AIM-listed Jersey Oil & Gas, an independent upstream oil and gas company focused on the UK Continental Shelf region of the North Sea, has provided a corporate update.
Highlights & Outlook
- The Company commenced the year with a focus on two key activities: advancing the Buchan Horst ("Buchan") development project to sanction and Field Development Plan ("FDP") approval; and the pursuit of UK producing asset acquisitions that accelerate monetisation of the Company's sizeable existing tax allowances.
- The Company and its Buchan project partners continue to await clarity on the fiscal and regulatory uncertainties currently facing the UK's oil and gas industry, with work on the Buchan project having been slowed down by the Operator, NEO Energy, as previously noted.
- Following an application submitted to the North Sea Transition Authority ("NSTA") in 2024, the Second Term of the P2498 Buchan licence has now been extended by 24 months to 28 February 2027. This extension was requested in order to provide the licensees with the time required to finalise a FDP for the Buchan field.
- Completion of the Buchan Environmental Impact Assessment ("EIA") approval process by the Offshore Petroleum Regulator for the Environment and Decommissioning ("OPRED") has naturally been paused following the Supreme Court's "Finch" judgment in 2024 concerning the inclusion of Scope 3 emissions in development project EIAs. The actions required to advance the Buchan EIA will be clarified once revised guidance is issued by OPRED, which is expected in spring 2025.
- The UK Government announced last year that a consultation will be held on the tax regime that will apply to the oil and gas industry after 2030. Satisfactory clarity on the results of this consultation is required to facilitate sanctioning of the Buchan project. It is anticipated that the fiscal consultation will be launched shortly.
- While the majority of the required inspection, verification and pre-transfer work has been completed by Dana Petroleum on the Western Isles floating production, storage and offloading ("FPSO") vessel to satisfy the main technical requirements of the sale and purchase agreement, the agreement longstop date was reached at the end of February 2025 with work outstanding. In light of the current slowdown in Buchan project activities as a consequence of the fiscal and regulatory consultations, along with work on the vessel still requiring completion, the parties have not terminated the agreement and are in dialogue on the optimal contractual way forward to accommodate these delays. NEO Energy, the Buchan operator, remains a 23% owner of the vessel.
- In order to both accelerate potential value creation from JOG's existing UK tax allowances of over $100 million and bring cash flow into the business, a number of potential UK producing asset acquisitions are being actively evaluated.
- The total cash running cost of the business has been reduced by approximately 50% to £1.5 million in 2025 as a result of actions taken by the Company following the slowdown in activities on the Buchan project. Per the terms of the farm-out agreements executed with NEO Energy and Serica Energy, the Company's 20% share of Buchan project expenditure is fully carried by our two joint venture partners.
- The Company's aggregate cash balance at the end of 2024 was approximately £12.3 million. A further $20 million cash payment is payable under the terms of the Buchan farm-out agreements following approval of the FDP by the NSTA and receipt of the associated regulatory and legal consents.
Andrew Benitz, CEO of Jersey Oil & Gas, commented:
'With the Buchan licence having now been extended, the joint venture partnership has secured the necessary time to determine the appropriate path to project sanction, with JOG holding a 20% carried interest to first oil. Whilst the UK Government's fiscal and regulatory consultations are creating a somewhat uncertain backdrop for the industry at the current time, the way forward on these two key areas is scheduled to be resolved over the coming months.'
'The Buchan project has the potential to create over 1,000 jobs across many parts of the UK's supply chain and over 200 project related jobs, attract private investment of around £1 billion into the UK economy and generate hundreds of millions in UK tax revenues.'
Source: Jersey Oil & Gas
