Proactive Investors - Market Update: 25 April 2023
Jadestone Energy PLC - Dividend declaration deferred to May
PetroTal Corp - Increases 2023 FCF estimate
Energy News:
Brent Oil US$82.8/bbl vs US81.3/bbl yesterday
Crude Oil WTI US$79.0/bbl vs US$77.8/bbl yesterday
Henry Hub Gas US$2.23/mmBtu vs US$2.20/mmBtu yesterday
UK NBP Futures 95p/therm vs 95p/therm yesterday
Dutch TTF Natural Gas Futures €40/MWh vs €40/MWh yesterday
- Crude oil prices edged higher despite continued uncertainty on the outlook for the global economy and refined product demand.
- Spot European energy prices are currently trading at the equivalent of $68/bbl in the UK and $61/bbl on the Continent, below the price of Brent crude but still significantly higher than the $13/bbl price of US HH gas.
Company News
Jadestone Energy PLC 59.2p, Market Cap £264m: Dividend declaration deferred to May
- Jadestone Energy (LON:JSE) reported average FY22 production of 11.5kboe/d generating $422m revenues, $162m adjusted EBITDA and an $8.5m profit, to finish the year with $123m net cash.
- The Company confirmed 1Q23 average net production of ~10kboe/d and reiterated guidance to average production of 13.5-17kboe/d for the remaining 9M of 2023 (85% oil).
- Jadestone expects that the Malaysia infill well campaign in 2H23 plus the addition of Akatara production commencing during 1H24 should add a further 5kboe/d to Group volumes.
- The Company commented that a recommendation on the final dividend for 2022 will be made when the audited accounts are released in late-May 2023.
While the massive investment programme and completion of the Sinphuhorm acquisition will likely push Jadestone into a net debt position in 2H23, the Company’s new RBL facility should provide additional flexibility ahead of the start-up of Akatara returning the balance sheet to net cash by the end of 2024. The news flow from the Montara FPSO shutdown and refurbish has dominated sentiment in recent months, and with production resumed we now expect investor focus to transfer to operational and M&A catalysts. Near-term organic growth from the Akatara project remains on track plus an infill drilling programme in Malaysia, but it is the M&A opportunity set in Southeast Asia that holds the most potential for Jadestone to make a significant step-change to the investment case.
PetroTal Corp 47.4p, Market Cap £419m: Increases 2023 FCF estimate
- Petrotal (LON:PTAL) reported average 1Q23 production up 17% q/q to 12.2kb/d and delivered total sales of 21.5kb/d in March, achieving over 20kb/d of production from the Bretana field (100% WI) for the last 60 consecutive days.
- The Company said the newly drilled 14H well is currently producing at a constrained rate of c.3kb/d, and drilling operations have commenced on the 15H well, which is expected to be completed in mid-June.
- PetroTal announced $56m of unrestricted cash and $15m of restricted cash for a total of $71m net cash at end 1Q23. Restricted cash includes amounts reserved for the social trust funds to be deposited at a later date.
- The Company reiterated FY23 production guidance of between 14-15kb/d and $220m EBITDA, but increased free cash flow guidance by $30m to $85m as a result of adjustments to tax loss pools available to carry forward.
A positive operational and financial update from PetroTal, which has repaid the outstanding debt and will commence cash returns to shareholders in 2Q23 through a share buyback and dividend programme. This comes despite the Company’s operations being significantly impacted by domestic political actions this past year, with PetroTal bolstering its barging capacity to remain in a flexible operating position and in robust financial health. The Northern Peruvian Pipeline (ONP) has now resumed pipeline operations after over a year of being shut down for maintenance and social unrest related reasons, which may allow PetroTal to surpass the previous production record of 26kb/d in the near term. Investment in new wells and facilities continue to add reserves and long-term value to the asset, from which the Company expects to generate free cash flow for the next 20 years.
Research
David Mirzai – David.Mirzai@spangel.co.uk – 0203 470 0473
Sales
Richard Parlons – Richard.Parlons@spangel.co.uk - 0203 470 0472
Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471
Rob Rees – Rob.Rees@spangel.co.uk - 0203 470 0535
Abigail Wayne – Abigail.Wayne@spangel.co.uk - 0203 470 0534
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+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.
Sources of commodity prices
Oil Brent - ICE
Natural Gas - NYMEX
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