JOG was founded in March 2014 from humble beginnings. 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.
JOG was one of the few companies to see this as an opportunity and in August 2015 we became a public company, quoted on AIM through the acquisition of Trap Oil Ltd. – evidence of astute deal-making. The combined entity was recapitalised, the balance sheet was cleaned up and following a share consolidation the company was relaunched as Jersey Oil and Gas plc. From this moment forward, JOG has had a clearly defined strategy to deliver shareholder value through extracting value from its existing exploration-focused asset portfolio and through pursuing an acquisition strategy primarily focused on production assets.
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 are 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 largest conventional oil discovery to be made in UK North Sea during 2017 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 keep our seat at the table as we enter the appraisal stage of Verbier. We are delighted with the progress that has been made to date and looks forward to an exciting next chapter in the growth of Jersey Oil and Gas.