Jadestone Energy (LSE:JSE) — Investor Presentation

0:00 Good morning, and welcome to the JADESTONE ENERGY PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to you over to Paul Blakely,

0:31 CEO. Good morning, sir. Very good. Thank you indeed, Lily. And ladies and gentlemen, good morning or good afternoon, and thank you for joining this presentation on the investor meet company platform. I'm Paul Blakely, JSEON's CEO, and I'm joined today by our CFO, Bertjarp Dexter.

0:58 It's been a while since we hosted an event directly focused on the retail and private investment community and our apologies for that. And we're committed to get back to more regular dialogue with you going forward. In particular, I know that many of you listening in today along with the wider retail community have been focused on the events of recent months, which have reached ahead in last month's equity placing. This has raised a lot of questions, which I hope we can address during the presentation and the subsequent question and answer session as we look to reset the investment case after a very difficult period for JADESTONE. But first, we'll just take you through a presentation which has been uploaded to the IMC platform and which you can all now hopefully see on the screen.

1:52 We'll then take questions starting with those which were submitted through the platform over the past week followed by those which are submitted during the presentation. And as Lily suggested, I mean, we're going to do our best to answer all the questions within the scheduled sixty minutes. But if we run out of time we'll follow-up with written responses. So just moving on to slide two which really lays out the standard disclaimers. Just a quick reminder about the cautionary remarks regarding forward looking statements and non IFRS measures that are used in the presentation. And with that, let's move on to slide three. This is just an introductory slide for myself and Bert Jaap emphasizing our experience.

2:46 But I'd also like to make the point that there is a lot of talent and experience within the organization in each country where we operate. We seek to attract local talent where possible and have been successful in retaining very high caliber individuals from larger companies for whom E and P growth has become increasingly deemphasized. And we bolster this with some global expertise, deeply skilled in our second phase or midlife operation strategy, some from Talisman Energy, my former company, but particularly sourced from more mature hydrocarbon provinces, such as the North Sea, Canada and elsewhere.

3:35 We also announced at the end of June an intent to add a Chief Operating Officer to the senior management team. This responds to the continued growth of the business and a greater need for more detailed oversight and management as the portfolio expands, centralizing responsibility for operational delivery. I honestly believe we have a team capable of taking on most asset opportunities and successfully delivering value upside through both investment activity and efficiency initiatives. And we hope over the years ahead, we'll prove that to you all.

4:16 Okay. Now let's move to slide four. And we're going to put this on full screen to make it easier for you to see. This highlights the growth of the business with some key statistics on reserves and resources. A key near term objective is to significantly diversify our asset base and geographical concentration. Also diversify the oil and gas mix and price exposure. And this will deemphasize the importance of Montara, especially once Acatara is on stream next year when we'll have seven producing assets across four countries.

5:04 Combined with our discoveries in Vietnam, this represents a total 2P reserves and 2C resource base of 175,000,000 BOEs a day. And it feels pretty clear that the value of this reserves and resource base and the potential growth it implies and value it creates is simply not reflected in our current market valuation. And of course, that's what we now need to address.

5:35 Turning to slide five, which sets out the thesis for our investment case in the near term and how we plan to deliver short term growth in production and cash flow, deleveraging the balance sheet and returning to a net cash position as quickly as we can. The immediate production growth comes from the restart and stable production at Montara, a full year of production from the stag wells, which were drilled late last year. The initial equity interest in CWLH and the subsequent purchase of equity in Sinfahorn, plus the upcoming East Belamut infill drilling campaign, which starts next month.

6:22 And this increase in production will be further bolstered next year once the Akhatara development comes on stream in the first half. You can also expect further drilling in Malaysia going forwards as well as at Stag, Montara and more through 2025 and into 2026 as well. And while not yet a promise, there are other potential organic development projects like PNLP in Malaysia, which is the former OBO assets within the OMV Sapura OMV asset acquisition we made in 2021 as well as gas developments in Vietnam, which could drive further growth in the out years.

7:11 While being especially careful in the short term with cash balance being a critical factor, we can still enhance this growth through acquisitions, which can potentially be funded through the RBL. Though conservative, the banks also want to see us grow. And with careful planning, acquisitions such as CWLH and Symphohorm, for example, can be funded through the RBL. Simphohorm, for example, adding more borrowing base than we paid for the asset at closing. And finally here, we also want to point out we're working to do all of this in a responsible way with a focus on safe operations while reducing our environmental footprint to as low as we reasonably can while working hard to maintain our current clean HSE scorecard.

8:09 Slide six briefly showcases some of the investment options as we search out for compelling acquisitions and then find ways to add reserves, value and extend field life. Typically, we look for 30% returns at acquisition or more and the follow on investments are often 100% IRRs as they pay back within months rather than years. Cash generation is significant and it's a business model which is predisposed to shareholder returns. Importantly, the broadening portfolio will in turn place far less reliance on Montera and events, of course, such as the recent extended shutdown.

8:57 And this provides resilience, reduces the risk of being knocked off course. And that's why portfolio expansion into multiple jurisdictions and with the addition of fixed price gas streams such as at Simphohorm and Akatara provide increasing diversity, which in turn adds far greater business strength, a key short term objective.

9:24 And now moving on to slide seven, where this and the next few slides provide some select highlights on assets where current activity is driving growth. I haven't included details on STAG or Symphorrome largely because they're delivering to expectations. So let's just start with Montara, where after securing Tank 2C, we completed an early phase of tank restoration, an extensive four yearly maintenance campaign and now production has been restored broadly to pre shutdown levels. The tank reinstatement activities shown on the bottom signal a measured approach with a thorough tank by tank visual inspection program.

10:15 With phase one now complete, we're focused on water ballast tanks, which is a current priority activity for class recertification in parallel with crude oil storage tank 1C. The latter is expected on stream by the end of this month. And then systematically, we'll just work our way to returning to a six or seven crude oil tank operation, which will restore full size parcels of crude for offload.

10:44 And in the meantime, we're selling smaller volumes and have used a standby shuttle tanker as a temporary storage facility to ensure no disruption to production operations. This has now been taken off hire, by the way, with a recent offload cargo, but we're still working on the options for the remainder of the year aimed at maximizing flexibility and minimizing cost. The operations team's objectives here are pretty clear. It's a constant focus on safe production operations along with high uptime and a ruthless control of costs, and we'll do all we can to support their delivery in this.

11:30 Moving to slide eight. This provides a summary of the Peninsula Malaysia operated assets which were acquired in August 2021. The team have been working hard to reduce downtime and decline rates of the fields with our first infill drilling campaign on East Belamut scheduled to start next month. And if successful, we'll likely see production restored back to the level at the time of the acquisition. As part of our emission strategy, these assets have also been identified as candidates for effective investments to mitigate greenhouse gases. And the right hand side of this slide sets out some of the initiatives that are currently underway.

12:17 The Akatara project now shown on slide nine is currently have I moved one slide too far? Slide 10. Okay, they've reversed. Let's talk about Akatara first. Thanks very much on this slide. It's currently just over 40% complete and we've summarized the economic return of what is our first new development within JADESTONE. The team carrying out the project, though, has many years of experience of this type of activity in Indonesia from past talisman energy days, but it still represents a really exciting milestone for us.

13:07 Costs are largely constrained through a fixed price lump sum contracting strategy. And with up to 750 people on-site, progress has been good while achieving over 1,900,000 man hours of safe working. Long lead items such as compressors and generators are usually the high risk items that can impact schedule. But these are all well under control following factory acceptance testing and they are expected to be delivered two months early into the region. The economic summary on the left reinforces the significant early cash generation, which under the PSC regime, production sharing contract regime, allows recovery of all costs, both past and current project costs, to be recovered on an accelerated basis.

14:07 This drives high IRRs and is a big contributor to a very rapid deleveraging of JADESTONE's balance sheet. We're also excited by potential subsurface upside in the Akatara Reservoir beyond the current contracted volumes, and we're working towards an incremental sales contract over the first few years. I think now let's just pause and perhaps we can watch a short video clip of progress at site today. Okay. Thanks.

15:30 The full version of that clip is already on our website, and we do provide monthly updates. And I recommend that you can keep tabs on progress on the project by viewing those from time to time. Can we move back to CWLH now? Thanks. This is just a recap of the Cossack, Wenea, Lambert, and Hermes fields, which were acquired from BP. Strategically, this is a very high quality asset with nearly 900,000,000 barrels of oil originally in place and with low decline rates.

16:26 To put that in context, that's almost six times larger oil in place volume than at the Montara fields. There's significant upside through further infill drilling, and our focus is on addressing the current partnership structure to give us the best chance of allowing that to happen. The potential upside led to a net 6,500,000 barrels or around 40,000,000 barrels of gross contingent resource booking at the year end 2022, which if we can deliver that could double the 2P reserves.

17:05 The transaction was completed in November last year for a net receipt of $6,000,000 plus an immediate 650,000 barrel crude oil parcel, which was sold for proceeds of $56,000,000 net to JADESTONE. This covered the first 50% of decommissioning security and more. And following closing of the RBL, we have now paid the second 41,000,000 of decommissioning trust funding to complete the entire funding of decommissioning. This results in a forward cash flow stream from CWLH, which is unencumbered by DCOM costs and therefore generating a very high forward valuation, which translates to a high borrowing capacity, which is very helpful in the context of the RBL structure.

17:58 And we'd very much like to do more here and they're working hard to expand our position in the asset. Now moving on to the next slide, which is the Peninsula Malaysia assets. The former non operated assets which were acquired in 2021 as part of the overall Sapura OMV package. At the time, they did not have much value attributed to them due to their non operated and very late life nature and with the PSC expiry due in 2024. So at acquisition, they were producing approximately 1,000 barrels a day net to JADESTONE And, of course, as you know, we're shut in since February last year following the class suspension of the Bunga Curtis FPSO.

18:54 The operator has recently decided to withdraw, and we have assumed operatorship of the interests for continuity and efficiency with our existing neighboring operated portfolio. Based on our internal studies, we believe there may be a very attractive redevelopment opportunity. And last week, we submitted a proposal to the Malaysian upstream regulator.

19:17 This is the beginning of a negotiated process over redevelopment plan and fiscal terms. There's potential for significant value generation, but there are a number of hurdles, and we would expect to have more to say later in the year. In the meantime, the previous operator is responsible for removing the FPSO and towing it to a shipyard in Malaysia next month. And once there, it will undergo repairs before being handed back to its owner later in the year. The net share to JADESTONE of this work is around $15,000,000 although we expect to recoup a lot of that through existing decommissioning CESS funds, which would likely pay out in 2024.

20:02 And now to the next slide, which illustrates the potential production growth and diversification from both committed investments and opportunities in our portfolio over the next two to three years. It also shows the shift from a very limited asset base on the left to a much broader portfolio on the right.

20:24 With a further small strategically targeted m and a opportunity, which should fit well within the borrowing base currently in the partner consent phase. In addition, there's the possible redevelopment of PNLP as I've just described. And then there's the potential in Vietnam where we see some momentum on the Namzhou and New Min gas development.

20:53 Overall, in summary, following a very difficult period for us, the outlook for short term growth, increasing diversity within the portfolio and growing cash flow is a very positive outlook overall. And we're working hard to deliver on all of this in order to restore investor confidence. And so with that now, I'm going to hand over to Bert Jaap to talk you through the RBL and the financial projections. Bert Jaap? Thank you, Paul. Good morning or afternoon to all of you. On this slide, I would like to discuss the RBL because its structure and temporary dip in availability at the beginning of next year based on the current banking model has been a focus for many of you listening in today.

21:41 First and foremost, we were very pleased to close the RBL with four international banks for a total of $200,000,000 in support of JADESTONE's growth ambitions. The RBL Bank's CSS responsible operator likely taking a lead role in consolidating midlife assets in the region. They also like our commitment to transparency, high standards of governance and our ESG positioning. The RBL supports JADESTONE's significant investment program, including funding the acquisition of producing assets. Total debt capacity is established in biannual redeterminations and is initially $200,000,000 This capacity is projected to decrease to around $90,000,000 at the start of the second quarter of twenty twenty four. In the third quarter of that year, assuming a successful completion test, Akatara would be integrated in the borrowing base as producing asset with availability increasing again to $200,000,000 Akatara's contribution is constrained at 40% of the total producing assets contribution until that completion test is passed.

22:48 Closing of the RBL occurred days before the 2022 results were due to be published. The RBL was, of course, an important element for the auditors' going concern statement. The RBL closed much later than we planned due to the continued slippage in the restart and stabilization of Montera, which was a milestone required by the banks to be able to close the RBL. This slippage significantly eroded our liquidity position going into the RBL. Also, in the final run up to closing of the RBL, oil prices had come down, which decreased the borrowing capacity at the low point in the second quarter of twenty twenty four and as such, increased the forecasted temporary liquidity shortfall in our final banking model.

23:33 This shortfall was not unexpected, and management believed and still believes that we have mitigants to close this gap, especially given its temporary nature. However, executing these mitigants will take time for assessment and most require bank approvals. This work today is underway, but could, of course, only start after we had closed the RBL. The Board took the decision to be proactive and raise additional financing before finalizing the twenty twenty two audited results and as such, avoid language in the draft going concern statement, which would likely have had a significant negative impact for all stakeholders. We prioritized equity over debt to avoid overleveraging the balance sheet.

24:20 To ensure protection against the tested downside scenarios, in addition to the $50,000,000 equity raise, we have also put in place the up to $35,000,000 working capital facility, which we don't expect to draw. This combined equity and debt funding, in addition to the existing RBL, provides financial flexibility to bridge across the temporary debt availability shortfall into the fast improving liquidity position following Alcantara's first gas. Next slide, please.

24:58 The chart on this slide illustrates the debt availability over time from our current banking model. This banking model calculates present value of future cash flow using third party verified production profiles, reserves, OpEx, CapEx and ABEX estimates. The oil price currently used in the banking model is $67 per barrel for $20.23 dollars 62 for $20.24 and $58 per barrel for later years. This accelerates forward field abandonment in the banking model. A 33% discount is then applied to the result to arrive at the borrowing base. The RBL facility requires that we hedge 50% of our production over the fourth quarter twenty twenty three to the third quarter of twenty twenty five period.

25:45 To date, around 90% has been hedged at a weighted average price of around $70 per barrel, is in line with the RBL banking model. We expect to finish the program over the coming weeks. Going forward, the present value reduces with production and the abandonment timing coming closer, mostly for Montara and STACK using the banking oil price deck. As mentioned earlier, there are options to mitigate the temporary dip in Q2 twenty twenty four. We have started that process with the RBL banks, which will take time as most options again require bank consent. Two examples here are opportunistic additional hedging and a CapEx add back feature, which we have in the RBL's facility agreement.

26:31 The key conclusion is that JADESTONE is looking at a temporary dip in its RBL borrowing base, which we are looking to improve going forward using various options with progressively more certainty around outcomes in the future. And in summary, the additional funding with the RBL bridges JADESTONE into a period of operating cash flow growth, significantly increasing RBL debt capacity and rapidly deleveraging balance sheet. On Slides fifteen and sixteen, I'd like to put Paul's earlier comments around the growth in the business over the next two years into the context of financial performance. The year on year reduction in cash flow in 2023 is mainly caused by lower forecasted revenues, caused by lower oil price realizations across the three scenarios in this chart compared to 2022.

27:22 On current assumptions, we also expect to lift fewer barrels at Montara than last year, primarily reflecting that the first lifting of the year from Montara only occurred in May. The $160,000,000 operating cash flow in the base case forecasted for 2024 is based on a $75 per barrel oil price. So the recovery in 2024 is driven by growth in revenues from increased production with a full year of contribution and liftings from Montera, the positive impact of the Panmol infill wells and, of course, the start of production from the Akatara gas field in the first half of twenty twenty four.

28:00 Then into 2025, operating cash flow is projected to increase further to around $190,000,000 in our base case, mostly due to the full year contribution of Alcantara, which brings high margin production and also incremental production from the forecasted STACK infill drilling campaign, which we have planned for the second half of that year. These operating cash flow forecasts combined for the impact of our record investment program in 2023 are the main drivers of converting our 2023 projected net debt position into a net cash position on the next slide in the near future under the base case.

28:39 On Slide 16, we show the history of the company's financial position and forecasted evolution of the company's net debt and cash, which illustrates that we are expecting a short lived funding requirement to finance our operations and more importantly, our record investment program. Under the stated assumptions, we project to return to a significant net cash position by 2025. Do note that these predictions were made prior to the impact of the successful placing we've done in early June. In the period from the first half of twenty twenty two to the year end 2023, JADESTONE moves from a net cash of $160,000,000 to a net debt position of around $100,000,000 This $260,000,000 variance over the period is mostly driven by the company's $300,000,000 investment program.

29:30 Of the $300,000,000 investment, dollars 190,000,000 is CapEx, covering around $70,000,000 for the second half of twenty twenty two, mostly due to STACK drilling and around $120,000,000 at the midpoint of this year's CapEx guidance. The other $110,000,000 is acquisition related and includes around $80,000,000 for all of the CWLH abandonment fund payments and the Symphohorm acquisition for around $30,000,000 completed early in 2023.

30:00 During 2024, the company expects to reduce its net debt by around $65,000,000 at year end in the base case. This is driven by operating cash flow of around $160,000,000 as explained on the previous slide, partly offset by planned CapEx. This is most notably stacked drilling in the last Lemang expenditure. Into 2025, the net debt position is forecasted to improve further. Again, this is driven by operating cash flow for 2025 of around $190,000,000 with significantly lower CapEx projected. Note the net debt position is presented as set before the equity placing, so following the successful raise and all else being equal, this position in the base case is projected to be around $50,000,000 better.

30:47 On Slide 17, we just reiterate the guidance for the full year 2023, which we have reported on earlier. We are looking to provide a regular update together with our 2023 mid year results presentation, which is planned for September. And with that, I'll hand back to Paul. Go ahead, Paul. You're

31:44 live, sir. Sorry. Thank you. Sorry. My microphone was off. Thank you so much. But yes, and so let's move to the final slide. With the balance sheet and liquidity underpinned by the RBL, the recent placing and the standby facility and with Montara operations restored, but also backed up by an increasingly diverse production portfolio and with Akatara on plan, the JADESTONE equity story feels to be somewhat revitalized with a clear line of sight to significant cash flow generation and a rapid deleveraging of the balance sheet.

32:30 In some ways, I have to say it almost feels like a relaunch of the business from a very low valuation, but rapidly returning to healthy cash generation and a strong balance sheet, which has always been a key hallmark of our investment thesis. Ladies and gentlemen, look, this has been a very difficult period with the Montara incident being completely unpredicted and unpredictable, and restoration was unquestionably hampered by limited access to the facility. However, we now find ourselves with a tremendous opportunity. And looking forward, we feel far more energized. We have baked in short term growth from an expanding and diverse portfolio, an environment with opportunity to further deepen the business with increasingly high quality assets, and a significant financial capacity largely backed by the highest quality international banks who've endorsed our business with their significant capital commitments.

33:37 In return, if we are to draw a line here, going forward requires a doubling of our focus on operating excellence, absolute confidence in delivering work programs safely and on time. And I believe the addition of a chief operating officer will help here.

33:55 Our Qatar First Gas is on schedule, adding significant production and cash flow in 2024, and this does support the rapid deleveraging of the balance sheet. As we've shown, this will return us to a net cash position, most likely in early twenty twenty five, but it could be earlier. And with a strengthened balance sheet, this can lead to restoring shareholder returns. We will commit to communicate progress on all this to the market more effectively than we have and with the aim of seeing this delivery reflected in our share price as soon and as much as possible. And so with that, may I offer my thanks for your attention.

34:42 And now let's move to the Q and A. Paul, Bert, yes, thank you very much for your presentation. And if I may just bring back up your cameras. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab situated on the top right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you that a recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard. As you can see, we have received a number of questions throughout today's presentation. Could I please ask you to read out the questions and give responses where appropriate to do so, and I'll pick up from you at the end. Very good. Thanks a lot. So let's start with the pre submitted questions, and I'm going to read the first one.

35:35 The last few months have been very tough to be a JADESTONE shareholder. As recently as February this year, the share price was 90 p and from the current 35 p would need to rise by a 160% to get back there. What are management planning to do to bring confidence back to the market and ensure the market fully reflects the asset base and value of the business? Well, I mean, let me say a few words. I mean, first and foremost, can only agree this has been tough. The board and management team all recognize that the last several months have been disappointing for all our stakeholders. We've already announced a number of changes, director and management, refreshment of the board, the hiring of a COO, all aimed at improving performance and delivery and providing stronger governance.

36:35 We have to improve our performance with much greater focus on operations delivery though. We continue to diversify and grow the business. And we also recognize a need to take more care to communicate clearly and more regularly to all shareholders, including retail investors, starting with this presentation today. And then it's down to delivery. But as you will have seen in the presentation, Montera production is now stabilized. Akatara is moving ahead on plan. Diversification of the portfolio is delivering clear benefits. We've had an incident which has significantly upset the business, but now we move forward.

37:25 And one of the slides that Bert Jaap showed demonstrated that the underlying thesis for cash generation from this type of portfolio is strong and is there. And we will bounce back fast as he has shown with the financial cash flow delivery. So we're now funded to deliver this program that we've outlined and produce the cash flow from a whole pipeline of high internal rate of return projects. And of course, that's what it takes. And over time, we hope that investor confidence is restored once we deliver on all of those aspects at an operational level.

38:28 The second question that we have is: the past few months sorry over the past few weeks there have been days with very large transactions. The suspicion is OD have capitulated in recent lows. Can management confirm? Have other institutions been selling also? But yes, would you like to take that question? Phil, if you don't mind moving to the appendix, we have a slide, which we created on our top holders recent and more recent, if you will, so end of April to the end of June. What you can see here is that OD shows a position of 6.6 at the end of April, which is now below 3%. I mean they have they're not in our top five shareholding anymore.

39:24 Bottom line is there's a lot of risk coverage by these, let's say, certain divestments made, and we believe that these redemptions were not unique to the JADESTONE case. So yes, what you can see here is that some shareholders also on top of our register decided to increase as always on this buyers and sellers, but ODS has sold most of this as a small belief, still in position that for sale is our existing portion and it's, yeah, for sale. Thanks, Paul. Good. Thank you, but, yeah. Third question. The recent transaction with Tyrus, whilst understandable from a financial support perspective, was very generous to them.

40:18 The issuing of warrants at 50 p significantly below intrinsic value dealt a very nasty blow to existing shareholders. Can management explain why this was seen as the preferred method? Let me say a few words here. I think, know, through the discussion earlier with what you can see is we were faced with some very difficult decisions in a very, very short time frame. And this, to some extent, significantly limited our options. Debt, for example, wasn't really an option in that time frame. Testing the debt market for unsecured second lien debt to be delivered $85,000,000 within days, you know, is an impossible ask. And under any circumstances, with difficult consequences and conditions, which would have been incredibly restrictive to the business.

41:24 And so, you you know, equity was really the only way we could solve this problem in in the time frame. And turning to Tyrus, you know, they've been JADESTONE's largest shareholder and a key supporter since the company's inception back in 2015. Tony Chidrawi, who is the founder of Tyrus, is personally very committed to the success of JADESTONE. And as the largest shareholder, it was obvious and logical to approach them first. You know, as I've as I've just said, we we already set out the chain of events that that led to the June financing transaction, which, of course, as has been discussed, in summary, were due to last minute changes in the RBL banking model and the auditors' interpretation of a temporary liquidity shortfall very early next year, which we had a number of options to manage, but given no time to implement, management was faced with really, I think, a very, very difficult choice.

42:33 We either publish an audit report with statements which could seriously damage the company's standing with all stakeholders, or we raise additional funding to safeguard the company's future. At this point, Tyrus were approached given their position as our largest shareholder. There was no viable equity solution possible over a nine day period without support from them. And this would have been the first question anyway and likely requirement from all other shareholders. And in the event, with a commitment from Tyrus to underwrite the whole 50,000,000 equity raise as well as to commit funds to the standby working capital facility as our largest shareholder, it sends the strongest possible positive signal that underpins the business.

43:26 So, you know, it was not unreasonable under those circumstances for Tyrus to be compensated for committing such significant funds over a short term period. By effectively underwriting the equity raise at 45p, in reality, Tyros is actually protecting everyone, including retail shareholders, from what would have been a far more highly dilutive equity raise at a significantly greater discount. So, you know, to all intents and purposes, you know, I see the actions of Tyrus of being, you know, really supportive of of of everyone and and, of course, especially of the business. The board management advisers and Tyrus, together with Tyrus, we worked around the clock to deliver this financing in an incredibly short time frame.

44:20 No one else apart from Tyrus was in a position to act as quickly. And this we've tested with a number of other shareholders who would have liked to support this, but were simply not able to move at that pace. And the warrants well, you know, circumstances around that I might equally argue that at 50p in support of the full underwrite given where the share price is today, it's far less dilutive than alternatives. And the final point here that's worth reminding. I mean, we do have a fiduciary duty to run independent fair and reasonable test.

45:08 The board received advice from the company's nominated adviser that the terms of the Tyre's participation were fair and reasonable insofar as shareholders were concerned. And so, you know, on that basis, we were more than happy to proceed. And indeed, you know, I think in many ways this has really turned around what was an incredibly difficult situation for the company. I hope that sufficiently answers the question. So let's move on. Question four: Can we have a detailed update on Akatara? What are the risks to timely completion and is there any possibility of further funding being required?

45:57 I think we've covered this largely through the presentation but I mean just to pick very much on the key points of the question. Long lead items, as I've said, are usually the thing that stand in the way of project schedule. We have no concerns at this stage on that score. And as I touched on, being largely lump sum fixed price contracts, funding requirements are well covered. The asset moves the project activity moves forward absolutely on schedule and on budget. So we feel very comfortable with where the project's going.

46:45 And we do hope to see some upside in the subsurface, which I touched on, we talk to that more, I think, in the future. So whilst you can never relax, think as project goes, implementation is well in hand, and we're feeling confident on delivery. Question number five: Is Montara now fully back and running as management would expect? Has there been any further challenges? What should I say? Know, Montara the challenge at Montara and we've talked about this before is actually all about limited access to bed space personnel. And you know that's an ongoing challenge until we fix that and that takes time.

47:32 There is a project being defined to expand the accommodation on Montara, and that would certainly alleviate what is a very, very dynamic scheduling of activities to make sure everything is done on time and to priority. But into the detail of specifically where we are today, there are two more wells still available to come on stream on the Montara Field. They're waiting for a small relief valve for the gas lift lines. They're being manufactured in The UK. They're a long lead item. They're coming soon, we hope. So there is some more production volume upside still available.

48:22 And the second, separator. With today's production levels, we can almost run to maximum capacity through one separator. Of course, the ship the process is designed for original peak production. But we do want the second separator back. We like to have the redundancy and it would allow some extra a few extra barrels by being able to handle more water. But that aside, and as we've showed with the tank reinstatement program, there's still a lot to do, but there's nothing that is causing us any more significant concerns post the incident last year. Question number six.

49:14 Matahayo Tamarind recently completed a deal in May 2023 in New Zealand. With regards to Mari, why weren't you able to conclude this deal quickly? And if this is a sign of a smoother regulatory process for asset transfers, would you consider going back to New Zealand? Also, how's the New Zealand office been permanently closed? The office has been permanently closed. The Matahio Tamarind transaction was onshore asset. It's not really a transaction. Matahio and Tamarind are essentially the same company, the same team. This is more a corporate reorganization. Tamarind was in liquidation and the name is disappearing. But importantly, as an onshore asset, it's not subject to the change in the offshore Crown Minerals Act, which is what drove the difficulty and actually still drives the difficulty of acquisitions and dispositions in the offshore environment in New Zealand.

50:21 That said, you you know, we recognizing the above ground issues to be dealt. But whilst we don't say no to New Zealand, we'd have to recognize those challenges need to be represented in an entirely different way for the future. Okay? There was a strong hint. Next question. There was a strong hint of lining up plans for director succession in a recent update. Is Paul considering retiring soon? I have no plans to step down. There's work to do. I'm feel personally extremely motivated to get the company back to where it it should be.

51:08 And we're undergoing a period of rapid growth and diversification. It's it's going to be an exciting time, and the team is is up for it. The additional the creation of additional role at COO, I think, will help. And to strengthen the board with with a couple of changes is all good for the business for the longer term, in my view. Thanks for the questions though. Slide eight. Please consider not going ahead with the Vietnam development. If it isn't if it wasn't for Lemang and some very questionable spending decisions in light of Montero being shut in, we would not have been very painfully diluted and succeeded pseudo control of the companies at Tyrus. Well, hope I've made clear the discussion on Tyrus who I think whose interest in the company actually hasn't changed in percentage terms.

52:09 They've simply although underwrote the full 50,000,000 for which we're extremely grateful at 45p we should all be grateful they in the end, only took their pro rata share. So their position hasn't really changed. And in respect to Vietnam, look, there's a while to go before any significant spending. If we make progress there, there's a possibility of agreements next year and move to sanction potentially late next year, a lot of ground to cover before you get there. No spending until '25 at the earliest, by which time, as you can see from the presentation from Biryap, our circumstances look very different by then.

53:06 Notwithstanding, Vietnam would be an extremely attractive project to take forward. But to the question, there are no plans right now. Okay. Slide nine sorry, question nine. In one investor call a few years ago, the company mentioned it was looking at deals in the range from 10,000,000 to 500,000,000 or even 1,000,000,000. Is the company still capable of executing material and most importantly, accretive deals going forward? What range of m and a values is the company looking at now since this statement of a few years ago? And is it capable of financing them without placing equity at horrific discounts? We are doing all we can to continue to grow the business and including M and A as we've discussed without equity.

54:00 I think you know, we can only agree that equity would be a last resort. And so, you know, to the sort of the meat of the question, it does focus our M and A strategy on certain types of assets specifically, which can be supported by the RBL. And I think that's the shortest and simplest answer. We're a growth business. There's lots of organic growth in the next twelve months. There is organic growth potential within the next twenty four months and we can layer on some M and A on top. It will be thoughtfully done.

54:48 It won't likely be in the $500,000,000 to $1,000,000,000 range, however, Okay? Number 10. It would be nice to see some material buys from all direction from all directors as the directors completely underestimated the damage they've caused to market confidence. This would help restore some confidence and go a long way into rebuilding trust. Several directors have made meaningful share purchases in the run up to the placing, myself included, and also committed to buying shares as part of the placing and subscription. You know, mean, I think this demonstrates, you know, importantly that, you know, we we had no sense of of what, you know, would would turn out to be a really challenging situation in the short you know, over a very short period.

55:54 And just to reiterate, you know, this isn't a deal with Tyrus. Tyrus was approached, and Tyrus stepped forward in an incredibly swift and and and certain way to to to bring the the the financing forward, which which would have been almost impossible otherwise. But but I think, you know, I think you you saw directors step up during the period even, you know, May through May and June. And we we continue to be, leveraged. And I speaking for myself, highly so personally to this business.

56:51 Slide question 11. OMV are selling their whole New Zealand package. I remember in 2019, the board mentioned they may be interested in these assets. Are they still attractive? And does Jason have the firepower to go for it? Our priority is to is to deliver on what we already have on our plate. At this point in time, we're unlikely to be looking at the OMV portfolio, I think, is the shortest answer.

57:45 Another question: How are stags two new infill wells performing? What are they currently averaging and why is decline very aggressive? Performance worse than expected. I'm not sure. Know the basis for the question, I can tell you we've drilled three infill wells. They all came on at an average of around 1,000 barrels a day each at initial production. Know subsequently, you know, through decline the wells continue at sort of 600 barrels a day range for a period a year or two and then slowly settle down into a decline of around 10% to 12% per annum. All three wells have followed that path.

58:30 The latter two drilled late last year are performing entirely as we expected. They still represent the first and second largest producers on the field, which we would expect from the newest wells. And we have no concerns at all. And in some ways, the well's performance actually encourages us with further infill drilling in the future. Question 13: What was the reason for the rush or rather panic to secure funding within two week window? What changed, and why didn't the company go ahead with the plan raised later down the line as mentioned in the financing call?

59:16 Now there must be a very good reason to rush the financing as it's resulted in dilution. I had financing being arranged in a more orderly fashion over the next few months. This could have arguably been far less value destructive or perhaps even in March when the share price was 80 p. And if I had the benefit of hindsight, there's lots of things I'd do differently. But yeah, but I think, you know, would you like to provide some thoughts on that question? And it's multifaceted question, but I think I think I'll leave that with you too. Yes, sure. Thanks, So it's also a combination of a question that I picked up that was recently stuck on the Q and A.

1:00:03 The urgency of the RBL, why do we need the RBL and why did we needed it fast? Well, the RBL clearly is there because we have an investment program. The investment program was committed. As we've shown by the end of May, we were already in a $9,000,000 $8,800,000 net debt position, which basically shows you that the bridge facility came in on time and has provided us, let's say, room to maneuver into the RBL. The idea was always to go from bridge facility into RBL. And that sounds really easy. And it was for the team, was quite a bit of hard work. But we needed that RBL in place for the investment program, which is going to ramp up over the summer time. And just to give you an impression, we on the first drawdown a while ago, we drew down $111,000,000 and we increased that to around $135,000,000 which is roughly where we believe we're going to be assuming working capital or not assuming, let's say, working capital steps.

1:01:02 But $135,000,000 is what we project going forward. So it goes to show that the RBL was very, very important. And just to run through some of my notes because it's an important question. There's been a lot of frustration in the market, and I'd like to address it, let's say, in full or as full as we can. The recent financing transactions, they were the result of a series of events, which really culminated, let's say, days before the annual report was due. First, of course, and this has been mentioned a number of times, Montera restart is key to all of this. It has occurred much later than we expected. It has slipped, and it has been on the trajectory for a while, which continued to erode, of course, JADESTONE's liquidity position. Also going into the RBL, of course, you need to have sufficient buffers whether you have a loan facility or you don't.

1:01:52 Banks required Montara to be in routine operations before they could sign. As mentioned in the presentation, the RBL then closed days before the annual report was due. There were some last minute requirements from banks, which caused additional pressure on the liquidity position, very, very last minute. Oil prices in the meantime had significantly decreased, which, as I explained earlier as well, had negatively impacted the borrowing base in the dip in the second quarter of twenty twenty four, which is clearly the point of attention. Now this dip has been there since early twenty twenty three when we started working on the RBL already. It's always been there. We have believed and we still believe, as we as I mentioned in the presentation as well, that this dip can be managed as there are several mitigation options.

1:02:39 But all of those need time, work. And of course, they need or most of them, I should say, need bank consents. I mean hedging, for example, doesn't need bank consents, obviously. The final update in our liquidity forecast was created after the RBL was closed, after which it turned out that the forecasted shortfall caused an issue with the language in the draft going concern statement, which was again days before the annual report was due. Our plan B, which is what we presented back in April with a conflict of support for additional capital from Tyros again, turned out to be insufficient to change the draft text in the going concern paragraph, which left us as management with two weeks instead of what we expected to happen, call it, eight months before we would hit that dip in the borrowing base in the second quarter of twenty twenty four to manage the situation.

1:03:31 And this is also what I mean, Paul has been going at length to explain what it looked like in terms of speed of execution and, let's say, the work that we've done together with the teams of Tyros as well to conclude the deal. Board decided to proactively go out and raise equity. And on the back of a stress test case, a fallback working capital facility, the ones that I put on my first slide as I went through them. And of course, as a bottom line, the financing provides us with a good balance sheet resilience and financial flexibility, which is in support of the company's investment program, a record breaking investment program and growth going forward for selective acquisition candidates if it fits the RBL framework. I'd like to leave it there, Paul.

1:04:18 Yes. Good. Well done. Thanks, but yes, that's clear and helpful. Okay. I think we have just a few more questions. We'll move very quickly through. In light of the decline in share prices, the rights issue we have, why have directors not bought shares? I think we've really answered that question already. Directors, of course, you know, make their own choices, but I think all all have been participating, you know, and some more than others, of course, but but that's fine. You mentioned a further acquisition in the information released around the rights issue. Do you have an update on this? It wasn't a rights issue. It was a placing and open offer. But on M and A, as we discussed, working within the RBL structure, we will continue to look for and I believe find exciting opportunities.

1:05:22 And we certainly look for strong returns and value generation in the past and going forwards. A question on Akatara, H1 start date. Do you expect this to be towards the beginning of H1 or the end? All I would say is in broad terms, pre commissioning activities are scheduled to take place in Q1 twenty twenty four for sure. And final acceptance and commencement of contract gas sales would be most likely very early in q two, if that answers the question. There's a question on Montara three d seismic interpretation.

1:06:07 Has this highlighted anything interesting? The three d seismic was high quality. It was extensively useful in the planning of the Montara H6 well and will be and is being used in the ongoing interpretation of the skewer field to optimize for locations for future infill locations there as well. We've also been mapping leads and prospects on the block, around skewer, but also looking at gas discoveries and whether or not we can understand if there's a commercially viable gas development through nearby infrastructure, albeit this is more likely longer term.

1:06:53 So we're pleased to have the three d, and it is of exceptional quality. What's the level of competition for assets in APAC region? Is it still low or has the dynamic shifted with many companies looking to diversify from the North Sea? I'd say we haven't seen a lot of change. There are the same few folk that attend data rooms that we always expect. Very few new faces as of now, although that may change in the future with respect to Southeast Asia. As for Australia, we are not seeing any meaningful competition for offshore Australian assets at all, which we think is a significant competitive advantage for us.

1:07:42 And the final of the pre the question sent in beforehand. Could you provide the oil hedging levels for 2023 and 2024? And could you stay clearly if this level is including or excluding the oil premiums for certain oils. But yes, why don't you take that one? Sure, Paul. There's around 5,500,000 barrels that's required to be are required to be hit under the RBL in the period of fourth quarter twenty twenty three to the third quarter of twenty twenty five inclusive. Of this, we're active in the market as we speak. We have a running order running. The completion rate is 90 nine-zero percent.

1:08:29 We have around 600,000 barrels to go. We expecting to finalize in near future. And I think we're able to pick up some of the recent oil prices at the back end of GERF. We've been hedging the front end first because it was really volatile and we wanted to lock in the RBL rates as we, of course, don't know where the oil price we're heading. We believe that we know, but we don't. So in a sense, we've at the back end, we've been picking up on recent strength. The weighted average price of the hedges are around EUR 70,000,000, which is because, of course, we keep a close eye on this. It's very close to the RBL oil price levels, which is, of course, important because it got you back to that borrowing base position that we've described earlier and especially the focus on the second quarter twenty twenty four.

1:09:18 Also some confusion around this that, of course, hedging premium. Stack, just to give you an example, the stack premium, as we've seen in north of $20 a barrel, is related to the end market for marine shipping fuel, and it's probably able to hedge in the first place. So there was some confusion around that hedging Brent. The underlying, we don't hedge premiums. But we did see, in all fairness, and we presented it before a while ago, we did see reduction the premiums that we realized and the underlying call it, prices. But that's all on that. Thank you. Well done. Thanks, Peter. Good. That's the list of questions.

1:10:05 I'm, you know, I'm looking here now. There are a lot of questions have been submitted over the course of the last hour and a little bit, and I'm conscious that we are running past our hour, we will take these questions, and and we will provide replies to them. I I think that's the the the best way forward here. There are so many. I don't think we have time to to to to to answer anymore. So so I think with that, we should probably try to to wrap up.

1:10:51 Paul. Paul. Paul, it's it's Phil here. Can you hear me? Yeah. I can. There there is one question that has been submitted that I think we just need to clear up Okay. Which is when earlier Berchak was talking about OD shareholding, his line broke up at that point. So just to make it clear, OD has sold the price of the of their holding and has indicated that they are not the seller of the small residual position. Okay. Yes. I think that's a clarification. That's what we said. They sold out the bulk. They have a small chunk left, they don't look at selling do not look at selling that. Yes, indeed. Thanks, Phil. Okay. Thanks, Phil. So so, you know, as much as I would like to spend another half an hour and and answer the questions and and, you know, just glancing down, there are some some excellent questions, and we can't we can't leave them unanswered. And so we will take care of that.

1:11:53 But but as we are now overrunning, I just really want to conclude by thanking you for joining this this event. And, you know, and to summarize, and though though, you know, of course, this has been a disappointing period for JADESTONE. The incident at Muntarra had far more far reaching consequences than we certainly imagined during the course of last year. But that's now behind us, and we have to look forward. I hope we've demonstrated we have an incredibly strong business as we move forward now. Production at Montara is restored. We have a far more diverse portfolio today and it is going to increasingly become diverse and that's a strength with strong growth underlying.

1:12:52 We are well funded and we also see opportunity, but we are going to be very prudent about opportunity in the short and medium term. But nonetheless, we continue to be a growth business and we'll work that to the best of our ability. Our commitment to you is to really is to work hard to deliver on all of this to the best we can. And and as I said earlier, a commitment to communicate more with you and to share more detail as often as we can. And so once again, thanks for joining. I hope you found this useful, and I wish you all a great day and the rest of the week. Thank you. Paul, but, yep, thank you for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations?

1:13:52 This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of JADESTONE ENERGY PLC, we'd like to thank you for attending today's presentation, and good afternoon.