REG - Jersey Oil & Gas PLC - Interim Results
19/09/2024 07:00
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RNS Number : 7781E Jersey Oil and Gas PLC 19 September 2024
19 September 2024
Jersey Oil and Gas plc
("Jersey Oil & Gas", "JOG" or the "Company")
Interim Results for the Six Month Period Ended 30 June 2024
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
2024.
Highlights
§ Significant progress has been made across all engineering, subsurface
and regulatory workstreams to position the Buchan Horst ("Buchan") project for
formal approval
§ The Company has been fully carried for its share of the £22 million
that has been spent to date on the current phase of activities by the Buchan
joint venture as a result of the farm-out agreements with NEO Energy ("NEO")
and Serica Energy ("Serica")
§ Multiple regulatory submissions have been made as part of moving towards
Field Development Plan ("FDP") approval - a draft FDP to the North Sea
Transition Authority, an Environmental Impact Assessment to the Offshore Major
Accident Regulator and a "Relocation Notice" to the Health & Safety
Executive concerning the floating production, storage and offloading vessel
§ As at 30 June 2024, the Company had a cash balance of approximately
£13 million and no debt. This reflects £5.5 million received during the
first half of the year as a result of completing the Greater Buchan Area
farm-out transaction with Serica
§ The Company benefits from no financial exposure to its 20% share of the
Buchan project's costs as a result of the farm-outs that have been completed
with NEO and Serica
§ Whilst clarity is awaited on the fiscal and regulatory uncertainties
currently facing the UK's oil and gas industry, work on the project is being
slowed down by the Buchan Operator and a licence extension is being requested
§ Actions are being taken to further reduce the cash costs of the
business in the near term ahead of Buchan FDP approval. Through various
measures, including a reduction in salaries, staff and Director numbers, the
cash costs of the business are forecast to fall by 50% from £3 million a year
to under £1.5 million in 2025
§ While the Company continues to seek compelling M&A opportunities
that could bring cash flow, portfolio diversification and quality investment
opportunities into the business, it is now looking through a wider lens than
the historic focus on purely UK oil and gas assets
Andrew Benitz, CEO of Jersey Oil & Gas, commented:
"The first half of the year has been marked by both highs and lows for the
Company. In February 2024, we celebrated completion of our second GBA
farm-out transaction to Serica Energy. Critically, this enabled us to secure
a fully funded 20% interest in the Buchan development project. This
achievement was testament to the quality of the asset we have nurtured from
inception and to the expertise and tenacity of the team.
The high of this farm-out success has been tempered over the course of the
year by the fiscal and political turmoil the UK oil and gas industry has
faced. Whilst demand for hydrocarbons continues during the energy
transition, developing homegrown energy provides the UK with a cleaner and
more secure solution than relying on carbon intensive imported fuels. The
Buchan project has the potential to create over 1,000 jobs across many parts
of the UK supply chain and over 200 project related jobs, attract private
investment of around £1 billion into the UK economy, generate hundreds of
millions in UK tax revenues and deliver accelerated investment in new offshore
renewable electricity generation.
Against that backdrop, we hope that the Government will ensure that sense
prevails and the right fiscal and regulatory environment is established to
enable the UK's oil and gas industry to continue being a highly valuable
contributor to the economy for years to come, whilst we transition to a lower
carbon economy."
Enquiries:
Jersey Oil and Gas plc Andrew Benitz c/o Camarco:
020 3757 4980
Strand Hanson Limited James Harris Tel: 020 7409 3494
Matthew Chandler
James Bellman
Zeus Capital Limited Simon Johnson Tel: 020 3829 5000
Cavendish Capital Markets Limited Neil McDonald Tel: 020 7220 0500
Leif Powis
Camarco Billy Clegg Tel: 020 3757 4980
Rebecca Waterworth
- Ends -
Notes to Editors:
Jersey Oil & Gas (AIM:JOG) is a UK energy company focused on creating
shareholder value through the development of oil and gas assets and the
execution of accretive transactions.
The Company has a focused asset portfolio centred on developing homegrown
North Sea resources that support the UK's energy requirements as it
transitions towards net zero. JOG holds a 20% interest in each of licences
P2498 (Blocks 20/5a, 20/5e and 21/1a) and P2170 (Blocks 20/5b and 21/1d)
located in the UK Central North Sea and referred to as the "Greater Buchan
Area" ("GBA"). Licence P2498 contains the Buchan Horst ("Buchan") oil field
and J2 oil discovery and licence P2170 contains the Verbier oil discovery.
JOG's strategy is focused on unlocking the organic value of its GBA assets,
combined with the pursuit of asset acquisitions that bring cash flow,
diversity and quality investment opportunities into the portfolio. The
Company's Board and Executive team have a wealth of experience in managing and
growing publicly listed energy companies and a strong track-record of value
creation in the UK North Sea oil and gas sector.
Forward-Looking Statements
This announcement may contain certain forward-looking statements that are
subject to the usual risk factors and uncertainties associated with an oil and
gas business. Whilst the Company believes the expectations reflected herein
to be reasonable in light of the information available to it at this time, the
actual outcome may be materially different owing to factors beyond the
Company's control or otherwise within the Company's control but where, for
example, the Company decides on a change of plan or strategy.
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of
the European Union (Withdrawal) Act 2018, as amended by virtue of the Market
Abuse (Amendment) (EU Exit) Regulations 2019.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S REPORT
Following a transformational year for the Company in 2023, the start of 2024
commenced in a similar fashion with the farm-out of a further 30% interest in
the Greater Buchan Area ("GBA") licences to Serica Energy (UK) Limited
("Serica") being successfully completed. This represented a key moment for
the business, as it provided the Company with a fully funded solution for the
planned redevelopment of the Buchan Horst ("Buchan") field. In addition to
delivering a further upfront cash payment of nearly £6 million plus
additional contingent cash payments, completing this farm-out secured the
ability for our shareholders to access the significant potential upside
associated with achieving a full carry for our remaining share of this
substantial investment programme through to first production.
Following the success in achieving this major strategic milestone, the Company
and the wider UK North Sea oil and gas industry have subsequently been
impacted by the need to navigate an increasingly difficult and evolving UK
political and fiscal backdrop.
Buchan Redevelopment Project's Progress
Since the start of the year, a significant amount of work has been completed
by NEO Energy ("NEO"), as Operator of the GBA licences, on maturing the
requisite engineering and plans for the sanction of the Buchan project. The
plans involve the redeployment of the "Western Isles" Floating Production,
Storage and Offloading vessel ("FPSO") as a production processing facility
located over the Buchan field, with up to five gas-lifted production wells,
supported by two water injection wells, connected via subsea infrastructure to
the vessel. Following processing on the FPSO, the produced oil is to be
exported via shuttle tankers and gas via a pipeline connection to nearby
infrastructure. The Company has been fully carried for its share of the £22
million that has been spent to date on the current phase of activities by the
Buchan joint venture as a result of its farm-out agreements with NEO and
Serica.
During the first half of the year, the focus of the main workstreams has been
on completion of the necessary engineering and subsurface studies that are
required to be able to prepare the development plan for sanction by the
partners and regulatory authorities, such that the project can then move into
the execution phase of activities. Front End Engineering and Design ("FEED")
studies have been completed with input from a number of specialist engineering
companies. These studies have been key to defining the appropriate solutions
for the design of the wells, the subsea infrastructure and the necessary FPSO
modification and life extension works. Alongside this activity, the Operator
has also completed offshore surveys in order to gather the geotechnical and
geophysical data that is required for the subsea and drilling rig contract
tendering processes and to inform the FPSO mooring design.
There has been significant engagement between the joint venture partners
throughout the FEED process, particularly around the key strategic engineering
decisions and the plans for making the FPSO "electrification-ready" ahead of
deployment. This engagement represents an important element of the assurance
and peer review process that both JOG and Serica are required to complete in
order to properly participate in the project sanction and regulatory approval
processes.
As part of the wider project workstreams, in July 2024 the FPSO was moved from
its operational location at the Western Isles fields in the UK Northern North
Sea to Scapa Flow in the Orkney Isles by its existing Operator, Dana Petroleum
(E&P) Limited ("Dana"). This marked an important step in the activities
that are being completed by Dana in preparation for handover of the vessel to
NEO following regulatory approval of the Buchan Field Development Plan
("FDP"). Alongside this work, NEO submitted a "Relocation Notification" to
the Health & Safety Executive, in its role as the Offshore Major Accident
Regulator, which was accepted, confirming the suitability of the FPSO's design
for its proposed location on the Buchan field.
Following submission of the draft FDP to the North Sea Transition Authority
("NSTA") at the end of 2023, the Operator has been actively engaging with the
regulator on addressing its subsurface and engineering evaluations concerning
the development plan. In addition, the specification of the "Field
Determination Area", which defines the maximum geological boundary of the
field, has been agreed with the NSTA and this forms part of the required
inputs to the formal FDP approval process. Finalisation of the FDP is
advancing well, with the key remaining workstreams being completion of the
subsurface studies required to finalise the drilling programme, operational
verification of the FPSO now that it has reached its stacking location and
finalisation of the overall capital expenditure forecast based on the FEED
studies and the project's schedule.
As part of preparing for obtaining regulatory approval of the Buchan FDP, the
required Environmental Impact Assessment ("EIA") was issued to the Offshore
Petroleum Regulator for the Environment and Decommissioning ("OPRED") for
public consultation early in the year. Regular engagement with OPRED has
continued since then, with a view to closing out the environmental approval
process ahead of year end. However, as announced in September 2024, this
target has now been delayed following the UK Government's announcement that it
is to launch a consultation on new environmental guidance for oil and gas
firms in light of the recent Supreme Court "Finch" judgment requiring
regulators to consider the impact of combustion of produced hydrocarbons,
Scope 3 emissions, in the EIA for new projects. The Government is aiming to
conclude its consultation by Spring 2025.
As a result of the consultation timeline, it is apparent that approval of the
Buchan EIA and subsequent approval of the FDP will not be possible ahead of
Spring 2025. Consequently, completion of the pre-sanction project activities
are being materially slowed down by Buchan's Operator, pending the outcome of
both the forthcoming UK Government's October Budget, particularly any
potential additional changes to the Energy Profits Levy, and the environmental
guidance consultation.
In light of the restrictions on the ability to achieve regulatory approval
within the current "Second Term" of the Buchan licence (P2498), which runs
until 28 February 2025, the joint venture has requested a licence extension
from the NSTA. The Second Term defines the time period in which FDP approval
for a field should be achieved, following which a licence moves into the
"Third Term", which covers the development and production phase of activities
for the life of the field.
Developing Homegrown Energy
Jersey Oil and Gas was awarded the Buchan licence in 2019 and was set the task
of delivering a low carbon, area-wide offshore energy hub. Now in
partnership with NEO and Serica, we have developed an investment opportunity
through the Buchan project that has the potential to create over 1,000 jobs
across many parts of the UK supply chain and over 200 project related jobs,
private investment of around £1 billion into the UK economy, generate
hundreds of millions in UK tax revenues and deliver accelerated investment in
new offshore renewable electricity generation.
From inception we have had a low carbon vision for our project with plans to
electrify the production facilities and power them from new offshore wind
energy. This represents a significant step forward for the future of the UK
North Sea, where the Buchan project is facilitating investment into cutting
edge floating offshore wind. This innovative and collaborative approach with
partners in the renewable sector is a clear demonstration of energy transition
in action that the UK should be proud to champion.
Over recent years, the landscape in the UK North Sea has dramatically shifted
away from "Big Oil" to smaller British independents like JOG, that are fully
invested in UK waters. Successive unwarranted fiscal raids on our domestic
energy industry is disproportionately damaging to these companies, which
collectively account for the majority of current production in the region, as
well as representing the primary source of future investment potential. With
economic growth at the heart of the new UK Government's agenda, it is hoped
that the on-going fiscal and environmental reviews that the Government is
consulting on will not lose sight of the essential importance of implementing
measures that support investment, jobs and the acceleration of economic value
creation for the UK economy. Along with our joint venture partners, over the
last twelve months we have been actively engaging with the Government on the
critical issues facing the industry and will continue to do so as the
consultations progress.
Financial Review
The Company's cash position was approximately £13.0 million as of 30 June
2024 (31 December 2023: £10.5 million) including £11.0 million (31 December
2023: £5.0m) in term deposits. The cash position grew due to £5.5 million
(H1 2023: £1.7 million) of transaction proceeds being received following the
completion of the Serica farm-out and interest received on the cash and term
deposits of £0.2 million (H1 2023: £Nil). These were partially offset by
cash outflows of £3.1 million. JOG had no production revenue during the
period.
The underlying cash expenditure incurred in running the business in the first
half of 2024 was down 17% from the same period last year at £1.5 million (H1
2023: £1.8 million) - this was in turn a 15% reduction from the first half of
2022. During the first six months of the year there were also transaction
costs of £1.2 million associated with the Serica farm-out, which crystallised
upon completion of the deal in February 2024. In addition, there was a
non-cash share-based compensation charge of £0.5 million (H1 2023: £1
million). There were no share options issued in the period. These business
costs are partially recognised as Administrative Expenses through the Profit
and Loss account, £2.8 million (H1 2023: £2.9 million) and partially
capitalised on the Balance Sheet as Intangible Asset Additions, £0.4 million
(H1 2023: £0.6 million).
The loss for the period, before and after tax, was approximately £2.6 million
(H1 2023: £2.9 million).
As a result of the farm-outs completed with NEO and Serica, JOG is fully
carried for all of its 20% share of the project costs to take the Buchan field
through to FDP approval and is also fully carried through the work programme
for the Buchan development project included in the FDP budget approved by the
joint venture partners and the NSTA.
In light of the recently announced slow down in Buchan project activities, the
Company will implement a number of measures to further reduce the cash costs
of running the business for a period of time. These measures are forecast to
result in the cash costs falling by 50% from the current underlying level of
£3 million a year to under £1.5 million.
§ The Board of Directors is to be reduced to four individuals through the
planned forthcoming retirement of a Non-Executive Director;
§ All remaining staff and Directors' salaries are being reduced by 50%; and
§ Corporate and operational running costs are forecast to be reduced by a
further £0.5 million.
Summary and Outlook
As an entrepreneurial company that has grown from humble beginnings to being
on the cusp of delivering a material investment project that has the potential
to deliver significant value to all our stakeholders, we have demonstrated the
strength and skills that lie within the business to be a corporate success.
We will continue to work tirelessly in our efforts to drive the Buchan
development to a successful conclusion over the coming months, alongside
setting the right long term future direction for the business. While we
continue to seek compelling M&A opportunities that could bring cash flow,
portfolio diversification and quality investment opportunities into the
business, the Company is now looking through a wider lens than the historic
focus on purely UK oil and gas assets.
While our short term success is clearly dependent on the UK Government making
sensible fiscal and regulatory decisions that harness the value that can be
generated from a managed energy transition that works in tandem with the
undeniable benefits that the oil and gas industry can continue to provide, our
long term success lies in our own hands. The JOG team has demonstrated
through our achievements to date that the Company has the skills and
capabilities to deliver upon the strategic imperatives of a well-defined
business plan. Accordingly, as we shape our next steps, we will draw upon
those key resources to maximise the long term value of the business for our
shareholders.
We greatly appreciate and value the support and patience we have received from
our shareholders at this complicated time for the industry.
Les Thomas
Non-Executive Chairman Andrew Benitz
Chief Executive Officer
19 September 2024
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2024
6 months to 6 months to Year to
30/06/24 30/06/23 31/12/23
(unaudited) (unaudited) (audited)
Notes £ £ £
Administrative expenses 4 (2,791,954) (2,941,550) (5,706,675)
OPERATING LOSS (2,791,954) (2,941,550) (5,706,675)
Finance income 171,601 47,149 114,825
Finance expense (1,799) (1,297) (3.503)
LOSS BEFORE TAX (2,622,152) (2,895,698) (5,595,353)
Tax 5 - - -
LOSS FOR THE PERIOD (2,622,152) (2,895,698) (5,595,353)
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD (2,622,152) (2,895,698) (5,595,353)
Total comprehensive loss attributable to:
Owners of the parent (2,622,152) (2,895,698) (5,595,353)
Loss per share expressed
in pence per share:
Basic 6 (8.03) (8.89) (17.19)
Diluted 6 (8.03) (8.89) (17.19)
The above condensed consolidated statement of comprehensive income should be
read in conjunction with the accompanying notes.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2024
30/06/24 30/06/23 31/12/23
(unaudited) (unaudited) (audited)
Notes £ £ £
NON-CURRENT ASSETS
Intangible assets - exploration & development costs 7 11,334,984 23,304,939 16,421,797
Property, plant and equipment 8 2,050 3,294 -
Right-of-use assets 12 111,729 182,809 139,661
Deposits 18,772 2,692 2,692
11,467,535 23,493,734 16,564,150
CURRENT ASSETS
Trade and other receivables 9 314,171 456,199 478,234
Cash and cash equivalents 10 2,031,761 5,633,066 5,482,935
Term deposits 11 11,000,000 - 5,000,000
13,345,932 6,089,265 10,961,169
TOTAL ASSETS 24,813,467 29,582,999 27,525,319
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 2,574,529 2,573,395 2,574,529
Share premium account 110,535,059 110,309,524 110,535,059
Share options reserve 4,432,875 3,431,457 3,890,986
Accumulated losses (92,582,254) (87,347,793) (89,960,102)
Reorganisation reserve (382,543) (382,543) (382,543)
TOTAL EQUITY 24,577,666 28,584,040 26,657,929
NON-CURRENT LIABILITIES
Lease liabilities 12 43,105 99,092 71,309
43,105 99,092 71,309
CURRENT LIABILITIES
Trade and other payables 13 136,710 845,532 740,927
Lease liabilities 12 55,986 54,335 55,154
192,696 899,867 796,081
TOTAL LIABILITIES 235,800 998,959 867,390
TOTAL EQUITY AND LIABILITIES 24,813,467 29,582,999 27,525,319
The above condensed consolidated statement of financial position should be
read in conjunction with the accompanying notes.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2024
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 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
At 1 January 2024 2,574,529 110,535,059 3,890,986 (89,960,102) (382,543) 26,657,929
Loss for the period and total comprehensive income - - - (2,622,152) - (2,622,152)
Share based payments - - - 541,889 - -
541,889
At 30 June 2024 2,574,529 110,535,059 4,432,875 (92,582,254) (382,543) 24,577,666
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 Condensed 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
The above condensed consolidated statement of changes in equity should be read
in conjunction with the accompanying notes
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2024
6 months to 6 months to Year to
30/06/24 30/06/23 31/12/23
(unaudited) (unaudited) (audited)
Notes £ £ £
CASH FLOWS FROM OPERATING ACTIVITIES
Cash used in operations 14 (2,678,054) (2,041,225) (4,185,049)
Net interest received 171,601 47,149 114,825
Net interest paid (1,799) (1,297) (3,503)
Net cash used in operating activities (2,508,252) (1,995,373) (4,073,727)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds received from farm-out transaction 7 5,519,216 1,684,990 9,103,944
Purchase of tangible assets 8 (2,363) - -
Purchase of intangible assets 7 (432,402) (549,314) (1,013,081)
5,084,451 1,135,676 8,090,863
Investing cash flows before movements in capital balances
Changes in term deposits (6,000,000) - (5,000,000)
Net cash generated from/(used in) investing activities (915,549) 1,135,676 (3,090,863)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal elements of lease payments (27,372) (86,586) (113,550)
(27,372) (86,586) (113,550)
Net cash used in financing activities
DECREASE IN CASH AND CASH EQUIVALENTS (3,451,173) (946,283) (1,096,414)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 5,482,935 6,579,349 6,579,349
CASH AND CASH EQUIVALENTS AT END OF PERIOD 10 2,031,761 5,633,066 5,482,935
The above condensed consolidated statement of cash flows should be read in
conjunction with the accompanying notes
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2024
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 71-75 Shelton Street, Covent Garden,
London WC2H 9JQ.
The reporting period of the Group's condensed consolidated interim financial
statements is the six-month period from 1 January 2024 to 30 June 2024 and
these were authorised for issue in accordance with a resolution of the Board
of Directors on 18 September 2024.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
The interim condensed consolidated financial statements for the six months
ended 30 June 2024 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 condensed 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 2023. These unaudited interim condensed 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 2023.
The financial information contained herein 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 2023, 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
a 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 funds to 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 latest audited annual financial statements
for the year ended 31 December 2023.
The impact of seasonality or cyclicality on operations is not considered
significant on the condensed consolidated interim 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 2024 and during the year ended 31 December 2023
the Group had no revenue.
4. ADMINISTRATIVE COSTS
The following significant costs are included:
30/06/24 30/06/23
(unaudited) (unaudited)
£ £
Third Party Transaction Fees / Bonuses 1,187,661 765,660
Non-Cash Share Based Payments 541,889 1,103,292
The H1 2024 Transaction Fees/Bonuses include payments of £490,000 to the
Executive Directors earned as a result of the Serica Farm-out and settled
conditional upon deal completion. Non-Cash Share Based Payments decreased in
H1 2024 mainly as a result of no new additional Share Options being granted.
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 2024 due to
trading losses. As at 31 December 2023, the Group held tax losses of
approximately £63m (2022: £62m).
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.
The share options issued in the Group that would potentially dilute earnings
per share in the future have not been included in the calculation of diluted
loss per share as their effect would be anti-dilutive
Losses attributable to ordinary shareholders Weighted average number of shares Per share amount
£ Pence
Period ended 30 June 2024
Basic and Diluted EPS
Loss attributable to ordinary shareholders (2,622,152) 32,667,343 (8.03)
7. INTANGIBLE ASSETS
Exploration
Costs
£
COST
At 1 January 2024 16,597,038
Additions 432,403
Farm out (5,519,216)
At 30 June 2024 11,510,225
ACCUMULATED AMORTISATION
At 1 January 2024 175,241
At 30 June 2024 175,241
CARRYING AMOUNT 30 June 2024 11,334,984
Additions represent the work capitalised on the GBA assets.
In February 2024, Jersey Oil and Gas plc completed a farm-out transaction with
Serica Energy (UK) Limited ("Serica Energy"). As a result, the licences
that comprise the Greater Buchan Area ("GBA"), being P2498 ("Buchan") and
P2170 ("Verbier") are now owned by NEO Energy (50% interest, Operator), Serica
Energy (UK) Limited (30% interest) and JOG (20% interest).
In exchange for entering into definitive agreements to divest a 30% working
interest in the GBA licences, the Company received from Serica on Completion
£5.5m and:
· a 7.5% carry of the costs to take the Buchan field through to FDP
approval
· a 7.5% carry of the Buchan field development costs, up to the
budget included in the approved FDP; equivalent to a 1.25 carry ratio
· a $7.5 million cash payment on approval of the Buchan FDP by the
NSTA
· $3 million cash payments on each FDP approval by the NSTA in
respect of the J2 and Verbier oil discoveries
In line with the NEO Energy transaction (details of which can be found in the
Company's Annual Report for 2023), the completion payment of £5.5m 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 in the interim condensed consolidated statement of
financial position.
Based on the Company's assessment, as at 30 June 2024, there are not deemed to
be any indicators that the licences are not commercial and the net carrying
value of £11,334,984 continues to be supported by ongoing development work on
the licence areas, with no impairments considered necessary. It is noted
that increases to the UK North Sea's fiscal regime were announced by the new
Government after the UK General Election in July 2024 and further changes are
anticipated in the October 2024 budget which are expected to result in a
trigger for impairment testing by the year end.
8. PROPERTY, PLANT AND EQUIPMENT
Computer
and office
equipment
£
COST
At 1 January 2024 228,447
Additions 2,363
At 30 June 2024 230,810
ACCUMULATED AMORTISATION, DEPLETION AND DEPRECIATION
At 1 January 2024 228,447
Charge for period 313
At 30 June 2024 228,760
CARRYING AMOUNT 30 June 2024 2,050
9. TRADE AND OTHER RECEIVABLES
30/06/24 30/06/23 31/12/23
(unaudited) (unaudited) (audited)
£ £ £
Other receivables 48,687 30 328,166
Prepayments and accrued income 218,572 378,468 68,222
Value added tax 46,912 77,701 81,846
314,171 478,234
456,199
As at 30 June 2024, 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 condensed consolidated statement of cash flows
in respect of cash and cash equivalents are in respect of these consolidated
statement of financial position amounts:
30/06/24 30/06/23 31/12/23
(unaudited) (unaudited) (audited)
£ £ £
Cash and cash equivalents 2,031,761 5,482,935
5,633,066
The cash balances are placed with creditworthy financial institutions with a
minimum rating of 'A'.
11. TERM DEPOSITS
30/06/24 30/06/23 31/12/23
(unaudited) (unaudited) (audited)
£ £ £
Maturing within six months 11,000,000 5,000,000
-
Term deposits are placed with a creditworthy financial institution with a
minimum rating of 'A'.
12. LEASES
Amounts recognised in the statement of financial position:
30/06/24 30/06/23 31/12/23
(unaudited) (unaudited) (audited)
Right-of-use Assets £ £ £
Buildings 111,729 182,809 139,661
111,729 182,809 139,661
30/06/24 30/06/23 31/12/23
Lease liabilities (unaudited) (unaudited) (audited)
£ £ £
Current 55,986 54,335 55,154
Non-current 43,105 99,092 71,309
99,091 153,427 126,463
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 2024 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:
30/06/24 30/06/23 31/12/23
(unaudited) (unaudited) (audited)
£ £ £
Depreciation charge of right-of-use asset
Buildings 51,840 51,840 94,988
51,840 51,840 94,988
30/06/24 30/06/23 31/12/23
(unaudited) (unaudited) (audited)
£ £ £
Interest expenses (included in finance cost)
Buildings (1,799) (1,297) (3,503)
(1,799) (1,297) (3,503)
13. TRADE AND OTHER PAYABLES
30/06/24 30/06/23 31/12/23
(unaudited) (unaudited) (audited)
£ £ £
Trade payables 59,920 221,847 345,814
Accrued expenses 16,024 440,583 256,283
Taxation and Social Security 50,086 183,102 127,860
Other payables 10,680 - 10,970
136,710 845,532 740,927
14. NOTES TO THE CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
RECONCILIATION OF LOSS BEFORE TAX TO CASH USED IN OPERATIONS
30/06/24 30/06/23 31/12/23
(unaudited) (unaudited) (audited)
£ £ £
Loss for the period before tax (2,622,152) (2,895,698) (5,595,353)
Adjusted for:
Depreciation 313 6,909 10,203
Depreciation on right-of-use asset 27,932 51,840 94,988
Share based payments (net) 541,889 1,013,292 1,560,167
Finance costs 1,799 1,297 3,503
Finance income (171,601) (47,149) (114,825)
(2,221,820) (1,869,509) (4,041,317)
Decrease/(increase) in trade and other receivables 147,983 (94,994) (109,685)
Decrease in trade and other payables (604,217) (76,722) (34,047)
Cash used in operations (2,678,054) (2,041,225) (4,185,049)
15. POST BALANCE SHEET EVENTS
Changes were announced to the Energy Profits Levy ("EPL") in a policy paper
published on 29 July 2024 as part of announcements made by the Chancellor
of the Exchequer, the Rt Hon Rachel Reeves MP.
· EPL to increase to 38% from 1 November 2024, bringing the
headline rate of tax on upstream oil and gas activities to 78%
· EPL to be extended to 31 March 2030 with the Energy Security
Investment Mechanism remaining in place meaning the levy will cease to apply
if prices fall consistently to, or below, historically normal levels for a
sustained period
· The EPL's main 29% investment allowance for qualifying
expenditure incurred will be removed from 1 November 2024
· Capital allowance claims that can be taken into account in
calculating EPL profits will be reduced; however, the extent of the reduction
will only be announced in the 2024 October Budget following engagement with
stakeholders
In addition, following the UK Government's announcement in August 2024
concerning its plans for a consultation on new environmental guidance for oil
and gas firms, Buchan's Operator, NEO, announced its decision to materially
slow down activities across all the development assets in its portfolio. In
relation to the Buchan Horst project, NEO advised that it was awaiting clarity
around the UK's regulatory and fiscal framework so that the full impact could
be assessed. NEO advised that this would inevitably delay first oil timing
in relation to the project, which was previously forecast to be late 2027.
NEO also confirmed that the Joint Venture would seek a licence extension in
order to continue technical evaluation in light of the changes to tax and
environmental consents.
16. AVAILABILITY OF THE INTERIM REPORT 2024
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 71-75 Shelton Street, Covent Garden, London WC2H 9JQ.
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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