Corporate and Operational Update

RNS Number : 5755N

Jersey Oil and Gas PLC

01 February 2016

 

1 February 2016

Jersey Oil and Gas plc

("Jersey Oil & Gas" or the "Company")

Corporate and Operational Update

Jersey Oil & Gas (AIM: JOG), an independent oil and gas company which is pursuing an acquisition-led strategy in the UK Continental Shelf region of the North Sea, is pleased to provide a corporate and operational update.

Corporate Update

The Company has implemented further cost savings and salary reductions that should enable it to continue operating with its existing cash resources into 2017. 

Further oil price declines since its previous Corporate Update in early December 2015 continue to create exciting opportunities for Jersey Oil & Gas, which has no existing debt, a clean balance sheet, access to debt capital and significant tax losses available to execute on its stated objective of acquiring interests in lower cost tie back fields capable of generating positive cash flow at an oil price of US$30 per barrel.  The Company has experienced an increase in the available opportunities presented to it which it is actively pursuing, increasingly turning from asset-related to more probable corporate opportunities.  The Company thus aims to enter the market at an opportune time in the cycle.

Licence P.2170, Blocks 20/5b & 21/1d ("Cortina") - Farm-out process underway

Jersey Oil & Gas and its co-venturer, CIECO Exploration and Production (UK) Limited are currently seeking farm-in partners for their Cortina blocks awarded in the 28th Licencing Round, having fulfilled the licence obligations and completed planned technical studies.

-       Two large medium risk oil prospects have been identified with most likely unaudited in place volumes of 300 and 212 million stock-tank barrels ("Mmstb") respectively, analogous to the adjacent Tweedsmuir fields. Prospectivity has been confirmed following extensive geological and geophysical analysis undertaken by Jersey Oil & Gas utilising the latest and best quality seismic data available, including a stratigraphic re-interpretation of 12 key wells and a petroleum charge study.

-       The Cortina blocks are located in the UK Central North Sea and straddle the western end of the North Buchan Graben in a water depth of between 100-128m. The acreage lies in a prolific, proven, light oil fairway close to the Buchan and Tweedsmuir oilfields with ease of access to surrounding infrastructure.

-       A farm-out process is underway with initial interest expressed by several parties.

Relinquishment of Licence P.1610, Block 13/23a ("Liberator"), Licence P.1666, Block 30/11c ("Romeo") and Licence P.1889, Blocks 12/26b & 27 ("Niobe-Kratos")

-       Licence P.1610, Block 13/23a (Liberator) has been relinquished with an effective date of 6 January 2016. This relinquishment is a result of onerous licence fees. The Company will therefore forgo its 10 per cent. carried interest in this licence.

-       A decision by the joint venture partners has also been made to relinquish Licence P.1666, Block 30/11c (Romeo) with an effective date of 11 February 2016. Relinquishment of this licence interest will remove further cost exposure for Jersey Oil & Gas.

-       Further to the drilling of the Niobe-Kratos well (12/27-4) in 2015 and there being no remaining identified drillable prospectivity, Licence P.1889 has been relinquished with an effective date of 31 December 2015.

Andrew Benitz, CEO of Jersey Oil & Gas, commented:

"We are pleased to report to our shareholders that through careful treasury management and operating cost reductions, the Company should now be able to operate with its existing cash reserves into 2017.  We believe that the recent oil price decline will create significant opportunities during 2016 for those entering the market and that Jersey Oil & Gas is very well positioned to take advantage of this opportune environment for acquirers. 

"We are also excited to announce the launch of the Cortina farm-out process, which benefits from two identified oil prospects with significant resource potential, located in a prolific, proven light oil fairway.  Jersey Oil & Gas continues to actively manage and de-risk its existing exploration portfolio and, through this attractive farm-out opportunity, the Company will seek to maintain exposure to the potential upside from the licence area at no further cost."

General enquiries:

Jersey Oil & Gas plc	Andrew Benitz, CEO	C/o Camarco: Tel:  [phone]
Strand Hanson Limited	James Harris Matthew Chandler	Tel:  [phone]
FirstEnergy Capital LLP	Hugh Sanderson David van Erp	Tel:  [phone]
Camarco	Billy Clegg Georgia Mann  Zoe Moulton	Tel:  [phone]

Cortina enquiries:

Requests for further information regarding the Cortina farm-out process should be directed to:

Martin David

Email:   [e-mail]

Phone:  [phone]

Address:           Jersey Oil and Gas plc

                        5^th Floor

                        85 Gresham Street

                        London

                        EC2V 7NQ

Notes to editors:

The Group's strategy is focused on maintaining, developing and exploiting a portfolio of North Sea assets with a greater focus on producing assets in order to seek to unlock the inherent value in the Group's existing tax losses. The Group is currently seeking to acquire potential further North Sea oil and/or gas producing assets, some of which have already been identified and are currently undergoing due diligence and subject to ongoing commercial negotiations. Any potential acquisitions that are taken forward are intended to be financed from one or more of the Group's balance sheet, the proceeds from strategic sales of selected parts of the Group's existing asset portfolio and further equity and debt capital raises. 

The Group's target acquisition profile includes mature oil and/or gas production assets with long tail-end production profiles and upside potential from principally satellite fields with production-based tariff agreements, limited exposure to host platform costs, low operating costs and manageable decommissioning liabilities. 

 

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