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Jersey Oil & Gas confirms potential of Greater Buchan acreage

Snapshot

  • Jersey Oil and Gas PLC (LON:JOG) is an AIM-listed junior focused on the North Sea
  • In July it was awarded full ownership of three North Sea licences
  • JOG has an 18% stake in the nearby Verbier licence, operated by Norway's Equinor
North Sea

Quick facts: Jersey Oil and Gas PLC

Price: 161 GBX

LSE:JOG
Market: LSE
Market Cap: £35.15 m
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​​​​​​How is it doing

 

Greater Buchan

In the latest North Sea licensing round by the Oil and Gas Authority, Jersey was awarded significant acreage.

Jersey landed 100% of three blocks hosting the Buchan oil field and the J2 oil discovery, acreage adjoining JOG's existing interest in Licence P2170, which contains the Verbier discovery.

A CPR by contractor Rockflow estimated the recoverable resources in The Greater Buchan Area at 94.7mln barrels, including the parts within P2170.

The estimates are £791mln for Jersey’s ‘mid-case’ contingent resources – including the new GBA estimates along with the explorer’s share of the Verbier discovery.

 

Verbier

Recent drilling at Verbier, situated 100km north-east of Aberdeen, did not hit the quantities of oil expected but still found a potentially commercial 25mln barrels and chief executive Andrew Benitz told investors that there is “still plenty to play for” at the project.

The well failed to upgrade Verbier’s resource base, with the discovery now believed to host closer to 25mln barrels than 130mln.

Equinor, as Verbier's operator, will carry out a full re-evaluation of the licence area, including an assessment of additional deeper targets and the other previously identified exploration opportunities, including Cortina.

A large part of the mapped area located to the north remains untested and additional resource upside potential was identified in a deeper horizon beneath the Verbier discovery.

 

What the CEO says

“Together with JOG's 18% share of the Verbier discovery, this gives a total of nearly 100mln barrels (MMstb) net to JOG and provides a contingent resource valuation (NPV10) of nearly US$1bn net to JOG for Buchan, the J2 discovery, Buchan Andrew and the company's share of Verbier in the adjacent licence,” said Andrew Benitz, Jersey chief executive.

“This independent valuation supports the significant value proposition for developing the base case discovered volumes that JOG owns within its core Greater Buchan Area assets."

 

Inflexion points

  • New partner for the Greater Buchan area
  • Final decision on development expected in 2022
  • Petrofac and Rockflow Resources are contractors on the GBA assets

 

What the broker says; WH Ireland

“In our opinion, the report confirms that the company’s centre of gravity now clearly resides on the Buchan field with 81.2mln barrels of recoverable resource,” analyst Brendan Long said in a note.

“We believe this is positive because this field has produced for decades and benefits from a high level of data and understanding.

“Most importantly having a strong asset that can deliver scale and attractive economics is what we believe will attract, at the appropriate time, the substantive capital to fund a development programme.

“On balance we are very impressed that Jersey, which is essentially a small/growing oil & gas company has landed the assets it now holds.”

Long added: “We are further impressed that the company has only issued 21.8 million shares to get it to where it is today."

 

Blue sky

Jersey Oil & Gas’s ambition is to build a sizeable North Sea-focused business and is looking for acquisitions to further that goal.

Last year, the company said that the revival in activity in the North Sea meant it had been priced out of some deals.

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