Proactive Investors - Jersey Oil and Gas PLC (LON:JOG) chief executive Andrew Benitz described 2023 as “exceptional” as the junior reported financial results for a year in which it sealed important partnership deals with Serica (LON:SQZ) Energy and NEO Energy.
Together the farm-out partnership deals see Jersey’s key Buchan project on the path to development, production and, importantly, revenue.
Jersey, following the completion of the Serica farm-out in February 2024, has more than £15 million of cash, and, as such the company highlighted that it is financially secure and funded for the planned Buchan redevelopment programme.
“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,” Benitz said in a statement.
“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.”
He added: "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.”
Benitz also noted the challenges that the UK government’s recent stance on the oil and gas sector, which has resulted in tighter fiscal conditions for North Sea firms, and pointed to the looming general election as a source of further fiscal uncertainty.
However, he commented: “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."
Jersey noted that in 2023 it reduced its underlying annual cash costs to £3.5 million, from a prior forecast of £4 million, and has “further pruned” those cost to under £3 million.
It believes that financially it has “an attractive springboard” to realise its ‘full potential and ambitions’.
The pre-revenue company reported a £5.59 million loss for the financial year.
The farm-outs deliver to Jersey a ‘carry’ for its 20% share of project costs to a final investment decision, estimated to be worth $25 million, and a carry of its share of project development cost.
It received cash upon completion of the transactions, and further milestone cash payments are tied to future anticipated events - $15 million when a development solution is finalised, $20 million when the Buchan field development plan get regulatory approval, and US$8 million when each follow-on project, Verbier and J2, are approved for development.