TIDMJOG
RNS Number : 0331M
Jersey Oil and Gas PLC
06 May 2020
6 May 2020
Jersey Oil and Gas plc
("Jersey Oil & Gas", "JOG" or the "Company")
Final Results for the year ended 31 December 2019
Jersey Oil & Gas (AIM: JOG), an independent upstream oil and
gas company focused on the UK Continental Shelf ("UKCS") region of
the North Sea, is pleased to announce its audited results for the
year ended 31 December 2019.
Highlights
-- Significantly increased net discovered and recoverable
resource estimates owned by the Company to more than 120 million
barrels of oil equivalent ("mmboe") following transformational
awards of licences in the Greater Buchan Area ("GBA") as part of
the Oil and Gas Authority's 31st Supplementary Offshore Licensing
Round
-- As part of the licence awards, the Company now owns a 100%
equity interest in the Buchan field as well as the J2 and Glenn
discoveries, in addition to its interest in the Verbier
discovery
-- Began work on a unique and major new North Sea Development
Plan with a focus on delivering a low-carbon development of the
GBA
-- Commitment to the highest levels of environmental, social and
corporate governance across the business with the Company currently
looking into opportunities to achieve a low carbon emissions
production facility for the GBA
-- Strong year-end cash position of GBP12.3 million, with no
debt, resulting in the Company being fully funded through concept
selection and to at least the end of 2021
-- Verbier Appraisal Well drilled safely and within budget, and,
although the well did not encounter Upper Jurassic sands as
anticipated , our contingent resource estimate for the earlier
Verbier discovery remain at 25 mmboe
Post year end
-- Acquired an additional 70% interest in and operatorship of
Licence P2170, which includes the Verbier oil discovery, increasing
total 2C discovered resources across the GBA to an estimated 142
mmboe net to the Company
-- The Verbier oil discovery is now a prime candidate for a tie back into the proposed GBA Hub
-- Significant exploration upside across the GBA, with estimated
prospective resources of 232 mmboe net to the Company
-- Established the Greater Buchan Area Joint Integrated Studies
Agreement between neighbouring field operators to undertake and
complete technical and commercial evaluation studies for a
collaborative development of the wider GBA
Outlook
-- JOG has a commanding position across the prolific GBA with
ownership of 5 discovered fields and 8 exploration prospects within
4 operated licences
-- Project lifetime cash flows for the GBA forecast to be in
excess of US$3bn, with an estimated project value of approximately
US$1.2bn
-- On track to reach concept selection by Summer 2020, which
will define the most prudent and commercially attractive way to
achieve first oil from the GBA
-- Prudent cash management being maintained
-- Sales process expected to be launched post concept selection
to attract a new industry partner(s) to join JOG in unlocking the
potential significant value that exists within the GBA
-- GBA development workstreams remain on track with the Company
and contract staff working remotely in response to the COVID-19
pandemic
Andrew Benitz, CEO of Jersey Oil & Gas, commented :
"Our efforts during 2019 resulted in transformational asset
growth for our Company. Our successful application in the 31 SLR
has provided our business with a vastly increased portfolio and the
potential to develop a highly valuable business for all of our
stakeholders. The GBA Project promises to be the largest new area
hub development in the UK Central North Sea in recent times.
"The Company is currently entirely focused on the timely
delivery of concept selection for this major new area hub that has
the potential to create significant value for stakeholders.
"JOG has assembled a team with the right skills, experience and
track record to implement its GBA development plan. I would like to
thank this team for adapting seamlessly to a new remote working
environment as a result of the COVID-19 pandemic, such that we
continue to remain on track with our current development
plans."
Enquiries :
Jersey Oil and Gas plc Andrew Benitz, CEO C/o Camarco:
Tel: 020 3757 4983
Strand Hanson Limited James Harris Tel: 020 7409 3494
Matthew Chandler
James Bellman
Arden Partners plc Paul Shackleton Tel: 020 7614 5900
Benjamin Cryer
BMO Capital Markets Limited Jeremy Low Tel: 020 7236 1010
Tom Rider
Camarco Billy Clegg Tel: 020 3757 4983
James Crothers
Notes to Editors :
Jersey Oil & Gas is a UK E&P company focused on building
an upstream oil and gas business in the North Sea. The Company
holds a significant acreage position within the Central North Sea
referred to as the Greater Buchan Area, which includes operatorship
and 100% working interests in blocks that contain the Buchan oil
field and J2 and Glenn oil discoveries, and, following the
acquisition of an additional 70% working interest announced in late
January 2020 will, subject to completion, also assume operatorship
of and hold an 88% working interest in the P2170 Licence, Blocks
20/5b & 21/1d, that contains the Verbier oil discovery.
JOG's acreage is estimated by management to contain more than
140 million barrels of oil equivalent ("boe") of discovered mean
recoverable resources net to JOG, in addition to significant
exploration upside potential. JOG is currently progressing the
concept select phase of a Field Development Plan ("FDP") for the
Greater Buchan Area.
JOG is focused on delivering shareholder value and growth
through creative deal-making, operational success and licensing
rounds. Its management is convinced that opportunity exists within
the UK North Sea to deliver on this strategy and the Company has a
solid track-record of tangible success.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014.
CHAIRMAN'S STATEMENT
Overview
This past year has been an exceptional one for Jersey Oil and
Gas ('JOG'). We started the year with an inventory of less than 5
million barrels of oil equivalent ('mmboe') discovered recoverable
resources net to our 18% interest in the Verbier discovery located
on Licence P2170. The year had potential for growth given we had an
appraisal well planned at Verbier and were participating in the
OGA's 31st Supplementary Offshore Licensing Round ('31 SLR'). We
ended the year with more than 120 mmboe of discovered recoverable
oil equivalent resources net to JOG. Post year end we took this
figure to over 140 mmboe with our acquisition of Equinor's interest
in Licence P2170 (Verbier), representing a 30-fold increase on our
2019 starting position, which was a transformational result for
JOG.
For much of 2018 and the first half of 2019, we were working
extensively on our application for further licence interests under
the 31 SLR, a round solely dedicated to what is known as the
Greater Buchan Area ('GBA'). I am glad to report that as a result
of the JOG team's well thought out strategy, and planning detail
for the development of the GBA, in July 2019 the Oil and Gas
Authority ('OGA') announced the award to JOG of two licences in the
GBA surrounding our Verbier discovery. A further acreage award was
made in August 2019, resulting in a total of three licence awards
and four blocks, with each licence awarded on a 100% equity
interest basis. Against this backdrop, the Verbier appraisal well
drilled in 2019, did not encounter the anticipated Upper Jurassic
sands. This was an unexpected result for us and, as a result, we
lowered our estimate of gross recoverable resources for the Verbier
discovery down to the lower end of the initial resource estimate of
25 mmboe (as estimated by Equinor following the initial discovery
well result in October 2017). Nonetheless, in our view there
remains significant prospectivity (>160 mmboe gross) across the
P2170 licence area and, subsequent to the year end, we were pleased
to have acquired an additional 70% interest in this licence,
bringing our total interest in Licence P2170 up to 88% on
completion. This is particularly important to JOG given that
Verbier and any other discoveries in the licence are within the
heart of the GBA and therefore will be prime candidates for tying
back to the planned Buchan hub, for which we are currently working
on the concept select phase of this new development project.
Economic Environment
For 2019, Brent Crude Oil started the year trading at a price of
approximately $52 per barrel and ended the year at a price of $65
per barrel, with a sizeable level of volatility in the second half
of the year. Since then the spot oil price has fallen dramatically
as a result of falling demand due to the Covid-19 outbreak and
excess supply notwithstanding cuts from OPEC+. At the end of April
2020 Brent was trading at around $23 per barrel.
As regards our own position, we do not currently have any
production, nor do we have any debt. First oil from the GBA
development project is currently planned for 2025 and we, along
with all the major market commentators, believe that the effects of
both the Covid-19 outbreak and the current reduction in demand for
oil will have ended by that time, with the Brent spot price
returning to materially higher levels. At the end of April 2020,
the January 2025 forward price for Brent was approximately $48 per
barrel with prices increasing for longer term contracts and many
market commentators looking at forward prices of $60+.
As a result, we believe the best course of action is to carry on
with the various workstreams needed to take the GBA project
through, and past, the Concept Select phase.
Environmental, Social and Corporate Governance
We continue to embrace the energy transition and fully support
the UK Government's commitment to net zero emissions by 2050, which
the OGA are integrating into their regulatory policies.
Nonetheless, we believe that these initiatives will take time to
implement and that in the interim oil and gas will continue to be a
vital part of the UK and broader global energy mix. Our role in
this process is therefore to provide our energy product in a way
that is best in class for both operational issues, such as health
and safety, environmental compliance and our workplace needs and
for longer term issues such as reducing the climate change risks
associated with our business, in addition to reducing the carbon
emissions from developing the GBA. With a new greenfield
development in the North Sea, we are well placed to use the latest
engineering and operational techniques to bring down its carbon
emissions, in a safe and efficient manner.
Our maiden statement on JOG's approach to Environmental, Social
and Governance matters is set out in the full Annual Report.
During 2018 we adopted the Quoted Companies Alliance Corporate
Governance Code, which codifies our belief that a strong and
transparent governance policy is a key ingredient to our success.
Underlying this approach is the recognition that good corporate
governance is based on culture rather than procedure. A separate
report on the principles that we strive to implement, without
constraining the entrepreneurial spirit in which the Company was
created, is also set out in the full Annual Report.
The Covid-19 Virus Outbreak
As will be well understood by all, countries, businesses,
organisations, individuals and families are having to change the
way they operate and behave following the Covid-19 virus outbreak.
As a company, we continue to place the highest priority on the
safety and wellbeing of our employees. As a result, all of our
employees now work from home and will continue to do so until it is
safe for them to return to an office environment.
This work from home approach is working well, with all employees
continuing with their respective workstreams remotely, alongside a
similar approach being adopted by our contractors. We currently see
the GBA Concept Select key stages largely proceeding to their
original timelines of summer 2020, although this may change,
depending on how events unfold.
Outlook
JOG ended 2019 in a strong position, with substantial contingent
and prospective reserves, which were then increased through the
2020 acquisition of an additional 70% interest in Licence P2170
(Verbier). The GBA licences, which can now be regarded as including
the Verbier licence area, should generate substantial cash flows
once we reach first oil, which we currently estimate to be in 2025.
We are moving ahead, at speed, through the planning phases of this
development and, at the time of this statement, we will be
approaching the concluding parts of the Concept Select phase.
Nonetheless, the costs of developing the GBA area will be
substantial and once we have passed through the key stages of
Concept Select we will launch a process to attract industry
partners and additional providers of capital in order to advance
this important project, taking into account market conditions at
that time.
We very much hope that the Covid-19 outbreak will pass, in due
course. In the interim the safety of our employees remains our
highest priority.
We believe that the current historically low oil price is not
sustainable and that by the time we reach first oil for the GBA
development project, oil prices will have returned to substantially
higher levels, in part due to underinvestment in conventional
growth projects.
On behalf of the Board, I would like to thank all of our
employees, both old and new, for the continuing hard work that is
being put into the development of the GBA, with all of us now
working in difficult circumstances, outside of our normal office
environment.
As always, I would also thank our Shareholders for their
continuing support.
Marcus Stanton
Non-Executive Chairman
6 May 2020
CHIEF EXECUTIVE OFFICER'S REPORT
Our efforts during 2019 resulted in transformational asset
growth for our Company. Our winning application in the 31 SLR has
provided our business with a vastly increased portfolio and the
potential to develop a highly valuable business for all of our
stakeholders. The GBA Project promises to be the largest new area
hub development by reserves in the UK Central North Sea in recent
times. JOG is now focused on the timely delivery of selecting the
development concept for this major new area hub development that
has an estimated current project value of $1.2 bn. and has the
potential to deliver free cash flow in excess of $3 bn.
Having grown our discovered oil resources 30-fold, we are now
operating a project which is estimated to contain net to JOG
approximately 140 million barrels of discovered and recoverable oil
and over 200 million barrels of highly prospective exploration
upside. At the core of the GBA is the Buchan oil field that
benefits from 36 years of production history and once production
resumes on this field we estimate more than 80 million barrels of
oil is yet to be recovered from this remarkable field, that was
often referred to as the field that kept on delivering. We are
making excellent progress on defining not only the core hub volumes
that JOG owns, but also third-party regional volumes. We have
established and are leading the Greater Buchan Area Joint
Integrated Studies Agreement ('JISA'). This agreement, between
neighbouring field operators, will see JOG undertake and complete
technical and commercial evaluation studies for a collaborative
development of the wider GBA, together with other regional
operators. The wider area contains discovered oil and gas resources
in excess of 200 million barrels of oil equivalent.
A key objective of the JISA is to establish whether a
collaborative development involving regional field operators would
lead to a single new production hub in the area, potentially
reducing development costs for all of the operators and delivering
on the OGA's objective of Maximising Economic Recovery ('MER').
Our industry is at an inflexion point with respect to energy
transition. We believe that oil and gas will remain an important
part of the UK's energy mix for the foreseeable future and projects
such as GBA will be a vital resource for retaining the UK's energy
security as we transition to net zero. It is JOG's vision to
provide cleaner, safer energy in the most responsible way. JOG is
now a proud signatory of the United Nations Global Compact, the
world's largest corporate sustainability initiative. We have put
energy transition at the forefront of our strategic thinking,
seeing this as an opportunity rather than a challenge, with the
potential to unlock significant value in the GBA for JOG.
Financial Results
JOG continues to benefit from a straightforward capital
structure, with a strong cash position that more than covers our
current contracted work programme for the Concept Select phase of
the GBA Project. We have no debt and no decommissioning
liabilities. Our pre-tax loss for the year amounted to GBP2.1m as
compared to a GBP2.0m loss in 2018.
Cash at year end was GBP12.3m, down from GBP19.8m at the end of
2018, largely due to our share of the costs of drilling the Verbier
appraisal well in 2019.
JOG remains fully funded to deliver the Concept Select work we
are progressing on our GBA development and we have implemented cost
saving initiatives to cut our 2020 budget guidance by more than
GBP3m from GBP10.6m to GBP7.5m. The Company has sufficient working
capital through to at least the end of 2021, prior to any proceeds
from our planned sale of a part interest in our GBA Project, the
process for which is expected to be launched later this year. Cost
control continues to be monitored closely by our Board.
People
We continue to build a strong and focused team in order to
progress the development of the GBA Project through to first oil
or, more accurately, second oil, given the Buchan field's
production history. These talented industry professionals bring
many skills to JOG ranging from extensive North Sea relevant field
development experience through to expertise in health, safety,
environment and social responsibility matters. The project team's
experience has been gained from working on projects including
Buzzard, Golden Eagle, Tolmount, Gannett and Goliat. This is
further supplemented through the extensive project development
track record of our recently appointed Board adviser. We welcome
all of these individuals into the Company. We have also leased some
new office space in London which enables our UK-based employees to
work from the same location.
Looking Forward
Notwithstanding the very real challenges that Covid-19 is
providing, JOG remains committed to building a profitable,
full-cycle upstream oil and gas business. Fortunately the
Government lockdown is having minimal impact on our activities,
which are continuing apace despite working remotely.
JOG has delivered the GBA opportunity with a nimble and creative
team, with a philosophy of a can-do attitude. We are building out
the team capabilities with a broad range of industry and commercial
skills and we are well placed to move forward and create further
value for our Shareholders.
We are pleased to be active in an area where there is a
proactive, industry facing regulator, the OGA, and we are fully
aligned with the OGA's objective of MER, evidenced through our
approach to progressing area collaboration initiatives across the
wider GBA.
JOG has a very low current and historic carbon footprint. We
have an opportunity to showcase the GBA Project as a low carbon,
sustainable development and highlight JOG as a leader in the UKCS
on sustainability. We fully embrace the UK Government's initiative
to be carbon net zero by 2050 and are actively investigating energy
transition initiatives such as platform electrification and see the
potential for the GBA Project to not only be a new production hub,
but potentially also a power hub. We are well placed to progress
our development plans through Concept Select, before launching a
process later this year to attract industry partners to join us in
unlocking the significant value that exists within the GBA.
We are making good progress to deliver on our strategy, while
adapting to an investment environment that is changing fast. We
have an excellent team at JOG and I would like to thank them all
for their continued dedication and relentless commitment to
advancing our activities across our asset base.
Andrew Benitz
Chief Executive Officer
6 May 2020
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2019
2019 2018
Note GBP GBP
Revenue 3 - -
Cost of sales (666,053) (609,925)
----------- -----------
GROSS LOSS (666,053) (609,925)
Other income 6 750,000 12,037
Loss on sale of assets (17,975) -
Administrative expenses (2,237,429) (1,447,383)
----------- -----------
OPERATING LOSS (2,171,457) (2,045,271)
Finance income 7 106,867 48,971
Finance expense 7 (419) -
----------- -----------
LOSS BEFORE TAX 8 (2,065,009) (1,996,300)
Tax 9 - -
----------- -----------
LOSS FOR THE YEAR (2,065,009) (1,996,300)
TOTAL COMPREHENSIVE LOSS FOR THE
YEAR (2,065,009) (1,996,300)
Total comprehensive loss for the
year attributable to:
Owners of the parent (2,065,009) (1,996,300)
=========== ===========
Loss per share expressed in pence
per share:
Basic 10 (9.46) (9.15)
Diluted 10 (9.46) (9.15)
=========== ===========
The total comprehensive loss for the year was
derived wholly from continuing operations.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2019
2019 2018
Note GBP GBP
NON-CURRENT ASSETS
Intangible assets 11 10,092,564 4,306,589
Property, plant and equipment 12 13,661 30,264
Right-of-use assets 13 164,125 -
Deposits 28,420 -
10,298,700 4,336,853
----------- ------------
CURRENT ASSETS
Trade and other receivables 14 428,310 80,594
Cash and cash equivalents 15 12,318,536 19,782,511
----------- ------------
12,746,846 19,863,105
----------- ------------
TOTAL ASSETS 23,045,616 24,199,958
=========== ============
EQUITY
Called up share capital 16 2,466,144 2,466,144
Share premium account 93,851,526 93,851,526
Share options reserve 20 1,928,099 1,491,019
Accumulated losses (75,727,888) (73,662,879)
Reorganisation reserve (382,543) (382,543)
TOTAL EQUITY 22,135,338 23,763,267
----------- ------------
LIABILITIES
NON-CURRENT LIABILITIES
Lease Liabilities 18 154,208 -
----------- ------------
154,208 -
----------- ------------
CURRENT LIABILITIES
Trade and other payables 17 742,166 436,691
Lease Liabilities 13 13,904 -
756,070 436,691
----------- ------------
TOTAL LIABILITIES 910,278 436,691
TOTAL EQUITY AND LIABILITIES 23,045,616 24,199,958
=========== ============
Vicary Gibbs
Chief Financial Officer
6 May 2020
Company Registration Number: 07503957
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2019
Called
up Share Share
share premium options Accumulated Reorganisation Total
capital account reserve losses reserve equity
GBP GBP GBP GBP GBP GBP
At 1 January 2018 2,466,144 93,851,526 1,231,055 (71,666,579) (382,543) 25,499,603
Loss and total comprehensive
loss for the year - - - (1,996,300) - (1,996,300)
Share-based payments - - 259,964 - - 259,964
At 31 December 2018
and 1 January 2019 2,466,144 93,851,526 1,491,019 (73,662,879) (382,543) 23,763,267
Loss and total comprehensive
loss for the year - - - (2,065,009) - (2,065,009)
Share-based payments - - 437,080 - - 437,080
At 31 December 2019 2,466,144 93,851,526 1,928,099 (75,727,888) (382,543) 22,135,338
========= ========== ========= ============ ============== ===========
The following describes the nature and purpose of each reserve
within owners' equity:
Reserve Description and purpose
Called up share Represents the nominal value of shares issued
capital
Share premium Amounts subscribed for share capital in
account excess of nominal value
Share options Represents the accumulated balance of share-based
reserve payment charges recognised in respect of
share options granted by the Company less
transfers to accumulated deficit in respect
of options exercised or cancelled/lapsed
Accumulated losses Cumulative net gains and losses in the Consolidated
Statement of Comprehensive Income
Reorganisation Amounts resulting from the restructuring
reserve of the Group at the time of the Initial
Public Offering (IPO) in 2011
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2019
2019 2018
Note GBP GBP
Cash flows from operating activities
Cash used in operations 22 (1,769,004) (2,698,361)
Net interest received 7 106,867 48,971
Net interest paid 7 (419) -
Net cash used in operating activities (1,662,556) (2,649,390)
----------- -----------
Cash flows from investing activities
Proceeds on sale of tangible assets 3,603 -
(5,785,975
Purchase of intangible assets 11 ) (2,948,630)
Purchase of tangible assets 12 (19,047) (34,879)
Net cash used in investing activities (5,801,419) (2,983,509)
----------- -----------
Net cash generated from financing - -
activities
----------- -----------
Decrease in cash and cash equivalents 22 (7,463,975) (5,632,899)
Cash and cash equivalents at beginning
of year 22 19,782,511 25,415,410
----------- -----------
Cash and cash equivalents at end
of year 22 12,318,536 19,782,511
----------- -----------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2019
1 . GENERAL INFORMATION
Jersey Oil and Gas plc (the "Company") and its subsidiaries
(together, the "Group") are involved in the upstream oil and gas
business in the UK.
The Company is a public limited company incorporated and
domiciled in the United Kingdom and quoted on AIM, a market
operated by London Stock Exchange plc. The address of its
registered office is 10 The Triangle, ng2 Business Park,
Nottingham, NG2 1AE.
2 . SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all the periods
presented, unless otherwise stated.
Basis of Accounting
These financial statements have been prepared under the historic
cost convention, in accordance with International Financial
Reporting Standards and IFRS IC interpretations as adopted by the
European Union ("IFRSs") and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS.
Going Concern
The Company is required to have sufficient resources to cover
the expected running costs of the business for a period of at least
12 months after the issue of these financial statements. Further to
completion of the detailed studies in connection with the GBA
Concept Select contracted work programmes, there are currently no
firm work commitments on any of the Group's licences, other than
ongoing Operator overheads and licence fees. Other work that the
Company is undertaking in respect of the GBA licences and
surrounding areas is modest relative to its current cash reserves.
The Company's current cash reserves are therefore expected to more
than exceed its estimated liabilities for at least 12 months
following the date of issue of the financial statements. Based on
these circumstances, the Directors have considered it appropriate
to adopt the going concern basis of accounting in preparing the
Company's consolidated financial statements.
Changes in Accounting Policies and Disclosures
(a) New and amended standards adopted by the Company:
At the start of the year the following standards were
adopted:
-- IFRS 16, 'Leases';
-- Prepayment Features with Negative Compensation - Amendments to IFRS 9;
-- Long-term Interests in Associates and Joint Ventures - Amendments to IAS 28;
-- Annual Improvements to IFRS Standards 2015-2017 Cycle;
-- Plan Amendment, Curtailment or Settlement - Amendments to IAS 19; and
-- Interpretation 23 'Uncertainty over Income Tax T reatments'.
The Group had to change its accounting policies as a result of
adopting IFRS 16. F rom 1 January 2019, leases are recognised as a
right-of-use asset and a corresponding liability at the date at
which the leased asset is available for use by the Group. The Group
adopted the practical expedient available to not apply IFRS 16 to
leases less than GBP5,000 in value or less than 12 month in lease
term. The other amendments listed above did not have any impact on
the amounts recognised in prior periods. At 1 January 2019 the
Group had no lease arrangements applicable for IFRS 16 so no
transition adjustment was recognised.
(b) Certain new accounting standards and interpretations have
been published that are not mandatory for 31 December 2019
reporting periods and have not been early adopted by the Group.
These standards are not expected to have a material impact on the
entity in the current or future reporting periods and on
foreseeable future transactions.
Significant Accounting Judgements and Estimates
The preparation of the financial statements requires management
to make estimates and assumptions that affect the reported amounts
of revenues, expenses, assets and liabilities at the date of the
financial statements. If in future such estimates and assumptions,
which are based on management's best judgement at the date of the
financial statements, deviate from the actual circumstances, the
original estimates and assumptions will be modified as appropriate
in the period in which the circumstances change. The Group's
accounting policies make use of accounting estimates and judgements
in the following areas:
-- The assessment of the existence of impairment triggers (note 11).
-- The estimation of share-based payment costs (note 20).
Impairments
The Group tests its capitalised exploration licence costs for
impairment when facts and circumstances suggest that the carrying
amount exceeds the recoverable amount. The recoverable amounts of
Cash Generating Units are determined based on fair value less costs
of disposal calculations. There were no impairment triggers in 2019
and no impairment charge has been recorded.
Share-Based Payments
The Group currently has a number of share schemes that give rise
to share-based charges. The charge to operating profit for these
schemes amounted to GBP437,080 (2018: GBP259,964). For the purposes
of calculating the fair value of the share options, a Black-
Scholes option pricing model has been used. Based on past
experience, it has been assumed that options will be exercised, on
average, at the mid-point between vesting and expiring. The share
price volatility used in the calculation is based on the actual
volatility of the Company's shares, since 1 January 2017. The
risk-free rate of return is based on the implied yield available on
zero coupon gilts with a term remaining equal to the expected
lifetime of the options at the date of grant.
Basis of Consolidation
(a) Subsidiaries
Subsidiaries are all entities over which the Group has the power
to govern their financial and operating policies generally
accompanying a shareholding of more than one half of the voting
rights. The existence and effect of potential voting rights that
are currently exercisable or convertible are considered when
assessing whether the Group controls another entit y. The Group
also assesses existence of control where it does not have more than
50% of the voting power but is able to govern the financial and
operating policies by virtue of de facto control. De facto control
may arise in circumstances where the size of the Group's voting
rights relative to the size and dispersion of holdings of other
Shareholders give the Group the power to govern the financial and
operating policies.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated from
the date the Group ceases to have control.
The Group applies the acquisition method of accounting to
account for business combinations. The consideration transferred
for the acquisition of a subsidiary is the fair value of the assets
transferred, the liabilities incurred and the equity interests
issued by the Group. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair value at the
acquisition date. The Group recognises any non-controlling interest
in the acquiree on an acquisition- by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognised amounts of the acquiree's identifiable net
assets.
Acquisition related costs are expensed as incurred.
If the business combination is achieved in stages, the
acquisition date fair value of the acquirer's previously held
equity interest in the acquiree is remeasured to fair value at the
acquisition date through profit or loss.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability are recognised in accordance
with IAS 39 either in profit or loss or as a change to other
comprehensive income. Contingent consideration that is classified
as equity is not remeasured, and its subsequent settlement is
accounted for within equit y.
Goodwill is initially measured as the excess of the aggregate of
the consideration transferred and the fair value of non-controlling
interest over the net identifiable assets acquired and liabilities
assumed. If this consideration is lower than the fair value of the
net assets of the subsidiary acquired, the difference is recognised
in profit or loss.
Inter-company transactions, balances, income and expenses on
transactions between Group companies are eliminated. Profits and
losses resulting from inter-company transactions that are
recognised in assets are also eliminated. Accounting policies of
subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
(b) Changes in ownership interests in subsidiaries without
change of control
T ransactions with non-controlling interests that do not result
in loss of control are accounted for as equity transactions - that
is, as transactions with the owners in their capacity as owners.
The difference between fair value of any consideration paid and the
relevant share acquired of the carrying value of net assets of the
subsidiary is recorded in equit y. Gains or losses on disposals to
non-controlling interests are also recorded in equit y.
(c) Disposal of subsidiaries
When the Group ceases to have control any retained interest in
the entity is remeasured to its fair value at the date when control
is lost, with the change in carrying amount recognised in profit or
loss. The fair value is the initial carrying amount for the
purposes of subsequently accounting for the retained interest as an
associate, joint venture or financial asset. In addition, any
amounts previously recognised in other comprehensive income in
respect of that entity are accounted for as if the Group had
directly disposed of the related assets or liabilities. This may
mean that amounts previously recognised in other comprehensive
income are reclassified to profit or loss.
Acquisitions, Asset Purchases and Disposals
Acquisitions of oil and gas properties are accounted for under
the purchase method where the acquisitions meet the definition of a
business combination.
Transactions involving the purchase of an individual field
interest, farm-ins, farm-outs, or acquisitions of exploration and
evaluation licences for which a development decision has not yet
been made that do not qualify as a business combination, are
treated as asset purchases. Accordingly, no goodwill or deferred
tax arises. The purchase consideration is allocated to the assets
and liabilities purchased on an appropriate basis. Proceeds on
disposal (including farm-ins/farm-outs) are applied to the carrying
amount of the specific intangible asset or development and
production assets disposed of and any surplus is recorded as a gain
on disposal in the Consolidated Statement of Comprehensive
Income.
Exploration and Evaluation Costs
The Group accounts for oil and gas exploration and evaluation
costs using IFRS 6 "Exploration for and Evaluation of Mineral
Resources". Such costs are initially capitalised as Intangible
Assets and include payments to acquire the legal right to explore,
together with the directly related costs of technical services and
studies, seismic acquisition, exploratory drilling and testing. The
Group only capitalises costs as intangible assets once the legal
right to explore an area has been obtained. The Group assesses the
intangible assets for indicators of impairment at each reporting
date.
Potential indicators of impairment include but are not limited
to:
a. the period for which the Group has the right to explore in
the specific area has expired during the period or will expire in
the near future, and is not expected to be renewed.
b . substantive expenditure on further exploration for and
evaluation of oil and gas reserves in the specific area is neither
budgeted nor planned.
c. exploration for and evaluation of oil and gas reserves in the
specific area have not led to the discovery of commercially viable
quantities of oil and gas reserves and the entity has decided to
discontinue such activities in the specific area.
d. sufficient data exists to indicate that, although a
development in the specific area is likely to proceed, the carrying
amount of the exploration and evaluation asset is unlikely to be
recovered in full from successful development or by sale.
In the event an impairment trigger is identified the Group
performs a full impairment test for the asset under the
requirements of IAS 36 Impairment of assets. An impairment loss is
recognised for the amount by which the exploration and evaluation
assets' carrying amount exceeds their recoverable amount. The
recoverable amount is the higher of the exploration and evaluation
assets' fair value less costs to sell and their value in use.
Cost of Sales
Within the statement of comprehensive income, costs directly
associated with generating revenue are included in cost of sales.
The Group only capitalises costs as intangible assets once the
legal right to explore an area has been obtained, any costs
incurred prior to the date of acquisition are recognised as cost of
sales within the Statement of Comprehensive Income.
Property, Plant and Equipment
Property, plant and equipment is stated at historic purchase
cost less accumulated depreciation. Asset lives and residual
amounts are reassessed each year. Cost includes the original
purchase price of the asset and the costs attributable to bringing
the asset to its working condition for its intended use.
Depreciation on these assets is calculated on a straight-line
basis as follows:
- Computer & office equipment 3 years
Leases
Until this financial year, leases of property, plant and
equipment were classified as either finance leases or operating
leases. From 1 January 2019, leases are recognised as a
right-of-use asset and a corresponding liability at the date at
which the leased asset is available for use by the Group.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
-- fixed payments (including in-substance fixed payments), less
any lease incentives receivable;
-- variable lease payment that are based on an index or a rate,
initially measured using the index or rate as at the commencement
date;
-- amounts expected to be payable by the Group under residual value guarantees;
-- the exercise price of a purchase option if the Group is
reasonably certain to exercise that option; and
-- payments of penalties for terminating the lease, if the lease
term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension
options are also included in the measurement of the liabilit y.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be readily determined,
which is generally the case for leases in the Group, the lessee's
incremental borrowing rate is used, being the rate that the
individual lessee would have to pay to borrow the funds necessary
to obtain an asset of similar value to the right-of-use asset in a
similar economic environment with similar terms, security and
conditions.
T o determine the incremental borrowing rate, the Group where
possible, uses recent third-party financing received by the
individual lessee as a starting point, adjusted to reflect changes
in financing conditions since third party financing was
received.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to profit or loss over the lease period
to produce a constant periodic rate of interest on the remaining
balance of the liability for each period.
Right-of-use assets are measured at cost comprising the
following:
-- the amount of the initial measurement of lease liability;
-- any lease payments made at or before the commencement date
less any lease incentives received;
-- any initial direct costs; and
-- restoration costs.
Right-of-use assets are generally depreciated over the shorter
of the asset's useful life and the lease term on a straight-line
basis. If the Group is reasonably certain to exercise a purchase
option, the right-of-use asset is depreciated over the underlying
asset's useful lif e.
Payments associated with shor t-term leases of equipment and
vehicles and all leases of low-value assets are recognised on a
straight-line basis as an expense in profit or loss. Shor t-term
leases are leases with a lease term of 12 months or less. Low-value
assets comprise any lease with a value of GBP5,000 or less.
Joint Ventures
The Group participates in joint venture/operation agreements
with strategic partners. The Group accounts for its share of
assets, liabilities, income and expenditure of these joint venture
agreements and discloses the details in the appropriate Statement
of Financial Position and Statement of Comprehensive Income
headings in the proportion that relates to the Group per the joint
venture agreement.
Investments
Fixed asset investments in subsidiaries are stated at cost less
accumulated impairment in the Company's Statement of Financial
Position and reviewed for impairment if there are any
indications that the carrying value may not be recoverable.
Financial Instruments
Financial assets and financial liabilities are recognised in the
Group's Statement of Financial Position when the Group becomes
party to the contractual provisions of the instrument. The Group
does not have any derivative financial instruments.
Cash and cash equivalents include cash in hand and deposits held
on call with banks with a maturity of three months or less.
T rade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less any expected credit loss. The Company
recognises an allowance for expected credit losses (ECLs) for all
debt instruments not held at fair value through profit or loss.
ECLs are based on the difference between the contractual cash flows
due in accordance with the contract and all the cash flows that the
Company expects to receive, discounted at an approximation of the
original effective interest rate. The carrying amount of the asset
is reduced through the use of an allowance account, and the amount
of the loss will be recognised in the Consolidated Statement of
Comprehensive Income within administrative expenses. Subsequent
recoveries of amounts previously provided for are credited against
administrative expenses in the Consolidated Statement of
Comprehensive Income.
T rade payables are stated initially at fair value and
subsequently measured at amortised cost.
Exceptional Items
Exceptional items are disclosed separately in the financial
statements where it is necessary to do so to provide further
understanding of the financial performance of the Group. They are
material items of income or expense that have been shown separately
due to the significance of their nature or amount.
Deferred Tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit. Deferred taxation liabilities
are provided, using the liability method, on all taxable temporary
differences at the reporting date. Such assets and liabilities are
not recognised if the temporary difference arises from goodwill or
from the initial recognition (other than in a business combination)
of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
Deferred income tax assets are recognised to the extent that it
is probable that future taxable profits will be available against
which the temporary differences can be utilised. The carrying
amount of deferred tax assets is reviewed at each reporting
date.
Foreign Currencies
The functional currency of the Group is Sterling. Monetary
assets and liabilities in foreign currencies are translated into
Sterling at the rates of exchange ruling at the reporting date.
Transactions in foreign currencies are translated into Sterling at
the rate of exchange ruling at the date of the transaction. Gains
and losses arising on retranslation are recognised in the
Consolidated Statement of Comprehensive Income for the year.
Employee Benefit Costs
Payments to defined contribution retirement benefit schemes are
recognised as an expense when employees have rendered service
entitling them to contributions.
Share-Based Payments
Equi t y settled sha r e-based payments to employees and others
p r oviding similar se r vices a re measu r ed at the fair value of
the equi ty instruments at the grant dat e. The total amount to be
expensed is determined by r e f e r ence to the fair value of the
options granted:
-- including any market performance conditions (for example, an entity's share price);
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitabilit y, sales
growth targets and remaining an employee of the entity over a
specified time period); and
-- including the impact of any non-vesting conditions (for
example, the requirement for employees to save).
The fair value determined at the grant date of the equity
settled share-based payments is expensed on a straight line basis
over the vesting period, based on the Group's estimate of equity
instruments that will eventually vest, with a corresponding
increase in equit y. At the end of each reporting period, the Group
revises its estimate of the number of equity instruments expected
to vest. The impact of the revision of the original estimates, if
any, is recognised in profit or loss such that the cumulative
expense reflects the revised estimate, with a corresponding
adjustment to the equity settled employee benefits reserve.
Equity settled share-based payment transactions with parties
other than employees are measured at the fair value of the goods or
services received, except where that fair value cannot be estimated
reliably, in which case they are measured at the fair value of the
equity instruments granted, measured at the date the entity obtains
the goods or the counterparty renders the service.
Exercise proceeds net of directly attributable costs are
credited to share capital and share premium.
Other Income
Other income relates to proceeds received from settlements and
is only recognised in the statement of comprehensive income when it
is virtually certain the economic benefits will flow to the
Group.
Share Capital
Ordinary shares are classified as equit y.
Incremental costs directly attributable to the issue of new
ordinary shares or options are shown in equity as a deduction, net
of tax, from the proceeds.
3 . SEGMENTAL REPORTING
Operating segments are reported in a manner consistent with the
internal reporting provided to the Board of Directors.
The Board considers that the Group operates in a single segment,
that of oil and gas exploration, appraisal, development and
production, in a single geographical location, the North Sea of the
United Kingdom and do not consider it appropriate to disaggregate
data further from that disclosed.
The Board is the Group's chief operating decision maker within
the meaning of IFRS 8 "Operating Segments".
During 2019 and 2018 the Group had no turnover. During the 2019
year the Group did receive GBP750,000 from TEPUK in relation to
TEPUK's termination of its 2013 farm-in to licence P2032 (Blocks
21/8c, 21/9c, 21/10c, 21/14a and 21/15b), which has been recognised
in the Income Statement as Other Income. (2018: GBP12,037) from
carried cost reimbursements from co-venturers which is also shown
in Other Income.
4. FINANCIAL RISK MANAGEMENT
The Group's activities expose it to financial risks and its
overall risk management programme focuses on minimising potential
adverse effects on the financial performance of the Group. The
Company's activities are also exposed to risks through its
investments in subsidiaries and it is accordingly exposed to
similar financial and capital risks as the Group.
Risk management is carried out by the Directors and they identif
y, evaluate and address financial risks in close co-operation with
the Group's management. The Board provides written principles for
overall risk management, as well as written policies covering
specific areas, such as mitigating foreign exchange risks and
investing excess liquidit y.
Credit Risk
The Group's credit risk primarily relates to its trade
receivables. Responsibility for managing credit risks lies with the
Group's management.
A debtor evaluation is typically obtained from an appropriate
credit rating agency. Where required, appropriate trade finance
instruments such as letters of credit, bonds, guarantees and credit
insurance will be used to manage credit risk.
The Group also has a number of joint venture arrangements where
co-venturers have made commitments to fund certain expenditure.
Management evaluate the credit risk associated with each contract
at the time of signing and regularly monitor the creditworthiness
of our partners.
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they become due. The Group
manages its liquidity through continuous monitoring of cash flows
from operating activities, review of actual capital expenditure
programmes, and managing maturity profiles of financial assets and
financial liabilities.
Capital Risk Management
The Group seeks to maintain an optimal capital structure. The
Group considers its capital to comprise both equity and net
debt.
The Group monitors its capital needs on the basis of suitability
of the type of capital available at a given stage to the quantum
required for that stage of its asset base. Earlier stage assets
(pre-production) typically require equity rather than debt given
the absence of cash flow to service debt. As the asset mix becomes
biased to production then typically more debt is available. The
Group seeks to maintain progress in developing its assets in a
timely fashion. Given the Group's current cash position is
insufficient to progress its assets to first oil it will be seeking
to bring an industry partner into its assets in return for a
capital (equity) contribution. This may be in the form of either
cash or payment of some or all the Group's development
expenditures. As the development progresses towards first oil, debt
becomes available and will be sought in order to enhance equity
returns. JOG's debt today is nil.
The Group monitors its capital structure by reference to its net
debt to equity ratio. Net debt to equity ratio is calculated as net
debt divided by total equit y. Net debt is calculated as borrowings
less cash and cash equivalents. Total equity comprises all
components of equit y.
The ratio of net debt to equity as at 31 December 2019 is Nil
(2018: Nil).
Maturity analysis of financial assets and liabilities
Financial Assets
2019 2018
GBP GBP
Up to 3 months 439,014 80,595
3 to 6 months 10,704 -
Over 6 months 171,137 -
------- ------
620,855 80,595
======= ======
Financial Liabilities
2019 2018
GBP GBP
Up to 3 months 718,614 436,691
3 to 6 months 1,274 -
Over 6 months 165,574 -
------- -------
885,462 436,691
======= =======
5. EMPLOYEES AND DIRECTORS
2019 2018
GBP GBP
Wages and salaries 1,519,588 956,915
Social security costs 138,859 76,119
Share-based payments (note 20) 437,080 259,964
Other pensions costs 31,462 66,984
--------- ---------
2,126,989 1,359,982
========= =========
Other pension costs include employee and Company contributions
to money purchase pension schemes.
The average monthly number of employees during the year was as
follows:
2019 2018
Directors 5 5
Employees - Finance 1 1
Employees - Technical 5 5
----
`
11 11
==== ====
2019 2018
GBP GBP
Directors' remuneration 914,933 557,341
Directors' pension contributions to money purchase
schemes 1,012 24,702
Benefits 13,108 2,992
929,053 585,035
======= =======
The average number of Directors to whom retirement benefits
were accruing was as follows:
2019 2018
Money purchase schemes 1 2
======= =======
Information regarding the highest paid Director 2019 2018
is as follows:
GBP GBP
Aggregate emoluments and benefits 300,500 167,800
Share-based payment 40,810 54,088
Pension contributions - 7,500
341,310 229,388
============ =======
The Directors did not exercise any share options
during the year.
Key management compensation
Key management includes Directors (Executive and Non-Executive)
and the Company Secretary in 2018. In 2019 the Company Secretarial
services were outsourced following the retirement of this employee
at the end of January 2019. The compensation paid or payable to key
management for employee services is shown below:
2019 2018
GBP GBP
Wages and short-term employee benefits 917,183 584,341
Share-based payments (note 20) 371,449 118,423
Pension Contributions 1,262 30,702
--------- -------
1,289,894 733,466
========= =======
6. OTHER INCOME
2019 2018
GBP GBP
Settlement agreement with Total E&P UK Limited 750,000 -
Carried costs reimbursement - 12,037
------
750,000 12,037
======= ======
Carried costs reimbursement: Reimbursement of well-related costs
received as a result of the carried
interest arrangement.
Settlement agreement with Total E&P UK Limited: Funds
received from TEPUK in relation to TEPUK's termination of its 2013
farm-in to licence P2032 (Blocks 21/8c, 21/9c, 21/10c, 21/14a and
21/15b) received in May 2019.
7. NET FINANCE INCOME
2019 2018
GBP GBP
Finance income:
Interest received 106,867 48,971
106,867 48,971
------- ------
Finance costs: (419) -
Net finance income 106,448 48,971
======= ======
8. LOSS BEFORE TAX
The loss before tax is stated after charging/(crediting):
2019 2018
GBP GBP
Depreciation tangible assets 14,067 4,615
Depreciation right-of-use asset 3,568 -
Auditors' remuneration - audit of parent company
and consolidation 51,800 35,000
Auditors' remuneration - audit of subsidiaries 18,700 12,500
Auditors' remuneration - non-audit work - 8,700
Foreign exchange (gain)/loss (2,722) 9,678
9. TAX
Reconciliation of tax charge
2019 2018
GBP GBP
Loss before tax (2,065,009) (1,996,300)
Tax at the domestic rate of 19% (2018: 19%) (392,352) (379,297)
Capital allowances in excess of depreciation (1,121,121) (589,363)
Expenses not deductible for tax purposes and
non-taxable income 110,834 51,292
Deferred tax asset not recognised 1,402,639 917,368
Total tax expense reported in the Consolidated - -
Statement of Comprehensive Income
=========== =============
No liability to UK corporation tax arose on ordinary activities
for the year ended 31 December 2019 or for the year ended 31
December 2018.
The Group has not recognised a deferred tax asset due to the
uncertainty over when the tax losses can be utilised. At the year
end the usable tax losses within the Group were approximately GBP39
million.
10. LOSS PER SHARE
Basic loss per share is calculated by dividing the losses
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
Diluted loss per share is calculated using the weighted average
number of shares adjusted to assume the conversion of all dilutive
potential ordinary shares.
Loss Weighted
attributable average
to ordinary number Per share
shareholders of amount
GBP shares pence
Year ended 31 December 2019
Basic and Diluted EPS
Basic & Diluted (2,065,009) 21,829,227 (9.46)
Year ended 31 December 2018
Basic and Diluted EPS
Basic & Diluted (1,996,300) 21,829,227 (9.15)
11. INTANGIBLE ASSETS
Exploration
costs
GBP
COST
At 1 January 2018 1,533,200
Additions 2,948,630
At 31 December 2018 4,481,830
------------
Additions 5,785,975
At 31 December 2019 10,267,805
------------
ACCUMULATED AMORTISATION
At 1 January 2018 175,241
Charge for the year -
Amortisation on disposal -
At 31 December 2018 175,241
------------
At 31 December 2019 175,241
------------
NET BOOK VALUE
At 31 December 2019 10,092,564
============
At 31 December 2018 4,306,589
============
At 31 December 2017 1,357,959
============
During 2019, the Group retained an 18% equity interest in
licence P2170 (Verbier) and was awarded three additional licences
with 100% working interests in the OGA's 31 SLR, Licence P2498
(Buchan and J2), Licence P2499 (Glenn) and Licence P2497
(Zermatt).
In line with the requirements of IFRS 6, we have considered
whether there are any indicators of impairment on the exploration
and development assets. Based on our assessment, as at 31 December
2019 there are not deemed to be indicators that the licences are
not commercial and the carrying value of GBP10,092,564 continues to
be supported by ongoing exploration work on the licence area with
no further impairments considered necessary.
12. PROPERTY, PLANT AND EQUIPMENT
Computer
and office
equipment
GBP
COST
At 1 January 2018 125,786
Additions 34,879
At 31 December 2018 160,665
------------
Additions 19,047
Disposals (36,130)
At 31 December 2019 143,582
------------
ACCUMULATED DEPRECIATION
At 1 January 2018 125,786
Charge for the year 4,615
At 31 December 2018 130,401
------------
Charge for the year 14,067
Disposals (14,547)
At 31 December 2019 129,921
------------
NET BOOK VALUE
At 31 December 2019 13,661
============
At 31 December 2018 30,264
============
At 31 December 2017 -
============
13. LEASES
Amounts Recognised in the Statement of financial position
2019 2018
GBP GBP
Right-of-use Assets
Buildings 164,125 -
Equipment - -
Vehicles - -
Other - -
------- ----
164,125 -
======= ====
Lease liabilities
Current 13,904 -
Non-Current 154,208 -
-------
168,112 -
=======
On adoption of IFRS 16, the Group recognised lease liabilities
in relation to leases which had previously been classified as
'operating leases' under the principles of IAS 17, 'Leases'. These
liabilities were measured at the present value of the remaining
lease payments, discounted using the lessee's incremental borrowing
rate as of 1 January 2019. The weighted average lessee's
incremental borrowing rate applied to the lease liabilities on 1
January 2019 was 3%.
At 1 January 2019 the Group held no leases which required
restating.
Amounts Recognised in the Statement of comprehensive income
2019 2018
GBP GBP
Depreciation charge of right-of-use asset
Buildings 3,568 -
Equipment - -
Vehicles - -
Other - -
----- ----
3,568 -
===== ====
Interest expenses (included in finance cost) (419) -
14. TRADE AND OTHER RECEIVABLES
2019 2018
Current: GBP GBP
Trade receivables (net) - -
Other receivables 135,548 67
Value added tax 171,344 63,818
Prepayments and accrued revenue 121,418 16,709
428,310 80,594
=========== ========
As at 31 December 2019 there were no trade receivables past due
nor impaired. There are no expected credit losses recognised on
these balances.
15. CASH AND CASH EQUIVALENTS
2019 2018
GBP GBP
Unrestricted cash in bank accounts 4,318,536 19,782,511
Cash in 65-day notice bank accounts 8,000,000 -
------------- ----------
12,318,536 19,782,511
The cash balances are placed with a creditworthy
financial institution.
16. CALLED UP SHARE CAPITAL
Issued and fully paid:
Number: Class Nominal 2019 2018
value GBP GBP
21,829,227 (2018:21,829,227) Ordinary 1p 2,466,144 2,466,144
========= =========
17. TRADE AND OTHER PAYABLES
2019 2018
Current: GBP GBP
Trade payables 399,791 142,565
Accrued expenses 131,706 140,932
Other payables 74,298 130,905
Taxation and Social Security 136,371 22,289
-------
742,166 436,691
======= =======
18. NON-CURRENT LIABILITIES
2019 2018
Non-Current: GBP GBP
Lease Liabilities 154,208 -
154,208 -
======= ====
19. CONTINGENT LIABILITY
In accordance with a 2015 settlement agreement reached with the
Athena Consortium, although Jersey Petroleum Limited remains a
Licensee in the joint venture, any past or future liabilities in
respect of its interest can only be satisfied from the Group's
share of the revenue that the Athena Oil Field generates and up to
60% of net disposal proceeds or net petroleum profits from the
Group's interest in the P2170 licence which is the only remaining
asset still held that was in the Group at the time of the agreement
with the Athena Consortium who hold security over this asset. Any
future repayments, capped at the unpaid liability associated with
the Athena Oil Field, cannot be calculated with any certainty, and
any remaining liability still in existence once the Athena Oil
Field has been decommissioned will be written off. A payment was
made in 2016 to the Athena Consortium in line with this agreement
following the farm-out of P2170 (Verbier) to Equinor and the
subsequent receipt of monies relating to that farm-out.
JOG is currently contesting a fee for an uplift payment of
$479,240 with TGS-NOPEC Geophysical Company ASA (TGS). In February
2018 JOG licensed 185 sq km of TGS MF CFI 3D seismic data. In
November 2018 the P2170 Licence Group made a mandatory
relinquishment of part of the P2170 acreage including an area that
subsequently became block 20/5a.
In July 2019, JOG was awarded in the 31 SLR, as part of Licence
P2498, Block 20/5a. TGS consider that as a consequence of that
award an uplift payment is due. JOG disputes the validity of the
uplift payment given that the TGS 3D data was obtained for use by
the Verbier owners for the sole purpose of locating the Verbier
appraisal well. The data was not used by the Group for the 31 SLR
application and the licence granted under Clause 2 of the
Supplemental Agreement does not apply to individual use by JOG. The
Master Licence Agreement ('MLA') between TGS and JOG applies to the
use of data by a 'Related Entity', such as Jersey Petroleum Ltd,
and permits its use. In the MLA the Related Entity becomes bound
when it uses the data and by doing so would trigger the uplift
liability. The JOG subsidiary did not use the data and so has not
become bound to pay the uplift.
20. SHARE-BASED PAYMENTS
The Group operates a number of share option schemes. Options are
exercisable at the prices set out in the table below. Options are
forfeited if the employee leaves the Group through resignation or
dismissal before the options vest.
Equity settled share-based payments are measured at fair value
at the date of grant and expensed on a straight-line basis over the
vesting period, based upon the Group's estimate of shares that will
eventually vest.
The Group's share option schemes are for Directors, Officers and
employees. The charge for the year was GBP437,080 (2018:
GBP259,964) and details of outstanding options are set out in the
table below.
No. of No. of
shares shares
for which Options for which
options lapsed/non options
Exercise outstanding vesting outstanding
Date of price Vesting Expiry at 1 Jan Options Options during at 31 Dec
Grant (pence) date date 2019 issued Exercised the year 2019
Mar 2011 100 Vested Mar 2021 3,164 - - - 3,164
Mar 2011 4,300 Vested Mar 2021 5,809 - - - 5,809
Mar 2011 4,300 Mar 2014 Mar 2021 4,355 - - - 4,355
Mar 2011 4,300 Mar 2015 Mar 2021 5,809 - - - 5,809
Jul 2011 4,300 Jul 2011 Jul 2021 523 - - - 523
Jul 2011 4,300 Jul 2012 Jul 2021 523 - - - 523
Jul 2011 4,300 Jul 2014 Jul 2021 523 - - - 523
Dec 2011 2,712 Dec 2012 Dec 2021 1,650 - - - 1,650
Dec 2011 2,712 Dec 2014 Dec 2021 1,650 - - - 1,650
May 2013 1,500 May 2014 May 2023 9,500 - - - 9,500
May 2013 1,500 May 2015 May 2023 9,500 - - - 9,500
Nov 2016 110 Nov 2016 Nov 2021 246,667 - - - 246,667
Nov 2016 110 Nov 2017 Nov 2021 246,667 - - - 246,667
Nov 2016 110 Nov 2018 Nov 2021 246,667 - - - 246,667
Apr 2017 310 Apr 2017 Apr 2022 20,000 - - - 20,000
Apr 2017 310 Apr 2018 Apr 2022 20,000 - - - 20,000
Apr 2017 310 Apr 2019 Apr 2022 20,000 - - - 20,000
Jan 2018 200 Jan 2021 Jan 2025 420,000 - - - 420,000
Jan 2018 200 Jan 2018 Jan 2023 76,666 - - - 76,666
Jan 2018 200 Jan 2019 Jan 2023 76,667 - - - 76,667
Jan 2018 200 Jan 2020 Jan 2023 76,667 - - - 76,667
Nov 2018 172 Nov 2021 Nov 2025 150,000 - - - 150,000
Jan 2019 175 Jan 2020 Jan 2026 - 88,333 - - 88,333
Jan 2019 175 Jan 2021 Jan 2026 - 88,333 - - 88,333
Jan 2019 175 Jan 2022 Jan 2026 - 88,333 - - 88,333
Jan 2019 175 Jan 2020 Jan 2024 - 11,667 - - 11,667
Jan 2019 175 Jan 2021 Jan 2024 - 11,667 - - 11,667
Jan 2019 175 Jan 2022 Jan 2024 - 11,667 - - 11,667
Apr 2019 200 Jan 2021 Jan 2025 120,000 120,000
Total 2,063,007
The weighted average fair value of options granted during the
year was determined using the Black-Scholes valuation. The
significant inputs into the model were the mid-market share price
on the day of grant as shown above and an annual risk-free interest
rate of 2%. The volatility measured at the standard deviation of
continuously compounded share returns is based on a statistical
analysis of daily share prices from the date of admission to AIM to
the date of grant on an annualised basis. The weighted average
exercise price for the options granted in 2019 was 182 pence, the
weighted average remaining contractural life of the options was 5
years, the weighted average volatility rates was 62.86% and the
dividend yield was nil. For schemes and scheme rules, please refer
to the Remuneration Report in the full Annual Report.
21. RELATED UNDERTAKINGS AND ULTIMATE CONTROLLING PARTY
The Group and Company do not have an ultimate controlling party
or parent Company.
Registered
Subsidiary % owned County of Incorporation Principal Activity Office
Jersey North Sea
Holdings Ltd 100% England & Wales Non-Trading 1
Jersey Petroleum
Ltd 100% England & Wales Oil Exploration 1
Jersey E & P Ltd 100% Scotland Non-Trading 2
Jersey Oil Ltd 100% Scotland Non-Trading 2
Jersey Exploration
Ltd 100% Scotland Non-Trading 2
Jersey Oil & Gas
E & P Ltd 100% Jersey Management services 3
Registered Offices
1 10 The Triangle, ng2 Business Park, Nottingham, NG2 1AE
2 6 Rubislaw Terrace, Aberdeen, AB10 1XE
3 First Floor, 17 The Esplanade, St Helier, Jersey JE2 3QA
22. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
RECONCILIATION OF LOSS BEFORE TAX TO CASH USED IN OPERATIONS
2019 2018
GBP GBP
Loss for the year before tax (2,065,009) (1,996,300)
Adjusted for:
Amortisation, impairments, depletion and depreciation 14,067 4,615
Depreciation right-of-use asset 3,568 -
Share-based payments (net) 437,080 259,964
Loss on disposal of assets 17,980 -
Finance costs 419 -
Finance income (106,867) (48,971)
(1,698,762) (1,780,692)
(Increase)/Decrease in trade and other receivables (543,829) 275,513
Increase/(Decrease) in trade and other payables 473,587 (1,193,182)
----------- -----------
Cash used in operations (1,769,004) (2,698,361)
CASH AND CASH EQUIVALENTS
The amounts disclosed on the consolidated Statement of Cash
Flows in respect of Cash and cash equivalents are in respect of
these statements of financial position amounts:
Year ended 2019
31 Dec 1 Jan 2019
2019
GBP GBP
Cash and cash equivalents 12,318,536 19,782,511
Year ended 2018
31 Dec 1 Jan 2018
2018
GBP GBP
Cash and cash equivalents 19,782,511 25,415,410
Analysis of net cash
At 1 Jan 2019 Cash flow At 31 Dec 2019
GBP GBP GBP
Cash and cash equivalents 19,782,511 (7,463,975) 12,318,536
Net cash 19,782,511 (7,463,975) 12,318,536
23. POST BALANCE SHEET EVENTS
On 27 January 2020 JOG entered into a conditional Sale and
Purchase Agreement (SPA) to acquire operatorship and an additional
70% working interest on Licence P2170 (Blocks 20/5b and 21/1d) from
Equinor UK Limited. The consideration for the Acquisition consists
of two milestone payments and a royalty based on potential future
oil volumes produced and sold from the Verbier Upper Jurassic
(J62-J64) reservoir oil discovery (the Verbier Field).
Contingent payments of:
-- US$3 million upon sanctioning by the UK's Oil & Gas
Authority ("OGA") of a Field Development Plan ("FDP") in respect of
the
V erbier Field; and US$5 million upon first oil from the Verbier
Field
-- Certain royalty payments on the first 35 million barrels of
oil produced and sold from the Verbier Field calculated on the
basis of a 70% working interest for on-block volumes
In February 2020 a new lease agreement was signed for offices in
10 Arthur Street, London EC4R 9AY, this is a 19 month lease which
expires in September 2021. The total rent for the property is
GBP109,000 per annum.
After the balance sheet date, we have seen macro-economic
uncertainty with regards to prices and demand for oil and gas as a
result of the Covid-19 outbreak. Furthermore, recent global
developments and uncertainty in oil supply in March and April have
caused further abnormally large volatility in commodity markets.
The scale and duration of these developments remain uncertain but
could impact on the progress of our GBA development project.
The Group consider all matters above to be non-adjusting post
balance sheet events.
24. Availability of the annual report 2019
A copy of the full 2019 Annual Report will be made available for
inspection at the Company's registered office during normal
business hours on any weekday. The Company's registered office is
at 10 The Triangle, ng2 Business Park, Nottingham NG2 1AE. A copy
can also be downloaded from the Company's website at ww w
.jerseyoilandgas.com. Jersey Oil and Gas plc is registered in
England and Wales with registration number 7503957.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR EAXSSESKEEFA
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