Jersey Oil & Gas flagged its “significant progress” towards “monetising” the Greater Buchan Area, while noting uncertainty within the North Sea sector as a whole over UK Government policy.
It said: “Following the significant progress that has been made by the company towards monetising the Greater Buchan Area, the last year has frustratingly seen momentum slowing as a result of the Government’s consultations on the future regulatory and fiscal direction of the UK North Sea.”
However, it added: “Despite this, the company remains well positioned as one of the leading UK-listed small-cap oil and gas companies, with a high-quality development portfolio and the funding to deliver on its organic growth plans.”
Jersey Oil & Gas declared that the potential for the Buchan Horst development, in which it has a 20% interest with Neo NEXT+ and Serica Energy partners on the joint venture with respective stakes of 50% and 30%, to drive long-term shareholder value is “well understood and securing sanction for this project represents a huge opportunity”.
It added: “While the end of the Government consultations in late 2025 helped provide additional clarity on the framework within which future investment decisions can be assessed, it is clear that the industry as a whole is still digesting the outcomes.”
Jersey Oil & Gas highlighted the timing of the replacement of the energy profits levy, known also as the “windfall tax”, as among key factors in determining when the Buchan Horst project would come to fruition.
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It told the stock market this morning: “Positive conclusions in respect of the protracted environmental and regulatory approval processes for the North Sea’s Jackdaw and Rosebank developments will inevitably help inform the optimal route forward for subsequent UK projects like Buchan. Obtaining clarity from these processes and the likelihood of an earlier than planned implementation of the ‘oil and gas price mechanism’, the replacement regime for the energy profits levy, will help influence the timeline and steps for taking the Buchan project towards sanction.”
The proposed Buchan Horst project is a redevelopment of the Buchan field which ceased production in 2017.
Jersey Oil & Gas said it “continues to prudently manage the financial position of the business” and maintain its “resilience to the delayed sanction of the Buchan development, which has resulted from the regulatory and fiscal headwinds the industry has faced”.
It added: “The Buchan joint venture is continuing to screen and consider additional potential development solutions that have arisen as a result of the inevitable delay in investment decision-making caused by the Government consultations.”
Jersey Oil & Gas declared that, although “various headwinds have buffeted the industry”, the core strengths of its business remain unchanged.
It said: “With estimated gross resources of over 100 million barrels of oil equivalent in the Greater Buchan Area (GBA), underpinned by a carried 20% working interest in the Buchan development, the company has the potential to generate substantial cash flow from its portfolio.
“Unlocking the resource base involves the installation of a central processing facility for the area, with initial production from Buchan to be followed by the tieback of the other GBA feeder fields.”
Jersey Oil & Gas added: “The farm-out transactions completed with NEO Next+ (NEO) and Serica Energy provide the funding for the company’s 20% investment in the Buchan development, along with several milestone cash payments – to date this has totalled over $25 million in cash and capital expenditure carry payments
“NEO and Serica are major, well-financed, UK North Sea oil and gas operators that provide strength and expertise to a high-quality joint venture partnership.”
Jersey Oil & Gas said it “remains sharply focused on unlocking the organic value of the GBA”, combined with utilisation of its existing UK tax allowances of more than $100 million “through the pursuit of accretive asset acquisitions that bring cash flow, diversity and quality investment opportunities into the portfolio”.
It added: “Such opportunities are thoroughly assessed in terms of their potential strategic fit, being mindful of the quality and unencumbered strengths of the existing portfolio.”
The company declared: “With total year-end cash reserves of £11 million, no debt and a current cash run rate of under £1.5 million per annum, the business is financially secure and funded for execution of the Buchan development programme. This backdrop provides an attractive springboard from which to realise the full potential and ambitions of the business for delivering long-term shareholder value.”
