TIDMJOG
RNS Number : 4835Z
Jersey Oil and Gas PLC
20 May 2019
20 May 2019
Jersey Oil and Gas plc
("Jersey Oil & Gas", "JOG" or the "Company")
Final Results for the year ended 31 December 2018
Jersey Oil & Gas (AIM: JOG), an independent upstream oil and
gas company focused on the UK Continental Shelf ("UKCS") region of
the North Sea, is pleased to announce its audited results for the
year ended 31 December 2018.
Highlights
-- Post discovery well analysis: 2018 was a year of post well
analysis following the Verbier oil discovery made in October
2017.
-- PGS Seismic Survey: JOG participated in pre-funding a 3D
seismic survey over the P2170 licence area and certain offset
acreage to advance the interpretation of the 2017 Verbier discovery
and assessment of other exploration opportunities within the P2170
licence and surrounding area.
-- Preparation for the Verbier Appraisal Well: The West Phoenix
semi-submersible rig was contracted for drilling, as part of a
larger Equinor operated drilling campaign, leading to cost benefits
for JOG with certain costs being shared. Originally scheduled to
commence in H2 2018, the well was subsequently rescheduled and
drilled in H1 2019.
-- Board Change: On 14 November 2018, Vicary Gibbs joined the
Company and Board, replacing Scott Richardson Brown as Chief
Financial Officer.
-- Strong Cash Position: Ended 2018 with GBP19.8 million of
which approximately GBP4-5 million will be utilised through H1
2019, principally to settle our share of the Verbier appraisal well
costs.
Post year end
-- Verbier Appraisal Well Result: The 20/05b-14 appraisal well,
which was safely drilled, ahead of schedule and within budget,
unfortunately did not encounter Upper Jurassic reservoir sands as
anticipated. The appraisal well results will be fully integrated
with the final processed data from the 3D seismic survey, acquired
in 2018, in order to evaluate the upside potential for further
Verbier appraisal activity.
o Our contingent resource volumetric estimates are likely to be
revised towards the lower end of the initial resource estimate of
25 million barrels of oil equivalent ("MMboe") from the 2017
Verbier oil discovery results, a volume which JOG views to be
commercially viable.
o A large part of the mapped area of the Verbier discovery,
located to the north west of the 20/05b-14 well location remains
untested. Additional resource potential, which was not tested with
this well or the discovery well, has also been identified in a
deeper horizon beneath the Verbier discovery. These prospects,
along with the Cortina prospect, will be re-evaluated with the new
seismic data and then considered for future drilling.
Outlook
-- Delivery of final 3D seismic survey dataset: Final processed
dataset from the 3D seismic survey is expected to be delivered
around the end of Q2 2019.
-- Technical re-evaluation of P2170 licence area: JOG, together
with Equinor and CIECO, will complete the already planned full
re-evaluation of the licence area, combining the recent appraisal
well results and data collected during operations with the fully
processed 3D seismic data in order to better understand the
reservoir distribution of the primary target. The evaluation will
also include an assessment of additional prospectivity in deeper
targets and the other previously identified exploration
opportunities, including Cortina, before making decisions on any
potential future appraisal/exploration programme.
-- Licensing awards in the 31(st) Supplementary Offshore
Licensing Round: We look forward to the results of the 31(st)
Supplementary Offshore Licensing Round which we see as being highly
beneficial to the Verbier discovery, with the potential to enhance
its commercial viability.
-- M&A: The UKCS continues to benefit from a vibrant M&A
market. JOG continues to evaluate all relevant opportunities as it
pursues its growth strategy seeking attractive returns.
Andrew Benitz, CEO of Jersey Oil & Gas, commented:
"JOG continues to benefit from our initial Verbier oil discovery
announced in 2017, notwithstanding the recent appraisal well
results. We look forward to delivery of the new 3D seismic data and
working with our co-venturers on assessing potential future
appraisal and exploration drilling opportunities on the licence
area. Additionally, we are excited by the potential for a new area
hub catalysed by the 31st Supplementary Offshore Licensing Round
and the positive impact we believe this will have for Verbier.
"The Company benefits from a strong funding position and we are
optimistic that we can create value for shareholders through our
core asset base, with multiple catalysts that exist for the Company
through the remainder of 2019."
Enquiries:
Jersey Oil and Gas Andrew Benitz, C/o Camarco:
plc CEO Tel: 020 3757 4983
Strand Hanson Limited James Harris Tel: 020 7409 3494
Matthew Chandler
James Bellman
Arden Partners plc Paul Shackleton Tel: 020 7614 5900
Benjamin Cryer
BMO Capital Markets Jeremy Low Tel: 020 7236 1010
Limited Tom Rider
Camarco Billy Clegg Tel: 020 3757 4983
James Crothers
Qualified Person's Statement:
The information contained in this announcement has been reviewed
and approved by Ronald Lansdell, Chief Operating Officer of Jersey
Oil & Gas, a qualified Geologist and Fellow of the Geological
Society, who has over 40 years' relevant experience within the
sector.
Notes to Editors:
Jersey Oil & Gas is a UK E&P company focused on building
an upstream oil and gas business in the North Sea. The Company owns
an 18% interest in the P2170 licence, Blocks 20/5b & 21/1d,
Outer Moray Firth, in which the operator, Equinor UK Limited, owns
a 70% interest and CIECO V&C (UK) Limited owns a 12%
interest.
The Company plans to build an upstream E&P portfolio via
both organic development and acquisitions coinciding with the
cyclical recovery in the oil price and the opportune buying market
in the North Sea. The Company is involved in multiple acquisition
opportunities and intends to draw on its management team's
considerable experience, knowledge and expertise to deliver
shareholder value from its stated growth strategy.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014.
CHAIRMAN'S STATEMENT
Overview
During the year ended 31 December 2018 Jersey Oil and Gas ("JOG"
or the "Company" or, together with its subsidiaries, the "Group")
sought to consolidate and develop its position following the oil
discovery at licence P2170 ("Verbier"). We did this largely through
agreeing a work programme with our co-venturers for the drilling of
an appraisal well to assess the extent of the Verbier discovery in
addition to undertaking seismic and other pre-drilling technical
work.
The appraisal well was drilled in the first quarter of 2019 and,
to our great disappointment, failed to intersect Upper Jurassic
reservoir sands as anticipated.
Whilst this was a setback to our short-term ambitions, we
continue to see core value to the Company from the estimated
contingent resource volume for the Verbier oil discovery and
material additional value potential across the P2170 licence and
look forward to the results of further technical work currently
being undertaken. We are also confident of our ability to
capitalise on a number of further opportunities in the North Sea,
the background to which is covered in the Chief Executive's
Statement that follows.
Economic and Industry Environment
Brent Crude Oil started trading in 2018 at a price of $65 per
barrel, increasing to $85 per barrel and then falling back to $55
per barrel at the year end. At the time of this statement Brent is
trading around $70 per barrel, with market commentators
anticipating prices of $70 per barrel for the end of 2019.
Geopolitical events and macroeconomic influences, of which there
are many, continue to play their part in setting the market price
of oil. Nonetheless, current and expected price levels continue to
bode well for the development of profitable oil and gas
opportunities in the North Sea.
Across the whole of the North Sea region, sixty exploration
wells are expected to be drilled in 2019, which is a 25% increase
versus 2018. As regards the UK sector of the North Sea, the Oil and
Gas Authority ("OGA") estimates that 10 to 20 billion barrels of
oil remain to be developed, which could sustain production for
another 20 years or more. As a result, we continue to be very
comfortable operating within this economic and industry
environment.
The OGA also continues to place great emphasis on its Maximising
Economic Recovery ("MER") programme, and our strategic plans to
develop the P2170 licence and surrounding areas, are fully aligned
with this strategy.
In addition to our operational activities, we continue to assess
multiple M&A growth opportunities, assisted by GBP30m of tax
losses and indicative bank funding support. However, based on our
internal pricing analysis and prudent economic evaluation of many
oil and gas interests, we have not been prepared to pay prices
which we believe to be unlikely to deliver a good return to
shareholders.
Financial Results
Our pre-tax loss for the year amounted to GBP2.0m down from a
GBP0.7m profit in 2017, reflecting the end of the carried interest
arrangement with CIECO V&C (UK) Limited in relation to licence
P2170.
Cash at year end was GBP19.8m, which will be reduced further by
approximately GBP4-5m, as our share of the Verbier appraisal well
costs falls due during H1 2019.
Corporate Governance
During 2018 we adopted the Quoted Companies Alliance Corporate
Governance Code (the "QCA Code") which, in practical terms, meant
that we codified many of the governance processes that we already
undertook, and implemented a number of new processes in a more
formal way, such as board effectiveness reviews. This process of
adopting the principles of the QCA Code was completed smoothly and
a full corporate governance report follows later in the 2018 Report
and Accounts and further details can be found on our website.
People
We continue to add to our team as our requirements grow and,
subsequent to the 2018 year-end, leased some office space in London
which is modest and cost effective and will act as a focal point
for our UK-based personnel.
In the latter part of 2018, Scott Richardson Brown stood down as
Chief Financial Officer and a director of the Company, in order to
focus on his other directorships and business interests, having
served on the Board since June 2013. At the same time, we welcomed
Vicary Gibbs as our new Chief Financial Officer. Vicary has
extensive experience as a corporate financier advising oil and gas
corporates, including JOG, and in addition to his finance
responsibilities, we look forward to taking advantage of his
deal-based skills, as the Company develops.
Outlook
JOG has a strong team, and on behalf of the Board, I would like
to thank all of our employees who have continued to work in support
of the Company's activities, both in the front line and in support
roles.
We continue to view the P2170 licence area, including Verbier,
as a valuable asset with significant prospectivity and will assess
the information obtained from the first quarter appraisal well, in
addition to the enhanced seismic data due to be delivered around
the end of Q2 2019 to determine the potential for further appraisal
and exploration wells.
Work also continues on other catalysts for growth, including the
OGA's 31st Supplementary Offshore Licensing Round, which includes
acreage in the Greater Buchan Area and various potential production
asset acquisition opportunities.
The Company remains well-funded to continue its exploration and
appraisal activities on its core P2170 licence and we remain fully
focused on increasing shareholder value.
Marcus Stanton
Non-Executive Chairman
20 May 2019
CHIEF EXECUTIVE OFFICER'S REPORT
Overview
2018 was a year of post-well analysis following the Verbier oil
discovery announced in October 2017 and preparation for the next
phase of exploration activity. Early on in the year, the joint
venture, operated by Equinor UK Ltd ("Equinor"), approved an
appraisal well programme and contracted the West Phoenix
semi-submersible rig for drilling. Such drilling had the objective
of determining the potential volume range of the Verbier oil
discovery, which on discovery was estimated by the operator to be
25-130 million barrels of oil equivalent ("MMboe"), whilst
acquiring data important to our further understanding of the
depositional model for the Verbier reservoir sands. In addition, we
pre-funded the acquisition and processing of a significant 3D
seismic survey by Petroleum Geo-Services ASA ("PGS") covering the
P2170 licence area and certain offset acreage. The final processed
dataset is expected to be delivered around the end of Q2 2019.
Post year-end, JOG announced the results of the Verbier
appraisal well, which unfortunately did not encounter the
anticipated Upper Jurassic reservoir sands. As a result, our
contingent resource estimate is likely to be revised towards the
lower, 25 MMboe end of its initial range. It is important to note
that such a revision does not factor in elements of additional
resource potential within the P2170 licence area which include the
area to the north west of Verbier, a deeper objective beneath the
Verbier discovery and the Cortina prospect to the east of
Verbier.
In addition to the P2170 prospects, we believe that there is
potential for the exploitation and development of existing
discovered, but currently undeveloped reserves that would allow for
an area development approach around Verbier. Further to this, in
January 2019, the OGA launched its 31st Supplementary Offshore
Licensing Round, covering what is referred to as the Greater Buchan
Area, which will comprise eight blocks that surround the existing
P2170 licence. The OGA has estimated that up to 300 MMboe of
recoverable oil volumes exist within this area, a material volume
that potentially could lead to an area hub development, thereby
enhancing the commercial viability of volumes discovered within
P2170. During the year and post year-end, JOG committed resources
to evaluating the development potential of this wider area. Post
completion of the Verbier appraisal well, JOG remains well funded
for further potential drilling activity on P2170, should this be
agreed by the joint venture parties.
Operations
In January 2018, the P2170 co-venturers confirmed an approved
work programme and budget for the appraisal of the Verbier oil
discovery. Subsequently, Equinor contracted the West Phoenix, a
sixth-generation semi-submersible drilling rig and related well
services. This high-specification drilling rig is equipped with a
dual derrick drilling system and substantial main deck space that
can be pre-loaded, allowing for an optimal drilling performance at
an attractive price.
Post the initial 2017 discovery, the co-venturers analysed the
discovery well results, re-interpreting the existing seismic data
and updating the prospectivity of P2170. JOG was pleased to
announce, in April 2018, the pre-funding of a significant new 3D
seismic survey over the licence area and certain offset acreage, as
part of a wider survey by PGS. The acquisition parameters of this
survey were specifically optimised to advance our interpretation of
Verbier and the further assessment of other late Jurassic
exploration opportunities. The survey was completed at the end of
June 2018 and the data is now being processed by PGS. In December
2018, a fast-track processed dataset volume from the PGS survey,
that overlays Verbier and Cortina, was delivered. Interpretation of
this data has already commenced, and JOG has recruited a senior
geoscientist in order to manage our own interpretation in parallel
with work underway by Equinor. Early indications are that the data
quality is improved compared to previous datasets. The fully
processed dataset is on track to be delivered around the end of Q2
2019. The drilling location for the appraisal well was determined
utilising a seismic data set, purchased for this purpose from
TGS-NOPEC Geophysical Company ASA during 2018.
In November 2018, the co-venturers relinquished certain acreage
in order to satisfy the Mandatory Surrender Area required under the
terms of the Licence, at the end of the Initial Term. The remaining
licensed area retains all identified prospectivity including
Verbier, Cortina and Meribel and is illustrated on our company
website.
The Verbier appraisal well programme was part of a larger
Equinor operated drilling campaign which began in September 2018
and moved into UK waters in January 2019 to commence the drilling
of two exploration wells for Equinor prior to Verbier. This had
cost benefits for JOG in that certain costs were shared, such as
mobilisation and demobilisation, across the whole campaign. Post
year-end, the 20/05b-14 Verbier appraisal well commenced drilling
on 4 March 2019 and its results were announced by JOG on 3 April
2019. The well was drilled ahead of schedule and under budget.
However, the well did not encounter Upper Jurassic reservoir sands
as anticipated and as a result, our contingent resource volumetric
estimates are likely to be revised towards the lower, 25 MMboe end
of the initial resource estimate range[1]. As a reminder, the
20/05b-13Z Verbier discovery well encountered excellent quality oil
bearing reservoir sands. A full suite of wireline logs was acquired
during the 2019 appraisal well programme and this data, together
with all the previous well results will be integrated into the
final processed 3D seismic data, of which JOG is expecting delivery
from PGS around the end of Q2 2019. The resulting analysis will be
used to fully evaluate the upside potential for further Verbier
appraisal activity. A large part of the mapped area of the Verbier
discovery, located to the north west of the recent 20/05b-14
appraisal well remains untested and further additional resource
potential, which was not tested with this appraisal well or the
20/05b-13Z discovery well, has also been identified in a deeper
horizon beneath the Verbier discovery. These prospects, along with
the Cortina prospect, also within the P2170 licence area, will be
re-evaluated with the new seismic data and considered for future
drilling. A 2017 Competent Person's Report produced by ERC
Equipoise, for JOG, ascribed mean recoverable prospective resources
of 124 MMbbls to the Cortina prospect.
Figure 1, illustrated in the following hyperlink, shows JOG's
latest prospect inventory map, outlining the aerial extent of the
Verbier discovery and the additional prospectivity across the P2170
licence area. Whilst the drilling of this first Verbier appraisal
well was disappointing, additional prospectivity remains on the
P2170 licence, beyond the Verbier low case and JOG expects to
update its on-licence resource estimates, once the new 3D seismic
has been fully evaluated.
[1] This on-block resource estimate was assessed by the Operator
as the minimum proven volumes as a result of the positive well
results of the 20/05b-13Z discovery well, its extent in a southerly
direction to the Verbier entry point and to the east where the
20/05a-10Y discovery well tested what is believed to be the eastern
extent of Verbier.
Figure 1 - P2170 discovery and prospect inventory map
http://www.rns-pdf.londonstockexchange.com/rns/4835Z_1-2019-5-19.pdf
Other Licence Activity
As reported in prior years, Total E&P UK Limited ("TEPUK")
has a conditional agreement to pay the Company GBP1m in relation to
the termination of its 2013 farm-in to licence P2032 (Blocks 21/8c,
21/9c, 21/10c, 21/14a and 21/15b). TEPUK disputes that the
conditions giving rise to the obligation to pay the Company have
been satisfied, but we continue our efforts in pursuit of this
claim.
JOG's Acquisition Strategy
The landscape for potential acquisitions in the North Sea has
changed and is increasingly active. The Company bid competitively
on the sales of multiple producing assets during the year, but on
each occasion, we were outbid. One exception was an acquisition
that was agreed but was withdrawn by the vendor at the last minute
due to vendor tax considerations. The Board remains committed to
growing the business and bringing positive cash flow generation
ever closer. Accordingly, we will continue to evaluate
opportunities that we consider to be accretive to building
shareholder value. We also acknowledge the growth opportunities
that exist within the region of the North Sea that we know best,
namely the Central Norh Sea, so we see potential growth in
shareholder value being achieved both through organic and inorganic
means. JOG remains committed to scaling up its business in the UK
North Sea and sees this as a good sector in which to build a
profitable full cycle upstream oil and gas business. We are pleased
to be active in an area where there is a proactive, industry-facing
regulator, the Oil and Gas Authority ("OGA"), and we are fully
aligned with the OGA's objective of Maximising Economic
Recovery.
Financial Review
JOG's 2018 year-end cash position was GBP19.8 million. As an oil
and gas exploration company, JOG produced no production revenue
during the year. The final amount payable under our carried
interest arrangement with CIECO V&C Limited ("CIECO"), in
respect of the P2170 licence, received at the start of 2018, was
GBP12,038 (2017: circa GBP2.4m). In addition, we received a small
amount of interest on our cash deposits.
The loss for the year, before and after tax, was GBP1,996,300
(2017: Profit GBP726,692). The change from 2017 reflects the fact
that we have fully used the carried interest arrangement with both
Equinor and CIECO but also reflects the Company's continued focus
on controlling administrative costs within the context of the work
undertaken during the year.
We also recognised the benefit of pre-funding the abovementioned
PGS multiclient 3D survey with our co-venturers on the P2170
licence, which is an important step in our overall strategic
planning as the P2170 licence area retains the potential for
further exploration, appraisal and future development phases.
Including other appraisal costs, our total spend on licence P2170
for year ended 31 December 2018 was GBP2.9m.
Further to the P2170 work programme and budget being approved in
November 2018, JOG estimated total capex for 2019 to be in the
range of GBP7 million to GBP10 million. The Verbier appraisal well,
which comprised the majority of this estimated capex, was drilled
ahead of schedule and under budget and therefore our capex guidance
for 2019 has been reduced to a range of GBP6 million to GBP7
million. JOG therefore remains in a well-funded position.
Looking Forward
Equinor, as the operator of the P2170 licence, remains committed
to the project and has confirmed to the co-venturers that it will
complete the already planned full re-evaluation of the licence
area, combining the recent appraisal well results and data
collected during operations with the fully processed new 3D
broadband seismic data, in order to better understand the reservoir
distribution of the primary target. The evaluation will also
include an assessment of additional prospectivity in the deeper
targets and the other previously identified exploration
opportunities, including Cortina, before a decision is made by the
co-venturers on potential future appraisal and exploration
programmes. Additionally, it is anticipated that plans for an area
hub development will be catalysed by licence awards in the OGA's
31st Supplementary Licencing Round and that this will enhance the
commercial viability of our Verbier oil discovery.
I would like to welcome new members to the JOG team, including
our new CFO, Vicary Gibbs and Senior Geoscientist, Dr Nasser Bani
Hassan. The Company has leased some new office space in London and
invested in the latest industry interpretation software and
hardware, which will position us well for the post well analysis
and seismic interpretation. I thank our dedicated team of
professionals for all their work and effort during the year.
Management remain excited by the Company's investment case and
continue to believe that there is significant potential to create
value for shareholders during 2019, with key events being the
integration of data from the wells drilled to date on Verbier into
the new 3D dataset, together with a potential update on resource
estimates, the 31st Supplementary Licencing Round and planning for
future drilling activity.
Many of our shareholders have supported JOG through the highs
and lows, as we have sought to grow this business from the ground
floor up. We are committed to the long-term growth of this Company
and would like to thank our shareholders for their continued
support
Andrew Benitz
Chief Executive Officer
20 May 2019
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
2018 2017
Note GBP GBP
Revenue 3 - -
Cost of sales (609,925) (13,498)
----------- -----------
GROSS LOSS (609,925) (13,498)
Other income 6 12,037 2,440,248
Administrative expenses (1,447,383) (1,705,068)
----------- -----------
OPERATING (LOSS)/PROFIT (2,045,271) 721,682
Finance income 7 48,971 5,010
----------- -----------
(LOSS)/PROFIT BEFORE TAX 8 (1,996,300) 726,692
Tax 9 - -
----------- -----------
(LOSS)/PROFIT FOR THE YEAR (1,996,300) 726,692
TOTAL COMPREHENSIVE (LOSS)/PROFIT
FOR THE YEAR (1,996,300) 726,692
Total comprehensive (loss)/profit
for the year attributable to:
Owners of the parent (1,996,300) 726,692
=========== ===========
(Loss)/profit per share expressed
in pence per share:
Basic 10 (9.15) 6.49
Diluted 10 (9.15) 6.03
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
2018 2017
Note GBP GBP
NON-CURRENT ASSETS
Intangible assets - Exploration
costs 11 4,306,589 1,357,959
Property, plant and equipment 12 30,264 -
4,336,853 1,357,959
----------- ------------
CURRENT ASSETS
Trade and other receivables 13 80,594 356,107
Cash and cash equivalents 14 19,782,511 25,415,410
----------- ------------
19,863,105 25,771,517
----------- ------------
TOTAL ASSETS 24,199,958 27,129,476
=========== ============
EQUITY
Called up share capital 15 2,466,144 2,466,144
Share premium account 93,851,526 93,851,526
Share options reserve 19 1,491,019 1,231,055
Accumulated losses (73,662,879) (71,666,579)
Reorganisation reserve (382,543) (382,543)
TOTAL EQUITY 23,763,267 25,499,603
----------- ------------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 16 436,691 1,629,873
TOTAL LIABILITIES 436,691 1,629,873
----------- ------------
TOTAL EQUITY AND LIABILITIES 24,199,958 27,129,476
=========== ============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Called
up Share Share
share premium options Accumulated Reorganisation Total
capital account reserve losses reserve equity
GBP GBP GBP GBP GBP GBP
At 1 January 2017 2,347,017 71,170,230 1,495,921 (72,763,959) (382,543) 1,866,666
Profit and total
comprehensive
profit for the year - - - 726,692 - 726,692
Issue of share capital 119,127 22,681,296 - - - 22,800,423
Share based payments - - 105,822 - - 105,822
Exercised share options - -(370,688) 370,688 - -
At 31 December 2017
and 1 January 2018 2,466,144 93,851,526 1,231,055 (71,666,579) (382,543) 25,499,603
Loss and total
comprehensive
loss for the year - - - (1,996,300) - (1,996,300)
Share based payments - - 259,964 - - 259,964
At 31 December 2018 2,466,144 93,851,526 1,491,019 (73,662,879) (382,543) 23,763,267
========= ========== ========= ============ ============== ===========
The following describes the nature and purpose of each reserve
within owners' equity:
Reserve Description and purpose
Called up share capital Represents the nominal value of shares
issued
Share premium account Amount subscribed for share capital in
excess of nominal value
Share options reserve Represents the accumulated balance of
share-based payment charges recognised in respect of share options
granted by the Company less transfers to accumulated deficit in
respect of options exercised or cancelled/lapsed
Accumulated losses Cumulative net gains and losses recognised in
the Consolidated Statement of Comprehensive Income
Reorganisation reserve Amounts resulting from the restructuring
of the Group at the time of the Initial Public Offering (IPO) in
2011
CONSOLIDATED STATEMENT OF CASH FLOWS
2018 2017
Note GBP GBP
Cash flows from operating activities
Cash (used in)/generated from operations 21 (2,698,361) 2,036,892
Net interest received 7 48,971 5,010
Net cash (used in)/generated from
operating activities (2,649,390) 2,041,902
----------- -----------
Cash flows from investing activities
Purchase of intangible assets 11 (2,948,630) (1,309,225)
Purchase of tangible assets 12 (34,879) -
Net cash used in investing activities (2,983,509) (1,309,225)
----------- -----------
Cash flows from financing activities
Net proceeds from share issue - 22,800,423
----------- -----------
Net cash generated from financing
activities - 22,800,423
----------- -----------
(Decrease)/Increase in cash and
cash equivalents 21 (5,632,899) 23,533,100
Cash and cash equivalents at beginning
of year 21 25,415,410 1,882,310
----------- -----------
Cash and cash equivalents at end
of year 21 19,782,511 25,415,410
----------- -----------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Jersey Oil and Gas plc (the "Company") and its subsidiaries
(together, the "Group") are involved in the upstream oil and gas
business in the UK.
The Company is a public limited company incorporated and
domiciled in the United Kingdom and quoted on AIM, a market
operated by London Stock Exchange plc. The address of its
registered office is 10 The Triangle, ng2 Business Park,
Nottingham, NG2 1AE.
2. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all the periods
presented, unless otherwise stated.
Basis of Accounting
These financial statements have been prepared under the historic
cost convention, in accordance with International Financial
Reporting Standards and IFRS IC interpretations as adopted by the
European Union ("IFRSs") and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS.
Going Concern
The Company is required to have sufficient resources to cover
the expected running costs of the business for a period of at least
12 months after the issue of these financial statements. Further to
completion of the Verbier appraisal well programme, there are
currently no firm work commitments on the P2170 licence, other than
ongoing Operator overheads and licence fees. Other work that the
Company is undertaking in respect of the P2170 licence and
surrounding areas is modest relative to its current cash reserves.
The Company's current cash reserves are therefore expected to more
than exceed its estimated liabilities. Based on these
circumstances, the Directors have considered it appropriate to
adopt the going concern basis of accounting in preparing its
consolidated financial statements.
Changes in Accounting Policies and Disclosures
(a) New and amended standards adopted by the Company:
At the start of the year the following standards were
adopted
-- IFRS 9 'Financial 'instruments' is effective for accounting
periods beginning on or after 1 January 2018.
-- IFRS 15 'Revenue from Contracts with Customers' is effective
for accounting periods beginning on or after 1 January 2018.
Other than changes to the terminology used in accounting
policies, these have not had a material impact on the financial
statements of the Group.
(b) The following standards have been published and are
mandatory for the Group's accounting periods beginning on or after
1 January 2019, but the Group has not adopted them early. The Group
does not expect the adoption of these standards to have a material
impact on the financial statements.
-- IFRS 16 'Leases' is effective for accounting periods beginning on or after 1 January 2019.
Amendments have also been made to the following standards
effective on or after 1 January 2018. The Group does not expect the
amendments to have a material impact on the Group's financial
statements.
-- IFRS 2 'Share-based Payment'
-- IFRS 9 'Financial Instruments'
-- IAS 28 'Investment in Associates and Joint Ventures'
-- IAS 40 'Investment Property'
All other amendments to accounting standards not yet effective
and not included above are not material or applicable to the
Group.
Significant Accounting Judgements and Estimates
The preparation of the financial statements requires management
to make estimates and assumptions that affect the reported amounts
of revenues, expenses, assets and liabilities at the date of the
financial statements. If in future such estimates and assumptions,
which are based on management's best judgement at the date of the
financial statements, deviate from the actual circumstances, the
original estimates and assumptions will be modified as appropriate
in the period in which the circumstances change. The Group's
accounting policies make use of accounting estimates and judgements
in the following areas:
-- the assessment of the existence of impairment triggers (note 11).
-- the estimation of share-based payment costs (note 19).
Impairments
The Group tests its capitalised exploration licence costs for
impairment when facts and circumstances suggest that the carrying
amount exceeds the recoverable amount. The recoverable amounts of
Cash Generating Units are determined based on value-in-use
calculations. There were no impairment triggers in 2018 and no
impairment charge has been recorded.
Share-Based Payments
The Group currently has a number of share schemes that give rise
to share-based charges. The charge to operating profit for these
schemes amounted to GBP259,964 (2017: GBP105,822). For the purposes
of calculating the fair value of the share options, a Black-Scholes
option pricing model has been used. Based on past experience, it
has been assumed that options will be exercised, on average, at the
mid-point between vesting and expiring. The share price volatility
used in the calculation is based on the actual volatility of the
Company's shares, since 1 January 2017. The risk-free rate of
return is based on the implied yield available on zero coupon gilts
with a term remaining equal to the expected lifetime of the options
at the date of grant.
Basis of Consolidation
(a) Subsidiaries
Subsidiaries are all entities over which the Group has the power
to govern their financial and operating policies generally
accompanying a shareholding of more than one half of the voting
rights. The existence and effect of potential voting rights that
are currently exercisable or convertible are considered when
assessing whether the Group controls another entity. The Group also
assesses existence of control where it does not have more than 50
per cent. of the voting power but is able to govern the financial
and operating policies by virtue of de-facto control. De-facto
control may arise in circumstances where the size of the Group's
voting rights relative to the size and dispersion of holdings of
other shareholders give the Group the power to govern the financial
and operating policies.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from
the date the Group ceases to have control.
The Group applies the acquisition method of accounting to
account for business combinations. The consideration transferred
for the acquisition of a subsidiary is the fair value of the assets
transferred, the liabilities incurred and the equity interests
issued by the Group. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair value at the
acquisition date. The Group recognises any non-controlling interest
in the acquiree on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognised amounts of the acquiree's identifiable net
assets.
Acquisition related costs are expensed as incurred.
If the business combination is achieved in stages, the
acquisition date fair value of the acquirer's previously held
equity interest in the acquiree is re-measured to fair value at the
acquisition date through profit or loss.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with
IAS 39 either in profit or loss or as a change to other
comprehensive income. Contingent consideration that is classified
as equity is not re-measured, and its subsequent settlement is
accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of
the consideration transferred and the fair value of non-controlling
interest over the net identifiable assets acquired and liabilities
assumed. If this consideration is lower than the fair value of the
net assets of the subsidiary acquired, the difference is recognised
in profit or loss.
Inter-company transactions, balances, income and expenses on
transactions between Group companies are eliminated. Profits and
losses resulting from inter-company transactions that are
recognised in assets are also eliminated. Accounting policies of
subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
(b) Changes in ownership interests in subsidiaries without
change of control
Transactions with non-controlling interests that do not result
in loss of control are accounted for as equity transactions - that
is, as transactions with the owners in their capacity as owners.
The difference between fair value of any consideration paid and the
relevant share acquired of the carrying value of net assets of the
subsidiary is recorded in equity. Gains or losses on disposals to
non-controlling interests are also recorded in equity.
(c) Disposal of subsidiaries
When the Group ceases to have control any retained interest in
the entity is re-measured to its fair value at the date when
control is lost, with the change in carrying amount recognised in
profit or loss. The fair value is the initial carrying amount for
the purposes of subsequently accounting for the retained interest
as an associate, joint venture or financial asset. In addition, any
amounts previously recognised in other comprehensive income in
respect of that entity are accounted for as if the Group had
directly disposed of the related assets or liabilities. This may
mean that amounts previously recognised in other comprehensive
income are reclassified to profit or loss.
Acquisitions, Asset Purchases and Disposals
Acquisitions of oil and gas properties are accounted for under
the purchase method where the business meets the definition of a
business combination.
Transactions involving the purchase of an individual field
interest, farm-ins, farm-outs, or acquisitions of exploration and
evaluation licences for which a development decision has not yet
been made that do not qualify as a business combination, are
treated as asset purchases. Accordingly, no goodwill or deferred
tax arises. Consideration from farm-ins/farm-outs is adequately
credited from, or debited to, the asset. The purchase consideration
is allocated to the assets and liabilities purchased on an
appropriate basis. Proceeds on disposal are applied to the carrying
amount of the specific intangible asset or development and
production assets disposed of and any surplus is recorded as a gain
on disposal in the Consolidated Statement of Comprehensive
Income.
Exploration and Evaluation Costs
The Group accounts for oil and gas and exploration and
evaluation costs using IFRS 6 "Exploration for and Evaluation of
Mineral Resources". Such costs are initially capitalised as
Intangible Assets and include payments to acquire the legal right
to explore, together with the directly related costs of technical
services and studies, seismic acquisition, exploratory drilling and
testing.
Exploration costs are not amortised prior to the conclusion of
appraisal activities.
Exploration costs included in Intangible Assets relating to
exploration licences and prospects are carried forward until the
existence (or otherwise) of commercial reserves has been determined
subject to certain limitations including review for indications of
impairment on an individual license basis. If commercial reserves
are discovered, the carrying value, after any impairment loss of
the relevant assets, is then reclassified as Property, plant and
equipment under Production interests and fields under development.
If, however, commercial reserves are not found, the capitalised
costs are charged to the Consolidated Statement of Comprehensive
Income. If there are indications of impairment prior to the
conclusion of exploration activities, an impairment test is carried
out.
Property, Plant and Equipment
Property, plant and equipment is stated at historic purchase
cost less accumulated depreciation. Asset lives and residual
amounts are reassessed each year. Cost includes the original
purchase price of the asset and the costs attributable to bringing
the asset to its working condition for its intended use.
Depreciation on these assets is calculated on a straight-line
basis as follows:
Computer & office - 3 years
equipment
Joint Ventures
The Group participates in joint venture agreements with
strategic partners. The Group accounts for its share of assets,
liabilities, income and expenditure of these joint venture
agreements and discloses the details in the appropriate Statement
of Financial Position and Statement of Comprehensive Income
headings in the proportion that relates to the Group per the joint
venture agreement.
Investments
Fixed asset investments in subsidiaries are stated at cost less
accumulated impairment in the Company's Statement of Financial
Position and reviewed for impairment if there are any indications
that the carrying value may not be recoverable.
Financial Instruments
Financial assets and financial liabilities are recognised in the
Group's Statement of Financial Position when the Group becomes
party to the contractual provisions of the instrument. The Group
does not have any derivative financial instruments.
Cash and cash equivalents include cash in hand and deposits held
on call with banks with a maturity of three months or less.
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less any expected credit loss. The Company
recognises an allowance for expected credit losses (ECLs) for all
debt instruments not held at fair value through profit or loss.
ECLs are based on the difference between the contractual cash flows
due in accordance with the contract and all the cash flows that the
Company expects to receive, discounted at an approximation of the
original effective interest rate. The carrying amount of the asset
is reduced through the use of an allowance account, and the amount
of the loss will be recognised in the Consolidated Statement of
Comprehensive Income within administrative expenses. Subsequent
recoveries of amounts previously provided for are credited against
administrative expenses in the Consolidated Statement of
Comprehensive Income.
Trade payables are stated initially at fair value and
subsequently measured at amortised cost.
Exceptional Items
Exceptional items are disclosed separately in the financial
statements where it is necessary to do so to provide further
understanding of the financial performance of the Group. They are
material items of income or expense that have been shown separately
due to the significance of their nature or amount.
Deferred Tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit. Deferred taxation liabilities
are provided, using the liability method, on all taxable temporary
differences at the reporting date. Such assets and liabilities are
not recognised if the temporary difference arises from goodwill or
from the initial recognition (other than in a business combination)
of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
Deferred income tax assets are recognised to the extent that it
is probable that future taxable profits will be available against
which the temporary differences can be utilised. The carrying
amount of deferred tax assets is reviewed at each reporting
date.
Foreign Currencies
Monetary assets and liabilities in foreign currencies are
translated into sterling at the rates of exchange ruling at the
reporting date. Transactions in foreign currencies are translated
into sterling at the rate of exchange ruling at the date of the
transaction. Gains and losses arising on retranslation are
recognised in the Consolidated Statement of Comprehensive Income
for the year.
Employee Benefit Costs
Payments to defined contribution retirement benefit schemes are
recognised as an expense when employees have rendered service
entitling them to contributions.
Share-Based Payments
Equity settled share-based payments to employees and others
providing similar services are measured at the fair value of the
equity instruments at the grant date. The total amount to be
expensed is determined by reference to the fair value of the
options granted:
-- including any market performance conditions (for example, an entity's share price);
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitability, sales
growth targets and remaining an employee of the entity over a
specified time period); and
-- including the impact of any non-vesting conditions (for
example, the requirement for employees to save).
The fair value determined at the grant date of the equity
settled share-based payments is expensed on a straight line basis
over the vesting period, based on the Group's estimate of equity
instruments that will eventually vest, with a corresponding
increase in equity. At the end of each reporting period, the Group
revises its estimate of the number of equity instruments expected
to vest. The impact of the revision of the original estimates, if
any, is recognised in profit or loss such that the cumulative
expense reflects the revised estimate, with a corresponding
adjustment to the equity settled employee benefits reserve.
Equity settled share based payment transactions with parties
other than employees are measured at the fair value of the goods or
services received, except where that fair value cannot be estimated
reliably, in which case they are measured at the fair value of the
equity instruments granted, measured at the date the entity obtains
the goods or the counterparty renders the service.
Exercise proceeds net of directly attributable costs are
credited to share capital and share premium.
Share Capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
ordinary shares or options are shown in equity as a deduction, net
of tax, from the proceeds.
Where any Group company purchases the Company's equity share
capital (treasury shares), the consideration paid, including any
directly attributable incremental costs (net of taxes) is deducted
from equity attributable to the Company's equity holders until the
shares are cancelled or reissued. Where such ordinary shares are
subsequently reissued, any consideration received, net of any
directly attributable incremental transaction costs and the related
tax effects is included in equity attributable to the Company's
equity holders.
Segmental Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the Board of Directors.
3. SEGMENTAL REPORTING
The Board consider that the Group operates in a single segment,
that of oil and gas exploration, appraisal, development and
production, in a single geographical location, the North Sea of the
United Kingdom and do not consider it appropriate to disaggregate
data further from that disclosed.
The Board is the Group's chief operating decision maker within
the meaning of IFRS 8 "Operating Segments".
During 2018 and 2017 the Group had no turnover. During the 2018
year the Group did receive GBP12,037 (2017: GBP2,417,748) carried
cost reimbursements from co-venturers which is shown in Other
Income.
4. FINANCIAL RISK MANAGEMENT
The Group's activities expose it to financial risks and its
overall risk management programme focuses on minimising potential
adverse effects on the financial performance of the Group. The
Company's activities are also exposed to risks through its
investments in subsidiaries and is accordingly exposed to similar
financial and capital risks as the Group.
Risk management is carried out by the Directors and they
identify, evaluate and address financial risks in close
co-operation with the Group's management. The Board provides
written principles for overall risk management, as well as written
policies covering specific areas, such as mitigating foreign
exchange risks and investing excess liquidity.
Credit Risk
The Group's credit risk primarily relates to its trade
receivables. Responsibility for managing credit risks lies with the
Group's management.
A debtor evaluation is typically obtained from an appropriate
credit rating agency. Where required, appropriate trade finance
instruments such as letters of credit, bonds, guarantees and credit
insurance will be used to manage credit risk.
The Group also has a number of joint venture arrangements where
co-venturers have made commitments to fund certain expenditure.
Management evaluate the credit risk associated with each contract
at the time of signing and regularly monitor the credit worthiness
of our partners.
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they become due. The Group
manages its liquidity through continuous monitoring of cash flows
from operating activities, review of actual capital expenditure
programmes, and managing maturity profiles of financial assets and
financial liabilities.
Capital Risk Management
The Group seeks to maintain an optimal capital structure. The
Group considers its capital to comprise both equity and net
debt.
The Group monitors its capital structure on the basis of its net
debt to equity ratio. Net debt to equity ratio is calculated as net
debt divided by total equity. Net debt is calculated as borrowing
less cash and cash equivalents. Total equity comprises all
components of equity.
The ratio of net debt to equity as at 31 December 2018 is Nil
(2017: Nil).
Maturity analysis of financial assets and liabilities
Financial Assets
2018 2017
GBP GBP
Up to 3 months 80,595 356,107
3 to 6 months - -
Over 6 months - -
------ -------
80,595 356,107
====== =======
Financial Liabilities
2018 2017
GBP GBP
Up to 3 months 436,691 1,629,872
3 to 6 months - -
Over 6 months - -
------- ---------
436,691 1,629,872
======= =========
5. EMPLOYEES AND DIRECTORS
2018 2017
GBP GBP
Wages and salaries 956,915 795,389
Social security costs 76,119 64,409
Share based payments (note 19) 259,964 105,822
Other pensions costs 66,984 42,407
--------- ---------
1,359,982 1,008,027
========= =========
Other pension costs include employee and Company contributions
to money purchase pension schemes.
The average monthly number of employees during the year was as
follows:
2018 2017
Directors 5 5
Employees 6 7
11 12
==== ====
2018 2017
GBP GBP
Directors' remuneration 557,341 489,000
Directors' pension contributions to money purchase
schemes 24,702 20,000
Benefits 2,992 5,231
585,035 514,231
======= =======
The average number of Directors to whom retirement benefits
were accruing was as follows:
2018 2017
Money purchase schemes 2 1
======= =======
Information regarding the highest paid Director 2018 2017
is as follows:
GBP GBP
Aggregate emoluments and benefits 167,800 153,924
Pension contributions 7,500 -
175,300 153,924
======= =======
The Directors did not exercise any share options
during the year.
Key management compensation
Key management includes Directors (Executive and Non-Executive)
and the Company Secretary. The compensation paid or payable to key
management for employee services is shown below;
2018 2017
GBP GBP
Wages and short-term employee benefits 584,341 519,544
Share based payments (note 19) 118,423 52,978
Pension Contributions 30,702 24,375
------- -------
733,466 596,897
======= =======
6. OTHER INCOME
2018 2017
GBP GBP
Sale of datasets - 22,500
Carried costs reimbursement 12,037 2,417,748
12,037 2,440,248
====== =========
Carried costs reimbursement: Reimbursement of well-related costs
received as a result of the carried interest arrangement with CIECO
V&C (UK) Limited in relation to licence P2170
Sale of datasets Income generated from the sale of data relating
to a relinquished licence
7. NET FINANCE INCOME
2018 2017
GBP GBP
Finance income:
Joint venture finance charge - -
Interest received 48,971 5,010
48,971 5,010
------ -----
Finance costs: - -
Net finance income 48,971 5,010
====== =====
.
8. (LOSS)/PROFIT BEFORE TAX
The loss before tax is stated after charging/(crediting):
2018 2017
GBP GBP
Depreciation 4,615 372
Auditors' remuneration - audit of parent company
and consolidation 35,000 28,500
Auditors' remuneration - audit of subsidiaries 12,500 11,500
Auditors' remuneration - non-audit work 8,700 50,000
Foreign exchange loss 9,678 4,980
Directors' remuneration (note 5) 585,035 514,231
Employee costs (note 5) 514,983 387,974
Share based payments (notes 5 & 19) 259,964 105,822
9. TAX
Reconciliation of tax charge
2018 2017
GBP GBP
(Loss)/Profit before tax (1,996,300) 726,692
Tax at the domestic rate of 19% (2017: 19.25%) (379,297) 139,888
Capital allowances in excess of depreciation (589,363) (276,257)
Expenses not deductible for tax purposes and
non-taxable income 51,292 20,034
Deferred tax asset not recognised 917,368 116,336
Total tax expense reported in the Consolidated - -
Statement of Comprehensive Income
=========== =========
No liability to UK corporation tax arose on ordinary activities
for the year ended 31 December 2018 or for the year ended 31
December 2017.
The Group has not recognised a deferred tax asset due to the
uncertainty over when the tax losses can be utilised. At the year
end the usable tax losses within the Group were approximately GBP30
million.
10. (LOSS)/PROFIT PER SHARE
Basic (loss)/profit per share is calculated by dividing the
losses attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the year.
Diluted (loss)/profit per share is calculated using the weighted
average number of shares adjusted to assume the conversion of all
dilutive potential ordinary shares. As a profit was recorded for
the prior year, the issue of potential ordinary shares would have
been anti-dilutive (see note 19 for share options in place at the
end of the year).
Profit/(Loss
attributable Weighted
to ordinary average Per share
shareholders number amount
GBP of shares pence
Year ended 31 December
2018
Basic and Diluted EPS
Basic & Diluted (1,996,300) 21,829,227 (9.15)
============== =========== ===========
Year ended 31 December
2017
Basic and Diluted EPS
Basic 726,692 11,203,777 6.49
Diluted 726,692 12,056,036 6.03
============== =========== ===========
11. INTANGIBLE ASSETS
Exploration
costs
GBP
COST
At 1 January 2017 16,446,425
Additions 1,309,596
Disposals (16,222,821)
At 31 December 2017 1,533,200
--------------
Additions 2,948,630
At 31 December 2018 4,481,830
--------------
ACCUMULATED AMORTISATION, DEPLETION & DEPRECIATION
At 1 January 2017 16,398,062
Charge for the year -
Amortisation on disposal (16,222,821)
At 31 December 2017 175,241
--------------
At 31 December 2018 175,241
--------------
NET BOOK VALUE
At 31 December 2018 4,306,589
==============
At 31 December 2017 1,357,959
==============
At 31 December 2016 48,363
==============
During 2017, the Group retained an 18% equity interest in
licence P2170 (Verbier) and a commercial interest in P1989
(Partridge)
In line with the requirements of IFRS 6, we have considered
whether there are any indicators of impairment on the remaining
exploration asset (P2170 - Verbier). Based on our assessment, as at
31 December 2018 there are not deemed to be indicators that the
licence is not commercial and the carrying value of GBP4,306,589
continues to be supported by on-going exploration work on the
licence area with no further impairments considered necessary.
12. PROPERTY, PLANT AND EQUIPMENT
Computer
and office
equipment
GBP
COST
At 1 January 2017 286,022
Disposals (160,236)
At 31 December 2017 125,786
------------
Additions 34,879
At 31 December 2018 160,665
------------
ACCUMULATED AMORTISATION, DEPLETION
& DEPRECIATION
At 1 January 2017 285,650
Charge for the year 372
Disposals (160,236)
At 31 December 2017 125,786
------------
Charge for the year 4,615
At 31 December 2018 130,401
------------
NET BOOK VALUE
At 31 December 2018 30,264
============
At 31 December 2017 -
============
At 1 January 2017 372
============
13. TRADE AND OTHER RECEIVABLES
2018 2017
Current: GBP GBP
Trade receivables (net) - 277,710
Other receivables 67 67
Value added tax 63,818 52,085
Prepayments and accrued revenue 16,709 26,245
80,594 356,107
========= ==========
As at 31 December 2018 there were no trade receivables past due
nor impaired. There are no credit quality concerns over the trade
receivables balance outstanding at the year end.
14. CASH AND CASH EQUIVALENTS
2018 2017
GBP GBP
Unrestricted cash in bank accounts 19,782,511 25,415,410
The cash balances are placed with a creditworthy
financial institution.
15. CALLED UP SHARE CAPITAL
Issued and fully paid:
Number: Class Nominal 2018 2017
value GBP GBP
21,829,227 (2017:21,829,227) Ordinary 1p 2,466,144 2,466,144
========= =========
16. TRADE AND OTHER PAYABLES
2018 2017
Current: GBP GBP
Trade payables 142,565 1,279,870
Accrued expenses 140,932 219,586
Other payables 130,905 8,169
Taxation and Social Security 22,289 122,248
436,691 1,629,873
======= =========
17. NON-CANCELLABLE OPERATING LEASE COMMITMENTS
Total commitments under non-cancellable operating leases were as
follows:
2018 2017
GBP GBP
Not longer than one year 5,333 -
Longer than one year but not longer than five - -
years
Longer than five years - -
5,333 -
===== ====
18. CONTINGENT LIABILITY
In accordance with a 2015 settlement agreement reached with the
Athena Consortium, although Jersey Petroleum Limited remains a
Licensee in the joint venture, any past or future liabilities in
respect of its interest can only be satisfied from the Group's
share of the revenue that the Athena Oil Field generates and up to
60 per cent. of net disposal proceeds or net petroleum profits from
the Group's interest in the P2170 licence which is the only
remaining asset still held that was in the Group at the time of the
agreement with the Athena Consortium who hold security over this
asset. Any future repayments, capped at the unpaid liability
associated with the Athena Oil Field, cannot be calculated with any
certainty, and any remaining liability still in existence once the
Athena Oil Field has been decommissioned will be written off. A
payment was made in 2016 to the Athena Consortium in line with this
agreement following the farm-out of P2170 (Verbier) to Equinor and
the subsequent receipt of monies relating to that farm-out.
19. SHARE BASED PAYMENTS
The Group operates a number of share option schemes. Options are
exercisable at the prices set out in the table below. Options are
forfeited if the employee leaves the Group through resignation or
dismissal before the options vest.
Equity settled share-based payments are measured at fair value
at the date of grant and expensed on a straight-line basis over the
vesting period, based upon the Group's estimate of shares that will
eventually vest.
The Group's share option schemes are for Directors, Officers and
employees. The charge for the year was GBP259,964 (2017:
GBP105,822) and details of outstanding options are set out in the
table below.
No. of No. of
shares shares
for which Options for which
options lapsed/non options
Exercise outstanding vesting outstanding
Date of price Vesting Expiry at 1 Jan Options Options during at 31 Dec
Grant (pence) date date 2018 issued Exercised the year 2018
Mar 2011 100 Vested Mar 2021 3,164 - - - 3,164
Mar 2011 4,300 Vested Mar 2021 5,809 - - - 5,809
Mar 2011 4,300 Mar 2014 Mar 2021 4,355 - - - 4,355
Mar 2011 4,300 Mar 2015 Mar 2021 5,809 - - - 5,809
Jul 2011 4,300 Jul 2011 Jul 2021 523 - - - 523
Jul 2011 4,300 Jul 2012 Jul 2021 523 - - - 523
Jul 2011 4,300 Jul 2014 Jul 2021 523 - - - 523
Dec 2011 2,712 Dec 2012 Dec 2021 1,650 - - - 1,650
Dec 2011 2,712 Dec 2014 Dec 2021 1,650 - - - 1,650
Dec 2011 2,712 Dec 2015 Dec 2021 - - - - -
May 2013 1,500 May 2014 May 2023 9,500 - - - 9,500
May 2013 1,500 May 2015 May 2023 9,500 - - - 9,500
May 2013 1,500 May 2015 May 2023 - - - - -
Nov 2016 110 Nov 2016 Nov 2021 246,667 - - - 246,667
Nov 2016 110 Nov 2017 Nov 2021 246,667 - - - 246,667
Nov 2016 110 Nov 2018 Nov 2021 246,667 - - - 246,667
Apr 2017 310 Apr 2017 Apr 2022 20,000 - - - 20,000
Apr 2017 310 Apr 2018 Apr 2022 20,000 - - - 20,000
Apr 2017 310 Apr 2019 Apr 2022 20,000 - - - 20,000
Jan 2018 200 Jan 2021 Jan 2025 420,000 - - 420,000
Jan 2018 200 Jan 2021 Jan 2025 120,000 - 120,000 -
Jan 2018 200 Jan 2018 Jan 2023 76,666 - - 76,666
Jan 2018 200 Jan 2019 Jan 2023 76,667 - - 76,667
Jan 2018 200 Jan 2020 Jan 2023 76,667 - - 76,667
Jun 2018 207 Jun 2019 Jun 2023 33,333 - 33,333 -
Jun 2018 207 Jun 2020 Jun 2023 33,333 - 33,333 -
Jun 2018 207 Jun 2021 Jun 2023 33,334 - 33,334 -
Nov 2018 172 Nov 2021 Nov 2025 150,000 - - 150,000
Total 1,643,007
The weighted average fair value of options granted during the
year determined using the Black-Scholes valuation model was 41.7p
per option. The significant inputs into the model were the
mid-market share price on the day of grant or 1p exercise price as
shown above and an annual risk-free interest rate of 2 per cent.
The volatility measured at the standard deviation of continuously
compounded share returns is based on a statistical analysis of
daily share prices from the date of admission to AIM to the date of
grant on an annualised basis.
20. RELATED UNDERTAKINGS AND ULTIMATE CONTROLLING PARTY
The Group and Company do not have an ultimate controlling party
or parent Company.
Registered
Subsidiary % owned County of Incorporation Principal Activity Office
Jersey North Sea
Holdings Ltd 100% England & Wales Non-Trading 1
Jersey Petroleum
Ltd 100% England & Wales Oil Exploration 1
Jersey E & P Ltd 100% Scotland Non-Trading 2
Jersey Oil Ltd 100% Scotland Non-Trading 2
Jersey Exploration
Ltd 100% Scotland Non-Trading 2
Jersey Oil & Gas
E & P Ltd 100% Jersey Management services 3
Registered Offices
1 10 The Triangle, ng2 Business Park, Nottingham, NG2 1AE
2 6 Rubislaw Terrace, Aberdeen, AB10 1XE
3 First Floor, 17 The Esplanade, St Helier, Jersey JE2 3QA
21. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
RECONCILIATION OF LOSS BEFORE TAX TO CASH (USED IN)/GENERATED
FROM OPERATIONS
2018 2017
GBP GBP
(Loss)/profit for the year before tax (1,996,300) 726,692
Adjusted for:
Amortisation, impairments, depletion and depreciation 4,615 -
Share based payments (net) 259,964 105,822
Gain on disposal of assets - -
Finance costs - -
Finance income (48,971) (5,010)
(1,780,692) 827,504
(Increase)/Decrease in trade and other receivables 275,513 (233,235)
Increase/(Decrease) in trade and other payables (1,193,182) 1,442,623
----------- ---------
Cash Generated from/(used in) operations (2,698,361) 2,036,892
CASH AND CASH EQUIVALENTS
The amounts disclosed on the consolidated Statement of Cash
Flows in respect of Cash and cash equivalents are in respect of
these statements of financial position amounts:
Year ended 2018
31 Dec 1 Jan 2018
2018
GBP GBP
Cash and cash equivalents 19,782,511 25,415,410
Year ended 2017
31 Dec 1 Jan 2017
2017
GBP GBP
Cash and cash equivalents 25,415,410 1,882,310
Analysis of net cash
At 1 Jan Cash flow At 31 Dec
2018 2018
GBP GBP GBP
Cash and cash equivalents 25,415,410 (5,632,899) 19,782,511
----------- ------------ -----------
Net cash 25,415,410 (5,632,899) 19,782,511
=========== ============ ===========
22. POST BALANCE SHEET EVENT
Since the balance sheet date, the appraisal well on the Verbier
prospect, within the P2170 licence, has been completed.
Unfortunately, the well did not encounter Upper Jurassic reservoir
sands as anticipated and as a result, our contingent resource
volumetric estimates are likely to be revised towards the lower end
of the initial resource estimate of 25 MMboe. For further details
refer to the Chief Executive Officer's Report.
23 AVAILABILITY OF THE ANNUAL REPORT 2018
A copy of these results will be made available for inspection at
the Company's registered office during normal business hours on any
weekday. The Company's registered office is at 10 The Triangle, ng2
Business Park, Nottingham NG2 1AE. A copy can also be downloaded
from the Company's website at www.jerseyoilandgas.com. Jersey Oil
and Gas plc is registered in England and Wales with registration
number 7503957.
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.
END
FR EAESNFLENEAF
(END) Dow Jones Newswires
May 20, 2019 02:00 ET (06:00 GMT)
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