I have recently opened a position in Jersey Oil and Gas (LON:JOG), an AIM £840k market cap tiddler, with only 8m shares in issue, more than half tightly held. This decision to buy in a minnow looking to capitalise on oil production is taking a view very much opposite to many in the market, but I make my own bed and happy to take this position with the JOG story and am bullish on oil midterm. This is of course a punt, but AIM O&G punts have served me well over the years, Jersey could be good or bad, who knows, but for me all things considered I am happy to back this minnow at £840k.

The COO is stating in public that a deal will be done in Q1 (interview below), which would be within the next six weeks. The significant tax losses available, touted to be worth around £12.5million in actual value to a North Sea producer looking to mitigate the 50 per cent tax on output (article below), could be a huge chip here and will be used to execute on its stated objective of acquiring interests in lower cost tie back fields capable of generating positive cash flow at an oil price of US$30 per barrel.

They have noted that they are funded to a level that should enable it to continue operating with its existing cash resources into 2017. JOG has no existing debt and a clean balance sheet and access to debt capital. They have a range of interests and can be viewed in the corporate update and presentation below.

The ‘this money’ article sums it up for my personal bet:

"History, meanwhile, tells us success is often forged from adversity."

"Take, for example, the early noughties, when Brent was trading well below its current level. We saw the emergence of a number of entrepreneurial mid-caps: names such as Dana, Enterprise, Lasmo and Bow Valley, which took advantage of the downturn to pick assets on the cheap."

"Will contrarians such as JOG win this time round? Only time will tell."

"Looking at the make-up for the company’s technical team there is the expertise to create the sort of value enhancing opportunities I have outlined. It will be interesting to see just what Benitz and his colleagues do next."

Ticker code: JOG, Shares in issue:

Unlock the rest of this article with a 14 day trial

Already have an account?
Login here