REG - Jersey Oil & Gas PLC - Interim Results
14/09/2023 07:00
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RNS Number : 3755M Jersey Oil and Gas PLC 14 September 2023
14 September 2023
Jersey Oil and Gas plc
("Jersey Oil & Gas", "JOG" or the "Company")
Interim Results for the Six Month Period Ended 30 June 2023
Jersey Oil & Gas (AIM: JOG), an independent upstream oil and gas company
focused on the UK Continental Shelf region of the North Sea, is pleased to
announce its unaudited Interim Results for the six month period ended 30 June
2023.
Highlights
§ Transaction with NEO Energy ("NEO") completed for the farm-out of a 50%
interest in the Greater Buchan Area ("GBA") licences in exchange for certain
cash payments, funding through to Field Development Plan ("FDP") approval and
a 12.5% development expenditure carry to first oil for the 50% interest
retained by the Company
§ Redeployment of a Floating, Production, Storage and Offloading ("FPSO")
vessel selected as the preferred GBA development solution - negotiation of
fully termed agreement for acquisition of a high-quality vessel advancing
§ Approval secured from the North Sea Transition Authority ("NSTA") for the
extension of the Second Term durations of the GBA licences, thereby providing
the time required to prepare the necessary Field Development Plans ("FDP")
§ Transfer of operatorship to NEO formally completed in July 2023, with the
project team now mobilised for commencement of Front End Engineering and
Design phase of activities
§ Preparation underway of the Environmental Statement for the Buchan field
redevelopment programme that is planned for submission later this year -
engagement ongoing with the statutory consultees
§ Key focus remains on creating additional value through securing a further
GBA farm-out in order to ultimately provide the Company with a fully carried
20-25% interest in the Buchan redevelopment - engagement ongoing with
potential counterparties
§ Cash position of approximately £5.6 million, with no debt, as at 30 June
2023. Further cash receipts due on satisfying Buchan re-development
milestones - $9.4 million on execution of the FPSO acquisition agreement and
$12.5 million on Buchan FDP approval
Andrew Benitz, CEO of Jersey Oil & Gas, commented:
"The first half of the year has been a pivotal period in the history of the
Company. With the farm-out to NEO Energy completed, the GBA development
solution locked down and the licences covering the area extended, we now have
a clear pathway to monetising the resource base we have built up over recent
years.
We are encouraged by the collaborative progress being made by NEO and look
forward to finalising the acquisition agreements for the FPSO, creating
additional value through securing further farm-outs and moving onwards with
the various workstreams required to get to Field Development Plan approval
next year."
Enquiries:
Jersey Oil and Gas plc Andrew Benitz C/o Camarco: 020 3757 4980
Strand Hanson Limited James Harris Tel: 020 7409 3494
Matthew Chandler
James Bellman
Zeus Capital Limited Simon Johnson Tel: 020 3829 5000
Cavendish Capital Markets Limited Christopher Raggett Tel: 020 7220 0500
Tim Redfern
Camarco Billy Clegg Tel: 020 3757 4980
Rebecca Waterworth
- Ends -
Notes to Editors:
Jersey Oil & Gas ("JOG") is a UK E&P company focused on building an
upstream oil and gas business in the North Sea. The Company holds a 50%
interest in each of licences P2498 (Blocks 20/5a, 20/5e and 21/1a) and P2170
(Blocks 20/5b and 21/1d) located in the UK Central North Sea and referred to
as the "Greater Buchan Area" ("GBA"). Licence P2498 contains the Buchan oil
field and J2 oil discovery and licence P2170 contains the Verbier oil
discovery.
The GBA licences are operated by NEO Energy ("NEO"), with the company holding
a 50% working interest. NEO is a major UK North Sea operator producing
approximately 90,000 barrels of oil equivalent per day and is backed by
HitecVision, a leading private equity investor focused on Europe's offshore
energy industry with US$8 billion of assets under management
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 by virtue of the Market
Abuse (Amendment) (EU Exit) Regulations 2019.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S REPORT
Greater Buchan Area Farm-out success
The first half of 2023 was a pivotal period in the Company's history with
April's announcement of the successful farm-out of an interest in our Greater
Buchan Area ("GBA") development to NEO Energy ("NEO"). The deal, which
completed in June, saw NEO acquire a 50% working interest in, and operatorship
of, both the licences that cover the GBA, which include the project to
redevelop the Buchan oil field, the Verbier and J2 discoveries and several
exploration prospects. The transaction unlocks the route to monetising total
resources in excess of 100 million barrels of oil equivalent.
The transaction delivers material value to JOG, including cash milestone
payments, funding through to Field Development Plan ("FDP") approval and a
minimum 12.5% development expenditure carry to first oil for the 50% interest
retained by the Company (a 1.25 carry ratio). NEO is a major UK North Sea
operator producing approximately 90,000 barrels of oil equivalent per day and
is owned by HitecVision AS, a leading private equity investor focused on
Europe's offshore energy industry with approximately US$8 billion of assets
under management.
GBA Development Operational Update
With the introduction of NEO to the GBA, the partnership undertook
confirmatory studies to finalise selection of the preferred development
solution for the GBA; determining that re-deployment of an "electrification
ready" FPSO offers the lowest cost development option and the one that results
in the lowest full-cycle carbon footprint out of all the potential options
evaluated. A Concept Select Report was submitted to the North Sea Transition
Authority ("NSTA") setting out the development solution and its alignment with
the NSTA's strategy to maximise the economic recovery of reserves and assist
with achieving the UK government's net zero target. The NSTA subsequently
issued a letter confirming that it has no objections to the licensees
preparing a Field Development Plan ("FDP") in accordance with that described
in the Concept Select Report.
To facilitate preparation, submission and approval of the FDP for the
redevelopment of the Buchan field, the NSTA approved an 18 month extension to
the Second Term of licence P2498 to 28 February 2025. Following FDP approval,
the licence will move into the Third Term, which covers the development and
production phase of activities for the life of the field. In addition, the
Second Term of the P2170 "Verbier" licence was extended by three years to 29
August 2026. This extension was requested in order to provide the licensees
with the time required to prepare an FDP for the Verbier discovery, as part of
a phased GBA development plan.
Following announcement of the farm-out transaction, NEO and JOG have been
working collaboratively to facilitate a smooth transfer of operatorship of the
GBA licences and the associated subsurface and engineering work completed on
the assets. The formal transfer of operatorship to NEO was approved by the
NSTA in July 2023. In tandem, NEO has established the necessary project
management team, including JOG secondees, and recently finalised the plan and
contracting strategy to move the Buchan redevelopment into the Front End
Engineering and Design ("FEED") phase of activities. FEED scopes of work are
now being initiated with respect to well design, subsea and gas export
infrastructure, as well as FPSO electrification, life extension and
re-deployment. Liaison with offshore wind developers continues, with the GBA
development offering 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. Preparation of the FDP is underway, with submission to
the NSTA targeted for the first half of 2024 for subsequent approval later in
the year. In addition, environmental impact assessments are being undertaken
and consultation with the Offshore Petroleum Regulator for Environment and
Decommissioning ("OPRED") and statutory consultees is ongoing, ahead of
submission of an Environmental Statement, being a precursor to FDP approval.
Business Development Progress
In line with the Company's strategy to ultimately retain a 20-25% fully
carried interest in the Buchan redevelopment project, JOG is engaged with
industry parties who have expressed potential interest in farming-in to the
GBA licences for a non-operated working interest. Whilst there can be no
certainty of a successful transaction(s), we are encouraged by this ongoing
engagement that is naturally facilitated by the progress the joint venture is
making on the Buchan redevelopment project. Completion of a further
farm-out(s) remains the Company's key priority.
Financial Review
JOG's cash position was approximately £5.6m as of 30 June 2023 (31 December
2022: £6.6m). Cash costs of £2.7m (including an £0.2m increase in working
capital) were partially offset by a payment of £1.7m received on completion
of the NEO transaction.
JOG had no production revenue during the period and received only a modest
amount of interest on its cash deposits.
The underlying cash expenditure incurred in running the business in the first
half of 2023 was down 15% from the same period last year at £1.8m (H1 2022:
£2.1m). During the first 6 months of the year there were also transaction
costs associated with the farm-out of £0.8m and a non-cash share based
compensation charge of £1.0m (2022: £0.3m). These business costs are
partially recognised as Administrative Expenses through the Profit and Loss
account, £2.9m (H1 2022: £1.2m) and partially capitalised on the Balance
Sheet as Intangible Asset Additions, £0.6m (H1 2022: £1.2m). The reduced
activity and personnel numbers in the first 6 months of this year has resulted
in a lower proportion of overhead being capitalised on the Balance Sheet and
hence a larger proportion has been expensed in the Profit and Loss account.
The loss for the period, before and after tax, was approximately £2.9m (2022:
£1.2m).
JOG is fully carried for its 50% share of the estimated US$25m cost to take
the Buchan field through to FDP approval and is forecast to receive its next
deferred cash payment of US$9.4m associated with the NEO farm-out upon
finalising the acquisition of the FPSO.
Macro Outlook
Global oil and gas fundamentals remain strong. Demand continues to grow,
unsurprisingly given an energy hungry growing global population and supply
continues to be suppressed by under investment. In the UK North Sea, the
country's oil production is roughly a quarter of its peak in 1999. Energy
policy should recognise the opportunity to attract global capital investment
into the UK North Sea where relatively low carbon developments are available.
Oil and gas imported from elsewhere inevitably has a higher carbon
footprint. When looked at holistically it is estimated that energy spend in
the UK North Sea could reach £200bn this decade, providing a major and unique
opportunity for the UK economy. It is not logical to deter investment to the
detriment of national energy security and drive-up costs to consumers with
carbon intensive energy imports. Within this context it is encouraging to
see the GBA development moving forward, a project that embodies the qualities
of locally sourced energy from a re-developed field, to be produced through
the reuse of existing infrastructure, with the lowest carbon emissions through
the planned integration and use of proximal wind power.
Summary and outlook
We are encouraged by the collaborative progress being made with NEO on the
Buchan field redevelopment programme, having successfully closed out the
development concept select phase of activities and entered into the FEED
phase. Finalising the selection of the preferred development concept, in the
form of redeployment of an existing FPSO, was naturally a significant step
forward and work is progressing to close out the relevant transaction
agreements to acquire a high quality vessel. We remain on track for
submission to the NSTA of the FDP for the Buchan field re-development
programme in 2024 and the commencement of production in 2026.
Alongside working closely with NEO to progress the various technical and
regulatory workstreams required to reach Buchan FDP approval, we remain
actively engaged with other potential GBA farm-in partners in order to secure
our ultimate objective of retaining a 20-25% fully carried interest in the
field redevelopment.
As ever, we are grateful for the ongoing support from our shareholders, who
should take comfort that the GBA development is being driven forward by a
highly capable North Sea operator that values the importance of a strong joint
venture partnership.
Les Thomas
Non-Executive Chairman Andrew Benitz
Chief Executive Officer
13 September 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2023
6 months to 6 months to Year to
30/06/23 30/06/22 31/12/22
(unaudited) (unaudited) (audited)
Notes £ £ £
Administrative expenses 4 (2,941,550) (1,200,589) (3,185,103)
OPERATING LOSS (2,941,550) (1,200,589) (3,185,103)
Finance income 47,149 17,050 82,842
Finance expense (1,297) (2,839) (4,730)
LOSS BEFORE TAX (2,895,698) (1,186,377) (3,106,991)
Tax 5 - - -
LOSS FOR THE PERIOD (2,895,698) (1,186,377) (3,106,991)
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD (2,895,698) (1,186,377) (3,106,991)
Total comprehensive loss attributable to:
Owners of the parent (2,895,698) (1,186,377) (3,106,991)
Loss per share expressed
in pence per share:
Basic 6 (8.89) (3.64) (9.54)
Diluted 6 (8.89) (3.64) (9.54)
The above consolidated statement of comprehensive income should be read in
conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
30/06/23 30/06/22 31/12/22
(unaudited) (unaudited) (audited)
Notes £ £ £
NON-CURRENT ASSETS
Intangible assets - exploration & development costs 7 23,304,939 22,752,129 24,372,882
Property, plant and equipment 8 3,294 24,633 10,203
Right-of-use assets 12 182,809 133,168 81,328
Deposits 2,692 31,112 31,112
23,493,734 22,941,042 24,495,525
CURRENT ASSETS
Trade and other receivables 9 456,199 346,631 167,060
Cash and cash equivalents 10 5,633,066 8,666,792 6,579,349
6,089,265 9,013,423 6,746,409
TOTAL ASSETS 29,582,999 31,954,465 31,241,934
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 11 2,573,395 2,573,395 2,573,395
Share premium account 110,309,524 110,309,524 110,309,524
Share options reserve 3,431,457 1,708,075 2,566,343
Accumulated losses (87,347,793) (82,738,107) (84,600,273)
Reorganisation reserve (382,543) (382,543) (382,543)
TOTAL EQUITY 28,584,040 31,470,344 30,466,446
NON-CURRENT LIABILITIES
Lease liabilities 12 99,092 18,830 -
99,092 18,830 -
CURRENT LIABILITIES
Trade and other payables 13 845,532 334,198 688,796
Lease liabilities 54,335 131,093 86,692
899,867 465,291 775,488
TOTAL LIABILITIES 998,959 484,121 775,488
TOTAL EQUITY AND LIABILITIES 29,582,999 31,954,465 31,241,934
The above consolidated statement of financial position should be read in
conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2023
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 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
At 1 January 2023 2,573,395 110,309,524 2,566,343 (84,600,273) (382,543) 30,466,446
Loss for the period and total comprehensive income - - - (2,895,698) - (2,895,698)
Lapsed share options - - (148,178) 148,178 -
Share based payments - - - 1,013,292 - -
1,013,292
At 30 June 2023 2,573,395 110,309,524 3,431,457 (87,347,793) (382,543) 28,584,040
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
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
6 months to 6 months to Year to
30/06/23 30/06/22 31/12/22
(unaudited) (unaudited) (audited)
Notes £ £ £
CASH FLOWS FROM OPERATING ACTIVITIES
Cash used in operations 14 (2,041,225) (3,085,544) (3,319,445)
Net interest received 47,149 17,050 82,842
Net interest paid (1,297) (2,839) (4,730)
Net cash used in operating activities (1,995,373) (3,071,333) (3,241,333)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds received from farm-out transaction 7 1,684,990 - -
Purchase of intangible assets 7 (549,314) (1,237,976) (3,092,186)
Net cash generated from/(used in) investing activities 1,135,676 (1,237,976) (3,092,186)
CASH FLOWS FROM FINANCING
ACTIVITIES
Principal elements of lease payments (86,586) (62,289) (125,520)
(86,586) (62,289) (125,520)
Net cash used in financing
activities
DECREASE IN CASH AND CASH EQUIVALENTS (946,283) (4,371,596) (6,459,039)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 6,579,349 13,038,388 13,038,388
CASH AND CASH EQUIVALENTS AT END OF PERIOD 10 5,633,066 8,666,792 6,579,349
The above consolidated statement of cash flows should be read in conjunction
with the accompanying notes
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2023
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 England & Wales 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 reporting period of the Group's condensed
consolidated interim financial statements is the six month period from 1
January 2023 to 30 June 2023 and these were authorised for issue in accordance
with a resolution of the Board of Directors on 12 September 2023.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
The interim condensed consolidated financial statements for the six months
ended 30 June 2023 were prepared in accordance with UK-adopted International
Accounting Standard 34 "Interim Financial Reporting" and in conformity with
the requirements of the Companies Act 2006 (the "Companies Act").
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 2022. 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 2022.
The financial information contained in this announcement does not constitute
statutory financial statements within the meaning of section 434 of the
Companies Act 2006.
Consolidated statutory accounts for the year ended 31 December 2022, on which
the auditors gave an unqualified audit report, have been filed with the
registrar of Companies.
The Group's financial statements have been prepared on a historical cost
basis. The condensed consolidated interim financial statements are presented
in Sterling, which is also the Group's functional currency.
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 condensed
consolidated interim financial statements. 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 condensed consolidated interim financial statements. Even in
an extreme scenario where the GBA development did not progress for any
unforeseen reason and the future farm-out instalment payments were not
realised the Group has the flexibility within its cost structure to amend its
expenditure profile and continue in business beyond the next 12 months solely
from utilisation of its existing cash resources. The directors have also
considered the risk associated with contractual arrangements associated with
progression of the GBA development and are satisfied that the Group is not
exposed to any contractual commitments which could impact on the Group's going
concern status over the next 12 months. Based on these circumstances, the
directors have considered it appropriate to adopt the going concern basis of
accounting in preparing the condensed consolidated interim financial
statements.
Accounting policies
The accounting policies adopted in the preparation of the condensed
consolidated interim financial statements are consistent with those followed
in the preparation of the Group's annual financial statements for the year
ended 31 December 2022, except for the following amendments which apply for
the first time in 2023. However, not all are expected to impact the Group as
they are either not relevant to the Group's activities or require accounting
which is consistent with the Group's current accounting policies.
The following new standards and amendments are effective for the period
beginning 1 January 2023:
• IFRS 17 Insurance Contracts;
• Disclosure of Accounting Policies (Amendments to IAS 1
Presentation of Financial Statements and IFRS Practice Statement 2);
• Definition of Accounting Estimates (Amendments to IAS 8
Accounting policies, Changes in Accounting Estimates and Errors);
• Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12 Income Taxes); and
• International Tax Reform - Pillar Two Model Rules (Amendment
to IAS 12 Income Taxes)
The impact of seasonality or cyclicality on operations is not considered
significant on the condensed consolidated interim financial statements.
Accounting policies (cont.)
The following new standards and amendments are effective for the period
beginning 1 January 2023:
• IFRS 17 Insurance Contracts;
• Disclosure of Accounting Policies (Amendments to IAS 1
Presentation of Financial Statements and IFRS Practice Statement 2);
• Definition of Accounting Estimates (Amendments to IAS 8
Accounting policies, Changes in Accounting Estimates and Errors);
• Deferred Tax related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12 Income Taxes); and
• International Tax Reform - Pillar Two Model Rules (Amendment
to IAS 12 Income Taxes)
The impact of seasonality or cyclicality on operations is not considered
significant on the interim consolidated financial statements.
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.
The Board is the Group's chief operating decision maker within the meaning of
IFRS 8 "Operating Segments".
During the period to 30 June 2023 and during the year ended 31 December 2022
the Group had no revenue.
4. ADMINISTRATIVE COSTS
The following
significant costs are included:
30/06/23 30/06/22
(unaudited) (unaudited)
£ £
Third Party Transaction Fees 497,164 -
Transaction Bonuses 268,496 -
Non Cash Share Based Payments 1,103,292 310,788
The Non Cash Share Based Payments increased in H1 2023 mainly as a result of
the grant of additional Share Options in April 2023 and accelerated vesting of
Share Options issued in November 2021 following the Greater Buchan Area
farm-out.
5. 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 2023 due to
trading losses. As at 31 December 2022, the Group held tax losses of
approximately £62m (2021: £57m).
6. 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.
There is no difference between dilutive and basic loss per share due to there
being a loss recorded in the period.
Losses attributable to ordinary shareholders Weighted average number of shares Per share amount
£ Pence
Period ended 30 June 2023
Basic and Diluted EPS
Loss attributable to ordinary shareholders (2,895,698) 32,554,293 (8.89)
7. INTANGIBLE ASSETS
Exploration
Costs
£
COST
At 1 January 2023 24,548,122
Additions 617,047
Disposals (1,684,989)
At 30 June 2023 23,480,180
ACCUMULATED AMORTISATION
At 1 January 2023 175,241
At 30 June 2023 175,241
NET BOOK VALUE at 30 June 2023 23,304,939
Additions represent the work capitalised on the
GBA assets.
In June 2023, Jersey Oil and Gas Plc completed a farm-out transaction with NEO
Energy ("NEO"). The parties each now hold a 50% interest in the licences
that comprise the Greater Buchan Area ("GBA"), being P2498 ("Buchan") and
P2170 ("Verbier"), with NEO having become the operator as part of the
transaction.
In exchange for entering into the agreements to divest a 50% working interest
and operatorship in the GBA licences to NEO, the Company received £1.685m on
completion and:
• a full carry for JOG's 50% share of the estimated US$25m cost to
take the Buchan field through to Field Development Plan ("FDP") approval;
• a US$9.4m cash payment upon finalisation of the GBA development
solution - namely execution of the fully termed FPSO acquisition agreement;
• a US$12.5m cash payment on approval of the Buchan FDP by
the North Sea Transition Authority ("NSTA");
• a 12.5% carry of the Buchan field development costs included in
the FDP approved by the NSTA; equivalent to a 1.25 carry ratio; and
• a US$5m cash payment on each FDP approval by the NSTA in respect
of the J2 and Verbier oil discoveries
The completion payment of £1.685m has been recorded as a disposal reducing
the intangible carrying value of the GBA. No value for the development carries
or the future contingent payments is currently being recognised on the
consolidated statement of financial position.
Based on the Company's assessment, as at 30 June 2023, there are not deemed to
be any indicators that the licences are not commercial and the net carrying
value of £23,304,939 continues to be supported by ongoing development work on
the licence areas, with no impairments considered necessary.
8. PROPERTY, PLANT AND EQUIPMENT
Computer
and office
equipment
£
COST
At 1 January 2023 228,447
Additions -
At 30 June 2023 228,447
ACCUMULATED AMORTISATION, DEPLETION AND DEPRECIATION
At 1 January 2023 218,244
Charge for period 6,909
At 30 June 2023 225,153
NET BOOK VALUE at 30 June 2023 3,294
This represents the capitalised cost of computer equipment and fixtures.
9. TRADE AND OTHER RECEIVABLES
30/06/23 30/06/22 31/12/22
(unaudited) (unaudited) (audited)
£ £ £
Other receivables 30 30 30
Prepayments and accrued income 378,468 268,323 97,328
Deposits - - -
Value added tax 77,701 78,278 69,702
456,199 167,060
346,631
As at 30 June 2023, there were no trade receivables past due nor impaired.
There are immaterial expected credit losses recognised on these balances.
10. 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:
30/06/23 30/06/22 31/12/22
(unaudited) (unaudited) (audited)
£ £ £
Cash and cash equivalents 5,633,066 8,666,792 6,579,349
5,633,066 6,579,349
8,666,792
11. CALLED UP SHARE CAPITAL
30/06/23 30/06/22 31/12/22
(unaudited) (unaudited) (audited)
£ £ £
Issued and fully paid:
Number: 32,554,293 (2022: 32,554,293)
Ordinary class 2,573,395 2,573,395 2,573,395
2,573,395 2,573,395 2,573,395
12. LEASES
Amounts Recognised in the Statement of financial position
30/06/23 30/06/22 31/12/22
(unaudited) (unaudited) (audited)
Right-of-use Assets £ £ £
Buildings 182,809 133,168 81,328
182,809 133,168 81,328
30/06/23 30/06/22 31/12/22
Lease liabilities (unaudited) (unaudited) (audited)
£ £ £
Current 54,335 131,094 86,692
Non-Current 99,092 18,829 -
153,427 149,923 86,692
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 2023 remained at 3% and the leases relate to office space. A new lease
agreement was entered into in June 2023 for a total of 9 years with break
clauses after 3 and 6 years. Given the 3 year break clause and the future
plans for the business it was deemed appropriate to recognise the liability
relating to a 3 year period.
Amounts Recognised in the Statement of comprehensive income
30/06/23 30/06/22 31/12/22
(unaudited) (unaudited) (audited)
£ £ £
Depreciation charge of right-of-use asset
Buildings 51,840 51,840 138,176
51,840 51,840 138,176
30/06/23 30/06/22 31/12/22
(unaudited) (unaudited) (audited)
£ £ £
Interest expenses (included in finance cost)
Buildings 1,297 2,831 5,820
1,297 2,831 5,820
13. TRADE AND OTHER PAYABLES
30/06/23 30/06/22 31/12/22
(unaudited) (unaudited) (audited)
£ £ £
Trade payables 221,847 111,041 459,461
Accrued expenses 440,583 135,770 161,253
Taxation and Social Security 183,102 87,387 68,082
845,532 334,198 688,796
14. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
RECONCILIATION OF LOSS BEFORE TAX TO CASH USED IN OPERATIONS
30/06/23 30/06/22 31/12/22
(unaudited) (unaudited) (audited)
£ £ £
Loss for the period before tax (2,895,698) (1,186,377) (3,106,991)
Adjusted for:
Depreciation 6,909 15,444 29,873
Depreciation right-of-use asset 51,840 51,840 103,680
Share based payments (net) 1,013,292 310,788 1,227,504
Finance costs 1,297 2,839 4,730
Finance income (47,149) (17,050) (82,842)
(1,869,509) (822,516) (1,824,046)
(Increase)/decrease in trade and other receivables (94,994) 6,482 186,054
Decrease in trade and other payables (76,722) (2,269,509) (1,681,452)
Cash used in operations (2,041,225) (3,085,544) (3,319,445)
15. POST BALANCE SHEET EVENTS
Following a competitive tender process, the Board of Directors approved the
appointment of BDO LLP as the Company's auditor for the financial year ending
31 December 2023. PricewaterhouseCoopers LLP ("PwC") formally resigned as
auditor with effect from 6 September 2023.
16. AVAILABILITY OF THE INTERIM REPORT 2023
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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