TIDMJOG
RNS Number : 7025X
Jersey Oil and Gas PLC
06 May 2021
6 May 2021
Jersey Oil and Gas plc
("Jersey Oil & Gas", "JOG" or the "Company")
Final Results for the year ended 31 December 2020
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 2020.
Highlights
-- Delivered 100% control across all of the Greater Buchan Area ("GBA")
o Acquired 70% working interest ("WI") and Operatorship in
licence P2170 from Equinor
o Acquired CIECO V&C (UK) Limited ("CIECO V&C") (12% WI
in P2170 and tax losses)
o The 32(nd) Licensing Round Award has been completed at
part-block 20/5e (within the GBA acreage)
-- Core GBA P50 Contingent Resources increased to 172 MMboe,
from 124 MMboe in 2019, with four high graded, drill-ready
exploration prospects at approximately 220 MMboe
-- Grown the GBA project team, expanding the size and
capabilities of the Company commensurate with the requirements of
operatorship of the GBA Development project (the "GBA Project")
-- Concept Select progressed during the period, focused on
delivering detailed plans for a low-carbon development concept with
highly attractive economics
-- Year-end cash position of GBP5.1 million, with no debt
Post year end
-- Key findings of the Concept Select published
o Uplift in P50 Contingent Resources estimates for the core GBA
to 172 MMboe
o Selected Concept for a three phase, low-carbon, conventional
platform development
-- A farm-out process has been launched to seek an aligned
partner to join the project and provide material funding
-- Concluded a Placing and Offer for Subscription
o Oversubscribed and raised GBP16.6 million
o Strengthened the balance sheet and received strong
institutional support
-- Concluded the acquisition of CIECO V&C, providing a 12%
WI in licence P2170 and associated tax losses of c.GBP15m
Outlook
-- Farm out process for GBA underway
-- JOG views the GBA as one of the most exciting developments in
the North Sea, with the potential to deliver significant value to
shareholders from
o 4 operated licences
o 5 oil discoveries
o 4 drill-ready exploration prospects
-- Project lifetime pre-tax free cash flow for the potential
core GBA development is forecast to be circa US$6.4bn, with an
estimated project value of approximately US$1.7bn pre-tax NPV
(10%)
Andrew Benitz, CEO of Jersey Oil & Gas, commented :
"JOG is delivering on a strategy of focused growth, having
successfully aggregated a significant portfolio of discovered
resources in the GBA together with significant exploration upside.
We have assembled an industry leading, multidisciplinary team of
specialists who have delivered a significant upgrade in discovered
and prospective resources and selected what we believe is the
optimum development concept.
"I would like to express my thanks to all our team and everyone
involved in our GBA project, who have worked tirelessly throughout
the Covid-19 pandemic to ensure ongoing progress.
"The GBA project will be a major investment for the UK, create
many jobs and ultimately produce a vital domestically sourced and
low carbon supply of energy. Our shareholder support is continually
appreciated, and it is only through their investment that we can
achieve our 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
finnCap Ltd Christopher Raggett Tel: 020 7220 0500
Tim Redfern
Camarco Billy Clegg Tel: 020 3757 4983
James Crothers
Rebecca Waterworth
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 ("GBA"), which includes
operatorship and 100% working interests in blocks that contain the
Buchan oil field and J2 and Glenn oil discoveries and an 100%
working interest in the P2170 Licence Blocks 20/5b & 21/1d,
that contain the Verbier oil discovery and other exploration
prospects.
JOG's total GBA acreage is estimated by management to contain
190 million barrels of oil equivalent ("MMboe") of discovered P50
recoverable resources net to JOG, in addition to significant
exploration upside potential of approximately 220 MMboe of
prospective resources in close proximity to the Company's planned
Buchan production platform. JOG has recently concluded the Concept
Select phase of an FDP for the Greater Buchan Area and plans to
progress into Front End Engineering and Design (FEED) later this
year.
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.
CHAIRMAN'S STATEMENT
Overview
During 2020 Jersey Oil and Gas ("JOG") worked tirelessly to
de-risk the development of its North Sea licence interests, thereby
setting the foundations for a very strong performance in the first
quarter of 2021.
A large part of our 2020 efforts were spent advancing the
Concept Select phase of our 100% owned and operated Greater Buchan
Area (the "GBA Development Project"), details of which were
announced in Q1 2021. This demonstrated an economically robust
development plan through to first oil in late 2025 made up of
pre-tax cash flows of US$6.4 billion, an NPV of US$1.7 billion and
an internal rate of return in excess of 25%. These estimated
economics included a low carbon approach to the development of the
GBA, by way of an electrified platform supplied with electricity
from shore. This has the potential to be a first for the United
Kingdom sector of the North Sea and one we are proud to
advance.
Another important part of our work undertaken in 2020, and
announced in Q1 2021, was an extensive review of our Buchan
contingent resources, based on extensive dynamic reservoir
modelling of the Buchan field. This modelling was based on all
available subsurface information which we successfully history
matched to production data going back 36 years. This modelling,
which was independently peer reviewed, demonstrated a significant
uplift in our earlier contingent resource estimates. The resulting
volumes for the Buchan Oil field and the J2 and Verbier oil
discoveries (which we refer to as the GBA core volumes), are now
forecast to be 162 million stock tank barrels ("MMstb") or 172
million of barrels of oil equivalent ("MMboe") including associated
gas (which excludes 18 MMboe of discovered resources from the 100%
owned Buchan Andrew and Glenn discoveries).
We were also pleased to announce the results of a comprehensive
subsurface evaluation of our prospective resources, P2170 ("Verbier
Deep"), P2498 ("Wengen" and "Cortina NE"), and P2497 ("Zermatt").
Each of these prospects can be regarded as drill ready and able to
be tied back to the GBA hub development in the event of a
discovery. This evaluation, which was also subject to a peer review
process, resulted in combined prospective P50 resource volumes of
approximately 220 MMboe. With these prospects in close proximity to
the planned GBA hub, minimum economic volumes are at or below the
P90 volumes calculated by JOG.
The year began with JOG acquiring an additional 70% interest in
Licence P2170 ("Verbier") from Equinor UK Limited which was
followed later in the year by the announcement of the acquisition
of a further 12% interest from Cieco V&C (UK) Limited, which
completed in Q2 2021, thereby resulting in JOG owning 100% of this
licence which includes the Verbier oil discovery, some 6km from the
Buchan oil field.
Business Environment
Following the Covid-19 outbreak in the first quarter of 2020,
the Brent Crude oil price fell to levels of around US$20 per
barrel. Since that time, the oil price has recovered to its
pre-Covid-19 levels and at the time of this statement is trading at
approximately US$65 per barrel. We continue to plan for first oil
from the GBA development to be in late 2025, with many market
commentators anticipating long term oil prices of US$60 and above.
Such levels are substantially above our current estimates for the
lifecycle costs for our GBA project, being approximately in US$30
per barrel.
Shortly after the Covid-19 outbreak we temporarily closed our
London and Jersey offices and put in place systems under which the
Board and employees of the Company could work remotely. We also
took steps to ensure that our staff maintained social contact with
each other through various remote activities.
I am pleased to report that this worked well and, indeed, we
increased the number of employees working for the Company over the
course of the year.
Environmental, Social and Corporate Governance
We fully support the UK Government's commitment to net zero
emissions by 2050 together with the various policy initiatives
being introduced by the Oil and Gas Authority ("OGA"), in
particular the revised "OGA Strategy" announced in Q1 2021, which
sets out a range of net zero obligations on the oil and gas
industry.
We adopt an active approach to environmental, social and
corporate governance issues in all that we do, ranging from the
environment in which our employees work through to the effect of
our North Sea development activities. As part of this process, JOG
is planning to limit its Scope 1 CO2 emissions by powering the GBA
platform with electrical power emissions through either a direct
electricity supply from shore, or participation in an industry wide
collaboration to electrify certain areas of the central North Sea.
This will avoid the requirement to install platform based gas
turbines, with a consequent, and substantial, reduction in related
CO2 emissions. We are working closely with the OGA on this, who are
fully supportive of this approach.
A full statement on JOG's approach to Environmental, Social and
Corporate Governance matters appears later in this Annual Report,
as does a Corporate Governance Report.
People
During 2020, we hired additional staff in order to progress the
development of the GBA. These talented industry professionals bring
many skills to JOG ranging from experience of developing other
similar sized North Sea fields through to expertise in health,
safety, environmental and social responsibility matters. We welcome
all of these individuals to the Company.
As we progress beyond the Concept Select phase of the GBA
development, in Q1 2021, and begin work on the Front End
Engineering Design of the project, the number of additional staff
required will increase.
During 2020 we were also pleased to announce the appointment of
Dr Chris Haynes, OBE, as an adviser to the Board. Chris has
extensive experience in the oil and gas industry and is providing
very helpful strategic guidance and oversight to our many work
programmes.
In April 2021 we were also pleased to announce the appointment
of Les Thomas to the Board as a Non-Executive Director. Les has
over 35 years' experience in the oil and gas industry and his
wealth of experience, particularly in the North Sea, will be of
significant value as we progress the development of Greater Buchan
Area.
Also in 2021, Frank Moxon was appointed as the Senior
Independent Director of JOG, which is an increasingly important
role as we grow the Company.
Outlook
JOG has successfully progressed and further de-risked the
development of the GBA during 2020. With increased ownership of
acreage within the GBA via two acquisitions, a successful licence
round award, the completion of the Concept Select phase and the
significant uplift in our estimates of our GBA resources, we view
the GBA development as one of the most exciting developments in the
North Sea and one with the potential to deliver significant value
to shareholders.
There are substantial costs to be incurred in taking the GBA
development through to first oil, which will require additional
funding. However we are confident that this project, by virtue of
its size, location and low carbon, electrically powered
credentials, will be of interest to many industry participants. We
formally launched a farm out process in Q1 2021 in addition to
raising approximately GBP16.6m (gross) of new equity capital, which
will enable us to maintain our plans for first oil in 2025 and
provide the Company with financial flexibility as we negotiate with
prospective farm in partners. We look forward to updating
shareholders as this process proceeds.
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, particularly as we have
all had to adapt to working remotely.
As always, I also would also thank our shareholders for their
continuing support and welcome our new shareholders into this
exciting and low carbon project.
Marcus Stanton
Non-Executive Chairman
5 May 2021
CHIEF EXECUTIVE OFFICER'S REPORT
Overview
2020 has been an important year of consolidation for the planned
development of the Company's Greater Buchan Area (GBA). Having
matured our understanding of the subsurface we have now selected
our preferred development concept - a low carbon, fully electrified
fixed platform located over the Buchan oil field. In parallel, the
Company has positioned itself with operatorship and complete
ownership of the GBA acreage putting JOG in an advantageous
position ahead of the Company's much anticipated farm-out process
which was launched in March 2021 in order to attract an industry
partner to join us in unlocking the considerable value that exists
within the GBA.
Subsurface
The subsurface evaluation undertaken with the benefit of the
recently acquired PGS 3D broadband seismic data has resulted in the
validation and furthering of our understanding of the existing
discovered and prospective resource potential.
The Buchan static model was built by Rockflow Resources Ltd
(Rockflow) and as part of their deliverables, P90, P50 and P10
static models were provided to Schlumberger UK Oilfield Plc
(Schlumberger) in order to undertake history matching with the 36
years of historic Buchan production data. The history matched
models were then used to generate production forecasts based on
subsurface development plan reflecting different producer and water
injection well counts. The subsurface development plans used for
these production forecasts, combined with economic modelling,
provide the basis for the final concept selection.
The initial core development will comprise Buchan, J2 (now
recognised as being structurally separated into J2 West and J2
East) and Verbier (now recognised as being structurally separated
into Verbier West and Verbier East) with a combined 2C resource of
172 million barrels of oil equivalent ("MMboe"). This includes a
significant increase in our 2C contingent resource estimate for the
Buchan oil field to 132 MMboe.
Evaluation of the prospective resource potential has not only
validated existing prospectivity but identified a volumetrically
material new prospect in Wengen. Of the prospective resource
inventory, four of the identified prospects have been matured to
drill-ready status: Verbier Deep, Wengen, Cortina NE (J64) and
Zermatt with a combined prospective resource in excess of 200
MMboe.
An assessment has been performed to determine the optimum
drilling sequence of these various exploration prospects, resulting
in the following sequence (subject to funding).
-- Wengen - Q2 2023
-- Cortina NE - Q2 2023
Analysis shows that in a P50 resource success case, each
exploration prospect offers a highly economic tie-back opportunity
to the GBA development. A successful outcome at either of the
Wengen or Cortina prospects has been shown to offer the potential
to extend the GBA Development Project's plateau production period
into the mid- to late- 2030s with enhanced economics.
Summary of Concept Select Findings
Delivering Concept Select has been a comprehensive work effort
led by our project team requiring over 14,000 JOG hours and 18,000
contractor hours. In early 2020, JOG completed an Appraise Phase
assessment of the various development options for the GBA. This
option screening phase concluded that development of the GBA's
resources via a fixed production platform located at the Buchan
field, offered the optimum solution when considering environmental
factors, safety issues, technical feasibility, execution risk,
schedule, capital and operating costs, project economics,
availability and operability.
Subsequently, the Company has progressed this development option
through the Concept Select Phase, with work commencing in April
2020. The objective of this Select Phase was to deliver a single,
economically acceptable concept to develop the GBA in order to take
the project forward into the Define Phase. The selected concept for
the GBA Development is planned to be executed in three Phases.
Phase 1 will deliver a single integrated wellhead, production,
utilities and quarters (WPUQ) platform located at the Buchan oil
field. The facility will be normally manned. The Buchan wells will
be drilled utilising a heavy- duty jack-up (HDJU) rig located over
an 12 slot well bay. The Phase 1 facilities will be designed to
accommodate Phase 2 and Phase 3 of the development. Phase 2 will
develop the J2 West, J2 East and Verbier East oil discoveries via a
subsea tie-back to the GBA platform.
Phase 3 will develop the Verbier West oil discovery via
connection to the Phase 2 subsea infrastructure. Production from
the reservoir will be supported by injection of both produced water
and seawater and enhanced by the use of electric submersible pumps
(ESP). Field life is anticipated to be 31 years.
The Buchan location benefits from proximity to existing export
infrastructure for both oil and gas. Selection of the final oil and
gas export routes will be subject to a detailed commercial dialogue
through formal requests for service issued in February 2021. It is
scheduled that this work will be completed to inform FEED (Front
End Engineering and Design), currently planned to take place later
this year.
GBA's Compelling Economics[1]
Our Concept Select findings have yielded some encouraging
economic estimates. Our management estimates show the GBA to be a
significantly cash generative asset, with the first full year of
production expected to generate US$840 million in EBITDA. Expected
pre tax free cash flow for the core discovered volumes is estimated
to be in excess of US$6 billion and this has the potential to
double on the back of near field exploration success.
Cost estimates for each phase have been prepared in accordance
with the detailed work break down structures for Phase 1, 2 and 3.
CAPEX costs for Phase 1 are estimated to be approximately GBP1
billion. Operating costs during plateau production are estimated at
US$8/boe to US$9/boe, with a payback period estimated at under 3
years. Plateau production is estimated for more than 3 years. Total
project costs based on current day values are estimated to be
approximately US$30/boe. Power from Shore is our preferred
development concept, and our economics are based off this
assumption.
Electrification
In line with the UK Government's net zero strategy and policies,
JOG recognises the need for a low carbon power solution and has an
aspiration to deliver production from the GBA Development Project
at an industry-leading carbon intensity level. Accordingly, options
have been assessed that offer the opportunity to eliminate carbon
dioxide emissions associated with power generation on the planned
production facility. Economics have been run based on the provision
of power from the UK national grid via the installation of a subsea
cable to shore.
The provision of power from shore offers the opportunity to
reduce CAPEX and OPEX due to the removal of certain utility systems
and a resulting lower maintenance burden although such reductions
are offset by the cost of the grid connection and subsea cable and
the in-service purchase price of electricity.
A "Net Zero" solution for the GBA Development Project is
economically attractive, despite a 'Green Premium' compared to the
conventional case utilising gas turbines.
Overall carbon emissions from the GBA with platform
electrification are estimated to be less than 1kg/boe. This
compares to estimated carbon emissions from the GBA development
using gas turbines of 13kg/boe, which is less than the UKCS average
of approximately 20kg/boe.
The forecast economic outturn for the power from shore case
relative to the conventional gas turbine case is based on current
UK Government carbon tax forecasts up to 2030 and the cost of
sourcing power from the UK. Based on these assumptions, the "Green
Premium" results in a project NPV reduction of approximately
8%.
The GBA is optimally located in the heart of the UK Central
North Sea such that there is credible potential for JOG to be an
enabler for regional electrification. Collaboration with other
regional operators could reduce overall capital costs associated
with the cable infrastructure. Additionally, early stage engagement
with infrastructure funds has indicated that there is potential
interest in financing the capital costs in return for future tariff
payments. The Company continues to progress studies that may lead
to electrification costs reducing in line with conventional power
solutions.
Regional hub potential
Collaborative studies conducted in parallel with the GBA Concept
Select Phase, have identified the potential for significant
synergies with neighbouring, third-party discovered resources. The
production of such resources through the GBA facility offers the
potential for both parties to realise reductions in development
costs and OPEX costs offering the potential to increase incremental
recovery of oil from the GBA and neighbouring discoveries.
Schedule
JOG's detailed planning and schedule for delivering first is
currently targeting late Q3 2025. Key milestones in achieving this
first oil date include:
-- Concept Select Report finalised - Q1 2021
-- Commit to FEED - Q3 2021
-- Field investment decision (FID) - Q3 2022
-- First oil - Q3 2025
Licensing activity
During the year JOG acquired operatorship of, and increased its
equity in, Licence P2170 to 100% having acquired 70% from Equinor
UK Ltd in April 2021 and more recently, acquired the remaining 12%
through the corporate acquisition of CIECO V&C (UK) Limited.
Details relating to the acquisitions can be found in note 19 of the
Consolidated Financial Statements.
In September 2020, JOG was awarded a 100% working interest in,
and operatorship of, part-block 20/5e in the Oil & Gas
Authority's ("OGA's") 32nd Offshore Licensing Round. Part-block
20/5e has been incorporated into our existing Licence P2498 and is
located within the GBA development acreage and contains an
extension of the J2 oil discovery.
These acquisitions serve to increase JOG's discovered resources,
add material value and increase our exposure to additional
exploration potential.
Effective 30 November, JOG made a discretionary partial
relinquishment of P2170, retaining the prospective areas and
realising a significant saving in licence fees.
Environmental, Social and Corporate Governance ("ESG")
Considerations
It is the Company's ambition to be a market differentiator in
emissions accountability and management. To ensure meaningful
carbon commitments, JOG has been working with ITPEnergised, a
leading environmental consultancy, to set specific targets based on
a quantifiable baseline. The defined action plan is to be
underpinned by our Carbon Policy. This Policy communicates the
Company's emissions intensity targets and reporting boundaries
looking forward.
Furthermore, JOG has undertaken analysis of the requirements of
the Taskforce for Climate-Related Financial Disclosures (TCFD) and
plans to report its disclosures in line with the recommendations of
the TCFD from 2021.
As a proud signatory of the UN Global Compact, JOG continues to
align itself with the philosophy of the Compact's Ten Principles in
the areas of Human Rights, Labour, Environment and Anti-
Corruption. Details of JOG's actions to integrate the Global
Compact and its Principle's into the Company's strategy, culture
and daily operations are outlined in our inaugural Sustainability
report included within this annual report.
Acquisition Strategy
2020 saw oil prices hit recent unexpected lows and the shock of
supply conflicts, demand slump as a result of the Covid-19 pandemic
and diminished investor sentiment challenged our industry to its
limit. Nevertheless, despite global economic havoc, demand for oil,
on an annual basis fell by approximately only 6%. Oil prices have
recovered following news of a Covid-19 vaccine during November
2020. This recovery has led to a re-emergence of deal activity
across the North Sea, with the announcement of several transactions
in the early weeks of 2021. As we have approached completion of our
Concept Select phase for the GBA Development Project, JOG's
priority has been focused on its core asset base and the launch of
the farm-out process.
As mentioned above, JOG announced two acquisitions during 2020,
successfully increasing its working interest in Licence P2170 from
18% to full control and a 100% working interest. The acquisition of
Equinor UK Limited's 70% working interest was an asset acquisition,
with certain future milestone contingent and royalty payments. The
acquisition of CIECO V&C (UK) Ltd. which was completed in Q2
2021 was a corporate acquisition, which included CIECO's 12%
working interest in Licence P2170 and approximately GBP15 million
of tax loses. Consideration comprised a modest upfront payment and
certain future milestone contingent payments. JOG remains active in
its pursuit of accretive acquisition opportunities and we have seen
a significant uplift in deal activity across the North Sea during
2021.
Financial Review
JOG's cash position was approximately GBP5.1 million as of 31
December 2020. As an oil and gas exploration and development
company, JOG generated no production revenue during the year. We
received a small amount of interest on our cash deposits.
The loss for the year, before and after tax, was GBP2.8 million
(2019 Year End: GBP2.1 million). Our main expenditure during the
year related to the Concept Select work on our GBA project.
Post year end, we were pleased to announce an oversubscribed
equity placing and a directors' subscription in addition to an
offer for subscription for existing shareholders, raising gross
proceed of approximately GBP16.6 million. The net proceeds from the
fundraising, together with the Company's existing cash reserves,
will be used to strengthen the Company's balance sheet ahead of
anticipated commercial negotiations for the GBA development project
during the farm-out process and to maintain momentum and ensure
that time and funding pressures do not interfere in the efficient
delivery of the overall project. Costs for the next stages of the
GBA development project will include surveys, license fees,
pre-FEED and FEED work and project management.
Summary and outlook
JOG is delivering on a strategy of focused growth having
successfully aggregated a significant portfolio of discovered
resources in the GBA, together with significant exploration upside.
We have assembled an industry leading, multidisciplinary team of
specialists who have delivered a significant upgrade in discovered
and prospective resources and selected the optimum development
concept.
Having completed our Concept Select work, we will be submitting
for approval to the OGA a report summarising the Company's findings
by 31st July 2021, in compliance with JOG's commitment under the
P2498 licence. Work continues apace with respect to the issuance of
tenders for marine surveys to support the Environmental Statement
required for the Field Development Plan. Tendering processes for
the provision of FEED engineering services is also underway.
JOG is currently working towards being ready to enter the FEED
phase of the GBA project in Q3 2021, with FID (Final Investment
Decision) currently anticipated for late H2 2022.
With the Concept Select Report finalised, JOG has now launched
its farm-out process to seek to secure an industry partner for the
GBA Development Project.
JOG's Board anticipates that this will be well received by the
industry as an exciting investment opportunity, in light of its
scale, economics and low carbon production approach.
Oil prices have recovered strongly from the lows witnessed
during 2020. JOG expects a significant supply crunch from global
under investment in upstream projects, which can be expected to
lead to further oil price increases favourably timed for our
development.
I would like to express my thanks to all our team and everyone
involved in our GBA project, who have worked tirelessly throughout
the Covid-19 pandemic to ensure ongoing progress. The GBA
Development Project will be a major investment for the UK, create
many jobs and ultimately produce a vital domestically sourced and
low CO2 supply of energy. Our shareholder support is continually
appreciated, and it is only through their investment that we can
achieve our plans.
Andrew Benitz
Chief Executive Officer
5 May 2021
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2020
Note 2020 2019
GBP GBP
================================== ==== =========== ===========
Revenue 3 - -
Cost of sales (53,046) (666,053)
GROSS LOSS (53,046) (666,053)
Other income 6 - 750,000
Other gains/(losses) 8 (637,028) -
Loss on sale of assets - (17,975)
Administrative expenses (2,111,532) (2,237,429)
================================== ==== =========== ===========
OPERATING LOSS (2,801,606) (2,171,457)
Finance income 7 27,937 106,867
Finance expense 7 (8,262) (419)
================================== ==== =========== ===========
LOSS BEFORE TAX 8 (2,781,931) (2,065,009)
Tax 9 - -
================================== ==== =========== ===========
LOSS FOR THE YEAR (2,781,931) (2,065,009)
======================================== =========== ===========
TOTAL COMPREHENSIVE LOSS FOR THE
YEAR (2,781,931) (2,065,009)
Total comprehensive loss for the
year attributable to:
Owners of the parent (2,781,931) (2,065,009)
================================== ==== =========== ===========
Loss per share expressed in pence
per share:
Basic 10 (12.74) (9.46)
Diluted 10 (12.74) (9.46)
================================== ==== =========== ===========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2020
Note 2020 2019
GBP GBP
====================================== ==== ============ ============
NON-CURRENT ASSETS
Intangible assets - Exploration costs 11 14,991,295 10,092,564
Property, plant and equipment 12 74,549 13,661
Right-of-use assets 13 197,374 121,310
Deposits 82,642 28,420
====================================== ==== ============ ============
15,345,860 10,255,955
============================================ ============ ============
CURRENT ASSETS
Trade and other receivables 14 401,440 471,125
Cash and cash equivalents 15 5,081,515 12,318,536
====================================== ==== ============ ============
5,482,955 12,789,661
============================================ ============ ============
TOTAL ASSETS 20,828,815 23,045,616
============================================ ============ ============
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 2,109,969 1,928,099
Accumulated losses (78,509,819) (75,727,888)
Reorganisation reserve (382,543) (382,543)
====================================== ==== ============ ============
TOTAL EQUITY 19,535,277 22,135,338
============================================ ============ ============
LIABILITIES
============ ============
NON-CURRENT LIABILITIES
Lease Liabilities 18 101,270 154,208
====================================== ==== ============ ============
101,270 154,208
============================================ ============ ============
CURRENT LIABILITIES
Trade and other payables 17 1,069,620 742,166
Lease Liabilities 13 122,648 13,904
====================================== ==== ============ ============
1,192,268 756,070
============================================ ============ ============
TOTAL LIABILITIES 17 1,293,538 910,278
====================================== ==== ============ ============
TOTAL EQUITY AND LIABILITIES 20,828,815 23,045,616
============================================ ============ ============
Vicary Gibbs
Chief Financial Officer
5 May 2021
Company Registration Number: 07503957
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2020
Called up Share Share Accumulated Reorganisation
share premium options losses reserve Total
capital account reserve GBP GBP equity
GBP GBP GBP GBP
================ =============== ================ ================ ============== ============== ===============
At 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
and
1 January 2020 2,466,144 93,851,526 1,928,099 (75,727,888) (382,543) 22,135,338
================ =============== ================ ================ ============== ============== ===============
Loss and total
comprehensive
loss for the
year - - - (2,781,931) - (2,781,931)
Share based
payments - - 181,870 - - 181,870
================ =============== ================ ================ ============== ============== ===============
At 31 December
2020 2,466,144 93,851,526 2,109,969 (78,509,819) (382,543) 19,535,277
================ =============== ================ ================ ============== ============== ===============
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 Amount subscribed for share capital in excess of nominal
account value
================== ===============================================================
Share options Represents the accumulated balance of share-based payment
reserve 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 recognised in the Consolidated
Statement of Comprehensive Income
================== ===============================================================
Reorganisation Amounts resulting from the restructuring of the Group
reserve at the time of the Initial Public Offering (IPO) in 2011
================== ===============================================================
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2020
2020 2019
Note GBP GBP
========================================= ====== =============== ===========
Cash flows from operating activities
Cash used in operations 22 (2,160,164) (1,769,004)
Net interest received 7 27,937 106,867
Net interest paid 7 (8,262) (419)
========================================= ====== =============== ===========
Net cash used in operating activities (2,140,489) (1,662,556)
================================================= =============== ===========
Cash flows from investing activities
Proceeds on sale of tangible assets - 3,603
Purchase of intangible assets 11 (4,898,731) (5,785,975)
Purchase of tangible assets 12 (84,865) (19,047)
========================================= ====== =============== ===========
Net cash used in investing activities (4,983,596) (5,801,419)
================================================= =============== ===========
Cash flows from financing activities
=============== ===========
Principal elements of lease payments (112,936) -
========================================= ====== =============== ===========
Net cash generated from financing activities (112,936) -
================================================= =============== ===========
Decrease in cash and cash equivalents 22 (7,237,021) (7,463,975)
Cash and cash equivalents at beginning
of year 22 12,318,536 19,782,511
========================================= ====== =============== ===========
Cash and cash equivalents at end of year 22 5,081,515 12,318,536
========================================= ====== =============== ===========
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2020
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 in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006.
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
the equity placing and offer for subscription concluded in April
2021 the Company has in a severe but plausible downside scenario
surplus funds significantly in excess of the outstanding
commitments to conclude the GBA Concept Select work programmes and
the ongoing Operator overheads and licence fees beyond November
2022. The farm-out process launched in March 2021 to secure a new
partner and material associated funding to progress the GBA Project
through FEED and to FID and beyond is expected to conclude in Q3
2021. Subject to securing suitable funding from this process
development work will continue at pace. Delays to the farm-out
process may serve to slow the pace of development and may delay the
date at which the project achieves FID. Given JOG currently owns
and operates 100% of project, the rate at which JOG may choose to
progress the project is entirely within its control and hence the
Company's current cash reserves are therefore expected to more than
exceed its estimated liabilities. Based on these circumstances, the
Directors have considered it appropriate to adopt the going concern
basis of accounting in preparing the Company's financial
statements.
Changes in Accounting Policies and Disclosures
The group has applied the following standards and amendments for
the first time for their annual reporting period commencing 1
January 2020:
-- Definition of Material - Amendments to IAS 1 and IAS 8;
-- Definition of a Business - Amendments to IFRS 3;
-- Interest Rate Benchmark Reform - Amendments to IFRS 9, IAS 39 and IFRS 7; and
-- Revised Conceptual Framework for Financial Reporting.
The amendments listed above did not have any impact on the
amounts recognised in prior periods and are not expected to
significantly affect the current or future periods.
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 2020
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 loss for these
schemes amounted to GBP181,870 (2019: GBP437,080). 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 entity. 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 equity.
Goodwill is initially measured as the excess of the aggregate of
the consideration transferred and the fair value of 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 on
consolidation. 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
Transactions 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 equity. Gains or losses on disposals to
non-controlling interests are also recorded in equity.
(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 Statement of Comprehensive Income.
Intangible assets are recognised at acquisition at the cost paid
using the cost accumulation model. Variable payments are not
included in the carrying amount of the asset at acquisition, and no
liability is recognised for the contingent consideration. The Group
does not recognise a liability because, following the IFRIC agenda
decision (March 2016), it is not clear that there is an obligation
before the uncertainty is resolved.
Exploration and Evaluation Costs
The Group financial statements 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. For the purposes of impairment the group allocates
all of its licences to one cash generating unit. The Group
considers this to be appropriate due to the future interdependency
of these fields.
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.
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
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 liability.
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.
To 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 life.
Payments associated with short-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. Short-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. Measurement is
based on the higher of fair value less cost of disposal or value in
use.
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.
The simplified approach requires expected lifetime losses to be
recognised from initial recognition of the receivables. This
involves determining the expected loss rates using a provision
matrix that is based on the company's historical default rates
observed over the expected life of the receivable and adjusted
forward-looking estimates. This is then applied to the gross
carrying amount of the receivable to arrive at the loss allowance
for the period.
The three-stage approach assesses impairment based on changes in
credit risk since initial recognition using the past due criterion
and other qualitative indicators such as increase in political
concerns or other macroeconomic factors and the risk of legal
action, sanction or other regulatory penalties that may impair
future financial performance. Financial assets classified as stage
1 have the ECL measured as a proportion of their lifetime ECL that
results from possible default events that can occur within one
year, while assets in stage 2 or 3 have their ECL measured on a
lifetime basis. If the borrower has sufficient accessible highly
liquid assets in order to repay the loan if demanded at the
reporting date, the expected credit loss is considered
immaterial.
If the borrower does not have sufficient accessible highly
liquid assets, the ECL is determined by projecting the probability
of default (PD), loss given default (LGD) and exposure at default
(EAD).
The PD is based on default rates determined by external rating
agencies for the counterparties. The LGD is determined based on
management's estimate of expected cash recoveries after considering
the historical pattern of the receivable, and it assesses the
portion of the outstanding receivable that is deemed to be
irrecoverable at the reporting period. For intercompany balances,
the discounted cashflows of the lender are also considered in
calculating the LGD. The EAD is the total amount of outstanding
receivable at the reporting period.
These three components are multiplied together, and adjusted for
forward looking information, such as crude oil prices, to arrive at
a summed ECL in relation to base, optimistic and downturn
scenarios, that carry different probability weightings.
Loss allowances for financial assets measured at amortised cost
are deducted from the gross carrying amount of the related
financial assets and the amount of the loss is recognised in the
statement of comprehensive income.
Trade 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 and the Company 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 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
Equity settled share-based payments to employees and others
providing similar services are measured at the fair value of the
equity instruments at the grant date. The total amount to be
expensed is determined by reference 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, profitability, 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 equity. 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 the 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.
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.
Share Capital
Ordinary shares are classified as equity.
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 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 2020 and 2019 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.
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
identify, 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 liquidity.
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 equity. Net debt is calculated as borrowings
less cash and cash equivalents. Total equity comprises all
components of equity.
The ratio of net debt to equity as at 31 December 2020 is Nil
(2019: Nil).
Maturity analysis of financial assets and liabilities
Financial assets 2020 2019
GBP GBP
================= ======= =======
Up to 3 months 446,082 439,014
3 to 6 months 35,980 10,704
Over 6 months 199,395 171,137
================= ======= =======
681,457 620,855
================= ======= =======
Financial liabilities 2020 2019
GBP GBP
====================== ========= =======
Up to 3 months 1,069,620 717,350
3 to 6 months - -
Over 6 months - -
====================== ========= =======
1,069,620 717,350
====================== ========= =======
Lease liabilities 2020 2019
GBP GBP
================== ======= =======
Up to 3 months 46,712 1,264
3 to 6 months 40,231 1,274
Over 6 months 136,975 165,574
================== ======= =======
223,918 168,112
================== ======= =======
5. EMPLOYEES AND DIRECTORS 2020 2019
GBP GBP
--------------------------------- --------- ---------
Wages and salaries 1,841,230 1,519,588
Social security costs 145,605 138,859
Share-based payments (note 20) 181,870 437,080
Other pension costs 181,010 31,462
================================= ========= =========
2,249,715 2,126,989
--------------------------------- --------- ---------
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:
2020 2019
GBP GBP
----------------------------------------------------------- ------- -------
Directors 5 5
Employees - Finance 1 1
Employees - Technical 8 5
=========================================================== ======= =======
14 11
----------------------------------------------------------- ------- -------
2020 2019
GBP GBP
----------------------------------------------------------- ------- -------
Directors' remuneration 878,100 914,933
----------------------------------------------------------- ------- -------
Directors' pension contributions to money purchase schemes 26,665 1,012
----------------------------------------------------------- ------- -------
Benefits 17,104 13,108
----------------------------------------------------------- ------- -------
921,869 929,053
----------------------------------------------------------- ------- -------
The Director's remuneration is shown net of share-based
payments.
The average number of Directors to whom retirement benefits were
accruing was as follows:
2020 2019
GBP GBP
======================= ==== ====
Money purchase schemes 2 1
======================= ==== ====
Information regarding the highest paid Director is as
follows:
2020 2019
GBP GBP
================================== ======= =======
Aggregate emoluments and benefits 254,784 300,500
Share-based payments 52,470 40,810
Pension contributions 25,000 -
================================== ======= =======
332,254 341,310
================================== ======= =======
The Directors did not exercise any share options during the
year.
Key management compensation
Key management includes Directors (Executive and Non-Executive).
The compensation paid or payable to key management for employee
services is shown below:
2020 2019
GBP GBP
======================================= ========= =========
Wages and short-term employee benefits 895,203 917,183
Share-based payments (note 20) 153,816 371,449
Pension Contributions 26,665 1,262
--------------------------------------- --------- ---------
1,075,684 1,289,894
--------------------------------------- --------- ---------
6. OTHER INCOME
2020 2019
GBP GBP
----------------------------------------------- ---- -------
Settlement agreement with Total E&P UK Limited - 750,000
----------------------------------------------- ---- -------
- 750,000
----------------------------------------------- ---- -------
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
2020 2019
GBP GBP
=================== ======= =======
Finance income:
======= =======
Interest received 27,937 106,867
=================== ======= =======
27,937 106,867
=================== ======= =======
Finance costs: (8,262) (419)
=================== ======= =======
Net finance income 19,675 106,448
=================== ======= =======
8. LOSS BEFORE TAX
The loss before tax is stated after charging/(crediting):
2020 2019
GBP GBP
===================================================== ======= =======
Depreciation tangible assets 23,977 14,067
Depreciation right-of-use asset 135,493 3,568
Auditors' remuneration - audit of parent company and
consolidation 58,000 51,800
Auditors' remuneration - audit of subsidiaries 20,000 18,700
Auditors' remuneration - non-audit work 16,000 -
TGS Settlement 637,028 -
Foreign exchange (gain)/loss (5,600) (2,722)
===================================================== ======= =======
In December 2020 the Company reached a settlement with TGS-Nopec
Geophysical Company ASA ("TGS") pursuant to an agreement entered
into with TGS on 9 February 2018. Under the agreement, TGS claimed
uplift payments from JOG totalling US$1,050,838 in respect of: a)
licence awards to Jersey Petroleum Limited ("JPL") in the Oil &
Gas Authority's 31st Supplementary Offshore Licencing Round; and b)
the acquisition by JPL of Equinor UK Limited's 70% interest in
Licence P2170 (Verbier). The company disputed the validity of both
claims, following which two hearings took place in the Norwegian
courts. Subsequent to these hearings and, on the basis of legal
advice received, the Company agreed a final settlement payment to
TGS of US$850,000 (GBP637,028).
9. TAX
Reconciliation of tax charge
2020 2019
GBP GBP
========================================================= =========== ===========
Loss before tax (2,781,931) (2,065,009)
Tax at the domestic rate of 19% (2019: 19%) (528,567) (392,352)
Capital allowances in excess of depreciation (957,549) (1,121,121)
Expenses not deductible for tax purposes and non-taxable
income 35,704 110,834
Deferred tax asset not recognised 1,450,412 1,402,639
========================================================= =========== ===========
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 2020 or for the year ended 31
December 2019.
In April 2023 the rate of corporation tax will increase to 25%
as announced in the March 2021 Budget.
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 GBP46
million (2019: 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.
There is no difference between dilutive and ordinary earnings
per share due to their being no dilutive shares in the period.
Loss attributable Weighted
to ordinary average Per share
shareholders number amount
GBP of pence
shares
============================ ================= ========== ===========
Year ended 31 December 2020
==========================================
Basic and Diluted EPS
============================ ================= ========== ===========
Basic & Diluted (2,781,931) 21,829,227 (12.74)
============================ ================= ========== ===========
Year ended 31 December 2019
Basic and Diluted EPS
Basic & Diluted (2,065,009) 21,829,227 (9.46)
============================ ================= ========== ===========
11. INTANGIBLE ASSETS
Exploration
costs
GBP
========================= ===========
COST
At 1 January 2019 4,481,830
Additions 5,785,975
------------------------- -----------
At 31 December 2019 10,267,805
------------------------- -----------
Additions 4,898,731
At 31 December 2020 15,166,536
------------------------- -----------
Accumulated Amortisation
At 1 January 2019 175,241
Charge for the year -
Amortisation on disposal -
========================= ===========
At 31 December 2019 175,241
------------------------- -----------
At 31 December 2020 175,241
------------------------- -----------
Net Book Value
At 31 December 2020 14,991,295
------------------------- -----------
At 31 December 2019 10,092,564
------------------------- -----------
During 2020, the Group acquired an additional 70% working
interest in licence P2170 (Verbier). The consideration for the
Acquisition consists of two milestone payments, which are
considered contingent liabilities, (note 19) US$3 million upon
sanctioning by the UK's Oil & Gas Authority ("OGA") of a Field
Development Plan ("FDP") in respect of the Verbier Field; and US$5
million upon first oil from the Verbier Field. In addition to the
existing 18% equity interest and retained 100% working interests in
the licences awarded pursuant to the OGA's 31 SLR (2019), Licence
P2498 (Buchan and J2), Licence P2499 (Glenn) and Licence P2497
(Zermatt). The Group was also awarded a 100% working interest in,
and operatorship of, part-block 20/5e in the OGA's 32 Offshore
Licensing Round in 2020. Part- block 20/5e is incorporated within
Licence P2498 (Buchan & J2) and is located within the Group's
existing Greater Buchan Area.
In line with the requirements of IFRS 6, we have considered
whether there are any indicators of impairment on the exploration
assets. Based on our assessment, as at 31 December 2020 there are
not deemed to be indicators that the licences are not commercial
and the carrying value of GBP14,991,295 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 2019 160,665
Additions 19,047
Disposals (36,130)
------------------------- -----------
At 31 December 2019 143,582
Additions 84,865
Disposals -
------------------------- -----------
At 31 December 2020 228,447
------------------------- -----------
ACCUMULATED DEPRECIATION
At 1 January 2019 130,401
Charge for the year 14,067
Disposals (14,547)
------------------------- -----------
At 31 December 2019 129,921
------------------------- -----------
Charge for the year 23,977
Disposals -
========================= ===========
At 31 December 2020 153,898
------------------------- -----------
NET BOOK VALUE
At 31 December 2020 74,549
------------------------- -----------
At 31 December 2019 13,661
------------------------- -----------
13. LEASES
Amounts Recognised in the Statement of financial position
2020 2019
GBP GBP
==================== ======= =======
Right-of-use Assets
======= =======
Buildings 197,374 121,310
==================== ======= =======
197,374 121,310
==================== ======= =======
Lease liabilities
Current 122,648 13,904
Non-Current 101,270 154,208
-------------------- ------- -------
223,918 168,112
==================== ======= =======
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%. The borrowing rate applied for 2020 remained
at 3% and the leases relate to office space.
At 1 January 2019 the group held no leases which required
restating.
Amounts Recognised in the Statement of comprehensive income
2020 2019
GBP GBP
============================================= ======= =====
Depreciation charge of right-of-use asset
======= =====
Buildings 135,493 3,568
============================================= ======= =====
135,493 3,568
============================================= ======= =====
Interest expenses (included in finance cost) (8,230) (419)
============================================= ======= =====
14. TRADE AND OTHER RECEIVABLES
2020 2019
GBP GBP
================================ ======= =======
Current:
Trade receivables (net) - -
Other receivables 91,020 135,548
Value added tax 161,111 171,344
Prepayments and accrued revenue 149,309 121,418
================================ ======= =======
401,440 428,310
================================ ======= =======
As at 31 December 2020 there were no trade receivables past due
nor impaired. There are immaterial expected credit losses
recognised on these balances.
15. CASH AND CASH EQUIVALENTS
2020 2019
GBP GBP
==================================== ========= ==========
Cash in bank accounts 2,081,515 4,318,536
Cash in 65-day notice bank accounts 3,000,000 8,000,000
------------------------------------ --------- ----------
5,081,515 12,318,536
------------------------------------ --------- ----------
The cash balances are placed with a creditworthy financial
institution.
16. CALLED UP SHARE CAPITAL
Issued and fully paid: Number: Nominal 2020 2019
Class value GBP GBP
------------------------------ -------- ------- --------- ---------
21,829,227 (2019:21,829,227) Ordinary 1p 2,466,144 2,466,144
------------------------------ -------- ------- --------- ---------
17. TRADE AND OTHER PAYABLES
2020 2019
GBP GBP
============================= ========= =======
Current:
Trade payables 451,857 399,791
Accrued expenses 465,291 131,706
Other payables 74,905 74,298
Taxation and Social Security 77,567 136,371
============================= ========= =======
1,069,620 742,166
============================= ========= =======
18. LEASE LIABILITIES
2020 2019
GBP GBP
------------------ ------- -------
Non-Current:
======= =======
Lease Liabilities 101,270 154,208
================== ======= =======
101,270 154,208
------------------ ------- -------
19. CONTINGENT LIABILITIES
2015 settlement agreement with Athena Consortium: In accordance
with a 2015 settlement agreement reached with the Athena
Consortium, although Jersey Petroleum Ltd 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 per cent.
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.
Equinor UK Limited: During the year (in January 2020), Jersey
Oil Limited announced that it had entered into a conditional Sale
and Purchase Agreement ("SPA") to acquire operatorship of, and an
additional 70% working interest in, Licence P2170 (Blocks 20/5b and
21/1d) from Equinor UK Limited ("Equinor"), this transaction
completed in May 2020. The consideration for the Acquisition
consists of two milestone payments, which are considered contingent
liabilities: US$3 million upon sanctioning by the UK's Oil &
Gas Authority ("OGA") of a Field Development Plan ("FDP") in
respect of the Verbier Field; and US$5 million upon first oil from
the Verbier Field.
The earliest of the milestone payments in respect of the
Acquisition is not currently anticipated being payable before the
start of 2022.
ITOCHU Corporation and Japan Oil, Gas and Metals National
Corporation: During the year (in November 2020) Jersey Oil Limited
announced that it entered into a conditional Sale and Purchase
Agreement ("SPA") to acquire the entire issued share capital of
CIECO V&C (UK) Limited, which was owned by ITOCHU Corporation
and Japan Oil, Gas and Metals National Corporation, this
transaction completed in April 2021. The consideration for the
Acquisition includes a completion payment of
GBP150k and two future milestone payments, which are considered
contingent liabilities: GBP1.5 million in cash upon consent from
the UK's Oil & Gas Authority ("OGA") for a Field Development
Plan ("FDP") in respect of the Verbier discovery in the Upper
Jurassic (J62-J64) Burns Sandstone reservoir located on Licence
P2170; and GBP1 million in cash payable not later than one year
after first oil from all or any part of the area which is the
subject of the Field Development Plan.
The earliest of the milestone payments in respect of the
Acquisition is not currently anticipated being payable before the
start of 2022.
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 GBP181,870 (2019:
GBP437,080) and details of outstanding options are set out in the
table below.
No. of shares No. of shares
Exercise for which Options for which
price options Options Options lapsed/non options outstanding
Date of (pence) Vesting Expiry outstanding issued Exercised vesting at 31 Dec
Grant date date at 1 Jan during 2020
2020 the year
========== ========== ========= ======== ============= ========= =========== ============ ====================
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 - - - 4,370
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 - - - 524
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 - - - 166,667
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 - - - 70,000
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 - - 6,667 5,000
Jun 2019 200 Jan 2021 Jan 2025 120,000 - - - 120,000
Jun 2019 110 Jun 2019 Jun 2029 40,000 - - - 40,000
========== ========== ========= ======== ============= ========= =========== ============ ====================
Total 2,009,689
========== ========== ========= ======== ============= ========= =========== ============ ====================
The weighted average fair value of options granted previously
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 contractual 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.
There were adjustments made to the opening balance of share
options due to 6,667 of the January 2018 issue of share options
lapsing in 2019 and 40,000 of the November 2016 issue lapsed and
then were re-issued in June 2019.
21. RELATED UNDERTAKINGS AND ULTIMATE CONTROLLING PARTY
The Group and Company do not have an ultimate controlling party
or parent Company.
County of Incorporation
Subsidiary % owned Principal Activity Registered 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, Tower House, La Route es Nouaux, St Helier, Jersey JE2 4ZJ
22. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
2020 2019
GBP GBP
------------------------------------------------------ ----------- -----------
Loss for the year before tax (2,781,931) (2,065,009)
Adjusted for:
Amortisation, impairments, depletion and depreciation 23,977 14,067
Depreciation right-of-use asset 135,493 3,568
Share-based payments (net) 181,870 437,080
Loss on disposal of assets - 17,980
Finance costs 8,262 419
Finance income (27,937) (106,867)
====================================================== =========== ===========
(2,460,266) (1,698,762)
(Increase)/Decrease in trade and other receivables (27,352) (543,829)
Increase/(Decrease) in trade and other payables 327,454 473,587
====================================================== =========== ===========
Cash used in operations (2,160,164) (1,769,004)
------------------------------------------------------ ----------- -----------
RECONCILIATION OF LOSS BEFORE TAX TO CASH USED IN OPERATIONS
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 2020
31 Dec 2020 31 Dec
GBP 2019
GBP
========================== =========== ==========
Cash and cash equivalents 5,081,515 12,318,536
========================== =========== ==========
Year ended 2019
31 Dec 2019 1 Jan 2019
GBP GBP
========================== =========== ==========
Cash and cash equivalents 12,318,536 19,782,511
========================== =========== ==========
Analysis of
net cash
====================================== ========================= ======================= =======================
At 1 Jan 2020 Cash flow 1 Jan 2019
GBP GBP GBP
====================================== ========================= ======================= =======================
Cash and cash equivalents 12,318,536 (7,237,021) 5,081,515
====================================== ========================= ======================= =======================
Net cash 12,318,536 (7,237,021) 5,081,515
====================================== ========================= ======================= =======================
23. POST BALANCE SHEET EVENTS
Share options awards
On 28th January 2021, 250,000 share options were granted to
employees (but not Directors) at an exercise price of 155p. These
had been awarded in July 2020 but could not be granted until
January 2021 due to multiple close periods.
On 18th March 2021, 330,000 share options were granted to
Directors and 192,000 to employees at an exercise price of 210p (a
premium of 15.7% to the previous day's middle market closing
price). As a result, the total number of share options outstanding
is 13% of issued share capital, well within the overall ten-year
limit of 15% under the Share Option Scheme. Post the equity
placing, directors subscription and offer for subscription
completed in April 2021 the total number of share options
outstanding as a percentage of issued share capital reduces to less
than 9%.
Capital raise
In April 2021 JOG held a General Meeting where the following
were approved by Shareholders:
The Offer for Subscription, announced as part of the Fundraising
on 17 March 2021, closed for applications on 12 April 2021, the
Company announced that valid applications were received from
Qualifying Participants in respect of, in aggregate, 974,157 Offer
Shares, representing approximately 80.36 per cent. of the Offer
Maximum. Accordingly, pursuant to the Placing, Subscription and
Offer announced on 17 March 2021 and further to the abovementioned,
the Company issued 9,054,548 new Ordinary Shares (the "Placing
Shares") pursuant to the Placing, 36,361 new Ordinary Shares (the
"Subscription Shares") pursuant to the Subscription and 974,157 new
Ordinary Shares pursuant to the Offer at a price of 165 pence per
share. The Company raised total gross proceeds from the Fundraising
of approximately GBP16.61 million (net proceeds GBP15.8m).
Completion of the CIECO V&C acquisition
On 7th April 2021 JOG completed its acquisition of the entire
issued share capital of CIECO V&C (UK) Limited ("CIECO
V&C"), owned by ITOCHU Corporation ("ITOCHU") and Japan Oil,
Gas and Metals National Corporation ("JOGMEC"). The consideration
for the acquisition consisted of a completion payment of GBP150,000
and two contingent payments based on the UK's Oil & Gas
Authority's consent for a Field Development Plan and the potential
future development and production of oil volumes from the Verbier
discovery in the Upper Jurassic (J62-J64) Burns Sandstone reservoir
located on Licence P2170 (Blocks 20/5b and 21/1d) ("Licence
P2170"). The Acquisition provides JOG with an opportunity to create
significant value through potentially developing the Verbier
discovery as part of its planned Greater Buchan Area ("GBA") hub.
Licence P2170 also benefits from multiple material exploration
prospects that have high value potential through tie-backs to the
proposed new GBA hub.
Appointment of non-executive director
On 13th April 2021, Les Thomas was appointed a non-executive
director of the Company. The terms of his letter of appointment
provide for a rolling contract with a notice period of three
months, no compensation for loss of office and an annual fee of
GBP40,000.
24. AVAILABILITY OF THE ANNUAL REPORT 2020
A copy of these results 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 www.jerseyoilandgas.com. Jersey Oil
and Gas plc is registered in England and Wales with registration
number 7503957.
COMPANY STATMENT OF FINANCIAL POSITION
Note 2020 2019
GBP GBP
============================== ==== ============ ============
Non-current assets
Investments in subsidiaries 4 - -
Property, plant and equipment 5 66,121 -
Right-of-use asset 6 76,064 -
============================== ==== ============ ============
142,185 -
==================================== ============ ============
Current assets
Trade and other receivables 7 17,088,267 10,908,099
Cash and cash equivalents 8 4,998,008 12,197,617
============================== ==== ============ ============
22,086,275 23,105,716
==================================== ============ ============
Total assets 22,228,460 23,105,716
==================================== ============ ============
Equity
Called up share capital 9 2,466,144 2,466,144
Share premium account 93,851,526 93,851,526
Share options reserve 2,109,964 1,928,094
Accumulated losses (76,754,297) (75,670,918)
============================== ==== ============ ============
Total equity 21,673,335 22,574,846
==================================== ============ ============
Liabilities
Current liabilities
Trade and other payables 10 474,881 530,870
Lease liabilities 80,244 -
============================== ==== ============ ============
Total liabilities 555,125 530,870
==================================== ============ ============
Total equity and liabilities 22,228,460 23,105,716
==================================== ============ ============
As at 31 December 2020
As permitted by Section 408 of the Companies Act 2006, the
Statement of Comprehensive Income of the parent Company is not
presented as part of these financial statements. The parent
Company's loss for the year was GBP1,083,379 (2019: Loss
GBP1,471,705).
Vicary Gibbs Chief
Financial Officer
5 May 2021
Company Registration Number: 07503957
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2020
Called Share premium Share options Accumulated
up account reserve losses Total equity
share capital GBP GBP GBP GBP
GBP
================================ ============== ============= ============= ============ ==============
At 1 January 2019 2,466,144 93,851,526 1,491,014 (74,199,213) 23,609,471
Total comprehensive loss for
the year - - - (1,471,705) (1,471,705)
Transactions with owners (share
based payments) - - 437,080 - 437,080
================================ ============== ============= ============= ============ ==============
At 31 December 2019 2,466,144 93,851,526 1,928,094 (75,670,918) 22,574,846
Total comprehensive loss for
the year - - - (1,083,379) (1,083,379)
Transactions with owners (share
based payments) - - 181,869 - 181,869
================================ ============== ============= ============= ============ ==============
At 31 December 2020 2,466,144 93,851,526 2,109,964 (76,754,297) 21,673,336
================================ ============== ============= ============= ============ ==============
COMPANY STATEMENT OF CASH FLOWS
For the year ended 31 December 2020
Note 2020 2019
GBP GBP
========================================= ==== =========== ===========
Cash flows from operating activities
=========== ===========
Cash used in operations 12 (787,999) (256,628)
========================================= ==== =========== ===========
Net cash used in operating activities (787,999) (256,628)
=============================================== =========== ===========
Cash flows from investing activities
Interest received 27,936 106,872
Asset purchased (84,167) -
========================================= ==== =========== ===========
Net cash generated from investing activities (56,231) 106,872
=============================================== =========== ===========
Cash flows from financing activities
Loans to subsidiary companies (6,266,882) (7,243,575)
Principal element of lease payments (88,497) -
========================================= ==== =========== ===========
Net cash used in financing activities (6,355,379) (7,243,575)
=============================================== =========== ===========
Decrease in cash and cash equivalents 12 (7,199,609) (7,393,331)
Cash and cash equivalents at beginning
of year 12 12,197,617 19,590,948
========================================= ==== =========== ===========
Cash and cash equivalents at end of year 12 4,998,008 12,197,617
========================================= ==== =========== ===========
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31 December 2020
1. SIGNIFICANT ACCOUNTING POLICIES
The separate financial statements of the Company are presented
as required by the Companies Act 2006. As permitted by that Act,
the separate financial statements have been prepared in accordance
with International Financial Reporting Standards.
These financial statements have been prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006. The financial statements
have been prepared on a going concern basis. The principal
accounting policies adopted are consistent with those set out in
note 2 to the consolidated financial statements. The financial risk
management strategy for the Company is consistent with that set out
in note 4 to the consolidated financial statements. These policies
have been consistently applied to all the periods presented, unless
otherwise stated.
Investments in subsidiaries are stated at cost less, where
appropriate, provisions for impairment.
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
the equity placing and offer for subscription concluded in April
2021 the Company has in a severe but plausible downside scenario
surplus funds significantly in excess of the outstanding
commitments to conclude the GBA Concept Select work programmes and
the ongoing Operator overheads and licence fees beyond November
2022. The farm-out process launched in March 2021 to secure a new
partner and material associated funding
to progress the GBA Project through FEED and to FID and beyond
is expected to conclude in Q3 2021. Subject to securing suitable
funding from this process development work will continue at pace.
Delays to the farm-out process may serve to slow the pace of
development and may delay the date at which the project achieves
FID. Given JOG currently owns and operates 100% of project, the
rate at which JOG may choose to progress the project is entirely
within its control and hence the Company's current cash reserves
are therefore expected to more than exceed its estimated
liabilities. Based on these circumstances, the Directors have
considered it appropriate to adopt the going concern basis of
accounting in preparing the Company's financial statements.
Risk management
The Company'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 Company. 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 identify, evaluate and
address financial risks in close co-operation with the Company'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
liquidity. Liquidity risk is the risk that the Company will not be
able to meet its financial obligations as they become due. The
Company 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.
2. EMPLOYEES AND DIRECTORS
2020 2019
GBP GBP
====================== ========= =========
Wages and salaries 1,161,300 792,422
Social security costs 121,025 122,185
Share based payments 181,869 437,080
Other pensions costs 138,010 18,295
====================== ========= =========
1,602,204 1,369,982
====================== ========= =========
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:
2020 2019
====================== ==== ====
Directors 5 5
Employees - Finance 1 1
Employees - Technical 6 4
====================== ==== ====
12 10
====================== ==== ====
2020 2019
GBP GBP
=========================================================== ======= =======
Directors' remuneration 382,100 327,933
Directors' pension contributions to money purchase schemes 1,665 1,012
Benefits 5,346 3,650
=========================================================== ======= =======
389,111 332,595
=========================================================== ======= =======
The Director's remuneration is shown net of share-based
payments.
The average number of Directors to whom retirement benefits were
accruing was as follows:
2020 2019
======================= ==== ====
Money purchase schemes 1 1
======================= ==== ====
Information regarding the highest paid Director is as
follows:
2020 2019
GBP GBP
================================== ======= =======
Aggregate emoluments and benefits 242,946 238,250
Pension contributions - -
================================== ======= =======
242,946 238,250
================================== ======= =======
The Directors did not exercise any share options during the
year.
Key management compensation
Key management includes Directors (Executive and Non-Executive).
The compensation paid or payable to key management for employee
services is shown below:
2020 2019
GBP GBP
======================================= ======= =======
Wages and short-term employee benefits 387,446 331,583
Share based payments (note 20) 153,816 371,449
Pension Contributions 1,665 1,262
--------------------------------------- ------- -------
542,927 704,294
--------------------------------------- ------- -------
3. LOSS OF PARENT COMPANY
As permitted by Section 408 of the Companies Act 2006, the
Statement of Comprehensive Income of the parent Company is not
presented as part of these financial statements.
The parent Company's loss for the year was GBP1,083,379 (2019:
Loss GBP1,471,705). Auditors' remuneration is disclosed in note 8
in the consolidated financial statements.
4. INVESTMENT IN SUBSIDIARIES
2020 2019
GBP GBP
============================================ ==== ====
Company - shares in subsidiary undertakings: - -
============================================ ==== ====
The carrying value of investments in subsidiary entities has
been written off in prior periods.
The subsidiary undertakings at 31 December 2020 were as
follows:
Subsidiary % owned County of Incorporation Principal Activity
================== ======= ======================= ===================
Jersey North Sea 100% England & Wales Non-Trading
Holdings Ltd*
Jersey Petroleum 100% England & Wales Oil Exploration
Ltd*
Jersey E & P Ltd** 100% Scotland Non-Trading
Jersey Oil Ltd** 100% Scotland Non-Trading
Jersey Exploration 100% Scotland Non-Trading
Ltd**
Jersey Oil & Gas 100% Jersey Management services
E & P Ltd***
================== ======= ======================= ===================
* Registered address: 10 The Triangle, ng2 Business Park, Nottingham, NG2 1AE
** Registered address: 6 Rubislaw Terrace, Aberdeen, AB10
1XE
*** Registered address: First Floor, Tower House, La Route es
Nouaux, St Helier, Jersey, JE2 4ZJ
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31 December 2020
5. PROPERTY, PLANT AND EQUIPMENT
Office
equipment
GBP
========================= ==========
COST
At 1 January 2019 94,793
========================= ==========
At 31 December 2019 94,793
========================= ==========
Additions 84,167
========================= ==========
At 31 December 2020 178,960
========================= ==========
ACCUMULATED DEPRECIATION
At 1 January 2019 94,793
========================= ==========
At 31 December 2019 94,793
========================= ==========
Charge for year 18,046
========================= ==========
At 31 December 2020 112,839
========================= ==========
NET BOOK VALUE
At 31 December 2020 66,121
========================= ==========
At 31 December 2019 -
========================= ==========
At 31 December 2018 -
========================= ==========
6. LEASES
Amounts Recognised in the Statement of financial position
2020 2019
GBP GBP
==================== ====== ====
Right-of-use Assets
====== ====
Buildings 76,064 -
==================== ====== ====
76,064 -
==================== ====== ====
Lease liabilities
Current 80,244 -
Non-Current - -
==================== ====== ====
80,244 -
==================== ====== ====
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 2020 was 3%. The leases relate to office space.
Amounts Recognised in the Statement of comprehensive income
2020 2019
GBP GBP
============================================= ======= ====
Depreciation charge of right-of-use asset
======= ====
Buildings 92,678 -
============================================= ======= ====
92,678 -
============================================= ======= ====
Interest expenses (included in finance cost) (3,031) -
============================================= ======= ====
7. TRADE AND OTHER RECEIVABLES
2020 2019
GBP GBP
==================================== ========== ==========
Current:
Value Added Tax 60,701 169,857
Amounts due from Group undertakings 16,947,627 10,680,745
Prepayments 25,717 57,497
Deposits 54,222 -
==================================== ========== ==========
17,088,267 10,908,099
==================================== ========== ==========
The balances above were assessed for recoverability under the
expected credit loss model. There is no expected credit loss on
these balances. The amounts due from Group undertakings are not
interest bearing, and are repayable on demand.
8. CASH AND CASH EQUIVALENTS
2020 2019
GBP GBP
============= ========= ==========
Cash at bank 4,998,008 12,197,617
============= ========= ==========
9. CALLED UP SHARE CAPITAL
Issued and fully paid:
Number: Class Nominal 2020 2019
Value GBP GBP
============================= ======== ======= ========= =========
21,829,227 (2019: 21,829,227) Ordinary 1p 2,466,144 2,466,144
============================= ======== ======= ========= =========
10. TRADE AND OTHER PAYABLES
2020 2019
GBP GBP
================================== ======= =======
Current:
Amounts due to Group undertakings 211,678 211,678
Trade payables 90,561 94,859
Other payables 59,344 121,418
Accrued expenses 113,298 102,915
================================== ======= =======
474,881 530,870
================================== ======= =======
Amounts shown as Current: Amounts owed to Group undertakings -
are repayable on demand.
11. RELATED PARTY DISCLOSURES AND ULTIMATE CONTROLLING PARTY
The Group and Company do not have an ultimate controlling party
or parent Company.
Amount
due
(to)/from
subsidiaries
Subsidiary % owned County of Principal 2020 2019
Incorporation Activity GBP GBP
Jersey North
Sea
Holdings England &
Ltd 100% Wales Non-Trading (211,676) (211,676)
Jersey
Petroleum England & Oil
Ltd 100% Wales Exploration 16,947,627 10,680,745
Jersey E & P
Ltd 100% Scotland Non-Trading - -
Jersey Oil
Ltd 100% Scotland Non-Trading (1) (1)
Jersey
Exploration
Ltd 100% Scotland Non-Trading (1) (1)
Jersey Oil &
Gas E & P Management
Ltd 100% Jersey services - -
============ ======= ============= =========== ============ ====================================================================================================================
The Company lends cash to Jersey Oil & Gas E&P Ltd to
fund salaries and other administrative costs. The balance
outstanding at the end of the year from Jersey Oil & Gas
E&P Ltd GBP3,295,427 (2019: GBP2,371,207) has been fully
provided for as a doubtful debt given the nature of the company
which does not generate revenue and the balance is not expected to
be recovered.
The Company provides funding to Jersey Petroleum Limited to fund
commitments due on its operations and licences. Historically these
have been provided for in full as those licences where not deemed
commercial. Following the historical drilling on Verbier the
Company believes that the funding provided for this licence to be
fully recoverable as the licence is commercially viable. The total
amount of funding provided to Jersey Petroleum Limited amounts to
GBP83,452,410 (2019: GBP78,109,749) of which GBP69,800,211 (2019:
66,371,145) is provided for as a doubtful debt with the remaining
balance being the funding provided in respect of the Verbier
licence.
The receivable balance is non-interest bearing and repayable on
demand with recovery expected over a number of years. During the
year the Company also charged a management fee to Jersey Petroleum
Limited amounting to GBP2,355,741 (2019:GBP1,414,327).
12. NOTES TO THE COMPANY STATEMENT OF CASH FLOWS
Reconciliation of loss before income tax to cash used in
operations
2020 2019
GBP GBP
====================================================== =========== =========
Loss for the year before tax (1,083,381) (602,287)
Adjusted for:
Tangible depreciation 18,046 -
Impairment of receivables from subsidiaries (note 11) - -
Right-of-use asset depreciation 92,677 -
Provision for write off of loan interest 179,660 211,154
Share based payments (net) 181,870 437,080
Finance income (207,596) (318,026)
====================================================== =========== =========
(818,724) (272,079)
(Decrease)/increase in receivables (note 7) 86,714 (172,434)
(Decrease)/increase in trade and other payables (note
10) (55,989) 187,885
====================================================== =========== =========
Cash used in operations (787,999) (256,628)
====================================================== =========== =========
Cash and cash equivalents
The amounts disclosed on the Statement of Cash Flows in respect
of Cash and cash equivalents are in respect of these statements of
financial position amounts:
Year ended 2020
31 Dec 2020 1 Jan
GBP 2020
GBP
========================== =========== ==========
Cash and cash equivalents 4,998,008 12,197,617
========================== =========== ==========
Year ended 2019
31 Dec 2019 1 Jan 2019
GBP GBP
========================== =========== ==========
Cash and cash equivalents 12,197,617 19,590,948
========================== =========== ==========
Analysis of net cash
========================== ==================== =========== =========
At 1 Jan Cash GBP At 31
2020 flow Dec
GBP 2020
GBP
========================== ==================== =========== =========
Cash and cash equivalents 12,197,617 (7,199,609) 4,998,008
========================== ==================== =========== =========
Net cash 12,197,617 (7,199,609) 4,998,008
========================== ==================== =========== =========
[1] Economics derived from JOG's financial model built for
Concept Select and therefore represent management estimates.
The estimates assume an oil price of US$65/bbl, gas price of
46.2p/therm with both prices and costs escalated at 2%.
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.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR EAASSEDSFEAA
(END) Dow Jones Newswires
May 06, 2021 02:00 ET (06:00 GMT)
Jersey Oil and Gas (AQSE:JOG.GB)
Historical Stock Chart
From Jun 2024 to Jul 2024
Jersey Oil and Gas (AQSE:JOG.GB)
Historical Stock Chart
From Jul 2023 to Jul 2024