JOG Jersey Oil And Gas Plc

13 May 2024

Jersey Oil and Gas plc

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

Final Results for the Year Ended 31 December 2023

& Notice of Annual General Meeting

Jersey Oil & Gas (AIM: JOG), an independent upstream oil and gas company ‎focused on the UK Continental Shelf region of the North Sea, is pleased to announce its audited financial results for the year ended 31 December 2023 and the date of its forthcoming Annual General Meeting ("AGM").

Highlights

§ Successful completion of two significant Greater Buchan Area ("GBA") farm-out transactions ensured the Company delivered on its core strategic objectives during 2023

§ The selected Buchan redevelopment plan delivers the lowest full-cycle carbon footprint solution for the field

§ The Buchan redevelopment project benefits from the key "R3" components that underpin a quality solution for the development of homegrown resources - Redeveloping an existing, known oil field, through Re-use of infrastructure that is to be made Ready for electrification

§ Financial outlook transformed, with the business securing a path to monetising its GBA interests without the need for additional equity from shareholders

Ambition Backed by Actions

2023 was a pivotal year for the Company.  Having successfully aggregated the GBA resource base and progressed the necessary development planning activities, two farm-out transactions were executed, bringing in two credible industry partners and the funding required to monetise the area.

Securing the means and the finance to move the GBA project forward into the development phase of activities has been the key ambition of the Company since taking over sole ownership of the licence area in 2021.  The farm-out transactions with NEO Energy ("NEO") and Serica Energy ("Serica") do just that and have transformed the outlook for the business. 

By bringing in leading industry partners, closing out the selection of the GBA development solution and securing a high-quality floating production, storage and offloading vessel ("FPSO"), the Company has set the path to delivering a material long-term income stream from the Buchan redevelopment project.   Importantly, the structure of the farm-out transactions ensures that the Company has secured a series of cash payments, which comfortably finance the on-going operations of the business, as well as funding for its remaining 20% interest in the Buchan project.

Buchan - Moving Forward

The Buchan redevelopment project continues to make good progress.  Completion of the necessary pre-sanction Front-End Engineering and Design work is on track and the first offshore survey vessel mobilisation occurred earlier this month to obtain the geophysical and geotechnical data required to finalise the subsea and drilling rig contract tendering process and inform the FPSO mooring design.

In line with the strategy for the future connection of the FPSO to one of the anticipated floating wind power developments in the area, engagement is on-going with the companies that were awarded acreage in the INTOG licencing round conducted by Crown Estate Scotland in 2023.  Securing a source of green power feeds into the post start-up electrification plan for the FPSO and does not defer the target date for first oil.

The draft Buchan Field Development Plan was submitted to the North Sea Transition Authority in December 2023 and the Environmental Statement was submitted to the Offshore Petroleum Regulator for the Environment and Decommissioning at the beginning of 2024.  Subject to project sanction from the joint venture partners, these submissions pave the way for obtaining the necessary regulatory approvals for the Buchan redevelopment project in the second half of 2024.

The UK oil and gas industry as a whole is currently being frustrated in its efforts to maximise the production of homegrown resources by fiscal uncertainty.  Through the work of the industry trade body, Offshore Energies UK, a significant amount of effort is going into engaging with the leaders of all parties to make sure the benefits of domestic energy production are understood and realised.

Solid Outlook

The Company's vision is centred on successfully growing the business in a smart and sustainable way.  The business is focused on unlocking the organic value of its existing GBA assets, combined with the pursuit of accretive asset acquisitions that bring cash flow, diversity and quality investment opportunities into the portfolio.  Such opportunities are thoroughly assessed in terms of their potential strategic fit, being mindful of the quality and unencumbered strengths of our existing portfolio.

The Company is well positioned to deliver on its strategic objectives.  With a cash balance following completion of the Serica farm-out in late February 2024 of over £15 million, the business is financially secure and funded for the planned Buchan redevelopment programme.  During 2023 the underlying annual cash costs of the business were trimmed from forecast levels of £4.0 million to £3.5 million.  Following the transfer of operatorship of the GBA licences to NEO and completion of the farm-outs, the Company has moved swiftly to further prune underlying forecast cash costs to under £3.0 million per annum.  This backdrop provides an attractive springboard from which to realise the full potential and ambitions of the business to deliver long-term shareholder value.

Annual General Meeting

The Company also announces that its 2023 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 2023 on 5 June 2024 at 12.00 noon at the offices of Strand Hanson Limited, 26 Mount Row, London W1K 3SQ.

Corporate Website

The Company is pleased to report that it has today launched a new version of its corporate website (www.jerseyoilandgas.com).

Andrew Benitz, Chief Executive Officer, commented:

"JOG had an exceptional 2023 and we are delighted to have NEO and Serica as our partners on the Greater Buchan Area, which is one of the largest and most exciting developments of homegrown energy in the UK North Sea.  Together with our joint venture partners and support from our shareholders we have delivered an investment opportunity that is expected to support over 1,000 jobs across many parts of the UK supply chain, provide private investment of around £900 million into the UK economy and generate hundreds of millions in forecast UK tax receipts.   

The project is progressing well, with the Front-End Engineering and Design work that needs to be completed ahead of project sanction remaining on track, along with execution of the offshore geotechnical survey campaign that commenced earlier this month. 

Multiple recent fiscal hikes, compounded by potentially further fiscal uncertainty associated with the forthcoming election, are weighing heavily on UK oil and gas industry.  With hydrocarbon imports into the UK at a record high last year, the spotlight will inevitably refocus on domestic supply from the North Sea.  We remain confident that any new government will realise that the industry is truly its best partner and enabler of the energy transition and that it must support private sector investment into all forms of homegrown energy.   Whilst demand for oil and gas remains, homegrown energy provides the most effective, lowest carbon option and provides an economic bridge to the future."

Enquiries:

- Ends -

GBA Farm-Out Terms

In exchange for entering into agreements with NEO and Serica to divest an aggregate 80% interest in the two licences that comprise the GBA, the Company has received / will receive:

§ A carry for JOG's 20% share of the estimated $25 million cost to take the Buchan field through to FDP approval

§ A 20% carry of the Buchan field development costs, as approved in the FDP; equivalent to a 1.25 carry ratio - estimated capital expenditure of £850-950 million (100%)

§ $3.2 million cash on completion of the transactions

§ $15 million cash payment for finalisation of the GBA development solution associated with acquisition of the Western Isles FPSO

§ $20 million cash payment following approval by the NSTA of the Buchan FDP and receipt of associated regulatory and legal consents

§ $8 million cash payment on each FDP approval by the NSTA in respect of the J2 and Verbier oil discoveries

Notes to Editors:

Jersey Oil & Gas (AIM:JOG) is a UK energy company focused on creating shareholder value through the development of oil and gas assets and the execution of accretive transactions. 

The Company has a focused asset portfolio centred on developing homegrown North Sea resources that support the UK's energy requirements as it transitions towards net zero.  JOG holds a 20% interest in each of licences P2498 (Blocks 20/5a, 20/5e and 21/1a) and P2170 (Blocks 20/5b and 21/1d) located in the UK Central North Sea and referred to as the "Greater Buchan Area." Licence P2498 contains the Buchan oil field and J2 oil discovery and licence P2170 contains the Verbier oil discovery.

JOG's strategy is focused on unlocking the organic value of its GBA assets, combined with the pursuit of asset acquisitions that bring cash flow, diversity and quality investment opportunities into the portfolio.  The Company's Board and Executive team have a wealth of experience in managing and growing publicly listed energy companies and a strong track-record of value creation in the UK North Sea oil and gas sector.

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

The financial year under review, 2023, was a transformational one for JOG and we were delighted to deliver on the key corporate objectives we had set for creating real shareholder value from our GBA licence interests and establishing the path forward for the GBA development project.

While the GBA farm-out process took longer than originally anticipated to complete, throughout it we were mindful of the fundamental requirement to deliver a credible and sustainable result.  In short, we were focused on attracting the right industry partners and agreeing upon the optimal development solution, being one that aligns with the oil and gas industry's support for the UK's energy transition and path towards achieving net zero in 2050.

Double Farm-out Success

In April 2023, we were pleased to announce a farm-out transaction with NEO. NEO acquired a 50% working interest in, and operatorship of, both the licences that cover the GBA, which includes the Buchan oil field, the Verbier and J2 discoveries and several exploration prospects.  Following swiftly on from completing the NEO transaction, we were then able to announce a further farm-out of a 30% non-operated working interest in the licences to Serica in November 2023.

These transactions, executed on identical pro-rata deal terms, deliver material value to JOG, including certain cash milestone payments, funding through to Buchan Field Development Plan ("FDP") approval and a 20% development expenditure carry on the costs included in the approved Buchan FDP (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 US$8 billion of assets under management.  Serica is a leading London listed UK oil and gas company producing more than 40,000 barrels of oil equivalent per day in the North Sea.

These transactions serve to unlock the route to monetising gross GBA resources in excess of 100 million barrels of oil equivalent and creating a major new production hub in the Central North Sea.  Following completion of the Serica transaction in late February 2024, we have so far received a total of $18 million in cash payments from the farm-outs, with a further $20 million due following Buchan FDP approval and completion of the regulatory consenting process in due course.  With Buchan first oil targeted for late 2026, our net 20% carried working interest in the field is anticipated to generate material cash flow, with an estimated breakeven cost in the initial years of approximately $15/boe.

Development Solution Secured

A critical component for making the planned Buchan redevelopment project a long-term success was to secure the right development solution.  In November 2023 we were very pleased to announce the execution of agreements to acquire the "Western Isles" FPSO.  The FPSO will be utilised as the production processing facility at the centre of the redevelopment.  This high-quality FPSO, which has only been operational since 2017 and is already partly owned by our partner, NEO, is an excellent fit for the GBA.  Transfer of the vessel is subject to completion of the necessary handover activities by the existing Operator, Dana Petroleum, and Buchan FDP approval, which is targeted for the second half of 2024.

Securing this critical piece of infrastructure removes the requirement to construct new processing facilities, which significantly de-risks the execution phase of the project.  The FPSO's existing specification and limited age mean that the modifications required for the FPSO to meet Buchan's development plan are relatively modest.  These are key factors for minimising the timeline risks associated with the ultimate project execution plan.  Importantly, JOG's 20% cost of acquiring the vessel is also fully carried under the terms of the farm-out agreements and we will benefit from vessel ownership as opposed to expensive vessel leasing, which is often a path taken for similar North Sea developments. 

Operational Progress

Following the transfer of operatorship of the GBA licences to NEO post completion of the initial farm-out transaction, we have been pleased with the pace at which the project has moved forward and the level of on-going collaboration.  NEO has formed a high-quality and experienced project team. The draft FDP was submitted to the NSTA in December and the Environmental Statement was submitted to the Offshore Petroleum Regulator for the Environment and Decommissioning ("OPRED") at the beginning of 2024.  These submissions pave the way for obtaining the necessary regulatory approvals for the Buchan redevelopment project in the second half of 2024.

In terms of the activities that need to be completed ahead of project sanction, we are pleased to report that all the required Front-End Engineering and Design ("FEED") work is on-going, and the engineering is progressing to plan.  The planned use of shuttle tanker offload for oil export from the FPSO has been endorsed by the NSTA and finalisation of the preferred gas export option is moving forward as planned.  Geophysical and Geotechnical surveys are scheduled for completion in the coming months, with the initial vessel mobilisation scheduled for May 2024.  The results of these activities will be used to finalise the subsea and drilling rig contract tendering process and inform the FPSO mooring design. 

In line with the strategy for the future connection of the FPSO to one of the anticipated floating wind power developments in the area, engagement is on-going with the companies that were awarded acreage in the INTOG licencing round conducted by Crown Estate Scotland in 2023.  Securing a source of green power feeds into the post start-up electrification plan for the FPSO and does not have an impact on our target date for first oil.

Supporting Energy Transition

The Buchan redevelopment is a show case example of energy transition in the making.  Our unique "R³" development characteristics have been designed to deliver the lowest full-cycle carbon footprint solution achievable, enabling us to produce a vital homegrown energy resource and thereby providing meaningful support for the North Sea energy transition plan.  We are Redeveloping an existing and known reservoir to maximise economic production.  We are Re-using infrastructure through the redeployment of an existing FPSO, and we are modifying the vessel so that it is Ready for electrification, which means that involvement in our project has the exciting opportunity to accelerate investment into offshore wind projects - Energy Transition in Motion.  

Throughout JOG's history, a key part of our strategy has been to identify and evaluate low cost, early-stage entry points into energy investment opportunities with the objective of adding value through maturation.  Through our work on the Buchan redevelopment project we have forged important relationships with major players in offshore wind development.  As a result, working alongside these sector experts, we are evaluating the Jersey Government's potential interest in creating a utility scale wind farm in the Channel Islands.

This is currently early-stage work with nominal expenditure, utilising our existing offshore engineering and commercial expertise, which has been effectively demonstrated in advancing the Buchan redevelopment project from inception to where it is now.

Developing Homegrown Energy

The future of the UK North Sea as a single holistic integrated energy hub is hugely exciting and it has the potential to unlock £200 billion of investment this decade.  Oil and gas investment remains the key catalyst to make this happen, an approach that countries such as Norway are capitalising on so effectively.

Now more than ever, the North Sea needs cross party-political backing.  Unfortunately, domestic oil and gas has been leveraged for short term political gain, threatening the energy security of the UK and damaging long term economic growth.  The ownership landscape in the North Sea has dramatically shifted away from Big Oil to independents like us and our partners, that are fully invested in UK waters.  Whilst it might be headline grabbing to advocate taxing 'Big Oil' to pay for green energy, it is having the adverse effect, making domestic energy less competitive and forcing increased reliance on costly imports.  Last year the UK spent more on importing hydrocarbons than it spent on the entire defence budget, a direct consequence of short-term fiscal policy damaging long-term investment into homegrown energy.  Whilst demand for oil and gas remains, domestic energy provides the most effective, lowest carbon option available and provides an economic bridge to the future as new energy infrastructure is created.

The UK energy sector contributes significantly to the economic strength of the country and generates much needed employment opportunities. The Buchan redevelopment project is a great example.  The project has the potential to unlock approximately £900 million of private sector investment, create over 1,000 jobs across the UK and contribute millions in value creation and tax payments into the UK economy.  It will also help facilitate billions of pounds of investment into cutting edge, floating offshore wind power technology.  Projects like this unleash the UK's potential to power our future and this is the message we are communicating to our politicians. 

Our industry as a whole is engaging with the major political parties and other key stakeholders in more detail than ever before, with a clear narrative on the benefits of backing low carbon, homegrown energy resources.  We continue to monitor the political landscape closely and we believe that there is a path forward to unlock the considerable benefits that the GBA project can deliver for the UK economy. 

Financial Strength

We ended the 2023 year with cash of £10.5 million (2022: £6.6 million) and this was further boasted by a net receipt of $6.8 million (approximately £5.4 million) in February 2024 upon completion of the Serica farm-out.

With JOG now fully carried for its 20% share of both pre-sanction costs and the capital expenditure to be set out in the approved Buchan FDP, the only remaining committed cash expenditure relates to the core running costs of the business.  We have moved quickly to right-size the business following the change to being a non-operated partner on the GBA and expect the underlying core cash spend going forward for the business to reduce to under £3 million per year, a reduction of 25% compared to the forecast of £4 million per annum this time last year.

A full Financial Review is provided on page 8 of this report.

Summary and Outlook

JOG had an exceptional 2023 and we are delighted to have NEO and Serica as our partners on the GBA.  The Buchan field is one of the largest and most exciting developments of low carbon homegrown energy in the UK North Sea.  NEO has hit the ground running with a first-class project team in place and is progressing the pre-sanction engineering activities at pace.  Having submitted the draft FDP and Environmental Statement to the regulators, we continue to make good operational progress on moving the project towards the target of regulatory approval later this year.

As always, we are very grateful to our loyal shareholders who have backed us to deliver on the key objectives we have had for the business for some time and we were delighted to achieve such key objectives over the course of last year.  We look forward to completing the next set of milestones that will take us closer to unlocking the full value of the business and move us into a phase of substantial cash flow generation.

Les Thomas,

Non-Executive

Chairman

Andrew Benitz,

Chief Executive Officer

10 May 2024

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2023    

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2023

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2023

The following describes the nature and purpose of each reserve within owners' equity:   

CONSOLIDATED STATEMENT OF CASH FLOWS

Notes to the Consolidated Financial Statements

For the year ended 31 December 2023

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. Material 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 2023 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 has substantial cash reserves following the successful farm-out of the GBA licences and receipt of initial funds resulting from the two transactions with NEO and Serica.  The Group now has a fully funded 20% interest in the on-going Buchan redevelopment project. 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 project did not progress for any unforeseen reason and any 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 2023:

·      Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);

·      Definition of Accounting Estimates (Amendments to IAS 8);

·      Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12);

·      IFRS 17 Insurance Contracts (Amendments to IFRS 17).

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 2023 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.

·      IFRS 16 Leases (Amendment - Liability in a Sale and Leaseback);

·      IAS 1 Presentation of Financial Statements (Amendment - Classification of Liabilities as Current or Non-current);

·      IAS 1 Presentation of Financial Statements (Amendment - Non-current Liabilities with Covenants).

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 the 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 judgement of the existence of impairment triggers (note 10).

•      The estimation of share-based payment costs (note 20).

•      The judgement associated with the treatment of farm-out transactions.

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.  

Share-Based Payments

The Group currently has several share schemes that give rise to share-based payment charges. The charge to operating profit for these schemes amounted to £1,560,167 (2022: £1,227,504). 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 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.

Farm-out transactions

Determining the value of the consideration received for a farm-out disposal of assets with proven resources can be challenging. This is even more the case for assets which are farmed out in the pre proven resources phase.  A judgement has been made that for such farm-outs only cash payments received will be recognised and no recognition will be made of any consideration in respect of the future value of work to be performed and carried by the farmee. Rather, the Group will carry the remaining interest at the previous full interest cost reduced by the amount of any cash consideration received from entering into the agreement. The effect will be that there is no gain recognised on the farm-out unless the cash consideration received exceeds the carrying value of the entire asset held.  Upon FID, the Group will start recognising both cash payments received and the value of future carried assets to be received, and will recognise a future asset receivable with an accompanying gain in the income statement for the equity share of the asset disposed of.

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.

The following subsidiaries which are included in these consolidated accounts are exempt from the requirements of the Companies Act relating to the audit of their accounts under section 479A of the Companies Act 2006:

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 a 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 soon 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 2023, the carrying value of intangible assets was £16.4m, 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 2023.

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 payments 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 £5,000 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 19).  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 2023 and 2022 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. With the completion of the NEO Energy farm-out during the year and the Serica Energy farm-out post year end (refer to Note 23, Post Balance Sheet Events) the Group expects 's that the introduction of these two industry partners will deliver sufficient cash to progress its assets to first oil in return for a capital (equity) contribution via the farm-outs.  As the GBA development project progresses towards first oil, debt becomes available and may be sought in order to enhance equity returns. As at 31 December 2023 there are no borrowings within the Group (2022: 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

Financial liabilities

Lease liabilities

5. Employees and Directors

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:

The average number of Directors to whom retirement benefits were accruing was as follows:

Information regarding the highest paid Director is as follows:

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:

6.   Net Finance Income

7.   Loss Before Tax

The loss before tax is stated after charging/(crediting):

8.   Tax

Reconciliation of tax charge

No liability to UK corporation tax arose on ordinary activities for the year ended 31 December 2023, or for the year ended 31 December 2022.

In April 2023, the rate of corporation tax rose to 25% for profits over £250,000.

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 £63 million (2022: £62 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.

The share options (note 20) issued in the Group that would potentially dilute earnings per share in the future have not been included in the calculation of diluted loss per share as their effect would be anti-dilutive.

10.  Intangible assets

At the start of 2022 and 2023 the Company owned 100% interests in two licenses; P2498 containing the Buchan field and J2 Discovery, and P2170 containing the Verbier discovery.

At the end of 2023 the costs incurred in acquiring and advancing the licenses to their current state was £25,700,982 (2022: £24,548,122). During 2023 the farm-out of a 50% interest in both licenses to NEO energy was completed in exchange for a series of cash payments and both a predevelopment and development carry on the Buchan Redevelopment project. In accordance with our farm-out policy for assets at this stage of development (please refer to section on Acquisitions, Asset Purchases and Disposals on page 54) the cash proceeds in the year of £9,103,944 have been deducted from the carrying value of the assets.

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 2023 there are not deemed to be indicators that the licences are not commercial and the carrying value of £16,475,394 continues to be supported by ongoing exploration and development work on the licence areas with no impairments considered necessary.

11.  Property, Plant and Equipment

12.  Leases

Amounts Recognised in the Statement of financial position

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 2023 remained at 3% and the leases relate to office space.

A new lease agreement was entered into in June 2023 for a total of 9 years with break clauses after 3 and 6 years The interest rate implicit in the agreement was 3% over the Bank of England's base rate. Given the 3-year break clause and the future plans for the business it was deemed appropriate to recognise the liability relating to a 3-year period.  This lease was in relation to an office in Jersey.

Amounts Recognised in the Statement of comprehensive income

13.  Trade and other receivables

Included within other receivables is an amount of £233,055 relating to monies outstanding from the exercise of share options.

14.  Cash and cash equivalents

The cash balances are placed with a creditworthy financial institution with a minimum rating of 'A'.

15.  Term deposits

Term deposits are placed with a creditworthy financial institution with a minimum rating of 'A'. The £5m was placed in Dec 2023 with an interest rate of 5%.

16.  Called up share capital

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.

Included in the above are ordinary shares of 1,667 (2022; nil) which were committed to be issued at the year end but not allotted until January 2024.

In 2023, 113,334 new ordinary shares were issued to satisfy the exercise of share options which raised £233,053 (gross) which was not paid at year end and is included in other receivables.  All other issued share capital was fully paid.

17.  Trade and other payables

18.  Lease liabilities

19.  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 consisted 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 included a completion payment of £150k and two future milestone payments, which are considered contingent liabilities:

·      £1.5 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

·      £1 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 FDP.

The earliest of the milestone payments in respect of the acquisition is not currently anticipated being payable before the start of 2025.

20.  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 the number of shares that will eventually vest.

The Group's share option schemes are for Directors, Officers and employees. The charge for the year was £1,560,167 (2022: £1,227,504) and details of outstanding options are set out in the table below.

*The share options issued in January 2018 had their expiry dates extended due to the Company being in several close periods whereby according to the scheme rules the options were unable to be exercised.  The amended expiry date for these options was 29 January 2024 with the remaining outstanding balances expiring on this date.

The weighted average value 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 3.9% and 4.1%. The volatility measured at the standard deviation of continuously compounded share returns is based on a statistical analysis of daily share prices from over a four year period. The weighted average exercise price for the options granted in 2023 was 247.50 pence, the weighted average remaining contractual life of the options was 6 years (for all schemes 4 years), the weighted average volatility rate was 115% and the dividend yield was nil. During the year 19,000 share options from the May 2013 issuance expired, these had an exercise price of 1,500 pence, a further 90,835 share options were forfeited due to the departure of employees, these had a weighted exercise price of 213 pence. In December 2023 113,333 share options that were granted in January 2018 were exercised by former employees, these had an exercise price of 200 pence. The weighted average exercise price for all outstanding options at 31 December 2023 was 200 pence.  For details of the schemes and scheme rules, please refer to the Remuneration Report.

21.  Related undertakings and ultimate controlling party

The Group and Company do not have an ultimate controlling party or parent Company.

Registered Offices

1.   10 The Triangle, ng2 Business Park, Nottingham, NG2 1AE

2.   7 Queen's Gardens, Aberdeen, AB15 4YD

3.   First Floor, Tower House, La Route es Nouaux, St Helier, Jersey JE2 4ZJ

22.  Notes to the consolidated statement of cash flows

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 2023

Year ended 2022

In December 2023 £5m was placed on 10-month deposit at a fixed rate of 5%.

23.  Post balance sheet events

On 26 February 2024, Jersey Oil & Gas plc announced that, further to the press release issued on 23 November 2023, the Company had completed its farm-out of a 30% interest in the Greater Buchan Area ("GBA") licences to Serica Energy (UK) Limited ("Serica") and received the associated milestone cash payment of $6.8 million. 

The farm-out transaction with Serica is on identical pro-rata terms to that previously completed with NEO Energy ("NEO") earlier in 2023.  In aggregate, the two transactions result in JOG retaining a 20% interest in the GBA licences, a full carry on the capital expenditure required to bring the Buchan field into production and a number of milestone cash payments.  Upon completion of the Serica Farm-out, the combined cash payments received from the two farm-outs were approximately $18 million, with up to a further $20 million due to be paid to JOG upon Buchan Field Development Plan ("FDP") approval. 

In exchange for entering into definitive agreements to divest a 30% working interest in the GBA licences, the Company is set to receive from Serica:

·      a 7.5% carry of the estimated $25 million cost to take the Buchan field through to FDP approval

·      a 7.5% carry of the Buchan field development costs, up to the budget included in the approved FDP; equivalent to a 1.25 carry ratio

·      a $6.8 million cash payment on completion, which includes a $5.6 million payment associated with the finalisation of the GBA development solution and associated acquisition of the "Western Isles" FPSO - this payment has been received

·      a $7.5 million cash payment on approval of the Buchan FDP by the NSTA

·      a $3 million cash payment on each FDP approval by the NSTA in respect of the J2 and Verbier oil discoveries

The primary condition precedent to completing the Serica Farm-out was receipt of approval from the NSTA for the transaction.

24.  Availability of the annual report 2023

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.