Jadestone Energy (JSE) is pleased to announce an agreement to acquire an interest in Peninsular Malaysia – and we can understand why. It is an initial $9 million agreement, with a further up to $6 million payable on certain upside scenarios which are tied to potential full year oil price outcomes in 2021 and 2022 and Jadestone to undertake the abandonment of facilities and wells.
The company though emphasises the move as “increases the company's 2P reserves by 34%, adding 12.5 million barrels oil equivalent of net working interest 2P reserves” and “adds immediate cash flow from around 6,000 barrels oil equivalent per day of low operating cost production, on a net working interest basis, of which over 90% is oil… Provides upside potential through reservoir optimisation opportunities, additional infill wells and cost efficiencies”.
We previously noted Jadestone’s 2021 outlook was for average crude oil production of 11,500-13,500 bbls/d at average unit production costs of $25.50-29.50/bbl, so the acquisition would be a very meaningful addition and the company believes it will be value accretive “within the year”. That is with the seller, SapuraOMV, focusing on its core gas resources, whilst Jadestone’s experienced CEO Paul Blakeley adds that the move also “sets the stage for us to establish operating credentials in-country while we continue pursuing more materiality and growth through our acquisition and development led strategy”.
With a more than doubling of net cash to $82.1 million in even the troubled last year comparing to a circa £315 million, currently approx. $435 million, market cap, we look for Jadestone’s development combining with an improving industry outlook as more normalised demand returns to see the shares back above 90p. Although they’ve responded well to the latest, at still below 70p still a buy.
This first appeared on the N50 website which Tom Winnifrith runs with Steve Moore & Lucian Miers. To access the website for a new share tip from Tom & Steve OUT JUST LAST FRIDAY AFTERNOON and a new shorting piece this week click HERE
Filed under: Jadestone Energy, Powerhouse, Tim Yeo, Iconic Labs, Hotel Chocolat, Greggs, Physiomics
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