Jersey Oil makes solid development progress in 2019

Pre-revenue upstream oil and gas company Jersey Oil & Gas said it “significantly increased” its net discovered and recoverable resource estimates to more than 120 million barrels of oil equivalent in the year ended 31 December on Wednesday.

The AIM-traded firm said that it followed the “transformational awards” of licences in the Greater Buchan Area (GBA) as part of the Oil and Gas Authority's 31st supplementary offshore licensing round.

As part of the licence awards, the company said it now owned a 100% equity interest in the Buchan field, as well as the J2 and Glenn discoveries, in addition to its interest in the Verbier discovery.

During the year, it began work on a “unique and major new” North Sea Development Plan, with a focus on delivering a low-carbon development of the GBA.

Jersey Oil & Gas reported a “strong” year-end cash position of £12.3m, with no debt, resulting in it being fully funded through concept selection and to at least the end of 2021.

It added that the Verbier Appraisal Well was drilled safely and within budget, and although it did not encounter Upper Jurassic sands as expected, its contingent resource estimate for the earlier Verbier discovery remained at 25 million barrels of oil equivalent.

Since the year ended, Jersey Oil & Gas acquired an additional 70% interest in, and operatorship of, licence P2170, which includes the Verbier oil discovery, increasing total 2C discovered resources across the GBA to an estimated 142 million barrels of oil equivalent net.

The Verbier oil discovery was now a prime candidate for a tie back into the proposed GBA Hub, the board said, adding to the “significant” exploration upside across the GBA, with estimated prospective resources of 232 millon barrels of oil net.

It also established the Greater Buchan Area joint integrated studies agreement between neighbouring field operators, to undertake and complete technical and commercial evaluation studies for a collaborative development of the wider GBA.

Looking ahead, Jersey Oil & Gas said it had a “commanding position” across the GBA, with ownership of five discovered fields and eight exploration prospects within four operated licences.

Project lifetime cash flows for the GBA were forecast to be in excess of $3bn, with an estimated project value of around $1.2bn.

Jersey said it was on track to reach concept selection by the summer of 2020, which would define the “most prudent and commercially attractive” way to achieve first oil from the GBA.

It said prudent cash management was being maintained, and explained that a sales process was expected to be launched post-concept selection to attract a new industry partner to join it in “unlocking the potential significant value” that existed within the GBA.

The GBA development work streams remained on track, with the company and its contract staff working remotely in response to the Covid-19 coronavirus pandemic.

“Our efforts during 2019 resulted in transformational asset growth for our company,” said chief executive officer Andrew Benitz.

“Our successful application in the 31 SLR has provided our business with a vastly increased portfolio and the potential to develop a highly valuable business for all of our stakeholders.

“The GBA project promises to be the largest new area hub development in the UK Central North Sea in recent times.”

Benitz said the firm was currently entirely focused on the timely delivery of concept selection for the major new area hub, that had the potential to create significant value for stakeholders.

“JOG has assembled a team with the right skills, experience and track record to implement its GBA development plan.

“I would like to thank this team for adapting seamlessly to a new remote working environment as a result of the Covid-19 pandemic, such that we continue to remain on track with our current development plans.”

At 1235 BST, shares in Jersey Oil & Gas were up 11.79% at 64.84p.