REG - Jersey Oil & Gas PLC - Final Results for the Year Ended 31 December 2023
13/05/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240513:nRSM0687Oa&default-theme=true
RNS Number : 0687O Jersey Oil and Gas PLC 13 May 2024
13 May 2024
Jersey Oil and Gas plc
("Jersey Oil & Gas", "JOG" or the "Company")
Final Results for the Year Ended 31 December 2023
& Notice of Annual General Meeting
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 audited financial results for the year ended 31 December 2023 and
the date of its forthcoming Annual General Meeting ("AGM").
Highlights
§ Successful completion of two significant Greater Buchan Area ("GBA")
farm-out transactions ensured the Company delivered on its core strategic
objectives during 2023
§ The selected Buchan redevelopment plan delivers the lowest full-cycle
carbon footprint solution for the field
§ The Buchan redevelopment project benefits from the key "R3" components that
underpin a quality solution for the development of homegrown resources -
Redeveloping an existing, known oil field, through Re-use of infrastructure
that is to be made Ready for electrification
§ Financial outlook transformed, with the business securing a path to
monetising its GBA interests without the need for additional equity from
shareholders
Ambition Backed by Actions
2023 was a pivotal year for the Company. Having successfully aggregated the
GBA resource base and progressed the necessary development planning
activities, two farm-out transactions were executed, bringing in two credible
industry partners and the funding required to monetise the area.
Securing the means and the finance to move the GBA project forward into the
development phase of activities has been the key ambition of the Company since
taking over sole ownership of the licence area in 2021. The farm-out
transactions with NEO Energy ("NEO") and Serica Energy ("Serica") do just that
and have transformed the outlook for the business.
By bringing in leading industry partners, closing out the selection of the GBA
development solution and securing a high-quality floating production, storage
and offloading vessel ("FPSO"), the Company has set the path to delivering a
material long-term income stream from the Buchan redevelopment project.
Importantly, the structure of the farm-out transactions ensures that the
Company has secured a series of cash payments, which comfortably finance the
on-going operations of the business, as well as funding for its remaining 20%
interest in the Buchan project.
Buchan - Moving Forward
The Buchan redevelopment project continues to make good progress. Completion
of the necessary pre-sanction Front-End Engineering and Design work is on
track and the first offshore survey vessel mobilisation occurred earlier this
month to obtain the geophysical and geotechnical data required to finalise the
subsea and drilling rig contract tendering process and inform the FPSO mooring
design.
In line with the strategy for the future connection of the FPSO to one of the
anticipated floating wind power developments in the area, engagement is
on-going with the companies that were awarded acreage in the INTOG licencing
round conducted by Crown Estate Scotland in 2023. Securing a source of green
power feeds into the post start-up electrification plan for the FPSO and does
not defer the target date for first oil.
The draft Buchan Field Development Plan was submitted to the North Sea
Transition Authority in December 2023 and the Environmental Statement was
submitted to the Offshore Petroleum Regulator for the Environment and
Decommissioning at the beginning of 2024. Subject to project sanction from
the joint venture partners, these submissions pave the way for obtaining the
necessary regulatory approvals for the Buchan redevelopment project in the
second half of 2024.
The UK oil and gas industry as a whole is currently being frustrated in its
efforts to maximise the production of homegrown resources by fiscal
uncertainty. Through the work of the industry trade body, Offshore Energies
UK, a significant amount of effort is going into engaging with the leaders of
all parties to make sure the benefits of domestic energy production are
understood and realised.
Solid Outlook
The Company's vision is centred on successfully growing the business in a
smart and sustainable way. The business is focused on unlocking the organic
value of its existing GBA assets, combined with the pursuit of accretive asset
acquisitions that bring cash flow, diversity and quality investment
opportunities into the portfolio. Such opportunities are thoroughly assessed
in terms of their potential strategic fit, being mindful of the quality and
unencumbered strengths of our existing portfolio.
The Company is well positioned to deliver on its strategic objectives. With
a cash balance following completion of the Serica farm-out in late February
2024 of over £15 million, the business is financially secure and funded for
the planned Buchan redevelopment programme. During 2023 the underlying
annual cash costs of the business were trimmed from forecast levels of £4.0
million to £3.5 million. Following the transfer of operatorship of the GBA
licences to NEO and completion of the farm-outs, the Company has moved swiftly
to further prune underlying forecast cash costs to under £3.0 million per
annum. This backdrop provides an attractive springboard from which to
realise the full potential and ambitions of the business to deliver long-term
shareholder value.
Annual General Meeting
The Company also announces that its 2023 Annual Report and Financial
Statements together with the AGM Notice and associated Form of Proxy are now
available on the Company's website (www.jerseyoilandgas.com) and will be
posted today to those shareholders who have elected to receive hardcopy
shareholder communications from the Company.
The Company will hold its AGM in respect of its financial year ended 31
December 2023 on 5 June 2024 at 12.00 noon at the offices of Strand Hanson
Limited, 26 Mount Row, London W1K 3SQ.
Corporate Website
The Company is pleased to report that it has today launched a new version of
its corporate website (www.jerseyoilandgas.com).
Andrew Benitz, Chief Executive Officer, commented:
"JOG had an exceptional 2023 and we are delighted to have NEO and Serica as
our partners on the Greater Buchan Area, which is one of the largest and most
exciting developments of homegrown energy in the UK North Sea. Together with
our joint venture partners and support from our shareholders we have delivered
an investment opportunity that is expected to support over 1,000 jobs across
many parts of the UK supply chain, provide private investment of around £900
million into the UK economy and generate hundreds of millions in forecast UK
tax receipts.
The project is progressing well, with the Front-End Engineering and Design
work that needs to be completed ahead of project sanction remaining on track,
along with execution of the offshore geotechnical survey campaign that
commenced earlier this month.
Multiple recent fiscal hikes, compounded by potentially further fiscal
uncertainty associated with the forthcoming election, are weighing heavily on
UK oil and gas industry. With hydrocarbon imports into the UK at a record
high last year, the spotlight will inevitably refocus on domestic supply from
the North Sea. We remain confident that any new government will realise that
the industry is truly its best partner and enabler of the energy transition
and that it must support private sector investment into all forms of homegrown
energy. Whilst demand for oil and gas remains, homegrown energy provides
the most effective, lowest carbon option and provides an economic bridge to
the future."
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 -
GBA Farm-Out Terms
In exchange for entering into agreements with NEO and Serica to divest an
aggregate 80% interest in the two licences that comprise the GBA, the Company
has received / will receive:
§ A carry for JOG's 20% share of the estimated $25 million cost to take the
Buchan field through to FDP approval
§ A 20% carry of the Buchan field development costs, as approved in the FDP;
equivalent to a 1.25 carry ratio - estimated capital expenditure of £850-950
million (100%)
§ $3.2 million cash on completion of the transactions
§ $15 million cash payment for finalisation of the GBA development solution
associated with acquisition of the Western Isles FPSO
§ $20 million cash payment following approval by the NSTA of the Buchan FDP
and receipt of associated regulatory and legal consents
§ $8 million cash payment on each FDP approval by the NSTA in respect of the
J2 and Verbier oil discoveries
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." Licence P2498 contains the 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.
All figures quoted in this announcement are in US dollars, unless stated
otherwise.
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 & CHIEF EXECUTIVE OFFICER'S REPORT
The financial year under review, 2023, was a transformational one for JOG and
we were delighted to deliver on the key corporate objectives we had set for
creating real shareholder value from our GBA licence interests and
establishing the path forward for the GBA development project.
While the GBA farm-out process took longer than originally anticipated to
complete, throughout it we were mindful of the fundamental requirement to
deliver a credible and sustainable result. In short, we were focused on
attracting the right industry partners and agreeing upon the optimal
development solution, being one that aligns with the oil and gas industry's
support for the UK's energy transition and path towards achieving net zero in
2050.
Double Farm-out Success
In April 2023, we were pleased to announce a farm-out transaction with NEO.
NEO acquired a 50% working interest in, and operatorship of, both the licences
that cover the GBA, which includes the Buchan oil field, the Verbier and J2
discoveries and several exploration prospects. Following swiftly on from
completing the NEO transaction, we were then able to announce a further
farm-out of a 30% non-operated working interest in the licences to Serica in
November 2023.
These transactions, executed on identical pro-rata deal terms, deliver
material value to JOG, including certain cash milestone payments, funding
through to Buchan Field Development Plan ("FDP") approval and a 20%
development expenditure carry on the costs included in the approved Buchan FDP
(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.
Serica is a leading London listed UK oil and gas company producing more than
40,000 barrels of oil equivalent per day in the North Sea.
These transactions serve to unlock the route to monetising gross GBA resources
in excess of 100 million barrels of oil equivalent and creating a major new
production hub in the Central North Sea. Following completion of the Serica
transaction in late February 2024, we have so far received a total of $18
million in cash payments from the farm-outs, with a further $20 million due
following Buchan FDP approval and completion of the regulatory consenting
process in due course. With Buchan first oil targeted for late 2026, our net
20% carried working interest in the field is anticipated to generate material
cash flow, with an estimated breakeven cost in the initial years of
approximately $15/boe.
Development Solution Secured
A critical component for making the planned Buchan redevelopment project a
long-term success was to secure the right development solution. In November
2023 we were very pleased to announce the execution of agreements to acquire
the "Western Isles" FPSO. The FPSO will be utilised as the production
processing facility at the centre of the redevelopment. This high-quality
FPSO, which has only been operational since 2017 and is already partly owned
by our partner, NEO, is an excellent fit for the GBA. Transfer of the vessel
is subject to completion of the necessary handover activities by the existing
Operator, Dana Petroleum, and Buchan FDP approval, which is targeted for the
second half of 2024.
Securing this critical piece of infrastructure removes the requirement to
construct new processing facilities, which significantly de-risks the
execution phase of the project. The FPSO's existing specification and
limited age mean that the modifications required for the FPSO to meet Buchan's
development plan are relatively modest. These are key factors for minimising
the timeline risks associated with the ultimate project execution plan.
Importantly, JOG's 20% cost of acquiring the vessel is also fully carried
under the terms of the farm-out agreements and we will benefit from vessel
ownership as opposed to expensive vessel leasing, which is often a path taken
for similar North Sea developments.
Operational Progress
Following the transfer of operatorship of the GBA licences to NEO post
completion of the initial farm-out transaction, we have been pleased with the
pace at which the project has moved forward and the level of on-going
collaboration. NEO has formed a high-quality and experienced project team.
The draft FDP was submitted to the NSTA in December and the Environmental
Statement was submitted to the Offshore Petroleum Regulator for the
Environment and Decommissioning ("OPRED") at the beginning of 2024. These
submissions pave the way for obtaining the necessary regulatory approvals for
the Buchan redevelopment project in the second half of 2024.
In terms of the activities that need to be completed ahead of project
sanction, we are pleased to report that all the required Front-End Engineering
and Design ("FEED") work is on-going, and the engineering is progressing to
plan. The planned use of shuttle tanker offload for oil export from the FPSO
has been endorsed by the NSTA and finalisation of the preferred gas export
option is moving forward as planned. Geophysical and Geotechnical surveys
are scheduled for completion in the coming months, with the initial vessel
mobilisation scheduled for May 2024. The results of these activities will be
used to finalise the subsea and drilling rig contract tendering process and
inform the FPSO mooring design.
In line with the strategy for the future connection of the FPSO to one of the
anticipated floating wind power developments in the area, engagement is
on-going with the companies that were awarded acreage in the INTOG licencing
round conducted by Crown Estate Scotland in 2023. Securing a source of green
power feeds into the post start-up electrification plan for the FPSO and does
not have an impact on our target date for first oil.
Supporting Energy Transition
The Buchan redevelopment is a show case example of energy transition in the
making. Our unique "R³" development characteristics have been designed to
deliver the lowest full-cycle carbon footprint solution achievable, enabling
us to produce a vital homegrown energy resource and thereby providing
meaningful support for the North Sea energy transition plan. We are
Redeveloping an existing and known reservoir to maximise economic
production. We are Re-using infrastructure through the redeployment of an
existing FPSO, and we are modifying the vessel so that it is Ready for
electrification, which means that involvement in our project has the exciting
opportunity to accelerate investment into offshore wind projects - Energy
Transition in Motion.
Throughout JOG's history, a key part of our strategy has been to identify and
evaluate low cost, early-stage entry points into energy investment
opportunities with the objective of adding value through
maturation. Through our work on the Buchan redevelopment project we have
forged important relationships with major players in offshore wind
development. As a result, working alongside these sector experts, we are
evaluating the Jersey Government's potential interest in creating a utility
scale wind farm in the Channel Islands.
This is currently early-stage work with nominal expenditure, utilising our
existing offshore engineering and commercial expertise, which has been
effectively demonstrated in advancing the Buchan redevelopment project from
inception to where it is now.
Developing Homegrown Energy
The future of the UK North Sea as a single holistic integrated energy hub is
hugely exciting and it has the potential to unlock £200 billion of investment
this decade. Oil and gas investment remains the key catalyst to make this
happen, an approach that countries such as Norway are capitalising on so
effectively.
Now more than ever, the North Sea needs cross party-political backing.
Unfortunately, domestic oil and gas has been leveraged for short term
political gain, threatening the energy security of the UK and damaging long
term economic growth. The ownership landscape in the North Sea has
dramatically shifted away from Big Oil to independents like us and our
partners, that are fully invested in UK waters. Whilst it might be headline
grabbing to advocate taxing 'Big Oil' to pay for green energy, it is having
the adverse effect, making domestic energy less competitive and forcing
increased reliance on costly imports. Last year the UK spent more on
importing hydrocarbons than it spent on the entire defence budget, a direct
consequence of short-term fiscal policy damaging long-term investment into
homegrown energy. Whilst demand for oil and gas remains, domestic energy
provides the most effective, lowest carbon option available and provides an
economic bridge to the future as new energy infrastructure is created.
The UK energy sector contributes significantly to the economic strength of the
country and generates much needed employment opportunities. The Buchan
redevelopment project is a great example. The project has the potential to
unlock approximately £900 million of private sector investment, create over
1,000 jobs across the UK and contribute millions in value creation and tax
payments into the UK economy. It will also help facilitate billions of
pounds of investment into cutting edge, floating offshore wind power
technology. Projects like this unleash the UK's potential to power our
future and this is the message we are communicating to our politicians.
Our industry as a whole is engaging with the major political parties and other
key stakeholders in more detail than ever before, with a clear narrative on
the benefits of backing low carbon, homegrown energy resources. We continue
to monitor the political landscape closely and we believe that there is a path
forward to unlock the considerable benefits that the GBA project can deliver
for the UK economy.
Financial Strength
We ended the 2023 year with cash of £10.5 million (2022: £6.6 million) and
this was further boasted by a net receipt of $6.8 million (approximately £5.4
million) in February 2024 upon completion of the Serica farm-out.
With JOG now fully carried for its 20% share of both pre-sanction costs and
the capital expenditure to be set out in the approved Buchan FDP, the only
remaining committed cash expenditure relates to the core running costs of the
business. We have moved quickly to right-size the business following the
change to being a non-operated partner on the GBA and expect the underlying
core cash spend going forward for the business to reduce to under £3 million
per year, a reduction of 25% compared to the forecast of £4 million per annum
this time last year.
A full Financial Review is provided on page 8 of this report.
Summary and Outlook
JOG had an exceptional 2023 and we are delighted to have NEO and Serica as our
partners on the GBA. The Buchan field is one of the largest and most
exciting developments of low carbon homegrown energy in the UK North Sea.
NEO has hit the ground running with a first-class project team in place and is
progressing the pre-sanction engineering activities at pace. Having
submitted the draft FDP and Environmental Statement to the regulators, we
continue to make good operational progress on moving the project towards the
target of regulatory approval later this year.
As always, we are very grateful to our loyal shareholders who have backed us
to deliver on the key objectives we have had for the business for some time
and we were delighted to achieve such key objectives over the course of last
year. We look forward to completing the next set of milestones that will
take us closer to unlocking the full value of the business and move us into a
phase of substantial cash flow generation.
Les Thomas,
Non-Executive
Chairman
Andrew Benitz,
Chief Executive Officer
10 May 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2023
Continuing operations Note 2023 2022
£ £
Administrative expenses (5,706,675) (3,185,103)
Operating loss 7 (5,706,675) (3,185,103)
Finance income 6 114,825 82,842
Finance expense 6 (3,503) (4,730)
Loss before tax 7 (5,595,353) (3,106,991)
Tax 8 - -
Loss for the year (5,595,353) (3,106,991)
Total comprehensive loss for the year (net of tax) (5,595,353) (3,106,991)
Total comprehensive loss for the year attributable to:
Owners of the parent (5,595,353) (3,106,991)
Loss per share expressed in pence per share:
Basic 9 (17.19) (9.54)
Diluted 9 (17.19) (9.54)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2023
Note 2023 2022
£ £
Non-current assets
Intangible assets - exploration & development costs 10 16,421,797 24,372,882
Property, plant and equipment 11 - 10,203
Right-of-use assets 12 139,661 81,328
Deposits 2,692 31,112
16,564,150 24,495,525
Current assets
Trade and other receivables 13 478,234 167,060
Cash and cash equivalents 14 5,482,935 6,579,349
Term deposits 15 5,000,000 -
10,961,169 6,746,409
Total assets 27,525,319 31,241,934
Equity
Called up share capital 16 2,574,529 2,573,395
Share premium account 110,535,059 110,309,524
Share options reserve 20 3,890,986 2,566,343
Accumulated losses (89,960,102) (84,600,273)
Reorganisation reserve (382,543) (382,543)
Total equity 26,657,929 30,466,446
Liabilities
Non-current liabilities
Lease liabilities 17 71,309 -
71,309 -
Current liabilities
Trade and other payables 18 740,927 688,796
Lease liabilities 12 55,154 86,692
796,081 775,488
Total liabilities 867,390 775,488
Total equity and liabilities 27,525,319 31,241,934
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2023
Called up Share premium account Share options reserve Accumulated Reorganisation
share capital £ £ losses reserve Total equity
£ £ £ £
At 1 January 2022 Note 2,573,395 110,309,524 1,397,287 (81,551,730) (382,543) 32,345,933
Loss and total comprehensive loss for the year
- - - (3,106,991) - (3,106,991)
Transactions with owners in their capacity as owners
Expired share options 20 - - (58,448) 58,448 - -
Share based payments 20 - - 1,227,504 - - 1,227,504
At 31 December 2022 and 2,573,395 110,309,524 2,566,343 (84,600,273) (382,543) 30,466,446
1 January 2023
Loss and total comprehensive loss for the year
- - - (5,595,353) - (5,595,353)
Transactions with owners in their capacity as owners
Issue of share capital 1,134 225,535 - - - 226,669
Expired share options 20 - - - - - -
Lapsed share options 20 - - (148,178) 148,178 - -
Exercised share options 20 - - (87,346) 87,346 - -
Share based payments 20 - - 1,560,167 - - 1,560,167
At 31 December 2023 2,574,529 110,535,059 3,890,986 (89,960,102) (382,543) 26,657,929
The following describes the nature and purpose of each reserve within owners'
equity:
Reserve Description and purpose
Called up share capital Represents the nominal value of shares issued
Share premium account Amount subscribed for share capital in excess of nominal value
Share options reserve Represents the accumulated balance of share-based payment charges recognised
in respect of share options granted by the Company less transfers to
accumulated deficit in respect of options exercised or cancelled/lapsed
Accumulated losses Cumulative net gains and losses recognised in the Consolidated Statement of
Comprehensive Income
Reorganisation reserve Amounts resulting from the restructuring of the Group at the time of the
Initial Public Offering (IPO) in 2011
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2023 2022
Note £ £
Cash flows from operating activities
Cash from/(used in) operations 22 (4,185,049) (3,319,445)
Interest received 6 114,825 82,842
Interest paid 6 (3,503) (4,730)
Net cash used in operating activities (4,073,727) (3,241,333)
Cash flows from investing activities
Farm-out proceeds 9,103,944 -
Purchase of intangible assets 10 (1,013,081) (3,092,186)
Investing cash flows before movements in capital balances 8,090,863 (3,092,186)
Changes in Term deposits: 15
(5,000,000) -
Net cash used in investing activities 3,090,863 (3,092,186)
Cash flows from financing activities
Principal elements of lease payments (113,550) (125,520)
Net cash (used in)/generated from financing activities (113,550) (125,520)
Decrease in cash and cash equivalents 22 (1,096,414) (6,459,039)
Cash and cash equivalents at beginning of year 14 6,579,349 13,038,388
Cash and cash equivalents at end of year 14 5,482,935 6,579,349
Notes to the Consolidated Financial Statements
For the year ended 31 December 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.
2. Material accounting policies
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. These policies have been
consistently applied to all the periods presented, unless otherwise stated.
Basis of Accounting
The consolidated financial statements of Jersey Oil and Gas Plc as of 31
December 2023 and for the year then ended (the "consolidated financial
statements") were prepared in accordance with UK-adopted International
Accounting Standards in conformity with the requirements of the Companies Act
2006 (the "Companies Act").
The financial statements have been prepared under the historic cost
convention, except as disclosed in the accounting policies below. All amounts
disclosed in the financial statements and notes have been rounded off to the
nearest one thousand pounds unless otherwise stated.
Going Concern
The Group has sufficient resources to meet its liabilities as they fall due
for a period of at least 12 months after the date of issue of these financial
statements. The Group has substantial cash reserves following the successful
farm-out of the GBA licences and receipt of initial funds resulting from the
two transactions with NEO and Serica. The Group now has a fully funded 20%
interest in the on-going Buchan redevelopment project. Other work that the
Group is undertaking in respect of the GBA licenses and surrounding areas is
modest relative to its current cash reserves. The Company's current cash
reserves are therefore expected to more than exceed its estimated cash
outflows in all reasonable scenarios for at least 12 months following the date
of issue of these financial statements. Even in an extreme scenario where the
Buchan development project did not progress for any unforeseen reason and any
future 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 the farm-out 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 consolidated financial
statements.
New and amended standards adopted by the Group. The Group has applied the
following amendments for the first time for the annual reporting period
commencing 1 January 2023:
· Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS
Practice Statement 2);
· Definition of Accounting Estimates (Amendments to IAS 8);
· Deferred Tax Related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12);
· IFRS 17 Insurance Contracts (Amendments to IFRS 17).
The amendments listed above did not have any impact on the amounts recognised
in prior periods and are not expected to significantly affect the current or
future periods.
New standards and interpretations not yet adopted
Certain new accounting standards, amendments to accounting standards and
interpretations have been published that are not mandatory for 31 December
2023 reporting periods and have not been early adopted by the Group. These
standards, amendments or interpretations are not expected to have a material
impact on the entity in the current or future reporting periods or on
foreseeable future transactions.
· IFRS 16 Leases (Amendment - Liability in a Sale and Leaseback);
· IAS 1 Presentation of Financial Statements (Amendment -
Classification of Liabilities as Current or Non-current);
· IAS 1 Presentation of Financial Statements (Amendment -
Non-current Liabilities with Covenants).
Significant Accounting Judgements and Estimates
The preparation of the financial statements requires management to make
estimates and assumptions that affect the reported amounts of expenses, assets
and liabilities at the date of the financial statements. If in the future such
estimates and assumptions, which are based on management's best judgement at
the date of the financial statements, deviate from the actual circumstances,
the original estimates and assumptions will be modified as appropriate in the
period in which the circumstances change. The Group's accounting policies make
use of accounting estimates and judgements in the following areas:
• The judgement of the existence of impairment triggers (note 10).
• The estimation of share-based payment costs (note 20).
• The judgement associated with the treatment of farm-out
transactions.
Impairments
The Group tests its capitalised exploration licence costs for impairment when
indicators, further detailed below under 'Exploration and Evaluation Costs' as
set out in IFRS 6, suggest that the carrying amount exceeds the recoverable
amount which is inherently judgmental. An impairment loss is recognised for
the amount by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount of the Cash Generating Unit is the higher of an
asset's fair value less costs of disposal and value in use. The Group assessed
that there were no impairment triggers during the year.
Share-Based Payments
The Group currently has several share schemes that give rise to share-based
payment charges. The charge to operating profit for these schemes amounted to
£1,560,167 (2022: £1,227,504). Estimates and judgements for determining the
fair value of the share options are required. For the purposes of the
calculation, a Black-Scholes option pricing model has been used. Based on
experience, it has been assumed that options will be exercised, on average, at
the mid-point between vesting and expiring. The share price volatility used in
the calculation is based on the actual volatility of the Group's shares since
1 January 2017. The risk-free rate of return is based on the implied yield
available on zero coupon gilts with a term remaining equal to the expected
lifetime of the options at the date of grant. Estimates are also used when
calculating the likelihood of share options vesting given the vesting
conditions of time and performance on the options granted.
Farm-out transactions
Determining the value of the consideration received for a farm-out disposal of
assets with proven resources can be challenging. This is even more the case
for assets which are farmed out in the pre proven resources phase. A
judgement has been made that for such farm-outs only cash payments received
will be recognised and no recognition will be made of any consideration in
respect of the future value of work to be performed and carried by the farmee.
Rather, the Group will carry the remaining interest at the previous full
interest cost reduced by the amount of any cash consideration received from
entering into the agreement. The effect will be that there is no gain
recognised on the farm-out unless the cash consideration received exceeds the
carrying value of the entire asset held. Upon FID, the Group will start
recognising both cash payments received and the value of future carried assets
to be received, and will recognise a future asset receivable with an
accompanying gain in the income statement for the equity share of the asset
disposed of.
Basis of Consolidation
(a) Subsidiaries
Subsidiaries are all entities over which the Group has the power to govern
their financial and operating policies generally accompanying a shareholding
of more than one half of the voting rights. The existence and effect of
potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Group controls another entity. The Group
also assesses the existence of control where it does not have more than 50% of
the voting power but is able to govern the financial and operating policies by
virtue of de facto control. De facto control may arise in circumstances where
the size of the Group's voting rights relative to the size and dispersion of
holdings of other Shareholders give the Group the power to govern the
financial and operating policies.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are de-consolidated from the date the Group
ceases to have control.
(b) Changes in ownership interests in subsidiaries without change of control
Transactions with non-controlling interests that do not result in loss of
control are accounted for as equity transactions - that is, as transactions
with the owners in their capacity as owners. The difference between fair value
of any consideration paid and the relevant share acquired of the carrying
value of net assets of the subsidiary is recorded in equity. Gains or losses
on disposals to non-controlling interests are also recorded in equity.
(c) Disposal of subsidiaries
When the Group ceases to have control any retained interest in the entity is
remeasured to its fair value at the date when control is lost, with the change
in carrying amount recognised in profit or loss. The fair value is the initial
carrying amount for the purposes of subsequently accounting for the retained
interest as an associate, joint venture, or financial asset. In addition, any
amounts previously recognised in other comprehensive income in respect of that
entity are accounted for as if the Group had directly disposed of the related
assets or liabilities. This may mean that amounts previously recognised in
other comprehensive income are reclassified to profit or loss.
Inter-company transactions, balances, income and expenses on transactions
between Group companies are eliminated on consolidation. Profits and losses
resulting from inter-company transactions that are recognised in assets are
also eliminated on consolidation. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency with the policies adopted
by the Group.
The following subsidiaries which are included in these consolidated accounts
are exempt from the requirements of the Companies Act relating to the audit of
their accounts under section 479A of the Companies Act 2006:
Subsidiary Registration number Country of Incorporation
Jersey North Sea Holdings Ltd 06451896 England & Wales
Jersey Petroleum Ltd 06490608 England & Wales
Jersey V&C Ltd 10853027 England & Wales
JOG Fox Ltd 15224480 England & Wales
Jersey E & P Ltd SC319467 Scotland
Jersey Oil Ltd SC319461 Scotland
Jersey Exploration Ltd SC319459 Scotland
Jersey Oil & Gas E & P Ltd 115157 Jersey
Acquisitions, Asset Purchases and Disposals
Transactions involving the purchase of an individual field interest, farm-ins,
farm-outs or acquisitions of exploration and evaluation licences for which a
development decision has not yet been made that do not qualify as a business
combination, are treated as asset purchases. Accordingly, no goodwill or
deferred tax arises. The purchase consideration is allocated to the assets and
liabilities purchased on an appropriate basis. Proceeds on disposal (including
farm-ins/farm-outs) are applied to the carrying amount of the specific
intangible asset or development and production assets disposed of and any
surplus is recorded as a gain on disposal in the Consolidated Statement of
Comprehensive Income.
Acquisitions of oil and gas properties are accounted for under the purchase
method where the acquisitions meet the definition of a business combination.
The Group applies the acquisition method of accounting to account for business
combinations. The consideration transferred for the acquisition of a
subsidiary is the fair value of the assets transferred, the liabilities
incurred, and the equity interests issued by the Group. The consideration
transferred includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair value at the acquisition date. The Group
recognises any non-controlling interest in the acquiree on an
acquisition-by-acquisition basis, either at fair value or at the
non-controlling interest's proportionate share of the recognised amounts of
the acquiree's identifiable net assets.
Acquisition related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date fair
value of the acquirer's previously held equity interest in the acquiree is
remeasured to fair value at the acquisition date through profit or loss.
Any contingent consideration to be transferred on a business combination by
the Group is recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is deemed to be
an asset or liability are recognised in accordance with IFRS 9 either in
profit or loss or as a change to other comprehensive income. Contingent
consideration that is classified as equity is not remeasured, and its
subsequent settlement is accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of the
consideration transferred and the fair value of non-controlling interest over
the net identifiable assets acquired and liabilities assumed. If this
consideration is lower than the fair value of the net assets of the subsidiary
acquired, the difference is recognised in profit or loss.
Exploration and Evaluation Costs
The Group accounts for oil and gas exploration and evaluation costs using IFRS
6 "Exploration for and Evaluation of Mineral Resources". Such costs are
initially capitalised as Intangible Assets and include payments to acquire the
legal right to explore, together with the directly related costs of technical
services and studies, seismic acquisition, exploratory drilling and testing.
The Group only capitalises costs as intangible assets once the legal right to
explore an area has been obtained. The Group assesses the intangible assets
for indicators of impairment at each reporting date.
Potential indicators of impairment include but are not limited to:
a. the period for which the Group has the right to explore in the specific
area has expired during the period or will expire soon and is not expected to
be renewed.
b. substantive expenditure on further exploration for and evaluation of
oil and gas reserves in the specific area is neither budgeted nor planned.
c. exploration for and evaluation of oil and gas reserves in the specific
area have not led to the discovery of commercially viable quantities of oil
and gas reserves and the entity has decided to discontinue such activities in
the specific area.
d. sufficient data exist to indicate that, although a development in the
specific area is likely to proceed, the carrying amount of the exploration and
evaluation asset is unlikely to be recovered in full from successful
development or by sale.
The Group analyses the oil and gas assets into cash generating units (CGUs)
for impairment and reporting purposes. In the event an impairment trigger is
identified the Group performs a full impairment test for the CGU under the
requirements of IAS 36 Impairment of assets. An impairment loss is recognised
for the amount by which the exploration and evaluation assets' carrying amount
exceeds their recoverable amount. The recoverable amount is the higher of the
exploration and evaluation assets' fair value less costs of disposal and value
in use.
As at 31 December 2023, the carrying value of intangible assets was £16.4m,
as per Note 10 'Intangible Assets'. The Group considered other factors which
could give rise to an impairment trigger such as commodity prices, licence
expiration dates, budgeted spend and movements in estimated recoverable
reserves. The Group exercised judgement in determining that the licence
agreements will likely be extended by the NSTA. Based on this assessment, no
impairment triggers existed in relation to exploration assets as of 31
December 2023.
Leases
Assets and liabilities arising from a lease are initially measured on a
present value basis. Lease liabilities include the net present value of the
following lease payments:
• fixed payments (including in-substance fixed payments), less any
lease incentives receivable;
• variable lease payments that are based on an index or a rate,
initially measured using the index or rate as at the commencement date;
• amounts expected to be payable by the Group under residual value
guarantees;
• the exercise price of a purchase option if the Group is
reasonably certain to exercise that option; and
• payments of penalties for terminating the lease, if the lease
term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension options are also
included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit in the
lease. If that rate cannot be readily determined, which is generally the case
for leases in the Group, the lessee's incremental borrowing rate is used,
being the rate that the individual lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value to the right-of-use asset
in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Group where possible, uses
recent third-party rates provided by banks or financial institutions as a
starting point, adjusted to reflect changes in financing conditions since
third party financing was received.
Lease payments are allocated between principal and finance cost. The finance
cost is charged to profit or loss over the lease period to produce a constant
periodic rate of interest on the remaining balance of the liability for each
period.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less
any lease incentives received;
• any initial direct costs; and
• restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset's
useful life and the lease term on a straight-line basis. If the Group is
reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset's useful life.
Payments associated with short-term leases of equipment and vehicles and all
leases of low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a lease term of
12 months or less. Low-value assets comprise any lease with a value of £5,000
or less.
Joint Ventures
The Group participates in joint venture/co-operation agreements with strategic
partners, these are classified as joint operations. The Group accounts for its
share of assets, liabilities, income and expenditure of these joint venture
agreements and discloses the details in the appropriate Statement of Financial
Position and Statement of Comprehensive Income headings in the proportion that
relates to the Group per the joint venture agreement.
Investments
Fixed asset investments in subsidiaries are stated at cost less accumulated
impairment in the Company's Statement of Financial Position and reviewed for
impairment if there are any indications that the carrying value may not be
recoverable.
Financial Instruments
Financial assets and financial liabilities are recognised in the Group and
Company's Statement of Financial Position when the Group becomes party to the
contractual provisions of the instrument. The Group does not have any
derivative financial instruments.
Cash and cash equivalents include cash in hand and deposits held on call with
banks with a maturity of three months or less.
Trade receivables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method, less any
expected credit loss. The Group recognises an allowance for expected credit
losses (ECLs) for all debt instruments not held at fair value through profit
or loss. ECLs are based on the difference between the contractual cash flows
due in accordance with the contract and all the cash flows that the Group
expects to receive, discounted at an approximation of the original effective
interest rate. The carrying amount of the asset is reduced through the use of
an allowance account, and the amount of the loss will be recognised in the
Consolidated Statement of Comprehensive Income within administrative expenses.
Subsequent recoveries of amounts previously provided for are credited against
administrative expenses in the Consolidated Statement of Comprehensive Income.
Trade payables are stated initially at fair value and subsequently measured at
amortised cost.
Offsetting of Financial Instruments
Financial assets and financial liabilities are offset, and the net amount is
reported in the Consolidated Statement of financial position if there is a
currently enforceable legal right to offset the recognised amounts and there
is an intention to settle on a net basis, or to realise the assets and settle
the liabilities simultaneously.
Deferred Tax
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit. Deferred taxation liabilities are provided, using the liability
method, on all taxable temporary differences at the reporting date. Such
assets and liabilities are not recognised if the temporary difference arises
from goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
Deferred income tax assets are recognised to the extent that it is probable
that future taxable profits will be available against which the temporary
differences can be utilised. The carrying amount of deferred tax assets is
reviewed at each reporting date.
Current Tax
The current income tax charge is calculated on the basis of the tax laws
enacted or substantively enacted at the end of the reporting period in the
countries where Jersey Oil and Gas Plc and its subsidiaries operate and
generate taxable income. We periodically evaluate positions taken in tax
returns with respect to situations in which applicable tax regulation is
subject to interpretation. Provisions are established where appropriate on the
basis of amounts expected to be paid to the tax authorities.
Current tax is payable based upon taxable profit for the year. Taxable profit
differs from net profit as reported in the Statement of Comprehensive Income
because it excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable or
deductible. Any Group liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the reporting date.
Foreign Currencies
The functional currency of the Company and its subsidiaries is Sterling.
Monetary assets and liabilities in foreign currencies are translated into
Sterling at the rates of exchange ruling at the reporting date. Transactions
in foreign currencies are translated into Sterling at the rate of exchange
ruling at the date of the transaction. Gains and losses arising on
retranslation are recognised in the Consolidated Statement of Comprehensive
Income for the year.
Employee Benefit Costs
Payments to defined contribution retirement benefit schemes are recognised as
an expense when employees have rendered service entitling them to
contributions.
Share-Based Payments
Equity settled share-based payments to employees and others providing similar
services are measured at the fair value of the equity instruments at the grant
date. The total amount to be expensed is determined by reference to the fair
value of the options granted using the Black-Scholes Model:
· including any market performance conditions (for example, an
entity's share price);
· excluding the impact of any service and non-market performance
vesting conditions (for example, profitability, sales growth targets and
remaining an employee of the entity over a specified time-period); and
· including the impact of any non-vesting conditions (for example,
the requirement for employees to save).
The fair value determined at the grant date of the equity settled share-based
payments is expensed on a straight-line basis over the vesting period, based
on the Group's estimate of equity instruments that will eventually vest, with
a corresponding increase in equity. At the end of each reporting period, the
Group revises its estimate of the number of equity instruments expected to
vest. The impact of the revision of the original estimates, if any, is
recognised in profit or loss such that the cumulative expense reflects the
revised estimate, with a corresponding adjustment to the equity settled
employee benefits reserve.
Equity settled share-based payment transactions with parties other than
employees are measured at the fair value of the goods or services received,
except where that fair value cannot be estimated reliably, in which case they
are measured at the fair value of the equity instruments granted, measured at
the date the entity obtains the goods or the counterparty renders the service.
Exercise proceeds net of directly attributable costs are credited to share
capital and share premium.
Contingent Liabilities & Provisions
In accordance with IAS 37, provisions are recognised where a present
obligation exists to third parties as a result of a past event, where a future
outflow of resources with economic benefits is probable and where a reliable
estimate of that outflow can be made. If the criteria for recognising a
provision are not met, but the outflow of resources is not remote, such
obligations are disclosed in the notes to the consolidated financial
statements (see note 19). Contingent liabilities are only recognised if the
obligations are more certain, i.e. the outflow of resources with economic
benefits has become probable and their amount can be reliably estimated.
Share Capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new ordinary shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
3. Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the Board of Directors.
The Board considers that the Group operates in a single segment, that of oil
and gas exploration, appraisal, development and production, in a single
geographical location, the North Sea of the United Kingdom.
The Board is the Group's chief operating decision maker within the meaning of
IFRS 8 "Operating Segments".
During 2023 and 2022 the Group had no revenue.
4. Financial risk management
The Group's activities expose it to financial risks and its overall risk
management programme focuses on minimising potential adverse effects on the
financial performance of the Group. The Company's activities are also exposed
to risks through its investments in subsidiaries and it is accordingly exposed
to similar financial and capital risks as the Group.
Risk management is carried out by the Directors and they identify, evaluate,
and address financial risks in close co-operation with the Group's management.
The Board provides written principles for overall risk management, as well as
written policies covering specific areas, such as mitigating foreign exchange
risks and investing excess liquidity.
Credit Risk
The Group's credit risk primarily relates to its trade receivables.
Responsibility for managing credit risks lies with the Group's management.
A debtor evaluation is typically obtained from an appropriate credit rating
agency. Where required, appropriate trade finance instruments such as letters
of credit, bonds, guarantees and credit insurance will be used to manage
credit risk.
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they become due. The Group manages its liquidity
through continuous monitoring of cash flows from operating activities, review
of actual capital expenditure programmes, and managing maturity profiles of
financial assets and financial liabilities.
Capital Risk Management
The Group seeks to maintain an optimal capital structure. The Group considers
its capital to comprise both equity and net debt.
The Group monitors its capital mix needs and suitability dependent upon the
development stage of its asset base. Earlier stage assets (pre-production)
typically require equity rather than debt given the absence of cash flow to
service debt. As the asset mix becomes biased towards production then
typically more debt is available. The Group seeks to maintain progress in
developing its assets in a timely fashion. With the completion of the NEO
Energy farm-out during the year and the Serica Energy farm-out post year end
(refer to Note 23, Post Balance Sheet Events) the Group expects 's that the
introduction of these two industry partners will deliver sufficient cash to
progress its assets to first oil in return for a capital (equity) contribution
via the farm-outs. As the GBA development project progresses towards first
oil, debt becomes available and may be sought in order to enhance equity
returns. As at 31 December 2023 there are no borrowings within the Group
(2022: Nil).
The Group monitors its capital structure by reference to its net debt to
equity ratio. Net debt to equity ratio is calculated as net debt divided by
total equity. Net debt is calculated as borrowings less cash and cash
equivalents. Total equity comprises all components of equity.
Maturity analysis of financial assets and liabilities
Financial assets
2023 2022
£ £
Up to 3 months 410,011 69,735
3 to 6 months - -
Over 6 months - 31,112
410,011 100,847
Financial liabilities
2023 2022
£ £
Up to 3 months 613,067 620,713
3 to 6 months - -
Over 6 months - -
613,067 620,713
Lease liabilities
2023 2022
£ £
Up to 3 months 14,585 31,971
3 to 6 months 14,585 32,212
Over 6 months 102,095 22,509
131,265 86,692
5. Employees and Directors
2023 2022
£ £
Wages and salaries 2,860,964 2,312,653
Social security costs 289,654 194,332
Share-based payments (note 20) 1,560,167 1,227,504
Other pension costs 265,538 209,394
4,976,323 3,943,883
Other pension costs include employee and Group contributions to money purchase
pension schemes.
The average monthly number of employees during the year was as follows:
2023 2022
No. No.
Directors 5 5
Employees - Finance 1 1
Employees - Technical 8 9
14 15
Directors Remuneration: 2023 2022
£ £
Directors' remuneration 1,174,317 664,200
Directors' pension contributions to money purchase schemes 39,047 26,500
Share-based payments (note 20) 853,551 618,914
Benefits 9,585 12,645
2,076,500 1,322,259
The average number of Directors to whom retirement benefits were accruing was
as follows:
2023 2022
No. No.
Money purchase schemes 2 2
Information regarding the highest paid Director is as follows:
2023 2022
£ £
Aggregate emoluments and benefits 520,586 255,699
Share-based payments 324,902 228,648
Pension contributions 26,667 25,000
872,155 509,347
Key management compensation
Key management includes Directors (Executive and Non-Executive) and an adviser
to the Board. The compensation paid or payable to key management for
employee services is shown below:
2023 2022
£ £
Wages and short-term employee benefits 1,193,901 698,513
Share-based payments (note 20) 853,551 618,914
Pension Contributions 39,047 26,500
2,086,499 1,343,927
6. Net Finance Income
2023 2022
£ £
Finance income:
Interest received 114,825 82,842
114,825 82,842
Finance costs:
Interest paid - (7)
Interest on lease liability (3,503) (4,723)
(3,503) (4,730)
Net finance income 111,322 78,112
7. Loss Before Tax
The loss before tax is stated after charging/(crediting):
2023 2022
£ £
Depreciation - tangible assets 10,203 29,873
Depreciation - right-of-use asset 94,988 103,680
Auditors' remuneration - audit of parent company and consolidation 85,000 105,000
Auditors' remuneration - audit of subsidiaries - 25,000
Auditors' remuneration - non-audit work - -
Foreign exchange gain (26,774) (6,735)
8. Tax
Reconciliation of tax charge
2023 2022
£ £
Loss before tax (5,595,353) (3,106,991)
Tax at the standard rate of 23.5% avg. (2022: 19%) (1,314,908) (590,328)
Capital allowances in excess of depreciation (671,854) (90,204)
Expenses not deductible for tax purposes and non-taxable income 370,622 234,654
Deferred tax asset not recognised 1,616,140 445,878
Total tax expense reported in the Consolidated Statement of Comprehensive - -
Income
No liability to UK corporation tax arose on ordinary activities for the year
ended 31 December 2023, or for the year ended 31 December 2022.
In April 2023, the rate of corporation tax rose to 25% for profits over
£250,000.
The Group has not recognised a deferred tax asset due to the uncertainty over
when the tax losses can be utilised. At the year end, the usable tax losses
within the Group were approximately £63 million (2022: £62 million).
9. Loss Per Share
Basic loss per share is calculated by dividing the losses attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the year.
Diluted loss per share is calculated using the weighted average number of
shares adjusted to assume the conversion of all dilutive potential ordinary
shares.
There is no difference between dilutive and ordinary earnings per share due to
there being a loss recorded in the year.
The share options (note 20) 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.
Loss attributable Weighted
to ordinary shareholders average number Per share amount pence
£ of shares
Year ended 31 December 2023
Basic and Diluted EPS
Basic & Diluted (5,595,353) 32,557,964 (17.19)
Year ended 31 December 2022
Basic and Diluted EPS
Basic & Diluted (3,106,991) 32,554,293 (9.54)
10. Intangible assets
Exploration
costs
£
Cost
At 1 January 2022 21,689,394
Additions 2,858,729
At 31 December 2022 24,548,122
Additions 1,152,860
Farm-out (9,103,944)
At 31 December 2023 16,597,038
Accumulated Amortisation
At 1 January 2022 175,241
Charge for the year -
At 31 December 2022 175,241
At 31 December 2023 175,241
Net Book Value
At 31 December 2023 16,421,797
At 31 December 2022 24,372,882
At the start of 2022 and 2023 the Company owned 100% interests in two
licenses; P2498 containing the Buchan field and J2 Discovery, and P2170
containing the Verbier discovery.
At the end of 2023 the costs incurred in acquiring and advancing the licenses
to their current state was £25,700,982 (2022: £24,548,122). During 2023 the
farm-out of a 50% interest in both licenses to NEO energy was completed in
exchange for a series of cash payments and both a predevelopment and
development carry on the Buchan Redevelopment project. In accordance with our
farm-out policy for assets at this stage of development (please refer to
section on Acquisitions, Asset Purchases and Disposals on page 54) the cash
proceeds in the year of £9,103,944 have been deducted from the carrying value
of the assets.
In line with the requirements of IFRS 6, we have considered whether there are
any indicators of impairment on the exploration and development assets. Based
on our assessment, as at 31 December 2023 there are not deemed to be
indicators that the licences are not commercial and the carrying value of
£16,475,394 continues to be supported by ongoing exploration and development
work on the licence areas with no impairments considered necessary.
11. Property, Plant and Equipment
Computer and office equipment
£
Cost
At 1 January 2022 228,447
Additions -
At 31 December 2022 228,447
Additions -
At 31 December 2023 228,447
Accumulated Depreciation
At 1 January 2022 188,370
Charge for the year 29,873
At 31 December 2022 218,244
Charge for the year 10,203
At 31 December 2023 228,447
Net Book Value
At 31 December 2023 -
At 31 December 2022 10,203
12. Leases
Amounts Recognised in the Statement of financial position
2023 2022
£ £
Right-of-use Assets
Buildings 139,661 81,328
139,661 81,328
Lease liabilities
Current 55,154 86,692
Non-Current 71,309 -
126,463 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 The interest rate implicit in the
agreement was 3% over the Bank of England's base rate. 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. This lease was in
relation to an office in Jersey.
Amounts Recognised in the Statement of comprehensive income
2023 2022
£ £
Depreciation charge of right-of-use asset
Buildings 94,988 103,680
94,988 103,680
Interest expenses (included in finance cost) (3,503) (4,723)
13. Trade and other receivables
2023 2022
£ £
Current:
Other receivables 328,166 30
Value added tax 81,846 69,702
Prepayments 68,222 97,328
478,234 167,060
Included within other receivables is an amount of £233,055 relating to monies
outstanding from the exercise of share options.
14. Cash and cash equivalents
2023 2022
£ £
Cash in bank accounts 5,482,935 6,579,349
The cash balances are placed with a creditworthy financial institution with a
minimum rating of 'A'.
15. Term deposits
2023 2022
£ £
Maturing within ten months 5,000,000 -
Term deposits are placed with a creditworthy financial institution with a
minimum rating of 'A'. The £5m was placed in Dec 2023 with an interest rate
of 5%.
16. Called up share capital
Issued: Nominal 2023 2022
Number: Class value £ £
32,667,627 (2022: 32,554,293) Ordinary 1p 2,574,529 2,573,395
Ordinary shares have a par value of 1p. They entitle the holder to participate
in dividends, distributions or other participation in the profits of the
Company in proportion to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting, in
person or by proxy, is entitled to one vote, and on a poll each share is
entitled to one vote.
Included in the above are ordinary shares of 1,667 (2022; nil) which were
committed to be issued at the year end but not allotted until January 2024.
In 2023, 113,334 new ordinary shares were issued to satisfy the exercise of
share options which raised £233,053 (gross) which was not paid at year end
and is included in other receivables. All other issued share capital was
fully paid.
17. Trade and other payables
2023 2022
£ £
Current:
Trade payables 345,814 459,461
Accrued expenses 256,283 161,253
Other payables 10,970 -
Taxation and Social Security 127,860 68,082
740,927 688,796
18. Lease liabilities
2023 2022
£ £
Non-Current
Lease Liabilities 71,309 -
71,309 -
19. Contingent Liabilities
i. 2015 settlement agreement with Athena Consortium: In accordance with
a 2015 settlement agreement reached with the Athena Consortium, although
Jersey Petroleum Ltd remains a Licensee in the joint venture, any past or
future liabilities in respect of its interest can only be satisfied from the
Group's share of the revenue that the Athena Oil Field generates and up to 60
per cent. of net disposal proceeds or net petroleum profits from the Group's
interest in the P2170 licence which is the only remaining asset still held
that was in the Group at the time of the agreement with the Athena Consortium
who hold security over this asset. Any future repayments, capped at the unpaid
liability associated with the Athena Oil Field, cannot be calculated with any
certainty, and any remaining liability still in existence once the Athena Oil
Field has been decommissioned will be written off. A payment was made in 2016
to the Athena Consortium in line with this agreement following the farm-out of
P2170 (Verbier) to Equinor and the subsequent receipt of monies relating to
that farm-out.
ii. Equinor UK Limited: During 2020, JOG announced that it had entered
into a conditional Sale and Purchase Agreement ("SPA") to acquire operatorship
of, and an additional 70% working interest in Licence P2170 (Blocks 20/5b and
21/1d) from Equinor UK Limited ("Equinor"), this transaction completed in May
2020. The consideration for the acquisition consisted of two milestone
payments, which will be accounted for in line with the cost accumulation
model, as opposed to contingent liabilities:
· US$3 million upon sanctioning by the UK's North Sea Transition
Authority ("NSTA") of a Field Development Plan ("FDP") in respect of the
Verbier Field; and
· US$5 million upon first oil from the Verbier Field.
The earliest of the milestone payments in respect of the acquisition is not
currently anticipated being payable before the start of 2025.
iii. ITOCHU Corporation and Japan Oil, Gas and Metals National
Corporation: During 2020, JOG announced that it had entered into a conditional
Sale and Purchase Agreement ("SPA") to acquire the entire issued share capital
of CIECO V&C (UK) Limited, which was owned by ITOCHU Corporation and Japan
Oil, Gas and Metals National Corporation, this transaction completed in April
2021. The acquisition was treated as an asset acquisition rather than a
business combination due to the nature of the asset acquired. There were no
assets or liabilities acquired other than the 12% interest in licence P2170
(Verbier). The consideration for the acquisition included a completion payment
of £150k and two future milestone payments, which are considered contingent
liabilities:
· £1.5 million in cash upon consent from the UK's North Sea
Transition Authority ("NSTA") for a Field Development Plan ("FDP") in respect
of the Verbier discovery in the Upper Jurassic (J62-J64) Burns Sandstone
reservoir located on Licence P2170; and
· £1 million in cash payable not later than one year after first
oil from all or any part of the area which is the subject of the FDP.
The earliest of the milestone payments in respect of the acquisition is not
currently anticipated being payable before the start of 2025.
20. Share based payments
The Group operates several share options schemes. Options are exercisable at
the prices set out in the table below. Options are forfeited if the employee
leaves the Group through resignation or dismissal before the options vest.
Equity settled share-based payments are measured at fair value at the date of
grant and expensed on a straight-line basis over the vesting period, based
upon the Group's estimate of the number of shares that will eventually vest.
The Group's share option schemes are for Directors, Officers and employees.
The charge for the year was £1,560,167 (2022: £1,227,504) and details of
outstanding options are set out in the table below.
Date of Grant Exercise price (pence) Vesting date Expiry date No. of shares for which options outstanding at 1 Jan 2023 Options issued Options Exercised Options lapsed/non vesting during the year No. of shares for which options outstanding at 31 Dec 2023
May-13 1,500 May-14 May-23 9,500 - - (9,500) -
May-13 1,500 May-15 May-23 9,500 - - (9,500) -
Jan-18 200 Jan-21 Jan-25 420,000 - - - 420,000
Jan-18 200 Jan-18 Jan-23* 76,666 - (40,000) - 36,666
Jan-18 200 Jan-19 Jan-23* 76,667 - (40,000) - 36,667
Jan-18 200 Jan-20 Jan-23* 70,000 - (33,333) - 36,667
Nov-18 172 Nov-21 Nov-25 150,000 - - - 150,000
Jan-19 175 Jan-20 Jan-26 88,333 - - - 88,333
Jan-19 175 Jan-21 Jan-26 88,333 - - - 88,333
Jan-19 175 Jan-22 Jan-26 68,333 - - - 68,333
Jan-19 175 Jan-20 Jan-24 11,667 - - - 11,667
Jan-19 175 Jan-21 Jan-24 11,667 - - - 11,667
Jan-19 175 Jan-22 Jan-24 11,667 - - - 11,667
Jun-19 200 Jan-21 Jun-29 120,000 - - - 120,000
Jun-19 110 Jun-19 Jun-29 40,000 - - - 40,000
Jan-21 155 Jan-22 Jan-28 83,333 - - - 83,333
Jan-21 155 Jan-23 Jan-28 75,000 - - - 75,000
Jan-21 155 Jan-24 Jan-28 75,000 - - (15,000) 60,000
Mar-21 210 Mar-22 Mar-26 11,666 - - - 11,666
Mar-21 210 Mar-23 Mar-26 11,667 - - - 11,667
Mar-21 210 Mar-24 Mar-26 11,667 - - - 11,667
Mar-21 210 Mar-22 Mar-28 136,668 - - (6,667) 130,001
Mar-21 210 Mar-23 Mar-28 93,333 - - (6,667) 86,666
Mar-21 210 Mar-24 Mar-28 93,333 - - (15,000) 78,333
Nov-21 147 Nov-22 Nov-28 233,334 - - - 233,334
Nov-21 147 Nov-23 Nov-28 233,333 - - - 233,333
Nov-21 147 Nov-24 Nov-28 233,333 - - - 233,333
Apr-22 230 Apr-23 Apr-29 285,000 - - (6,667) 278,333
Apr-22 230 Apr-24 Apr-29 285,000 - - (16,667) 268,333
Apr-22 230 Apr-25 Apr-29 285,000 - - (16,667) 268,333
Apr-22 230 Apr-23 Apr-27 45,000 - - - 45,000
Apr-22 230 Apr-24 Apr-27 45,000 - - - 45,000
Apr-22 230 Apr-25 Apr-27 45,000 - - - 45,000
Apr-23 247.5 Apr-24 Apr-30 - 171,667 - (2,500) 169,167
Apr-23 247.5 Apr-25 Apr-30 - 171,667 - (2,500) 169,167
Apr-23 247.5 Apr-26 Apr-30 - 171,666 - (2,500) 169,166
Apr-23 247.5 Apr-24 Apr-28 - 28,334 - - 28,334
Apr-23 247.5 Apr-25 Apr-28 - 28,333 - - 28,333
Apr-23 247.5 Apr-26 Apr-28 - 28,333 - - 28,333
Total 3,910,832
*The share options issued in January 2018 had their expiry dates extended due
to the Company being in several close periods whereby according to the scheme
rules the options were unable to be exercised. The amended expiry date for
these options was 29 January 2024 with the remaining outstanding balances
expiring on this date.
The weighted average value of the options granted during the year was
determined using a Black-Scholes valuation. The significant inputs into the
model were the mid-market share price on the day of grant as shown above and
an annual risk-free interest rate ranging between 3.9% and 4.1%. The
volatility measured at the standard deviation of continuously compounded share
returns is based on a statistical analysis of daily share prices from over a
four year period. The weighted average exercise price for the options granted
in 2023 was 247.50 pence, the weighted average remaining contractual life of
the options was 6 years (for all schemes 4 years), the weighted average
volatility rate was 115% and the dividend yield was nil. During the year
19,000 share options from the May 2013 issuance expired, these had an exercise
price of 1,500 pence, a further 90,835 share options were forfeited due to the
departure of employees, these had a weighted exercise price of 213 pence. In
December 2023 113,333 share options that were granted in January 2018 were
exercised by former employees, these had an exercise price of 200 pence. The
weighted average exercise price for all outstanding options at 31 December
2023 was 200 pence. For details of the schemes and scheme rules, please
refer to the Remuneration Report.
21. Related undertakings and ultimate controlling party
The Group and Company do not have an ultimate controlling party or parent
Company.
Country of Incorporation
Subsidiary % owned Principal Activity Registered Office
Jersey North Sea Holdings Ltd 100% England & Wales Non-Trading 1
Jersey Petroleum Ltd 100% England & Wales Oil Exploration 1
Jersey V&C Ltd 100% England & Wales Oil Exploration 1
JOG Fox Ltd 100% England & Wales Oil Exploration 1
Jersey E & P Ltd 100% Scotland Non-Trading 2
Jersey Oil Ltd 100% Scotland Non-Trading 2
Jersey Exploration Ltd 100% Scotland Non-Trading 2
Jersey Oil & Gas E & P Ltd 100% Jersey Management services 3
Registered Offices
1. 10 The Triangle, ng2 Business Park, Nottingham, NG2 1AE
2. 7 Queen's Gardens, Aberdeen, AB15 4YD
3. First Floor, Tower House, La Route es Nouaux, St Helier, Jersey JE2 4ZJ
22. Notes to the consolidated statement of cash flows
Reconciliation of Loss Before Tax to Cash Used in Operations
2023 2022
£ £
Loss for the year before tax (5,595,353) (3,106,991)
Adjusted for:
Depreciation 10,203 29,873
Depreciation right-of-use asset 94,988 103,680
Share-based payments 1,560,167 1,227,504
Finance costs 3,503 4,730
Finance income (114,825) (82,842)
(4,041,317) (1,824,046)
(Increase)/decrease in trade and other receivables (109,685) 186,054
Decrease in trade and other payables (34,047) (1,681,452)
Cash from/(used in) operations (4,185,049) (3,319,445)
Cash and cash equivalents
The amounts disclosed on the consolidated Statement of Cash Flows in respect
of Cash and cash equivalents are in respect of these statements of financial
position amounts:
Year ended 2023
31 Dec 2023 01 Jan 2023
£ £
Cash and cash equivalents 5,482,935 6,579,349
Year ended 2022
31 Dec 2022 01 Jan 2022
£ £
Cash and cash equivalents 6,579,349 13,038,388
Analysis of net cash
At 1 Jan 2023 Cash outflow At 31 Dec 2023
£ £ £
Cash and cash equivalents 6,579,349 (1,096,414) 5,482,935
Net cash 6,579,349 (1,096,414) 5,482,935
In December 2023 £5m was placed on 10-month deposit at a fixed rate of 5%.
23. Post balance sheet events
On 26 February 2024, Jersey Oil & Gas plc announced that, further to the
press release issued on 23 November 2023, the Company had completed its
farm-out of a 30% interest in the Greater Buchan Area ("GBA") licences
to Serica Energy (UK) Limited ("Serica") and received the associated
milestone cash payment of $6.8 million.
The farm-out transaction with Serica is on identical pro-rata terms to that
previously completed with NEO Energy ("NEO") earlier in 2023. In aggregate,
the two transactions result in JOG retaining a 20% interest in the GBA
licences, a full carry on the capital expenditure required to bring the
Buchan field into production and a number of milestone cash payments. Upon
completion of the Serica Farm-out, the combined cash payments received from
the two farm-outs were approximately $18 million, with up to a further $20
million due to be paid to JOG upon Buchan Field Development Plan ("FDP")
approval.
In exchange for entering into definitive agreements to divest a 30% working
interest in the GBA licences, the Company is set to receive from Serica:
· a 7.5% carry of the estimated $25 million cost 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 $6.8 million cash payment on completion, which includes
a $5.6 million payment associated with the finalisation of the GBA
development solution and associated acquisition of the "Western Isles" FPSO -
this payment has been received
· a $7.5 million cash payment on approval of the Buchan FDP by the
NSTA
· a $3 million cash payment on each FDP approval by the NSTA in
respect of the J2 and Verbier oil discoveries
The primary condition precedent to completing the Serica Farm-out was receipt
of approval from the NSTA for the transaction.
24. Availability of the annual report 2023
A copy of this report will be made available for inspection at the Company's
registered office during normal business hours on any weekday. The Company's
registered office is at 10 The Triangle, ng2 Business Park, Nottingham NG2
1AE. A copy can also be downloaded from the Company's website at
www.jerseyoilandgas.com. (http://www.jerseyoilandgas.com/) Jersey Oil and Gas
Plc is registered in England and Wales, with registration number 7503957.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR EALSAFLSLEFARecent news on Jersey Oil and Gas
See all newsREG - Jersey Oil & Gas PLC - Result of AGM
AnnouncementREG - Jersey Oil & Gas PLC - AGM Update
AnnouncementREG - Jersey Oil & Gas PLC - Final Results for the Year Ended 31 December 2023
AnnouncementREG - Jersey Oil & Gas PLC - TR-1: Notification of major holdings
AnnouncementREG - Jersey Oil & Gas PLC - GBA Farm-Out Completion
Announcement