General impact of application of IFRS 16 Leases

 

The Group, for the first time, has applied IFRS 16 Leases (as issued by the IASB in January 2016) as at January 1, 2019.

 

IFRS 16 introduces new or amended requirements with respect to lease accounting.  It introduces significant changes to lessee accounting, by removing the distinction between operating and finance lease.  IFRS 16 requires the recognition of a right of use asset and a lease liability, at commencement for all leases, except for short-term leases and leases of low value assets. Details of the new requirements are described in note 19, right of use assets.  The impact of the adoption of IFRS 16 on the Group's consolidated financial statements is described below.

 

The Group has applied IFRS 16 using the "modified retrospective" approach, and has elected not to restate comparatives. 

 

Impact of the new definition of a lease

 

The change in definition of a lease mainly relates to the concept of control.  IFRS 16 determines whether a contract contains a lease, on the basis of whether the customer has the right to control the use of an identified asset for a period of time, in exchange for consideration.

 

The Group has made use of the practical expedient available on transition to IFRS 16 not to reassess whether a contract is or contains a lease.  Accordingly, the definition of a lease in accordance with IAS 17 and IFRIC 4 will continue to be applied to those leases entered or modified before January 1, 2019.

 

The Group applies the definition of a lease and related guidance set out in IFRS 16 to all lease contracts entered into or modified on, or after, January 1, 2019 (whether it is a lessor or a lessee in the lease contract).  In preparation for the first-time application of IFRS 16, the Group has carried out an implementation project.  The project has shown that the new definition in IFRS 16 will not change significantly the scope of contracts that meet the definition of a lease for the Group.

 

Impact on lessee accounting

 

On adoption, IFRS 16 changed how the Group accounts for leases previously classified as operating leases.  The impact to the Group accounts are:

 

-    Recognises right of use assets and lease liabilities in the consolidated statement of financial position, initially measured at the present value of future lease payments;

 

-    Recognises depreciation of right of use assets and interest on lease liabilities in the consolidated statement of profit or loss; and

 

-    Separates the total amount of cash paid into a principal portion (presented within financing activities) and interest (presented within operating activities) in the consolidated statement of cash flows.

 

Under IFRS 16, right of use assets are tested for impairment in accordance with IAS 36 Impairment of Assets.  This replaces the previous requirement to recognise a provision for onerous lease contracts.

 

Financial impact of initial application of IFRS 16

 

Upon the initial application of IFRS 16, the recognition of the present value of the minimum lease payments resulted in US$38.0 million (note 19) of right of use assets and associated lease liabilities.  The Company has recognised the lease liabilities in relation to lease arrangements, previously disclosed as operating lease commitments under IAS 17, that meet the criteria of a lease under IFRS 16.

 

Upon recognition, the Company's weighted average incremental borrowing rate used in measuring lease liabilities was 8.6% percent.

 

The nature of the Company's leasing activities includes vessels, helicopters, buildings and the Stag FSO, all of which are used in producing and storage of hydrocarbons where the Company has a right to substantially all of the economic benefits.

 

The Company's lease contracts may contain termination, renewal, and/or purchase options, residual value guarantees, or a combination thereof, all of which are evaluated by the Company on a quarterly basis.  The Company accounts for such contract options when the Company is reasonably certain that it will exercise one of these options.

 

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

 

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

 

-    Amendments to IFRS 3 Business Combinations.

 

The amendments are effective for annual periods beginning on, or after, January 1, 2020, and generally require prospective application.  The Group is currently performing an assessment of the standard, and does not anticipate a material impact on the financial statements of the Group in future periods, with the exception of the item listed below.

 

Amendments to IFRS 3 Business Combinations

 

The definition of a business has been amended under IFRS 3, on October 22, 2018, clarifying that to be considered a business, rather than an asset sale or purchase, an acquisition would have to include an input and a substantive process that together significantly contribute to the ability to create outputs.  The definition of the term outputs is narrowed to focus on goods and services provided to customers, generating investment income and other returns.  The amended definition will be applied to reporting period's beginning on, or after, January 1, 2020 prospectively.

 

 

4.  REVENUE

 

The Group derives its revenue from contracts with customers for the sale of oil and gas products.  Revenue is presented in the consolidated statement of profit or loss, net of royalties.

 

 

 

Three months ended

September 30,

2019

USD'000

 

 

 

Three months ended

September 30,

2018

USD'000

 

 

 

Nine months ended

September 30,

2019

USD'000

 

 

 

Nine months ended

September 30,

2018

USD'000

 

 

 

 

 

 

 

 

Liquids revenue - after hedging

 

 

 

 

 

 

 

Montara

41,709

 

-

 

187,085

 

-

Stag

20,791

 

32,545

 

47,121

 

65,765

Ogan Komering

-

 

-

 

-

 

3,608

 

 

 

 

 

 

 

 

Gas revenue

 

 

 

 

 

 

 

Ogan Komering

-

 

124

 

-

 

2,628

 

62,500

 

32,669

 

234,206

 

72,001

 

 

 

 

 

 

 

 

Royalties

-

 

-

 

-

 

(3,549)

Total revenue derived from contracts with customers

62,500

 

32,669

 

234,206

 

68,452

 

 

All royalties included in the comparative period ended September 30, 2018, relate to production entitlement in Indonesia.  The Ogan Komering PSC expired on May 19, 2018, and hence no revenue or royalties arose in the current period.

 

 

 

 

 

 

5.  PRODUCTION COSTS

 

 

 

Three months ended

September 30,

2019

USD'000

 

 

 

Three months ended

September 30,

2018

USD'000

 

 

 

Nine months ended

September 30,

2019

USD'000

 

 

 

Nine months ended

September 30,

2018

USD'000

 

 

 

 

 

 

 

 

Operating costs

13,256

 

7,875

 

41,745

 

24,950

Workovers

12,717

 

1,385

 

22,995

 

6,922

Logistics

3,814

 

1,253

 

15,845

 

3,598

Repairs and maintenance

5,345

 

630

 

16,564

 

2,610

Movement in inventory

(3,165)

 

5,727

 

(3,127)

 

2,257

 

31,965

 

16,870

 

94,022

 

40,337

 

 

6.  COMPARATIVE FIGURES

 

Following the transfer of Montara operatorship as at August 6, 2019, the Group has revised the initial provisional fair value estimates for inventory and oil and gas properties as at September 28, 2018. This revision is made pursuant to IFRS 3, to reflect new information obtained, following the transfer of the Montara operatorship, as of the acquisition date (see Note 7.2).  The adjustment to the Montara initial provisional fair value estimates impacted the following line items for the financial year ended December 31, 2018:

 

As at December 31, 2018

As previously reported

USD'000

 

Adjustment/

reclassification

USD'000

 

As restated

USD'000

 

 

 

 

 

 

Oil and gas properties

 

14,828

 

430,193

Inventories

 

(14,009)

 

15,822

Trade and other payables

 

(819)

 

(31,493)

 

 

 

 

 

 

7.  ACQUISITION OF MONTARA ASSETS

 

On September 28, 2018 (the "acquisition date"), Jadestone Energy (Eagle) Ltd, a wholly owned subsidiary of the Company, closed the acquisition of the Montara Assets, obtaining control and 100% of the legal ownership from PTTEP Australasia (Ashmore Cartier) Pty Ltd ("PTTEP Australia").  The Company received 99% interest in the Montara titles on May 30, 2019, and following transfer of the Montara operatorship to Jadestone on August 6, 2019, the Company received the final 1% title interest on October 1, 2019, and the transaction was completed.

 

7.1  Fair value of consideration transferred

 

The consideration for the Montara Assets on the acquisition date comprised a cash payment of US$133.1 million, as set out below.

 

 

 

 

 

 

 

USD'000

 

 

 

 

 

 

 

 

 

Asset purchase price

 

 

 

 

 

            195,000

 

Crude inventory value

 

 

 

 

 

                6,657

 

Capital charge

 

 

 

 

 

                6,982

 

Net income adjustment (from January 1, 2018 to the date of acquisition)

             (75,547)

 

Cash payment on acquisition date

 

 

 

 

 

133,092

 

 

In addition to the upfront cash consideration set out above, there are deferred contingent payments payable, depending on the outcome of a number of trigger events.  The trigger events relate to future Dated Brent prices in 2019 and 2020, production from the infill well drilling scheduled for 2020, and any future final investment decision for developments with significant 2P reserves.  The Group has reviewed all the contingent payment trigger events at acquisition and recognised the following two potential payments, based on current and future anticipated potential prices of Dated Brent crude oil.

 

-    Annual average Dated Brent crude price exceeding US$80/bbl in 2019: US$20.0 million; and

 

-    Annual average Dated Brent crude price exceeding US$80/bbl in 2020: US$10.0 million.

 

Management has assessed the fair value of the above deferred contingent consideration using a Monte Carlo option simulation model, which considered inputs such as spot Dated Brent oil prices at the completion date, the prevailing risk-free rate, volatility of oil prices, and the period of time over which the contingent payment will apply.  At the date of acquisition, the Company recognised a fair value of US$15.8 million for the two contingent payments.  This amount was reduced to US$3.8 million at December 31, 2018, and at September 30, 2019 the revised fair value is US$0.9 million (Note 27).

 

The maintenance and inspection shutdown that occurred at Montara between November 1, 2018 to January 11, 2019, resulted in a deferral of production and revenue during that period of time, as well as an increase in costs due to overheads still being incurred and additional maintenance and inspection work required to rectify the safety issues.  As a result, on January 7, 2019, PTTEP Australia and the Group agreed that PTTEP Australia would fund cash calls capped at US$22.0 million.  Management believes that the shutdown was a result of facts and circumstances that existed as at the acquisition date.  As such, the US$22.0 million has been adjusted against the consideration transferred for the Montara Assets.

 

Since the acquisition date, the Company reviewed the fair value consideration on acquisition date, in accordance with IFRS 3 Business Combinations.  This assessment resulted in the restatements below.

 

 

As at September 28, 2018

September 30, 2019

USD'000

 

 

Restatement

USD'000

 

December 31, 2018

USD'000

 

 

 

 

 

 

Asset purchase price

195,000

 

-

 

195,000

Crude inventory value

6,657

 

-

 

6,657

Capital charge

6,982

 

-

 

6,982

Net income adjustment

(75,547)

 

-

 

(75,547)

Cash payment on acquisition date

133,092

 

-

 

133,092

 

 

 

 

 

 

Deferred contingent consideration

15,805

 

-

 

15,805

Prepaid asset for future cash calls

(22,000)

 

-

 

(22,000)

Working capital adjustment

1,816

 

819

 

997

Total fair value consideration on acquisition date

128,713

 

819

 

127,894

 

 

7.2 Assets acquired and liabilities assumed at the date of acquisition

 

The fair value assessment of the Montara identifiable assets and liabilities, acquired as at the acquisition date, have also been reviewed in accordance with IFRS 3 Business Combinations.  Following the transfer of Montara operatorship as at August 6, 2019, the Group has revised the initial provisional fair value estimates for inventory and for oil and gas properties as at September 28, 2018.  This revision is made pursuant to IFRS 3, to reflect new information obtained about facts and circumstances that existed as of the acquisition date.  The restatement is as below.

 

 As at September 28, 2018

 September 30,

2019

USD'000

 

 

Restatement

USD'000 

 

December 31, 2018

USD'000

 

 

 

 

 

 

Assets

 

 

 

 

 

Non-current assets

 

 

 

 

 

Oil & gas properties

368,634

 

14,828

 

353,806

Current assets

 

 

 

 

 

Inventory - oil

17,195

 

-

 

17,195

Inventory - materials

4,169

 

(14,009)

 

18,178

Prepayments

4,098

 

-

 

4,917

Total assets

394,096

 

(819)

 

394,096

 

 

 

 

 

 

 

 

 September 30,

2019

USD'000

 

Restatement

USD'000 

 

December 31, 2018

USD'000

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Current liabilities

 

 

 

 

 

Trade and other payables

             (4,314)

 

-

 

             (4,314)

Non-current liabilities

 

 

 

 

 

Provision for asset restoration obligations

        (183,020)

 

-

 

        (183,020)

Deferred tax liabilities

           (78,437)

 

-

 

           (78,437)

Other provisions

                (431)

 

 

 

                (431)

Total liabilities

      (266,202)

 

-

 

      (266,202)

 

 

 

 

 

 

Net identifiable assets acquired

128,713

 

819

 

127,894

             

 

 

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

 

 

Three months ended

September 30,

2019

USD'000

 

 

Three months ended

September 30,

2018

USD'000

 

 

Nine months ended

September 30,

2019

USD'000

 

 

Nine months ended

September 30,

2018

USD'000

 

 

 

 

 

 

 

 

Depletion, depreciation and amortisation

 

 

 

 

 

 

Montara

16,091

 

306

 

53,403

 

306

Stag

3,221

 

2,382

 

6,998

 

6,592

Ogan Komering

-

 

-

 

-

 

657

 

19,312

 

2,688

 

60,401

 

7,555

Depreciation of plant and equipment (Note 18)

118

 

92

 

313

 

289

Right of use assets (Note 19)

4,477

 

-

 

10,860

 

-

Movement in inventory

(6,781)

 

-

 

(8,159)

 

-

 

17,126

 

2,780

 

63,415

 

7,844

 

 

 

 

 

 

 

 

The Ogan Komering DD&A charge is based on a units of production basis, during the comparable period.  The PSC expired on May 19, 2018, and the Group no longer holds an interest in the PSC.

 

The right of use assets relates predominately to operating leases previously included in production costs.  Since the implementation of IFRS 16 Leases, these expenses are now recognised as right of use assets, and are capitalised and depreciated over the life of the lease.

 

 

9.  OTHER EXPENSES

 

Three months ended

September 30,

2019

USD'000

 

Three months ended

September 30,

2018

USD'000

 

Nine months ended

September 30,

2019

USD'000

 

Nine months ended

September 30,

2018

USD'000

 

 

 

 

 

 

 

 

Professional fees/consultancies

1,467

 

2,663

 

4,082

 

4,672

Office costs

872

 

739

 

1,831

 

1,683

Travel and entertainment

190

 

245

 

461

 

576

Other expenses

283

 

2,667

 

1,476

 

4,778

 

2,812

 

6,314

 

7,850

 

11,709

 

 

 

 

 

 

 

 

 

10.           OTHER INCOME

 

 

Three months ended

September 30,

2019

USD'000

 

 

Three months ended

September 30,

2018

USD'000

 

 

Nine months ended

September 30,

2019

USD'000

 

 

Nine months ended

September 30,

2018

USD'000

 

 

 

 

 

 

 

 

Interest income

383

 

180

 

961

 

246

Net foreign exchange gain/(loss)

(75)

 

-

 

-

 

45

Miscellaneous income (Note 27)

-

 

-

 

1,445

 

-

 

308

 

180

 

2,406

 

291

 

Miscellaneous income for the nine months ended September 30, 2019 of US$1.4 million arises from a reduction in estimated Stag FSO redundancy payments in Q2 2019.

 

 

11.           IMPAIRMENT OF ASSETS

 

 

Three months ended

September 30,

2019

USD'000

 

 

Three months ended

September 30,

2018

USD'000

 

 

Nine months ended

September 30,

2019

USD'000

 

 

Nine months ended

September 30,

2018

USD'000

 

 

 

 

 

 

 

 

Impairment of intangible exploration assets

-

 

-

 

-

 

11,902

 

The impairment booked in the comparable period relates to the relinquishment of deepwater Block 127 in Vietnam.

 

 

 

 

 

 

 

12.           FINANCE COSTS

 

 

Three months ended

September 30,

2019

USD'000

 

 

Three months ended

September 30,

2018

USD'000

 

 

Nine months ended

September 30,

2019

USD'000

 

 

Nine months ended

September 30,

2018

USD'000

 

 

 

 

 

 

 

 

Interest

1,010

 

142

 

3,756

 

706

Accretion - asset retirement obligations (Note 25)

1,269

 

440

 

4,554

 

964

Accretion - lease payments (Note 28)

1,226

 

-

 

3,271

 

-

Accretion - RBL (Note 29)

374

 

51

 

1,368

 

51

Fair value loss on derivative liability - convertible bond

-

 

(97)

 

-

 

1,196

Accretion - convertible bond

-

 

146

 

-

 

706

Facility fees - convertible bond

-

 

35

 

-

 

98

Other finance costs

634

 

124

 

1,578

 

142

 

4,513

 

841

 

14,527

 

3,864

 

During the current reporting period, the Company paid interest of US$1.0 million related to the reserve based loan ("RBL"), which was drawn down in Q3 2018.  The comparable quarter interest paid of US$0.1 million relates to the convertible bond, which was repaid in August 2018.

 

The lease accretion reflects the finance charge on operating leases due to the adoption of IFRS 16; previously lease payments were treated as a production cost.  

 

 

13.           OTHER FINANCIAL GAINS

 

 

Three months ended

September 30,

2019

USD'000

 

 

Three months ended

September 30,

2018

USD'000

 

 

Nine months ended

September 30,

2019

USD'000

 

 

Nine months ended

September 30,

2018

USD'000

 

 

 

 

 

 

 

 

Change in provisions - contingent payments (Note 7, 27)

871

 

-

 

2,807

 

-

 

 

14.           INCOME TAX (EXPENSE)/CREDIT

 

 

Three months ended

September 30,

2019

USD'000

 

 

Three months ended

September 30,

2018

USD'000

 

 

Nine months ended

September 30,

2019

USD'000

 

 

Nine months ended

September 30,

2018

USD'000

 

 

 

 

 

 

 

 

Current tax

 

 

 

 

 

 

 

  Corporate tax

3,203

 

721

 

31,417

 

1,703

  Petroleum resource rent tax (PRRT)

2,177

 

3,464

 

(3,359)

 

3,464

 

5,381

 

4,185

 

28,058

 

5,167

 

 

 

 

 

 

 

 

 

 

 

Three months ended

September 30,

2019

USD'000

 

 

Three months ended

September 30,

2018

USD'000

 

 

Nine months ended

September 30,

2019

USD'000

 

 

Nine months ended

September 30,

2018

USD'000

 

 

 

 

 

 

 

 

Deferred tax

 

 

 

 

 

 

 

  Corporate tax

(2,578)

 

2,220

 

(12,339)

 

2,518

  PRRT

(55)

 

(218)

 

359

 

244

 

(2,633)

 

2,002

 

(11,980)

 

2,762

Total tax charge for the period

2,748

 

6,187

 

16,078

 

7,929

 

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

 

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 Indonesian corporate income tax rate is applied at 35%, and branch profits tax is applied at 20%.

 

The tax (expense)/credit on Group profit/(loss) differs from the amount that would arise using the standard rate of income tax applicable in the countries of operation as explained below.

 

 

INCOME TAX RECONCILIATION

 

 

Three months ended

September 30,

2019

USD'000

 

 

Three months ended

September 30,

2018

USD'000

 

 

Nine months ended

September 30,

2019

USD'000

 

 

Nine months ended

September 30,

2018

USD'000

 

 

 

 

 

 

 

 

Profit/(loss) before tax on continuing operations

2,767

 

3,232

 

46,219

 

(16,530)

 

 

 

 

 

 

 

 

Tax expense/(credit) calculated at the domestic tax rates applicable to the profit/(loss) in the respective countries (Canada 27%, Australia 30%, Indonesia 48% and Singapore 17%)

871

 

1,486

 

14,618

 

(1,642)

Effect of non-deductible tax expense

294

 

1,525

 

4,908

 

5,861

Others

(539)

 

(70)

 

(448)

 

2

Tax expense for the period

626

 

2,941

 

19,078

 

4,221

 

 

 

 

PRRT TAX RECONCILIATION

 

 

Three months ended

September 30,

2019

USD'000

 

 

Three months ended

September 30,

2018

USD'000

 

 

Nine months ended

September 30,

2019

USD'000

 

 

Nine months ended

September 30,

2018

USD'000

 

 

 

 

 

 

 

 

Profit/(loss) before tax on continuing operations

2,767

 

3,232

 

46,219

 

(16,530)

 

 

 

 

 

 

 

 

Add back losses from operations before tax for activities outside of Australia

1,177

 

4,675

 

7,413

 

22,255

Non PRRT assessable profits

4,621

 

1,857

 

(10,722)

 

7,332

Profit before taxation for activities in Australia

8,565

 

9,764

 

42,910

 

13,057

 

 

 

 

 

 

 

 

PRRT expense calculated at 28%

2,398

 

2,733

 

12,015

 

3,656

Utilisation of PRRT credits

(209)

 

13

 

(15,348)

 

(843)

Other

(67)

 

499

 

333

 

895

Tax expense/(credit) for the period

2,122

 

3,246

 

(3,000)

 

3,708

 

 

 

 

 

 

 

 

 

DEFERRED TAX INCOME STATEMENT RECONCILIATION

 

 

Three months ended

September 30,

2019

USD'000

 

 

Three months ended

September 30,

2018

USD'000

 

 

Nine months ended

September 30,

2019

USD'000

 

 

Nine months ended

September 30,

2018

USD'000

 

 

 

 

 

 

 

 

Income tax

 

 

 

 

 

 

 

Timing differences

(4,635)

 

1,475

 

(19,659)

 

854

Hedging - unrealised loss

(35)

 

(696)

 

(190)

 

(696)

Prepayments

439

 

755

 

-

 

755

Losses

(1,558)

 

686

 

4,253

 

1,605

Other

3,211

 

-

 

3,257

 

-

 

(2,578)

 

2,220

 

(12,339)

 

2,518

 

 

 

 

 

 

 

 

PRRT

 

 

 

 

 

 

 

Unused tax credits

214

 

39

 

735

 

895

Provisions

(269)

 

(256)

 

(376)

 

(651)

 

(55)

 

(218)

 

359

 

244

 

(2,633)

 

2,002

 

(11,980)

 

2,762

 

The above movement in deferred PRRT credits relates to Stag.  The Group has unused PRRT tax credits of approximately US$2.9 billion available for offset against future PRRT taxable profits generated from the Montara field.  No deferred tax asset is recognised, in respect of the Montara PRRT credits, pursuant to IAS12 and LIFO principles, as future augmentation of existing PRRT credits is expected to more than offset any future PRRT tax otherwise due.

 

 

 

 

DEFERRED TAX BALANCE SHEET RECONCILIATION

 

 

 

September 30,

2019

USD'000

 

 

December 31,

2018

USD'000

 

 

 

 

 

Current tax

 

 

 

 

Corporation tax on fixed asset timing differences

 

(63,133)

 

(75,473)

PRRT tax on fixed asset timing differences

 

19,140

 

19,498

 

 

(43,993)

 

(55,975)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income - deferred tax

 

 

 

 

Income tax related to carrying amount of hedged item

 

(5,545)

 

(15,206)

 

 

(49,538)

 

(71,181)

 

 

 

 

 

 

The deferred tax balances in the statement of financial position are based on the following split.

 

 

 

September 30,

2019

USD'000

 

December 31,

2018

USD'000

 

 

 

 

 

Deferred tax liabilities

 

(70,958)

 

(92,468)

Deferred tax assets

 

21,420

 

21,287

 

 

(49,538)

 

(71,181)

 

 

 

 

15.           PROFIT/(LOSS) PER ORDINARY SHARE

 

The calculation of the basic and diluted profit/(loss) per share is based on the following data

 

 

Three months ended

September 30,

2019

USD'000

 

 

Three months ended

September 30,

2018

USD'000

 

 

Nine months ended

September 30,

2019

USD'000

 

 

Nine months ended

September 30,

2018

USD'000

 

 

 

 

 

 

 

 

Profit/(loss) for the purposes of basic and diluted per share, being the net profit/(loss) for the quarter attributable to equity holders of the Company

19

 

(2,955)

 

30,141

 

(24,459)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

September 30,

2019

 

Three months ended

September 30,

2018

 

Nine months ended

September 30,

2019

 

Nine months ended

September 30,

2018

 

 

 

 

 

 

 

 

Weighted average number of ordinary shares for the purposes of basic earnings per share

461,042,811

 

359,392,658

 

461,040,125

 

267,835,396

Effect of dilutive potential ordinary shares

 

 

 

 

 

 

 

- Share options

2,726,334

 

-

 

2,126,197

 

-

Weighted average number of ordinary shares for the purposes of diluted earnings per share

463,769,145

 

359,392,658

 

463,166,322

 

267,835,396

 

 

 

Earnings per share (US$)

 

 

 

Three months ended

September 30,

2019

 

 

 

Three months ended

September 30,

2018

 

 

 

Nine months ended

September 30,

2019

 

 

 

Nine months ended

September 30,

2018

 

 

 

 

 

 

 

 

-  Basic

0.00

 

(0.01)

 

0.07

 

(0.09)

 

 

 

 

 

 

 

 

-  Diluted

0.00

 

(0.01)

 

0.07

 

(0.09)

 

 

The calculation of diluted earnings per share for the nine months ended September 30, 2019 includes 2,126,197 of weighted average dilutive ordinary shares available for exercise from in-the-money vested options (nine months ended September 30, 2018: 300,228 of weighted average potential ordinary shares available for exercise from in-the-money vested options are excluded, as they are non-dilutive given the Group's loss from operations).  Additionally, 607,821 of weighted average potential ordinary shares available for exercise are excluded, as they are out-of-the-money (nine months ended September 30, 2018: 526,467). 

 

The calculation of diluted earnings per share for the three months ended September 30, 2019 includes 2,726,334 of weighted average dilutive ordinary shares available for exercise from in-the-money vested options (three months ended September 30, 2018: 636,056 of weighted average potential ordinary shares available for exercise from in-the-money vested options are excluded, as they are non-dilutive given the Group's loss from operations).  Additionally, 607,821 of weighted average potential ordinary shares available for exercise are excluded, as they are out-of-the-money (three months ended September 30, 2018: 607,821).

 

Additionally, the calculation of diluted earnings per share for the nine months ended September 30, 2018, and for the three months ended September 30, 2018, excludes 66,644,947 and 64,023,510 respectively, of weighted average potential ordinary shares eligible for conversion under the secured convertible bond as they are non-dilutive, given the interest and other costs on the bond per share exceed basic loss per share in each respective reporting period.  The secured convertible bond was fully repaid on August 15, 2018. 

 

 

 

 

 

 

 

 

 

16.           INTANGIBLE EXPLORATION ASSETS

 

 

Total
USD'000

 

 

Cost

 

 

At January 1, 2019

95,607

Additions

8,525

Disposal of exploration assets

-

At September 30, 2019

104,132

 

 

Net book value

 

At December 31, 2018

95,607

 

 

At September 30, 2019

104,132

 

 

Amounts capitalised to exploration for the nine months period were US$8.5 million (December 31, 2018: US$1.8 million), predominantly related to activities on the Nam Du and U Minh assets in Vietnam.

 

 

 

17.           OIL AND GAS PROPERTIES

 

 

 

 

Total

 

 

 

 

USD'000

 

 

 

 

 

Cost

 

 

 

 

At January 1, 2019* (Note 6)

 

 

 

457,818

Changes in asset restoration obligations (Note 26)

 

 

 

8,836

Additions

 

 

 

41,847

At September 30, 2019

 

 

 

508,501

 

 

 

 

 

Accumulated depletion and amortisation

 

 

 

 

At January 1, 2019

 

 

 

(27,625)

Depletion and amortisation for the nine months period (Note 8)

 

 

 

(60,401)

At September 30, 2019

 

 

 

(88,026)

 

 

 

 

 

Net book value

 

 

 

 

At December 31, 2018*

 

 

 

430,193

 

 

 

 

 

At September 30, 2019

 

 

 

420,475

 

* Restated, see Note 6

 

 

 

 

 

 

 

 

 

18.           PLANT AND EQUIPMENT

 

 

 

At January 1, 2019

 

Additions

 

Impairment & disposals

 

At September 30,

 2019

 

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

Cost

 

 

 

 

 

 

 

 

 Computer equipment

 

2,372

 

429

 

-

 

2,801

 Fixtures and fittings

 

1,269

 

49

 

(4)

 

1,314

Total

 

3,641

 

478

 

(4)

 

4,115

 

 

 

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

 

 

 

 Computer equipment

 

991

 

263

 

-

 

1,254

 Fixtures and fittings

 

941

 

50

 

-

 

991

Total

 

1,932

 

313

 

-

 

2,245

 

 

 

 

 

 

 

 

 

Carrying amount

 

1,709

 

 

 

 

 

1,870

 

 

 

 

 

 

 

 

 

 

19.           RIGHT OF USE ASSETS

 

The Group leases several assets including an FSO, helicopters, and buildings, among others.  The leases are under fixed terms of between 12 months to 6 years.

 

 

 

Production assets

 

Transportation and logistics

 

Other

 

Total

 

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

January 1, 2019

 

 

 

 

 

 

 

 

Initial recognition

 

30,226

 

4,893

 

2,901

 

38,020

Total

 

30,226

 

4,893

 

2,901

 

38,020

 

 

 

 

 

 

 

 

 

Additions

 

-

 

38,421

 

-

 

38,421

Depreciation (Note 8)

 

(4,587)

 

(5,975)

 

(298)

 

(10,860)

 

 

 

 

 

 

 

 

 

September 30, 2019

 

25,639

 

37,340

 

2,603

 

65,582

 

 

Right of use additions predominately relates to a helicopter transportation contract that has been recognised as a lease.  The contract has an undiscounted commitment of US$42.4 million over four years, and results in a discounted right of use asset and lease liability (Note 28) of US$37.7 million upon initial recognition.

 

 

 

 

 

 

 

 

 

 

 

20.           INVENTORIES

 

 

 

 

 

September 30,

 

December 31,

 

 

 

 

2019

 

2018*

 

 

 

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Materials and spares

 

 

 

9,174

 

8,955

Crude oil inventory

 

 

 

18,317

 

6,867

 

 

 

 

27,491

 

15,822

 

* Materials and spares restated, see Note 6

 

 

21.           TRADE AND OTHER RECEIVABLES

 

 

 

 

 

September 30,

 

December 31,

 

 

 

 

2019

 

2018

 

 

 

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade receivables

 

 

 

41,382

 

57

Prepayments

 

 

 

12,004

 

26,831

Other receivables and deposits

 

 

 

2,376

 

4,857

PRRT receivables (Note 14)

 

 

 

-

 

700

GST/VAT receivables

 

 

 

741

 

355

 

 

 

 

56,503

 

32,800

 

Trade receivables increased to US$41.4 million due to the latest Montara lifting being completed on August 30, 2019. The receivable was settled on October 1, 2019.  Prepayments as at September 30, 2019, includes US$7.5 million of cash held by PTTEP under the transitional operational arrangements for Montara, which concluded on August 6, 2019.

 

 

22.           CASH AND BANK BALANCES

 

 

September 30,

 

December 31,

 

2019

 

2018

 

USD'000

 

USD'000

 

 

 

 

Current assets

 

 

 

  Cash and bank balances

54,525

 

58,064

  Less: restricted cash

(3,686)

 

             (5,083)

  Cash and cash equivalents

50,839

 

52,981

 

 

 

 

Non-current assets

 

 

 

Cash and bank balances

20,440

 

23,561

  Less: restricted cash

(20,440)

 

          (23,561)

Cash and cash equivalents

-

 

-

 

 

 

 

Cash and cash equivalents in the statement of cash flows

50,839

 

52,981

 

The restricted cash balance includes US$10.4 million of cash held in a debt service reserve account related to the RBL facility.  The current balance of restricted cash of US$3.7 million represents principal and interest that will be released over the next 12 months, with the remainder included in the non-current balance and to be released later in 2020 and in 2021.

 

The Group retains US$10.0 million (December 31, 2018: US$10.0 million) in support of a bank guarantee to a key supplier in respect of Stag's FSO vessel.  This deposit is kept in a specific bank account that has in place certain restrictions that does not allow for the cash to be used for normal operations.

 

 

23.           SHARE CAPITAL

 

Authorised share capital

 

Unlimited number of ordinary voting shares with no par value.

 

 

 

 

 

No. of shares

 

USD'000

 

 

 

 

 

 

 

Issued and fully paid

 

 

 

 

 

 

As at January 1, 2019

 

 

 

461,009,478

 

466,562

Issued during the period

 

 

 

33,333

 

11

As at September 30, 2019

 

 

 

461,042,811

 

466,573

 

The Company has one class of ordinary share.  Fully paid ordinary shares carry one vote per share without restriction, and carry a right to dividends as and when declared by the Company.

 

During the nine months ended September 30, 2019, employee share options of 33,333 were exercised and issued at a price of CAD 0.47 per share.

 

 

24.           HEDGING RESERVES

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

USD'000

 

 

 

 

 

 

 

As at January 1, 2019

 

 

 

 

 

        (35,480)

Loss arising on changes in fair value of hedging instruments during the period

 

20,854

Income tax related to gain recognised in other comprehensive income

 

(6,256)

Gain reclassified to profit or loss

 

 

 

 

 

11,354

Income tax related to amounts reclassified to profit or loss

 

 

 

(3,406)

As at September 30, 2019

 

 

 

 

 

(12,934)

 

There was no hedging reserve, or movement, in the comparative period ended September 30, 2018.

 

 

25.           SHARE BASED PAYMENTS RESERVE

 

The total expense arising from share-based payments recognised for the nine months ended September 30, 2019 was US$1.1 million (September 30, 2018: US$0.5 million).

 

The Black-Scholes option-pricing model, with the following assumptions, was used to estimate the fair value of the options at the date of grant.

 

 

 

 

 

Options granted on

 

March 29,           2019

 

July 29,
2018

 

March 29,          2018

 

December 10,    2017

 

 

 

 

 

 

 

 

Risk-free rate

1.46% to 1.47%

 

2.23% to 2.26%

 

1.99% to 2.04%

 

1.68% to 1.72%

Expected life

5.5 to 6.5 years

 

5.5 to 6.5 years

 

5.5 to 6.5 years

 

5.5 to 6.5 years

Expected volatility

42.3% to 39.9%

 

44.7% to 43.2%

 

43.1% to 44.1%

 

43.2% to 43.9%

Share price

C$0.85

 

C$0.61

 

C$0.43

 

C$0.42

Exercise price

C$0.85

 

C$0.61

 

C$0.50

 

C$0.45

Expected dividends

Nil

 

Nil

 

Nil

 

Nil

 

The following table summarises the share options outstanding and exercisable as at September 30, 2019:

 

 

Share options

 

 

 

Weighted

 

Weighted

 

 

 

 

 

average

 

average

 

Number of

 

Number of

 

exercise

 

remaining

 

options

 

options

 

price, C$

 

contract life

 

exercisable

 

 

 

 

 

 

As at January 1, 2019

12,132,821

 

0.56

 

8.50

 

3,232,809

Vested during the period

-

 

0.50

 

7.90

 

3,816,651

Exercised during the period

(33,333)

 

0.47

 

N/A

 

(33,333)

Cancelled during the period

(306,667)

 

0.48

 

N/A

 

(113,333)

New options granted

8,000,000

 

0.85

 

9.49

 

-

As at September 30, 2019

19,792,821

 

0.68

 

8.46

 

6,902,794

 

 

 

 

 

 

 

26.           PROVISION FOR ASSET RESTORATION OBLIGATIONS

 

 

 

 

 

September 30,

 

December 31,

 

 

 

 

2019

 

2018

 

 

 

 

USD'000

 

USD'000

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

January 1,

 

 

 

277,697

 

          84,728

Acquisition of Montara

 

 

 

-

 

            183,020

Accretion expense

 

 

 

4,554

 

                3,632

Changes in discount rate and FX assumptions

 

8,836

 

                6,353

Other

 

 

 

-

 

                   (36)

September 30, 2019

 

 

 

291,087

 

        277,697

 

The Group's asset restoration obligations ("ARO") result from the future estimated costs to decommission each of the Stag and Montara assets.

 

In accordance with IAS37, the carrying value of the ARO provision comprises the discounted present value of the estimated future costs.  The present value of the future estimated ARO costs for each of the Stag and Montara assets, has been calculated based on blended risk-free rates set at the same rate as the estimated inflation rates of 2.26% and 2.14% respectively (December 31, 2018: Stag - 2.49%, Montara - 2.58%).

 

Management expects decommissioning expenditures to be incurred from 2032 onwards.

 

 

27.           OTHER PAYABLES

 

 

 

 

 

September 30,

 

December 31,

 

 

 

 

2019

 

2018

 

 

 

 

USD'000

 

USD'000

 

 

 

 

 

 

 

Stag FSO redundancy payments (Note 10)

 

 

 

5,251

 

6,603

Montara contingent payments (Notes 7, 35)

 

 

 

940

 

3,748

 

 

 

 

6,191

 

10,351

 

 

28.           LEASE LIABILITIES

 

 

September 30,

Statement of financial position

2019

 

 

Current lease liabilities

20,122

Non-current lease liabilities

47,692

 

67,814

Reconciliation to operating lease commitments

 

 

 

Operating leases included in commitments as at December 31, 2018

44,447

Discounting

(6,427)

Additional lease liabilities recognised on January 1, 2019 due to the adoption of IFRS 16

38,020

 

 

 

 

 

 

 

 

 

 

Nine months ended

Statement of profit or loss

 

 

 

 

 

 

 

September 30, 2019

 

 

 

 

 

 

 

 

 

Interest expense on lease liabilities

 

 

 

 

 

 

 

1,323

Expense relating to short term leases

 

 

 

 

 

 

 

1,948

Accretion lease payment (Note 12)

 

 

 

 

 

 

 

3,271

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended

Statement of cashflows

 

 

 

 

 

 

 

September 30, 2019

 

 

 

 

 

 

 

 

 

Total cash flow used for leases

 

 

 

 

 

 

 

11,653

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29.           BORROWINGS

 

 

 

 

 

September 30,

 

December 31,

 

 

 

 

2019

 

2018

 

 

 

 

USD'000

 

USD'000

 

 

 

 

 

 

 

Non-current secured borrowings

 

 

 

 

 

 

 Reserve based lending facility

 

 

 

17,306

 

49,420

 

 

 

 

17,306

 

49,420

 

 

 

 

 

 

 

Current secured borrowings

 

 

 

 

 

 

 Reserve based lending facility

 

 

 

43,445

 

51,114

Current unsecured borrowings

 

 

 

 

 

 

 Other

 

 

 

-

 

1,279

 

 

 

 

43,445

 

52,393

 

On August 2, 2018, the Company entered into an RBL agreement to borrow US$120.0 million to partly fund the Montara acquisition (Note 7).  The loan is secured against the Montara Assets, and is repayable in quarterly tranches from December 31, 2018 until March 31, 2021.  The loan incurs interest at 3% above LIBOR.

 

During the nine months period ended September 30, 2019 the Company repaid US$1.3 million of unsecured borrowings associated with Stag insurance premiums.

 

 

30.           TRADE AND OTHER PAYABLES

 

 

 

 

 

September 30,

 

December 31,

 

 

 

 

2019

 

2018

 

 

 

 

USD'000

 

USD'000

 

 

 

 

 

 

 

Trade payables

 

 

 

6,093

 

7,178

Other payables

 

 

 

6,726

 

8,993

Accruals

 

 

 

17,635

 

5,484

Provision for long service leave

 

 

 

714

 

722

Other provisions

 

 

 

4,126

 

9,117

 

 

 

 

35,293

 

31,493

 

These amounts are non-interest bearing.  The Group believes that the carrying amount of trade payables approximates their fair value.

 

 

31.           DERIVATIVE FINANCIAL INSTRUMENTS

 

The Group uses derivatives to manage its exposure to oil price fluctuations.  Oil price hedges are undertaken using swaps and call options using fixed price sales contracts.  All contracts are hedged using Dated Brent oil price benchmarks.  The Group has designated the Montara capped swap as a cash flow hedge of highly probable sales.

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

 

 

2019

 

2018

 

 

 

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Designated as cash flow hedges

 

 

 

 

 

 

Commodity capped swap

 

 

 

18,483

 

51,324

 

 

 

 

 

 

 

Analysed as:

 

 

 

 

 

 

Current

 

 

 

17,356

 

35,985

Non-current

 

 

 

1,127

 

15,339

 

 

 

 

18,483

 

51,324

 

 

 

 

 

 

 

 

Contract quantity

 

Type of contract

 

 

Term

 

Contract price

Hedge classification

 

 

 

 

 

 

 

 

 

Swaps cover 50% of Montara's planned 2PD production

 

Calls cover 66% of swapped volumes

 

Commodity capped swap

 

Oct 2018 - Sep 2020

 

Swap component: US$74.22/bbl in January 2019 through to US$66.62/bbl in September 2020

 

Call component: US$80.00/bbl from January 2019 to September 2019, US$85.00/bbl from October 2019 to September 2020

 

Cash flow

 

 

 

 

 

 

 

 

 

 

During the nine-month period ended September 30, 2019, the fair value of the capped swap declined by US$32.8 million. This decline was largely due to the decrease in future Dated Brent oil prices, over the term of the swap.  US$20.9 million of the decline was directly due to the revaluation of hedge contracts and was recorded in other comprehensive income (Note 24).  US$0.6 million was due to the ineffective portion of the capped swap and was recorded in finance cost (Note 12).  US$11.4 million of the decline was related to hedge contracts settled in the period, and included in revenue (Note 4).

 

 

32.           BUSINESS RISKS AND UNCERTAINTIES

 

The Company has processes and systems in place designed to identify the principal risks of the business and has established what is considers reasonable mitigation strategies wherever possible.

 

For detailed analysis of how the Company manages its business risks and uncertainties see the Company financial statements for the year ended December 31, 2018. 

 

The operational and environmental risks have not materially changed since December 31, 2018.

 

 

33.           FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENTS

 

For a detailed analysis on how the Company manages its financial instruments, financial risks and capital management, see the annual financial statements for the year ended December 31, 2018.

 

The financial risks, instruments and capital market strategies have not materially changed since December 31, 2018.

 

Capital management

 

The Group manages its capital structure and makes adjustments to it, based on the funds available to the Group, in order to support the acquisition, exploration and development of resource properties and the ongoing operations of its producing assets.

 

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Group, is reasonable.  There were no changes in the Group's approach to capital management during the nine-month period ended September 30, 2019.

 

 

 

 

 

September 30,

 

December 31,

 

 

 

 

2019

 

2018

Gearing ratio

 

 

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt (Note 29)

 

 

 

               60,751

 

            101,813

Cash and cash equivalents (Note 22)

 

 

 

            (54,526)

 

            (52,981)

Restricted cash (Note 22)

 

 

 

(10,440)

 

            (18,644)

Net (cash)/debt

 

 

 

           (4,215)

 

          30,188

Equity

 

 

 

             223,948

 

            215,261

Net debt to equity ratio

 

 

 

N/M

 

14%

 

Debt is defined as long and short-term borrowings (excluding derivatives) as defined in Note 29.  Cash and cash equivalents include the Montara Assets' minimum working capital cash balance of US$15.0 million required under the RBL, while restricted cash comprises the US$14.1 million in the RBL debt service reserve account as at September 30, 2019.  Restricted cash, as shown here, excludes the US$10.0 million deposited in support of a bank guarantee to a key supplier in respect of the Stag FSO.

 

 

34.           SEGMENT INFORMATION

 

Revenue and balance sheet information is based on the geographical location of assets as follows:

 

 

Nine months ended September 30, 2019

 

Producing assets

 

Exploration

 

 

 

 

 

Australia

 

SEA

 

SEA

 

Corporate

 

Total

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

 

Revenue

234,206

 

-

 

-

 

-

 

234,206

 

 

 

 

 

 

 

 

 

 

Production cost

(94,022)

 

-

 

-

 

-

 

(94,022)

DD&A

(63,072)

 

-

 

-

 

(343)

 

(63,415)

Staff costs

(4,911)

 

(747)

 

(853)

 

(6,875)

 

(13,386)

Other expenses

(7,912)

 

(114)

 

(320)

 

496

 

(7,850)

Other income

956

 

-

 

-

 

1,450

 

2,406

Finance costs

(14,414)

 

-

 

-

 

(113)

 

(14,527)

Other financial gain

2,807

 

-

 

-

 

-

 

2,807

Profit/(loss) before tax

53,638

 

(861)

 

(1,173)

 

(5,385)

 

46,219

 

 

 

 

 

September 30, 2019

 

Producing assets

 

Exploration

 

 

 

 

 

Australia

 

SEA

 

SEA

 

Corporate

 

Total

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

 

Additions to non-current assets

57,026

 

-

 

8,525

 

23

 

65,574

 

 

 

 

 

 

 

 

 

 

Total assets & liabilities

 

 

 

 

 

 

 

 

 

Current assets

146,760

 

137

 

-

 

8,978

 

155,875

Non-current assets

529,882

 

-

 

104,132

 

1,032

 

635,046

Current liabilities

(128,052)

 

(112)

 

-

 

(5,576)

 

(133,739)

Non-current liabilities

(433,234)

 

-

 

-

 

-

 

(433,234)

Net assets

115,356

 

25

 

104,132

 

4,435

 

223,948

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30, 2018

 

Producing assets

 

Exploration

 

 

 

 

 

Australia

 

SEA

 

SEA

 

Corporate

 

Total

 

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

61,153

 

7,299

 

-

 

-

 

68,452

 

 

 

 

 

 

 

 

 

 

 

 

Production cost

(36,954)

 

(3,383)

 

-

 

-

 

(40,337)

 

DD&A

(7,110)

 

(657)

 

-

 

(77)

 

(7,844)

 

Staff costs

(1,798)

 

(1,470)

 

(553)

 

(5,796)

 

(9,617)

 

Other expenses

(5,301)

 

(153)

 

(184)

 

(6,071)

 

(11,709)

 

Other income

105

 

(4)

 

-

 

190

 

291

 

Impairment of asset

-

 

-

 

(11,902)

 

-

 

(11,902)

 

Finance costs

(2,413)

 

(32)

 

-

 

(1,419)

 

(3,864)

 

Profit/(loss) before tax

7,682

 

1,600

 

(12,639)

 

(13,173)

 

(16,530)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

Producing assets

 

Exploration

 

 

 

 

 

Australia

 

SEA

 

SEA

 

Corporate

 

Total

 

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

USD'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additions to non-current assets

360,774

 

-

 

1,835

 

1

 

362,610

 

 

 

 

 

 

 

 

 

 

 

 

Total assets & liabilities

 

 

 

 

 

 

 

 

 

 

Current assets*

133,349

 

345

 

417

 

8,560

 

142,671

 

Non-current assets*

491,809

 

-

 

95,607

 

280

 

587,696

 

Current liabilities

(80,687)

 

(93)

 

(737)

 

(3,653)

 

(85,170)

 

Non-current liabilities

(429,936)

 

-

 

-

 

-

 

(429,936)

 

Net assets

114,535

 

252

 

95,287

 

5,187

 

215,261

 

 

 

 

 

 

 

 

 

 

 

 

                                   

Non-current assets include oil and gas properties, intangible exploration assets and property plant and equipment used in corporate offices. (* Materials and spares restated, see Note 6)

 

35.           CONTINGENT LIABILITIES

 

Stag

The Group may be responsible for certain contingent payments of up to US$10 million linked to future expansion of the Stag Oilfield.  At this time, Jadestone's management does not consider it probable that the conditions necessary to trigger the contingent payments will occur.  Accordingly, as at September 30, 2019, no provision has been recognised in the financial statements.

 

Montara

The Group may be responsible for certain contingent payments of up to US$130 million linked to oil price appreciation, and/or volumes of production from the first infill well in its first year, and/or future expansion of the Montara Assets (see also Note 7).  At this time, Jadestone's management only considers the contingent payments of up to US$30.0 million linked to oil price appreciation above US$80/bbl in 2019 and/or in 2020 as probable, while also noting the uncertain nature of future changes in oil prices; in this case future prices of Dated Brent.  Accordingly, the fair value of the two oil price linked contingent payments of up to US$30.0 million is recognised as a payable (Note 27), and the remaining US$100.0 million of contingent payments has not been recognised in the financial statements.

 

 

36.           RELATED PARTY TRANSACTIONS

 

During the period, the Group entities did not enter into transactions with related parties, other than the following:

 

Compensation of key management personnel

 

 

Three months ended

September 30,

2019

USD'000

 

 

Three months ended

September 30,

2018

USD'000

 

 

Nine months ended

September 30,

2019

USD'000

 

 

Nine months ended

September 30,

2018

USD'000

 

 

 

 

 

 

 

 

Short-term benefits

1,505

 

1,672

 

3,664

 

3,468

Other benefits

208

 

461

 

711

 

716

Share based payments

273

 

173

 

642

 

297

 

1,986

 

2,306

 

5,017

 

4,481

 

 

37.           EVENTS AFTER THE REPORTING PERIOD

 

Transfer of remaining 1% title interest in Montara titles

 

The transfer of operatorship at Montara was completed on August 6, 2019, following the acceptance by NOPSEMA, the safety regulator in Australia, of the Company's safety case.  The Company received a 99% interest in the Montara titles on May 30, 2019, with the final 1% approved by NOPTA on October 1, 2019. 

 

Acquisition of a 69% stake in the Maari oil complex

 

On November 16, 2019, a wholly owned subsidiary of the Company signed a binding asset sale and purchase agreement to purchase a 69% operated interest in the Maari oil complex from OMV New Zealand Limited, a subsidiary of OMV AktiengesellschaftThe headline purchase consideration is US$50.0 million, with an economic effective date of January 1, 2019.  If Dated Brent averages US$75/bbl or more in 2020, then a further US$2.6 million is payable, and US$1.3 million if Dated Brent averages US$75/bbl or more in 2021.  The Maari oil complex is currently free cashflow positive, with 2P reserves of 13.9mm bbls and recent production of 4,000 - 4,500 bbls/d (both net to 69% working interest).

 

The transaction is expected to close in H2 2020 and will be funded from Company cash available on hand.  Completion will occur upon satisfaction of conditions, including acceptance of Jadestone as operator by the Maari joint venture partners, New Zealand Government approvals relating to title transfer and change of operatorship and other customary conditions.  OMV will continue as operator until the transaction completes in H2 2020.

 

 

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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