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RNS Number : 2293A Jersey Oil and Gas PLC 22 September 2022
22 September 2022
Jersey Oil and Gas plc
("Jersey Oil & Gas", "JOG" or the "Company")
Interim Results for the Six Month Period Ended 30 June 2022
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 unaudited Interim Results for the six month period
ended 30 June 2022.
Highlights
§ Favourable fiscal and macroeconomic developments have further bolstered
interest in our on-going "Greater Buchan Area" ("GBA") farm-out process
§ GBA farm-out process advancing as planned, with continued active engagement
with multiple counterparties
§ Substantial progress has been made, with the majority of interested parties
forecast to complete their technical due diligence in October 2022
§ Constructive commercial discussions are taking place with potential
counterparties
§ Cash position of approximately £8.7 million, with no debt, as at 30 June
2022 - well ahead of the group's forecast
Andrew Benitz, CEO of Jersey Oil & Gas, commented:
"Great progress is being made with our GBA farm-out process - the key activity
for the Group in 2022. Interest is strong, technical studies across the
various development solutions are well advanced and commercial discussions are
ongoing with serious, well-funded counterparties. Since launching the
process, the Company's engagement strategy has been broadened to advance a
range of competing development solutions, thereby providing increased
optionality."
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
Rory McGirr
Tel: 020 7614 5900
finnCap Ltd
Christopher Raggett / Tim
Redfern
Tel: 020 7220 0500
Camarco
Billy Clegg / Rebecca
Waterworth
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 the P2498
Licence Blocks 20/5b and 21/1d that contain the Buchan oil field and J2 oil
discovery and a 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 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.
Chairman & Chief Executive Officer's Report
GBA Farm-out Process Update
Encouraging progress continues to be made on our GBA farm-out process, and the
Company remains actively engaged with multiple counterparties. Joint technical
studies for the various different development solutions are now at an advanced
stage.
As previously highlighted, since launching the farm-out process, a broad range
of competing development solutions has been generated to supplement the
initial work on the proposed installation of a new processing platform. The
alternative solutions include tiebacks to existing platforms and the re-use of
available floating production, storage and offloading ("FPSO") vessels.
Since confirming the technical and economic attractiveness of the potential
GBA development solutions earlier this year, JOG's most recent operational
focus has been centred on completing confirmatory pre-Front End Engineering
and Design studies for the various options with the different counterparties.
The studies are being undertaken in collaboration with the infrastructure
owners and cover areas that serve to validate and de-risk the different
solutions and associated capital expenditure forecasts. While the precise
studies are specific to each potential solution, they broadly cover work on
flow assurance, host facility "brownfield" modification requirements and
potential future electrification workscopes. This technical work is expected
to conclude in October 2022.
Whilst there can be no certainty of a successful conclusion, constructive
commercial discussions are also now well underway.
Regional Electrification Opportunities
The different GBA development solutions that are being assessed all have the
potential to be a component of the future Outer Moray Firth offshore wind
electrification plans that are currently being considered as part of the
Government's Innovation and Targeted Oil and Gas ("INTOG") leasing round
process. As such, we were pleased to provide a leading offshore wind
developer with a letter of support as a potential power user to assist them in
their application for a lease in the upcoming INTOG offshore wind licence
round. This operator has experience in both development and operations for
floating offshore wind. In addition to the GBA being a potential off-taker
of locally sourced wind power, there are also complimentary investment
opportunities in offshore wind that require further evaluation.
Licensing activity
JOG continues to work closely and constructively with the North Sea Transition
Authority ("NSTA") on our licence commitments. On Licence P2498, which
includes the Buchan field as well as the J2 and part of the Verbier
discoveries, our milestone related to delivery of a Field Development Plan
("FDP") has been adjusted to align with the current scheduled licence expiry
in August 2023 and, pending conclusion of a successful farm-out, we are on
track to deliver on this. Upon approval of an FDP, the licence would then
move into the "third phase", which covers all future development and
production activities. On Licence P2170, there is a requirement to submit an
FDP for the Verbier discovery in order to advance the licence into the third
term. Verbier is part of our phased area wide GBA development plan, with
production scheduled to commence following the start of production from the
Buchan field. The P2170 Licence is due to expire on 22 November 2022,
therefore we are in close consultation with the NSTA to agree an appropriate
way forward.
JOG's Acquisition Strategy
JOG's priority is to secure a GBA farm-out and any M&A activity has been
focused around this objective. We have evaluated potential asset swaps as
part of our ongoing discussions, but remain of the view that an industry
farm-out provides the best solution to advance the planned GBA development and
thereby deliver greater value for shareholders. Building a full cycle
upstream business focused on the UKCS remains the ultimate goal for JOG.
Financial Review
JOG's cash position was approximately £8.7 million as of 30 June 2022. The
cash spend of the business will continue to be comfortably below the £1.5
million per quarter run rate previously forecast. As an oil and gas
exploration and development company, JOG had no production revenue during the
period and received only a small amount of interest on its cash deposits.
The loss for the period, before and after tax, was approximately £1.2m (2021:
£1.9m). The Company's main expenditure during the first half of 2022 related
to technical studies assessing parallel development options for our GBA
Development project. The Company remains well funded to fulfil its farm-out
objective.
Tax
The Energy Profits Levy ("EPL") that was introduced by the Government in May
2022 caught the industry off guard, particularly those that have invested and
built production portfolios in the UKCS over the past few years. Fiscal
instability has made some question their North Sea investment strategy. The
silver lining, however, was the introduction of a generous investment
allowance that is specifically ring fenced to attract capital spend into new
investments. A full taxpayer in the North Sea now has the ability to secure
91% tax relief through investing into new projects, essentially meaning that
for a cost of only 9p a company can get £1 of investment value. Projects of
the scale of the proposed GBA development should benefit from this investment
allowance.
Summary and outlook
A significantly improved macroeconomic outlook for the oil and gas sector
compared to last year has ushered in significant profits for the oil majors.
The pandemic and terrible events in Ukraine have masked the underlying issue
that is challenging the upstream sector - namely, a looming supply crunch.
The industry has been starved of capital since 2015 and this has led to
chronic under investment. Energy transition is an important issue and the
oil and gas industry is at the forefront of the challenges that this evolution
brings. It must be managed appropriately as hydrocarbons continue to provide
the world with approximately 80% of its daily energy supply. Unfortunately,
inflationary pressures resulting from a restricted energy supply are already
being seen and, in turn, the even more concerning prospect of energy
poverty. The world needs urgent and responsible investment upstream to
address the supply shortfall against a backdrop of significantly increasing
global demand for energy. Consumers, industry and Governments deserve access
to affordable energy to go about their lives during the energy transition.
It will take time for the supply side to increase, and in the meantime
continued high oil prices are highly likely. The GBA is a vital resource and
is estimated to be the third largest oil development opportunity in the
UKCS. We look forward to concluding the farm-out process and thereby
securing investment to take this project into development and contributing to
ensuring long term energy supply and security for the UK economy.
We appreciate the ongoing commitment of our dedicated team and the
professionalism they have displayed throughout our industry and stakeholder
engagement. We also thank our shareholders for their ongoing and unstinting
support as we continue to advance our GBA farm-out process.
Les Thomas Andrew Benitz
Non-Executive Chairman Chief Executive Officer
22 September 2022
JERSEY OIL AND GAS PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2022
6 months to 6 months to Year to
30/06/22 30/06/21 31/12/21
(unaudited) (unaudited) (audited)
Notes £ £ £
CONTINUING OPERATIONS
Revenue - - -
Cost of sales - 66,403 (101,079)
GROSS PROFIT/(LOSS) - 66,403 (101,079)
Exploration write-off/licence relinquishment - - (447,812)
Administrative expenses (1,200,589) (1,986,483) (3,672,135)
OPERATING LOSS (1,200,589) (1,920,080) (4,221,026)
Finance income 17,050 1,127 1,807
Finance expense (2,839) (2,788) (6,098)
LOSS BEFORE TAX (1,186,377) (1,921,741) (4,225,317)
Tax 4 - - -
LOSS FOR THE PERIOD (1,186,377) (1,921,741) (4,225,317)
OTHER COMPREHENSIVE INCOME - - -
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD (1,186,377) (1,921,741) (4,225,317)
Total comprehensive loss attributable to:
Owners of the parent (1,186,377) (1,921,741) (4,225,317)
Loss per share expressed
in pence per share:
Basic 5 (3.64) (7.15) (14.48)
Diluted 5 (3.64) (7.15) (14.48)
The above consolidated statement of comprehensive income should be read in
conjunction with the accompanying notes.
JERSEY OIL AND GAS PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
30/06/22 30/06/21 31/12/21
(unaudited) (unaudited) (audited)
Notes £ £ £
NON-CURRENT ASSETS
Intangible assets - Exploration costs 6 22,752,129 17,359,856 21,514,153
Property, plant and equipment 7 24,633 57,187 40,077
Right-of-use assets 133,168 125,415 185,008
Deposits 31,112 28,420 31,112
22,941,042 17,570,878 21,770,350
CURRENT ASSETS
Trade and other receivables 8 346,631 593,643 353,114
Cash and cash equivalents 9 8,666,792 17,056,538 13,038,388
9,013,423 17,650,181 13,391,502
TOTAL ASSETS 31,954,465 35,221,059 35,161,852
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 10 2,573,395 2,566,795 2,573,395
Share premium account 110,309,524 110,358,234 110,309,524
Share options reserve 1,708,075 2,308,462 1,397,287
Accumulated losses (82,738,107) (80,431,559) (81,551,730)
Reorganisation reserve (382,543) (382,543) (382,543)
TOTAL EQUITY 31,470,344 34,419,389 32,345,933
NON-CURRENT LIABILITIES
Lease liabilities 18,830 74,200 83,012
18,830 74,200 83,012
CURRENT LIABILITIES
Trade and other payables 11 334,198 643,419 2,603,707
Lease liabilities 131,093 84,051 129,200
465,291 727,470 2,732,907
TOTAL LIABILITIES 484,121 801,670 2,815,919
TOTAL EQUITY AND LIABILITIES 31,954,465 35,221,059 35,161,852
The above consolidated statement of financial position should be read in
conjunction with the accompanying notes.
JERSEY OIL & GAS PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2022
Called up share Share premium Share options Accumulated Re- organisation Total
capital account reserve Losses reserve equity
£ £ £ £ £ £
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
At 1 January 2021 2,466,144 93,851,526 2,109,969 (78,509,819) (382,543) 19,535,277
Loss for the period and total comprehensive income - - - (1,921,741) - (1,921,741)
100,651 16,506,709 - - - 16,607,360
Issue of share capital
Share based payments - - - 198,493 - - 198,493
At 30 June 2021 2,566,795 110,358,235 2,308,462 (80,431,560) (382,543) 34,419,389
At 1 January 2022 2,573,395 110,309,524 1,397,287 (81,551,730) (382,543) 32,345,933
Loss for the period and total comprehensive income - - - (1,186,377) - (1,186,377)
Share based payments - - - 310,788 - -
310,788
At 30 June 2022 2,573,395 110,309,524 1,708,075 (82,738,107) (382,543) 31,470,344
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 retained deficit in respect of options exercised or cancelled/lapsed
Accumulated
losses
Cumulative losses recognised in the Consolidated Statement of Comprehensive
Income
Reorganisation
reserve
Amounts resulting from the restructuring of the Group
The above consolidated statement of changes in equity should be read in
conjunction with the accompanying notes
JERSEY OIL AND GAS PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
6 months to 6 months to Year to
30/06/22 30/06/21 31/12/21
(unaudited) (unaudited) (audited)
Notes £ £ £
CASH FLOWS FROM OPERATING ACTIVITIES
Cash used in operations 12 (3,085,544) (2,196,448) (1,495,899)
Net interest received 17,050 1,127 1,807
Net interest paid (2,839) (2,788) (6,098)
Net cash used in operating activities (3,071,333) (2,198,109) (1,500,190)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of intangible assets 6 (1,237,976) (2,368,561) (6,970,670)
Net cash used in investing activities (1,237,976) (2,368,561) (6,970,670)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds of issue of shares - 16,607,360 16,565,248
Principal elements of lease payments (62,289) (65,667) (137,516)
(62,289) 16,541,693 16,427,732
Net cash generated from financing
activities
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (4,371,596) 11,975,023 7,956,873
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 13,038,388 5,081,515 5,081,515
CASH AND CASH EQUIVALENTS AT END OF PERIOD 9 8,666,792 17,056,538 13,038,388
The above consolidated statement of cash flows should be read in conjunction
with the accompanying notes
JERSEY OIL AND GAS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
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.
The Group's half year condensed financial statements
for the six months ended 30 June 2022 were authorised for issue in accordance
with a resolution of the Board of Directors on 22 September 2022.
2. BASIS OF PREPARATION
AND ACCOUNTING POLICIES
Basis of Preparation
The interim condensed consolidated financial statements for the six months
ended 30 June 2022 have been prepared in accordance with International
Accounting Standard 34 "Interim Financial Reporting".
These unaudited interim consolidated financial statements of the Group have
been prepared following the same accounting policies and methods of
computation as the consolidated financial statements for the year ended 31
December 2021. These unaudited interim consolidated financial statements do
not include all the information and footnotes required by generally accepted
accounting principles for annual financial statements and therefore should be
read in conjunction with the consolidated financial statements and the notes
thereto in the Company's annual report for the year ended 31 December 2021.
The financial information contained in this announcement does not constitute
statutory financial statements within the meaning of section 435 of the
Companies Act 2006.
Consolidated statutory accounts for the year ended 31 December 2021, on which
the auditors gave an unqualified audit report, have been filed with the
registrar of Companies. The report of the auditors included in that 2021
Annual Report was unqualified and did not contain a statement under either
Section 498(2) or Section 498(3) of the Companies Act 2006.
Going Concern
The Group has no material 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. The Group expects to be
able to manage its estimated cash outflows such that its current cash reserves
are 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 interim
financial statements. Based on these circumstances, the Directors have
considered it appropriate to continue to adopt the going concern basis of
accounting in preparing these interim financial statements.
Accounting policies
The accounting policies adopted in the preparation of the interim condensed
consolidated financial statements are consistent with those followed in the
preparation of the Group's annual financial statements for the year ended 31
December 2021. No new standards, amendments or interpretations have had a
material impact on the Group's interim consolidated financial statements for
the period ended 30 June 2022.
The impact of seasonality or cyclicality on operations is not considered
significant on the interim consolidated financial statements.
3. SEGMENTAL REPORTING
The Directors consider 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.
JERSEY OIL AND GAS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
4. TAX
Jersey Oil and Gas plc is a trading company but no liability to UK corporation
tax arose on its ordinary activities for the period ended 30 June 2022 due to
trading losses. As at 31 December 2021, the Group held tax losses of
approximately £57 million (2020: £46 million).
On 26 May 2022, the UK Government announced the introduction of an Energy
Profits Levy ('EPL') on the UK ring fence profits of oil and gas producers
with effect from 26 May 2022. The legislation introducing the EPL was
substantively enacted on 11 July 2022. The EPL is charged at the rate of 25%
on taxable profits in addition to ring fence corporation tax of 30% and
Supplementary Charge of 10%, making a total rate on ring fence profits of 65%.
Qualifying capital expenditure may be offset against the 25% EPL at an
uplifted rate of 1.8 times. When combined with the existing Investment
Allowance uplift of 6.25% this results in an overall 91.25% tax relief on new
qualifying capital expenditure.
5. EARNINGS/(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 period.
Diluted loss per share is calculated using the weighted average number of
shares adjusted to assume the conversion of all dilutive potential ordinary
shares.
Earnings attributable to ordinary shareholders Weighted average number of shares Per share amount
£ Pence
Period ended 30 June 2022
Basic and Diluted EPS
Loss attributable to ordinary shareholders (1,186,377) 32,554,293 (3.64)
JERSEY OIL AND GAS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
6. INTANGIBLE ASSETS
Exploration
Costs
£
COST
At 1 January 2022 21,689,394
Additions 1,237,976
At 30 June 2022 22,927,370
ACCUMULATED AMORTISATION
At 1 January 2022 175,241
At 30 June 2022 175,241
NET BOOK VALUE at 30 June 2022 22,752,129
This represents the work capitalised on the
GBA assets.
7. PROPERTY, PLANT AND EQUIPMENT
Computer
and office
equipment
£
COST
At 1 January 2022 228,447
Additions -
At 30 June 2022 228,447
ACCUMULATED AMORTISATION, DEPLETION AND DEPRECIATION
At 1 January 2022 188,370
Charge for period 15,444
At 30 June 2022 203,814
NET BOOK VALUE at 30 June 2022 24,633
This represents the capitalised cost of computer equipment and fixtures.
JERSEY OIL AND GAS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
8. TRADE AND OTHER RECEIVABLES
30/06/22 30/06/21 31/12/21
(unaudited) (unaudited) (audited)
£ £ £
Other receivables 30 30 30
Prepayments and accrued income 268,323 270,019 119,249
Deposits - 54,222 -
Value added tax 78,278 269,372 233,835
346,631 353,114
593,643
As at 30 June 2022, there were no trade receivables past due nor impaired.
There are immaterial expected credit losses recognised on these balances.
9. CASH AND CASH EQUIVALENTS
The amounts disclosed in the consolidated statement of cash flows in respect
of cash and cash equivalents are in respect of these consolidated statement of
financial position amounts:
Period ended 30 June 2022 30/06/22 30/06/21 31/12/21
(unaudited) (unaudited) (audited)
£ £ £
Cash and cash equivalents 8,666,792 17,056,538 13,038,388
8,666,792 17,056,538 13,038,388
10. CALLED UP SHARE CAPITAL
30/06/22 30/06/21 31/12/21
(unaudited) (unaudited) (audited)
£ £ £
Issued and fully paid:
Number: 32,554,293 (2021: 31,894,293)
Ordinary class 2,573,395 2,573,395
2,566,795
2,573,395 2,566,795 2,573,395
11. TRADE AND OTHER PAYABLES
30/06/22 30/06/21 31/12/21
(unaudited) (unaudited) (audited)
£ £ £
Trade payables 111,041 267,385 1,211,220
Accrued expenses 135,770 303,979 1,021,105
Other payables - 4 -
Taxation and Social Security 87,387 72,051 371,381
334,198 643,419 2,603,706
JERSEY OIL AND GAS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
12. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
RECONCILIATION OF LOSS BEFORE TAX TO CASH USED IN OPERATIONS
30/06/22 30/06/21 31/12/21
(unaudited) (unaudited) (audited)
£ £ £
Loss for the period before tax (1,186,377) (1,921,741) (4,225,317)
Adjusted for:
Depreciation 15,444 17,362 34,472
Impairments - - 447,812
Depreciation right-of-use asset 51,840 71,959 138,176
Share based payments (net) 310,788 198,493 470,724
Finance costs 2,839 2,788 6,098
Finance income (17,050) (1,127) (1,807)
(822,516) (1,632,266) (3,129,842)
Decrease in inventories
(Increase)/decrease in trade and other receivables 6,482 (137,980) 99,856
Increase/(decrease) in trade and other payables (2,269,509) (426,202) 1,534,087
Cash used in operations (3,085,544) (2,196,448) (1,495,899)
13. POST BALANCE SHEET EVENTS
None.
14. AVAILABILITY OF THE INTERIM REPORT 2022
A copy of these results 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,
Nottinghamshire NG2 1AE. A copy can also be downloaded from the Company's
website at www.jerseyoilandgas.com. Jersey Oil and Gas plc is registered in
England and Wales with registration number 7503957.
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