REG - Jersey Oil & Gas PLC - Final Results for the year ended 31 December 2021
28/04/2022 07:15
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RNS Number : 6166J Jersey Oil and Gas PLC 28 April 2022
28 April 2022
Jersey Oil and Gas plc
("Jersey Oil & Gas", "JOG" or the "Company")
Final Results for the year ended 31 December 2021
and Notice of Annual General Meeting
Jersey Oil & Gas (AIM: JOG), an independent upstream oil and gas company
focused on the UK Continental Shelf ("UKCS") region of the North Sea, is
pleased to announce its audited results for the financial year ended 31
December 2021 and the time and date of its forthcoming Annual General Meeting
("AGM").
Highlights
§ The Company has aggregated a significant oil and gas resource base in the
Central North Sea, the "Greater Buchan Area" ("GBA")
§ JOG launched its GBA farm-out process and is actively engaged with multiple
counterparties
§ Farm-out activities have intensified with JOG broadening the development
solutions under ongoing evaluation with the various interested parties
§ Work completed by the Company during the year is facilitating an
accelerated technical evaluation of the alternative development options under
consideration
§ Key pre-FEED operations completed during the year
§ Strengthened Board and senior management team with significant industry
experience
§ Year-end cash position of approximately £13.0 million, with no debt
Andrew Benitz, CEO of Jersey Oil & Gas, commented:
"2021 was an active and exciting year for the Company, most notably involving
the commencement of our Greater Buchan Area farm-out process. Interest in
developing the GBA has been strong and we are actively engaged with multiple
serious counterparties. Since launching the process our engagement strategy
has been broadened to advance a range of competing development solutions,
providing increased optionality.
"The GBA is a high-quality, development ready UK North Sea resource base of
scale and we look forward to concluding the farm-out process and moving into
the next phase of activities. The Company remains well funded as we progress
at pace to deliver stakeholder value through securing a successful farm-out to
ensure this exciting project can be developed in the most economic and
sustainable manner."
Corporate Update
JOG has aggregated a significant oil and gas resource base in the heart of the
Central North Sea. As the sole owner of the GBA, the Company has the control
and flexibility to advance an optimal new development capable of unlocking
substantial long-term shareholder value. To this end, the next major step
for JOG is to secure an industry partner(s) in order to move the development
into the next phase of activities and secure the regulatory approvals in 2023
for execution of the project.
GBA Focus
§ JOG is actively engaged with multiple high quality interested parties
regarding the planned farm-out of an interest in the GBA
§ Work is progressing to expand the development options in order to
facilitate the farm-out process, with opportunities to utilise existing
infrastructure for future production from the GBA under evaluation
§ Engineering studies are being completed in collaboration with the various
counterparties in order to validate and de-risk the different development
solutions and facilitate the negotiation of commercial constructs for the GBA
farm-out
§ The range of competing development solutions, including tie-backs to
existing platforms and re-use of available FPSO's, has the potential to
enhance the overall development economics
§ Upon confirmation and selection of the optimal GBA development scheme the
project will then move into Front-End Engineering & Design ("FEED")
activities along with preparation of the required Field Development Plan for
the North Sea Transition Authority (formerly, the Oil & Gas Authority)
§ Pre-FEED operational work included JOG completing an offshore survey to
support Phase 1 of the GBA Development project. The survey acquired
geotechnical and environmental baseline data within the GBA
§ The GBA development solution that is taken forward for regulatory approval
will seek to deliver upon both of the industry's strategic objectives of
"Maximising Economic Recovery" and "Net Zero"
Supportive Macro Environment
§ Recent geopolitical events, exacerbated by recent under investment in the
upstream sector, have led to a material escalation in oil and gas prices that
has served to underline the importance of maximising domestic energy supplies
§ The UK North Sea has only a limited number of readily executable oil and
gas developments with the resource scale of the GBA
Attractive Outlook
§ Progressing the GBA development project remains JOG's number one
priority with a singular focus on converting value in the GBA through
industry partnership
§ Opportunities to accelerate the Company's corporate growth strategy through
the execution of potential accretive acquisitions continue to be screened and
evaluated
§ The Company remains well funded with current expenditure primarily related
to workstreams that will facilitate securing a successful farm-out
§ Strengthened the team with the appointments of Les Thomas as Non-Executive
Chairman, Graham Forbes as Chief Financial Officer and Richard Smith as Chief
Commercial Officer
Availability of Annual Report and Accounts and Notice of Annual General
Meeting
In addition, the Company announces that its 2021 Annual Report and Financial
Statements, together with the AGM Notice and associated Form of Proxy, are now
available on the Company's website (www.jerseyoilandgas.com) and have today
been posted to those shareholders who have elected to receive hardcopy
shareholder communications from the Company.
The Company will hold its AGM in respect of its financial year ended 31
December 2021 on Thursday, 26 May 2022 at 2.00 p.m. at the offices of Pinsent
Masons LLP, 30 Crown Place, Earl Street, London EC2A 4ES.
Enquiries:
Jersey Oil and Gas plc
Andrew Benitz, CEO - c/o
Camarco
Tel: 020 3757 4983
Strand Hanson Limited
James Harris / Matthew Chandler / James
Bellman
Tel: 020 7409 3494
Arden Partners plc
Paul Shackleton
Tel: 020 7614 5900
finnCap Ltd
Christopher Raggett / Tim
Redfern
Tel: 020 7220 0500
Camarco
Billy Clegg / James
Crothers
Tel: 020 3757 4983
Notes to Editors:
Jersey Oil & Gas is a UK E&P company focused on building an upstream
oil and gas business in the North Sea. The Company holds a significant acreage
position within the Central North Sea referred to as the Greater Buchan Area
("GBA"), which includes operatorship and 100% working interests in blocks that
contain the Buchan oil field and J2 oil discovery and an 100% working interest
in the P2170 Licence Blocks 20/5b & 21/1d, that contain the Verbier oil
discovery and other exploration prospects.
JOG is focused on delivering shareholder value and growth through creative
deal-making, operational success and licensing rounds. Its management is
convinced that opportunity exists within the UK North Sea to deliver on this
strategy and the Company has a solid track-record of tangible success.
Forward-Looking Statements
This announcement may contain certain forward-looking statements that are
subject to the usual risk factors and uncertainties associated with the oil
and gas sector. Whilst the Company believes any 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.
CHAIRMAN & CHIEF EXECUTIVE OFFICER'S REPORT
Overview
During 2021, JOG made good progress in advancing its primary objective of
unlocking value from the Greater Buchan Area ("GBA") development project.
The hard work and effort of our team on multiple work streams has positioned
the Group well; defining the unique investment opportunity the GBA offers,
with the significant proven oil resources providing attractive economics and
flexibility for various development options, in the heart of the Central North
Sea.
Portfolio With Scale
The Group has constructed a quality portfolio of assets that form the GBA in
the Outer Moray Firth area of the UK North Sea. It represents a near
full-cycle portfolio of assets, underpinned by the Buchan Oil field and the J2
and Verbier oil discoveries, along with three high impact and drill-ready
exploration prospects; Verbier Deep, Wengen and Cortina.
In addition to contingent oil resources of in excess of 100mmbbls in the
planned first phase development of the Greater Buchan Area, our shareholders
have ownership of significant resource upside from further development phases
and the drill-ready exploration prospects that are proximal to the core
project. As an indication of confidence in our ability to deliver value for
shareholders, the Group raised £16.61m (gross) through an oversubscribed
placing and subscription in March 2021, providing strength and flexibility to
advance the project to the next phase.
A standalone GBA platform development concept was prepared and a Concept
Select Report ("CSR") submitted to the North Sea Transition Authority
("NSTA"). The CSR was focused on meeting the NSTA's twin strategic
objectives of 'Maximising Economic Recovery' and contributing to the
Government target for 'Net Zero' and it was used to launch an industry
farm-out process, as a project of this scale requires multiple partners and
funding components for successful delivery.
GBA Farm-Out Advancing
The farm-out process is generating interest from a wide variety of producers
and infrastructure owners. Initial engagement and screening has led to JOG
being actively engaged with multiple serious counterparties of scale, with
ongoing due diligence involving two-way collaborative workstreams. Work is
progressing to assess various development concepts that can facilitate the
farm-out, including using existing third-party host infrastructure and
facilities to enhance overall development economics through synergies and cost
savings. The associated recoverable volumes from the GBA will naturally be
dependent on the development solution that is taken forward. Opportunities
to optimise forecast production and capital expenditure requirements represent
a core component of the evaluations. The work completed during 2021 on the
platform development concept has accelerated the technical evaluation of these
further options.
Completing the assessment of the wider set of development solutions for the
GBA is naturally an important driver for delivering stakeholder value from the
project and a task the Group is working on with pace to progress.
The Group remains well funded with a cash balance at the end of 2021 of
approximately £13 million and with current expenditure focused on workstreams
that will facilitate securing a successful farm-out.
Positive Macro Environment
It has been a volatile year for sentiment in the oil and gas sector and in the
lead up to "COP26" there was much debate about the future of the North Sea.
We see the North Sea as a crucible for energy transition where upstream oil
and gas can function effectively alongside the advancement of renewable
energy, with examples of oil and gas companies leading investments into
offshore wind and carbon capture, utilisation and storage ("CCUS")
technologies. Indeed, offshore wind developments, facilitating the
decarbonisation of offshore oil and gas infrastructure and regional
electrification may likely play an important role in optimising the GBA
development plans. We have put net zero considerations at the heart of our
business by subscribing to the principles that underpin the North Sea
Transition Deal that was announced in March 2021, and which supports the
industry's transition to clean, green energy.
Recent geopolitical events have sadly served as a salutary reminder that
security of energy supply remains of vital importance as the energy transition
is achieved. The reality of underlying supply fundamentals, exacerbated by
several years of under investment across the upstream sector and the
significant and steady increase in commodity prices have served as a reminder
that oil and gas is a vital component of the overall energy mix. Investment
in maximising the production of indigenous, low-carbon UK resources remains
crucial for security of supply and represents the best way for the UK economy
to navigate the energy transition wisely, with JOG having an important part to
play in this evolution. Improved commodity prices have bolstered producing
company cash positions, serving to improve sector confidence and provide a
helpful backdrop to the on-going GBA farm-out process.
Strong Organisation & Outlook
During 2021, JOG made several senior management and Board changes which marked
the next phase in the Group's development for delivery on its key strategic
ambitions. It was pleasing to be able to welcome Graham Forbes and Richard
Smith into the Group as Chief Financial Officer and Chief Commercial Officer,
respectively. This, combined with the smooth transition of the Chairman's
role from Marcus Stanton to myself (Les Thomas), has strengthened the
execution capabilities and leadership of the Group.
We have built a team of experienced professionals, with a demonstrable track
record in the industry, a high-quality asset base and a comfortable funding
position to work from.
The Group is therefore well positioned for success and on behalf of the Board,
we would like to thank our dedicated JOG team for their accomplishments during
the year and to recognise and acknowledge the ongoing support we have received
from all of our shareholders and stakeholders at large.
Les Thomas
Non-Executive Chairman
Andrew Benitz
Chief Executive Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December
2021
Note 2021 2020
£ £
Revenue - -
Cost of sales (101,079) (53,046)
Gross loss (101,079) (53,046)
Exploration write-off/licence relinquishment 10 (447,812) -
Other losses 7 - (637,028)
Administrative expenses (3,672,135) (2,111,532)
Operating loss (4,221,026) (2,801,606)
Finance income 6 1,807 27,937
Finance expense 6 (6,098) (8,262)
Loss before tax (4,225,317) (2,781,931)
Tax 8 - -
Loss for the year (4,225,317) (2,781,931)
Total comprehensive loss for the year (net of tax) (4,225,317) (2,781,931)
Total comprehensive loss for the year attributable to:
Owners of the parent (4,225,317) (2,781,931)
Loss per share expressed in pence per share:
Basic 9 (14.48) (12.74)
Diluted 9 (14.48) (12.74)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 December 2021
Note 2021 2020
£ £
Non-current assets
Intangible assets exploration & development costs 10 21,514,153 14,991,295
Property, plant and equipment 11 40,077 74,549
Right-of-use assets 12 185,008 197,374
Deposits 31,112 82,642
21,770,350 15,345,860
Current assets
Trade and other receivables 13 353,114 401,440
Cash and cash equivalents 14 13,038,388 5,081,515
13,391,502 5,482,955
Total assets 35,161,852 20,828,815
Equity
Called up share capital 15 2,573,395 2,466,144
Share premium account 110,309,524 93,851,526
Share options reserve 19 1,397,287 2,109,969
Accumulated losses (81,551,730) (78,509,819)
Reorganisation reserve (382,543) (382,543)
Total equity 32,345,933 19,535,277
Liabilities
83,012 101,270
Non-current liabilities
Lease liabilities 17
83,012 101,270
Current liabilities
Trade and other payables 16 2,603,707 1,069,620
Lease liabilities 12 129,200 122,648
2,732,907 1,192,268
Total liabilities 2,815,919 1,293,538
Total equity and liabilities 35,161,852 20,828,815
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021
Called up Share premium account Share options reserve Accumulated Reorganisation
share capital £ £ losses reserve Total equity
£ £ £ £
At 1 January 2020 2,466,144 93,851,526 1,928,099 (75,727,888) (382,543) 22,135,338
Loss and total comprehensive loss for the year
- - - (2,781,931) - (2,781,931)
Share based payments - - 181,870 - - 181,870
At 31 December 2020 and
1 January 2021 2,466,144 93,851,526 2,109,969 (78,509,819) (382,543) 19,535,277
Loss and total comprehensive loss for the year
- - - (4,225,317) - (4,225,317)
Issue of share capital 107,251 16,457,997 - - - 16,565,248
Expired share options - - (909,176) 909,176 - -
Exercised share options - - (274,230) 274,230 - -
Share based payments - - 470,725 - - 470,725
At 31 December 2021 2,573,395 110,309,523 1,397,287 (81,551,730) (382,543) 32,345,933
The following describes the nature and purpose of each reserve within owners'
equity:
Reserve Description and purpose
Called up share capital Represents the nominal value of shares issued
Share premium account Amount subscribed for share capital in excess of nominal value
Share options reserve Represents the accumulated balance of share-based payment charges recognised
in respect of share options granted by the Company less transfers to
accumulated deficit in respect of options exercised or cancelled/lapsed
Accumulated losses Cumulative net gains and losses recognised in the Consolidated Statement of
Comprehensive Income
Reorganisation reserve Amounts resulting from the restructuring of the Group at the time of the
Initial Public Offering (IPO) in 2011
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2021
2021 2020
Note £ £
Cash flows from operating activities
Cash used in operations 21 (1,495,899) (2,160,164)
Net interest received 6 1,807 27,937
Net interest paid 6 (6,098) (8,262)
Net cash used in operating activities (1,500,190) (2,140,489)
Cash flows from investing activities
Addition of intangible assets 10 (6,970,670) (4,898,731)
Purchase of tangible assets 10 - (84,865)
Net cash used in investing activities (6,970,670) (4,983,596)
Cash flows from financing activities
(137,516) (112,936)
Principal elements of lease payments
Net proceeds from issue of shares 16,565,248 -
Net cash generated from/(used in) financing activities 16,427,732 (112,936)
Increase/(decrease) in cash and cash equivalents 21 7,956,873 (7,237,021)
Cash and cash equivalents at beginning of year 14 5,081,515 12,318,536
Cash and cash equivalents at end of year 14 13,038,388 5,081,515
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
1. General information
Jersey Oil and Gas plc (the "Company") and its subsidiaries (together, the
"Group") are involved in the upstream oil and gas business in the UK.
The Company is a public limited company incorporated and domiciled in the
United Kingdom and quoted on AIM, a market operated by London Stock Exchange
plc. The address of its registered office is 10 The Triangle, ng2 Business
Park, Nottingham, NG2 1AE.
2. Significant accounting policies
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. These policies have been
consistently applied to all the periods presented, unless otherwise stated.
Basis of Accounting
The consolidated financial statements of Jersey Oil and Gas Plc as of 31
December, 2021 and for the year then ended (the "consolidated financial
statements") were prepared in accordance with UK-adopted International
Accounting Standards in conformity with the requirements of the Companies Act
2006 (the "Companies Act").
On 31 December 2020, IFRS as adopted by the European Union at that date was
brought into UK law and became UK-adopted International Accounting Standards,
with future changes being subject to endorsement by the UK Endorsement Board.
Jersey Oil and Gas Plc transitioned to UK-adopted International Accounting
Standards in its consolidated financial statements on 1 January 2021. This
change constitutes a change in accounting framework. However, there is no
impact on recognition, measurement or disclosure in the period reported as a
result of the change in framework. The consolidated financial statements of
Jersey Oil and Gas Plc have been prepared in accordance with UK-adopted
International Accounting Standards and with the requirements of the Companies
Act 2006 as applicable to those companies reporting under those standards.
The financial statements have been prepared under the historic cost
convention, except as disclosed in the accounting policies below.
Going Concern
The Group has sufficient resources to meet its liabilities as they fall due
for a period of at least 12 months after the date of issue of these financial
statements. Further to the equity raise completed in March 2021, the Group has
substantial cash reserves with currently no firm work commitments on any of
the Group's licences, other than ongoing Operator overheads and licence fees.
Other work that the Group is undertaking in respect of the GBA licences and
surrounding areas is modest relative to its current cash reserves. A range of
potential farm-out scenarios has also been modelled to provide further
comfort. The Company's current cash reserves are therefore expected to more
than exceed its estimated cash outflows in all reasonable scenarios for at
least 12 months following the date of issue of these financial statements.
Based on these circumstances, the Directors have considered it appropriate to
adopt the going concern basis of accounting in preparing the consolidated
financial statements.
Changes in Accounting Policies and Disclosures
(a) New and amended standards adopted by the Group:
At the start of the year the following standards were adopted:
• Covid-19-Related Rent Concessions (Amendment to IFRS 16);
• Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39,
IFRS 7, IFRS 4 and IFRS 16);
• IFRS3 conceptual framework amendment; and
• Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS
16);
(b) Certain new accounting standards and interpretations have been published
that are not mandatory for 31 December 2021 reporting periods and have not
been early adopted by the Group. These standards are not expected to have a
material impact on the entity in the current or future reporting periods and
on foreseeable future transactions:
• IFRS17 Insurance Contracts;
• Property, Plant and Equipment: Proceeds before intended use (Amendment to
IAS 16);
• Reference to Conceptual Framework (Amendments to IFRS 3);
• Onerous Contracts - Cost of Fulfilling a contract (Amendments to IAS 37);
• Annual Improvements to IFRS Standards 2018-2020
Significant Accounting Judgements and Estimates
The preparation of the financial statements requires management to make
estimates and assumptions that affect the reported amounts of revenues,
expenses, assets and liabilities at the date of the financial statements. If
in future such estimates and assumptions, which are based on management's best
judgement at the date of the financial statements, deviate from the actual
circumstances, the original estimates and assumptions will be modified as
appropriate in the period in which the circumstances change. The Group's
accounting policies make use of accounting estimates and judgements in the
following areas:
• The assessment of the existence of impairment triggers
(note 10).
• The estimation of share-based payment costs (note 19).
Impairments
The Group tests its capitalised exploration licence costs for impairment when
indicators, further detailed below under 'Exploration and Evaluation Costs' as
set out in IFRS 6, suggest that the carrying amount exceeds the recoverable
amount which is inherently judgmental. An impairment loss is recognised for
the amount by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount of the Cash Generating Unit is the higher of an
asset's fair value less costs of disposal and value in use. The Group assessed
that there were no impairment triggers during the year - this included the
judgement that there was no trigger arising from future licence expiry for
which we did not expect the licence concerned to be renewed.
Share-Based Payments
The Group currently has a number of share schemes that give rise to
share-based payment charges. The charge to operating profit for these schemes
amounted to £470,725 (2020: £181,870). Estimates and judgements for
determining the fair value of the share options are required. For the purposes
of the calculation, a Black- Scholes option pricing model has been used. Based
on past experience, it has been assumed that options will be exercised, on
average, at the mid-point between vesting and expiring. The share price
volatility used in the calculation is based on the actual volatility of the
Group's shares, since 1 January 2017. The risk-free rate of return is based on
the implied yield available on zero coupon gilts with a term remaining equal
to the expected lifetime of the options at the date of grant.
Basis of Consolidation
(a) Subsidiaries
Subsidiaries are all entities over which the Group has the power to govern
their financial and operating policies generally accompanying a shareholding
of more than one half of the voting rights. The existence and effect of
potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Group controls another entity. The Group
also assesses the existence of control where it does not have more than 50% of
the voting power but is able to govern the financial and operating policies by
virtue of de facto control. De facto control may arise in circumstances where
the size of the Group's voting rights relative to the size and dispersion of
holdings of other Shareholders give the Group the power to govern the
financial and operating policies.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are de-consolidated from the date the Group
ceases to have control.
(b) Changes in ownership interests in subsidiaries without change of control
Transactions with non-controlling interests that do not result in loss of
control are accounted for as equity transactions - that is, as transactions
with the owners in their capacity as owners. The difference between fair value
of any consideration paid and the relevant share acquired of the carrying
value of net assets of the subsidiary is recorded in equity. Gains or losses
on disposals to non-controlling interests are also recorded in equity.
(c) Disposal of subsidiaries
When the Group ceases to have control any retained interest in the entity is
remeasured to its fair value at the date when control is lost, with the change
in carrying amount recognised in profit or loss. The fair value is the initial
carrying amount for the purposes of subsequently accounting for the retained
interest as an associate, joint venture or financial asset. In addition, any
amounts previously recognised in other comprehensive income in respect of that
entity are accounted for as if the Group had directly disposed of the related
assets or liabilities. This may mean that amounts previously recognised in
other comprehensive income are reclassified to profit or loss.
Inter-company transactions, balances, income and expenses on transactions
between Group companies are eliminated. Profits and losses resulting from
inter-company transactions that are recognised in assets are also eliminated.
Accounting policies of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the Group.
Acquisitions, Asset Purchases and Disposals
Transactions involving the purchase of an individual field interest, farm-ins,
farm-outs, or acquisitions of exploration and evaluation licences for which a
development decision has not yet been made that do not qualify as a business
combination, are treated as asset purchases. Accordingly, no goodwill or
deferred tax arises. The purchase consideration is allocated to the assets and
liabilities purchased on an appropriate basis. Proceeds on disposal (including
farm-ins/farm-outs) are applied to the carrying amount of the specific
intangible asset or development and production assets disposed of and any
surplus is recorded as a gain on disposal in the Consolidated Statement of
Comprehensive Income.
Acquisitions of oil and gas properties are accounted for under the purchase
method where the acquisitions meets the definition of a business combination.
The Group applies the acquisition method of accounting to account for business
combinations. The consideration transferred for the acquisition of a
subsidiary is the fair value of the assets transferred, the liabilities
incurred, and the equity interests issued by the Group. The consideration
transferred includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair value at the acquisition date. The Group
recognises any non-controlling interest in the acquiree on an
acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest's proportionate share of the recognised amounts of
the acquiree's identifiable net assets.
Acquisition related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date fair
value of the acquirer's previously held equity interest in the acquiree is
remeasured to fair value at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the Group is recognised at
fair value at the acquisition date. Subsequent changes to the fair value of
the contingent consideration that is deemed to be an asset or liability are
recognised in accordance with IFRS 9 either in profit or loss or as a change
to other comprehensive income. Contingent consideration that is classified as
equity is not remeasured, and its subsequent settlement is accounted for
within equity.
Goodwill is initially measured as the excess of the aggregate of the
consideration transferred and the fair value of non-controlling interest over
the net identifiable assets acquired and liabilities assumed. If this
consideration is lower than the fair value of the net assets of the subsidiary
acquired, the difference is recognised in profit or loss.
Exploration and Evaluation Costs
The Group accounts for oil and gas exploration and evaluation costs using IFRS
6 "Exploration for and Evaluation of Mineral Resources". Such costs are
initially capitalised as Intangible Assets and include payments to acquire the
legal right to explore, together with the directly related costs of technical
services and studies, seismic acquisition, exploratory drilling, and testing.
The Group only capitalises costs as intangible assets once the legal right to
explore an area has been obtained. The Group assesses the intangible assets
for indicators of impairment at each reporting date.
Potential indicators of impairment include but are not limited to:
a) the period for which the Group has the right to explore in the specific
area has expired during the period or will expire in the near future and is
not expected to be renewed.
b) substantive expenditure on further exploration for and evaluation of oil
and gas reserves in the specific area is neither budgeted nor planned.
c) exploration for and evaluation of oil and gas reserves in the specific area
have not led to the discovery of commercially viable quantities of oil and gas
reserves and the entity has decided to discontinue such activities in the
specific area.
d) sufficient data exist to indicate that, although a development in the
specific area is likely to proceed, the carrying amount of the exploration and
evaluation asset is unlikely to be recovered in full from successful
development or by sale.
The Group analyses the oil and gas assets into cash generating units (CGUs)
for impairment and reporting purposes. In the event an impairment trigger is
identified the Group performs a full impairment test for the CGU under the
requirements of IAS 36 Impairment of assets. An impairment loss is recognised
for the amount by which the exploration and evaluation assets' carrying amount
exceeds their recoverable amount. The recoverable amount is the higher of the
exploration and evaluation assets' fair value less costs of disposal. A cost
of £255,847 was recorded for relinquishing P2497 Block 20/4c (Zermatt), and
£191,965 for P2499 Block 21/2a (Glenn) in the financial year ended 31
December 2021, resulting in the carrying value of both assets being £nil.
As at 31 December 2021, the carrying value of intangible assets was £21.5m,
as per Note 10 'Intangible Assets'. The Group considered other factors which
could give rise to an impairment trigger such as commodity prices, licence
expiration dates, budgeted spend and movements in estimated recoverable
reserves. The group exercised judgement in determining that the licence
agreements will be likely be extended by the NSTA. Based on this assessment,
no impairment triggers existed in relation to exploration assets as of 31
December 2021.
Cost of Sales
Within the statement of comprehensive income, costs directly associated with
generating future revenue are included in cost of sales such as software
licences that were used across the asset base. The Group only capitalises
costs as intangible assets once the legal right to explore an area has been
obtained, any costs incurred prior to the date of acquisition are recognised
as cost of sales within the Statement of Comprehensive Income.
Property, Plant and Equipment
Property, plant and equipment is stated at historic purchase cost less
accumulated depreciation. Asset lives and residual amounts are reassessed each
year. Cost includes the original purchase price of the asset and the costs
attributable to bringing the asset to its working condition for its intended
use.
Depreciation on these assets is calculated on a straight-line basis as
follows:
Computer & office equipment 3 years
Leases
Assets and liabilities arising from a lease are initially measured on a
present value basis. Lease liabilities include the net present value of the
following lease payments:
• fixed payments (including in-substance fixed payments),
less any lease incentives receivable;
• variable lease payment that are based on an index
or a rate, initially measured using the index or rate as at the commencement
date;
• amounts expected to be payable by the Group under residual
value guarantees;
• the exercise price of a purchase option if the Group is
reasonably certain to exercise that option; and
• payments of penalties for terminating the lease, if the
lease term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension options are also
included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the
lease. If that rate cannot be readily determined, which is generally the case
for leases in the Group, the lessee's incremental borrowing rate is used,
being the rate that the individual lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value to the right-of-use asset
in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Group where possible, uses
recent third-party financing received by the individual lessee as a starting
point, adjusted to reflect changes in financing conditions since third party
financing was received.
Lease payments are allocated between principal and finance cost. The finance
cost is charged to profit or loss over the lease period to produce a constant
periodic rate of interest on the remaining balance of the liability for each
period.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any
lease incentives received;
• any initial direct costs; and
• restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset's
useful life and the lease term on a straight-line basis. If the Group is
reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset's useful life.
Payments associated with short-term leases of equipment and vehicles and all
leases of low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a lease term of
12 months or less. Low-value assets comprise any lease with a value of £5,000
or less.
Joint Ventures
The Group participates in joint venture/operation agreements with strategic
partners, these are classified as joint operations. The Group accounts for its
share of assets, liabilities, income and expenditure of these joint venture
agreements and discloses the details in the appropriate Statement of Financial
Position and Statement of Comprehensive Income headings in the proportion that
relates to the Group per the joint venture agreement.
Investments
Fixed asset investments in subsidiaries are stated at cost less accumulated
impairment in the Company's Statement of Financial Position and reviewed for
impairment if there are any indications that the carrying value may not be
recoverable.
Financial Instruments
Financial assets and financial liabilities are recognised in the Group and
Company's Statement of Financial Position when the Group becomes party to the
contractual provisions of the instrument. The Group does not have any
derivative financial instruments.
Cash and cash equivalents include cash in hand and deposits held on call with
banks with a maturity of three months or less.
Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method, less any
expected credit loss. The Group recognises an allowance for expected credit
losses (ECLs) for all debt instruments not held at fair value through profit
or loss. ECLs are based on the difference between the contractual cash flows
due in accordance with the contract and all the cash flows that the Group
expects to receive, discounted at an approximation of the original effective
interest rate. The carrying amount of the asset is reduced through the use of
an allowance account, and the amount of the loss will be recognised in the
Consolidated Statement of Comprehensive Income within administrative expenses.
Subsequent recoveries of amounts previously provided for are credited against
administrative expenses in the Consolidated Statement of Comprehensive Income.
Trade payables are stated initially at fair value and subsequently measured at
amortised cost.
Offsetting of Financial Instruments
Financial assets and financial liabilities are offset, and the net amount is
reported in the consolidated statement of financial position if there is a
currently enforceable legal right to offset the recognised amounts and there
is an intention to settle on a net basis, or to realise the assets and settle
the liabilities simultaneously.
Exceptional Items
Exceptional items are disclosed separately in the financial statements where
it is necessary to do so to provide further understanding of the financial
performance of the Group. They are material items of income or expense that
have been shown separately due to the significance of their nature or amount.
Deferred Tax
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit. Deferred taxation liabilities are provided, using the liability
method, on all taxable temporary differences at the reporting date. Such
assets and liabilities are not recognised if the temporary difference arises
from goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
Deferred income tax assets are recognised to the extent that it is probable
that future taxable profits will be available against which the temporary
differences can be utilised. The carrying amount of deferred tax assets is
reviewed at each reporting date.
The current income tax charge is calculated on the basis of the tax laws
enacted or substantively enacted at the end of the reporting period in the
countries where Jersey Oil and Gas Plc and its subsidiaries operate and
generate taxable income. We periodically evaluate positions taken in tax
returns with respect to situations in which applicable tax regulation is
subject to interpretation. Provisions are established where appropriate on the
basis of amounts expected to be paid to the tax authorities.
Current Tax
Current tax is payable based upon taxable profit for the year. Taxable profit
differs from net profit as reported in the Statement of Comprehensive Income
because it excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable or
deductible. Any Group liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the reporting date.
Foreign Currencies
The functional currency of the Company and its subsidiaries is Sterling.
Monetary assets and liabilities in foreign currencies are translated into
Sterling at the rates of exchange ruling at the reporting date. Transactions
in foreign currencies are translated into Sterling at the rate of exchange
ruling at the date of the transaction. Gains and losses arising on
retranslation are recognised in the Consolidated Statement of Comprehensive
Income for the year.
Employee Benefit Costs
Payments to defined contribution retirement benefit schemes are recognised as
an expense when employees have rendered service entitling them to
contributions.
Share-Based Payments
Equity settled share-based payments to employees and others providing similar
services are measured at the fair value of the equity instruments at the grant
date. The total amount to be expensed is determined by reference to the fair
value of the options granted:
• including any market performance conditions (for
example, an entity's share price);
• excluding the impact of any service and non-market
performance vesting conditions (for example, profitability, sales growth
targets and remaining an employee of the entity over a specified time-period);
and
• including the impact of any non-vesting conditions
(for example, the requirement for employees to save).
The fair value determined at the grant date of the equity settled share-based
payments is expensed on a straight-line basis over the vesting period, based
on the Group's estimate of equity instruments that will eventually vest, with
a corresponding increase in equity. At the end of each reporting period, the
Group revises its estimate of the number of equity instruments expected to
vest. The impact of the revision of the original estimates, if any, is
recognised in profit or loss such that the cumulative expense reflects the
revised estimate, with a corresponding adjustment to the equity settled
employee benefits reserve.
Equity settled share-based payment transactions with parties other than
employees are measured at the fair value of the goods or services received,
except where that fair value cannot be estimated reliably, in which case they
are measured at the fair value of the equity instruments granted, measured at
the date the entity obtains the goods or the counterparty renders the service.
Exercise proceeds net of directly attributable costs are credited to share
capital and share premium.
Share Capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new ordinary shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
3. Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the Board of Directors.
The Board considers that the Group operates in a single segment, that of oil
and gas exploration, appraisal, development and production, in a single
geographical location, the North Sea of the United Kingdom and do not consider
it appropriate to disaggregate data further from that disclosed.
The Board is the Group's chief operating decision maker within the meaning of
IFRS 8 "Operating Segments".
During 2021 and 2020 the Group had no revenue.
4. Financial risk management
The Group's activities expose it to financial risks and its overall risk
management programme focuses on minimising potential adverse effects on the
financial performance of the Group. The Company's activities are also exposed
to risks through its investments in subsidiaries and it is accordingly exposed
to similar financial and capital risks as the Group.
Risk management is carried out by the Directors and they identify, evaluate,
and address financial risks in close co-operation with the Group's management.
The Board provides written principles for overall risk management, as well as
written policies covering specific areas, such as mitigating foreign exchange
risks and investing excess liquidity.
Credit Risk
The Group's credit risk primarily relates to its trade receivables.
Responsibility for managing credit risks lies with the Group's management.
A debtor evaluation is typically obtained from an appropriate credit rating
agency. Where required, appropriate trade finance instruments such as letters
of credit, bonds, guarantees and credit insurance will be used to manage
credit risk.
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they become due. The Group manages its liquidity
through continuous monitoring of cash flows from operating activities, review
of actual capital expenditure programmes, and managing maturity profiles of
financial assets and financial liabilities.
Capital Risk Management
The Group seeks to maintain an optimal capital structure. The Group considers
its capital to comprise both equity and net debt.
The Group monitors its capital mix needs and suitability dependent upon the
development stage of its asset base. Earlier stage assets (pre-production)
typically require equity rather than debt given the absence of cash flow to
service debt. As the asset mix becomes biased to production then typically
more debt is available. The Group seeks to maintain progress in developing its
assets in a timely fashion. Given the Group's current cash position is
insufficient to progress its assets to first oil it will be seeking to bring
an industry partner into its assets in return for a capital (equity)
contribution. This may be in the form of either cash or payment of some or all
the Group's development expenditures. As the development progresses towards
first oil, debt becomes available and will be sought in order to enhance
equity returns. As at 31 December 2021 there are no borrowings within the
Group (2020: Nil).
The Group monitors its capital structure by reference to its net debt to
equity ratio. Net debt to equity ratio is calculated as net debt divided by
total equity. Net debt is calculated as borrowings less cash and cash
equivalents. Total equity comprises all components of equity.
Maturity analysis of financial assets and liabilities
Financial assets
2021 2020
£ £
Up to 3 months 233,864 446,082
3 to 6 months - 35,980
Over 6 months 31,112 199,395
264,976 681,457
Financial liabilities
2021 2020
£ £
Up to 3 months 2,232,325 1,069,620
3 to 6 months - -
Over 6 months - -
2,232,325 1,069,620
Lease liabilities
2021 2020
£ £
Up to 3 months 31,028 46,712
3 to 6 months 31,261 40,231
Over 6 months 149,923 136,975
212,212 223,918
5. Employees and Directors
2021 2020
£ £
Wages and salaries* 2,207,384 1,841,230
Social security costs** 215,267 145,605
Share-based payments (note 19) 470,724 181,870
Other pension costs 218,253 181,010
3,111,628 2,349,715
*In addition, there were payments in lieu of notice and loss of office fees of
£733,725.
** In addition, there were social security costs associated with the payments
in lieu of notice and loss of office of £49,985.
Other pension costs include employee and Group contributions to money purchase
pension schemes.
The average monthly number of employees during the year was as follows:
2021 2020
£ £
Directors 6 5
Employees - Finance 1 1
Employees - Technical 10 8
17 14
Directors Remuneration: 2021 2020
£ £
Directors' remuneration* 938,465 878,100
Directors' pension contributions to money purchase schemes 26,450 26,665
Share-based payments (note 19) 207,534 153,816
Benefits** 17,074 17,104
1,189,523 1,075,685
The Director's remuneration is shown net of share-based payments.
*In addition, there were payments in lieu of notice and loss of office fees of
£733,725.
** In addition, there were benefit costs associated with the payments in lieu
of notice and loss of office of £13,197.
The average number of Directors to whom retirement benefits were accruing was
as follows:
2021 2020
£ £
Money purchase schemes 2 2
Information regarding the highest paid Director is as follows:
2021 2020
£ £
Aggregate emoluments and benefits 256,036 254,784
Share-based payments 74,707 52,470
Pension contributions 25,000 25,000
355,743 332,254
Key management compensation
Key management includes Directors (Executive and Non-Executive) and an advisor
to the Board. The compensation paid or payable to key management for
employee services is shown below:
2021 2020
£ £
Wages and short-term employee benefits* 992,204 895,203
Share-based payments (note 19) 207,534 153,816
Pension Contributions 26,450 26,665
1,226,188 1,075,684
*In addition, there were payments in lieu of notice and loss of office fees of
£733,725 and associated benefit costs of £13,197.
6. Net Finance Cost
2021 2020
£ £
Finance income:
1,807 27,937
Interest received
1,807 27,937
Finance costs:
Interest paid (278) (33)
Interest on lease liability (5,820) (8,229)
(6,098) (8,262)
Net finance income (4,290) 19,675
7. Loss Before Tax
The loss before tax is stated after charging/(crediting):
2021 2020
£ £
Depreciation - tangible assets 34,472 23,977
Depreciation - right-of-use asset 138,176 135,493
Auditors' remuneration - audit of parent company and consolidation 80,000 58,000
Auditors' remuneration - audit of subsidiaries 27,000 20,000
Auditors' remuneration - non-audit work (taxation advice) 3,150 16,000
TGS Settlement - 637,028
Foreign exchange gain (6,027) (5,600)
In December 2020, the Group reached a settlement with TGS-Nopec Geophysical
Company ASA ("TGS") pursuant to an agreement entered into with TGS on 9
February 2018. Under the agreement, TGS claimed uplift payments from JOG
totalling US$1,050,838 in respect of: a) licence awards to Jersey Petroleum
Limited ("JPL") in the Oil & Gas Authority's 31st Supplementary Offshore
Licensing Round; and b) the acquisition by JPL of Equinor UK Limited's 70%
interest in Licence P2170 (Verbier). The Group disputed the validity of both
claims, following which two hearings took place in the Norwegian courts.
Subsequent to these hearings and, on the basis of legal advice received, the
Group agreed a final settlement payment to TGS of US$850,000 (£637,028).
8. Tax
Reconciliation of tax charge
2021 2020
£ £
Loss before tax (4,225,317) (2,781,931)
Tax at the domestic rate of 19% (2020: 19%) (802,810) (528,567)
Capital allowances in excess of depreciation (1,330,468) (957,549)
Expenses not deductible for tax purposes and non-taxable income 91,330 35,704
Deferred tax asset not recognised 2,041,949 1,450,412
Total tax expense reported in the Consolidated Statement of Comprehensive - -
Income
No liability to UK corporation tax arose on ordinary activities for the year
ended 31 December 2021, or for the year ended 31 December 2020.
In April 2023, the rate of corporation tax will increase to 25% as announced
in the March 2021 Budget.
The Group has not recognised a deferred tax asset due to the uncertainty over
when the tax losses can be utilised. At the year end, the usable tax losses
within the Group were approximately £57 million (2020: £46million).
9. Loss Per Share
Basic loss per share is calculated by dividing the losses attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the year.
Diluted loss per share is calculated using the weighted average number of
shares adjusted to assume the conversion of all dilutive potential ordinary
shares.
There is no difference between dilutive and ordinary earnings per share due to
there being no dilutive shares in the period.
Loss attributable Weighted average number of
to ordinary shareholders shares Per share amount pence
£
Year ended 31 December 2021
Basic and Diluted EPS
Basic & Diluted (4,225,317) 29,171,548 (14.48)
Year ended 31 December 2020
Basic and Diluted EPS
Basic & Diluted (2,781,931) 21,829,227 (12.74)
10. Intangible Assets
Exploration
costs
£
Cost
At 1 January 2020 10,267,805
Additions 4,898,731
At 31 December 2020 15,166,536
Additions 6,970,670
Exploration write-off/relinquishment (447,812)
At 31 December 2021 21,689,394
Accumulated Amortisation
At 1 January 2020 175,241
Charge for the year -
Amortisation on disposal -
At 31 December 2020 175,241
At 31 December 2021 175,241
Net Book Value
At 31 December 2021 21,514,153
At 31 December 2020 14,991,295
During the year, the Group relinquished licences P2497 Block 20/4c (Zermatt)
and P2499 Block 21/2a (Glenn). Following undertaking a comprehensive
technical and economic evaluation of licences P2497 and P2499 and meetings
held with the North Sea Transition Authority ("NSTA"), the NSTA confirmed
that it was satisfied that the Phase A Firm Commitments for both licences had
been fulfilled. JOG has decided not to progress to the next licence phase,
which would have required committing to a firm well in each of these two
licence areas. Accordingly, the licences automatically ceased and determined
at the end of Phase A of their Initial Term on 29 August 2021.
In 2020, the Group acquired an additional 70% working interest in licence
P2170 (Verbier) in addition to the existing 18% equity interest and retained
100% working interests in the licences awarded pursuant to the NSTA's 31st SLR
(2019), Licence P2498 (Buchan and J2), Licence P2499 (Glenn) and Licence P2497
(Zermatt). The Group was also awarded a 100% working interest in, and
operatorship of, part-block 20/5e in the NSTA's 32 Offshore Licensing Round in
2020. Part-block 20/5e is incorporated within Licence P2498 (Buchan &
J2) and is located within the Group's existing Greater Buchan Area.
In April 2021, the Group acquired an additional 12% working interest in P2170
following the acquisition of Cieco V&C (UK) Limited (now Jersey V&C
Ltd), thereby resulting in the Group owning 100% of this licence which
includes the Verbier oil discovery, some 6km from the Buchan oil field. The
consideration for the acquisition included a completion payment of £150k and
two future milestone payments, details of which can be found in note 18.
In line with the requirements of IFRS 6, we have considered whether there are
any indicators of impairment on the exploration and development assets. Based
on our assessment, as at 31 December 2021 there are not deemed to be
indicators that the licences are not commercial and the carrying value of
£21,514,153 continues to be supported by ongoing exploration and development
work on the licence area with no impairments considered necessary.
11. Property, Plant and Equipment
Computer and office equipment
£
Cost
At 1 January 2020 143,582
Additions 84,865
At 31 December 2020 228,447
Additions -
At 31 December 2021 228,447
Accumulated Depreciation
At 1 January 2020 129,921
Charge for the year 23,977
At 31 December 2020 153,898
Charge for the year 34,472
At 31 December 2021 188,370
Net Book Value
At 31 December 2021 40,077
At 31 December 2020 74,549
12. Leases
Amounts Recognised in the Statement of financial position
2021 2020
£ £
Right-of-use Assets
185,008 197,374
Buildings
185,008 197,374
Lease liabilities
Current 129,200 122,648
Non-Current 83,012 101,270
212,212 223,918
The liabilities were measured at the present value of the remaining lease
payments, discounted using the lessee's incremental borrowing rate as of 1
January 2019. The weighted average lessee's incremental borrowing rate applied
to the lease liabilities on 1 January 2019 was 3%. The borrowing rate applied
for 2021 remained at 3% and the leases relate to office space.
A new lease agreement was entered into in September 2021 with a lease end date
of September 2023, this was in relation to the London office.
Amounts Recognised in the Statement of comprehensive income
2021 2020
£ £
Depreciation charge of right-of-use asset
138,176 135,493
Buildings
138,176 135,493
Interest expenses (included in finance cost) (5,820) (8,230)
13. Trade and other receivables
2021 2020
£ £
Current:
Other receivables 30 91,020
Value added tax 233,835 161,111
Prepayments and accrued revenue 119,249 149,309
353,114 401,440
As at 31 December 2021, there were no trade receivables past due nor impaired.
14. Cash and cash equivalents
2021 2020
£ £
Cash in bank accounts 13,038,388 5,081,515
The cash balances are placed with creditworthy financial institutions with a
minimum rating of 'A'.
15. Called up share capital
Issued and fully paid: Number: Nominal 2021 2020
Class value £ £
32,554,293 (2020:21,829,227) Ordinary 1p 2,573,395 2,466,144
Ordinary shares have a par value of 1p. They entitle the holder to participate in dividends, distribution or other participation in the profits of the Company in proportion to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting, in person or by proxy, is entitled to one vote, and on a poll each share is entitled to one vote.
During the year 660,000 ordinary shares were issued to satisfy the exercise of share options which raised £778,357 (gross). An oversubscribed placing and subscription of shares raised a further £16.61m (gross) with a total of 10,065,066 ordinary shares issued.
16. Trade and other payables
2021 2020
£ £
Current:
Trade payables 1,211,220 451,857
Accrued expenses 1,021,105 465,291
Other payables - 74,905
Taxation and Social Security 371,381 77,567
2,603,706 1,069,620
17. Lease liabilities
2021 2020
£ £
Non-Current:
83,012 101,270
Lease liabilities
83,012 101,270
18. Contingent Liabilities
(i) 2015 settlement agreement with Athena Consortium: In accordance with a
2015 settlement agreement reached with the Athena Consortium, although Jersey
Petroleum Ltd remains a Licensee in the joint venture, any past or future
liabilities in respect of its interest can only be satisfied from the Group's
share of the revenue that the Athena Oil Field generates and up to 60 per
cent. of net disposal proceeds or net petroleum profits from the Group's
interest in the P2170 licence which is the only remaining asset still held
that was in the Group at the time of the agreement with the Athena Consortium
who hold security over this asset. Any future repayments, capped at the
unpaid liability associated with the Athena Oil Field, cannot be calculated
with any certainty, and any remaining liability still in existence once the
Athena Oil Field has been decommissioned will be written off. A payment was
made in 2016 to the Athena Consortium in line with this agreement following
the farm-out of P2170 (Verbier) to Equinor and the subsequent receipt of
monies relating to that farm-out.
(ii) Equinor UK Limited: During 2020, JOG announced that it had entered into
a conditional Sale and Purchase Agreement ("SPA") to acquire operatorship
of, and an additional 70% working interest in Licence P2170 (Blocks 20/5b and
21/1d) from Equinor UK Limited ("Equinor"), this transaction completed in May
2020. The consideration for the acquisition consists of two milestone
payments, which will be accounted for in line with the cost accumulation
model, as opposed to contingent liabilities:
• US$3 million upon sanctioning by the UK's North Sea Transition
Authority ("NSTA") of a Field Development Plan ("FDP") in respect of the
Verbier Field; and
• US$5 million upon first oil from the Verbier Field.
The earliest of the milestone payments in respect of the acquisition is not
currently anticipated being payable before the start of 2025.
(iii) ITOCHU Corporation and Japan Oil, Gas and Metals National Corporation:
During 2020, JOG announced that it entered into a conditional Sale and
Purchase Agreement ("SPA") to acquire the entire issued share capital of CIECO
V&C (UK) Limited, which was owned by ITOCHU Corporation and Japan Oil, Gas
and Metals National Corporation, this transaction completed in April 2021. The
acquisition was treated as an asset acquisition rather than a business
combination due to the nature of the asset acquired. There were no assets or
liabilities acquired other than the 12% interest in licence P2170 (Verbier).
The consideration for the acquisition includes a completion payment of £150k
and two future milestone payments, which are considered contingent
liabilities:
• £1.5 million in cash upon consent from the UK's North Sea
Transition Authority ("NSTA") for a Field Development Plan ("FDP") in respect
of the Verbier discovery in the Upper Jurassic (J62-J64) Burns Sandstone
reservoir located on Licence P2170; and
• £1 million in cash payable not later than one year after first oil
from all or any part of the area which is the subject of the Field Development
Plan.
The earliest of the milestone payments in respect of the acquisition is not
currently anticipated being payable before the start of 2025.
19. Share based payments
The Group operates several share options schemes. Options are exercisable at
the prices set out in the table below. Options are forfeited if the employee
leaves the Group through resignation or dismissal before the options vest.
Equity settled share-based payments are measured at fair value at the date of
grant and expensed on a straight-line basis over the vesting period, based
upon the Group's estimate of shares that will eventually vest.
The Group's share option schemes are for Directors, Officers and employees.
The charge for the year was £470,725 (2020: £181,870) and details of
outstanding options are set out in the table below.
Date of Grant Exercise price (pence) Vesting date Expiry date No. of shares for which options outstanding at 1 Jan 2021 Options issued Options Exercised Options lapsed/non vesting during the year No. of shares for which options outstanding at 31 Dec 2021
Mar 2011 100 Vested Mar 2021 3,164 - - (3,164) -
Mar 2011 4,300 Vested Mar 2021 5,809 - - (5,809) -
Mar 2011 4,300 Mar 2014 Mar 2021 4,370 - - (4,370) -
Mar 2011 4,300 Mar 2015 Mar 2021 5,809 - - (5,809) -
Jul 2011 4,300 Jul 2011 Jul 2021 523 - - (523) -
Jul 2011 4,300 Jul 2012 Jul 2021 523 - - (523) -
Jul 2011 4,300 Jul 2014 Jul 2021 523 - - (523) -
Dec 2011 2,712 Dec 2012 Dec 2021 1,650 - - (1,650) -
Dec 2011 2,712 Dec 2014 Dec 2021 1,650 - - (1,650) -
May 2013 1,500 May 2014 May 2023 9,500 - - - 9,500
May 2013 1,500 May 2015 May 2023 9,500 - - - 9,500
Nov 2016 110 Nov 2016 Nov 2021 246,667 - (246,667) - -
Nov 2016 110 Nov 2017 Nov 2021 246,667 - (246,667) - -
Nov 2016 110 Nov 2018 Nov 2021 166,667 - (166,667) - -
Apr 2017 310 Apr 2017 Apr 2022 20,000 - - - 20,000
Apr 2017 310 Apr 2018 Apr 2022 20,000 - - - 20,000
Apr 2017 310 Apr 2019 Apr 2022 20,000 - - - 20,000
Jan 2018 200 Jan 2021 Jan 2025 420,000 - - - 420,000
Jan 2018 200 Jan 2018 Jan 2023 76,666 - - - 76,666
Jan 2018 200 Jan 2019 Jan 2023 76,667 - - - 76,667
Jan 2018 200 Jan 2020 Jan 2023 70,000 - - - 70,000
Nov 2018 172 Nov 2021 Nov 2025 150,000 - - - 150,000
Jan 2019 175 Jan 2020 Jan 2026 88,333 - - - 88,333
Jan 2019 175 Jan 2021 Jan 2026 88,333 - - - 88,333
Jan 2019 175 Jan 2022 Jan 2026 81,666 - - (13,333) 68,333
Jan 2019 175 Jan 2020 Jan 2024 11,667 - - - 11,667
Jan 2019 175 Jan 2021 Jan 2024 11,667 - - - 11,667
Jan 2019 175 Jan 2022 Jan 2024 11,667 - - - 11,667
Jun 2019 200 Jan 2021 Jun 2029 120,000 - - - 120,000
Jun 2019 110 Jun 2019 Jun 2029 40,000 - - - 40,000
Jan 2021 155 Jan 2022 Jan 2028 - 83,333 - - 83,333
Jan 2021 155 Jan 2023 Jan 2028 - 83,333 - - 83,333
Jan 2021 155 Jan 2024 Jan 2028 - 83,334 - - 83,334
Mar 2021 210 Mar 2022 Mar 2026 - 11,666 - - 11,666
Mar 2021 210 Mar 2023 Mar 2026 - 11,667 - - 11,667
Mar 2021 210 Mar 2024 Mar 2026 - 11,667 - - 11,667
Mar 2021 210 Mar 2022 Mar 2028 - 162,334 - (25,000) 137,334
Mar 2021 210 Mar 2023 Mar 2028 - 162,333 - (25,000) 137,333
Mar 2021 210 Mar 2024 Mar 2028 - 162,333 - (25,000) 137,333
Nov 2021 147 Nov 2022 Nov 2028 - 233,334 - - 233,334
Nov 2021 147 Nov 2022 Nov 2028 - 233,333 - - 233,333
Nov 2021 147 Nov 2022 Nov 2028 - 233,333 - - 233,333
Total 2,709,333
The weighted average of the options granted during the year was determined
using a Black-Scholes valuation. The significant inputs into the model were
the mid-market share price on the day of grant as shown above and an annual
risk-free interest rate of 2%. The volatility measured at the standard
deviation of continuously compounded share returns is based on a statistical
analysis of daily share prices from the date of admission to AIM to the date
of grant on an annualised basis. The weighted average exercise price for the
options granted in 2021 was 171 pence, the weighted average remaining
contractual life of the options was 7 years, the weighted average volatility
rates was 128.58% and the dividend yield was nil. For schemes and scheme
rules, please refer to the Remuneration Report.
20. Related undertakings and ultimate controlling party
The Group and Company do not have an ultimate controlling party or parent
Company.
County of Incorporation
Subsidiary % owned Principal Activity Registered Office
Jersey North Sea Holdings Ltd 100% England & Wales Non-Trading 1
Jersey Petroleum Ltd 100% England & Wales Oil Exploration 1
Jersey V&C Ltd 100% England & Wales Oil Exploration 1
Jersey E & P Ltd 100% Scotland Non-Trading 2
Jersey Oil Ltd 100% Scotland Non-Trading 2
Jersey Exploration Ltd 100% Scotland Non-Trading 2
Jersey Oil & Gas E & P Ltd 100% Jersey Management services 3
Registered Offices
1. 10 The Triangle, ng2 Business Park, Nottingham, NG2 1AE
2. 6 Rubislaw Terrace, Aberdeen, AB10 1XE
3. First Floor, Tower House, La Route es Nouaux, St Helier, Jersey JE2 4ZJ
21. Notes to the consolidated statement of cash flows
Reconciliation of Loss Before Tax to Cash Used in Operations
2021 2020
£ £
Loss for the year before tax (4,225,317) (2,781,931)
Adjusted for:
Depreciation 34,472 23,977
Impairments 447,812 -
Depreciation right-of-use asset 138,176 135,493
Share-based payments (net) 470,724 181,870
Finance costs 6,098 8,262
Finance income (1,807) (27,937)
(3,129,842) (2,460,266)
(Increase)/decrease in trade and other receivables 99,856 (27,352)
Increase in trade and other payables 1,534,087 327,454
Cash used in operations (1,495,899) (2,160,164)
Cash and cash equivalents
The amounts disclosed on the consolidated Statement of Cash Flows in respect
of Cash and cash equivalents are in respect of these statements of financial
position amounts:
Year ended 2021
31 Dec 2021 31 Dec 2020
£ £
Cash and cash equivalents 13,038,388 5,081,515
Year ended 2020
31 Dec 2019 1 Jan 2019
£ £
Cash and cash equivalents 5,081,515 12,318,536
Analysis of net cash
At 1 Jan 2021 Cash flow At 31 Dec 2021
£ £
Cash and cash equivalents 5,081,515 7,956,873 13,038,388
Net cash 5,081,515 7,956,873 13,038,388
22. Post balance sheet events
The Group has considered its supply chain and activities in light of the
Russia/Ukraine war and does not believe that there will be any impact on its
business.
23. Availability of the 2021 Annual Report
A copy of the full annual report will be made available for inspection at the
Company's registered office during normal business hours on any weekday. The
Company's registered office is at 10 The Triangle, ng2 Business Park,
Nottingham NG2 1AE. A copy can also be downloaded from the Company's website
at www.jerseyoilandgas.com. (http://www.jerseyoilandgas.com/) Jersey Oil and
Gas plc is registered in England and Wales, with registration number
7503957.
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