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Broker looks forward to a ‘busy time’ for Jersey Oil & Gas

Arden analyst Daniel Slater today repeated a ‘buy’ recommendation for the North Sea exploration company.
oil platform
Arden's upside case sees Verbier worth 517p per share

City broker Arden Partners is looking forward to a ‘busy time’ for North Sea focussed junior Jersey Oil & Gas Plc (LON:JOG).

Jersey is partnered with Statoil and CIECO in an exploration venture targeting the Verbier prospect with a well, slated for this summer. At the same time, the AIM quoted group is looking at potential acquisitions of producing offshore asset.

Arden analyst Daniel Slater today repeated a ‘buy’ recommendation for Jersey and a valuation of 192p per share (current price 310p) albeit if Verbier is successful he sees an upside case where the project could be worth 517p per share.

“The Verbier well provides a tangible catalyst for the stock within the next six to nine months, and would be very significant for the company if it is successful,” Slater said in a note.

“The acquisition strategy has the potential to underpin JOG with cash generative production volumes, which would help provide funding for Verbier on success, and a hedge otherwise.”

Statoil deal was obvious highlight of 2016

The Statoil deal that set up 2017’s potentially exciting summer was an obvious highlight in Jersey’s financial results statement on Thursday.

It was the company’s key milestone achievement in 2016. It saw the AIM quoted explorer retain an 18% stake in the project, and Statoil commit to pay Jersey’s share of drilling costs, up to US$25mln on the first well.

Jersey raised £1.6mln of new capital during the year, and ended December with £1.9mln of cash.

The company reported a £793,439 pre-tax loss for the year, down for £1.4mln in the previous year.

It highlighted that it continues to keep tight control of costs, noting that staff agreed to salary cuts of up to 50% for nine months of the year (albeit normal salary levels have since been restored). There are plans to re-open a London office when circumstances allow and in the meantime continue to operate out of its office in Jersey.

 

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