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Jersey Oil and GasAnnouncement

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RNS Number : 7771O  Jersey Oil and Gas PLC  14 January 2026

14 January 2026

 

Jersey Oil and Gas plc

("Jersey Oil & Gas", "JOG" or the "Company")

 

Corporate Update

 

Jersey Oil & Gas (AIM: JOG), an independent upstream oil and gas company
‎focused on the UK Continental Shelf region of the North Sea, is pleased to
provide a corporate update and outlook for the year ahead.

 

Highlights

§ Outcome of the UK Government's regulatory and fiscal consultations have
been set - providing an opportunity to optimise the investment programme for
development projects like Buchan

§ Work planned to assess the optimal Buchan development solution within the
re-set investment horizon

§ Buchan joint venture partners are materially growing through further
corporate consolidations - Buchan well positioned

§ JOG's solid financial position maintained - the business is right-sized for
its current activities and focused on achieving its growth potential

 

UK Oil & Gas Industry Landscape

§ Following the lengthy regulatory and fiscal consultations carried out by
the UK Government during 2025, clarity was finally obtained in the latter part
of the year on both the future application of environmental regulations and
the longer-term fiscal framework for the oil and gas industry.  The
environmental consultation confirmed the need for oil and gas developments
like Buchan Horst ("Buchan") to assess the Scope 3 emissions arising from the
project as part of its regulatory approval submissions.  In terms of the
fiscal regime, the consultation resulted in the continued application of the
Energy Profits Levy ("EPL") in its current form until 1 April 2030, which
implies a marginal tax rate of 78% for the industry.  The successor regime,
the Oil and Gas Price Mechanism ("OGPM"), replaces the EPL with a
revenue-based model for calculating windfall profits, that levies a 35% tax
only on the revenues generated above applicable commodity threshold prices (in
addition to the corporate and supplementary tax rate of 40%).

§ Under the OGPM two independent threshold price points will be set annually,
one for oil (in dollars per barrel) and one for gas (in pence per therm).
The thresholds in financial year 2026-27 have been set at $90/bbl for oil and
90p/therm for gas - they will be adjusted annually in line with CPI inflation
and are projected to be around $98/bbl and 98p/therm by 2030.  When in effect
the OGPM restores the tax rate to the 40% headline rate in the permanent
regime, with the OGPM only applying to oil or gas revenues in the event the
respective commodity price is unusually high.

§ The interplay between the EPL and OGPM regimes provides tax paying
companies with the opportunity to continue securing a 78% tax offset
(including 38% attributable to the EPL) for every pound invested between now
and 2030 (or 84.25% when including the investment allowance available on the
Supplementary Charge Tax), alongside the potential to generate revenue from
those investing activities post 2030 with just the permanent 40% tax rate
applicable so long as commodity prices remain under the OGPM threshold
prices.  This points to it being optimal for long term investments being
undertaken between now and the end of the decade.

§ Alongside the changes in the regulatory and fiscal landscape, 2025 was also
marked by a step change in the scale of both our Buchan joint venture
partners.  NEO Energy Limited, the operator for the Buchan development
project, not only combined its business with the UK subsidiary of Repsol S.A.,
but in December 2025 it announced a subsequent merger with the UK business of
TotalEnergies S.A., to create NEO Next+ ("NEO").

§ Upon completion of the NEO Next+ transaction, NEO will become the leading
operator and producer in the UK North Sea, with an expected production
portfolio of over 250,000 barrels of oil equivalent per day ("boe/d").

§ Serica Energy ("Serica") (AIM: SQZ) also announced a series of strategic
acquisitions during the year, establishing the business as the leading
mid-tier UK North Sea producer.

 

Greater Buchan Area

§ The major transformations that have taken place with NEO and Serica places
the growth prospects that the Buchan project provides within two high-quality,
UK North Sea focused asset portfolios.  Access to a project with estimated
gross mid case proven and probable resources of approximately 70 million
barrels of oil equivalent represents a material prize at this stage of the UK
North Sea lifecycle.

§ There continues to be active engagement between the Buchan joint venture
partners, particularly around the key strategic engineering decisions and
plans for the development.  Work is progressing to prepare the necessary
addendum to the Buchan Environmental Impact Assessment incorporating the
requirements of the updated guidance regarding the inclusion of Scope 3
emissions, as well as setting out the socio-economic benefits to the UK that
the development will deliver. Value engineering work is also being completed,
particularly with respect to drilling and subsea infrastructure scopes of
work, as part of the pre-sanction technical work aimed at optimising the
capital expenditure programme for developing the field.

§ NEO's recent strategic moves also provide the Buchan joint venture with the
means to assess the development solution for the field with a wider lens.
While the "Western Isles" floating production, storage and offloading ("FPSO")
vessel has been set out as the development solution in the draft Field
Development Plan ("FDP"), the passage of time resulting from the delays caused
by the Government's industry consultations means other potential production
solutions warrant further screening and consideration.  As such, the FPSO
represents one of several options for Buchan.  Additional development
engineering activities to evaluate these alternatives will now form part of
the project work programme to be completed during 2026.

§ The Greater Buchan Area ("GBA") partners elected to partially relinquish a
portion of the P2170 "Verbier" licence acreage in late 2025.  This enabled an
approximately 40% reduction in licence fees, attributable to the cost of the
area that contained the highest risk exploration prospect on the licence (the
retained licence area still contains the Verbier and J2 discoveries and the
"Verbier Deep" and "Cortina" exploration prospects).  The Company's P2170
licence costs are not carried by its Buchan joint venture partners.

§ The P2498 ("Buchan") and P2170 licences are both in the Second Term, the
period in which licencees need to obtain FDP approval in order to subsequently
move into the Third Term, which covers the development and production phase of
activities for the life of a field.  The end of the Second Term of the P2498
licence is 28 February 2027 and 29 August 2026 for the P2170 licence.
Significant progress has been made on the Buchan development, which
facilitates unlocking the wider GBA resource base contained in licence P2170,
and an application to extend the Second Term duration of both licences will be
made to the North Sea Transition Authority ("NSTA") during the current year.
With the draft FDP and associated Environmental Impact Assessment for the
Buchan development already submitted to the NSTA, the regulator is fully
briefed on the joint venture's plans for the GBA and NEO is well placed to
continue its engagement with the regulator on the proposed extensions.

 

Strategic Focus

§ The Company's vision is centred on successfully growing the business in a
smart and sustainable way, developing important domestic energy supply in
response to society's energy needs and creating value for our stakeholders.
The organisation is "right sized" for the stage and scale of its activities
and maintains a nimble approach to advancing its key strategic objectives.

§ The Company remains sharply focused on unlocking the organic value of its
existing assets in the GBA, combined with the pursuit of potential accretive
asset acquisitions that bring cash flow, diversity and quality investment
opportunities into the portfolio.

§ With over £100 million of UK tax allowances, including an element of EPL
losses, UK North Sea opportunities continue to be thoroughly assessed in terms
of their potential strategic fit.  The Company is also evaluating
international producing asset opportunities which have the potential to
sensibly deploy the financial resources of the business.

 

Solid Financial Position

§ The Company's cash balance at the end of 2025 was approximately £11
million with no debt.

§ The cash running cost of the business were reduced by approximately 50% at
the end of 2024, as a result of the actions taken following the slowdown in
activities on the Buchan project.  As a result total cash expenditure in 2025
is expected to be approximately £1.5 million, with the corresponding cash
cost for 2026 currently projected to be a little under this level absent any
changes in the underlying activities of the business.

§ Per the terms of the farm-out agreements executed with NEO and Serica, the
Company's 20% share of Buchan project expenditure is fully carried by its two
joint venture partners.  A further $20 million cash payment is payable under
the terms of the agreements following approval of the FDP by the NSTA and
receipt of the associated regulatory and legal consents.

 

 

Andrew Benitz, CEO of Jersey Oil & Gas, commented:

"It is clear that the regulatory and fiscal consultations the Government has
undertaken since coming into office in July 2024 have disrupted the UK North
Sea oil and gas industry and stifled investment activities.  However, the
outcome of the consultations have now been finalised and the fiscal terms
within which to best optimise investment decisions have been set.  These
terms point to a longer investment cycle over the coming years, which
maximises value across the applicable fiscal regimes.  For Buchan, taking the
time now, to verify and engineer the best possible development solution within
that cycle, should ultimately enhance the overall value of the project for all
parties.

 

While the Government has been working to set the overall parameters in which
the industry operates, the corporate landscape has also evolved.  Most
notably our joint venture partner and Buchan field operator, NEO Next+, on
completion of its latest deal, will establish itself as the largest operator
and producer in the UK North Sea.  This represents an exciting step, both for
us to be working alongside the leading player in the basin and to be part of
one of the key growth opportunities in its asset portfolio.  The Greater
Buchan Area, with estimated gross resources of over 100 MMboe and significant
exploration upside, represents a material opportunity on a standalone basis
and within the outlook of the UK sector as a whole."

 

 

Enquiries:

 Jersey Oil and Gas plc             Andrew Benitz        c/o Camarco:

                                                         020 3757 4980

 Strand Hanson Limited              James Harris         Tel: 020 7409 3494

                                    Matthew Chandler

                                    James Bellman

 Zeus Capital Limited               Simon Johnson        Tel: 020 3829 5000

 Cavendish Capital Markets Limited  Neil McDonald        Tel: 020 7220 0500

 Camarco                            Billy Clegg          Tel: 020 3757 4980

                                    Rebecca Waterworth

 

- Ends -

 

Notes to Editors

Jersey Oil & Gas (AIM:JOG) is a UK energy company focused on creating
shareholder value through the development of oil and gas assets and the
execution of accretive transactions.

 

The Company has a focused asset portfolio centred on developing homegrown
North Sea resources that support the UK's energy requirements as it
transitions towards net zero.  JOG holds a 20% interest in each of licences
P2498 (Blocks 20/5a, 20/5e and 21/1a) and P2170 (Blocks 20/5b and 21/1d)
located in the UK Central North Sea and referred to as the "Greater Buchan
Area" ("GBA").  Licence P2498 contains the Buchan Horst ("Buchan") oil field
and J2 oil discovery and licence P2170 contains the Verbier oil discovery.

 

JOG's strategy is focused on unlocking the organic value of its GBA assets,
combined with the pursuit of potential asset acquisitions that bring cash
flow, diversity and quality investment opportunities into the portfolio.  The
Company's Board and Executive team have a wealth of experience in managing and
growing publicly listed energy companies and a strong track-record of value
creation in the UK North Sea's oil and gas sector.

 

Forward-Looking Statements

This announcement may contain certain forward-looking statements that are
subject to the usual risk factors and uncertainties associated with an oil and
gas business.  Whilst the Company believes the expectations reflected herein
to be reasonable in light of the information available to it at this time, the
actual outcome may be materially different owing to factors beyond the
Company's control or otherwise within the Company's control but where, for
example, the Company decides on a change of plan or strategy.

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of
the European Union (Withdrawal) Act 2018, as amended by virtue of the Market
Abuse (Amendment) (EU Exit) Regulations 2019.

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