TIDMJOG
RNS Number : 7095N
Jersey Oil and Gas PLC
26 September 2019
26 September 2019
Jersey Oil and Gas plc
("Jersey Oil & Gas", "JOG" or the "Company")
Interim Results for the Six Months Ended 30 June 2019
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 interim results for the
six months ended 30 June 2019 (the "Period").
Highlights:
-- Strong cash position of approximately GBP15.5m at period end
-- Drilled the 20/05b-14 Verbier appraisal well which, although
failing to encounter Upper Jurassic sands, provided the P2170 JV
partners with valuable well data
-- Received the final instalment of the processed data from the
2018 PGS 3D seismic survey, which will be incorporated with data
from the 20/05b-14 Verbier appraisal well to provide a Verbier
licence full re-evaluation
-- Received GBP750,000 in settlement from Total E&P UK
Limited ("TEPUK") in relation to the termination of its 2013
farm-in to licence P2032
Post Period End:
-- Transformational licence awards in the Oil and Gas
Authority's ("OGA") 31st Supplementary Offshore Licensing Round in
the UK North Sea
-- Greater Buchan Area awards include 100% equity and
operatorship of the Buchan Field together with the J2 and Glenn
discoveries
-- Awards add an estimated 119 million barrels of discovered
mean recoverable resources net to JOG
-- Three month 50% option granted to Equinor for Blocks 20/5d and 21/1a (the "Buchan Blocks")
Outlook:
-- Field Development Planning ("FDP") work underway on the
Greater Buchan Area hub development project
-- Adopting key Environment, Social and Governance principles to
ensure that we develop our resources in a sustainable, low carbon
and responsible manner
-- Hiring key project team members to enhance our technical and
project management capabilities
-- Appointing key contractors to undertake Appraise and Select phases of the FDP work
-- Commissioned a new independent Competent Person's Report
("CPR") for the Buchan Blocks, which contain the Buchan Field and
J2 discovery
-- Progressing full subsurface re-interpretation / validation of
licence P2170 using the new final processed data from the 2018 PGS
3D seismic survey
-- Undertaking independent work in respect of licence P2170 to
support potential future drilling activity
-- Potential production acquisition opportunities continue to be pursued
Andrew Benitz, CEO of Jersey Oil & Gas, commented:
"The first half of 2019 has been transformational for JOG, we
have begun work on a full re-evaluation of the P2170 licence area
and after significant effort and investment JOG was awarded 100%
working interest and operatorship of four blocks in the Greater
Buchan Area. This has significantly enhanced the Company's resource
base of discovered oil volumes.
The Greater Buchan area is a very material and scalable project,
which has the clear potential to deliver significant shareholder
value beyond what we have already achieved. We are dealing with
well-known, good quality, light oil fields and discoveries in a
relatively benign and shallow part of the Central North Sea, which
are located within UK waters, near good surrounding infrastructure
for export and represent a potentially valuable energy resource for
both JOG and the UK.
The board and I look forward to develop this vital resource
sustainably and would like to thank shareholders for their ongoing
support and look forward to updating them on further progress."
Enquiries:
Jersey Oil and Gas plc Andrew Benitz, C/o Camarco:
CEO Tel: 020 3757
4983
Strand Hanson Limited James Harris Tel: 020 7409
Matthew Chandler 3494
James Bellman
Arden Partners plc Paul Shackleton Tel: 020 7614
Benjamin Cryer 5900
BMO Capital Markets Limited Jeremy Low Tel: 020 7236
Tom Rider 1010
Camarco Billy Clegg Tel: 020 3757
James Crothers 4983
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.
This licence contains the 2017 Verbier oil discovery.
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.
CHAIRMAN'S STATEMENT
Overview
The first six months of 2019 was a busy period for Jersey Oil
and Gas ("JOG" or the "Company") as we drilled the Verbier (P2170)
appraisal well, made a detailed application to the Oil and Gas
Authority ("OGA") in respect of acreage adjacent to P2170 offered
in its 31(st) Supplementary Offshore Licensing Round ("31 SLR"),
and commenced work on the interpretation of the 3D seismic survey's
processed data over the P2170 licence area.
This was against a backdrop of the Brent Crude oil price
starting 2019 at approximately US$55 per barrel and increasing to
US$65 per barrel as at 30th June 2019.
Verbier and the Greater Buchan Area Development
To our great disappointment, the Verbier appraisal well did not
encounter the anticipated Upper Jurassic sands. Nonetheless, we
remain committed to the P2170 Licence area, particularly in the
context of: a) the operator's estimate of 25m barrels of discovered
contingent resources at Verbier; b) potential additional resources
in the area located to the north west of the earlier Verbier
discovery (the 20/05b-14 well) which remain untested; c) the
further untested resource potential in a deeper horizon beneath the
Verbier discovery; and d) the Cortina prospect.
During the first half of 2019, we also continued to work very
hard on our application for acreage on offer under the 31 SLR,
which included the Buchan oil field and the J2 oil discovery (well
20/5a-10Y), both of which are located in areas contiguous to P2170
in the UK North Sea.
In July 2019, we were delighted to announce that JOG had been
awarded various licence interests, including Blocks 20/5d and 21/1a
(containing the Buchan field and the J2 discovery), new exploration
acreage with the award of Block 20/4c and, subsequent to the
initial awards, a further award including Block 21/2a (containing
the Glenn oil discovery). These awards, when combined, provide JOG
with licence acreage with an additional estimated 119 million
barrels of oil equivalent ("mmboe") of discovered mean recoverable
resources.
The 31 SLR awards represent a huge opportunity for JOG, bringing
us operatorship of most of the key discovered oil fields within the
Greater Buchan Area, whilst additionally enhancing the potential
development of the Verbier discovery, as part of an overall area
development project.
Further details of the 31 SLR awards are contained in the Chief
Executive Officer's Report. As Chairman, I would like to take this
opportunity to acknowledge the huge amount of effort that has been
put into achieving these licence awards by the entire JOG team,
which is the culmination of preparatory work that has been ongoing
for much of the last two years.
Financial Position
The Company's total cash reserves at 30 June 2019 were
approximately GBP15.5 million.
Going forward, we now have a much enlarged portfolio of assets,
which we expect will continue to grow in the future, each with
interdependent funding considerations.
Outlook
Following the recent 31 SLR awards, we have started to work on
the development project for the Greater Buchan Area with vigour and
look forward to delivering significant shareholder value as this
workstream progresses.
Marcus Stanton
Non-Executive Chairman
26 September 2019
CHIEF EXECUTIVE OFFICER'S REPORT
Overview
In January 2019, the OGA launched the 31(st) Supplementary
Offshore Licensing Round ("31 SLR"), covering the Greater Buchan
Area ("GBA"). The acreage offered in the 31 SLR centred around our
existing P2170 licence area, where the Company made the Verbier oil
discovery in October 2017. We referred to the 31 SLR in our 2018
annual report and accounts, recognising the potential for a new
area hub development to produce the material discovered oil volumes
that exist within the GBA. Looking at the GBA in a wider hub
context has been part of JOG's strategic thinking for the past two
years, and it was this foresight that has helped to transform the
Company to where we are today - a North Sea focused upstream
business with in excess of 120 million barrels of discovered oil
across multiple high quality oil fields that, tied together, could
form a major new JOG-operated development hub within the Central
North Sea.
During the first half of 2019, the Verbier appraisal well was
drilled, in which JOG holds an 18% non-operated working interest.
Unfortunately, after the success of the initial exploration
discovery in late 2017, this initial appraisal well did not
encounter the anticipated Upper Jurassic reservoir sands. Whilst
this was a temporary setback for the Company, it is important to
note that such an outcome does not factor in elements of additional
resource potential within the P2170 licence area which include an
area to the north west of Verbier, a deeper objective beneath the
Verbier discovery and the Cortina prospect to the east of Verbier.
Together with our co-venturers, Equinor UK Limited ("Equinor") and
CIECO V&C (UK) Limited ("CIECO"), we have begun work on a full
re-evaluation of the licence area, including an assessment of
additional prospectivity in the deeper targets and the other
previously identified exploration opportunities. This additional
prospectivity provides material upside potential for JOG's area
development plans within the GBA.
Operations
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 in order 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.
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, which was drilled ahead of schedule and under budget, did not
encounter the anticipated Upper Jurassic reservoir sands and, as a
result, our contingent resource volumetric estimates have been
revised towards the lower, 25 mmboe end of the operator's initial
resource estimate range. The original 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, the data from which, together with all the previous
well results, is being integrated into the final processed 3D
seismic survey data, which was delivered during June and July 2019.
The resulting analysis will be used to evaluate fully 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 situated within
the P2170 licence area, will be re-evaluated, utilising the new
seismic data and considered for potential future drilling.
The Greater Buchan Area - A transformational event for Jersey
Oil and Gas
In July 2019, after expending significant time, effort and
investment on an application, JOG was awarded 100% working
interests and operatorship of four blocks in the 31 SLR. The
acreage awarded includes the Buchan oil field and the J2 and Glenn
oil discoveries and additional exploration upside and is contiguous
with JOG's existing interest in Licence P2170 that contains the
Verbier discovery. JOG's acreage interest in the GBA, including
P2170, is estimated to contain in excess of 120 mmboe discovered
mean recoverable resources in addition to in excess of 300 mmboe
identified mean prospective resources. Work has now commenced on
preparing an FDP for the Greater Buchan Area development project
with, subject to funding, first oil targeted for 2024. By way of a
low-risk accumulation of discovered resource volumes, this is by
far the most significant event for JOG since its inception and we
are excited that work on this new project is underway.
The Buchan oil field was discovered in the mid-1970s and was
brought onstream by BP in 1981 with nine development wells with
initial production peaking at 54,537 barrels of oil per day
("bopd"). 148 million barrels ("mmbbls") of oil were produced under
natural depletion with aquifer support through to May 2017, at
which point the field went into early cessation of production
because the Buchan Alpha platform was no longer compliant with the
current safety rules and regulations. Buchan oil is a light 33.5deg
API oil with a low gas/oil ratio ("GOR") (285 standard cubic feet
per barrel ("scf/bbl")). Buchan benefits from a significant oil
column in excess of 1,900 ft (well 21/1a-6) and a number of
in-depth studies compiled since 2014 have concluded a strong case
for Buchan to be redeveloped. JOG has already spent two years
investigating the subsurface attributes of Buchan and estimates
that over 80 million barrels of recoverable oil volumes remain to
be produced from the field. Additional oil has been discovered in
the Andrew Sandstone, a recognised shallow reservoir that sits
above the main Buchan reservoir. JOG currently anticipates that
Buchan will form the new hub for our area development plans for the
GBA and this will be the focal point for the Company as we progress
our FDP.
The J2 oil discovery, discovered by the 20/5a-10Y well in 2006,
is some 3.5km north of Buchan and represents a viable tie back
opportunity to the proposed Buchan hub. The well reportedly
encountered hydrocarbons within the Sgiath Formation Sandstone that
flowed at 2,850 bopd plus 1.2 million metric standard cubic feet
per day ("mmscfd") of gas (37(o) API, GOR 426 scf/bbl) on test.
Additionally, the well also encountered approximately 16 metres of
excellent quality Upper Jurassic sands that flowed at 4,800 bopd
plus 2.6 mmscfd (39(o) API, GOR 500 scf/bbl) on test. The two
reservoirs are contained within different pressure cells. JOG's
management estimates that the Sgiath discovery is 20 million
barrels of recoverable oil volumes and that the Upper Jurassic test
is potentially the eastern extension of the Verbier field.
Development plans for J2 Sgiath will be run concurrently with our
plans for Buchan.
The Glenn oil discovery is located some 15km to the east of
Buchan and is also a potential tie back opportunity to the proposed
Buchan hub. The Glenn oil accumulation is a faulted horst structure
with oil trapped within late Jurassic, shallow marine Sgiath
Formation sands. JOG's management estimates that 14 million barrels
of recoverable oil volumes can be potentially produced from Glenn.
The licence in respect of Block 21/2a comprises a two-year initial
term with certain firm work obligations, principally comprising
geotechnical studies, with a drill or drop well obligation at the
end of the initial term.
In addition to the above discovered oil volumes, JOG has also
been awarded acreage that includes a number of exploration
prospects that we have identified. In aggregate, JOG's management
has estimated mean case recoverable prospective resources of 91
mmbboe across these prospects. Directly to the North East of Buchan
lies the Capri prospect, which we currently believe represents the
updip, slope apron fan deposits of the basinal Cortina prospect
recognised in Licence P2170. Directly to the west of Buchan, JOG
has been awarded the 20/4c block, where JOG has mapped the Zermatt
and Chamonix Upper Jurassic prospects and the Courchevel lead which
is a Sgiath reservoir target. The licence working obligations
include a drill or drop well obligation to be elected after two
years.
As part of our strategy for the development of the GBA, in 2018
JOG pre-funded a major 3D seismic survey by PGS that covered a
1,000km(2) area overlaying all the acreage we have been awarded in
the 31 SLR. The final, fully-processed data was delivered to JOG in
July 2019 and we are pleased to observe a significant improvement
in the image quality and an enhanced resolution. This data will be
of significant benefit as we progress our subsurface work across
all the awarded acreage.
Upon the award of Blocks 20/5d and 21/1a (the "Buchan Blocks")
in July 2019, JOG entered into a three-month option agreement with
Equinor under which Equinor has been granted an option over a 50%
equity interest in the Buchan Blocks, which contain the Buchan oil
field and J2 oil discovery. Should the option be exercised, JOG
shall act as Licence Operator and Equinor will reimburse JOG for
its 50% share of costs in relation to the licence applications. In
the event of the option not being exercised, JOG will consider
farm-out terms for value with other industry partners and
alternative funding opportunities that can be put in place over the
course of the next two years as the FDP develops. We are confident
of securing appropriate funding for a project of this calibre.
Environment, Social and Governance ("ESG") Considerations
With the launch of its Greater Buchan Area development plans,
JOG has begun its focus on ESG principles. The oil industry is
understandably a focal point for environmental concerns, however,
JOG believes that the energy market transition is about evolving
the energy mix to be as sustainable as possible rather than an
immediate halt of hydrocarbon production. JOG is developing ESG
criteria to be applied throughout its business. Our governing
principles are outlined below:
-- Applying appropriate criteria to all our activities to ensure
that JOG is environmentally conscientious
-- Respectful treatment of all people within JOG's operating community
-- Honest and transparent business practices
We will assess all development options from an ESG standpoint to
ensure that we develop our resources in a sustainable, low carbon
and responsible manner, in parallel with our core company objective
of creating shareholder value - we do not see these as being
mutually exclusive ideals. Simple examples of this could be through
reducing the GBA project's carbon footprint through designing a
platform with lower steel content and a production strategy that
adopts a lower but longer plateau life, or assessing 'gas to wire'
technologies to manage gas production. Moving forward JOG will now
make ESG part of its regular reporting to shareholders.
Other Licence Activity
On 28th May 2019 JOG was pleased to announce that it had
received GBP750,000 from TEPUK in relation to TEPUK's termination
of its 2013 farm-in to licence P2032 (Blocks 21/8c, 21/9c, 21/10c,
21/14a and 21/15b), which has been recognised in the income
statement as other income.
JOG's Acquisition Strategy
JOG has delivered to its shareholders a significant growth
opportunity with a major new development project within its core
Greater Buchan Area. As we progress through the FDP, we will
continue to be opportunistic on the potential acquisitions front,
with positive cashflow production assets being one viable way to
meet future funding requirements post-FDP on our GBA hub project.
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, in the form of the OGA, and we are fully aligned with
the OGA's objective of Maximising Economic Recovery ('MER').
Financial Review
JOG's cash position was approximately GBP15.5 million as of 30th
June 2019. JOG had no production revenue during the reporting
period, although it received a small amount of interest on its cash
deposits.
The loss for the six month period to 30 June 2019, before and
after tax, was GBP412,511 (2018 interims: GBP857,455). This
reflects inter alia, the settlement received from TEPUK and the
Company's continued focus on controlling administrative costs
within the context of the requisite work undertaken during the
year.
Our main expenditure during the reporting period related to the
Verbier appraisal well programme, which has been capitalised as
part of our continuing Verbier exploration programme, within
intangible assets.
We continue to review our cash requirements which, in the medium
term, will be based on considerations relating to any future joint
venture partner in the GBA licences and the costs associated with
progressing the development of the GBA hub project through to an
agreed Field Development Plan ("FDP"), potential future appraisal
and/or exploration well drilling on licence P2170, further
evaluation of our new exploration licences and any potential
M&A activity. These areas of expenditure are interdependent and
we will update shareholders accordingly as our plans develop.
Looking Forward
JOG has rapidly evolved into a company in charge of its future.
The Company has embarked on workstreams to progress an FDP seeking,
subject to funding, to deliver a potential JOG-operated major new
area hub development in the medium term in line with the OGA's MER
strategy. We currently estimate that we are fully funded to compile
and submit the requisite FDP. The proposed new area hub will be
planned to incorporate the redevelopment of the Buchan oil field,
together with the J2 oil discovery, with the potential to include
the development of the Glenn oil field and the Verbier oil
discovery as well as other discovered and yet-to-be-found resources
in the GBA. First oil, subject to funding, will be targeted for
2024. JOG will evaluate and determine the optimal sustainable
development plan, designed to deliver future phased and extended
plateau production. JOG has recently commissioned a new CPR for the
Buchan Blocks, which contain the Buchan and J2 fields, which will
include a valuation assessment in addition to resource estimates
for these discovered fields.
Work continues with our co-venturers on the P2170 licence,
combining the recent appraisal well results and data collected
during operations with the fully processed new 3D broadband seismic
survey data, in order to better understand the reservoir
distribution of the primary target and additional exploration
opportunities. Future appraisal or exploration drilling plans are
anticipated to be made towards the end of the year.
As we move into the exciting phase of FDP work for our GBA area
hub, we will be awarding contracts to key service providers and
making a few select hires to ensure that JOG starts this project
with the best available human and other resources. Our strong view
is that a project's success is shaped by the front end and the more
planning and preparation that can be done at this stage the better
equipped we will be to deliver a successful outcome.
JOG's awards in the 31 SLR have significantly enhanced its
resource base of discovered oil volumes. We have a very material
and scalable project on our hands, which has the clear potential to
deliver significant shareholder value beyond what we have already
achieved. We are dealing with well-known, good quality, light oil
fields and discoveries in a relatively benign and shallow part of
the Central North Sea. These are within UK waters, near good
surrounding infrastructure for export and represent a potentially
valuable energy resource for both JOG and the UK. At the forefront
of our plans will be our corporate vision to develop this vital
resource sustainably, with due regard to environmental and social
considerations, intertwined with a project that delivers on the
OGA's MER objectives.
Andrew Benitz
Chief Executive Officer
26 September 2019
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 JUNE 2019
6 months 6 months Year to
to to
30/06/19 30/06/18 31/12/18
(unaudited) (unaudited) (audited)
Notes GBP GBP GBP
CONTINUING OPERATIONS
Revenue - - -
Cost of sales (451,997) - (609,925)
GROSS LOSS (451,997) - (609,925)
Other income 6 750,000 12,038 12,037
Administrative expenses (768,055) (887,261) (1,447,383)
OPERATING LOSS (470,052) (875,223) (2,045,271)
Finance income 57,541 17,768 48,971
LOSS BEFORE TAX (412,511) (857,455) (1,996,300)
Tax 9 - - -
LOSS FOR THE PERIOD (412,511) (857,455) (1,996,300)
OTHER COMPREHENSIVE INCOME - - -
TOTAL COMPREHENSIVE LOSS FOR
THE PERIOD (412,511) (857,455) (1,996,300)
============ ============ ============
Total comprehensive loss attributable
to:
Owners of the parent (412,511) (857,455) (1,996,300)
============ ============ ============
Profit/(Loss) per share expressed
in pence per share:
Basic 10 (1.89) (3.93) (9.15)
Diluted (1.89) (3.93) (9.15)
============ ============ ============
The above consolidated statement of comprehensive income should
be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019
30/06/19 30/06/18 31/12/18
(unaudited) (unaudited) (audited)
Notes GBP GBP GBP
NON-CURRENT ASSETS
Intangible assets - Exploration
costs 11 8,072,860 3,559,984 4,306,589
Property, plant and equipment 12 34,656 - 30,264
------------- ------------- -------------
8,107,516 3,559,984 4,336,853
------------- ------------- -------------
CURRENT ASSETS
Trade and other receivables 7 440,931 17,539 80,594
Cash and cash equivalents 13 15,527,814 22,085,291 19,782,511
------------- ------------- -------------
15,968,745 22,102,830 19,863,105
------------- ------------- -------------
TOTAL ASSETS 24,076,261 25,662,814 24,199,958
============= ============= =============
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 2,466,144 2,466,144 2,466,144
Share premium account 93,851,526 93,851,526 93,851,526
Share options reserve 1,607,667 1,541,898 1,491,019
Accumulated losses (74,075,390) (72,524,034) (73,662,879)
Reorganisation reserve (382,543) (382,543) (382,543)
------------- ------------- -------------
TOTAL EQUITY 23,467,404 24,952,991 23,763,267
------------- ------------- -------------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 8 608,857 709,823 436,691
------------- ------------- -------------
TOTAL LIABILITIES 608,857 709,823 436,691
------------- ------------- -------------
TOTAL EQUITY AND LIABILITIES 24,076,261 25,662,814 24,199,958
============= ============= =============
The above consolidated statement of financial position should be
read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 JUNE 2019
Called Share Share Re-
up share premium options Accumulated organisation Total
capital account reserve Losses reserve equity
GBP GBP GBP GBP GBP GBP
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
At 1 January
2018 2,466,144 93,851,526 1,231,055 (71,666,579) (382,543) 25,499,603
Loss for the
period
and total
comprehensive
income - - - (857,455) - (857,455)
Share based
payments - - - 310,843 - - 310,843
At 30 June 2018 2,466,144 93,851,526 1,541,898 (72,524,034) (382,543) 24,952,991
============= ============= ============= ============== ============== =============
At 1 January
2019 2,466,144 93,851,526 1,491,019 (73,662,879) (382,543) 23,763,267
Loss for the
period
and total
comprehensive
income - - - (412,511) - (412,511)
Share based
payments - - - 116,648 - - 116,648
At 30 June 2019 2,466,144 93,851,526 1,607,667 (74,075,390) (382,543) 23,467,404
============= ============= ============= ============== ============== =============
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 retained deficit in
respect of options exercised or cancelled/lapsed
Accumulated losses Cumulative losses recognised in the
Consolidated Statement of Comprehensive Income
Reorganisation reserve Amounts resulting from the restructuring
of the Group
The above consolidated statement of changes in equity should be
read in conjunction with the accompanying notes
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 2019
6 months 6 months Year
to to to
30/06/19 30/06/18 31/12/18
(unaudited) (unaudited) (audited)
Notes GBP GBP GBP
CASH FLOWS FROM OPERATING ACTIVITIES
Cash used in operations 13 (534,053) (1,145,862) (2,698,361)
Net interest received 57,541 17,768 48,971
------------ ------------ ------------
Net cash used in operating activities (476,512) (1,128,094) (2,649,390)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of intangible assets (3,766,271) (2,202,025) (2,948,630)
Purchase of tangible assets (11,914) - (34,879)
Net cash used in investing activities (3,778,185) (2,202,025) (2,983,509)
------------ ------------ ------------
DECREASE IN CASH AND CASH EQUIVALENTS (4,254,697) (3,330,119) (5,632,899)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 13 19,782,511 25,415,410 25,415,410
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT
OF PERIOD 13 15,527,814 22,085,291 19,782,511
============ ============ ============
The above consolidated statement of cash flows should be read in
conjunction with the accompanying notes
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 30 JUNE 2019
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 U.K.
The Company is a public limited company, which is quoted on AIM,
a market operated by London Stock Exchange plc and incorporated and
domiciled in the United Kingdom. The address of its registered
office is 10 The Triangle, ng2 Business Park, Nottingham, NG2
1AE.
2. BASIS OF PREPARATION
These consolidated interim financial statements have been
prepared under the historic cost convention, using the accounting
policies that will be applied in the Group's statutory financial
information for the year ended 31 December 2019 and in accordance
with the Disclosure and Transparency Rules of the Financial Conduct
Authority and with IAS 34 'Interim financial reporting'. The
condensed interim financial statements should be read in
conjunction with the annual financial statements for the year ended
31 December 2018, which have been prepared in accordance with IFRS
as adopted by the European Union.
The Group 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
the completion of the Verbier appraisal well programme, there are
currently no firm commitments on the P2170 licence, other than
ongoing Operator overheads and licence fees. The current cash
reserves comfortably cover the costs on a 100 per cent basis of the
Field Development Planning work that is being undertaken in respect
of the Greater Buchan Area licences for a period of at least 12
months after the issue of these financial statements. Other work
that the Group is undertaking in respect of the P2170 licence and
surrounding areas is modest relative to its current cash reserves.
The Group'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.
The reports for the six months ended 30 June 2019 and 30 June
2018 are unaudited and do not constitute statutory accounts as
defined by the Companies Act 2006. The financial statements for 31
December 2018 have been prepared and delivered to the Registrar of
Companies. The auditors' report on those financial statements was
unqualified. Their report did not contain a statement under section
498 of the Companies Act 2006.
Under IFRS 11, the Group will continue to proportionately
account for its share of assets, liabilities, revenue and expenses
in its joint operations.
IFRS 16 has come into effect with an effective date of 1 January
2019. IFRS16 Leases, addresses the recognition in the balance sheet
of each contract, with some exceptions, that meets the definition
of a lease as a right of use asset and lease liability, while lease
payments are to be reflected as interest expense and a reduction of
lease liability. The Group has made the following transition
choices in relation to IFRS 16: (a) application of the modified
retrospective method, (b) right of use assets are measured at an
amount equal to the lease liability and (c) leases with a less than
12 months remaining lease term at year end 2018 are not reflected
as leases. The Group has made the following application policy
choice: short term leases (less than 12 months) and leases of low
value assets are not reflected in the balance sheet, but will be
expensed as incurred.
The Group has assessed the impact of IFRS 16 on the financial
statements of the Group and has identified two relevant contracts
but due to their short term nature these leases will have no
material impact on the financial statements of the Group.
There are no other IFRSs or IFRIC interpretations that are
effective for the first time for the financial period beginning on
or after 1 January 2019 that would be expected to have a material
impact on the Group.
The Group's results are not impacted by seasonality.
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies adopted are consistent with those
applied in the previous financial year.
Revenue recognition
Revenue is recognised to the extent that it is probable that
economic benefits will flow to the Group and the revenue can be
reliably measured. It is measured at the fair value of
consideration received or receivable for the sale of goods.
Exploration and evaluation costs
The Group accounts for oil and gas 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.
Joint operations
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.
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.
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.
4. SEGMENTAL REPORTING
The Directors 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.
5. FAIR VALUE OF NON-DERIVATIVE FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Maturity analysis of financial assets and liabilities
Financial Assets
30/06/19 30/06/18 31/12/18
(unaudited) (unaudited) (audited)
GBP GBP GBP
Up to 3 months 57,841 17,539 80,595
3 to 6 months - - -
Over 6 months - - -
------------ ------------ ----------
57,841 17,539 80,595
============ ============ ==========
Financial Liabilities
30/06/19 30/06/18 31/12/18
GBP GBP GBP
Up to 3 months 608,857 709,823 436,691
3 to 6 months - - -
Over 6 months - - -
--------- --------- ---------
608,857 709,823 436,691
========= ========= =========
6. OTHER INCOME
30/06/19 30/06/18 31/12/18
(unaudited) (unaudited) (audited)
GBP GBP GBP
Carried costs reimbursement - 12,038 12,038
Settlement agreement with Total
E&P UK Limited 750,000 - -
750,000 12,038 12,038
============ ============ ==========
7. TRADE AND OTHER RECEIVABLES
30/06/19 30/06/18 31/12/18
(unaudited) (unaudited) (audited)
GBP GBP GBP
Other receivables 657 67 67
Prepayments and accrued income 294,883 17,472 16,709
Joint venture debtor 83,069 - -
Value added tax 62,322 - 63,818
440,931 17,539 80,594
============ ============ ==========
8. TRADE AND OTHER PAYABLES
30/06/19 30/06/18 31/12/18
(unaudited) (unaudited) (audited)
GBP GBP GBP
Trade payables 546,427 592,730 142,565
Accrued expenses 26,551 73,299 140,932
Other payables - 3,279 130,905
Taxation and Social Security 35,879 40,515 22,289
608,857 709,823 436,691
============ ============ ==========
9. TAX
Jersey Oil and Gas plc is a trading company but no liability to
UK corporation tax arose on the ordinary activities for the period
ended 30 June 2019 due to trading losses. As at 31 December 2018,
the Group held tax losses of approximately GBP30m.
10. EARNINGS/(LOSS) PER SHARE
Basic loss per share is calculated by dividing the losses
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period.
Diluted loss per share is calculated using the weighted average
number of shares adjusted to assume the conversion of all dilutive
potential ordinary shares.
Earnings Weighted
attributable average
to ordinary number Per share
shareholders of shares amount
GBP Pence
Period ended 30 June 2019
Basic and Diluted EPS
Loss attributable to ordinary
shareholders (412,511) 21,829,227 (1.89)
============== =========== ==========
11. INTANGIBLE ASSETS
Exploration
Costs
GBP
COST
At 1 January 2019 4,481,830
Additions 3,766,271
At 30 June 2019 8,248,101
============
ACCUMULATED AMORTISATION
At 1 January 2019 175,241
At 30 June 2019 175,241
============
NET BOOK VALUE at 30 June
2019 8,072,860
============
All intangible asset additions and costs currently relate to
licence P2170
12. PROPERTY, PLANT AND EQUIPMENT
Computer
and office
equipment
GBP
COST
At 1 January 2019 160,665
Additions 11,914
At 30 June 2019 172,579
==========
ACCUMULATED AMORTISATION, DEPLETION AND
DEPRECIATION
At 1 January 2019 130,401
Charge for period 7,522
At 30 June 2019 137,923
==========
NET BOOK VALUE at 30 June
2019 34,656
==========
13. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
RECONCILIATION OF LOSS BEFORE TAX TO CASH USED IN OPERATIONS
30/06/19 30/06/18 31/12/18
(unaudited) (unaudited) (audited)
GBP GBP GBP
Loss for the period before
tax (412,511) (857,455) (1,996,300)
Adjusted for:
Amortisation, impairments,
depletion and depreciation 7,522 - 4,615
Share based payments (net) 116,648 310,843 259,964
Finance income (57,541) (17,768) (48,971)
------------ ------------ --------------
(345,882) (564,380) (1,780,692)
Decrease in inventories - - -
(Increase)/Decrease in trade
and other receivables (360,337) 338,568 275,513
Increase/(Decrease) in trade
and other payables 172,166 (920,050) (1,193,182)
------------ ------------ --------------
Cash used in operations (534,053) (1,145,862) (2,698,361)
============ ============ ==============
CASH AND CASH EQUIVALENTS
The amounts disclosed in the consolidated statement of cash
flows in respect of cash and cash equivalents are in respect of
these consolidated statement of financial position amounts:
Period ended 30 June 30/06/19 30/06/18 31/12/18
2019
(unaudited) (unaudited) (audited)
GBP GBP GBP
Cash and cash equivalents 15,527,814 22,085,291 19,782,511
------------ ------------
15,527,814 22,085,291 19,782,511
============ ============ ===========
14. CONTINGENT LIABILITIES
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 interests in the P2170 and P1989 licences which are the
only remaining assets still held that were in the Group at the time
of the agreement with the Athena Consortium who hold security over
these assets. 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.
15. RELATED PARTIES
During the period, Jersey Oil and Gas plc made loans available
to its wholly owned subsidiaries. The balances outstanding at the
end of the period are Jersey Petroleum Ltd GBP75,490,919 (2018:
GBP71,735,593) and Jersey Oil & Gas E&P Ltd GBP1,767,898
(2018: GBP1,501,788). At the end of the period, Jersey Oil and Gas
plc owed Jersey North Sea Holdings Ltd GBP211,676 (2018:
GBP211,676). During the period, the Company also charged management
fees to Jersey Petroleum Ltd amounting to GBP550,643 (2018:
GBP272,068).
16. POST BALANCE SHEET EVENTS
In July 2019, Jersey Petroleum Limited, a subsidiary of Jersey
Oil and Gas plc, was awarded, subject to documentation, 100%
working interests and operatorship of three blocks in the OGA's
31(st) Supplementary Offshore Licensing Round. This Greater Buchan
Area ("GBA") acreage awarded to JOG includes the Buchan oil field
and the J2 (well 20/5a-10Y) oil discovery. The acreage awarded is
contiguous with JOG's existing interest in Licence P2170 (Blocks
20/5b and 21/1d) which contains the 2017 Verbier (J62-J64) oil
discovery with a low case operator estimate of approximately 25
mmboe of discovered resource in addition to significant identified
prospective resources, in which JOG holds an 18% working interest
alongside the operator, Equinor UK Limited (70%), and co-venturer
CIECO V&C (UK) Limited (12%). In August 2019, Jersey Petroleum
Limited was awarded, subject to documentation, 100% working
interest and operatorship of Block 21/2a in the OGA's 31st
Supplementary Offshore Licensing Round. The additional acreage
awarded to JOG, subject to documentation, includes the Glenn oil
discovery. Together with its interest in the Verbier discovery, the
new GBA acreage provides JOG with a significant opportunity to
potentially establish and operate a future major new area
development to access more than 120 mmboe of discovered mean
recoverable resources plus in excess of 300 mmboe of identified
mean prospective resources that are estimated to be present in the
GBA.
The Company has now commenced work to progress a Field
Development Plan ("FDP") seeking, subject to funding, to deliver a
potential JOG-operated major new area hub development in the medium
term in line with the OGA's Maximum Economic Recovery ("MER")
strategy. JOG is currently fully funded to compile and submit the
requisite FDP. This proposed new area hub will be planned to
incorporate the redevelopment of the Buchan oil field, together
with the J2 oil discovery, with the potential to include the
development of the Verbier discovery as well as other discovered
and yet-to-be-found resources in the GBA. First oil, subject to
funding, will be targeted for 2024. JOG will evaluate and determine
the optimal sustainable development plan, designed to deliver
future phased and extended plateau production.
The Buchan oil field was discovered by BP plc in the mid-1970s
and came onstream in 1981. Production continued until May 2017,
when the Buchan Alpha platform was no longer compliant with the
current Safety Case, by which point a total of 148 million barrels
had been produced. Buchan oil is a light 33.5deg API oil with low
GOR (285 scf/bbl). JOG estimates that over 80 million barrels of
recoverable oil volumes remain to be produced from the field.
JOG also announced in July 2019 that Equinor and JOG had agreed
and entered into a three month option agreement under which Equinor
was granted an option over a 50% equity interest in respect of
Blocks 20/5d and 21/1a (the "Buchan Blocks"), which contain the
Buchan oil field and J2 oil discovery. Should the option be
exercised, JOG shall act as Licence Operator in respect of the
Buchan Blocks and Equinor will reimburse JOG for its 50% share of
costs in relation to the licence applications.
17. AVAILABILITY OF THE INTERIM REPORT 2019
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
IR LAMJTMBJTTML
(END) Dow Jones Newswires
September 26, 2019 02:02 ET (06:02 GMT)
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