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 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.'
Source: Jersey Oil & Gas
