TIDMJOG
RNS Number : 4263A
Jersey Oil and Gas PLC
24 May 2023
24 May 2023
Jersey Oil and Gas plc
("Jersey Oil & Gas", "JOG" or the "Company")
Final Results for the Year Ended 31 December 2022
& Annual General Meeting Notice
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 financial results
for the year ended 31 December 2022 and the date of the forthcoming
Annual General Meeting ("AGM").
Highlights
-- In April 2023 JOG executed agreements to farm-out a 50%
working interest in the GBA licences to NEO Energy ("NEO") in
exchange for various cash payments and the carry of a proportion of
the Company's future development expenditure
-- The Company has secured a technically and financially strong
partner to move the GBA development forwards into production, with
NEO set to become operator of the GBA licences following completion
of the transaction
-- In addition to milestone related cash payments associated
with the Buchan field development totalling approximately $24
million, the transaction results in the Company being fully carried
for its $12.5 million share of costs up to Field Development Plan
("FDP") approval
-- Following FDP approval, JOG will be carried for 12.5% of its
50% share of the Buchan field development costs by NEO (equivalent
to a 1.25 carry ratio)
-- With the route to monetisation of the GBA resources
established, the Company has the opportunity to deliver long term
shareholder value through unlocking the multiple value catalysts
that stem from execution of the GBA development programme
-- It is anticipated that the farm-out will be completed around
the end of the second quarter of 2023
GBA Development
-- During 2022 the Company was actively engaged with multiple
counterparties regarding the planned divestment of an interest in
the GBA licences
-- Technical and commercial diligence has been completed on the
range of different development options that could be used for
future production from the GBA
-- With the introduction of NEO to the GBA, the partnership will
work together to finalise selection of the preferred development
solution from a short list of attractive options, with first
production targeted for 2026
-- Upon selection of the preferred development solution, the
project will move into "Front End Engineering & Design"
activities along with preparation of the required FDP that is
planned for submission to the North Sea Transition Authority
("NSTA") for approval in the first half of 2024
Attractive Outlook
-- The NEO farm-out delivers significant value to the Company,
not least by securing a fully funded position through to FDP
submission, and additionally unlocks the route to monetisation of
the GBA resources
-- JOG will retain a 50% working interest in the GBA following
completion of the farm-out (with 12.5% of development costs carried
by NEO) and to catalyse further shareholder value, the Company
intends to farm-out additional GBA equity such that it ultimately
retains a 20-25% fully carried interest in the development
-- Pursuit of the Company's corporate growth strategy, through
the execution of accretive acquisitions, remains an important
objective
-- The Company is well positioned with a cash balance at the end
of 2022 of approximately GBP6.6 million, which is set to be
enhanced by the various milestone payments incorporated into the
farm-out transaction terms agreed with NEO
Andrew Benitz, Chief Executive Officer, commented :
"2022 was an instrumental year in securing the future success of
the Company. The GBA farm-out process involved extensive
interactions with multiple counterparties during the year,
culminating in the transaction that was announced in April of this
year with NEO Energy. The GBA is a high-quality re-development,
which is on track to generate significant value for the Company and
its shareholders. With the route for execution of the development
programme now firmly established, the Company looks forward to
unlocking the many value catalysts that mark the run up to approval
of the project and beyond."
Annual General Meeting
The Company also announces that its 2022 Annual Report and
Financial Statements together with the AGM Notice and associated
Form of Proxy are now available on the Company's website
(www.jerseyoilandgas.com) and will be posted today to those
shareholders who have elected to receive hardcopy shareholder
communications from the Company.
The Company will hold its AGM in respect of its financial year
ended 31 December 2022 on 20 June 2023 at 13.00 at the offices of
Pinsent Masons LLP, 30 Crown Place, Earl Street, London EC2A
4ES.
Corporate Presentation
An updated corporate presentation has been placed on the
Company's website.
Enquiries
Jersey Oil and Gas Andrew Benitz C/O Camarco: 020 3757
plc 4980
Strand Hanson Limited James Harris Tel: 020 7409 3494
Matthew Chandler
James Bellman
Zeus Capital Limited Simon Johnson Tel: 020 3829 5000
finnCap Ltd Christopher Raggett Tel: 020 7220 0500
Tim Redfern
Camarco Billy Clegg Tel: 020 3757 4980
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 prior to completion of the announced farm-out to
NEO Energy, 100% working interest in Licence P2498 (Blocks 20/5a,
20/5e and 21/1a) that contains the Buchan oil field and J2 oil
discovery and an 100% working interest in Licence P2170 (Blocks
20/5b & 21/1d) that contains the Verbier oil discovery and
other exploration prospects.
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.
Forward-Looking Statements
This announcement may contain certain forward-looking statements
that are subject to the usual risk factors and uncertainties
associated with an oil and gas business. Whilst the Company
believes the expectations reflected herein to be reasonable in
light of the information available to it at this time, the actual
outcome may be materially different owing to factors beyond the
Company's control or otherwise within the Company's control but
where, for example, the Company decides on a change of plan or
strategy.
All figures quoted in this announcement are in US dollars,
unless stated otherwise.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018, as amended by virtue of the Market Abuse
(Amendment) (EU Exit) Regulations 2019.
CHAIRMAN & CHIEF EXECUTIVE OFFICER'S REPORT
GBA Farm-out
In April 2023 we were delighted to announce the farm-out of an
interest in our GBA development to NEO Energy ("NEO"). We have
agreed terms for NEO to acquire a 50% working interest and
operatorship in both licences that cover the GBA, including the
Buchan oil field, the Verbier and J2 oil discoveries and various
exploration prospects. This transaction unlocks the route to
finalising the GBA development solution and monetisation of
resources in excess of 100 million barrels of oil equivalent in
total. The transaction delivers material value to JOG, including
cash milestone payments, funding through to Field Development Plan
("FDP") approval and a minimum 12.5% development expenditure carry
to first oil for the 50% interest retained by the Company (a 1.25
carry ratio). NEO is a major UK North Sea operator producing
approximately 90,000 barrels of oil equivalent per day and is owned
by HitecVision AS, a leading private equity investor focused on
Europe's offshore energy industry with approximately $8 billion of
assets under management.
Operational Update
Our operational focus during 2022 has been on advancing
technical studies on various development solutions in collaboration
with infrastructure owners. This included studies such as flow
assurance work for assessing tie back options to regional platform
infrastructure, the topside modification requirements for the
potential receiving infrastructure, and for potential FPSO options.
With this work now completed, the Company will be working in
partnership with NEO to select the preferred development solution,
having already confirmed a short list of attractive options. We
also continue to proactively collaborate on potential joint
development opportunities with other industry parties who own
regional assets that could be tied back to a GBA development.
Low Carbon Development
The GBA development has the exciting potential to be one of the
lowest full-cycle carbon development projects in the UK North Sea
through the use of existing infrastructure and potential low carbon
electrification options. In late 2022, we were pleased to provide
letters of support as a potential power user to the offshore wind
developers applying for leases in the vicinity of the GBA in the
Innovation and Targeted Oil & Gas ("INTOG") offshore wind
licence round. Awards were announced in March 2023, with licences
granted by Crown Estate Scotland in close proximity to the GBA.
Powering the GBA from low carbon wind power can reduce our carbon
emissions to less than 2kg of CO2/bbl versus the average in the UK
North Sea of 22kg. We will be evaluating the potential to make the
GBA development solution that is ultimately selected
"electrification ready", so that it can be powered with green
energy upon completion of a proximal wind farm.
Licensing Activity
JOG continues to work closely and constructively with the North
Sea Transition Authority ("NSTA") on our licence commitments. In
keeping with the Company's stated strategy of developing the GBA as
an area-wide development plan, we were pleased to receive a licence
extension to the Second Term of our P2170 "Verbier" licence, such
that it is now aligned with the P2498 "Buchan" licence, with the
current term being until the end of August 2023. Following the
farm-out to NEO, we are in close consultation with the North Sea
Transition Authority to seek an extension on both licences to allow
delivery of a Field Development Plan ("FDP").
JOG's Business Development Strategy
At the forefront of our business development plans is to
farm-out additional GBA equity such that the Company ultimately
retains a 20-25% carried interest in the development. Building a
full cycle upstream business focused on the UKCS remains the
ultimate goal for JOG and having now announced a farm-out in
respect of the GBA development, we will also be seeking to advance
our acquisition strategy. We believe the North Sea can be the
crucible for the energy transition and that oil and gas companies
can lead investment into new energies. We see JOG as being no
different to our larger peers such that in addition to upstream
asset and corporate opportunities, we are also actively looking at
new energy investment opportunities.
Financial Review
The Company's cash position was approximately GBP6.6 million as
of 31 December 2022, well within our forecast. As an oil and gas
exploration and development company, JOG had no production revenue
during the year and received only a modest amount of interest on
its cash deposits.
The loss for the period, before and after tax, was approximately
GBP3.1 million (2021: GBP4.2 million). Our main expenditure during
2022 related to technical studies on parallel development options
for the GBA Development project. Having successfully negotiated the
farm-out to NEO, the Company remains appropriately funded as we
move forwards towards approval of the Buchan Field Development
Plan.
Tax
The Energy Profits Levy (EPL) that was introduced by the UK
Government in May 2022 caught the industry off guard, particularly
those that have invested and built production portfolios in the
UKCS over the past few years. A second change in September 2022
increased the tax rate further to 75% through to March 2028. With
no price floor on when this windfall tax would fall away, the
industry has no option other than to plan as if it is a permanent
tax and consequently this has significantly harmed the industry's
borrowing capacity. We believe it is sensible for the Government to
provide some guidance on a price floor to facilitate the
continuation of vital domestic energy supplies. The silver lining
of these changes, however, was the introduction of an investment
allowance that is specifically ring fenced to attract capital spend
into new investments. A full taxpayer in the North Sea has the
ability to secure substantial tax relief through investing into new
projects such as the GBA Development.
Macro Backdrop
A significantly improved macro-economic outlook for the oil and
gas sector compared to 2021 ushered in significant profits for the
oil majors. The pandemic and the war in Ukraine have masked the
underlying issue that is challenging the upstream sector - a
looming supply crunch. Our industry has been starved of capital
since 2015 and this has led to chronic under investment. The energy
transition is underway, and our industry is at the forefront of the
challenges that this evolution brings. The approach must be managed
appropriately as hydrocarbons currently continue to provide the
world with approximately 80% of our daily energy supply.
Unfortunately, we are already seeing the inflationary pressures
that result from a restricted energy supply and an even more
concerning prospect of energy poverty. We need urgent and
responsible investment in the upstream sector in order to address
the supply shortfall against a backdrop of significantly increasing
global demand for energy. It will take time for supply to catch up
and strong commodity prices are expected.
Summary and outlook
We are excited to be starting our journey with NEO, who, in
partnership with JOG, will be working to close out the selection of
the preferred GBA development solution and take the project through
the Front End Engineering and Design ("FEED") phase of activities
and on to project sanction, which is targeted for next year. The
Company intends to farm-out additional equity in the GBA licences
in order to ultimately retain a 20-25% carried interest in the
development. Discussions with companies potentially interested in
non-operated stakes have been underway as part of the farm-out
process and these remain ongoing.
Finally, we would like to extend our gratitude to the JOG team,
who have delivered a transformational farm-out for the Company. We
are a small team of dedicated professionals and we will use this
excellent result as a springboard to grow the long-term value of
the business. We also thank our shareholders for the ongoing
support they have shown as we have advanced the GBA farm-out
process. We were delighted to announce the transaction with NEO and
look forward to building upon this success.
Les Thomas,
Non-Executive
Chairman
Andrew Benitz,
Chief Executive Officer
23 May 2023
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2022
Note 2022 2021
GBP GBP
Cost of sales - (101,079)
==================================================================== ============ ============
Gross loss - (101,079)
==================================================================== ============ ============
Exploration
write-off/licence
relinquishment 10 - (447,812)
==================================================================== ============ ============
Administrative
expenses (3,185,103) (3,672,135)
==================================================================== ============ ============
Operating loss 7 (3,185,103) (4,221,026)
==================================================================== ============ ============
Finance income 6 82,842 1,807
==================================================================== ============ ============
Finance expense 6 (4,730) (6,098)
==================================================================== ============ ============
Loss before tax 7 (3,106,991) (4,225,317)
==================================================================== ============ ============
Tax 8 - -
==================================================================== ============ ============
Loss for the year (3,106,991) (4,225,317)
==================================================================== ============ ============
Total comprehensive
loss for the year
(net
of tax) (3,106,991) (4,225,317)
==================================================================== ============ ============
Total comprehensive
loss for the year
attributable
to:
==================================================================== ============ ============
Owners of the
parent (3,106,991) (4,225,317)
==================================================================== ============ ============
Loss per share
expressed in pence
per share:
==================================================================== ============ ============
Basic 9 (9.54) (14.48)
==================================================================== ============ ============
Diluted 9 (9.54) (14.48)
==================================================================== ============ ============
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
Note 2022 2021
GBP GBP
Non-current assets
===== ========================= =============
Intangible assets - exploration
& development costs 10 24,372,882 21,514,153
===== ========================= =============
Property, plant and equipment 11 10,203 40,077
===== ========================= =============
Right-of-use assets 12 81,328 185,008
===== ========================= =============
Deposits 31,112 31,112
===== ========================= =============
24,495,525 21,770,350
===== ========================= =============
Current assets
===== ========================= =============
Trade and other receivables 13 167,060 353,114
===== ========================= =============
Cash and cash equivalents 14 6,579,349 13,038,388
===== ========================= =============
6,746,409 13,391,502
===== ========================= =============
Total assets 31,241,934 35,161,852
===== ========================= =============
Equity
===== ========================= =============
Called up share capital 15 2,573,395 2,573,395
===== ========================= =============
Share premium account 110,309,524 110,309,524
===== ========================= =============
Share options reserve 19 2,566,343 1,397,287
===== ========================= =============
Accumulated losses (84,600,273) (81,551,730)
===== ========================= =============
Reorganisation reserve (382,543) (382,543)
===== ========================= =============
Total equity 30,466,446 32,345,933
===== ========================= =============
Liabilities - 83,012
===== ========================= =============
Non-current liabilities
===== ========================= =============
Lease liabilities 17
===== ========================= =============
- 83,012
===== ========================= =============
Current liabilities
===== ========================= =============
Trade and other payables 16 688,796 2,603,707
===== ========================= =============
Lease liabilities 12 86,692 129,200
===== ========================= =============
775,488 2,732,907
===== ========================= =============
Total liabilities 775,488 2,815,919
===== ========================= =============
Total equity and liabilities 31,241,934 35,161,852
===== ========================= =============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
Called Share premium Share options Accumulated Reorganisation
up account reserve losses reserve Total
share GBP GBP GBP GBP equity
capital GBP
GBP
At 1 January
2021 Note 2,466,144 93,851,526 2,109,969 (78,509,819) (382,543) 19,535,277
===== ============ ============== ============== =============== =============== ==============
Loss and total
comprehensive
loss for the
year - - - (4,225,317) - (4,225,317)
===== ============ ============== ============== =============== =============== ==============
Issue of share
capital 107,251 16,457,997 - - - 16,565,248
===== ============ ============== ============== =============== =============== ==============
Transactions
with owners in
their capacity
as owners
===== ============ ============== ============== =============== =============== ==============
Expired share
options 19 - - (909,176) 909,176 - -
===== ============ ============== ============== =============== =============== ==============
Exercised
share
options - - (274,230) 274,230 - -
===== ============ ============== ============== =============== =============== ==============
Share based
payments 19 - - 470,725 - - 470,725
===== ============ ============== ============== =============== =============== ==============
At 31 December
2021 and
1 January
2022 2,573,395 110,309,524 1,397,287 (81,551,730) (382,543) 32,345,933
===== ============ ============== ============== =============== =============== ==============
Loss and total
comprehensive
loss for the
year - - - (3,106,991) - (3,106,991)
===== ============ ============== ============== =============== =============== ==============
Transactions
with owners in
their capacity
as owners
===== ============ ============== ============== =============== =============== ==============
Expired share
options 19 - - (58,448) 58,448 - -
===== ============ ============== ============== =============== =============== ==============
Share based
payments 19 - - 1,227,504 - - 1,227,504
===== ============ ============== ============== =============== =============== ==============
At 31 December
2022 2,573,395 110,309,524 2,566,343 (84,600,273) (382,543) 30,466,446
===== ============ ============== ============== =============== =============== ==============
The following describes the nature and purpose of each reserve
within owners' equity:
Reserve Description and purpose
Called up Represents the nominal value of shares issued
share 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 Cumulative net gains and losses recognised in the Consolidated
losses 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 2022 2021
Note GBP GBP
Cash flows from operating activities
======= ===================== =======================
Cash used in operations 21 (3,319,445) (1,495,899)
======= ===================== =======================
Interest received 6 82,842 1,807
======= ===================== =======================
Interest paid 6 (4,730) (6,098)
======= ===================== =======================
Net cash used in operating activities (3,241,333) (1,500,190)
======= ===================== =======================
Cash flows from investing activities
======= ===================== =======================
Purchase of intangible assets 10 (3,092,186) (6,970,670)
======= ===================== =======================
Net cash used in investing activities (3,092,186) (6,970,670)
======= ===================== =======================
Cash flows from financing activities
======= ===================== =======================
Principal elements of lease payments (125,520) (137,516)
======= ===================== =======================
Proceeds from issue of shares - 16,565,248
======= ===================== =======================
Net cash (used in)/generated from
financing activities (125,520) 16,427,732
======= ===================== =======================
(Decrease)/increase in cash and
cash equivalents 21 (6,459,039) 7,956,873
======= ===================== =======================
Cash and cash equivalents at beginning
of year 14 13,038,388 5,081,515
======= ===================== =======================
Cash and cash equivalents at end
of year 14 6,579,349 13,038,388
======= ===================== =======================
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
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 England & Wales 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
The consolidated financial statements of Jersey Oil and Gas Plc
as of 31 December 2022 and for the year then ended (the
"consolidated financial statements") were prepared in accordance
with UK-adopted International Accounting Standards in conformity
with the requirements of the Companies Act 2006 (the "Companies
Act").
The financial statements have been prepared under the historic
cost convention, except as disclosed in the accounting policies
below . All amounts disclosed in the financial statements and notes
have been rounded off to the nearest one thousand pounds unless
otherwise stated.
Going Concern
The Group has sufficient resources to meet its liabilities as
they fall due for a period of at least 12 months after the date of
issue of these financial statements. The Group's main cost
commitment; a 50% equity share of Front End Engineering and Design
("FEED") work for the GBA ahead of project sanction will be paid
for from 1 April 2023 by the $12.5m Pre sanction farm-in carry
agreed with NEO in April 2023. This is forecast to adequately cover
the field development sanction work to be carried out over the next
12 months. In addition, any FEED spend above $12.5m and post
sanction development costs of the GBA through to first oil are
carried at an equity level of 12.5%.
Other work that the Group is undertaking in respect of the GBA
licenses and surrounding areas is modest relative to its current
cash reserves. The Company's current cash reserves are therefore
expected to more than exceed its estimated cash outflows in all
reasonable scenarios for at least 12 months following the date of
issue of these financial statements. Even in an extreme scenario
where the Buchan development did not progress for any unforeseen
reason and the future instalment payments were not realised the
Group has the flexibility within its cost structure to amend its
expenditure profile and continue in business beyond the next 12
months solely from utilisation of its existing cash resources. The
directors have also considered the risk associated with contractual
arrangements associated with the farm-out and are satisfied that
the group is not exposed to any contractual commitments which could
impact on the Group's going concern status over the next 12 months.
Based on these circumstances, the directors have considered it
appropriate to adopt the going concern basis of accounting in
preparing the consolidated financial statements.
New and amended standards adopted by the Group. The Group has
applied the following amendments for the first time for the annual
reporting period commencing 1 January 2022:
-- Property, Plant and Equipment: Proceeds before Intended Use - Amendments to IAS 16;
-- Annual Improvements to IFRS Standards 2018-2020; and
-- Reference to the Conceptual Framework - Amendments to IFRS 3.
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.
New standards and interpretations not yet adopted
Certain new accounting standards, amendments to accounting
standards and interpretations have been published that are not
mandatory for 31 December 2022 reporting periods and have not been
early adopted by the Group. These standards, amendments or
interpretations are not expected to have a material impact on the
entity in the current or future reporting periods or on foreseeable
future transactions.
-- Deferred Tax related to Assets and Liabilities arising from a
Single Transaction - amendments to IAS 12; and
-- Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2.
Significant Accounting Judgements and Estimates
The preparation of the financial statements requires management
to make estimates and assumptions that affect the reported amounts
of 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 10).
-- The estimation of share-based payment costs (note 19).
Impairments
The Group tests its capitalised exploration licence costs for
impairment when indicators, further detailed below under
'Exploration and Evaluation Costs' as set out in IFRS 6, suggest
that the carrying amount exceeds the recoverable amount which is
inherently judgmental. An impairment loss is recognised for the
amount by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount of the Cash Generating Unit is the
higher of an asset's fair value less costs of disposal and value in
use. The Group assessed that there were no impairment triggers
during the year - this included the judgement that there was no
trigger arising from future licence expiry as the Group expects its
licences concerned to be renewed.
Share-Based Payments
The Group currently has a number of share schemes that give rise
to share-based payment charges. The charge to operating profit for
these schemes amounted to GBP1,227,504 (2021: GBP470,725).
Estimates and judgements for determining the fair value of the
share options are required. For the purposes of the calculation, 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 Group'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. Estimates are also
used when calculating the likelihood of share options vesting given
the vesting conditions of time and performance on the options
granted.
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 the 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.
(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.
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 on
consolidation. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies
adopted by the Group.
Acquisitions, Asset Purchases and Disposals
Transactions involving the purchase of an individual field
interest, farm-ins, farm-outs, or acquisitions of exploration and
evaluation licences for which a development decision has not yet
been made that do not qualify as a business combination, are
treated as asset purchases. Accordingly, no goodwill or deferred
tax arises. The purchase consideration is allocated to the assets
and liabilities purchased on an appropriate basis. Proceeds on
disposal (including farm-ins/farm-outs) are applied to the carrying
amount of the specific intangible asset or development and
production assets disposed of and any surplus is recorded as a gain
on disposal in the Consolidated Statement of Comprehensive
Income.
Acquisitions of oil and gas properties are accounted for under
the purchase method where the acquisitions meet the definition of a
business combination. 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 on business
combination 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 IFRS 9 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 non-controlling
interest over the net identifiable assets acquired and liabilities
assumed. If this consideration is lower than the fair value of the
net assets of the subsidiary acquired, the difference is recognised
in profit or loss.
Exploration and Evaluation Costs
The Group accounts for oil and gas exploration and evaluation
costs using IFRS 6 "Exploration for and Evaluation of Mineral
Resources". Such costs are initially capitalised as Intangible
Assets and include payments to acquire the legal right to explore,
together with the directly related costs of technical services and
studies, seismic acquisition, exploratory drilling, and testing.
The Group only capitalises costs as intangible assets once the
legal right to explore an area has been obtained. The Group
assesses the intangible assets for indicators of impairment at each
reporting date.
Potential indicators of impairment include but are not limited
to:
a) the period for which the Group has the right to explore in
the specific area has expired during the period or will expire in
the near future and is not expected to be renewed.
b) substantive expenditure on further exploration for and
evaluation of oil and gas reserves in the specific area is neither
budgeted nor planned.
c) exploration for and evaluation of oil and gas reserves in the
specific area have not led to the discovery of commercially viable
quantities of oil and gas reserves and the entity has decided to
discontinue such activities in the specific area.
d) sufficient data exist 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.
The Group analyses the oil and gas assets into cash generating
units (CGUs) for impairment and reporting purposes. In the event an
impairment trigger is identified the Group performs a full
impairment test for the CGU 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 of disposal and value in use.
As at 31 December 2022, the carrying value of intangible assets
was GBP24.4m, as per Note 10 'Intangible Assets'. The Group
considered other factors which could give rise to an impairment
trigger such as commodity prices, licence expiration dates,
budgeted spend and movements in estimated recoverable reserves. The
Group exercised judgement in determining that the licence
agreements will likely be extended by the NSTA. Based on this
assessment, no impairment triggers existed in relation to
exploration assets as of 31 December 2022.
Cost of Sales
Within the statement of comprehensive income, costs directly
associated with generating future revenue are included in cost of
sales such as software licences that were used across the asset
base. The Group only capitalises costs as intangible assets once
the legal right to explore an area has been obtained, any costs
incurred prior to the date of acquisition are recognised as cost of
sales within the Statement of Comprehensive Income.
Property, Plant and Equipment
Property, plant and equipment is stated at historic purchase
cost less accumulated depreciation. Asset lives and residual
amounts are reassessed each year. Cost includes the original
purchase price of the asset and the costs attributable to bringing
the asset to its working condition for its intended use.
Depreciation on these assets is calculated on a straight-line
basis as follows:
Computer & office equipment 3 years
Leases
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 rates provided by banks or
financial institutions 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/co-operation agreements
with strategic partners, these are classified as joint operations.
The Group accounts for its share of assets, liabilities, income and
expenditure of these joint venture agreements and discloses the
details in the appropriate Statement of Financial Position and
Statement of Comprehensive Income headings in the proportion that
relates to the Group per the joint venture agreement.
Investments
Fixed asset investments in subsidiaries are stated at cost less
accumulated impairment in the Company's Statement of Financial
Position and reviewed for impairment if there are any indications
that the carrying value may not be recoverable.
Financial Instruments
Financial assets and financial liabilities are recognised in the
Group and Company'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.
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less any expected credit loss. The Group
recognises an allowance for expected credit losses (ECLs) for all
debt instruments not held at fair value through profit or loss.
ECLs are based on the difference between the contractual cash flows
due in accordance with the contract and all the cash flows that the
Group expects to receive, discounted at an approximation of the
original effective interest rate. The carrying amount of the asset
is reduced through the use of an allowance account, and the amount
of the loss will be recognised in the Consolidated Statement of
Comprehensive Income within administrative expenses. Subsequent
recoveries of amounts previously provided for are credited against
administrative expenses in the Consolidated Statement of
Comprehensive Income.
Trade payables are stated initially at fair value and
subsequently measured at amortised cost.
Offsetting of Financial Instruments
Financial assets and financial liabilities are offset, and the
net amount is reported in the Consolidated Statement of financial
position if there is a currently enforceable legal right to offset
the recognised amounts and there is an intention to settle on a net
basis, or to realise the assets and settle the liabilities
simultaneously.
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.
Current Tax
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the end of the
reporting period in the countries where Jersey Oil and Gas Plc and
its subsidiaries operate and generate taxable income. We
periodically evaluate positions taken in tax returns with respect
to situations in which applicable tax regulation is subject to
interpretation. Provisions are established where appropriate on the
basis of amounts expected to be paid to the tax authorities.
Current tax is payable based upon taxable profit for the year.
Taxable profit differs from net profit as reported in the Statement
of Comprehensive Income because it excludes items of income or
expense that are taxable or deductible in other years and it
further excludes items that are never taxable or deductible. Any
Group liability for current tax is calculated using tax rates that
have been enacted or substantively enacted by the reporting
date.
Foreign Currencies
The functional currency of the Company and its subsidiaries is
Sterling. Monetary assets and liabilities in foreign currencies are
translated into Sterling at the rates of exchange ruling at the
reporting date. Transactions in foreign currencies are translated
into Sterling at the rate of exchange ruling at the date of the
transaction. Gains and losses arising on retranslation are
recognised in the Consolidated Statement of Comprehensive Income
for the year.
Employee Benefit Costs
Payments to defined contribution retirement benefit schemes are
recognised as an expense when employees have rendered service
entitling them to contributions.
Share-Based Payments
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 using the Black-Scholes Model:
-- 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 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.
Contingent Liabilities & Provisions
In accordance with IAS 37, provisions are recognised where a
present obligation exists to third parties as a result of a past
event, where a future outflow of resources with economic benefits
is probable and where a reliable estimate of that outflow can be
made. If the criteria for recognising a provision are not met, but
the outflow of resources is not remote, such obligations are
disclosed in the notes to the consolidated financial statements
(see note 18). Contingent liabilities are only recognised if the
obligations are more certain, i.e. the outflow of resources with
economic benefits has become probable and their amount can be
reliably estimated.
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
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.
The Board is the Group's chief operating decision maker within
the meaning of IFRS 8 "Operating Segments".
During 2022 and 2021 the Group had no revenue.
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.
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 mix needs and suitability
dependent upon the development 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 towards 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. Please refer to Note 22, Post Balance Sheet Events,
regarding the farm-out agreement with NEO. As the development
progresses towards first oil, debt becomes available and will be
sought in order to enhance equity returns. As at 31 December 2022
there are no borrowings within the Group (2021: 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.
Maturity analysis of financial assets and liabilities
Financial assets
2022 2021
GBP GBP
Up to 3 months 69,735 233,864
======== ========
3 to 6 months - -
======== ========
Over 6 months 31,112 31,112
======== ========
100,847 264,976
======== ========
Financial liabilities
2022 2021
GBP GBP
Up to 3 months 620,713 2,232,325
======== ==========
3 to 6 months - -
======== ==========
Over 6 months - -
======== ==========
620,713 2,232,325
======== ==========
Lease liabilities
2022 2021
GBP GBP
Up to 3 months 31,971 31,028
======= ========
3 to 6 months 32,212 31,261
======= ========
Over 6 months 22,509 149,923
======= ========
86,692 212,212
======= ========
5. Employees and Directors
2022 2021
GBP GBP
Wages and salaries* 2,312,653 2,207,384
========== ==========
Social security costs** 194,332 215,267
========== ==========
Share-based payments (note 19) 1,227,504 470,724
========== ==========
Other pension costs 209,394 218,253
========== ==========
3,943,883 3,111,628
========== ==========
*In addition, there were payments in lieu of notice and loss of
office fees of GBP733,725 in 2021.
** In addition, there were social security costs associated with
the payments in lieu of notice and loss
of office of GBP49,985 in 2021.
Other pension costs include employee and Group contributions to
money purchase pension schemes.
The average monthly number of employees during the year was as
follows:
2022 2021
No. No.
Directors 5 6
===== =====
Employees - Finance 1 1
===== =====
Employees - Technical 9 10
===== =====
15 17
===== =====
Directors Remuneration: 2022 2021
GBP GBP
Directors' remuneration* 664,200 938,465
========== ==========
Directors' pension contributions to money
purchase schemes 26,500 26,450
========== ==========
Share-based payments (note 19) 618,914 207,534
========== ==========
Benefits** 12,645 17,074
========== ==========
1,322,259 1,189,523
========== ==========
The Director's remuneration is shown net of share-based
payments.
*In addition, there were payments in lieu of notice and loss of
office fees of GBP733,725 in 2021.
** In addition, there were benefit costs associated with the
payments in lieu of notice and loss of office
of GBP13,197 in 2021.
The average number of Directors to whom retirement benefits were
accruing was as follows:
2022 2021
No. No.
Money purchase schemes 2 2
============ =====
Information regarding the highest paid Director is as
follows:
2022 2021
GBP GBP
Aggregate emoluments and benefits 255,699 256,036
========= =========
Share-based payments 228,648 74,707
========= =========
Pension contributions 25,000 25,000
========= =========
509,347 355,743
========= =========
Key management compensation
Key management includes Directors (Executive and Non-Executive)
and an adviser to the Board.
The compensation paid or payable to key management for employee services is shown below:
2022 2021
GBP GBP
Wages and short-term employee benefits* 698,513 992,204
================ ==============
Share-based payments (note 19) 618,914 207,534
================ ==============
Pension Contributions 26,500 26,450
================ ==============
1,343,927 1,226,188
================ ==============
*In addition, there were payments in lieu of notice and loss of
office fees of GBP733,725 and associated
benefit costs of GBP13,197 in 2021.
6. Net Finance Income
2022 2021
GBP GBP
Finance income:
================= ================
Interest received 82,842 1,807
================= ================
82,842 1,807
================= ================
Finance costs:
================= ================
Interest paid (7) (278)
Interest on lease liability (4,723) (5,820)
================= ================
(4,730) (6,098)
================= ================
Net finance income/(expense) 78,112 (4,290)
================= ================
7. Loss Before Tax
The loss before tax is stated after charging/(crediting):
2022 2021
GBP GBP
Depreciation - tangible assets 29,873 34,472
=============== ================
Depreciation - right-of-use asset 103,680 138,176
=============== ================
Auditors' remuneration - audit of parent
company and consolidation 105,000 80,000
=============== ================
Auditors' remuneration - audit of subsidiaries 25,000 27,000
=============== ================
Auditors' remuneration - non-audit work
(taxation advice) - 3,150
=============== ================
Foreign exchange gain (6,735) (6,027)
=============== ================
8. Tax
Reconciliation of tax charge
2022 2021
GBP GBP
Loss before tax (3,106,991) (4,225,317)
============ ============
Tax at the standard rate of 19% (2021: 19%) (590,328) (802,810)
============ ============
Capital allowances in excess of depreciation (90,204) (1,330,468)
============ ============
Expenses not deductible for tax purposes
and non-taxable income 234,654 91,330
============ ============
Deferred tax asset not recognised 445,878 2,041,949
============ ============
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 2022, or for the year ended 31
December 2021.
In April 2023, the rate of corporation tax will increase to 25%
for profits over GBP250,000.
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
GBP62 million (2021: GBP57 million).
9. 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 there being a loss recorded in the year.
Loss attributable Weighted
to ordinary average number Per share
shareholders of shares amount pence
GBP
Year ended 31 December
2022
================== ================ ===============
Basic and Diluted
EPS
================== ================ ===============
Basic & Diluted (3,106,991) 32,554,293 (9.54)
================== ================ ===============
Year ended 31 December
2021
================== ================ ===============
Basic and Diluted
EPS
================== ================ ===============
Basic & Diluted (4,225,317) 29,171,548 (14.48)
================== ================ ===============
10. Intangible assets
Exploration
costs
GBP
Cost
==============================
At 1 January 2021 15,166,536
==============================
Additions 6,970,670
==============================
Exploration write-off/relinquishment (447,812)
==============================
At 31 December 2021 21,689,394
==============================
Additions 2,858,729
==============================
At 31 December 2022 24,548,122
==============================
Accumulated Amortisation
==============================
At 1 January 2021 175,241
==============================
Charge for the year -
==============================
At 31 December 2021 175,241
==============================
At 31 December 2022 175,241
==============================
Net Book Value
==============================
At 31 December 2022 24,372,882
==============================
At 31 December 2021 21,514,153
==============================
In 2020, the Group acquired an additional 70% working interest
in licence P2170 (Verbier) in addition to the existing 18% equity
interest and retained 100% working interests in the licences
awarded pursuant to the NSTA's 31st 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 NSTA'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 April 2021, the Group acquired an additional 12% working
interest in P2170 following the acquisition of Cieco V&C (UK)
Limited (now Jersey V&C Ltd), thereby resulting in the Group
owning 100% of this licence which includes the Verbier oil
discovery, some 6km from the Buchan oil field. The consideration
for the acquisition included a completion payment of GBP150k and
two future milestone payments, details of which can be found in
note 18.
Later in 2021, the Group relinquished licences P2497 Block 20/4c
(Zermatt) and P2499 Block 21/2a (Glenn). Following undertaking a
comprehensive technical and economic evaluation of licences P2497
and P2499 and meetings held with the North Sea Transition Authority
("NSTA"), the NSTA confirmed that it was satisfied that the Phase A
Firm Commitments for both licences had been fulfilled. JOG decided
not to progress to the next licence phase, which would have
required committing to a firm well in each of these two licence
areas. Accordingly, the licences automatically ceased and
determined at the end of Phase A of their Initial Term on 29 August
2021.
In line with the requirements of IFRS 6, we have considered
whether there are any indicators of impairment on the exploration
and development assets. Based on our assessment, as at 31 December
2022 there are not deemed to be indicators that the licences are
not commercial and the carrying value of GBP24,372,882 continues to
be supported by ongoing exploration and development work on the
licence area with no impairments considered necessary. Under IFRS
6, this required a significant judgement to be made confirming that
we expect the NSTA to extend our license interests in P2498 and
P2170.
11. Property, Plant and Equipment
Computer and office equipment
GBP
Cost
==============================
At 1 January 2021 228,447
==============================
Additions -
==============================
At 31 December 2021 228,447
==============================
Additions -
==============================
At 31 December 2022 228,447
==============================
Accumulated Depreciation
==============================
At 1 January 2021 153,898
==============================
Charge for the year 34,472
==============================
At 31 December 2021 188,370
==============================
Charge for the year 29,873
==============================
At 31 December 2022 218,244
==============================
Net Book Value
==============================
At 31 December 2022 10,203
==============================
At 31 December 2021 40,077
==============================
12. Leases
Amounts Recognised in the Statement of financial position
2022 2021
GBP GBP
Right-of-use Assets
Buildings 81,328 185,008
========= ==========
81,328 185,008
========= ==========
Lease liabilities
========= ==========
Current 86,692 129,200
========= ==========
Non-Current - 83,012
========= ==========
86,692 212,212
========= ==========
The 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 2022 remained
at 3% and the leases relate to office space.
A new lease agreement was entered into in September 2021 with a
lease end date of September 2023, this was in relation to the
London office.
Amounts Recognised in the Statement of comprehensive income
2022 2021
GBP GBP
Depreciation charge of right-of-use
asset
Buildings 103,680 138,176
========== ==========
103,680 138,176
========== ==========
Interest expenses (included in finance
cost) (4,723) (5,820)
========== ==========
13. Trade and other receivables
2022 2021
GBP GBP
Current:
======== =========
Other receivables 30 30
======== =========
Value added tax 69,702 233,835
======== =========
Prepayments 97,328 119,249
======== =========
167,060 353,114
======== =========
14. Cash and cash equivalents
2022 2021
GBP GBP
Cash in bank accounts 6,579,349 13,038,388
========== ===========
The cash balances are placed with creditworthy financial
institutions with a minimum rating of 'A'.
15. Called up share capital
Issued and fully paid: Nominal 2022 2021
Number: Class value GBP GBP
32,554,293 (2021: 32,554,293) Ordinary 1p 2,573,395 2,573,395
========= ======== ========== ==========
Ordinary shares have a par value of 1p. They entitle the holder
to participate in dividends, distributions or other participation
in the profits of the Company in proportion to the number of and
amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a
meeting, in person or by proxy, is entitled to one vote, and on a
poll each share is entitled to one vote.
In 2021, 660,000 ordinary shares were issued to satisfy the
exercise of share options which raised GBP778,357 (gross).
An oversubscribed placing and subscription of shares raised a
further GBP16.61m (gross) with a total of 10,065,066 ordinary
shares issued.
16. Trade and other payables
2022 2021
GBP GBP
Current:
======== ==========
Trade payables 459,461 1,211,220
======== ==========
Accrued expenses 161,253 1,021,105
======== ==========
Taxation and Social Security 68,082 371,381
======== ==========
688,796 2,603,706
======== ==========
17. Lease liabilities
2022 2021
GBP GBP
Non-Current: - 83,012
====== =========
Lease liabilities
====== =========
- 83,012
========================== =========
18. Contingent Liabilities
(i) 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.
(ii) Equinor UK Limited: During 2020, JOG 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 will be accounted for in line with the cost
accumulation model, as opposed to contingent liabilities:
-- US$3 million upon sanctioning by the UK's North Sea
Transition Authority ("NSTA") 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 2025.
(iii) ITOCHU Corporation and Japan Oil, Gas and Metals National
Corporation: During 2020, JOG announced that it had 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
acquisition was treated as an asset acquisition rather than a
business combination due to the nature of the asset acquired. There
were no assets or liabilities acquired other than the 12% interest
in licence P2170 (Verbier). 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 North Sea
Transition Authority ("NSTA") 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 2025.
19. Share based payments
The Group operates several share options 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 GBP1,227,504 (2021:
GBP470,725) and details of outstanding options are set out in the
table below.
Date Exercise Vesting Expiry No. of Options Options Options No. of
of price date date shares issued Exercised lapsed/non shares
Grant (pence) for which vesting for which
options during options
outstanding the year outstanding
at 1 Jan at 31 Dec
2022 2022
May May May
2013 1,500 2014 2023 9,500 - - - 9,500
========= ======== ======= ======================= ======== ========== =========== ========================
May May May
2013 1,500 2015 2023 9,500 - - - 9,500
========= ======== ======= ======================= ======== ========== =========== ========================
Apr Apr Apr
2017 310 2017 2022 20,000 - - (20,000) -
========= ======== ======= ======================= ======== ========== =========== ========================
Apr Apr Apr
2017 310 2018 2022 20,000 - - (20,000) -
========= ======== ======= ======================= ======== ========== =========== ========================
Apr Apr Apr
2017 310 2019 2022 20,000 - - (20,000) -
========= ======== ======= ======================= ======== ========== =========== ========================
Jan Jan Jan
2018 200 2021 2025 420,000 - - - 420,000
========= ======== ======= ======================= ======== ========== =========== ========================
Jan Jan Jan
2018 200 2018 2023 76,666 - - - 76,666
========= ======== ======= ======================= ======== ========== =========== ========================
Jan Jan Jan
2018 200 2019 2023 76,667 - - - 76,667
========= ======== ======= ======================= ======== ========== =========== ========================
Jan Jan Jan
2018 200 2020 2023 70,000 - - - 70,000
========= ======== ======= ======================= ======== ========== =========== ========================
Nov Nov Nov
2018 172 2021 2025 150,000 - - - 150,000
========= ======== ======= ======================= ======== ========== =========== ========================
Jan Jan Jan
2019 175 2020 2026 88,333 - - - 88,333
========= ======== ======= ======================= ======== ========== =========== ========================
Jan Jan Jan
2019 175 2021 2026 88,333 - - - 88,333
========= ======== ======= ======================= ======== ========== =========== ========================
Jan Jan Jan
2019 175 2022 2026 68,333 - - - 68,333
========= ======== ======= ======================= ======== ========== =========== ========================
Jan Jan Jan
2019 175 2020 2024 11,667 - - - 11,667
========= ======== ======= ======================= ======== ========== =========== ========================
Jan Jan Jan
2019 175 2021 2024 11,667 - - - 11,667
========= ======== ======= ======================= ======== ========== =========== ========================
Jan Jan Jan
2019 175 2022 2024 11,667 - - - 11,667
========= ======== ======= ======================= ======== ========== =========== ========================
Jun Jan Jun
2019 200 2021 2029 120,000 - - - 120,000
========= ======== ======= ======================= ======== ========== =========== ========================
Jun Jun Jun
2019 110 2019 2029 40,000 - - - 40,000
========= ======== ======= ======================= ======== ========== =========== ========================
Jan Jan Jan
2021 155 2022 2028 83,333 - - - 83,333
========= ======== ======= ======================= ======== ========== =========== ========================
Jan Jan Jan
2021 155 2023 2028 83,333 - - (8,333) 75,000
========= ======== ======= ======================= ======== ========== =========== ========================
Jan Jan Jan
2021 155 2024 2028 83,334 - - (8,334) 75,000
========= ======== ======= ======================= ======== ========== =========== ========================
Mar Mar Mar
2021 210 2022 2026 11,666 - - - 11,666
========= ======== ======= ======================= ======== ========== =========== ========================
Mar Mar Mar
2021 210 2023 2026 11,667 - - - 11,667
========= ======== ======= ======================= ======== ========== =========== ========================
Mar Mar Mar
2021 210 2024 2026 11,667 - - - 11,667
========= ======== ======= ======================= ======== ========== =========== ========================
Mar Mar Mar
2021 210 2022 2028 137,334 - - (666) 136,668
========= ======== ======= ======================= ======== ========== =========== ========================
Mar Mar Mar
2021 210 2023 2028 137,333 - - (44,000) 93,333
========= ======== ======= ======================= ======== ========== =========== ========================
Mar Mar Mar
2021 210 2024 2028 137,333 - - (44,000) 93,333
========= ======== ======= ======================= ======== ========== =========== ========================
Nov Nov Nov
2021 147 2022 2028 233,334 - - - 233,334
========= ======== ======= ======================= ======== ========== =========== ========================
Nov Nov Nov
2021 147 2023 2028 233,333 - - - 233,333
========= ======== ======= ======================= ======== ========== =========== ========================
Nov Nov Nov
2021 147 2024 2028 233,333 - - - 233,333
========= ======== ======= ======================= ======== ========== =========== ========================
Apr Apr Apr
2022 230 2023 2029 - 285,000 - - 285,000
========= ======== ======= ======================= ======== ========== =========== ========================
Apr Apr Apr
2022 230 2024 2029 - 285,000 - - 285,000
========= ======== ======= ======================= ======== ========== =========== ========================
Apr Apr Apr
2022 230 2025 2029 - 285,000 - - 285,000
========= ======== ======= ======================= ======== ========== =========== ========================
Apr Apr Apr
2022 230 2023 2027 - 45,000 - - 45,000
========= ======== ======= ======================= ======== ========== =========== ========================
Apr Apr Apr
2022 230 2024 2027 - 45,000 - - 45,000
========= ======== ======= ======================= ======== ========== =========== ========================
Apr Apr Apr
2022 230 2025 2027 - 45,000 - - 45,000
========= ======== ======= ======================= ======== ========== =========== ========================
Total 3,534,000
========= ======== ======= ======================= ======== ========== =========== ========================
The weighted average of the options granted during the year was
determined using a 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 ranging
between 1.10% and 1.30%. 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 2022 was
230 pence, the weighted average remaining contractual life of the
options was 6 years (for all schemes 4 years), the weighted average
volatility rates was 114% and the dividend yield was nil. During
the year 60,000 share options from the April 2018 issuance expired,
these had an exercise price of 310 pence, a further 105,333 share
options were forfeited due to the departure of employees, these had
a weighted exercise price of 201 pence. There were no share options
exercised in the year. The weighted average exercise price for all
outstanding options at 31 December 2022 was 199 pence. For details
of the schemes and scheme rules, please refer to the Remuneration
Report.
20. 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 Registered
Activity Office
Jersey North Sea
Holdings Ltd 100% England & Wales Non-Trading 1
========== ======================== ================ =============
Jersey Petroleum
Ltd 100% England & Wales Oil Exploration 1
========== ======================== ================ =============
Jersey V&C 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 Management
E & P Ltd 100% Jersey 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
21. Notes to the consolidated statement of cash flows
Reconciliation of Loss Before Tax to Cash Used in Operations
2022 2021
GBP GBP
Loss for the year before tax (3,106,991) (4,225,317)
============ ============
Adjusted for:
============ ============
Depreciation 29,873 34,472
============ ============
Impairments - 447,812
============ ============
Depreciation right-of-use asset 103,680 138,176
============ ============
Share-based payments (net) 1,227,504 470,724
============ ============
Finance costs 4,730 6,098
============ ============
Finance income (82,842) (1,807)
============ ============
(1,824,046) (3,129,842)
========================================= ============ ============
Decrease in trade and other receivables 186,054 99,856
============ ============
(Decrease)/increase in trade and
other payables (1,681,452) 1,534,087
============ ============
Cash used in operations (3,319,445) (1,495,899)
============ ============
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 2022
31 Dec 2022 01 Jan 2022
GBP GBP
Cash and cash equivalents 6,579,349 13,038,388
==================== ============
Year ended 2021
31 Dec 2021 1 Jan 2021
GBP GBP
Cash and cash equivalents 13,038,388 5,081,515
============ ===========
Analysis
of net cash
At 1 Jan 2022 Cash outflow At 31 Dec
GBP GBP 2022
GBP
============== =============== ==========
Cash and cash equivalents 13,038,388 6,459,039 6,579,349
============== =============== ==========
Net cash 13,038,388 6,459,039 6,579,349
============== =============== ==========
22. Post balance sheet events
On 6 April 2023, Jersey Oil and Gas Plc announced that it has
agreed to farm-out a 50% interest in the Greater Buchan Area
licences to NEO Energy ("NEO").
In exchange for entering into definitive agreements to divest a
50% working interest and operatorship in the GBA licences to NEO,
the Company will receive:
-- 12.5% carry of the Buchan field development costs included in
the FDP approved by the North Sea Transition Authority ("NSTA");
equivalent to a 1.25 carry ratio
-- Carry for JOG's 50% share of the estimated $25 million cost
to take the Buchan field through to FDP approval
-- $2 million cash payment on completion of the transaction
-- $9.4 million cash payment upon finalisation of the GBA development solution
-- $12.5 million cash payment on approval of the Buchan FDP by the NSTA
-- $5 million cash payment on each FDP approval by the NSTA in
respect of the J2 and Verbier oil discoveries
The primary conditions precedent to completing the transaction
are receipt of the approvals from the NSTA for the transaction and
the associated extension of the Company's two GBA licences.
Following completion of the transaction, operatorship of the
licences will transfer to NEO.
23. Availability of the annual report 2022
A copy of this report will be made available for inspection at
the Company's registered office during normal business hours on any
weekday. The Company's registered office is at 10 The Triangle, ng2
Business Park, Nottingham NG2 1AE. A copy can also be downloaded
from the Company's website at www.jerseyoilandgas.com. Jersey Oil
and Gas Plc is registered in England and Wales, with registration
number 7503957.
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END
FR EAASDAADDEAA
(END) Dow Jones Newswires
May 24, 2023 02:00 ET (06:00 GMT)
Jersey Oil and Gas (AQSE:JOG.GB)
過去 株価チャート
から 10 2024 まで 11 2024
Jersey Oil and Gas (AQSE:JOG.GB)
過去 株価チャート
から 11 2023 まで 11 2024
