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Jersey Oil & Gas reveals disappointing result for Statoil’s Verbier well

“We are naturally disappointed by these results, but remain in a strong position to continue to pursue our core strategy of growth through potential production asset acquisitions," said chief executive Andrew Benitz
oil and gas operations
JOG was covered for the costs of the North Sea well

The value of Jersey Oil & Gas Plc (LON:JOG) collapsed in Monday’s dealings, falling around 75% to 165p to trade at 54.3p, after the company revealed that two exploration wells had been unsuccessful.

The Statoil operated Verbier exploration well has been unsuccessful, finding the target reservoir to be water bearing and deeper-than-expected.

The explorer noted that a side-track to the well could be drilled, with a decision following further analysis, although it told investors that such a decision would be considered unlikely at this stage.

It offered investors something of a silver-lining, saying that the well was "drilled with ultimately no cost exposure" to the company as a result of its farm-out arrangements.

This was, however, scant consolation for shareholders as the price plummeted on Monday.

Stockbroker SP Angel, in a note, said: “Today’s announcements that both Wells are dry holes will undoubtedly disappointed not only management, but the company’s owners too.

“What the management does next will define the how they’re viewed by the public, and more importantly by their existing shareholders.

“We believe that the management team need to cut these results in the context of the remainder of their portfolio and highlight any impact, if any, that today’s announcement has on the remaining prospectivity.”

Meanwhile, oil companies expert Malcolm Graham Wood in a note said: “The company is still planning to continue with its stated strategy of growth through acquisitions of assets including production with a number of potential deals being currently assessed.

“JOG has a good team and is without a doubt in this for the long haul, it has good sources of funding for its longer term strategy.”

Strong position for core strategy

Chief executive Andrew Benitz, in a statement, said: “We are naturally disappointed by these results, but remain in a strong position to continue to pursue our core strategy of growth through potential production asset acquisitions.

"In light of the Verbier result, the company will now update its evaluation of the P.2170 licence acreage and consider the possible implications for the Cortina prospect, which remains an independent and prospective Upper Jurassic target."

JOG had an 18% stake in Verbier, and, following the programme it expects cash resources will amount to £2.5mln.

 

*Updated to include broker comment and share price movement

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