AIM-listed Jersey Oil & Gas, an independent upstream oil and gas company focused on the UK Continental Shelf region of the North Sea, has announced its audited financial results for the year ended 31 December 2024.
Further to the successful Greater Buchan Area ('GBA') farm-outs to NEO Energy and Serica Energy in 2023-24, the Company has strategically positioned itself as one of the UK's leading UK quoted small-cap oil and gas companies with a high-quality development portfolio and the funding to deliver on its organic growth plans. Despite the uncertainties that have been created within the UK oil and gas industry as a result of the Energy Profits Levy ('EPL') and the on-going consultations that have been launched by the Government, the Company remains well placed to execute upon its plans for long-term value creation.
Buchan Redevelopment Project
Significant progress was made during 2024 to advance the Buchan Horst redevelopment project towards sanction and Field Development Plan ('FDP') approval. Despite the project slowdown resulting from the various regulatory consultations and the need to obtain sufficient clarity on the outcome of these to finalise the way forward, three major workstreams have been matured:
- Detailed engagement has been on-going on the draft Buchan FDP with the North Sea Transition Authority ("NSTA"). In addition, the Buchan "Field Determination Area", that defines the maximum geological boundary of the field, was agreed with the NSTA
- The Environmental Impact Assessment ("EIA") for the project was issued to the Offshore Petroleum Regulator for the Environment and Decommissioning ("OPRED") and various activities have been completed to progress the regulatory evaluation.
- Front-end engineering and design ("FEED") studies were completed, the results of which have been used to define the details of the development execution plan. The primary engineering studies covered the appropriate solutions for the design of the wells, the subsea infrastructure and the necessary modification and life extension works required on the planned floating, production, storage and offloading ("FPSO") vessel. Offshore surveys were also completed to gather the geotechnical and geophysical data required for the subsea infrastructure and drilling rig contract tendering processes and to inform the FPSO mooring design
With the announcements during the year of three Government consultations concerning revised guidance for EIAs, the future for UK North Sea oil and gas licensing and the future fiscal regime, the timeline for progressing the project to the point of joint venture partner sanction and FDP approval was naturally delayed. An extension to the Buchan P2498 licence was obtained from the NSTA, which means that the joint venture has until 28 February 2027 to obtain FDP approval. Given the uncertainty surrounding the timing of FDP approval, the agreement for the acquisition of the "Western Isles" FPSO for redeployment on the Buchan field was terminated in March 2025 by Dana Petroleum ("Dana") after the longstop date in the agreement was passed. NEO, the Buchan Operator, is a 23% owner of the vessel and the possibility remains to recontract the vessel for deployment on Buchan.
Subject to satisfactory clarity being obtained from the Government consultations, there are clear steps that need to be completed to move the Buchan project forward to FDP approval and onward into the development execution phase of activities. These are:
- Reactivation and completion of the contract tender process for the main drilling, subsea and FPSO modification workscopes
- Re-contracting of the FPSO
- Submission to OPRED of an updated EIA that incorporates the requirements of the guidance resulting from the on-going consultation, which is expected to principally concern the inclusion of Scope 3 emission forecasts for the project
- Joint venture finalisation of the FDP and approval of the NSTA
While the exact timeline for completing these activities has not yet been finalised, it is likely that a positive outcome from the consultations would lead to FDP approval being targeted during 2026.
As a result of the farm-out transactions with NEO and Serica, the Company is carried for its 20% share of the costs to take Buchan through to FDP approval, along with its share of the development costs included in the approved FDP. To date, the financial benefit of this has totalled approximately $25 million in cash milestone payments and expenditure carry. Further cash milestone payments of $20 million are due upon Buchan FDP approval and receipt of the associated regulatory and legal consents.
Strategic Focus
The Company's vision is centred on successfully growing the business in a smart and sustainable way, developing important domestic energy supply in response to society's energy needs and creating value for our stakeholders. The organisation is "right sized" for the stage and scale of its activities and maintains a nimble approach to advancing its key strategic objectives.
The Company remains sharply focused on unlocking the organic value of its existing assets in the GBA, 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.
Solid Outlook
Jersey Oil & Gas is well positioned to navigate through the current headwinds facing the UK oil and gas industry. With total year-end cash reserves of approximately £12.3 million and a current cash run rate of around £1.5 million per annum, the business is financially secure and funded for execution of the Buchan redevelopment programme. This backdrop provides an attractive springboard from which to realise the full potential and ambitions of the business for delivering shareholder value.
Andrew Benitz, CEO of Jersey Oil & Gas, commented:
'2024 was effectively a year of two halves. A significant amount of work was completed on progressing the Buchan redevelopment project to joint venture sanction and the securing of the necessary regulatory approvals. However, this progress was hampered in the latter part of the year as the Government announced its intention to launch various consultations that will determine the future direction of the UK's oil and gas industry.
Given the significant contribution that the industry can make to UK economic growth, jobs, tax revenues and both the energy transition and energy security, all of which are priorities for the current Government, we are optimistic that such consultations will provide sensible answers to the issues being considered. In the meantime, the Company remains in a solid financial position and we continue to evaluate opportunities to enhance the long-term value of the business.'
Source: Jersey Oil and Gas
