JOG was founded in March 2014 with realistic ambitions. The Company was launched with the belief that a cyclical recovery was, in time, inevitable. JOG quickly identified opportunity in the UK North Sea, which was enduring a sustained crisis following years of under investment, declining production and unsustainable high costs, against a backdrop of falling oil prices.
Against a backdrop of sub $30 oil prices, JOG launched a farm out process of our operated P2170 Licence in February 2016. We were very encouraged by the response we received from multiple major oil companies and ultimately concluded a deal with oil major Statoil (whose name has subsequently changed to Equinor), who, like us, saw the significant exploration potential in the Verbier oil prospect. JOG managed the process technically and commercially to achieve the best deal and retain maximum value. This resulted in what we believe to be the first promoted farm out deal to be done in the UK North Sea in over three years, which led to a drilling commitment by Statoil (whose name has subsequently changed to Equinor) for a summer 2017 well campaign.
2017 was a landmark year for JOG, as we were the catalyst for the drilling of three exploration wells in the UKCS one of which resulted in the highly publicised Verbier oil discovery. Initial Operator estimates of gross recoverable resources were between 25 and 130 million barrels of oil equivalent, with a minimum proven recoverable volume in the immediate vicinity of the wellbore of 25 million barrels of oil equivalent. JOG’s working interest in this discovery and other exploration prospects on the licence is a material 18%. The creation of value for our shareholders to this stage has been significant. JOG plc raised £2.4m gross from both new and existing shareholders, including management prior to the discovery. Post completion of the Verbier drilling campaign, our cash position was approximately £1.8m. JOG’s ownership in the discovery was created from a net expenditure of just £0.6m.
On the back of this success, JOG completed a significant equity financing of £24m, strengthening our shareholder base and positioning us to be well-financed for the near-term growth and development of the Company.
In early 2019, the Verbier appraisal well 20/5b-14 was safely drilled. This well did not encounter Upper Jurassic sands, as anticipated, resulting in our contingent resource volumetric estimations being revised towards the lower end of the initial resource estimate of 25 million barrels of oil equivalent.
In August 2019, a transformational event occurred when, after significant effort and investment, JOG was awarded 100% working interests and operatorship of four blocks in the Oil & Gas Authority’s (“OGA”) 31stSupplementary Offshore Licensing Round. The acreage awarded includes the Buchan oil field and the J2 and Glenn oil discoveries and is contiguous with JOG’s existing interest in Licence P2170 (Blocks 20/5b and 21/1d) that contains the Verbier discovery. JOG’s acreage interest in the Greater Buchan Area (“GBA”), including P2170, is estimated to contain in excess of 120 million barrels of oil equivalent (“mmboe”) discovered mean recoverable resources with additional significant exploration upside potential. Work has now commenced on preparing a Field Development Plan (“FDP”) for the Greater Buchan Area development with first oil targeted for 2024.
By way of low-risk accumulation of discovered resource volumes, this is by far the most significant event for JOG since its inception and we are excited to start work on this new project with immediate effect.