Jadestone Energy plc

Hello, everyone, and thank you for joining the JSTONE Energy Full Year 2025 Results Conference Call. My name is Gabrielle, and I will be coordinating your call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two. I will now hand over to our host, Mitch Little, Chief Executive Officer of JSTONE Energy. Please go ahead.

Thank you, Gabrielle. Good morning and good afternoon, everyone. I would also like to welcome all of you to Jadestone Energy's full year 2025 results conference call. I'm Mitch Little, Jadestone's chief executive officer, and I'm joined on the call today by Andrew Faircloth, our chief financial officer. I will make some introductory remarks prior to handing over to Andrew to take us through the financial update. and then I will return to provide an operational review and some closing comments. We'll be referring to our results presentation, which you can view through the webcast and which can also be accessed on our website. After our prepared comments, we will open the call for questions and answers. Moving past slide two, which outlines our standard disclaimers, I'll start on slide three. Geopolitical events in early 2026 have magnified the importance of domestic energy security and the safe and reliable supply of oil and gas. For the last 10 years, Jadestone has been building an operated upstream platform across the Asia Pacific region, building critical mass in Australia, Malaysia, and Indonesia. We've established a 20,000 VOE per day production base from existing assets and a material organic growth project in Vietnam, both from the initial development as well as the additional 1.5 TCF upside within our existing licenses that has attractively low finding and development costs in the success case. Our 2025 performance was anchored by another year of strong HSE performance. During the year, we reached the milestone of 12 million man-hours LTI-free, delivering on our commitment to the safety of our people, our assets, and the community's environment in which we operate. Operational excellence and cost discipline drove record production and materially lower operating costs during 2025, resulting in significant improvement in cash flow generation during the year. We have started 2026, where we left off in 2025, delivering on several of our key priorities in the first four months of the year. Most notably, we have made significant commercial and technical progress on the Nam Du U Minh project in Vietnam, allowing us to book approximately 32 million BOE of gross 2P reserves for the initial development phase. We've also refinanced our existing debt through the issue of our debut bonds, Strong benchmark oil prices, record premiums, and the bond issue have contributed to significant liquidity, providing us with a strong foundation to support and deliver on our strategic growth objectives. Moving now to slide four, where I will cover three high-level themes that define the direction of travel for our business and our 2025 highlights in more detail. Under the leadership of our refreshed management team and board, the organization's hard work and relentless focus on operational excellence is beginning to yield measurable improvements. Perhaps most evident is the delivery of 14% growth in the underlying producing assets and a unit operating cost reduction of 21%. We have no illusions about the hard work that's required to effectively and efficiently manage mature assets. especially in the offshore operating environment. And while we realize that new challenges may surface from time to time, I have confidence that we are instilling the right processes, behaviors, and competencies that will allow us to address those challenges on par with the best operators in the business. The improved focus and discipline around protecting the base has translated to a significant improvement in cash flow generation during 2025. where despite only achieving a 3% improvement in annual revenue, our adjusted EBITDAX and operating cash flow were up meaningfully year over year, and our net debt was meaningfully reduced. Additionally, we have recently delivered on a further key 2026 objective in refinancing the group's reserve-based lending facility with a $200 million debut Nordic bond. The increased liquidity and associated flexibility of the bond greatly enhances our ability to direct the cash flows generated from the business towards our near and midterm growth objectives. A very timely and important achievement in light of the great momentum continuing to be achieved on our Vietnam gas development, with all key regulatory and commercial approvals now in hand. On slide five, let me touch on a key priority for the board and management team. namely narrowing the significant and persistent discount of the share price to the underlying value of our portfolio. On the left of the slide, we compare the current share price to the valuations of the sell-side analysts who cover Jadestone. Valuations are structured as core NAV, or in other words, the value of our producing assets, and risked NAV, which adds a risked view of the known upside potential in our business. These valuations were calculated on oil prices much closer to where we entered the year rather than what we see on the screen today. And despite the conservative oil price basis, their valuations are still multiples of the current share price, a compelling third-party endorsement supporting our internal view that the share price undervalues our existing business. On the right-hand side, of the slide, we asked the same sell-side analysts to run their models and valuations at a series of flat real oil price scenarios from 2026 to demonstrate our high gearing towards Brent oil prices. The share price disconnect we see on the analyst base case valuations is magnified in higher oil price scenarios. While we are not in the business of forecasting oil prices, we are of the view that the significant dislocation in energy markets we've seen this year will take some time to normalize, even if there's a rapid de-escalation in the Middle East. We will continue to focus on demonstrating the potential of the business and narrowing this discount with several near-term catalysts. Firstly, we will remain steadfast in our focus on protecting the base business. both in terms of operational excellence and cost discipline, which improve our ability to deliver on the business drivers within our control and professionally and efficiently manage through non-controllable events like Cyclone Norell to regain the confidence of the broader investment community and deliver the cash flow generation which underpins these analyst valuations. We remain active in seeking out accretive opportunities in the Asia Pacific region to deploy our skills in late-life field management and development of regional gas resources. The refinancing of our debt facility earlier this year will allow more of the cash flow generated by the business to be directed toward that growth ambition rather than repayment of debt. The NAMDU UMIN project has tangible momentum with project contract awards, farm down, and final investment decision, all near-term visible catalysts towards crystallizing and de-risking the value carried in the analyst models while enabling the transfer from risk upside into core NAB. We're also excited about further organic growth opportunities, which are not currently included in the analyst models. Later in this presentation, we will further detail the upside potential around our existing discoveries in Vietnam and as well as the significant gas resource potential around Montara, where we are actively progressing conceptual development studies. In summary, I believe there is significant unrecognized value in our portfolio with several near-term catalysts, which should naturally translate to a meaningful narrowing of the gap between that underlying value and our share price. I'll now hand over to Andrew, who will take you through the financial update. Thank you, Mitch.

Good morning to everyone. Thanks for joining us this morning. On slide six, we show the operational and financial summary for 2025. From an operational and a cash flow perspective, 2025 was a strong year. Record annual production, along with the schedule of liftings, led to a 23% increase in lifted volumes. This offset the impact of weaker bread prices on our realizations and premiums through the period, delivering a 3% increase in revenues, including a $2 million hedging gain in the year. Reported production costs reduced 19%. After adjustments, removing non-cash inventory and lifting charges, royalties, and non-recurring costs, our adjusted unit OPEX for the year was $28 per BOE, which was a 21% reduction year-on-year. Adjusted EBITDAX increased 20% year-on-year to $153 million, demonstrating the group's ability to deliver material cash flow. However, There was a loss after tax for the year of $111 million, largely as a result of a post-tax non-cash impairment of $88.2 million, which was broadly in line with the estimate we provided in the February guidance and reserves update. The impairment entirely relates to the Montara and Stagg balance sheet carrying values, which have been significantly written down following the end-of-year impairment exercises. A primary driver of the impairment was the requirement to use an independent oil price forecast as of December 2025, which, together with changes in discount rates, tax calculations and the addition of skewer-level costs, contributes to the impairment. Now, while an impairment of this scale and the resulting loss after tax is clearly disappointing after the operational successes of the year, a more current oil price assumption would have made a material difference. Using our reserves auditors' updated oil price forecast at the end of Q1 of this year and keeping all other inputs unchanged, the post-tax impairment would have been reduced to approximately $31 million. Return as cash flow, we delivered a significant year-on-year increase in operating cash flow post-work capital of $124 million. Capital expenditure was $93 million, reflecting the SCURE 11 drilling campaign during the year. and net debt at 31 December 2025 was $89 million. This comprised $61 million of cash and cash equivalents and $150 million of drawn RBL debt. These figures excluded approximately $24 million of proceeds related to December 2025 liftings, which was received in January 26. Moving to slide 7, which provides more detail on our cost performance during the year, The chart on the left-hand side compares reported production costs for 2025 versus 2024. Reported production costs can be split into underlying operating costs, royalties, and production-based payments, and the long cash inventory lifting charge, which ensures operating costs match lifted barrels. Year-on-year, underlying operating costs reduce by $36 million, or 15%, to $212 million. On the right side of the slide, we can see year-on-year reductions of STAG, Montara, and our Peninsula Malaysia assets, driven by the strategy to focus on efficiency and prioritization across our office programs. At STAG, which comprises a significant portion of the year-on-year operating cost savings, we saw cost reductions across workover activity, where improved pump performance reduced the number of workovers from 10 in 2024 to 4 in 2025. There was also a significant focus on greater efficiency in repairs and maintenance programmes. The reductions at Stagg, Montara and Amalaza operations were partially offset by a small increase at CWLH, representing a full year of ownership in the period of the interest acquired in February 2024, and a full first year of operating costs at Akotaro. You can see that the uplift in ACATARA costs is relatively modest, as there were a number of one-off costs during the commissioning phase of ACATARA in 2024, which were therefore not repeated in 2025. On slide 8, moving left to right, we can see that cash from operations in 2025 after working capital was $110 million. Cash capex of $102 million was predominantly related to the SCURE 11 sidetrack drilling campaign. and we received $39.4 million from the disposal of the Thailand interest in April. During the year, we also repaid $50 million of the RBL principal, and other financing cash flows of $40 million were roughly split equally between financing costs and interest on these payments. That delivered a consolidated cash balance of $61 million at the year end, and the December 2025 lifting proceeds of $24 million were included, That would then be closer to $85 million. Including the Simple Home Disclosure Proceeds and the December 25 Lifting Proceeds, the business generated approximately $80 million of unlevered free cash flow last year. And this represents good initial progress towards our 2025 to 2027 unlevered free cash flow range of $200 to $240 million. Moving on to slide nine. We have significantly improved our liquidity position since the end of the year, following the successful Nordic bond issue, which raised $200 million. We were pleased that our debut bond offering generated substantial demand from credit investors, seeking exposure to the strong upstream growth story of the Asia-Pacific region. Including our working capital facility, which remains undrawn, our pro-forma liquidity at the end of April stood at approximately $220 million. Now, although we have a much improved liquidity position, it should be noted that most of our lifting activity this year will be concentrated in the first and the fourth quarters of the year. While we have continuing expenditure throughout the year with the CWLH FPSO dry dock program, which was recently completed, the PM323 drilling campaign cap is ongoing, and the compressor upgrade at Montara, which was recently started. We also need to manage the stag, convoy, recovery and any near-term costs associated with that ahead of the insurance process coming into effect. Regarding hedging, our policy has always been one of protecting our cost base, which given the consistent negative oil price outlook through the back half of last year and into the start of this year has been the strategy we executed. We currently have approximately 1.5 million barrels hedged through to the end of the year at a weighted average price of just over $70 per barrel, and that's excluding premiums, which is about 40% of forecast oil and condensate production over that period. Obviously, events in the Middle East since the end of March have significantly altered global oil markets for the foreseeable future. although we did manage to capture some of that with more recent hedges put in place in mid-March, adding 400,000 barrels in the fourth quarter at just over $80 per barrel. And with that, I'll hand back to Mitch. Thank you.