It is undoubtedly an important time for Jersey Oil & Gas PLC (LON:JOG) and its key asset, the Verbier discovery in the North Sea.
Discovered just over a year ago, Verbier has quickly become Jersey’s core asset.
In early 2019, new drilling is expected to take forward the asset.
Verbier is being led by Norway’s state-backed operator Equinor (formerly called Statoil) and Jersey holds 18%. It is located around 100 kilometres offshore, in relative proximity to pipeline infrastructure.
The 2017 exploration well unearthed a substantial oil resource, though presently the volumes are estimated in a broad range of 25mln to 130mln barrels - the gross oil value was estimated up to $1.75bn and a conservative ‘low case’ net estimate saw JOG’s stake worth around £31mln.
A new well slated to start in the coming weeks will aim to appraise the discovery, which if successful will lift and narrow the current resource estimates and valuations.
Practically, the well could set Verbier on a path to production.
Importantly for Jersey, valued in the market at about £40mln, the AIM-quoted firm’s share of exploration costs have been partially covered, thanks to a farm-out deal agreed with Statoil in summer 2016.
Jersey’s contribution to the appraisal programme has been estimated up to around £11mln, which could be recouped in multiples if the well proves successful. At the end of June, the company had £22.1mln of cash.
To put the proposition into context, Jersey’s ‘high case’ modelling in the event that the appraisal is successful would deliver nearly £200mln of potential value net to the company.
On paper, a potential field development would potentially begin in 2022, with peak daily output projected between 55,000 and 65,000 barrels of oil per day.
"Management remain very excited by the investment case and continue to believe that there is significant value potential for shareholders in the event of a successful outcome on the Verbier appraisal well programme and, importantly, in the additional opportunity set in this prolific part of the Central North Sea," chief executive Andrew Benitz said in September.
Jersey chief executive Andrew Benitz is due to meet investors and deliver a presentation at the Proactive Investors One2One Investor Forum on November 22 at The Spencer Hotel, IFSC, Dublin.