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Oil Capital
EPIC: JOG
Market: LSE:JOG
FRA:TPC1
52-week High/Low: 275.00p / 82.00p
Sector: Energy
Market Cap: 40.71M

Jersey Oil and Gas is a British independent North Sea focused upstream oil and gas company, driving shareholder value through creative deal making and operational success.

Jersey Oil and Gas PLC

www.jerseyoilandgas.com

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Big picture - Why invest in Jersey Oil and Gas PLC

Jersey Oil and Gas PLC Snapshot

Jersey Oil and Gas is a London listed UK E&P Company focused on building its position in the UK North Sea.

By leveraging the management team’s worldwide oil and gas experience and our strong financial position, Jersey Oil and Gas intends to become a significant E&P company. Through the acquisition of production, development, exploration and appraisal opportunities, Jersey Oil and Gas intends to take full advantage of favourable market conditions found in the UK North Sea.

Formed in March 2014, Jersey Oil and Gas has grown significantly since inception and, following the drilling of the Verbier discovery in 2017, has an appraisal well planned in the summer of 2018 with its co-venturers Equinor (70% interest and Operator) and CIECO V&C (UK) Limited (12% interest).

The Team is actively pursuing a UK North Sea production-focused strategy, aiming to deliver strong shareholder returns through:

  • . Exposure to any oil price recovery – acquire assets at current oil prices
  • . Lower cost base – benefit from falling operating costs, low overheads and management costs
  • . Improving Tax Environment – UK Budget 2016 reduced headline tax from 50% to 40% and PRT was abolished
  • . Low Financing Costs – Attractive bank funding costs can deliver attractive leveraged yields
  • . A focused and well-managed growth strategy to deliver strong returns.

 

P2170 BLOCKS 20/5B & 21/1D (VERBIER) – JOG 18%

Blocks 20/5b and 21/1d were awarded as a Traditional Licence in the 28th Licencing Round. The blocks lie approximately 100km northeast of Aberdeen, close to the Buchan and Tweedsmuir North and South oilfields and straddle the western end of the North Buchan Trough.

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On the 9th October 2017 JOG announced an oil discovery in the Verbier sidetrack well, 20/05b-13Z drilled in Licence P2170. The well was drilled safely and within budget to the planned total depth of 3811m and a suite of log data had been acquired via Logging While Drilling (“LWD”), including pressure data.

PRELIMINARY ANALYSIS INDICATES

  • The well has proven a hydrocarbon accumulation in good quality sands, up dip of the water bearing sands encountered in the initial well
  • Evaluation of the well results, together with the existing 3D seismic data is ongoing
  • Initial Operator estimates of gross recoverable resources associated with the Verbier discovery are between 25 and 130 million barrels of oil equivalent, with a minimum proven recoverable volume, in the immediate vicinity of the wellbore, of 25 million barrels of oil equivalent

In addition to confirming the presence of oil in the Verbier prospect, this discovery provides valuable information to help better understand the prospectivity of the licence area, which includes the Cortina prospect and the Meribel lead.

BACKGROUND

Blocks 20/5b and 21/1d were awarded as a Traditional Licence in the 28th Licencing Round. The blocks lie approximately 100km northeast of Aberdeen, close to the Buchan and Tweedsmuir North and South oilfields and straddle the western end of the North Buchan Trough.  On licence award, Trap Oil Ltd., a fully owned subsidiary of Jersey Oil and Gas Plc (“JOG”) became Operator with a 60 per cent. working interest of which 10 per cent. was carried by CIECO Exploration & Production (UK) Limited  (“CIECO”) with a 40 per cent working interest. A Drill-or-drop election was required by 30th November 2016.

Prospectivity was identified in the Late Jurassic and the technical studies undertaken since award were focused on seismic reprocessing, remapping and petroleum charge studies. The completed work programme improved the delineation and risking of the identified prospectivity.

Further to a farm out campaign undertaken in the early part of 2016, JOG and CIECO completed, on the 7th October 2016, a sale and purchase agreement (“SPA”) with Statoil (U.K.) Limited (“Statoil”), a leading multinational oil and gas company, for the farm-out of, in aggregate, a 70 per cent. working interest and operatorship in Licence P2170.

In accordance with the terms of the farm-out, JOG received a cash consideration of US$540,000 from Statoil. The balance of the US$1.2 million cash consideration, due to JOG as part of the farm-out agreement, was paid to the Company’s co-venturers in the Athena asset, in accordance with the Company’s historical settlement agreement.

Post completion of the Farm-out, Statoil funded all costs up to US$25 million in respect of the first exploration well.  The Company retained an 18 per cent. interest, of which 10 per cent. continued to be carried by CIECO, pursuant to the pre-existing arrangements between the parties, through the first two wells to be drilled in the Licence, and CIECO retained a 12 per cent. interest.

Subsequently, Statoil confirmed to the OGA that a well to test the Verbier prospect would be drilled in 2017.  Both JOG and CIECO confirmed participation in the well.  A site survey was acquired during October – November 2016 and well planning was completed.

On the 27th March 2017, JOG announced that an independent assessment of resource estimates in relation to Licence P2170, Blocks 20/5b & 21/1d had been completed by ERC Equipoise Ltd (“ERCE”).

Highlights of the CPR

  • Mean Prospective Resources attributed to Licence P2170 for the Verbier prospect increased to 162 Million barrels of oil equivalent (“MMboe”) from 118 MMboe and the chance of success increased to 29% from 26%
  • Contingent Resources relating to discovery well 20/5a-10Y identified
  • Mean Prospective Resources for the Cortina prospect increased to 124 MMboe from 91 MMboe with a chance of success of 19%

On the 4th April 2017 JOG announced that Statoil had awarded a contract to Transocean Drilling UK Limited (“Transocean”) for the semisubmersible rig Transocean Spitsbergen.  The Transocean Spitsbergen rig was scheduled to drill the Verbier prospect as part of a Statoil operated three well drilling programme, with the Verbier well planned to be drilled in summer 2017.

Effective the 14th August 2017 and further to internal restructuring, CIECO changed its name from CIECO Exploration and Production (UK) Limited to CIECO E&P (UK) Limited to CIECO V&C (UK) Limited.

On the 14th August 2017 JOG announced that drilling operations had commenced on the Verbier prospect with the drilling programme including a provision for the drilling of a sidetrack well, dependent on the results of the initial well, which was expected to take up to 70 days.

On the 11th September 2017 JOG announced that the Statoil operated 20/05b-13 exploration well drilled to test the Verbier prospect had been safely drilled, reaching the planned target Total Depth of 4,267m on 10 September 2017. The well encountered water-bearing Upper Jurassic sands, deeper than anticipated. A decision on whether to drill a sidetrack would be taken after evaluation of wireline logs, although at the time JOG considered this to be unlikely.

On the 18th September 2017 JOG announced that, further to the Company’s announcement of 11 September 2017, the wireline log data from the initial exploration well, received late on 12 September 2017, had been evaluated by the P2170 Joint Venture led by the operator Statoil. Indications of the potential for hydrocarbons to be present in a smaller accumulation up dip of the 20/05b-13 Verbier exploration well could not be ruled out. Accordingly, agreement was reached by the P2170 Joint Venture to target this resource with a sidetrack exploration well.

On the 29th January 2018 JOG announced the P2170 Licence Group had approved a work programme and budget for 2018. The approved work programme and budget included the appraisal of the recent Verbier oil discovery and contingent well planning including the acquisition of a site survey to progress exploration activity in the licence area.

JOG also advised that negotiations were advanced with respect to contracting a rig for the Verbier appraisal well programme, with plans for one well and an option for a sidetrack well, to be drilled in late Q3 / early Q4 2018.

JOG further advised the Company’s share of the work programme would be funded from its existing cash reserves. Further to the successful fundraising completed in November 2017, cash balances were estimated to be approximately £25 million as of 31 December 2017.  Capex for 2018 was estimated to be £9 million to £11 million for the Company.

On the 1st March 2018 JOG announced that Statoil had awarded contracts to Seadrill North Atlantic Drilling UK Ltd. and North Atlantic Norway Ltd. for the semi-submersible rig, West Phoenix, to drill a well on the Norwegian Continental Shelf followed by three wells on the UKCS. The West Phoenix rig would drill the Verbier appraisal well, with the possibility for a sidetrack well, as the first of Statoil’s planned UKCS wells, in the summer of 2018. The purpose of the planned appraisal well being to constrain the potential volume range in the discovery.

On the 24th April 2018 JOG announced that the co-venturers in respect of UKCS Licence P2170 (Blocks 20/5b & 21/1d) had committed to pre-fund a 3D seismic survey over the P2170 licence area and certain offset acreage (the “Area of Interest” or “AOI”), which was to be conducted as part of a wider GeoStreamer MultiClient 3D seismic survey by Petroleum Geo-Services ASA (“PGS”) during Q2 2018 in the Moray Firth area. Delivery of the final imaged data by PGS from the survey is expected in late Q1 2019.

The anticipated timing for delivery of the final imaged data from PGS will facilitate integration with the results from the Verbier appraisal well that, in a success case, will be an important step for strategic planning as the project progresses into a potential future development phase.

JOG further advised the Company’s share of the survey costs in respect of the AOI was to be funded from its existing cash reserves, with total Capex for 2018 now expected to be towards the upper end of the previously announced range of £9 million to £11 million.

Effective the 16th May 2018 operator changed its name from Statoil (U.K.) Limited to Equinor UK Limited (“Equinor”).

On the 28th June 2018 JOG announced that the 3D seismic survey had been completed on time and without any HSE incidents.

On the 24th July 2018 JOG announced that it had been advised by Equinor that the Verbier appraisal well with the possibility of a sidetrack well will now likely be the third well in the sequence for the UK drilling campaign with the contracted West Phoenix rig as opposed to the first. The most likely timing of the Verbier appraisal well is now expected to be mid to late Q4 2018, rather than late Q3 to early Q4.

 

 

P1293 BLOCK 14/18B (ATHENA)

Block 14/18b is located in the North West Witch Ground Graben in the Moray Firth and contains the Athena oil field. On 21st December 2012 Trapoil completed the acquisition of a 15 per cent working interest in Athena from Dyas UK Limited.

As a consequence of the falling oil price, in mid 2015 an agreement was reached with the Athena Consortium whereby all future liabilities (including decommissioning costs) owed to the Athena Consortium will be met by Trap’s partners in the Athena Consortium and repayment will only be sought by way of any realisations stemming from Trapoil’s existing licences, being P1610 Block 13/23a (Magnolia), P1666 Block 30/11c (Romeo), P1889 Blocks 12/26b & 27 (Niobe), P1989 Blocks 14/11, 12 & 16 (Homer) and P2170 Blocks 20/5b & 21/1d (Cortina).

In summary, 60 per cent. of any petroleum sales or net disposal proceeds from these licences will be passed over to the Athena Consortium as well as all future revenue generated from our interest in the Athena Oil Field and when 125 per cent. of the outstanding debt obligation has been met, no further amounts will be due to the Athena Consortium.

Should Trapoil not have repaid the outstanding debt obligation by the time the Athena field is fully decommissioned, the remaining debt will be written off by the Athena Consortium. With respect to the future decommissioning liabilities associated with the Athena field, Trapoil’s share of such liabilities is to be satisfied from the cash already held in trust and put in place to cover such costs. In the event of any potential insolvency, or similar proceedings, being commenced by Trapoil in the future, the rights of the Athena Consortium will revert to those in place prior to this settlement agreement.

Production ceased in January 2016 following which the FPSO BW Athena came off station on 14th February 2016. Further to the approval by the OGA of the proposed Decommissioning Programme, Phase 1 has now been completed.

 

 

 

DR SATINDER PUREWAL

VICE PRESIDENT - TECHNICAL, RESERVOIR ENGINEERING & ADVISOR TO THE BOARD

 

Satinder Purewal has been a Visiting Professor of Petroleum Engineering at Imperial College since 2004. He has 36+ years global experience in Reservoir Engineering. He was COO/TD of EER Limited for two years and before that he was responsible for Proved Reserves Assurance for Shell’s European Region, Global Proved Reserves Training and delivery of several reservoir engineering courses worldwide. With the UNECE, he is currently Chairman of the Petroleum Work Group, Member of the Technical Advisory Group and Member of the Expert Group on Resource Classification.

He is a Fellow of the Institute of Physics, Fellow of the Energy Institute, member of SPEE and a Chartered Engineer (CEng). During 2007-11 he chaired the Applications Document Subcommittee leading the effort to ensure publication of the ‘Guidelines for Application of the Petroleum Resources Management System’ (PRMS) on November 1, 2011. Satinder holds BSc (Hons), MSc and PhD degrees from Imperial College (including ARCS and DIC).

MARTIN DAVID

MANAGER - EXPLORATION AND LICENCES

 

Martin David has over 35 years’ experience in the oil and gas industry encompassing technical, operational, commercial and executive management roles for a variety of oil and gas companies, including UK Independent and publicly owned companies and major European and North American corporations. Martin is a geologist by background and his career has been focused on upstream exploration and production activities in the North Sea.

GARY TOOTILL

DEVELOPMENT MANAGER

 

Gary Tootill has over 35 years’ experience in the oil and gas industry encompassing technical, operational and management roles in a number of oil and gas companies including 20 years at Shell. Whilst Gary’s background is in subsurface description much of his career has been focused on delivering upstream development projects and optimising safe production from new and mature assets.

Prior to his joining the Company, Gary was General Manager at Repsol Sinopec Resources UK, responsible for the optimisation of safe production from assets including Buchan, Bleo Holm and Clyde.

SEAN RUSH

LEGAL COUNSEL

 

Sean Rush has been a UK oil and gas lawyer for over 20 years having worked at senior levels in house for ENI and Petro-Canada and as a partner in a London city law firm. Mr Rush was a member of the former UK industry – Government steering group ‘PILOT’ and has served on Oil & Gas UK’s legal sub-committee as well as being a Chairman of the UK Energy Lawyers Group. He has a Master’s in Petroleum Law and Policy (with distinction) from Dundee University’s Centre for Energy, Mineral and Petroleum Law and Policy.

JOHN CHURCH

COMPANY SECRETARY

 

John Church is a Chartered Accountant with over 30 years’ experience across a variety of industries, having worked with both small and large companies in the private and quoted arenas. Mr Church founded TCP Chartered Accountants in 1985, which was subsequently sold in 2008 when he joined Jersey Oil and Gas. In addition, Mr Church currently sits on the board of a number of private companies, ranging from early stage resource companies to property companies, and is a Fellow of the Institute of Chartered Accountants in England and Wales.

DAVID LARCOMBE

ENGINEERING & COMMERCIAL MANAGER

 

David Larcombe is a Chartered Engineer with the Institute of Chemical Engineers with a broad knowledge of the oil and gas industry. David commenced his career as a Process Engineer with CB&I where he designed oil and gas platforms, LNG facilities and pipelines. Building on David’s technical foundation of the Oil and Gas Industry, he moved to IHS Markit to focus on the commercial aspects of the industry. He spent a number of years in the Upstream Oil & Gas Asset Valuation Team, responsible for the valuation of global oil and gas assets and field development planning.

David moved to Jersey Oil and Gas in 2016 where his focus is the commercial and technical valuation of oil and gas assets and corporates, to deliver JOG’s production focussed acquisitions strategy. David completed his undergraduate studies at The University of Birmingham graduating with a Masters Degree in Chemical Engineering (1st Class Honours).

REBECCA SMITH

GROUP FINANCIAL CONTROLLER

 

Rebecca Smith joined Jersey Oil and Gas plc in 2011 becoming the Group’s Financial Controller in 2014. Rebecca’s career in accounting started in 1998 at PwC followed by Arthur Andersen. In 2001 Rebecca founded BXI, a company specialising in outsourced accounting solutions, before joining Jersey Oil and Gas plc.

 

SIGNIFICANT SHAREHOLDERS

 

 
 

Any person with a holding of 3% or more in any class of AIM security (excluding treasury shares)

 

 

Jersey Oil and Gas PLC
Howard House
9 The Esplanade
St Helier, Jersey
Channel Islands
JE2 3QA

FINANCIAL AND NOMINATED ADVISER

Strand Hanson Limited
26 Mount Row
London W1K 3SQ

BROKERS

Arden Partners plc
125 Old Broad Street
London
EC2N 1AR

AUDITORS

PricewaterhouseCoopers LLP
32 Albyn Place
Aberdeen AB10 1YL

FINANCIAL PR

Camarco
107 Cheapside
London
EC2V 6DN

REGISTRARS

Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA

LEGAL COUNSEL

Pinsent Masons LLP
30 Crown Place
Earl Street
London
EC2A 4ES

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