Annual Report
Year ended 31 December 2022
CCOONNTTEENNTTSS
OOvveerrvviieeww
Chairman & Chief
Executive Officer’s Report
01
SSttrraatteeggiicc RReeppoorrtt
Strategic Report
03
Our Assets
Financial Review
Our Stakeholders
Risks
OOuurr GGoovveerrnnaannccee
Board of Directors
Corporate Governance
Report
Sustainability Report
Directors’ Report
Directors’ Responsibilities
Audit Committee Report
Remuneration Report
Independent Auditors’
Report
FFiinnaanncciiaall SSttaatteemmeennttss
Consolidated Statement
of Comprehensive Income
Consolidated Statement
of Financial Position
Consolidated Statement
of Changes in Equity
Notes to the Consolidated
Financial Statements
Company Statement of
Financial Position
Company Statement of
Changes in Equity
Notes to the Company
Financial Statements
04
06
07
09
12
14
20
30
32
33
34
39
46
47
48
49
71
72
73
Jersey Oil and Gas plc
JJeerrsseeyy OOiill aanndd GGaass ((““JJOOGG””)) iiss aann iinnddeeppeennddeenntt UUKK EE&&PP ccoommppaannyy ffooccuusseedd oonn
bbuuiillddiinngg aann uuppssttrreeaamm ooiill aanndd ggaass bbuussiinneessss iinn tthhee NNoorrtthh SSeeaa..
Since 2019 the Company has successfully aggregated a significant oil and
gas resource base in the UK Central North Sea, the “Greater Buchan Area”
(“GBA”). Through a combination of licence round awards and acquisitions
the Company positioned itself as the sole owner of the GBA, thereby
providing the control and flexibility to progress the establishment of a new
development hub concept capable of unlocking substantial long-term
shareholder value. Having determined the scale and potential of the GBA
resource base, a farm-out process was launched in order to secure an
industry partner and move the development into the next phase of
activities towards obtaining regulatory approval for the execution of the
project. In April 2023, this process culminated in the announcement that
NEO Energy (“NEO”) would be acquiring a 50% interest and operatorship
of the GBA licences in exchange for various cash milestone payments and
the carry of a proportion of the Company’s future development
expenditure.
GGBBAA DDeevveellooppmmeenntt
▪ During 2022, the Company was actively engaged with multiple
counterparties regarding the planned divestment of an interest in its
GBA licences.
▪ As part of this process, technical and commercial diligence has been
completed on a range of different development options that could be
utilised to achieve future production from the GBA. These include the
use of a standalone processing platform, tie-backs to existing third-party
infrastructure or floating production / FPSO solutions.
▪ With the introduction of NEO to the GBA, the partnership will work
together to select the preferred development solution from a short list of
attractive options, with first production targeted for 2026.
▪ Upon selection of the preferred development solution, the project will
move into “Front End Engineering & Design” activities along with
preparation of the required Field Development Plan (“FDP”) that is
planned for submission to the North Sea Transition Authority (“NSTA”)
for approval in the first half of 2024.
AAttttrraaccttiivvee OOuuttllooookk
▪ The farm-out to NEO delivers significant value to the Company, not least
by securing a fully funded position through to FDP submission, and
unlocks the route to monetisation of the GBA resources.
▪ While JOG will retain a 50% working interest in the GBA following
completion of the farm-out (with 12.5% of development costs carried by
NEO), the Company intends to farm-out additional GBA equity such that
it ultimately retains a 20-25% carried interest in the development.
▪ Pursuit of the Company’s corporate growth strategy, through the
execution of accretive acquisitions, also remains an important objective.
▪ The Company is well positioned, with a cash balance at the end of 2022
of approximately £6.6 million, which is set to be enhanced by the various
milestone payments incorporated into the farm-out transaction terms
agreed with NEO.
CHAIRMAN & CHIEF EXECUTIVE OFFICER’S REPORT
Jersey Oil and Gas plc
the
interest
working
including
the GBA,
discoveries
and
prospects.
GBA Farm-out
In April 2023 we were delighted to
farm-out of an
announce
interest in our GBA development to
NEO Energy (“NEO”). We have
agreed terms for NEO to acquire a
and
50%
operatorship in both licences that
cover
the
Buchan oil field, the Verbier and J2
various
oil
exploration
This
transaction unlocks the route to
finalising the GBA development
and monetisation of
solution
resources in excess of 100 million
barrels of oil equivalent in total. The
transaction delivers material value
to JOG, including cash milestone
payments, funding through to Field
Development Plan (“FDP”) approval
and a minimum 12.5% development
expenditure carry to first oil for the
50%
the
Company (a 1.25 carry ratio). NEO
is a major UK North Sea operator
producing approximately 90,000
barrels of oil equivalent per day and
is owned by HitecVision AS, a
leading private equity
investor
focused on Europe’s offshore
energy industry with approximately
$8
under
management.
retained by
interest
assets
billion
of
Operational Update
Our operational focus during 2022
has been on advancing technical
studies on various development
in collaboration with
solutions
infrastructure owners. This included
studies such as flow assurance work
for assessing tie back options to
regional platform infrastructure, the
topside modification requirements
for
receiving
potential
infrastructure, and for potential
FPSO options. With this work now
completed, the Company will be
working in partnership with NEO to
select the preferred development
solution, having already confirmed a
short list of attractive options. We
proactively
also
continue
the
to
collaborate on potential
joint
development opportunities with
industry parties who own
other
regional assets that could be tied
back to a GBA development.
Low Carbon Development
The GBA development has the
exciting potential to be one of the
lowest
carbon
full-cycle
development projects in the UK
North Sea through the use of
existing infrastructure and potential
low carbon electrification options.
In late 2022, we were pleased to
provide
letters of support as a
potential power user to the offshore
wind developers applying for leases
in the vicinity of the GBA in the
Innovation and Targeted Oil & Gas
(“INTOG”) offshore wind
licence
round. Awards were announced in
March 2023, with licences granted
by Crown Estate Scotland in close
proximity to the GBA. Powering the
GBA from low carbon wind power
can reduce our carbon emissions to
less than 2kg of CO2/bbl versus the
average in the UK North Sea of
22kg. We will be evaluating the
the GBA
to make
potential
development
is
that
ultimately selected “electrification
ready”, so that it can be powered
with green energy upon completion
of a proximal wind farm.
solution
Licensing Activity
JOG continues to work closely and
constructively with the North Sea
Transition Authority (“NSTA”) on
our
In
licence commitments.
keeping with the Company’s stated
strategy of developing the GBA as
an area-wide development plan, we
were pleased to receive a licence
extension to the Second Term of our
P2170 “Verbier” licence, such that it
is now aligned with the P2498
“Buchan” licence, with the current
term being until the end of August
2023. Following the farm-out to
NEO, we are in close consultation
with the North Sea Transition
Authority to seek an extension on
both licences to allow delivery of a
Field Development Plan (“FDP”).
in
carried
interest
Business
Development
JOG’s
Strategy
At the forefront of our business
development plans is to farm-out
additional GBA equity such that the
Company ultimately retains a 20-
the
25%
development. Building a full cycle
upstream business focused on the
UKCS remains the ultimate goal for
JOG and having now announced a
farm-out in respect of the GBA
development, we will also be
seeking to advance our acquisition
strategy. We believe the North Sea
can be the crucible for the energy
transition and that oil and gas
companies can lead investment into
new energies. We see JOG as being
no different to our larger peers such
that in addition to upstream asset
and corporate opportunities, we are
also actively looking at new energy
investment opportunities.
Financial Review
The Company’s cash position was
approximately £6.6 million as of 31
December 2022, well within our
forecast. As an oil and gas
development
and
exploration
company, JOG had no production
revenue during
the year and
received only a modest amount of
interest on its cash deposits.
The loss for the period, before and
after tax, was approximately £3.1
million (2021: £4.2 million). Our
main expenditure during 2022
related to technical studies on
parallel development options for
the GBA Development project.
Having successfully negotiated the
farm-out to NEO, the Company
remains appropriately funded as we
move forwards towards approval of
the Buchan Field Development
Plan.
1
in
September
introduced by
Tax
The Energy Profits Levy (EPL) that
was
the UK
Government in May 2022 caught
the industry off guard, particularly
those that have invested and built
production portfolios in the UKCS
over the past few years. A second
2022
change
increased the tax rate further to 75%
through to March 2028. With no
price floor on when this windfall tax
would fall away, the industry has no
option other than to plan as if it is a
permanent tax and consequently
this has significantly harmed the
industry’s borrowing capacity. We
the
is sensible
believe
Government
some
guidance on a price floor to facilitate
the continuation of vital domestic
energy supplies. The silver lining of
these changes, however, was the
introduction of an
investment
allowance that is specifically ring
fenced to attract capital spend into
new investments. A full taxpayer in
the North Sea has the ability to
secure substantial tax relief through
investing into new projects such as
the GBA Development.
to provide
for
it
Macro Backdrop
improved macro-
A significantly
economic outlook for the oil and gas
sector compared to 2021 ushered in
significant profits for the oil majors.
in
The pandemic and the war
Ukraine
the
underlying issue that is challenging
have masked
Jersey Oil and Gas plc
licences in order to ultimately retain
a 20-25% carried interest in the
development.
Discussions with
companies potentially interested in
non-operated stakes have been
underway as part of the farm-out
process and these remain ongoing.
small
Finally, we would like to extend our
gratitude to the JOG team, who
have delivered a transformational
farm-out for the Company. We are
team of dedicated
a
professionals and we will use this
excellent result as a springboard to
grow the long-term value of the
business.
We also thank our
the ongoing
for
shareholders
support they have shown as we have
advanced
farm-out
the GBA
process.
We were delighted to
announce the transaction with NEO
and look forward to building upon
this success.
the
world
the upstream sector – a looming
supply crunch. Our industry has
been starved of capital since 2015
and this has led to chronic under
investment. The energy transition is
underway, and our industry is at the
forefront of the challenges that this
evolution brings.
The approach
must be managed appropriately as
hydrocarbons currently continue to
provide
with
approximately 80% of our daily
energy supply. Unfortunately, we
are already seeing the inflationary
pressures
from a
restricted energy supply and an
even more concerning prospect of
energy poverty. We need urgent
and responsible investment in the
upstream sector in order to address
the supply shortfall against a
backdrop of significantly increasing
global demand for energy. It will
take time for supply to catch up and
strong
commodity prices are
expected.
result
that
Summary and outlook
We are excited to be starting our
in
journey with NEO, who,
partnership with
JOG, will be
working to close out the selection of
the preferred GBA development
the project
take
solution and
through the Front End Engineering
and Design
(“FEED”) phase of
activities and on to project sanction,
which is targeted for next year. The
farm-out
Company
intends
the GBA
additional equity
to
in
Les Thomas,
Non-Executive
Chairman
Andrew Benitz,
Chief Executive Officer
23 May2023
2
STRATEGIC REPORT
under
(“AIM”)
Business Review & Future Activities
The principal activity of the Group is
that of an upstream oil and gas
business in the United Kingdom.
The Company is a public limited
company incorporated in England
(Company number
and Wales
07503957) and is quoted on the AIM
the London Stock
market of
Exchange
the
designation JOG. The Company is
required by the Companies Act
2006 to set out in this report a
review of the business of the Group
during the year ended 31 December
2022 and the position of the Group
at the end of the year, as well as the
principal risks and uncertainties
facing the Group. The information
that
requirements,
these
including discussion of the business
and future developments, is set out
in the Chairman and Chief Executive
the
Officer’s
Strategic Report.
report and
fulfils
joint
at
delivering
Business Strategy
The Group has a two-pronged
approach to its strategy, which is
aimed
strong
shareholder returns. The first is a
Core Area Strategy, which
is
focused on the area surrounding our
principal assets, UK licences P2498
and P2170 (collectively known as the
Greater Buchan Area), to create and
increase value in the licences and
surrounding areas. The second is
the pursuit and execution of asset
acquisitions in the UK North Sea
area. The continued evolution of the
UK North Sea and wider industry
environment are expected to result
in some
interesting acquisition
opportunities that we, as a Group
or
unencumbered
decommissioning liabilities, may be
able to exploit beneficially.
debt
by
The Greater Buchan Area
During the year, JOG maintained its
focus on its Core Area Strategy,
which culminated in the April 2023
that NEO will
announcement
acquire a 50% working interest and
operatorship in the two licences
comprising the GBA. The licences
contain the Buchan oil field, the
Verbier and J2 oil discoveries, and
various exploration prospects. It is
expected that this deal will unlock
the route to finalising the GBA
development solution and move the
project onwards to first production,
which is targeted for 2026. The
Group will look to build upon this
cornerstone farm-out and seek to
divest additional equity in the GBA
licences in order to ultimately retain
a 20-25% carried interest in the
Buchan development.
GBA Farm-out to NEO Energy
into
for entering
In exchange
definitive agreements to divest a
50%
and
operatorship in the GBA licences to
NEO, the Company will receive:
working
interest
▪ a 12.5% carry of the Buchan field
development costs included in
the FDP to be approved by the
North Sea Transition Authority
(“NSTA”); equivalent to a 1.25
carry ratio
▪ a carry for JOG's 50% share of
the estimated $25 million cost to
Jersey Oil and Gas plc
take the Buchan field through to
FDP approval
▪ $2 million cash payment on
completion of the transaction
▪ $9.4 million cash payment upon
the GBA
of
finalisation
development solution
▪ $12.5 million cash payment on
approval of the Buchan FDP by
the NSTA
▪ $5 million cash payment on each
FDP approval by the NSTA in
respect of the J2 and Verbier oil
discoveries
The primary conditions precedent
to completing the transaction are
receipt of the approvals from the
NSTA for the transaction and the
of
extension
associated
the
licences.
Company’s
two GBA
Completion of the transaction is
anticipated around the end of the
second quarter of 2023, following
which, operatorship of the licences
will transfer to NEO.
NEO Energy is an independent full-
cycle North Sea operator in the UK
Continental Shelf backed by
HitecVision AS.
UK North Sea Growth Through
Acquisitions
Our primary focus remains on our
flagship GBA Development project,
but JOG remains active in reviewing
a number of potential acquisitions
and/or opportunities for possible
business combinations.
3
OUR ASSETS
During 2022, the core focus of the
business was centred on advancing
the farm-out of the GBA licences.
This work culminated in the April
2023 announcement of a farm-out
of a 50% interest in the licences to
NEO, with operatorship of the
licences scheduled to transfer to
NEO following completion of the
transaction.
of
discovered
Extensive Resource Base
Following the award of the Buchan
in 2019 and subsequent
licence
the
to consolidate
transactions
Group’s other key licence interest in
the surrounding acreage during
2020, JOG created an attractive
and
portfolio
prospective resources which were
well positioned, and with sufficient
critical mass, for a proposed hub-
based development. In aggregate,
the licences contain the Buchan oil
field,
J2 and Verbier oil
discoveries and a number of
exploration prospects, which are
estimated by the Group to contain
contingent resources in excess of
150 million barrels of oil equivalent.
the
The primary asset in the portfolio is
the Buchan oil field, which sits
across two blocks in the P2498
licence. This licence, together with
licence P2170, forms the Company’s
core area. Through acquisitions and
licence round awards, the Group
established sole ownership of the
such,
GBA
established
and
flexibility to determine the optimal
route
the
to monetisation of
resources.
as
control
licences
and
the
de-risk
static and dynamic modelling work
was completed to appropriately
the
and
characterise
expected performance of the fields.
The static models are designed to
depict the geological setting of the
the dynamic
reservoirs, while
modelling
production
involves
forecasting that incorporates the
lateral and vertical distribution of
properties,
rock
non-uniform
coupled with rock-fluid properties,
to determine production
rates,
pressures, fluid compositions and
saturations.
In the case of the Buchan oil field,
the focus of the subsurface work has
been centred on developing a
dynamic history matched model
that robustly simulates the actual
production of oil, gas and water
from the field over the 36 years the
field was originally in production (up
to 2017 when facilities driven issues
resulted in the operator at the time
ceasing production from the field).
the
Refinement
simulated
field
History matching
is aimed at
achieving a reasonable alignment
and
between
observed historical
/ well
behaviour to establish a satisfactory
model for reservoir management
and
purposes.
maturation of the modelling
is
generally a continual process and
located
having
successfully
additional core data
the
original Buchan oil field wells in late
2021, work continued in 2022 to
further
field
characterisation
history
matched model.
optimise
from
and
the
Subsurface
Since the award of the Buchan
acreage in the 31st Licence Round,
extensive subsurface work has been
undertaken to better understand
the
reservoir
characteristics and performance
forecasts of the field and nearby J2
and Verbier discoveries. Extensive
geology,
GBA
overall
The
resource
development plan envisages three
Phase 1 is
phases of activities.
centred on the exploitation of the
Buchan oil field, with production
supported by water
injection to
maintain pressure support and
optimise reservoir sweep. Phase 2
focuses on development of the J2
Jersey Oil and Gas plc
West, J2 East and Verbier East
discoveries and Phase 3 on the
Verbier West discovery.
licences
Development Plan & Farm-Out
In order to progress and fund the
GBA development programme, the
Company embarked on a farm-out
process
industry
to secure an
partner to acquire an interest in the
in
GBA
partnership with JOG to unlock the
value of the resource base. This
approach is in line with the Group’s
objectives for maintaining a prudent
financing and risk management
strategy when embarking on major
capital expenditure programmes.
and work
Following the launch of the farm-
out process, the Group has been
actively engaged with multiple
As part of this
counterparties.
engagement, the Company has
evaluated a range of alternative
engineering concepts that could
facilitate the GBA development,
including the use of a standalone
processing platform, tie-backs to
existing third-party
infrastructure
(via either subsea infrastructure or
utilising a normally unmanned
installation located at Buchan) or
floating
FPSO
production
solutions.
/
The development options have
been assessed and optimised both
technically and economically
in
the most
to ascertain
order
appropriate solution for the GBA.
With the agreements now executed
for NEO to acquire a significant
the
the
interest
Company will be working
in
partnership with NEO to select the
preferred development solution.
licences,
in
The criteria used to assess the
take
development options
into
account
encompassing
project deliverability, execution
risks, environmental impact and life
of field operability; all with a view to
factors
4
considerations,
determining the level of confidence
around the ability to safely deliver
the development concept on time
and within budget. With respect to
the
economic
development options are being
evaluated using the typical range of
metrics including project IRR, NPV,
valuation
period,
payback
sensitivities, taking into account the
projected first oil date, CAPEX,
OPEX,
and
decommissioning obligations.
availability
Regulatory Activities
Upon selection of the preferred
GBA development solution, the
project will move into the next phase
of activities, being the completion of
Front End Engineering and Design
(“FEED”). Completion of FEED is
the
to culminate
designed
submission of the required Field
Development Plan to the NSTA for
approval.
in
In November 2022, the Company
secured an extension to the Second
Term of its P2170 “Verbier” Licence.
This licence is now aligned with
JOG’s P2498 “Buchan” Licence, for
which the current
licence phase
expires at the end of August 2023.
The alignment of the two licence
terms
the
Company's
strategy of
stated
developing the GBA as an area-wide
development plan.
in keeping with
is
the
in order
As part of the conditions precedent
NEO
with
associated
transaction,
is
the Company
required to secure an extension
from the NSTA to the term of both
licences
to provide
sufficient time to submit a Buchan
field development plan. The
Company has submitted the formal
extension
is
applications
actively engaged with the NSTA on
completion of
the associated
approval process. It is anticipated
that the NEO farm-out transaction
will completed around the end of
the second quarter of this year.
and
North Sea Transition
JOG has been actively working to
the GBA development
ensure
solution that
is ultimately taken
forward for regulatory approval will
be set-up to deliver upon both the
industry’s strategic objectives of
“Maximising Economic Recovery”
and “Net Zero”.
footprint of
The ability to minimise the full-cycle
environmental
the
different development solutions will
be a key component in evaluating
the various options and concluding
the specification of the preferred
development solution.
Jersey Oil and Gas plc
have
the potential
for
Furthermore,
electrification of the future GBA
a
represents
facilities
core
technical
of
component
the
been
that
evaluations
completed. This opportunity has
been greatly enhanced as a result of
the recent Crown Estate offshore
wind “Innovation and Targeted Oil
and Gas” (“INTOG”) licensing round,
which resulted in two companies
being awarded seabed licences for
potential offshore floating wind
developments in the vicinity of the
GBA licences. The construction of
such facilities would be expected to
enable the future electrification of
development
any
infrastructure once power exports
commence from the windfarm. As
part of the Company’s support for
the INTOG licensing round, letters
of support were provided to two
applicants preparing submissions in
the vicinity of the GBA.
GBA
5
FINANCIAL REVIEW
Cash Resources and Short-Term
Investments
in a
The Group ended 2022
comfortable position, with £6.6m of
cash remaining.
Debt
JOG currently has no debt.
of
Statement
Consolidated
Comprehensive Income
The Group had no trading revenues
in 2022. Administrative expenses
reduced approximately 13% from
the prior year to £3.2m (2021:
£3.7m).
Expenditure Highlights
2022 saw the team complete the
engineering work and
studies
associated with the GBA concept
select. This included engineering
studies covering the subsea facilities
and well design aspects of the
project. In addition, external tax and
legal
incurred
advancing potential farm-in terms
with counterparties.
services were
Costs directly associated with the
GBA Development project continue
to be capitalised and amounted to
£2.9 million in 2022 (2021: £6.9
million).
The 2022 work programme was
focused on
interaction with the
multiple counterparties who are
in our GBA farm-out
engaged
process. This phase necessitates a
smaller, more focused team and
our manpower
consequently
were
requirements
flexed
accordingly. The Group continues to
remain lean and cost-efficient and
has reduced its forecast cash spend
to a quarterly run rate of around £1
million.
(“KPIs”)
Key Performance Indicators
The Group’s Key Performance
remain
Indicators
dominated by the key driver for the
business – the farm out of the GBA
Development project, which will
catapult the growth of the Group.
financial
Additionally, there are
KPIs, which
tightly
relate
controlled cash expenditure and
non-financial KPIs which relate to
Health, Safety, Security and the
Environment (“HSSE”).
to
Although substantial progress was
made with the farm-out, the key KPI
was not achieved during 2022 but
was carried forward as the main
objective
performance
indicator in 2023. The other KPI’s
were fully achieved in 2022 with the
strong
cash management of
particular note.
and
financial
flexibility
Given the nature of our business, it is
critical
that we monitor and
carefully manage our cash and
to
maintain
recapitalise the balance sheet as
and when required, whilst at all
times being able to honour our
commitments and progress our
of
the
business
shareholders. On a similar note, our
administration
operating
expenditure needs to be kept within
interest
and
in
Jersey Oil and Gas plc
budget and within a range that is
appropriate
size and
operations of the Group.
the
to
The HSSE KPI was met during the
year, with all activities safely
managed without incident. This is
our most important non-financial
KPI, due to the importance we place
on
the
protection
environment and the safety of our
employees.
the
of
an
the
stated
Group
current
Outlook
The Directors continue to consider
remains
that
for
appropriately capitalised
its
is well
current asset base.
It
efficient,
managed, with
effective, and scalable cost base,
and remains well placed to pursue
our
strategy.
Securing the milestone payments
and
expenditure
carries associated with the NEO
transaction announced in April 2023
secures the Group’s financial ability
to take the GBA through to FDP
approval and provides a major step
the Group
funding
forward
the
first oil; with
through
Company ultimately targeting the
retention of a full carried 20-25%
interest in the development.
development
in
to
Graham Forbes
Chief Financial Officer
23 May 2023
6
Jersey Oil and Gas plc
OUR STAKEHOLDERS
S172 Companies Act 2006
▪ Stakeholders
▪ ESG
▪ UN Global
Compact
Human Resources
▪ Employees
▪ Contractors
▪ Advisers
For JOG, engaging with our stakeholders is an integral part of how we operate as a
business – actively seeking to understand what really matters to our stakeholders and
ensuring that we take this into account in our decision-making, both at strategic and
operational levels. This engagement enables us to continue to build a leading, mid-tier
upstream oil & gas company, through maintaining a motivated workforce, dependable
supply chains, close relationships with Government Regulators, while providing good
returns for our shareholders and a positive social impact in our local communities. We
set out below our key stakeholder groups and how we engage with them.
Further information on how stakeholder considerations are taken into account by the
Board in their decision-making, in accordance with s172 of the Companies Act 2006, is
provided in the Governance section.
The Group maintains an active dialogue with its regulator, the NSTA, in carrying out its
role as licence operator on its assets. Throughout the year under review and during the
period up to the publication of the annual report, we discussed the Group’s progress on
developing and farming out the GBA area as well as engagements with operators of
nearby infrastructure and future developments.
JOG is committed to doing business responsibly by aligning its activities with the
UNGC’s Ten Principles on human rights, labour, the environment, and anti-corruption.
The Group engages with suppliers of goods and services to the GBA Project, to ensure
that those organisations with which JOG seeks to contract with are aware of JOG’s ESG
Standards and that JOG will endeavour to seek alignment between JOG’s ESG policies
and those of its Contractors.
Our staff are key to delivering our business goals and ambitions. We rely on their skills,
experience, knowledge and diversity to deliver our vision to grow a successful,
sustainable and valuable business.
We have been fortunate to be able to attract some of the industry’s best and brightest
talent. We promote and maintain a strong and embedded culture of health and safety,
which is of fundamental importance to us. Culture and brand; we are proud of what we
have built and achieved. Ethics and values; good governance, based on strong principles
and leadership. Well-being: we care for and about all our staff and employees. The
Group communicates continuously on key corporate news and structural changes
through emails, video and conference calls which allow for questions from employees.
We value all employees, and we ensure that our communications are inclusive,
providing full transparency across the business.
We aim for continual improvement in the management of our human resources. Key
include opportunities for career progression,
topics for further
development and succession planning, and working practices. As a Group, we are
focused on sustaining a positive business culture and continue to promote our values
and behaviours through performance reviews and communication.
improvement
Shareholders
▪ Shareholder
Communication
It is important that our shareholders understand our strategic priorities and ambition
and their views inform our decision-making. Communication and engagement are
critical to this aim. We held our last Annual General Meeting in May 2022. Our financial
results are announced twice a year, and regulatory news announcements provide
7
Jersey Oil and Gas plc
communication to our shareholders, along with our annual report to help investors and
other stakeholders understand our business and its performance. In conjunction with
our announcements our Chief Executive Officer regularly meets with and updates our
investors.
JOG’s Procurement Policy is underpinned by our internal procedures, which detail the
specific processes and governance procedures implemented to provide the most
efficient, effective, and cost-conscious supply service which incorporates effective
governance, risk management and prompt payment protocols.
Our effort is to be always professional and establish a reputation as being a reliable
customer with whom suppliers and partners want to do business.
When taking on a new supplier, we conduct a detailed review to ensure that we
understand not only the quality of their product or services but also their policies,
procedures and working practices, making sure they are consistent with our values and
informed of our business
compliance requirements. We keep our suppliers
performance through public disclosures and communication where appropriate.
The Group ensures that the quality of the services being supplied meets the standards
expected, through our engagement and monitoring payment terms.
We aim to be a contributor to economic growth by providing investment opportunities,
creating jobs and project development. We aim to ensure that many people can benefit
from our operations. We also provide support for our local communities through a
variety of initiatives. Including raising funds for the Beresford Street Kitchen Charity
based in Jersey that provides quality education, training and employment for people
with learning activities.
Regulators are key external stakeholders across various aspects of our business and
particularly in activities which require statutory permits or consents. Briefings and
meetings with the various regulators occur at regular intervals, typically corresponding
to entering a new phase in the activity or key project phases, to provide updates on the
schedule, a look-ahead on work to be undertaken and to advise of any forthcoming
regulatory submissions or notifications.
Suppliers
▪ Procurement and
Contracting
Community
▪ Corporate
Citizenship
Government / Regulator
▪ Key Stakeholders
8
Jersey Oil and Gas plc
RISKS
The Group operates in an environment that has substantial risks, albeit ones that it aims to mitigate and manage.
These risks have to be carefully balanced to maximise the chances of providing attractive returns for our
shareholders. The Group has a well-developed Risk Register. It is updated on a regular basis and discussed at regular
points throughout the year, within a business operational and management context and at Board meetings.
The risks and opportunities set out below and herein are not exhaustive and additional risks, uncertainties and
opportunities may arise or become material in the future. Any of these risks, as well as other risks and uncertainties
discussed in this report, could have a material adverse effect on the business.
Strategic and External Risks and Opportunities
▪ Regulatory obligations
▪ Completion of the GBA
Farm-Out to NEO
▪ Movement and conditions
in capital markets
▪ Material oil price
movements
▪ Material changes in
Governmental approach
towards continued
hydrocarbon exploration,
development and
production
The Group works continually to foster positive relationships at all levels with
relevant government and regulatory bodies, including but not limited to the
NSTA and BEIS / OPRED.
The Group is exposed to various regulatory obligations as part of maintaining
its UK North Sea licences. JOG’s portfolio consists of licence P2498 (Buchan
and J2) and P2170 (Verbier) which currently have licence expiration dates of 29
August 2023. Retention of each licence requires the relevant field development
plans to be approved by the NSTA by the end of each licence term. The Group
maintains an active dialogue with the NSTA on its activities and seeks to ensure
it can adjust any licence obligations that reasonably require additional time to
effectively execute its plans. There are no work programmes associated with
second term licences, however progress is monitored by the NSTA via a series
of milestones.
Completion of the deal announced in April 2023 with NEO is conditional on
NSTA approval and an extension of the GBA licences by at least 12 months. The
NSTA have been kept informed throughout the farm-out process. As with any
transaction of this nature, there is no certainty that the deal will complete
although the Company works closely with all parties required to provide
approvals.
The Group competes with other exploration and production companies, some
of whom have much greater financial resources, for the identification and
acquisition of oil and gas licences and properties. The market price of
hydrocarbons can be volatile and is not within the control of the Group.
The successful progression of the Group’s oil and gas assets depends not only
on technical success, but also on the ability of the Group to obtain appropriate
funds through equity financing, debt financing, farm-outs and/or other means.
The availability of funding may continue to be influenced by macroeconomic
events, such as oil price fluctuations or the overall state of the economy, both
of which remain outside the control of the Group. There is no assurance that
the Group will be successful in obtaining the required financing going forward.
The Group’s financial risk management policies are set out in note 4 of the
Consolidated Financial Statements.
There is no absolute assurance that the Group’s ongoing activities will be
successful. At the current time, the Group has two active licence interests,
which it still considers to have good reserves potential and prospects. These
licences come with some degree of risk and there may be an uncertainty over
the future success and potential commercialisation of the assets. The Group
may expand its portfolio through the acquisition of growth assets in the future
to provide asset diversification.
9
Financial Risks
▪ Availability of industry
funding and / or access to
capital markets
▪ Oil and gas price
movements
▪ Cost overruns and inflation
▪ Adverse taxation and
legislative changes
▪ Regulatory and compliance
risks
Jersey Oil and Gas plc
The Group is operating in an evolving environment where the energy transition
and decarbonisation of the wider economy will impact current and future
operations. The Group seeks to assess and manage the associated regulatory,
commercial, physical, and societal risks and opportunities in a structured
manner over the various applicable time horizons. Portfolio decisions,
including investments and potential acquisitions, are assessed against the
potential impacts of the transition to the use of lower-carbon energy. These
include higher regulatory costs linked to carbon emissions and lower demand
for oil and gas. The Group’s strategy recognises that the world is moving
towards a lower-carbon energy system, while acknowledging that the pace and
specific path forward remains uncertain. This means the Group will need to
make agile business decisions in step with society.
Approval of the FDP for the redevelopment of the Buchan field is key to
achieving future cashflows from the field. Obtaining the necessary approval of
all the regulatory authorities cannot be guaranteed, although the Company will
continue to work closely with the various organisations to ensure a robust and
socially responsible development plan is developed for the field.
The key ongoing activity of the business is the future development of the GBA
licences and execution of a further farm-out transaction(s) following the
scheduled completion of the deal with NEO. Failure to secure a further farm-
out partner(s) could have a detrimental impact on the ability of the business to
develop the GBA and generate future cashflows.
The uncertain political and regulatory environment over the last 24 months
continues to be an unhelpful backdrop to execute development farm-out
transactions with speed and certainty. The farm-out risk has however been
substantially mitigated having agreed a 50% farm-out with a leading industry
player.
Close relationships are maintained with banks and the investor community as
the Group may require additional capital to facilitate potential future
acquisitions. The Group is usually in ongoing discussions with various financial
partners, with a view to them supporting the Group in the future once
producing assets are acquired or development, appraisal or exploration assets
require further funding. We are also regularly in talks with various third parties
and shareholders, regarding the provision of capital, with which to execute any
future acquisitions.
Based on current budgets and forecasts, the Group is well funded to pursue its
farm-out objectives. Budgets and cash flow projections, considering a range of
cost inflation and joint venture investment scenarios, are prepared and
updated regularly, circulated to all Directors and reviewed at Board meetings.
The Group raised significant funds in 2021 and, like in 2022, in 2023 expects to
be able to operate within its existing cash reserves and beyond based on its
current work programme, subject to there not being any unforeseen cost
overruns or other expenses.
The Group currently has no income exposure to oil price fluctuations, since
there is no production accruing to the Group from its asset portfolio however
the underlying medium/long term strength of oil prices can impact on the
Group’s ability to complete future farm downs and raise funds, if required, as it
can impact the value of the assets.
The Group will be exposed to any changes in the UK tax regime longer term and
supports the work of industry bodies in influencing government policy to
10
Operational Risks
▪ Loss of key employees
▪ Delay and cost overruns,
including weather related
delays
▪ HSSE incidents
▪ Co-venturer and other
counterparty risk
▪ Failure of third-party
services
▪ Inherent geological risks
and uncertainties
Jersey Oil and Gas plc
encourage investment in oil exploration and production, in addition to the
management of tax planning and compliance.
At present, the Group holds almost all its available cash resources in Sterling,
hence it has minimal forex exposure.
The Group ensures the risks considered appropriate for the Group’s needs and
circumstances.
The Group recognises that to achieve its long-term strategy it will need to
continue to take an active approach to identify, attract and retain the skills and
expertise needed and to incentivise employees appropriately. The oil and gas
sector is a particularly expensive sector in which to operate from a personnel
perspective. The Group tries to ensure that we are leanly but appropriately
staffed, with a focus on technical capability and that employees are working
under contracts that provide the Group with a degree of protection, should
people leave our employ. Retention of key staff is aided by the award of share
options throughout the full staff structure.
Through the employment of high-quality, experienced staff and contractors,
combined with efficient and effective management overview and controls, we
believe we can mitigate many of the risks associated with our operations.
The Group typically aims to hold shared equity in its assets. Currently the
Group holds 100% working interests in all its licences. The Group has the
capabilities, skills, knowledge, and experience to mitigate many of the
operational risks associated with current and planned activities including HSSE
and the management of third-party contractors and service suppliers. Upon
completing the farm-out of 50% equity and transfer of Operatorship in the
GBA to NEO, the Group will be exposed to the usual range of co-venturer risks,
including the ability of co-venturers to finance their own share of asset
expenditures. It is anticipated that such risks will be mitigated by the scale and
capabilities of the co-venturers.
Full operational risk cover and advice is provided through the Group’s insurance
brokers. The Group monitors and evaluates all aspects of HSSE performance
and has adopted continuous improvement business practices and processes,
monitored, and evaluated at every level of the organisation. The Group will
continue to conduct its operations in a responsible manner that protects the
health, safety and security of employees, contractors and the public and
minimises the impact on the environment.
The Group is exposed to the inherent geological risks and uncertainties
associated with the oil and gas industry. Such risks can result in the volume of
hydrocarbons ultimately recovered from the Group’s assets and the associated
production profiles being different to the projected reservoir performance
characteristics. The Group undertakes thorough technical evaluations of all its
licences, including subsurface mapping and reservoir modelling. This work is
carried out by technically competent and experienced personnel, supported
where appropriate by leading technical consultants and third-party specialists.
A prudent range of input assumptions and possible outcomes are considered
within planning processes and opportunities to minimise the impact of
subsurface risks incorporated into drilling and engineering evaluations and
plans.
The foregoing risks, together with the Group’s relationships with the
government and regulators, are discussed and monitored as part of on-going
Board review processes.
11
BOARD OF DIRECTORS
Jersey Oil and Gas plc
Les Thomas
Andrew Benitz
Graham Forbes
Non-Executive Chairman
Chief Executive Officer
Chief Financial Officer
Les Thomas has over 40 years’
experience in the Oil and Gas
industry, in various subsurface,
engineering, operational
and
senior management positions.
Les was formerly CEO of Ithaca
Energy Inc. from 2013 to 2020 and
previously served for eight years
on the Board of John Wood Group
plc, as Chief Executive of
its
Production Facilities business and
the Group Director responsible
for HSE. Prior to this, he spent 22
years with Marathon Oil UK
Limited in various locations and
roles,
including four years as
European Business Unit Leader.
is also an
Les
independent
director of Repsol Sinopec
joint
Resources UK Limited, a
venture between Repsol and
Sinopec with a significant UK
North Sea portfolio, as well as
serving as a Non-Executive
Director of Avingtrans Plc, an AIM
quoted
and
manufacturing business. Les has
a BSc (1st class hons) in Civil
Engineering and a Masters
degree in Petroleum Engineering,
both from Heriot Watt University
in Edinburgh.
engineering
in
Andrew Benitz was a Founding
Director of Jersey Oil and Gas E&P
Ltd (now a subsidiary of Jersey Oil
and Gas plc) and has over 20
financial
years’ experience
company
markets
and
management. Prior
co-
to
founding Jersey Oil and Gas,
Andrew was Chief Executive
Officer and Director at Longreach
Oil and Gas Ltd, a TSX-V quoted
company. He joined Longreach in
2009 as Chief Operating Officer
it was a small private
when
company
the
and oversaw
company’s growth, building a
significant portfolio of oil and gas
assets in Morocco. Prior to his
move
industry, Andrew
worked at Deutsche Bank AG as
an Analyst within the Oil and Gas
Investment Banking Group as well
as within
the Equity Capital
Markets team, where he worked
on a broad range of oil and gas
M&A transactions, together with
equity
equity-related
financings. Andrew is also founder
and Director of Titan Properties
SL, a real estate business in Spain.
He completed his undergraduate
studies at Edinburgh University
graduating with a Bachelor of
Commerce (Honours).
into
and
as
as
Accountant
Graham Forbes is a Chartered
Accountant with over 20 years’
experience in the oil and gas
industry. Prior to joining Jersey
Oil & Gas in 2021, Graham was
the Chief Financial Officer (CFO)
of Ithaca Energy from 2010 to
a
2020. He qualified
at
Chartered
PricewaterhouseCoopers before
moving to ExxonMobil, where for
over five years he worked on a
variety of operational and
acquisition-based projects.
In
2002, Graham joined First Oil
Finance
Group where,
then Executive
Director and
Director, he helped develop the
business
into the UK’s then
largest privately owned E&P
company. Following his move to
Ithaca Energy in 2010, Graham
was
in
instrumental
transforming the company into a
UKCS
independent
major
operator through both organic
developments
and multiple
acquisitions. He has extensive
quoted company and corporate
finance
having
experience,
completed various debt and
equity market offerings and the
US$1.2
and
subsequent delisting of Ithaca
Energy.
billion
sale
12
Frank Moxon
Marcus Stanton
Senior Independent Director
Non-Executive Director
a
as
the
financial
Frank Moxon has over 30 years’
corporate
experience
financier and financial adviser to
companies, from start-ups to over
£3 billion in size, in a wide range of
industry sectors. However, he has
specialised for the last 24 years in
oil & gas and mining. He has held
several senior management roles
within
services
industry and, in addition to being
senior
independent director at
Cove Energy Plc, has been a
director of various oil & gas and
mining
in
London, Australia and Canada.
Frank is currently also President of
the East of England Co-operative
Society.
in
Economics and is an Honorary
Chartered
the
Fellow
Chartered Institute for Securities
& Investment, a Fellow of the
the
Energy
Institute of Materials, Minerals &
Mining and a member of The
Geoscience Energy Society of
Great Britain.
He has a BSc
Institute and of
companies
listed
of
Marcus Stanton has extensive
experience in the oil & gas and
banking industries and has been a
Non-Executive Chairman and
Non-Executive Director of a
quoted
number
companies over the past 20
years. These have
included
various oil and gas companies,
both in the UK and overseas,
covering E&P and oil and gas
services.
AIM
of
Marcus qualified as a Chartered
Accountant at Arthur Andersen,
where he worked in the oil and gas
division. Previously held banking
include Chief Operating
roles
Officer of Global Capital Markets,
Robert Fleming & Co. and
Director, Corporate Finance, at
Hill Samuel & Co. Marcus also
provides expert evidence on
banking transactions, both in the
UK and overseas. He is a Fellow of
the
of Chartered
Accountants
in England and
Wales and a Chartered Fellow of
for
the Chartered
Securities
Investment.
and
Marcus graduated from Oriel
College, Oxford.
Institute
Institute
Jersey Oil and Gas plc
13
Jersey Oil and Gas plc
CORPORATE GOVERNANCE REPORT
The Board of Jersey Oil and Gas plc (“JOG”, “the Company” or the “Group”), believes that a sound corporate
governance policy, involving a transparent set of procedures and practices, is an essential ingredient to the Group’s
success both in the medium and long term. The application of these policies enables key decisions to be made by
the Board as a whole, and for the Company to function in a manner that takes into account all stakeholders in the
Group, including employees, suppliers and business partners.
As a company quoted on AIM, JOG is also required to comply with a recognised corporate governance code. At the
current stage of the Company’s development, the Board believes it appropriate for the Group to comply with the
QCA Corporate Governance Code (the “QCA Code”). The code is designed for growing companies and provides an
effective and proportionate governance framework that is reflective of the Group’s culture and values. As Chairman
of the Board it is my responsibility to ensure these policies and procedures are in place and operate effectively.
QCA Corporate Governance Code
1.Establish a strategy and business
model which promotes long-term
value for shareholders
JOG is an oil and gas Group whose
principal activity
is that of an
upstream oil and gas business in the
United Kingdom.
The Group’s
strategy and business model is set
out in this Annual Report and during
2022 this was primarily focused on
the development of the Group’s
GBA licence interests.
The Group seeks
to generate
shareholder value from bringing the
core area of
into
production as soon as
reasonably practicable, in addition
to obtaining value from its nearby
exploration prospects.
the GBA
This Annual Report sets out a
number of risks and uncertainties
that may represent challenges to
the Group’s
the execution of
strategy and business model, and
how such risks and uncertainties are
managed by the Group.
The Board of Directors participate in
a regular conference calls, typically
monthly, during which they discuss -
amongst other items - the strategic
direction and operational status of
the Group, and as a result any
significant deviation or change,
be
should
highlighted to the Board promptly.
occur, will
such
2.Seek to understand and meet
shareholder needs and expectations
important.
The Board considers that good
communication with shareholders,
based on the mutual understanding
of objectives,
In
is
addition to the information included
in the Group’s Annual and Interim
Reports, there is regular dialogue
between the Board (led by the Chief
Executive Officer) and shareholders,
as well
public
Chief
announcements.
Executive Officer and the Chief
Financial Officer
give
presentations to
investors when
justified by events, including one-to-
one meetings
with major
shareholders, in addition to specific
meetings with shareholders relating
to major transactions.
required
The
also
as
and
constant
A
up-to-date
information flow is also maintained
on the Group’s website which
contains all press announcements
and financial reports as well as
extensive operational information
on the Group’s activities. The Board
also encourages shareholders to
attend the Annual General Meeting,
at which members of the Board are
available to answer questions and
present a summary of the year’s
activity and the corporate outlook
for the Group.
The Group also utilises professional
advisers such as a Broker, NOMAD,
Corporate
communications
specialists and Company Secretarial
services to provide advice and
recommendations
various
shareholder considerations where
relevant.
on
Contact details are provided on the
Group’s website and within public
documents, should shareholders
wish to communicate with the
Group.
into
account
and
3.Take
stakeholder
responsibilities
implications for long-term success
wider
social
their
and
JOG takes an active role in seeking
to address the environmental, social
and governance aspects of
its
business.
A description of how the Group
considers key stakeholders in its
decision making is provided in the
“Our Stakeholders” section of this
report.
As a relatively small and inclusive
organisation, the Group is readily
aware of any employee practices
that are inconsistent with its values
and plans for long-term sustainable
success. The Group nevertheless
has in place many of the procedures
found in larger companies, together
14
with a wealth of experience on the
Board
in addressing employee
related matters. Our operating
activities are led by the principles of
the UN Global Compact as we
continue to define and assess the
social and environmental impacts of
the
GBA
Group’s
development project.
flagship
The Group has published a Carbon
Policy (available on the website)
which aims to reduce the Group’s
carbon
lowest
practicable level, for the benefit of
our
other
stakeholders.
shareholders
footprint
and
its
to
The Board firmly believes that high
Health, Safety, Security, and the
Environment
(“HSSE”) standards
the Group’s
to
crucial
are
operational success. All Directors,
officers, managers, employees and
contractors are required to comply
is
with
reviewed periodically by the Board
and, if necessary, updated and re-
issued.
overall
The Group’s
approach to stakeholder and social
responsibilities, is covered in further
detail in the Sustainability Report
contained in this Annual Report.
its HSSE Policy, which
effective
4.Embed
risk
management, considering both
opportunities
threats,
throughout the organisation
and
Group
embeds
throughout
risk
The
management
the
organisation, and this is described in
the Risk section of the report.
The Board is responsible for the
Group's system of internal controls
and for reviewing its effectiveness.
The system is designed to manage,
rather than eliminate, the risk of
failure to achieve the execution of
the Group’s strategic objectives and
These controls
business model.
include Board approval
for all
policies, procedures and significant
projects.
The Board monitors
controls through:
financial
a) a budgeting and planning
process, requiring approval by the
Board;
the
b)
receipt of quarterly
management reports and monthly
management accounts covering the
Group’s financial affairs;
c) internal controls as articulated in
the Group’s Financial Reporting
Procedures; and,
d) a review by the Audit Committee
of the draft annual and interim
reports, and the Group’s annual
budget,
being
before
recommended to the Board.
As regards non-financial risks and
opportunities, and given the current
size of the Group, it is considered
preferable for this part of the
Group’s risk management to be the
responsibility of the Board as a
sub-
whole,
committee.
rather
than
a
Jersey Oil and Gas plc
All of the Executive Directors are
employed under service contracts
and work full time for the Group.
The Board considers and aspires to
achieve increased diversity where
possible when making
new
appointments, whilst recognising
the practical constraints of a small
focused Group.
The Non-Executive Directors work
part time, with additional time
commitments depending on new
Group developments as they arise.
The Board considers that all three of
the Non-Executive Directors, Les
Thomas, Frank Moxon and Marcus
Stanton
in
character and judgement. All three
have shareholdings (acquired with
their own funds) and have limited
share options (granted as part of the
annual remuneration process and
approved by the Board), and the
Board considers that this does not
impair their judgement.
independent
are
Additionally, the Group consults
when relevant with the Group’s
NOMAD
corporate
and
communications advisers.
The audit committee reviews the
appropriateness of the internal and
financial controls.
5.Maintain the Board as a well-
functioning, balanced team led by
the Chair
The Board is the main decision-
making body of the Group which
meets both formally and informally
during the year.
The Board is comprised of:
▪ Les
Thomas Non-Executive
Chairman
▪ Andrew Benitz, Chief Executive
Officer
▪ Graham Forbes, Chief Financial
Officer
▪ Frank
Moxon,
Senior
Independent Director
▪ Marcus Stanton, Non-Executive
Director
The QCA Code recommends that
non-executive directors serve up to
a maximum of nine years, in order to
maintain their independence from
the executive members of the
Board. In this regard, Mr Stanton
(Non-Executive Director), was first
appointed a Non-Executive Director
of Trap Oil in 2011 and took on the
role of Non-Executive Chairman in
2014, following the departure of the
then Chairman, Chief Executive
Officer and Chief Operating Officer.
Mr Stanton, who has extensive
Board management experience,
including within the oil and gas
sector, was responsible for the
the Group’s
rationalisation of
operations during 2014 to 2015
leading up
the subsequent
reverse takeover by JOG in 2015.
For corporate governance purposes
the Board of JOG regard the
stipulated nine-year period relating
to Mr Stanton as effectively
the current
commencing with
formation of JOG on AIM (in 2015),
which
introduced a new Chief
Executive Officer, a new Chief
to
15
Operating Officer and a new set of
controlling
shareholders. Mr
Stanton resumed his role as a Non-
Executive Director in 2021, when Mr
Thomas assumed the role of Non-
Executive Chairman.
and
its Committees
The Board and
timely
receive appropriate and
information prior to each meeting.
A formal agenda is produced for
each meeting
Board
Committee papers are distributed
before meetings take place. Specific
actions arising from meetings are
agreed by the Board or relevant
committee and then followed up by
management. All Directors spend
such
to
effectively carry out their roles and
directors have access to advice or
services needed to enable them to
carry out their roles and duties.
is necessary
time as
In addition, at the end of each
month the Chief Executive Officer
briefs the Non-Executive Directors
on current developments.
6.Ensure that between them the
Directors have the necessary up-to-
date
and
capabilities
experience,
skills
The Board, as a whole, seeks to
maintain an appropriate mix of
experience, skills, personal qualities
and capabilities in order to deliver
the strategy of the Group. As a small
but growing Group this presents its
own
challenges, with Board
members taking on responsibilities
corporate
for
developments
and when
opportunities, or problems, arise.
dealing with
as
as
representing
The skills and experience of the
Directors are set out in the “Board of
Directors” section of this Annual
Report and are considered by the
an
Board
appropriate range of capabilities
needed to deliver the strategy of the
Group
its
shareholders over the medium to
long term. The experience and
knowledge of each of the Directors,
the benefit of
for
and the steps taken to keep these
skill sets up to date, gives them the
ability to constructively challenge
strategy
scrutinise
performance.
and
to
Ian Farrelly,
The Board throughout 2022 was
assisted by
the
Company Secretary, whose services
were retained through a contract
with MSP Corporate Services
Limited, a professional company
secretarial services provider.
7.Evaluate Board
based on clear and
objectives,
improvement
seeking
performance
relevant
continuous
The Group seeks to undertake an
evaluation of Board performance on
an annual basis or on an ad hoc
basis, as considered appropriate.
of
A formal Board evaluation process
was last completed in January 2020,
which was led by the Chairman,
assisted by the Company Secretary.
Individual Directors responded to a
detailed questionnaire covering
aspects
numerous
the
effectiveness
the Board’s
of
performance as a unit, as well as
its committees and the
that of
individual Directors. The results of
this questionnaire were compiled
into a formal report that was
reviewed and discussed by the
Board. The overall results of the
report were encouraging, and the
next Board evaluation process is
planned to take place once the GBA
development is fully farmed-down.
the
level of
Succession planning
is reviewed
periodically both at the Board level
and at
senior
management. This is undertaken
from
the
the perspective of
development of the Board as a
whole as the business develops, and
unanticipated departures.
8.Promote a corporate culture that
is based on ethical values and
behaviours
Jersey Oil and Gas plc
The Board believes that the long-
term success of the Group
is
underpinned by a corporate culture
that is based on ethical values and
behaviours. Many of these are
highlighted
extensive
employee Staff Handbook which
draws together all of the Company’s
rules, policies and procedures.
an
in
a
These values, which JOG seeks to
instil throughout the Group, include
respect, honesty and
integrity,
transparency and are led by the
behavioural example of individual
Board members, particularly the
Chief Executive Officer and the
Chief Financial Officer. JOG also
well-defined
operates
organisational structure
through
which the Group seeks to determine
that ethical values and behaviours
are recognised and respected, in
addition to which every employee is
aware
established
our
whistleblowing procedures. These
include a formal Anti-Bribery and
Corruption Policy under which the
Group
to acting
legally, fairly and ethically wherever
business is conducted. The Group
does not
tolerate bribery and
corruption in any of its forms, nor
will it be tolerated in those with
whom the Group does business.
is committed
of
9.Maintain governance structures
and processes that are fit for
purpose and support good decision
making by the Board
structures
The Group maintains appropriate
and
governance
processes according to its size and
complexity. The Board is the main
decision-making body of the Group,
being responsible for:
a) the overall direction and strategy
of the Group;
b) monitoring performance;
c) understanding risk; and,
controls.
reviewing
d)
collectively
success of the Group.
responsible
It
for
is
the
16
Chairman
The Board of Directors comprises a
Non-Executive
(Les
Thomas), a Chief Executive Officer
(Andrew Benitz), a Chief Financial
Officer (Graham Forbes), a Senior
Independent
(Frank
Moxon) and one other Non-
Executive
(Marcus
Director
Stanton).
Director
is
key
The Chairman’s role is part-time,
and he is a Non-Executive Director.
the
responsibility
His
leadership of the Board, and this is
primarily effected through regular
Board meetings as well as contact
with other Board members and
interested parties between Board
meetings. The Chairman
is also
responsible for the establishment of
sound
governance
principles and practices.
corporate
is
The Chief Executive Officer
responsible
the day-to-day
for
running of the Group’s operations
Jersey Oil and Gas plc
from
the Audit
e) proposals
Committee,
the Remuneration
Committee and the Nomination
Committee;
f) significant financing matters; and,
statutory
g)
shareholders.
reporting
to
which
At the formal meetings of the Board
is prepared by the
an agenda
includes
Chairman
presentations by each of
the
Executive Directors together with
reports and recommendations from
the relevant sub-committees of the
Board. These Board meetings have
typically preceded by a
been
presentation by the Group’s Board
Adviser, Dr Chris Haynes, OBE
FREng CEng FIMechE FIEAust,
together with a presentation by
senior management
the
progress of the GBA development.
on
and for implementing the strategy
agreed by the Board, in conjunction
with the other Executive Director.
is
The Chief Financial Officer
the Group’s
for
responsible
finances,
to other
in addition
aspects of the business, including
property
risk
matters,
insurance and human
resources.
management,
is a formal schedule of
There
matters specifically reserved for the
Board, in addition to the formal
matters required to be considered
by the Board under the Companies
includes matters
Act. This
relating to:
list
a) strategy and policy;
b) acquisition and divestment
proposals;
c) approval of major capital
investments;
d) risk management policy;
17
Jersey Oil and Gas plc
Board Committees
The Group operates an Audit Committee, a Remuneration Committee and a Nomination Committee, each
comprised of Non-Executive Directors.
Audit Committee
Chair: Marcus Stanton, Other Members: Frank Moxon, Les Thomas
Under its terms of reference, the Audit Committee is required to meet at least twice a year, at which executive
directors may attend by invitation, and its responsibilities include:
▪ Monitoring the independence and objectivity of the External Auditors;
▪ Reviewing and approving the External Auditor’s terms of engagement, scope of work, fees, the findings
arising from the external audit work and external audit performance;
▪ Monitoring the integrity of the Group’s published financial information;
▪ Reviewing the risk identification and risk management processes of the Group; and
▪ Reviewing the Group’s procedures to prevent bribery and corruption in addition to ensuring that
appropriate whistleblowing arrangements are in place.
Due to the current size of the business, it is not considered appropriate to have an internal audit function.
Remuneration Committee
Chair: Frank Moxon, Other Members: Marcus Stanton, Les Thomas
Under its terms of reference, it is required to meet at least twice a year and its responsibilities include:
▪ Determining and agreeing with the Board the broad policy for the remuneration of the Executive Directors;
▪ Determine the individual remuneration package of each Executive Director;
▪ Review all share incentive plans; and
▪ Recommending option grants for the Executive Directors and other employees, as considered appropriate.
No Director is involved in deciding their own remuneration. The Non-Executive Directors’ remuneration is
decided by the Executive Directors.
Nomination Committee
Chair: Frank Moxon, Other Members: Marcus Stanton, Les Thomas
Under its terms of reference, it is required to meet at least twice a year and its responsibilities include:
▪ Evaluating the balance of skills, experience and diversity on the Board; and
▪ Approving candidates for Board vacancies, save for the appointment of the Chairman of the Board or the
Chief Executive Officer, which are matters for the whole Board.
Due to the size of the Group, no meetings of the Nomination Committee were held during 2022 as its functions
have been properly carried out as part of the work of the Remuneration Committee and the Board.
18
2022 Board and Committee Meeting Attendance
Jersey Oil and Gas plc
Board
Meetings
Audit
Committee
Remuneration
Committee
Nominations
Committee
Held Attended Held Attended Held Attended Held Attended
5
5
5
5
5
5
5
3
5
5
3
3
3
3*
3*
3
3
3
3*
3*
2
2
2
-
-
2
2
1
-
-
-
-
-
-
-
-
-
-
-
-
Non-Executive Directors
L J Thomas
M J Stanton
F H Moxon
Executive Directors
J A Benitz
G A Forbes
* By invitation
Les Thomas,
Non-Executive Chairman
23 May 2023
19
SUSTAINABILITY REPORT
Company Profile
Jersey Oil and Gas (“JOG”) is a London quoted UK E&P
Company focused on building its position in the UK
North Sea.
JOG has built a significant asset base in the UK North
Sea by leveraging the management team’s extensive oil
and gas experience. In the past three years we have
increased our discovered oil resources by over 40 fold
and are currently advancing the redevelopment of the
GBA in the Central North Sea.
Formed in March 2014, JOG has grown significantly
since inception following the drilling of the Verbier
discovery in 2017 and more recently through the 2019
award of licences in the GBA to JOG.
JOG’s activities are based in offices in Jersey, Aberdeen
and Central London.
Key Figures
Total number of hours worked by JOG employees and
contractors in 2022
25,592 hours
Number of recordable incidents
zero
CO2e emitted (Scope 1 & 2)
2498kg
CO2e intensity (Scope 1 & 2)
95kg per 1000 worked hours
Introduction by the Chief Executive Officer
We continue to believe that our operations in the North
Sea form an important part of the UK’s strategy for
energy security. Hydrocarbons have a place alongside
other sources of energy in guaranteeing the UK has a
safe and reliable supply of energy to both industrial and
domestic customers.
Jersey Oil and Gas plc
working toward the Sustainable Development Goals
adds value to JOG’s activities.
Our social licence to operate in the UK North Sea
depends on our ability to recognise and respond to our
stakeholder’s concerns regarding the sustainability of
our operations.
implemented a project-specific
For our GBA Project, JOG has made considerable efforts
to identify and engage with all relevant stakeholders.
stakeholder
We
management plan to this end, to ensure that our
decision-making process is clear and transparent where
this affects NGOs, local populations and so on. We have
put considerable effort into explaining how we choose
our preferred development concept to regulators to
ensure
that maximising economic recovery and
transition to net zero are at the core of our decision
making.
We have also included ESG concerns in our major
contract award process, by making membership of the
UN Global Compact part of the evaluation for awarding
contracts.
Elsewhere in this report we describe the successful
offshore survey operation carried out in support of the
GBA Project. We were pleased that all works by our
contractor were carried out to a high professional
standard with zero safety or environmental incidents,
and a high level of interaction was achieved with local
stakeholders such as the local and national fishermens’
federations.
As we move forward with the GBA Project, we are
confident that we can make measurable steps to
meeting those Sustainable Development Goals which
are of highest priority in JOG’s activities. At JOG we are
pleased that we are able to employ a highly experienced
technical and management team who have held senior
roles in some of the biggest projects in the North Sea
over the last twenty years. We understand that this level
of experience will be key to progressing the GBA Project
to development and first oil.
We understand the importance of being a responsible
UK E&P Company. As a result, we have placed
Environmental, Social and Governance issues at the
heart of JOG’s strategy moving forward.
Andrew Benitz
Chief Executive Officer
We continue to believe that following the key principles
of the United Nations Global Compact and adopting and
20
Jersey Oil and Gas plc
▪ Progress in implementing JOG’s
Carbon Policy;
▪ Key
aspects of
the GBA
major contracts and since 2019
JOG has put policy and guidance
in place to this effect;
JOG’s GBA Interests
Development Project;
in
▪ Disclosures made
alignment with
line with
the
JOG’s
recommendations of the Task
force for Climate related Financial
Disclosures (TCFD).
2022 Revision of Materiality
Assessment
JOG has reviewed and fully updated
the Materiality Assessment first
carried out in 2019. The assessment
lists those Materiality Topics which
are of significance to JOG’s ESG
reporting.
Since 2019, it has been identified
that
there are other generic
Material Topics that influence the
management of JOG’s activities,
principally associated with
the
management of ESG aspects of the
GBA Development project. These
are as follows:
▪ Supply Chain Management – JOG
recognises that assessment of the
supply chain’s ESG credentials is a
valid
the
purposes of assessing bids for
differentiator
for
terms
▪ Management of the Legal &
Regulatory Environment – JOG
that
strong ESG
recognises
performance
of
in
managing stakeholder relations is
related to the ability to engage
with the relevant regulators and
to
relevant
regulation, especially with respect
to environmental impacts. Since
identified and
2019, JOG has
engaged with
relevant
regulators and non-governmental
organisations (NGOs).
JOG develops
comply with
its GBA
business, it will seek to prioritise
those Materiality Topics of most
importance to its stakeholders.
Materiality
The
Assessment includes guidance on
how this may be achieved. The
results
the Materiality
Assessment are shown below.
revised
▪ As
all
of
21
Overview
JOG continues to progress the core
aims set out in 2019 for ESG conduct
i.e.
▪ Establish appropriate criteria for
all activities to ensure the business
is environmentally conscientious
and perceived as a progressive
and market-leading entity;
▪ Ensure respectful treatment of all
JOG’s stakeholders;
▪ Build upon corporate ethics and
values via open and transparent
business practices.
In 2022, emphasis has been placed
on developing and documenting
procedures, methodologies and
metrics to clearly document JOG’s
performance in meeting these aims
and to provide reassurance to all
stakeholders that ESG remains at
the centre of JOG’s activities. This
report describes the following:
▪ Revision of JOG’s Materiality
Assessment in line with progress
made on GBA Development
Project activities;
▪ Activities associated with JOG
following the principles of the UN
Global Compact;
Jersey Oil and Gas plc
JOG Materiality Assessment Summary
and for which of the SDGs may be
appropriate for reporting purposes.
an
Using
Industry-standard
methodology, JOG undertook to
determine and prioritise those SDGs
which are appropriate for future
reporting purposes. These are
presented below:
Progress toward UN Global
Compact Sustainability
Development Goals
JOG follows the principles of the
UN Global Compact (UNGC) and it
is one of the principal governance
measures taken by JOG as part of
its social licence to operate.
The strategy of the UNGC is to
encourage businesses to recognise
the UN Sustainable Development
Goals (SDGs) as defining those key
aspects which can be used to direct
their corporate and operational
activities while adhering to the 10
UNGC principles.
Not all the 17 SDGs are relevant to
JOG’s activities. The Materiality
Assessment
to
identifying those aspects of JOG’s
activities which are Material Topics
essential
is
SDGs assessed as relevant to JOG’s
activities
SDGs assessed as not relevant to JOG’s
activities
i
y
t
i
r
o
i
r
P
g
n
d
n
e
c
s
e
D
n
i
d
e
k
n
a
r
s
G
D
S
JOG’s Prioritisation of UNGC SDGs
22
It is notable that SDG8 “Decent
Work and Economic Growth” is the
highest priority goal for JOG; this is
because progress toward the goal
consists of activities related to the
greatest number of Material Topics
as presented
in the Materiality
Assessment summary. Progress on
these Material Topics is reported as
follows:
Ecological Impact
▪ JOG analyses and assesses the
ecological effect of its operations,
as part of JOG’s HSSE Policy and
also its regulatory obligations. For
example, extensive survey activity
was carried out to determine the
environmental baseline for the
GBA Development Project, to
inform the magnitude of likely
impact on the local ecology.
and
Human Rights and Community
Relations
▪ JOG identifies those local working
non-
communities
government organisations who
likely to be stakeholders
are
regarding
proposed
JOG’s
activities. Timely consultation
exercises are carried out so that
areas of concern can be identified
and mitigated.
in
Employee Health and Safety
▪ JOG considers the health and
safety of irs employees to be of
utmost
the
importance
execution of its activities. Safety
risks are identified at an early
stage of each of JOG’s activities so
that hazards can be eliminated,
or
prevented,
mitigated.
controlled
Diversity
▪ JOG employs contractors and
staff without discrimination to
ensure they have a high level of
expertise to maximise the value of
Company activities. JOG’s equal
opportunity policy is set out in the
JOG Staff Handbook. Where
opportunity exists JOG will seek to
advance further diversity within
the Board.
Business Model Resilience
▪ JOG continues to assess the risks
and opportunities associated with
the transition to net zero and the
UK
framework
established to this end, see later in
this report.
Regulatory
Supply Chain Management
▪ JOG has issued and implemented
its Major Contract Sustainability
Policy which requires contracting
companies
demonstrate
to
commitment to the UNGC.
▪ Other goals with relatively high
priority are SDG3 “Good Health
and
SDG12
“Responsible Consumption and
“Life
Production” and SDG14
Below Water”.
Well-being”,
▪ JOG’s activities related to the
Material Topics associated with
these goals are as follows:
to
their
GHG Emissions
▪ JOG reports the magnitude of
their Scope 1 and 2 emissions
activities
related
elsewhere in this report and have
also identified the sources of their
Scope 3 emissions. JOG is also
committed to working towards
meeting the UK Government’s
net zero targets for the GBA
Development Project.
Jersey Oil and Gas plc
Air Quality
▪ JOG will ensure that all emissions
from
the GBA Development
Project will meet or exceed all
relevant Air Quality criteria. These
will
the
set
be
Impact
Environmental
the GBA
Assessment
for
Development
submission
UK
Government.
Project
the
out
for
to
in
Water and Waste Water
Management
▪ JOG will ensure that any water
discharged
the GBA
from
Development Project will meet or
exceed all relevant regulatory
criteria for water quality. An
assessment of the use of Best
Available Technology will be
in the Environmental
included
Statement for submission to the
UK Government
Cyber Security
▪ JOG has taken all practicable
steps to protect data and systems
from cyber-attacks, in line with
JOG’s HSSE Policy.
Business Ethics
▪ The JOG Board continues to
provide oversight of
JOG’s
activities and will ensure the JOG
management team adopts ethical
practices at all times.
Critical Incident Risk Management
▪ JOG will ensure that all safety and
environmental risks associated
with
the GBA Development
Project are assessed and reduced
reasonably
to
practicable in the Safety Case and
an Environmental Statement is to
be
the UK
Government.
submitted
low
as
as
to
23
Progress in Implementing the JOG Carbon Policy
Work has been carried out to implement the Carbon Policy introduced by JOG in 2021. The Policy contains a
number of targets. Progress towards these targets in 2022 is reported below.
Jersey Oil and Gas plc
Policy Item
Full compliance with all current and future
emissions-related laws and regulations in the UK.
The requirement to record and report emissions
in line with TCFD will become mandatory in 2023
Scope 1, 2 and material Scope 3 emissions will be
JOG's
the
identified
operational activity both offshore and onshore.
scrutiny of
through
JOG is quantifying the Scope 1 and Scope 2
emissions of its office-based activities with the
ambition to be carbon neutral.
All existing JOG operations to be carbon neutral
from the point of first oil for Scope 1 and Scope 2
emissions.
Where the use of combustion equipment is
unavoidable, fully disclose the justification for this
choice and demonstrate full alignment with this
policy.
Source the
largest possible percentage of
renewable electrical power in the energy mix for
all JOG operated sites, both onshore and
offshore, where this demonstrably presents the
best lifecycle emissions profile and asset value
creation.
Invest in accredited and, where possible, local
carbon capture or offset to support the UK's net
zero ambitions.
Ensure climate related risks and opportunities,
including cost of emissions through trading and
taxation, are incorporated into JOG's financial
decision-making process.
Progress
JOG continually reviews regulatory requirements related
to emissions as part of their planning, in particular as
related to the UK Government’s net zero targets for the
Greater Buchan Area Development Project.
Certain disclosures with regards climate change, including
total emissions, are provided on a voluntary basis, the
Group have focused on the areas which the it believes are
most directly relevant to the business, disclosures are
made in good faith with respect to JOG’s desire to
converge with the upcoming recommendations.
JOG has issued guidelines which will be used to define
operational and organisational boundaries within which it
will identify, measure and disclose emissions. For example,
these were used to estimate emissions relating to its GBA
Concept Selection work. These emissions relate to onshore
construction and fabrication and also offshore operational
activities. These emissions will be presented to the
regulator as part of the regulatory approvals process.
JOG’s emission measurement guidelines were used to
assess office-based emissions which have been offset to
become carbon-neutral.
JOG continues to pursue options for the electrification of
the GBA Development Project as part of its environmental
commitments. These will be presented to the regulator as
part of the project approval process.
JOG continues to investigate options and opportunities for
investing in carbon capture and offset schemes, as part of
its wider business strategy.
JOG reviews the ESG and Corporate Risk Registers twice-
annually which includes identifying and assessing those
issues related to climate change.
24
Jersey Oil and Gas plc
Sustainability in the GBA Project
JOG’s principal activity is the development of the GBA Project. This has afforded JOG the opportunity to put into
practice its ESG-related policies. Some of these ESG activities are described in the following sections.
Project Stage Gate Process
▪ At the outset of the GBA Project, a “Stage Gate” process was adopted by the management team to assist in
Project Governance. This splits the project into stages divided by Gates, which are illustrated below. In order to
process through a Stage Gate, the Project must demonstrate that a sufficiently defined body of work has been
completed and independently verified, to allow the project to proceed e.g. to receive further funding. This allows
ESG activities related to the SDGs to form part of the Stage Gate criteria. These can then be included within the
Project Execution Plan.
JOG’s Project Stage Gate Process
GHG Emissions – Concept Selection
▪ As part of the Select Phase of the GBA Project, a study of the GHG Emissions resulting from each concept option
has been carried out. Emissions will occur as part of the operations phase, however these should be low in keeping
with the goal to electrify the facilities. In order to obtain a picture of whole-life emissions, the study included an
estimate of those emissions resulting from raw material manufacture, equipment manufacture, structural
fabrication and offshore installation. Emissions from the drilling programme were also considered. The study
showed those concept options which resulted in the highest GHG emissions were those which required the
largest amount of manufactured steel. This is because steel manufacture is relatively highly carbon-intensive i.e.
one ton of manufactured steel results in over two-and-a-half tons of emitted CO2e.
GHG Emissions resulting from GBA Pre-Operations Activities for Each Concept Option under Consideration
25
Jersey Oil and Gas plc
Electrification
▪ JOG has a strategy to deliver the GBA Project with industry leading low carbon emissions associated with the
production of hydrocarbons. Our preferred development concept will include electrification of the production
facilities, a well proven technology that has been successfully deployed in Norway. JOG is targeting net zero
operations from start-up of first oil for the GBA Project through delivering low carbon emissions from
electrification, purchase of renewable power and through offset of any residual carbon emissions. To these ends,
JOG takes a close interest in innovative schemes to provide renewable power to offshore oil and gas installations
such as INTOG leasing.
HSEQ Planning
▪ As part of the Project Stage Gate Process, it is necessary at the start to set out the plan of how the GBA project
will be executed. It is in turn necessary to set out how high HSEQ performance will be achieved through the
project lifecycle, which is one of the principal aspects of sustainability. Organisations which do not prioritise
HSEQ performance do not attract investment or talented individuals. The following goals are set out for the
Project:
▪ No accidents;
▪ No harm to people;
▪ No damage to the environment;
▪ No damage to assets.
The HSEQ plan sets out the activities and metrics that will be used to monitor progress to meeting these goals,
which include management reviews and audits.
Risk Management
▪ Elsewhere in this Report, the corporate and ESG risk management process adopted by JOG is described. For the
GBA Project, the ability to manage risk effectively is essential for realising the Project schedule and in turn the
overall value of the Project. It was considered necessary to initiate a Project-specific risk management process
and risk & opportunities register. This is used both for internal project management and for relevant stakeholders
to ensure that risks that jeopardise the Project Execution Plan can be identified and prioritised for prevention,
control and mitigation. While the corporate and ESG risks registers are reviewed and updated bi-annually, the
project risk registers are subject to monthly review.
Stakeholder Management
▪ There are many stakeholders that have an interest, or role, or are impacted by the GBA Project. These can be
categorised:
▪ Internal & Partners;
▪ Regulators;
▪ Third Party Contractors;
▪ Financiers & Corporate Regulators;
▪ NGOs & Local Populations;
▪ Supply Chains.
Effective stakeholder management is important to sustainability because stakeholders are typically key enablers
to the project execution activities. The goal of stakeholder management is to communicate with all relevant
stakeholders in a timely, transparent, and accountable manner fulfilling all JOG’s publicly stated commitments
and HSEQ and social responsibility obligations. Early in the Project, a formal exercise was carried out to identify
these stakeholders and an associated management strategy. This was plotted on a management matrix and is
revised and used as a planning tool over the course of the Project.
Environmental Survey
▪ As part of the environmental management process for the GBA project, it was necessary to carry out extensive
seabed surveys of the proposed pipeline export routes and also the proposed electrical cable supply route, to
determine the impact of the proposed subsea infrastructure on flora, fauna and geology. In order to minimise
the impact of the surveys on the local environment, JOG carried out a robust consultation programme which
included reaching out to both national and local fishermens’ federations. The survey activities were carried out
successfully over a period of seven weeks, with no environmental or safety incidents.
26
Jersey Oil and Gas plc
Recommendations of the Task Force for Climate-related Financial Disclosures
JOG are not currently required to comply with the Recommendations of the Task Force for Climate-related
Financial Disclosures (TCFD), however in accordance with our stated policy, we are working towards compliance.
The disclosures set out below are therefore voluntary and are focused on the areas which the Group believe are
most directly relevant to the business. They are made in good faith with respect to JOG’s desire to converge with
the Recommendations, and are not intended to ensure full compliance with the Recommendations is achieved
The disclosures are categorised in terms of “core elements” as shown below:
In the table below, the TCFD areas are listed on the left, and JOGs progress towards compliance with the
recommendations is set out on the right.
Governance
Disclose the organisation’s
governance around climate
related risks and opportunities.
▪ Describe the board’s oversight
of climate related risks and
opportunities.
▪ Describe management’s role
in assessing and managing
climate related risks and
opportunities.
Management’s role is to implement the risk management process for all JOG’s
activities. This includes setting the scope of the process and formulating a
management procedure for JOG to follow so that risks are managed in a manner
that is robust, transparent and consistent. JOG management then provides
resource to ensure that the process is adopted across the Company and that risks
are identified and assessed properly, in a timely way. JOG also maintain the risk
management process by ensuring that the process itself is reviewed and
updated.
The JOG Board provides oversight of the risk management process. Corporate
and ESG Risks are reviewed periodically by the JOG management team and the
results are entered onto the Risk Register. The results of this review are
presented to the JOG Board who are responsible for accounting for these risks in
in turn providing direction to the JOG
setting Company strategy and
management team.
Strategy
Disclose the actual and potential
impacts of climate related risks
and opportunities on the
organisation’s businesses,
strategy, and financial planning
where such information is
material.
▪ Describe the climate related
risks and opportunities the
organisation has identified
JOG’s ESG Risk Register includes assessment of the following climate-related
risks:
▪ Stricter decarbonisation agenda pushed by regulators and policymakers
resulting in:
➢
Increases in taxes related to business activities;
➢ Changes in policies. laws and regulations;
➢ Bias against energy-related investment;
➢
Incurring high costs arising from emission reduction from hydrocarbon
installations;
27
over the short, medium, and
long term.
▪ Describe the impact of climate
related risks and opportunities
on the organisation’s
businesses, strategy, and
financial planning.
▪ Describe the resilience of the
organisation’s strategy, taking
into consideration different
Climate related scenarios,
including a 2°C or lower
scenario.
Jersey Oil and Gas plc
Technology developments resulting in reduced demand for hydrocarbons, for
example:
➢ Reduction in cost of renewables and long-term energy storage;
➢
Improvements in the efficiency of energy users;
Reduced appetite for investment in the oil and gas industry caused by
“Greenwashing”, noting the current inability of many oil and gas
companies to transparently quantify Scope 3 emissions.
Some of these risks may have an impact in the short and medium term. For
example, changes in taxation may occur on an annual basis, leading to an
immediate impact on JOG’s activities. Other risks, such as the effect of
technological developments on the demand for hydrocarbons, may cause
impact in the longer term.
Opportunities arising from climate-related activities arise from activities relating
the use of wind-generated electricity for the GBA Project. Participation in
offshore wind power schemes as a customer puts JOG at the forefront of the
implementation of UK govts. net zero strategy for offnet zero.
The JOG Board readily appreciates that climate-related risks have the potential
to significantly affect the activities of the Company. The contents of the Risk
Register review is reported to the JOG Board and Executive Committee, who
continually monitor and review the business landscape to determine those
aspects such as the regulatory and taxation regime which may be subject to
change, and which may in turn have significant impact on JOG.
JOG believes that adopting a transparent and auditable approach to risk
management at both strategic and also operational levels makes the business
resilient to changes which may occur, including climate change scenarios which
necessarily affect UK and international energy markets. In this respect, JOG’s
activities in the UKCS are as resilient to climate change scenarios as other
companies engaged in offshore oil and gas activities, insofar that achieving a Low
Carbon Future i.e. a 2°C or lower scenario may be contingent on restricting the
activities of existing Licence Holders and equity holders, e.g. by changing
taxation or carbon-credit trading arrangements. On the other hand, a High
Carbon Future i.e. greater than a 2°C scenario, places further pressure on energy
companies to pursue net zero solutions. Therefore, the strategy of playing a key
role in energy transition is seen as making JOG’s strategy resilient to either
scenario. It places responsibility on both the Board and also JOG’s management
team to consider and assess ESG-related issues and formally record their effect
amongst other things for relevant stakeholders.
Risk Management
Disclose how the organisation
identifies, assesses, and
manages climate related risks.
▪ Describe the organisation’s
processes for identifying and
assessing climate related risks.
▪ Describe the organisation’s
processes for managing
climate related risks.
▪ Describe how processes for
identifying, assessing, and
managing climate related risks
In late 2019, shortly after JOG became the holder of Licence P2498 Block 20/5a
& 21/1a (Buchan), a Risk Management Procedure was implemented. Amongst
other things, this required Risk Registers to be drawn up, for both Corporate and
ESG affairs where the changing nature of the oil and gas industry environment
resulted in both risks and opportunities for JOG’s business. The focus of the
Corporate Risk Register is on how the external commercial and operational
environment may directly affect JOG. The ESG Risk Register is more granular
and looks closely at how ESG issues including climate related risks are affecting
the wider investment climate and how these in turn may affect JOG’s business.
Issues addressed include:
▪ Government policy e.g. net zero, changes to the environmental tax regime
▪ Technology advances
28
Jersey Oil and Gas plc
are integrated into the
organisation’s overall risk
management.
Metrics and Targets
Disclose the metrics and targets
used to assess and manage
relevant climate related risks and
opportunities where such
information is material
▪ Disclose the metrics used by
the organisation to assess
climate related risks and
opportunities in line with its
strategy and risk management
process.
▪ Disclose Scope 1, Scope 2,
and, if appropriate, Scope 3
greenhouse gas (GHG)
emissions, and the related
risks.
▪ Describe the targets used by
the organisation to manage
climate related risks and
opportunities and
performance against targets.
▪ Social attitudes
Reviews of both the Corporate and ESG Risk Registers are carried out by the JOG
management team bi-annually in a formal workshop session. Risks are assessed
and ranked using a Risk Matrix. Actions are issued which are intended to reduce
risks to as low as practical, which are assigned to members of the JOG
management team. The Risk Register workshop session also reviews the status
of actions raised previously. The results were communicated to the JOG Board
who provide oversight of the risk management process.
JOG compiles emission data for its day-to-day office activities which are solely
Scope 2 emissions. These are calculated directly from measurements of
electricity used and combined with emission factors for generated electricity
published by the UK Government to give tonnes of CO2e.
Predicted emissions are also compiled in support of the regulatory approval
process for major projects. For the GBA Development Project, emissions are
estimated for each concept, from raw material manufacture through to
fabrication and then operation. Emissions are estimated from data in the public
domain to enable transparency and auditability, and are a mixture of Scope 1,
Scope 2, and Scope 3.
JOG’s office emissions for 2022 were 2.498kg CO2e, calculated using UK
Government emission factors. Carbon offsets have been purchased from my
carbonplan.org so that these emissions are neutralised.
For the GBA Project, the principal target (as noted above) is to make the new
facilities carbon neutral for first oil. To this end, JOG is exploring the possibility of
taking power from offshore windfarms and will present its plans as part of the
regulatory approval process.
29
DIRECTORS’ REPORT
The Directors present their report
together with the audited Group
and Company financial statements
for the year ended 31 December
2022.
Annual General Meeting
The Annual General Meeting will be
held on 20th June 2023 as stated in
the Notice of Meeting.
Results and Dividends
The Group’s loss for the year was
£3.1m (2021: loss of £4.2m). The
Directors do not recommend the
payment of a dividend (2021: Nil).
Going Concern
is required to have
The Group
sufficient resources to cover the
expected running costs of the
business for a period of at least 12
months after the issue of these
financial statements. Further to
completion of the detailed studies in
connection with the GBA Concept
Select
work
contracted
programmes, there are currently no
firm work commitments on any of
our licences, other than ongoing
Operator overheads and
licence
fees. Other work that the Group is
undertaking in respect of the GBA
licences and surrounding areas is
modest relative to its current cash
reserves. The Group’s current cash
reserves are therefore expected to
more than exceed
its estimated
in all reasonable
cash outflows
these
on
Based
scenarios.
circumstances, the Directors have
considered it appropriate to adopt
concern basis of
the going
its
preparing
in
accounting
Consolidated Financial Statements.
Financial Instruments
financial
The Group’s principal
cash
comprise
instruments
balances, short-term deposits and
receivables or payables that arise
through
the normal course of
business. The Group does not have
any derivative financial instruments.
The financial risk management of
the Group is disclosed in note 4 of
Financial
the
Statements.
Consolidated
the
and
Board Committees
Audit
on
Information
Remuneration
Committee,
Nomination
Committee
Committee
the
in
Corporate Governance section, the
Audit Committee Report and the
Remuneration Report contained in
this Annual Report.
included
is
Disclosure of Information to the
Auditors
Each of the Directors at the date of
approval of this report confirms
that:
(1) So far as the Director is aware,
there
relevant audit
information of which the Group’s
auditors are unaware; and
is no
(2) Each Director has taken all the
steps that they ought to have
taken as a Director in order to
make themselves aware of any
relevant audit information and to
the Group’s
establish
that
that
auditors are aware of
information.
This confirmation
is given and
should be interpreted in accordance
with the provisions of s418 of the
Companies Act 2006.
Jersey Oil and Gas plc
of
the
Indemnity
Directors’ Third Party
Provisions
During the year and to the date of
approval
financial
statements, the Group maintained
indemnity insurance for its Directors
in
and Officers against
respect of proceedings brought by
third parties, subject to the terms
and conditions of the Companies
Act 2006.
liability
business
depends
Employees
The
upon
maintaining a highly qualified and
well-motivated workforce and every
effort is made to achieve a common
awareness of the financial and
affecting
factors
economic
The Group
performance.
is
to being an equal
committed
opportunities
and
engages employees with a broad
range of skills and backgrounds.
employer
Independent Auditors
A
reappoint
to
resolution
PricewaterhouseCoopers LLP as
Auditors will be proposed at the
forthcoming
General
Meeting at a fee to be agreed in due
course by the Audit Committee and
the Directors.
Annual
Nominated Adviser & Stockbrokers
The Group’s Nominated Adviser is
Strand Hanson Limited, and its Joint
Brokers are Zeus Capital and
finnCap Ltd.
Share Capital
At 31 December 2022, 32,554,293
(2021: 32,554,293) ordinary shares
of 1p each were issued and fully
paid. Each ordinary share carries
one vote.
30
Jersey Oil and Gas plc
Directors’ Interests
The beneficial and other interests of the Directors holding office during the year and their families in the shares of
the Company at 31 December 2022 were:
1p Ordinary Shares
As at 31 Dec. 2022
As at 31 Dec. 2021
L J Thomas
M J Stanton
F Moxon
J A Benitz
G A Forbes
Shares
33,000
112,411
87,026
702,176
-
Vested Options
-
66,667
40,000
286,667
116,667
Shares
25,000
110,411
87,026
688,892
-
Vested Options
-
53,333
29,999
266,666
-
Substantial Shareholders
At 31 December 2022, notification had been received by
the Company of the following who had a disclosable
interest in 3% or more of the nominal value of the
ordinary share capital of the Company:
Hargreaves Lansdown Asset Mgt. 15.91%
Interactive Investor
Mr J Baldwin
Mr Nicholas Robinson
A J Bell
Barclays Smart Investor
HDSL, stockbrokers
Janus Henderson
Quilter Cheviot Inv Mgt
Ronald Lansdell
7.29%
6.51%
5.10%
4.23%
4.11%
3.99%
3.53%
3.46%
3.28%
UBS Collateral Holdings 3.23%
None of the current directors hold 3% or more of the
nominal value of the ordinary share capital of the
company.
Up to date details and changes of substantial
shareholders are contained on the Company’s website
(www.jerseyoilandgas.com).
On behalf of the Board
Graham Forbes
Chief Financial Officer
23 May 2023
31
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF
THE FINANCIAL STATEMENTS
Jersey Oil and Gas plc
The Directors are responsible for
preparing the Annual Report and
the
in
accordance with applicable law and
regulation.
statements
financial
financial
statements
Company law requires the directors
to prepare financial statements for
each financial year. Under that law
the directors have prepared the
group
in
accordance with
UK-adopted
international accounting standards
financial
company
the
and
in accordance with
statements
Generally
United
Accepted Accounting
Practice
Accounting
(United
Standards, comprising FRS 101
“Reduced Disclosure Framework”,
and applicable law).
Kingdom
Kingdom
Under company law, the Directors
must not approve the financial
statements unless they are satisfied
that they give a true and fair view of
the state of affairs of the Group and
Company and of the profit or loss of
the Company for that period. In
preparing the financial statements,
the Directors are required to:
▪ Select
accounting
policies and then apply them
consistently;
suitable
▪ state whether applicable UK-
adopted
international
accounting standards have been
followed for the group financial
statements and United Kingdom
Accounting
Standards,
comprising FRS 101 have been
company
followed
financial statements, subject to
any
departures
disclosed and explained in the
financial statements;
material
the
for
The Directors are responsible for
the maintenance and integrity of
the Company’s website. Legislation
in the United Kingdom governing
the preparation and dissemination
of financial statements may differ
from
other
jurisdictions.
legislation
in
▪ Make
and
judgements
accounting estimates that are
reasonable and prudent; and
▪ Prepare the financial statements
on the going concern basis unless
it is inappropriate to presume
that the Company will continue in
business.
The Directors are responsible for
safeguarding the assets of the
Group and Company and hence for
taking reasonable steps for the
prevention and detection of fraud
and other irregularities.
The Directors are also responsible
for keeping adequate accounting
records that are sufficient to show
the Group’s and
and explain
and
transactions
Company’s
disclose with reasonable accuracy at
any time the financial position of the
Group and Company and enable
them to ensure that the financial
statements
the
Companies Act 2006.
comply with
Directors’ Confirmations
In the case of each Director in office
at the date the Directors’ Report is
approved:
▪ So far as the Director is aware,
there
relevant audit
information of which the Group’s
and Company’s auditors are
unaware; and
is no
▪ They have taken all the steps that
they ought to have taken as a
Director
to make
in order
themselves aware of any relevant
and
information
audit
to
the Group’s
establish
that
auditors are aware of
that
information.
Graham Forbes
Chief Financial Officer
23 May 2023
32
AUDIT COMMITTEE REPORT
Jersey Oil and Gas plc
Introduction
This Audit Committee Report has
the Audit
been prepared by
Committee and approved by the
Board.
Membership & Meetings Held
The Audit Committee is chaired by
Marcus Stanton and
its other
members are Les Thomas and
Frank Moxon (both Non-Executive
Directors). The Committee formally
met three times during 2022, linked
both to events in the Company’s
financial calendar and to certain ad
hoc matters. In addition, an informal
meeting of the committee was held
in connection with the 2022 Annual
(financial
Report and Accounts
statements), approximately one
week before a formal meeting to
discuss the same.
In order to
encourage greater understanding
and involvement in the work of the
the Chief
Audit Committee,
Executive Officer,
the Chief
Financial Officer and the Chief
attended
Commercial Officer
certain of these meetings. The
external audit partner also attended
the meeting held in connection with
the Company’s 2022 Report and
Accounts.
Role of the Audit Committee
The Terms of Reference for the
Audit Committee, which have been
prepared in accordance with the
QCA Code, provide
the
Committee’s main responsibilities
to include:
for
▪ Monitoring the
independence
▪ Review of the 2022 cash budget.
and objectivity of the Auditors,
▪ Reviewing and approving the
external auditor’s
terms of
engagement, scope of work,
fees, the findings arising from the
external audit work and external
audit performance,
▪ Monitoring the integrity of the
financial
published
Group’s
information,
▪ Reviewing the risk identification
and risk management processes
of the Group, and
▪ Reviewing
Group’s
the
procedures to prevent bribery
in addition to
and corruption
appropriate
ensuring
that
arrangements
whistleblowing
are in place.
Internal Audit
Due to the current size of the
is not considered
business,
it
appropriate to have an
internal
audit function.
Key Areas of Focus
The Committee’s particular areas of
focus during the year were as
follows:
▪ Review of the 2022 Annual
Report and the accounting for
our licence interests,
▪ Review of the interim results for
the six months ended 30 June
2022;
▪ Giving consideration to areas of
significant
judgement such as
concluding on going concern and
existence of impairment triggers;
The Committee also considered the
independence and objectivity of the
PwC audit function. With the PwC
engagement partner in his fourth
year as engagement partner (as
compared
years
considered appropriate to rotate an
engagement
the
Committee is of the view that PwC
are considered independent.
partner),
five
the
to
being
Management of Risk
As in previous years, it was decided
to continue with the Group practice
of the oversight of risk, and risk
management,
the
responsibility of the Board as a
whole,
sub-
committee. This is put into effect by
the preparation of a Risk Register,
Chief
by
maintained
Commercial Officer, which
is
presented and discussed at Board
meetings.
rather
than
the
a
Marcus Stanton
Chairman of the Audit Committee
23 May 2023
33
REMUNERATION REPORT
Jersey Oil and Gas plc
The
to
Introduction
This Remuneration Report has been
the Remuneration
prepared by
Committee and approved by the
Committee
Board.
is
committed
transparent and
quality disclosure. Our report for
2022 sets out the details of the
the
remuneration
Directors,
its
implementation and discloses the
amounts paid during the year. The
remuneration report has not been
audited.
policy
describes
for
Membership & Meetings Held
The Remuneration Committee is
chaired by Frank Moxon and its
other members are Les Thomas and
(both Non-
Marcus
The
Executive
Committee met
twice
during 2022.
Directors).
formally
Stanton
Remuneration Policy
The Committee aims to ensure that
total remuneration
is set at an
appropriate level for the Group and
its operations.
The objectives and core principles of
the remuneration policy are to
ensure:
▪ Remuneration levels support the
Group strategy;
▪ An appropriate
link between
performance and reward;
▪ Alignment of Directors, senior
management and shareholder
interests;
▪ Linking of long-term incentives
to shareholder returns;
retention
▪ Recruitment,
and
motivation of individuals with the
skills, capabilities and experience
to achieve Group objectives; and,
▪ Good teamwork by enabling all
the
to share
employees
success of the business.
in
and
management
senior
employees:
▪ Basic annual salary or fees;
▪ Benefits in kind;
▪ Discretionary annual bonus; and,
▪ A long-term incentive plan, the
Jersey Oil and Gas PLC 2016
Management
Enterprise
Incentive
and
Unapproved Share Option Plan
(the “Old Share Option Plan”),
which was
replaced on 23
November 2021 with the Jersey
Oil and Gas Plc 2021 Employee
Share Option Plan (the “New
Share Option Plan”).
(“EMI”)
studies
on
solutions
Performance of the Group in 2022
The Group’s focus during 2022 was
on advancing the farm-out and of
various
technical
development
in
infrastructure
collaboration with
owners, discussions with other
industry parties on potential joint
development opportunities and the
seeking of a partner for the Greater
Buchan Area project (the “GBA
Sales Process”). On 6 April 2023, the
Company announced that it had
agreed to farm-out a 50% interest in
its Greater Buchan Area licences to
NEO Energy (the Farm-out”).
three)
Key Activities in 2022
▪ Recommended option awards to
Directors and employees which
were granted in May 2022; and
▪ Approved the vesting of the third
tranche of share
(of
options granted to executive
directors and employees
in
January 2019 and the first (of
three) tranche of options granted
to executive directors
and
employees in March 2021, any
relevant performance conditions
having been deemed by the
Committee to have been met.
year.
each year with any changes usually
taking effect from 1 January of the
are
following
reviewed and adjusted taking into
individual performance,
account
market
sector
and
factors
conditions.
Salaries
The annual salary of J A Benitz as at
1 January 2022 was £250,000 (2021:
£250,000). The salary of G A Forbes
as at 1 January 2022 was £240,000
(2021: £240,000). Neither received
any increase in salary during 2022.
alignment
for
The Committee last undertook a
peer
of
group
remuneration
Executive
Directors in 2019. Since then, the
Group’s work has been focused on
several critical processes that will
determine the future scale and
direction of the Group’s business
activities (including concept select
work during 2020, 2021 and 2022
and subsequent discussions and
negotiations to progress the critical
GBA Sales Process during 2022 and
2023). The Committee therefore
decided not
to undertake any
subsequent remuneration reviews,
pending a successful outcome. As a
result, no remuneration review was
carried out in 2022.
Benefits in Kind & Cash Equivalents
Benefits provided
to Executive
Directors during the year comprised
life
protection
income
and
and private health
insurance
insurance. In addition, J A Benitz
received a 10% matching pension
contribution while G A Forbes took
an 8% cash alternative.
Discretionary Bonuses
No bonus awards were made to
for
Executive
performance during 2022.
Directors
There are four possible elements
that can make up the remuneration
packages for Executive Directors,
Basic salary
The basic salaries of Executive
Directors are normally determined
by the Committee around the end of
Share option plan
Under the terms of the Old Share
Option
and
employees are eligible for awards.
Plan, Directors
34
EMI options are subject to an
limit of £3m and an
aggregate
limit of £250,000 by
individual
market
shares.
of
value
Performance conditions are not
required but options can be granted
conditions,
with
vesting
both.
or
Performance conditions can apply
to individual tranches within grants.
Performance conditions can be
amended, provided they are still
performance
schedules
a
fair measure of
deemed
performance and not materially
more easy or difficult to satisfy as a
result. Upon any change of control,
in full and any
all options vest
performance conditions are not
applied.
The New Share Option Plan
(adopted on 23 November 2021)
contains no EMI provisions since
JOG no longer meets the relevant
eligibility requirements.
Jersey Oil and Gas plc
New share option awards were
made to Directors and employees in
May 2022. In line with previous
grants, options have an exercise
period of seven years for Executive
Directors and staff and five years for
Non-executive Directors, although
both the Old and New Share Option
Plans provide for exercise periods of
up to ten years.
Executive Directors’ Service Contracts
The principal termination provisions of the Executive Directors’ service contracts, as amended by any relevant deed
of variation, are summarised below. Executive Directors’ service contracts are available to view at the Company’s
registered office.
Effective Contract Date
Unexpired Term
Notice Period
J A Benitz
11.03.19
Rolling Contract
in certain
12 months
circumstances
(including material
changes to contract terms or non-
consensual relocation), the Executive
may provide 30 days’ notice
that,
save
G A Forbes
22.11.21
Rolling Contract
3 months
Non‐Executive Directors’ Fees
The Non-Executive Directors receive an annual fee for carrying out their duties and responsibilities. The level of such
fees is set and reviewed annually by the Board, excluding the Non-Executive Directors.
During 2022, the annual fees for L J Thomas (Non-Executive Chairman), F H Moxon (Senior Independent Director)
and M J Stanton (Non-Executive Director) were:
L J Thomas
F H Moxon
M J Stanton
Role
Non-Exec. Chairman
Senior Independent Director
Non-Exec. Director
Fee
£60,000
£50,000
£45,000
During the year, the Non-Executive Directors did not receive additional fees for acting as members of the Board’s
various committees.
35
Non‐Executive Directors’ Letters of Appointment
The principal termination provisions of the Non-executive Directors’ letters of appointment, as amended by any
relevant deed of variation, are summarised below. Non-executive Directors’ letters of appointment are available to
view at the Company’s registered office.
Jersey Oil and Gas plc
L J Thomas
13.04.21
Rolling Contract
3 Months
No
M J Stanton
11.03.19
Rolling Contract
3 Months
No
F Moxon
11.03.19
Rolling Contract
3 Months
No
Date of Appointment
Unexpired Term
Notice Period
Loss of Compensation
Directors’ Emoluments
Year Ended 31 Dec. 2022
Year Ended 31 Dec. 2021
Presented in
£’000s
Salary(1)
/ Fees
Pension
Benefits
Exercise
of
Options(2)
Total
Salary(1)
/ Fees
Pension Benefits Exercise
Total
of
Options(2)
J A Benitz
G A Forbes
R J Lansdell (3)
Resigned Nov.2021
V J Gibbs (4)
Resigned Nov. 2021
Executive Directors
L J Thomas
M J Stanton
F H Moxon
Non-Exec.
Directors
250
259
-
-
25
-
-
-
509
25
65
40
50
155
-
-
2
2
6
7
-
-
13
-
-
-
-
Total Directors
664
27
13
-
-
-
-
-
-
-
-
-
-
281
266
-
-
547
65
40
52
157
250
29
247
225
751
31
84
73
188
25
-
-
-
25
-
-
2
2
6
-
4
7
17
-
-
-
-
54
-
54
-
108
-
12
6
18
335
29
305
232
901
31
96
81
208
704
939
27
17
126
1,109
Notes:
1. Salary includes an 8% cash contribution as an alternative to a matching 10% pension contribution if elected.
2. The amount of the gain on exercising share options is calculated as the difference between market price of the shares on the day of exercise and
the price actually paid for the shares.
3. Ronald Lansdell served as Chief Operating Officer until 19th November 2021 when JOG made several senior management and Board changes. In
addition to the salary stated above, salary in lieu of notice, benefits and settlement costs were accrued in the financial year ended 31 December
2021 and have all now been fully settled. The total salary cost of the notice period was £270,000, of which £247,500 was accrued, the social security
relating to this amounted to £7,812 and accrued healthcare costs were £8,087. In addition, there was compensation for loss of office of £135,000.
4. Vicary Gibbs served as Chief Financial Officer until 19th November 2021 when JOG made several senior management and Board changes. In
addition to the salary stated above, salary in lieu of notice, benefits and settlement costs were accrued in the financial year ended December 2021
and have all now been fully settled. The salary cost of the notice period was £237,600, the social security relating to this amounted to £42,173 and
accrued healthcare and life cover costs were £5,110. In addition, there was compensation for loss of office of £91,125.
There were no bonus’ to Directors paid in 2022 (2021: nil)
36
Options held by Directors at 31 December 2022 are set out below.
Jersey Oil and Gas plc
Presented in ‘000s
Executive Directors
J A Benitz
At 110.0p (note 1)
At 200.0p (note 2)
At 175.0p (note 5)
At 210.0p (note 7)
At 230.0p (note 10)
G A Forbes
At 147.0p (note 9)
At 230.0p (note 10)
Non-Executive Directors
L J Thomas
At 230.0p (note 11)
F H Moxon
At 110.0p (note 1)
At 200.0p (note 3)
At 175.0p (note 6)
At 210.0p (note 8)
At 230.0p (note 11)
M J Stanton
At 4,300.0p (note 4)
At 110.0p (note 1)
At 200.0p (note 3)
At 175.0p (note 6)
At 210.0p (note 8)
At 230.0p (note 11)
Total
Exercisable
By
At 1 Jan
2021
Issued Exercised Lapsed At 31 Dec
Issued Exercised Lapsed At 31 Dec
2021
2022
29.11.21
29.01.25
17.01.26
18.03.28
29.04.29
23.11.28
29.04.29
29.04.27
29.11.21
29.01.23
17.01.24
18.03.26
29.04.27
12.03.21
29.11.21
29.01.23
17.01.24
18.03.26
29.04.27
180
180
70
-
-
430
-
-
-
-
-
20
20
15
-
-
55
2
40
40
20
-
-
102
587
-
-
-
110
-
110
350
-
350
-
-
-
-
-
15
-
15
-
-
-
-
20
-
20
495
(180)
-
-
-
-
(180)
-
-
-
-
-
(20)
-
-
-
-
(20)
-
(40)
-
-
-
-
(40)
(240)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2)
-
-
-
-
-
(2)
(2)
-
180
70
110
-
360
350
-
350
-
-
-
20
15
15
-
50
-
-
40
20
20
-
80
840
-
-
-
-
290
290
-
150
150
-
75
75
-
-
-
-
30
30
-
-
-
-
-
30
30
575
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
180
70
110
290
650
350
150
500
-
75
75
-
20
15
15
30
80
-
-
40
20
20
30
110
1,415
Notes:
1. Granted on 29 November 2016 under the Old Share Option Plan. All the options have vested, were exercisable up to 29 November 2021 and lapsed if
not exercised by that date.
2. Granted on 29 January 2018 under the Old Share Option Plan. All the options have vested, are exercisable at any time up to 29 January 2025 and if not
exercised by that date will lapse.
3. Granted on 29 January 2018 under the Old Share Option Plan. All the options have vested, are exercisable at any time up to 29 January 2023 and if not
exercised by that date will lapse.
4. Granted on 13 March 2011 under an Individual Option Agreement. All the options have vested, and were exercisable at any time up to 13 March 2021.
All have now lapsed.
5. Granted on 17 January 2019 under the Old Share Option Plan. All the options have vested, are exercisable up to 17 January 2026 and will lapse if not
exercised by such date.
6. Granted on 17 January 2019 under the Old Share Option Plan. All the options have vested, are exercisable up to 17 January 2024 and will lapse if not
exercised by such date.
7. Granted on 18 March 2021 under the Old Share Option Plan. Options vest in three equal tranches (one, two and three years from the date of grant) and
are subject to the satisfaction of certain performance conditions to be determined and interpreted at the discretion of the Remuneration Committee.
The first and second tranches have already vested. Subject to vesting and such performance conditions being met, the options are exercisable up to 18
March 2028 and will lapse if not exercised by such date.
8. Granted on 18 March 2021 under the Old Share Option Plan. Options vest in three equal tranches (one, two and three years from the date of grant) and
have no performance conditions. Subject to vesting, the options are exercisable up to 18 March 2026 and will lapse if not exercised by such date.
9. Granted on 23 November 2021 under the New Share Option Plan. Upon the 6 April 2023 announcement of a farm-out in respect of the Group’s Greater
Buchan Area (“GBA”) development project, these options vested in full and became exercisable from such date. the options are exercisable up to 23
November 2028 and will lapse if not exercised by such date.
10. Granted on 29 April 2022 under the New Share Option Plan. Options vest in three equal tranches (one, two and three years from the date of grant)
and are subject to the satisfaction of certain performance conditions to be determined and interpreted at the discretion of the Remuneration
Committee. The first tranche has already vested. Subject to vesting and such performance conditions being met, the options are exercisable up to 29
April 2029 and will lapse if not exercised by such date.
11. Granted on 29 April 2022 under the New Share Option Plan. Options vest in three equal tranches (one, two and three years from the date of grant)
and have no performance conditions. The first tranche has already vested. Subject to vesting, the options are exercisable up to 29 April 2027 and will
lapse if not exercised by such date.
37
Shareholder Feedback
The objective of this report is to communicate the remuneration of the Directors and how this is linked to
performance. In this regard the Board is committed to maintaining an open and transparent dialogue with
shareholders and is always interested to hear their views on remuneration matters.
Jersey Oil and Gas plc
Frank Moxon
Chairman of the Remuneration Committee
23 May 2023
38
Jersey Oil and Gas plc
Independent auditors’ report to the
members of Jersey Oil and Gas Plc
Report on the audit of the financial statements
Opinion
In our opinion:
•
• Jersey Oil and Gas Plc’s group financial statements and company financial statements (the “financial statements”)
give a true and fair view of the state of the group’s and of the company’s affairs as at 31 December 2022 and of the
group’s loss and the group’s cash flows for the year then ended;
the group financial statements have been properly prepared in accordance with UK-adopted international accounting
standards as applied in accordance with the provisions of the Companies Act 2006;
the company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure
Framework”, and applicable law); and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
•
•
We have audited the financial statements, included within the Annual Report, which comprise: the Consolidated and
Company Statements of Financial Position as at 31 December 2022; the Consolidated Statement of Comprehensive
Income, the Consolidated and Company Statements of Changes in Equity and the Consolidated Statement of Cash Flows
for the year then ended; and the notes to the financial statements, which include a description of the significant accounting
policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements.
Our audit approach
Overview
Audit scope
• We have performed a full scope audit of Jersey Petroleum Limited, the component which holds all licenses held by
the group, and the parent company, Jersey Oil and Gas Plc. Both components were selected due to their size and
risk. We also performed audit procedures on specified balances and transactions within Jersey Oil and Gas E&P
Limited due to the contribution to the group consolidation. No audit work was performed outside of the UK. No other
component auditors or firms were involved in reporting for the purposes of the consolidated opinion.
39
Jersey Oil and Gas plc
Key audit matters
Impairment of Intangible Assets (group)
•
• Going concern (group and parent)
Materiality
• Overall group materiality: £312,000 (2021: £350,000) based on 1% of total assets.
• Overall company materiality: £296,000 (2021: £200,000) based on 1% of total assets.
• Performance materiality: £234,000 (2021: £262,500) (group) and £222,000 (2021: £150,000) (company).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made subjective judgements, for example in respect of
significant accounting estimates that involved making assumptions and considering future events that are inherently
uncertain.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit
of the financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and
any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
This is not a complete list of all risks identified by our audit.
Going concern (group and parent) is a new key audit matter this year. Otherwise, the key audit matters below are
consistent with last year.
Key audit matter
How our audit addressed the key audit matter
Impairment of Intangible Assets (group)
As at 31 December 2022, the consolidated balance sheet
included £24.4m of intangible exploration assets in
relation to the Greater Buchan Area (GBA). In line with
IFRS 6 'Exploration for and Evaluation of Mineral
Resources', management have assessed the intangible
assets for indicators of impairment. We have focused on
this area given the significance of the balance of
intangible exploration assets as well as management
judgement involved in determining the existence of
impairment triggers under IFRS 6. Please refer to Note 2
'Significant accounting policies, Significant Accounting
Judgements and Estimates' and Note 10 'Intangible
Assets'.
In auditing management’s impairment trigger assessment,
we performed the following:
• Obtained and reviewed the relevant licence
agreements relating to the GBA assets;
Audited the appropriateness and corroborated
management’s plans and budgets for future activity
on the GBA licences;
•
• Obtained and reviewed the agreements entered
•
•
into with the group's proposed joint venture partner
post year end.
Assessed the group’s interactions with the NSTA
including considering whether these give rise to
any indicator that the GBA licences will not be
extended beyond current terms;
Assessed the objectivity and competence of
management’s external reserves experts as well as
the results of valuations performed on the GBA
assets for any indicators that the value of
intangibles may not be recoverable;
• Considered other factors which could indicate the
existence of an impairment trigger including
commodity price movements;
•
Assessed the impact of climate change and how
this has been considered within management's
assessment; and
40
Jersey Oil and Gas plc
• Reviewed and assessed management’s
disclosures included within the financial
statements.
Based on our procedures, we concur with management’s
assessment that no indicators of impairment existed in
relation to its intangible exploration assets at the year end.
We consider the financial statements disclosures to be
appropriate and in accordance with accounting standards,
including management’s judgement in relation to the
licence extension.
The procedures performed in respect of going concern and
our findings are set out in the "Conclusions relating to going
concern" section below.
Going concern (group and parent)
As at 31 December 2022 the group holds approximately
£6.6m of cash and cash equivalents. Accounting
standards require management to assess the Company’s
ability to continue as a going concern for a period of at
least 12 months after the date of signing the financial
statements. Given the group does not generate any
revenue and currently has no financing facilities, there is
a risk that the cash held is not sufficient to meet the
group's liabilities as they fall due for a period of at least
12 months after the date of the financial statements. Our
risk assessment focused on the uncertainties over the
timing and amounts of anticipated payments in relation to
further development of the GBA asset and the group's
ability to control it's expenditure. Please refer to note 2 in
the consolidated financial statements for management's
conclusions regarding going concern.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the group and the company, the accounting processes and
controls, and the industry in which they operate.
The group financial statements are a consolidation of eight components and an additional consolidation component. There
are four dormant subsidiaries which do not significantly impact the group consolidated position. In establishing the overall
approach for the group audit, we determined the type of work that needed to be performed over the components. We
identified two financially significant components (Jersey Oil and Gas Plc and Jersey Petroleum Limited) that, in our view,
required full scope audits due to their relative size in the group. The audit of these full scope components was performed
by the group engagement team in the UK. Together, the full scope components scoped into our audit included 99% of the
consolidated total assets of the group. We also performed testing on the group consolidation adjustments as a separate
component.
The impact of climate risk on our audit
Our audits considered the impact of climate change. As part of our audit, we made enquiries with management to
understand the process adopted to assess the extent of the potential impact of climate risk on the Group's financial
statements. We read the group's carbon policy and sustainability reporting. Using our knowledge of the business, we
focused our work on how the impact of climate change could impact the assumptions made in the intangible asset
impairment assessment. We also evaluated whether the impact of both physical and transitional risks had been
appropriately included in management's going concern assessment. Finally, we assessed the consistency of the
information in the front half of the Annual Report.
41
Jersey Oil and Gas plc
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating
the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall
materiality
How we
determined it
Rationale for
benchmark
applied
Financial statements - group
£312,000 (2021: £350,000).
Financial statements - company
£296,000 (2021: £200,000).
1% of total assets
1% of total assets
A benchmark of total assets is deemed to be the most
appropriate measure used by shareholders in assessing the
performance of the group. This is based on users of the
financial statements focusing on the recoverable value of
assets on the balance sheet and the cash balance as this is
what will fund future development.
The allocation reflects the
Company's relative contribution to
the Group's total assets capped due
to the allocation provided in the
group materiality calculations.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group
materiality. The range of materiality allocated across components was £50,000 - £296,000. Certain components were
audited to a local statutory audit materiality that was also less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining
the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and
disclosures, for example in determining sample sizes. Our performance materiality was 75% (2021: 75%%) of overall
materiality, amounting to £234,000 (2021: £262,500) for the group financial statements and £222,000 (2021: £150,000)
for the company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk
assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of
our normal range was appropriate.
We agreed with those charged with governance that we would report to them misstatements identified during our audit
above £15,600 (group audit) (2021: £17,500) and £14,800 (company audit) (2021: £17,500) as well as misstatements
below those amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group's and the company’s ability to continue to adopt the going concern
basis of accounting included:
• Obtained and challenged management’s future budgets and cash flows that underpin the going concern assessment,
corroborating committed costs to underlying support and challenging the reasonableness of baseline operating costs,
including the impact of climate change;
• Held discussions with both finance and operational management regarding future development plans and
corroborated any assumptions in relation to development costs;
• Obtained and assessed the contractual arrangements entered into with the group's proposed joint venture partner
including the proposed carry arrangements and considered potential payments to be made during the going concern
period;
• Assessed the group's ability to control it's expenditure commitments across the going concern period through
contractual arrangements relating to GBA development and other operating costs;
• Validated the opening cash position and mathematical accuracy of management's going concern assessment; and
42
Jersey Oil and Gas plc
• Ensured that disclosures in the financial statements relating to the basis of preparation are sufficient.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions
that, individually or collectively, may cast significant doubt on the group's and the company’s ability to continue as a going
concern for a period of at least twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group's
and the company's ability to continue as a going concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements
does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent
otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained
in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report based on these responsibilities.
With respect to the Strategic report and Directors' Report, we also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain
opinions and matters as described below.
Strategic report and Directors' Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and
Directors' Report for the year ended 31 December 2022 is consistent with the financial statements and has been prepared
in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and company and their environment obtained in the course of
the audit, we did not identify any material misstatements in the Strategic report and Directors' Report.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the statement of directors' responsibilities in respect of the financial statements, the directors
are responsible for the preparation of the financial statements in accordance with the applicable framework and for being
satisfied that they give a true and fair view. The directors are also responsible for such internal control as they determine
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
43
Jersey Oil and Gas plc
basis of accounting unless the directors either intend to liquidate the group or the company or to cease operations, or
have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The
extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws
and regulations related to the Petroleum Act 1998, and we considered the extent to which non-compliance might have a
material effect on the financial statements. We also considered those laws and regulations that have a direct impact on
the financial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for
fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the
principal risks were related to unusual manual journal entries and potential management bias in disclosures relating to
the future prospects of the group. Audit procedures performed by the engagement team included:
• Enquiries made of management and legal counsel of their awareness of any instances of actual or potential litigation
or claims and breaches in laws and regulation;
• Review of Board minutes;
• Review of financial statement disclosures and testing to supporting documentation where applicable, including
disclosures relating to the future prospects of the company;
• Testing over journals posted by management to address the risk of management override of controls which involved
testing of journals containing unusual amounts and unusual words; and
• Challenge of management in relation to assumptions made in areas of significant accounting judgement.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances
of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the
financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing
complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In
other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is
selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance
with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept
or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands
it may come save where expressly agreed by our prior consent in writing.
44
Jersey Oil and Gas plc
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not obtained all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the company, or returns adequate for our audit have not been
received from branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
•
the company financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Bruce Collins (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Aberdeen
23 May 2023
45
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2022
Jersey Oil and Gas plc
Cost of sales
Gross loss
Exploration write-off/licence relinquishment
Administrative expenses
Operating loss
Finance income
Finance expense
Loss before tax
Tax
Loss for the year
Total comprehensive loss for the year (net of tax)
Total comprehensive loss for the year attributable to:
Owners of the parent
Loss per share expressed in pence per share:
Basic
Diluted
Note
10
7
6
6
7
8
2022
£
-
-
-
(3,185,103)
(3,185,103)
82,842
(4,730)
(3,106,991)
–
(3,106,991)
(3,106,991)
2021
£
(101,079)
(101,079)
(447,812)
(3,672,135)
(4,221,026)
1,807
(6,098)
(4,225,317)
–
(4,225,317)
(4,225,317)
(3,106,991)
(4,225,317)
9
9
(9.54)
(9.54)
(14.48)
(14.48)
The notes on pages 49 to 69 are an integral part of these financial
statements
46
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
Jersey Oil and Gas plc
O
v
e
r
v
i
e
w
O
u
r
G
o
v
e
r
n
a
n
c
e
Non-current assets
Intangible assets - exploration & development costs
Property, plant and equipment
Right-of-use assets
Deposits
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity
Called up share capital
Share premium account
Share options reserve
Accumulated losses
Reorganisation reserve
Total equity
Liabilities
Non-current liabilities
Lease liabilities
Current liabilities
Trade and other payables
Lease liabilities
Total liabilities
Total equity and liabilities
Note
2022
£
2021
£
10
11
12
13
14
15
19
17
16
12
24,372,882
10,203
81,328
31,112
24,495,525
21,514,153
40,077
185,008
31,112
21,770,350
167,060
6,579,349
6,746,409
31,241,934
353,114
13,038,388
13,391,502
35,161,852
2,573,395
110,309,524
2,566,343
(84,600,273)
(382,543)
30,466,446
2,573,395
110,309,524
1,397,287
(81,551,730)
(382,543)
32,345,933
-
-
83,012
83,012
688,796
86,692
775,488
775,488
31,241,934
2,603,707
129,200
2,732,907
2,815,919
35,161,852
The financial statements on pages 46 to 48 were approved by the Board of Directors and authorised for issue on 23 May 2023
They were signed on its behalf by Graham Forbes – Chief Financial Officer.
Graham Forbes
Chief Financial Officer
23 May 2023
Company Registration Number: 07503957
The notes on pages 49 to 69 are an integral part of these financial
statements
47
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
Jersey Oil and Gas plc
Called up
share
capital
£
2,466,144
Share
premium
account
£
93,851,526
Share
options
reserve
£
2,109,969
Note
Accumulated
losses
£
Reorganisation
reserve
£
(78,509,819)
(382,543)
-
-
107,251
16,457,997
-
-
(4,225,317)
-
-
-
-
-
-
-
(909,176)
(274,230)
470,725
909,176
274,230
-
-
-
-
-
-
Total
equity
£
19,535,277
(4,225,317)
16,565,248
-
-
470,725
2,573,395
110,309,524
1,397,287
(81,551,730)
(382,543)
32,345,933
-
-
-
(3,106,991)
-
(3,106,991)
-
-
2,573,395
-
-
110,309,524
(58,448)
1,227,504
2,566,343
58,448
-
(84,600,273)
-
-
(382,543)
-
1,227,504
30,466,446
At 1 January 2021
Loss and total
comprehensive
loss for the year
Issue of share capital
Transactions with owners in
their capacity as owners
Expired share options
Exercised share options
Share based payments
At 31 December 2021 and
1 January 2022
Loss and total
comprehensive
loss for the year
Transactions with owners in
their capacity as owners
Expired share options
Share based payments
At 31 December 2022
19
19
19
19
The following describes the nature and purpose of each reserve within owners’ equity:
Reserve
Called up share capital
Share premium account Amount subscribed for share capital in excess of nominal value
Share options reserve
Description and purpose
Represents the nominal value of shares issued
Accumulated losses
Reorganisation reserve
Represents the accumulated balance of share-based payment charges recognised in respect of share
options granted by the Company less transfers to accumulated deficit in respect of options exercised or
cancelled/lapsed
Cumulative net gains and losses recognised in the Consolidated Statement of Comprehensive Income
Amounts resulting from the restructuring of the Group at the time of the Initial Public Offering (IPO) in 2011
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December
Cash flows from operating activities
Cash used in operations
Interest received
Interest paid
Net cash used in operating activities
Cash flows from investing activities
Purchase of intangible assets
Net cash used in investing activities
Cash flows from financing activities
Principal elements of lease payments
Proceeds from issue of shares
Net cash (used in)/generated from financing activities
(Decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Note
2022
£
2021
£
21
6
6
10
21
14
14
(3,319,445)
82,842
(4,730)
(3,241,333)
(1,495,899)
1,807
(6,098)
(1,500,190)
(3,092,186)
(3,092,186)
(6,970,670)
(6,970,670)
(125,520)
-
(125,520)
(6,459,039)
13,038,388
6,579,349
(137,516)
16,565,248
16,427,732
7,956,873
5,081,515
13,038,388
48
The notes on pages 49 to 69 are an integral part of these financial statements
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
Jersey Oil and Gas plc
1. General information
Jersey Oil and Gas plc (the “Company”) and its subsidiaries (together, the “Group”) are involved in the upstream oil
and gas business in the UK.
The Company is a public limited company incorporated and domiciled in England & Wales and quoted on AIM, a
market operated by London Stock Exchange plc. The address of its registered office is 10 The Triangle, ng2 Business
Park, Nottingham, NG2 1AE.
2. Significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out
below. These policies have been consistently applied to all the periods presented, unless otherwise stated.
Basis of Accounting
The consolidated financial statements of Jersey Oil and Gas Plc as of 31 December 2022 and for the year then
ended (the "consolidated financial statements") were prepared in accordance with UK-adopted International
Accounting Standards in conformity with the requirements of the Companies Act 2006 (the "Companies Act").
The financial statements have been prepared under the historic cost convention, except as disclosed in the
accounting policies below. All amounts disclosed in the financial statements and notes have been rounded off to
the nearest one thousand pounds unless otherwise stated.
Going Concern
The Group has sufficient resources to meet its liabilities as they fall due for a period of at least 12 months after the
date of issue of these financial statements. The Group’s main cost commitment; a 50% equity share of Front End
Engineering and Design (“FEED”) work for the GBA ahead of project sanction will be paid for from 1 April 2023 by
the $12.5m Pre sanction farm-in carry agreed with NEO in April 2023. This is forecast to adequately cover the field
development sanction work to be carried out over the next 12 months. In addition, any FEED spend above $12.5m
and post sanction development costs of the GBA through to first oil are carried at an equity level of 12.5%. Other
work that the Group is undertaking in respect of the GBA licenses and surrounding areas is modest relative to its
current cash reserves. The Company’s current cash reserves are therefore expected to more than exceed its
estimated cash outflows in all reasonable scenarios for at least 12 months following the date of issue of these
financial statements. Even in an extreme scenario where the Buchan development did not progress for any
unforeseen reason and the future instalment payments were not realised the Group has the flexibility within its
cost structure to amend its expenditure profile and continue in business beyond the next 12 months solely from
utilisation of its existing cash resources. The directors have also considered the risk associated with contractual
arrangements associated with the farm-out and are satisfied that the group is not exposed to any contractual
commitments which could impact on the Group’s going concern status over the next 12 months. Based on these
circumstances, the directors have considered it appropriate to adopt the going concern basis of accounting in
preparing the consolidated financial statements.
49
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
Jersey Oil and Gas plc
New and amended standards adopted by the Group. The Group has applied the following amendments for the
first time for the annual reporting period commencing 1 January 2022:
•
•
•
Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16;
Annual Improvements to IFRS Standards 2018-2020; and
Reference to the Conceptual Framework – Amendments to IFRS 3.
The amendments listed above did not have any impact on the amounts recognised in prior periods and are not
expected to significantly affect the current or future periods.
New standards and interpretations not yet adopted
Certain new accounting standards, amendments to accounting standards and interpretations have been published
that are not mandatory for 31 December 2022 reporting periods and have not been early adopted by the Group.
These standards, amendments or interpretations are not expected to have a material impact on the entity in the
current or future reporting periods or on foreseeable future transactions.
•
•
Deferred Tax related to Assets and Liabilities arising from a Single Transaction – amendments to IAS 12; and
Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2.
Significant Accounting Judgements and Estimates
The preparation of the financial statements requires management to make estimates and assumptions that affect the
reported amounts of expenses, assets and liabilities at the date of the financial statements. If in future such estimates
and assumptions, which are based on management’s best judgement at the date of the financial statements, deviate
from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the period
in which the circumstances change. The Group’s accounting policies make use of accounting estimates and
judgements in the following areas:
•
•
The assessment of the existence of impairment triggers (note 10).
The estimation of share-based payment costs (note 19).
Impairments
The Group tests its capitalised exploration licence costs for impairment when indicators, further detailed below under
‘Exploration and Evaluation Costs’ as set out in IFRS 6, suggest that the carrying amount exceeds the recoverable
amount which is inherently judgmental. An impairment loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount of the Cash Generating Unit is the higher
of an asset’s fair value less costs of disposal and value in use. The Group assessed that there were no impairment
triggers during the year – this included the judgement that there was no trigger arising from future licence expiry as
the Group expects its licences concerned to be renewed.
50
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
Jersey Oil and Gas plc
Share-Based Payments
The Group currently has a number of share schemes that give rise to share-based payment charges. The charge to
operating profit for these schemes amounted to £1,227,504 (2021: £470,725). Estimates and judgements for
determining the fair value of the share options are required. For the purposes of the calculation, a Black– Scholes
option pricing model has been used. Based on past experience, it has been assumed that options will be exercised, on
average, at the mid-point between vesting and expiring. The share price volatility used in the calculation is based on
the actual volatility of the Group’s shares since 1 January 2017. The risk-free rate of return is based on the implied yield
available on zero coupon gilts with a term remaining equal to the expected lifetime of the options at the date of grant.
Estimates are also used when calculating the likelihood of share options vesting given the vesting conditions of time
and performance on the options granted.
Basis of Consolidation
(a) Subsidiaries
Subsidiaries are all entities over which the Group has the power to govern their financial and operating policies
generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of
potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group
controls another entity. The Group also assesses the existence of control where it does not have more than 50% of the
voting power but is able to govern the financial and operating policies by virtue of de facto control. De facto control
may arise in circumstances where the size of the Group’s voting rights relative to the size and dispersion of holdings
of other Shareholders give the Group the power to govern the financial and operating policies.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated
from the date the Group ceases to have control.
(b) Changes in ownership interests in subsidiaries without change of control
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions
- that is, as transactions with the owners in their capacity as owners. The difference between fair value of any
consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in
equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
(c) Disposal of subsidiaries
When the Group ceases to have control any retained interest in the entity is remeasured to its fair value at the date
when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying
amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial
asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are
accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts
previously recognised in other comprehensive income are reclassified to profit or loss.
Inter-company transactions, balances, income and expenses on transactions between Group companies are
eliminated on consolidation. Profits and losses resulting from inter-company transactions that are recognised in assets
are also eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the Group.
51
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
Jersey Oil and Gas plc
Acquisitions, Asset Purchases and Disposals
Transactions involving the purchase of an individual field interest, farm-ins, farm-outs, or acquisitions of exploration
and evaluation licences for which a development decision has not yet been made that do not qualify as a business
combination, are treated as asset purchases. Accordingly, no goodwill or deferred tax arises. The purchase
consideration is allocated to the assets and liabilities purchased on an appropriate basis. Proceeds on disposal
(including farm-ins/farm-outs) are applied to the carrying amount of the specific intangible asset or development and
production assets disposed of and any surplus is recorded as a gain on disposal in the Consolidated Statement of
Comprehensive Income.
Acquisitions of oil and gas properties are accounted for under the purchase method where the acquisitions meet the
definition of a business combination. The Group applies the acquisition method of accounting to account for business
combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred,
the liabilities incurred, and the equity interests issued by the Group. The consideration transferred includes the fair
value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value at the
acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition
basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of the
acquiree’s identifiable net assets.
Acquisition related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity
interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.
Any contingent consideration to be transferred on business combination by the Group is recognised at fair value at the
acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset
or liability are recognised in accordance with IFRS 9 either in profit or loss or as a change to other comprehensive
income. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is
accounted for within equity.
52
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
Jersey Oil and Gas plc
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of
non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower
than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.
Exploration and Evaluation Costs
The Group accounts for oil and gas exploration and evaluation costs using IFRS 6 “Exploration for and Evaluation of
Mineral Resources”. Such costs are initially capitalised as Intangible Assets and include payments to acquire the legal
right to explore, together with the directly related costs of technical services and studies, seismic acquisition,
exploratory drilling, and testing. The Group only capitalises costs as intangible assets once the legal right to explore
an area has been obtained. The Group assesses the intangible assets for indicators of impairment at each reporting
date.
Potential indicators of impairment include but are not limited to:
a) the period for which the Group has the right to explore in the specific area has expired during the period or will
expire in the near future and is not expected to be renewed.
b) substantive expenditure on further exploration for and evaluation of oil and gas reserves in the specific area is
neither budgeted nor planned.
c) exploration for and evaluation of oil and gas reserves in the specific area have not led to the discovery of
commercially viable quantities of oil and gas reserves and the entity has decided to discontinue such activities in
the specific area.
d) sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying
amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development or
by sale.
The Group analyses the oil and gas assets into cash generating units (CGUs) for impairment and reporting
purposes. In the event an impairment trigger is identified the Group performs a full impairment test for the CGU
under the requirements of IAS 36 Impairment of assets. An impairment loss is recognised for the amount by which
the exploration and evaluation assets’ carrying amount exceeds their recoverable amount. The recoverable amount
is the higher of the exploration and evaluation assets’ fair value less costs of disposal and value in use.
As at 31 December 2022, the carrying value of intangible assets was £24.4m, as per Note 10 ‘Intangible Assets’.
The Group considered other factors which could give rise to an impairment trigger such as commodity prices,
licence expiration dates, budgeted spend and movements in estimated recoverable reserves. The Group exercised
judgement in determining that the licence agreements will likely be extended by the NSTA. Based on this
assessment, no impairment triggers existed in relation to exploration assets as of 31 December 2022.
Cost of Sales
Within the statement of comprehensive income, costs directly associated with generating future revenue are
included in cost of sales such as software licences that were used across the asset base. The Group only capitalises
costs as intangible assets once the legal right to explore an area has been obtained, any costs incurred prior to the
date of acquisition are recognised as cost of sales within the Statement of Comprehensive Income.
Property, Plant and Equipment
Property, plant and equipment is stated at historic purchase cost less accumulated depreciation. Asset lives and
residual amounts are reassessed each year. Cost includes the original purchase price of the asset and the costs
attributable to bringing the asset to its working condition for its intended use.
Depreciation on these assets is calculated on a straight-line basis as follows:
Computer & office equipment 3 years
53
S
t
r
a
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e
g
i
c
R
e
p
o
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t
O
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G
o
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n
a
n
c
e
O
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F
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a
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i
a
l
s
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
Jersey Oil and Gas plc
Leases
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net
present value of the following lease payments:
•
•
•
•
•
fixed payments (including in-substance fixed payments), less any lease incentives receivable;
variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the
commencement date;
amounts expected to be payable by the Group under residual value guarantees;
the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and
payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the
liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being
the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value
to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
To determine the incremental borrowing rate, the Group where possible, uses recent third-party rates provided by
banks or financial institutions as a starting point, adjusted to reflect changes in financing conditions since third party
financing was received.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over
the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each
period.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability;
• any lease payments made at or before the commencement date less any lease incentives received;
• any initial direct costs; and
• restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-
line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over
the underlying asset’s useful life.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are
recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12
months or less. Low-value assets comprise any lease with a value of £5,000 or less.
54
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
Jersey Oil and Gas plc
Joint Ventures
The Group participates in joint venture/co-operation agreements with strategic partners, these are classified as joint
operations. The Group accounts for its share of assets, liabilities, income and expenditure of these joint venture
agreements and discloses the details in the appropriate Statement of Financial Position and Statement of
Comprehensive Income headings in the proportion that relates to the Group per the joint venture agreement.
Investments
Fixed asset investments in subsidiaries are stated at cost less accumulated impairment in the Company’s
Statement of Financial Position and reviewed for impairment if there are any indications that the carrying value
may not be recoverable.
Financial Instruments
Financial assets and financial liabilities are recognised in the Group and Company’s Statement of Financial Position
when the Group becomes party to the contractual provisions of the instrument. The Group does not have any
derivative financial instruments.
Cash and cash equivalents include cash in hand and deposits held on call with banks with a maturity of three months
or less.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less any expected credit loss. The Group recognises an allowance for expected credit
losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference
between the contractual cash flows due in accordance with the contract and all the cash flows that the Group
expects to receive, discounted at an approximation of the original effective interest rate. The carrying amount of the
asset is reduced through the use of an allowance account, and the amount of the loss will be recognised in the
Consolidated Statement of Comprehensive Income within administrative expenses. Subsequent recoveries of
amounts previously provided for are credited against administrative expenses in the Consolidated Statement of
Comprehensive Income.
Trade payables are stated initially at fair value and subsequently measured at amortised cost.
Offsetting of Financial Instruments
Financial assets and financial liabilities are offset, and the net amount is reported in the Consolidated Statement
of financial position if there is a currently enforceable legal right to offset the recognised amounts and there is an
intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
Deferred Tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets
and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.
Deferred taxation liabilities are provided, using the liability method, on all taxable temporary differences at the
reporting date. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from
the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit.
O
v
e
r
v
i
e
w
Deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be available
against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at
each reporting date.
55
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
Jersey Oil and Gas plc
Current Tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
end of the reporting period in the countries where Jersey Oil and Gas Plc and its subsidiaries operate and generate
taxable income. We periodically evaluate positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. Provisions are established where appropriate on the basis of
amounts expected to be paid to the tax authorities.
Current tax is payable based upon taxable profit for the year. Taxable profit differs from net profit as reported in
the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or
deductible in other years and it further excludes items that are never taxable or deductible. Any Group liability for
current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.
Foreign Currencies
The functional currency of the Company and its subsidiaries is Sterling. Monetary assets and liabilities in foreign
currencies are translated into Sterling at the rates of exchange ruling at the reporting date. Transactions in foreign
currencies are translated into Sterling at the rate of exchange ruling at the date of the transaction. Gains and losses
arising on retranslation are recognised in the Consolidated Statement of Comprehensive Income for the year.
Employee Benefit Costs
Payments to defined contribution retirement benefit schemes are recognised as an expense when employees have
rendered service entitling them to contributions.
Share-Based Payments
Equity settled share-based payments to employees and others providing similar services are measured at the fair value
of the equity instruments at the grant date. The total amount to be expensed is determined by reference to the fair
value of the options granted using the Black-Scholes Model:
•
•
•
including any market performance conditions (for example, an entity’s share price);
excluding the impact of any service and non-market performance vesting conditions (for example,
profitability, sales growth targets and remaining an employee of the entity over a specified time-period); and
including the impact of any non-vesting conditions (for example, the requirement for employees to save).
The fair value determined at the grant date of the equity settled share-based payments is expensed on a straight-
line basis over the vesting period, based on the Group’s estimate of equity instruments that will eventually vest, with
a corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number
of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in
profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the
equity settled employee benefits reserve.
Equity settled share-based payment transactions with parties other than employees are measured at the fair value
of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are
measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or
the counterparty renders the service.
Exercise proceeds net of directly attributable costs are credited to share capital and share premium.
56
Jersey Oil and Gas plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
Contingent Liabilities & Provisions
In accordance with IAS 37, provisions are recognised where a present obligation exists to third parties as a result of
a past event, where a future outflow of resources with economic benefits is probable and where a reliable estimate
of that outflow can be made. If the criteria for recognising a provision are not met, but the outflow of resources is
not remote, such obligations are disclosed in the notes to the consolidated financial statements (see note 18).
Contingent liabilities are only recognised if the obligations are more certain, i.e. the outflow of resources with
economic benefits has become probable and their amount can be reliably estimated.
Share Capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
3. Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Board of
Directors.
The Board considers that the Group operates in a single segment, that of oil and gas exploration, appraisal,
development and production, in a single geographical location, the North Sea of the United Kingdom.
The Board is the Group’s chief operating decision maker within the meaning of IFRS 8 “Operating Segments”.
O
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F
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l
s
During 2022 and 2021 the Group had no revenue.
4. Financial risk management
The Group’s activities expose it to financial risks and its overall risk management programme focuses on minimising
potential adverse effects on the financial performance of the Group. The Company’s activities are also exposed to
risks through its investments in subsidiaries and it is accordingly exposed to similar financial and capital risks as the
Group.
Risk management is carried out by the Directors and they identify, evaluate, and address financial risks in close co-
operation with the Group’s management. The Board provides written principles for overall risk management, as well
as written policies covering specific areas, such as mitigating foreign exchange risks and investing excess liquidity.
Credit Risk
The Group’s credit risk primarily relates to its trade receivables. Responsibility for managing credit risks lies with the
Group’s management.
A debtor evaluation is typically obtained from an appropriate credit rating agency. Where required, appropriate
trade finance instruments such as letters of credit, bonds, guarantees and credit insurance will be used to manage
credit risk.
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they become due. The
Group manages its liquidity through continuous monitoring of cash flows from operating activities, review of actual
capital expenditure programmes, and managing maturity profiles of financial assets and financial liabilities.
57
Jersey Oil and Gas plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
Capital Risk Management
The Group seeks to maintain an optimal capital structure. The Group considers its capital to comprise both
equity and net debt.
The Group monitors its capital mix needs and suitability dependent upon the development stage of its asset base.
Earlier stage assets (pre-production) typically require equity rather than debt given the absence of cash flow to
service debt. As the asset mix becomes biased towards production then typically more debt is available. The
Group seeks to maintain progress in developing its assets in a timely fashion. Given the Group’s current cash
position is insufficient to progress its assets to first oil it will be seeking to bring an industry partner into its assets
in return for a capital (equity) contribution. This may be in the form of either cash or payment of some or all the
Group’s development expenditures. Please refer to Note 22, Post Balance Sheet Events, regarding the farm-out
agreement with NEO. As the development progresses towards first oil, debt becomes available and will be
sought in order to enhance equity returns. As at 31 December 2022 there are no borrowings within the Group
(2021: Nil).
The Group monitors its capital structure by reference to its net debt to equity ratio. Net debt to equity ratio is
calculated as net debt divided by total equity. Net debt is calculated as borrowings less cash and cash equivalents.
Total equity comprises all components of equity.
Maturity analysis of financial assets and liabilities
Financial assets
Up to 3 months
3 to 6 months
Over 6 months
Financial liabilities
Up to 3 months
3 to 6 months
Over 6 months
Lease liabilities
Up to 3 months
3 to 6 months
Over 6 months
2022
£
69,735
–
31,112
100,847
2022
£
620,713
–
–
620,713
2022
£
31,971
32,212
22,509
86,692
2021
£
233,864
–
31,112
264,976
2021
£
2,232,325
–
–
2,232,325
2021
£
31,028
31,261
149,923
212,212
58
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Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
5. Employees and Directors
Wages and salaries*
Social security costs**
Share-based payments (note 19)
Other pension costs
Jersey Oil and Gas plc
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£
2,312,653
194,332
1,227,504
209,394
3,943,883
2021
£
2,207,384
215,267
470,724
218,253
3,111,628
*In addition, there were payments in lieu of notice and loss of office fees of £733,725 in 2021.
** In addition, there were social security costs associated with the payments in lieu of notice and
loss of office of £49,985 in 2021.
Other pension costs include employee and Group contributions to money purchase pension
schemes.
The average monthly number of employees during the year was as follows:
Directors
Employees - Finance
Employees - Technical
Directors Remuneration:
Directors’ remuneration*
Directors’ pension contributions to money purchase schemes
Share-based payments (note 19)
Benefits**
2022
No.
5
1
9
15
2022
£
664,200
26,500
618,914
12,645
1,322,259
2021
No.
6
1
10
17
2021
£
938,465
26,450
207,534
17,074
1,189,523
The Director’s remuneration is shown net of share-based payments.
*In addition, there were payments in lieu of notice and loss of office fees of £733,725 in 2021.
** In addition, there were benefit costs associated with the payments in lieu of notice and loss of office of
£13,197 in 2021.
The average number of Directors to whom retirement benefits were accruing was as follows:
Money purchase schemes
Information regarding the highest paid Director is as follows:
Aggregate emoluments and benefits
Share-based payments
Pension contributions
2022
No.
2
2021
No.
2
2022
£
255,699
228,648
25,000
509,347
2021
£
256,036
74,707
25,000
355,743
59
Jersey Oil and Gas plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
Key management compensation
Key management includes Directors (Executive and Non-Executive) and an adviser to the Board. The
compensation paid or payable to key management for employee services is shown below:
Wages and short-term employee benefits*
Share-based payments (note 19)
Pension Contributions
*In addition, there were payments in lieu of notice and loss of office fees of
£733,725 and associated benefit costs of £13,197 in 2021.
6. Net Finance Income
Finance income:
Interest received
Finance costs:
Interest paid
Interest on lease liability
Net finance income/(expense)
7. Loss Before Tax
The loss before tax is stated after charging/(crediting):
Depreciation - tangible assets
Depreciation - right-of-use asset
Auditors' remuneration - audit of parent company and consolidation
Auditors’ remuneration - audit of subsidiaries
Auditors’ remuneration - non-audit work (taxation advice)
Foreign exchange gain
2022
£
698,513
618,914
26,500
1,343,927
2021
£
992,204
207,534
26,450
1,226,188
2022
£
2021
£
82,842
1,807
82,842
1,807
(7)
(4,723)
(4,730)
78,112
(278)
(5,820)
(6,098)
(4,290)
2022
£
29,873
103,680
105,000
25,000
-
(6,735)
2021
£
34,472
138,176
80,000
27,000
3,150
(6,027)
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60
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
8. Tax
Reconciliation of tax charge
Loss before tax
Tax at the standard rate of 19% (2021: 19%)
Capital allowances in excess of depreciation
Expenses not deductible for tax purposes and non-taxable income
Deferred tax asset not recognised
Total tax expense reported in the Consolidated Statement of
Comprehensive Income
Jersey Oil and Gas plc
2022
£
(3,106,991)
(590,328)
(90,204)
234,654
445,878
–
2021
£
(4,225,317)
(802,810)
(1,330,468)
91,330
2,041,949
–
No liability to UK corporation tax arose on ordinary activities for the year ended 31 December 2022, or for the year ended
31 December 2021.
In April 2023, the rate of corporation tax will increase to 25% for profits over £250,000.
The Group has not recognised a deferred tax asset due to the uncertainty over when the tax losses can be utilised. At the
year end, the usable tax losses within the Group were approximately £62 million (2021: £57 million).
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9. Loss Per Share
Basic loss per share is calculated by dividing the losses attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
Diluted loss per share is calculated using the weighted average number of shares adjusted to assume the conversion of
all dilutive potential ordinary shares.
There is no difference between dilutive and ordinary earnings per share due to there being a loss recorded in the year.
Year ended 31 December 2022
Basic and Diluted EPS
Basic & Diluted
Year ended 31 December 2021
Basic and Diluted EPS
Basic & Diluted
Loss attributable
to ordinary
shareholders
£
Weighted
average number
of shares
Per share
amount
pence
(3,106,991)
32,554,293
(9.54)
(4,225,317)
29,171,548
(14.48)
61
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
10. Intangible assets
Cost
At 1 January 2021
Additions
Exploration write-off/relinquishment
At 31 December 2021
Additions
At 31 December 2022
Accumulated Amortisation
At 1 January 2021
Charge for the year
At 31 December 2021
At 31 December 2022
Net Book Value
At 31 December 2022
At 31 December 2021
Jersey Oil and Gas plc
Exploration
costs
£
15,166,536
6,970,670
(447,812)
21,689,394
2,858,729
24,548,122
175,241
–
175,241
175,241
24,372,882
21,514,153
In 2020, the Group acquired an additional 70% working interest in licence P2170 (Verbier) in addition to the
existing 18% equity interest and retained 100% working interests in the licences awarded pursuant to the NSTA’s
31st SLR (2019), Licence P2498 (Buchan and J2), Licence P2499 (Glenn) and Licence P2497 (Zermatt). The
Group was also awarded a 100% working interest in, and operatorship of, part-block 20/5e in the NSTA’s 32
Offshore Licensing Round in 2020. Part-block 20/5e is incorporated within Licence P2498 (Buchan & J2) and
is located within the Group’s existing Greater Buchan Area.
In April 2021, the Group acquired an additional 12% working interest in P2170 following the acquisition of Cieco
V&C (UK) Limited (now Jersey V&C Ltd), thereby resulting in the Group owning 100% of this licence which
includes the Verbier oil discovery, some 6km from the Buchan oil field. The consideration for the acquisition
included a completion payment of £150k and two future milestone payments, details of which can be found in
note 18.
Later in 2021, the Group relinquished licences P2497 Block 20/4c (Zermatt) and P2499 Block 21/2a (Glenn).
Following undertaking a comprehensive technical and economic evaluation of licences P2497 and P2499 and
meetings held with the North Sea Transition Authority ("NSTA"), the NSTA confirmed that it was satisfied that
the Phase A Firm Commitments for both licences had been fulfilled. JOG decided not to progress to the next
licence phase, which would have required committing to a firm well in each of these two licence areas.
Accordingly, the licences automatically ceased and determined at the end of Phase A of their Initial Term on 29
August 2021.
In line with the requirements of IFRS 6, we have considered whether there are any indicators of impairment on
the exploration and development assets. Based on our assessment, as at 31 December 2022 there are not
deemed to be indicators that the licences are not commercial and the carrying value of £24,372,882 continues
to be supported by ongoing exploration and development work on the licence area with no impairments
considered necessary. Under IFRS 6, this required a significant judgement to be made confirming that we
expect the NSTA to extend our license interests in P2498 and P2170.
62
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
11. Property, Plant and Equipment
Cost
At 1 January 2021
Additions
At 31 December 2021
Additions
At 31 December 2022
Accumulated Depreciation
At 1 January 2021
Charge for the year
At 31 December 2021
Charge for the year
At 31 December 2022
Net Book Value
At 31 December 2022
At 31 December 2021
12. Leases
Amounts Recognised in the Statement of financial position
Right-of-use Assets
Buildings
Lease liabilities
Current
Non-Current
Jersey Oil and Gas plc
Computer and
office
equipment
£
228,447
-
228,447
–
228,447
153,898
34,472
188,370
29,873
218,244
10,203
40,077
2022
£
2021
£
81,328
81,328
185,008
185,008
86,692
-
86,692
129,200
83,012
212,212
The liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s
incremental borrowing rate as of 1 January 2019. The weighted average lessee’s incremental borrowing rate
applied to the lease liabilities on 1 January 2019 was 3%. The borrowing rate applied for 2022 remained at 3%
and the leases relate to office space.
A new lease agreement was entered into in September 2021 with a lease end date of September 2023,
this was in relation to the London office.
Amounts Recognised in the Statement of comprehensive income
Depreciation charge of right-of-use asset
Buildings
Interest expenses (included in finance cost)
2022
£
2021
£
103,680
138,176
103,680
(4,723)
138,176
(5,820)
63
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
13. Trade and other receivables
Current:
Other receivables
Value added tax
Prepayments
14. Cash and cash equivalents
Cash in bank accounts
Jersey Oil and Gas plc
2022
£
30
69,702
97,328
167,060
2021
£
30
233,835
119,249
353,114
2022
£
6,579,349
2021
£
13,038,388
The cash balances are placed with creditworthy financial institutions with a minimum rating of ‘A’.
15. Called up share capital
Issued and fully paid:
Number:
32,554,293 (2021: 32,554,293)
Class
Ordinary
Nominal
value
1p
2022
£
2,573,395
2021
£
2,573,395
Ordinary shares have a par value of 1p. They entitle the holder to participate in dividends, distributions or other
participation in the profits of the Company in proportion to the number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting, in person or by proxy, is entitled to one vote,
and on a poll each share is entitled to one vote.
In 2021, 660,000 ordinary shares were issued to satisfy the exercise of share options which raised £778,357 (gross). An
oversubscribed placing and subscription of shares raised a further £16.61m (gross) with a total of 10,065,066 ordinary
shares issued.
16. Trade and other payables
Current:
Trade payables
Accrued expenses
Taxation and Social Security
17. Lease liabilities
Non-Current:
Lease liabilities
2022
£
459,461
161,253
68,082
688,796
2022
£
-
-
2021
£
1,211,220
1,021,105
371,381
2,603,706
2021
£
83,012
83,012
64
Jersey Oil and Gas plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
18. Contingent Liabilities
(i) 2015 settlement agreement with Athena Consortium:
In accordance with a 2015 settlement agreement
reached with the Athena Consortium, although Jersey Petroleum Ltd remains a Licensee in the joint venture, any
past or future liabilities in respect of its interest can only be satisfied from the Group’s share of the revenue that the
Athena Oil Field generates and up to 60 per cent. of net disposal proceeds or net petroleum profits from the
Group’s interest in the P2170 licence which is the only remaining asset still held that was in the Group at the time
of the agreement with the Athena Consortium who hold security over this asset. Any future repayments, capped
at the unpaid liability associated with the Athena Oil Field, cannot be calculated with any certainty, and any
remaining liability still in existence once the Athena Oil Field has been decommissioned will be written off. A
payment was made in 2016 to the Athena Consortium in line with this agreement following the farm-out of P2170
(Verbier) to Equinor and the subsequent receipt of monies relating to that farm-out.
(ii) Equinor UK Limited: During 2020, JOG announced that it had entered into a conditional Sale and Purchase
Agreement (“SPA”) to acquire operatorship of, and an additional 70% working interest in Licence P2170 (Blocks 20/5b
and 21/1d) from Equinor UK Limited (“Equinor”), this transaction completed in May 2020. The consideration for the
acquisition consists of two milestone payments, which will be accounted for in line with the cost accumulation
model, as opposed to contingent liabilities:
• US$3 million upon sanctioning by the UK’s North Sea Transition Authority (“NSTA”) of a Field Development Plan
(“FDP”) in respect of the Verbier Field; and
• US$5 million upon first oil from the Verbier Field.
The earliest of the milestone payments in respect of the acquisition is not currently anticipated being payable
before the start of 2025.
(iii) ITOCHU Corporation and Japan Oil, Gas and Metals National Corporation: During 2020, JOG announced
that it had entered into a conditional Sale and Purchase Agreement (“SPA”) to acquire the entire issued share capital
of CIECO V&C (UK) Limited, which was owned by ITOCHU Corporation and Japan Oil, Gas and Metals National
Corporation, this transaction completed in April 2021. The acquisition was treated as an asset acquisition rather
than a business combination due to the nature of the asset acquired. There were no assets or liabilities acquired
other than the 12% interest in licence P2170 (Verbier). The consideration for the acquisition includes a completion
payment of £150k and two future milestone payments, which are considered contingent liabilities:
• £1.5 million in cash upon consent from the UK’s North Sea Transition Authority (“NSTA”) for a Field Development
Plan (“FDP”) in respect of the Verbier discovery in the Upper Jurassic (J62-J64) Burns Sandstone reservoir located
on Licence P2170; and
• £1 million in cash payable not later than one year after first oil from all or any part of the area which is the subject
of the Field Development Plan.
The earliest of the milestone payments in respect of the acquisition is not currently anticipated being payable
before the start of 2025.
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Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
Jersey Oil and Gas plc
19. Share based payments
The Group operates several share options schemes. Options are exercisable at the prices set out in the table below.
Options are forfeited if the employee leaves the Group through resignation or dismissal before the options vest.
Equity settled share-based payments are measured at fair value at the date of grant and expensed on a straight-line basis
over the vesting period, based upon the Group’s estimate of shares that will eventually vest.
The Group’s share option schemes are for Directors, Officers and employees. The charge for the year was £1,227,504 (2021:
£470,725) and details of outstanding options are set out in the table below.
Date of Grant
May 2013
May 2013
Apr 2017
Apr 2017
Apr 2017
Jan 2018
Jan 2018
Jan 2018
Jan 2018
Nov 2018
Jan 2019
Jan 2019
Jan 2019
Jan 2019
Jan 2019
Jan 2019
Jun 2019
Jun 2019
Jan 2021
Jan 2021
Jan 2021
Mar 2021
Mar 2021
Mar 2021
Mar 2021
Mar 2021
Mar 2021
Nov 2021
Nov 2021
Nov 2021
Apr 2022
Apr 2022
Apr 2022
Apr 2022
Apr 2022
Apr 2022
Exercise price
(pence)
1,500
1,500
310
310
310
200
200
200
200
172
175
175
175
175
175
175
200
110
155
155
155
210
210
210
210
210
210
147
147
147
230
230
230
230
230
230
Vesting date
May 2014
May 2015
Apr 2017
Apr 2018
Apr 2019
Jan 2021
Jan 2018
Jan 2019
Jan 2020
Nov 2021
Jan 2020
Jan 2021
Jan 2022
Jan 2020
Jan 2021
Jan 2022
Jan 2021
Jun 2019
Jan 2022
Jan 2023
Jan 2024
Mar 2022
Mar 2023
Mar 2024
Mar 2022
Mar 2023
Mar 2024
Nov 2022
Nov 2023
Nov 2024
Apr 2023
Apr 2024
Apr 2025
Apr 2023
Apr 2024
Apr 2025
Expiry date
May 2023
May 2023
Apr 2022
Apr 2022
Apr 2022
Jan 2025
Jan 2023
Jan 2023
Jan 2023
Nov 2025
Jan 2026
Jan 2026
Jan 2026
Jan 2024
Jan 2024
Jan 2024
Jun 2029
Jun 2029
Jan 2028
Jan 2028
Jan 2028
Mar 2026
Mar 2026
Mar 2026
Mar 2028
Mar 2028
Mar 2028
Nov 2028
Nov 2028
Nov 2028
Apr 2029
Apr 2029
Apr 2029
Apr 2027
Apr 2027
Apr 2027
No. of shares
for which
options
outstanding at
1 Jan 2022
9,500
9,500
20,000
20,000
20,000
420,000
76,666
76,667
70,000
150,000
88,333
88,333
68,333
11,667
11,667
11,667
120,000
40,000
83,333
83,333
83,334
11,666
11,667
11,667
137,334
137,333
137,333
233,334
233,333
233,333
-
-
-
-
-
-
Options
lapsed/non
vesting during
the year
No. of shares
for which
options
outstanding at
31 Dec 2022
Options
issued
Options
Exercised
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
285,000
285,000
285,000
45,000
45,000
45,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,500
-
9,500
-
-
(20,000)
-
(20,000)
-
(20,000)
420,000
-
76,666
-
76,667
-
70,000
-
150,000
-
88,333
-
-
88,333
- 68,333
11,667
-
-
11,667
- 11,667
120,000
-
40,000
-
83,333
-
75,000
(8,333)
75,000
(8,334)
11,666
-
11,667
-
11,667
-
136,668
(666)
93,333
(44,000)
93,333
(44,000)
233,334
-
233,333
-
233,333
-
285,000
-
285,000
-
285,000
-
45,000
-
45,000
-
45,000
-
3,534,000
Total
66
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
Jersey Oil and Gas plc
The weighted average of the options granted during the year was determined using a Black–Scholes valuation. The
significant inputs into the model were the mid-market share price on the day of grant as shown above and an annual
risk-free interest rate ranging between 1.10% and 1.30%. The volatility measured at the standard deviation of
continuously compounded share returns is based on a statistical analysis of daily share prices from the date of admission
to AIM to the date of grant on an annualised basis. The weighted average exercise price for the options granted in 2022
was 230 pence, the weighted average remaining contractual life of the options was 6 years (for all schemes 4 years),
the weighted average volatility rates was 114% and the dividend yield was nil. During the year 60,000 share options from
the April 2018 issuance expired, these had an exercise price of 310 pence, a further 105,333 share options were forfeited
due to the departure of employees, these had a weighted exercise price of 201 pence. There were no share options
exercised in the year. The weighted average exercise price for all outstanding options at 31 December 2022 was 199
pence. For details of the schemes and scheme rules, please refer to the Remuneration Report.
20. Related undertakings and ultimate controlling party
The Group and Company do not have an ultimate controlling party or parent Company.
Subsidiary
% owned
Jersey North Sea Holdings Ltd
Jersey Petroleum Ltd
Jersey V&C Ltd
Jersey E & P Ltd
Jersey Oil Ltd
Jersey Exploration Ltd
Jersey Oil & Gas E & P Ltd
Registered Offices
100%
100%
100%
100%
100%
100%
100%
County of
Incorporation
England & Wales
England & Wales
England & Wales
Scotland
Scotland
Scotland
Jersey
Principal Activity
Non-Trading
Oil Exploration
Oil Exploration
Non-Trading
Non-Trading
Non-Trading
Management services
Registered
Office
1
1
1
2
2
2
3
10 The Triangle, ng2 Business Park, Nottingham, NG2 1AE
1.
2. 6 Rubislaw Terrace, Aberdeen, AB10 1XE
3. First Floor, Tower House, La Route es Nouaux, St Helier, Jersey JE2 4ZJ
21. Notes to the consolidated statement of cash flows
Reconciliation of Loss Before Tax to Cash Used in Operations
Loss for the year before tax
Adjusted for:
Depreciation
Impairments
Depreciation right-of-use asset
Share-based payments (net)
Finance costs
Finance income
Decrease in trade and other receivables
(Decrease)/increase in trade and other payables
Cash used in operations
2022
£
(3,106,991)
2021
£
(4,225,317)
29,873
-
103,680
1,227,504
4,730
(82,842)
(1,824,046)
186,054
(1,681,452)
(3,319,445)
34,472
447,812
138,176
470,724
6,098
(1,807)
(3,129,842)
99,856
1,534,087
(1,495,899)
67
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Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
Cash and cash equivalents
The amounts disclosed on the consolidated Statement of Cash Flows in respect of Cash and cash equivalents
are in respect of these statements of financial position amounts:
Year ended 2022
Cash and cash equivalents
Year ended 2021
Cash and cash equivalents
31 Dec 2022
£
6,579,349
31 Dec 2021
£
13,038,388
01 Jan 2022
£
13,038,388
1 Jan 2021
£
5,081,515
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Analysis of net cash
At 1 Jan 2022
£
Cash outflow
£
At 31 Dec 2022
£
Cash and cash equivalents
Net cash
13,038,388
13,038,388
6,459,039
6,459,039
6,579,349
6,579,349
68
Jersey Oil and Gas plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2022
22. Post balance sheet events
On 6 April 2023, Jersey Oil and Gas Plc announced that it has agreed to farm-out a 50% interest in the Greater Buchan
Area licences to NEO Energy ("NEO").
In exchange for entering into definitive agreements to divest a 50% working interest and operatorship in the GBA
licences to NEO, the Company will receive:
•
12.5% carry of the Buchan field development costs included in the FDP approved by the North Sea Transition
Authority ("NSTA"); equivalent to a 1.25 carry ratio
• Carry for JOG's 50% share of the estimated $25 million cost to take the Buchan field through to FDP approval
•
•
•
•
$2 million cash payment on completion of the transaction
$9.4 million cash payment upon finalisation of the GBA development solution
$12.5 million cash payment on approval of the Buchan FDP by the NSTA
$5 million cash payment on each FDP approval by the NSTA in respect of the J2 and Verbier oil discoveries
The primary conditions precedent to completing the transaction are receipt of the approvals from the NSTA for the
transaction and the associated extension of the Company's two GBA licences. Following completion of the
transaction, operatorship of the licences will transfer to NEO.
23. Availability of the annual report 2022
A copy of this report will be made available for inspection at the Company’s registered office during normal business
hours on any weekday. The Company’s registered office is at 10 The Triangle, ng2 Business Park, Nottingham NG2 1AE. A
copy can also be downloaded from the Company’s website at www.jerseyoilandgas.com. Jersey Oil and Gas Plc is
registered in England and Wales, with registration number 7503957.
69
Contents for the Company Financial Statements
For year ended 31 December 2022
Company Statement of Financial Position
Company Statement of Changes in Equity
Notes to the Company Financial Statements
Jersey Oil and Gas plc
Pages
71
72
73
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COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
Jersey Oil and Gas plc
Non-current assets
Investments in subsidiaries
Property, plant and equipment
Right-of-use asset
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity
Called up share capital
Share premium account
Share options reserve
Accumulated losses
Total equity
Non-current liabilities
Lease liabilities
Current liabilities
Trade and other payables
Lease liabilities
Total liabilities
Total equity and liabilities
2022
£
–
10,010
45,649
55,659
2021
£
–
38,065
106,514
144,579
31,842,163
6,436,069
38,278,232
38,333,891
26,090,088
12,891,047
38,981,135
39,125,714
2,573,395
110,309,524
2,566,338
(77,623,549)
37,825,708
2,573,395
110,309,524
1,397,282
(76,286,305)
37,993,896
-
36,290
Note
4
5
6
7
8
9
6
10
6
471,893
36,290
508,183
38,333,891
1,024,558
70,970
1,131,818
39,125,714
As permitted by Section 408 of the Companies Act 2006, the Statement of Comprehensive Income of the parent
Company is not presented as part of these financial statements. The parent Company’s loss for the year was £1,395,692
(2021: Loss of £715,412).
The financial statements on pages 71 and 72 were approved by the Board of Directors and authorised for issue on 23
May 2023. They were signed on its behalf by Graham Forbes – Chief Financial Officer.
Graham Forbes
Chief Financial Officer
23 May 2023
Company Registration Number: 07503957
The notes on pages 73 to 79 are an integral part of these financial
statements
71
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
Jersey Oil and Gas plc
At 1 January 2021
Total comprehensive loss for the
year
Issue of share capital
Transactions with owners in their
capacity as owners
Expired share options
Exercised share options
Transactions with owners (share-
based payments)
At 31 December 2021
Total comprehensive loss for the
year
Transactions with owners n their
capacity as owners
Expired share options
Transactions with owners (share-
based payments)
At 31 December 2022
Note
Called up
share
capital
£
2,466,144
–
Share
premium
account
£
93,851,526
–
Share
options
reserve
£
2,109,964
–
Accumulated
losses
£
(76,754,297)
(715,412)
Total
equity
£
21,673,336
(715,412)
107,251
16,457,997
–
–
16,565,248
5
5
–
–
–
–
–
–
(909,176)
(274,230)
470,725
909,176
274,230
–
–
–
470,725
2,573,395
–
110,309,524
–
1,397,282
–
(76,286,305)
(1,395,692)
37,993,896
(1,395,692)
–
–
–
–
(58,448)
1,227,504
58,448
–
–
1,227,504
2,573,395
110,309,524
2,566,338
(77,623,549)
37,825,708
The following describes the nature and purpose of each reserve:
Description and purpose
Represents the nominal value of shares issued
Reserve
Called up share
capital
Share premium
account
Share options reserve Represents the accumulated balance of share-based payment charges recognised in respect of
share options granted by the Company less transfers to accumulated deficit in respect of
options exercised or cancelled/lapsed
Amount subscribed for share capital in excess of nominal value
Accumulated losses Cumulative net gains and losses recognised in the Consolidated Statement of Comprehensive
Income
The notes on pages 73 to 79 are an integral part of these financial
statements
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Notes to the Company Financial Statements
For the year ended 31 December 2022
Jersey Oil and Gas plc
1. Significant accounting policies
The financial statements of Jersey Oil and Gas Plc have been prepared in accordance with Financial Reporting Standard
101, ‘Reduced Disclosure Framework’ (FRS 101). In preparing these financial statements, the Company applies the
recognition, measurement and disclosure requirements of International Financial Reporting Standards as adopted by
the UK (UK-adopted international accounting standards), but makes amendments where necessary in order to comply
with the Companies Act 2006 and to take advantage of FRS 101 disclosure exemptions.
The principal accounting policies adopted are consistent with those set out in note 2 to the consolidated financial
statements. The financial risk management strategy for the Company is consistent with that set out in note 4 to the
consolidated financial statements. These policies have been consistently applied to all the periods presented, unless
otherwise stated.
The Company is a qualifying entity for the purposes of FRS 101. The application of FRS 101 has enabled the Company to
take advantage of certain disclosure exemptions that would have been required had the Company adopted IFRS in full.
The disclosure exemptions adopted by the Company are as follows:
The following exemptions from the requirements of IFRS have been applied in the preparation of these financial
statements, in accordance with FRS 101:
• Paragraphs 45(b) and 46 to 52 of IFRS 2, ‘Share-based payment’ (details of the number and weighted average
exercise prices of share options, and how the fair value of goods or services received was determined).
IFRS 7, ‘Financial instruments: Disclosures’.
•
• Paragraphs 91 to 99 of IFRS 13, ‘Fair value measurement’ (disclosure of valuation techniques and inputs used for
fair value measurement of assets and liabilities).
• Paragraph 38 of IAS 1, 'Presentation of financial statements' – comparative information requirements in respect
of:
o paragraph 79(a)(iv) of IAS 1; and
o paragraph 73(e) of IAS 16, 'Property, plant and equipment';
• The following paragraphs of IAS 1, ‘Presentation of financial statements’:
o
o
o
o
o
o
10(d) (statement of cash flows);
16 (statement of compliance with all IFRS);
38A (requirement for minimum of two primary statements, including cash flow statements);
38B-D (additional comparative information);
111 (statement of cash flows information); and
134-136 (capital management disclosures).
IAS 7, ‘Statement of cash flows’.
•
• Paragraphs 30 and 31 of IAS 8, ‘Accounting policies, changes in accounting estimates and errors’ (requirement
for the disclosure of information when an entity has not applied a new IFRS that has been issued but is not yet
effective).
• Paragraph 17 of IAS 24, ‘Related party disclosures’ (key management compensation).
• The requirements in IAS 24, ‘Related party disclosures’, to disclose related party transactions entered into
between two or more members of a group.
73
Notes to the Company Financial Statements
For the year ended 31 December 2022
Jersey Oil and Gas plc
Going Concern
The Group has sufficient resources to meet its liabilities as they fall due for a period of at least 12 months after the date
of issue of these financial statements. The Group’s main cost commitment; a 50% equity share of Front End
Engineering and Design (“FEED”) work for the GBA ahead of project sanction will be paid for from 1 April 2023 by the
$12.5m Pre sanction farm-in carry agreed with NEO in April 2023. This is forecast to adequately cover the field
development sanction work to be carried out over the next 12 months. In addition, any FEED spend above $12.5m and
post sanction development costs of the GBA through to first oil are carried at an equity level of 12.5%. Other work that
the Group is undertaking in respect of the GBA licenses and surrounding areas is modest relative to its current cash
reserves. The Company’s current cash reserves are therefore expected to more than exceed its estimated cash
outflows in all reasonable scenarios for at least 12 months following the date of issue of these financial statements.
Even in an extreme scenario where the Buchan development did not progress for any unforeseen reason and the future
instalment payments were not realised the Group has the flexibility within its cost structure to amend its expenditure
profile and continue in business beyond the next 12 months solely from utilisation of its existing cash resources. The
directors have also considered the risk associated with contractual arrangements associated with the farm-out and are
satisfied that the group is not exposed to any contractual commitments which could impact on the Group’s going
concern status over the next 12 months. Based on these circumstances, the directors have considered it appropriate to
adopt the going concern basis of accounting in preparing the consolidated financial statements.
Risk management
The Company’s activities expose it to financial risks and its overall risk management programme focuses on minimising
potential adverse effects on the financial performance of the Company. The Company’s activities are also exposed to
risks through its investments in subsidiaries and it is accordingly exposed to similar financial and capital risks as the Group.
Risk management is carried out by the Directors and they identify, evaluate and address financial risks in close co-
operation with the Company’s management. The Board provides written principles for overall risk management, as well
as written policies covering specific areas, such as mitigating foreign exchange risks and investing excess liquidity. Liquidity
risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company
manages its liquidity through continuous monitoring of cash flows from operating activities, review of actual capital
expenditure programmes, and managing maturity profiles of financial assets and financial liabilities.
2. Employees and directors
Wages and salaries*
Social security costs**
Share based payments
Other pensions costs
2022
£
1,499,246
198,718
1,227,504
165,019
3,090,487
2021
£
1,548,961
190,882
470,724
175,253
2,385,821
*In addition, there were payments in lieu of notice and loss of office fees of £328,725 in 2021.
** In addition, there were social security costs associated with the payments in lieu of notice and loss of office of
£42,173 in 2021.
Other pension costs include employee and Company contributions to money purchase pension schemes. The
average monthly number of employees during the year was as follows:
Directors
Employees – Finance
Employees – Technical
2022
4
1
7
12
2021
6
1
8
15
74
Notes to the Company Financial Statements
For the year ended 31 December 2022
2. Employees and directors continued
Directors’ remuneration*
Directors’ pension contributions to money purchase schemes
Benefits**
Jersey Oil and Gas plc
2022
£
434,392
1,500
6,946
442,838
2021
£
487,042
1,450
6,881
495,373
The Directors’ remuneration excludes remuneration paid by other Group companies for services to the Group.
The Directors’ remuneration is shown net of share-based payments.
*In addition, there were payments in lieu of notice and loss of office fees of £328,725 in 2021.
** In addition, there were benefit costs associated with the payments in lieu of notice and loss of office of £5,110
in 2021.
The average number of Directors to whom retirement benefits were accruing was as follows:
Money purchase schemes
Information regarding the highest paid Director is as follows:
2022
2021
1
1
Aggregate emoluments and benefits
Pension contributions
2022
£
266,146
–
266,146
2021
£
232,069
–
232,069
Key management compensation
Key management includes Directors (Executive and Non-Executive). The compensation paid or payable to key
management for employee services is shown below:
Wages and short-term employee benefits*
Share based payments (note 19)
Pension Contributions
2022
£
2021
£
463,006
618,914
1,500
1,083,420
530,588
207,534
1,450
739,572
*In addition, there were payments in lieu of notice and loss of office fees of £328,725 and benefit costs
associated with the payments in lieu of notice and loss of office of £5,110 in 2021.
3. Loss of parent company
As permitted by Section 408 of the Companies Act 2006, the Statement of Comprehensive Income of the parent
Company is not presented as part of these financial statements.
The parent Company’s loss for the year was £1,395,692 (2021: Loss of £715,412).
Auditors’ remuneration is disclosed in note 7 in the consolidated financial statements.
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Notes to the Company Financial Statements
For the year ended 31 December 2022
4. Investment in subsidiaries
Company – shares in subsidiary undertakings:
The carrying value of investments in subsidiary entities has been written off in prior
periods.
The subsidiary undertakings at 31 December 2022 were as follows:
% owned
Subsidiary
Jersey Petroleum Ltd*
Jersey North Sea Holdings Ltd*
County of
Incorporation
England & Wales
England & Wales
England & Wales
Jersey V&C Ltd*
Scotland
Jersey E & P Ltd**
Scotland
Jersey Oil Ltd**
Scotland
Jersey Exploration Ltd**
Jersey Oil & Gas E & P Ltd***
Jersey
* Registered address: 10 The Triangle, ng2 Business Park, Nottingham, NG2 1AE
100%
100%
100%
100%
100%
100%
100%
** Registered address: 6 Rubislaw Terrace, Aberdeen, AB10 1XE
*** Registered address: First Floor, Tower House, La Route es Nouaux, St Helier, Jersey, JE2 4ZJ
5. Property, plant and equipment
Cost
At 1 January 2022
At 31 December 2022
Accumulated depreciation
At 1 January 2022
Charge for year
At 31 December 2022
Net book value
At 31 December 2022
At 31 December 2021
Jersey Oil and Gas plc
2022
£
2021
£
–
–
Principal Activity
Non-Trading
Oil Exploration
Oil Exploration
Non-Trading
Non-Trading
Non-Trading
Management services
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Office
equipment
£
178,960
178,960
140,895
28,055
168,950
10,010
38,065
76
Notes to the Company Financial Statements
For the year ended 31 December 2022
6. Right-of-use Assets
Amounts Recognised in the Statement of financial position
Right-of-use assets
Buildings
Lease liabilities
Current
Non-Current
Jersey Oil and Gas plc
2022
£
2021
£
45,649
106,514
45,649
106,514
36,290
-
36,290
70,970
36,290
107,260
These liabilities were measured at the present value of the remaining lease payments, discounted using the
lessee’s incremental borrowing rate as of 1 January 2019. The weighted average lessee’s incremental borrowing
rate applied to the lease liabilities on 1 January 2021 was 3%. The borrowing rate applied for 2022 remained at
3% and the leases relate to office space.
A new lease agreement was entered into in September 2021 with a lease end date of September 2023, this was
in relation to the London office.
Amounts Recognised in the Statement of comprehensive income
Depreciation charge of right-of-use asset
Buildings
Interest expenses (included in finance cost)
2022
£
60,865
60,865
(2,430)
2021
£
95,360
95,360
(1,908)
77
Notes to the Company Financial Statements
For the year ended 31 December 2022
7. Trade and other receivables
Jersey Oil and Gas plc
2022
£
2021
£
Current:
Value Added Tax
Amounts due from Group undertakings
Prepayments
Deposits
231,665
25,780,429
75,302
2,692
26,090,088
The balances above were assessed for recoverability under the expected credit loss model and amounts due
from Group undertakings are stated net of losses of £69,800,211 (2021: £69,800,211). The amounts due from
Group undertakings are unsecured, non-interest bearing, have no fixed date of repayment and are repayable
on demand.
67,532
31,704,534
67,405
2,692
31,842,163
8. Cash and cash equivalents
Cash at bank
9. Called up share capital
Issued and fully paid:
Number:
32,554,293 (2021: 32,554,293)
2022
£
6,436,069
2021
£
12,891,047
Class
Ordinary
Nominal
Value
1p
2022
£
2,573,395
2021
£
2,573,395
Ordinary shares have a par value of 1p. They entitle the holder to participate in dividends, distributions or other
participation in the profits of the Company in proportion to the number of and amounts paid on the shares
held.
On a show of hands every holder of ordinary shares present at a meeting, in person or by proxy, is entitled to
one vote, and on a poll each share is entitled to one vote.
10. Trade and other payables
Current:
Amounts due to Group undertakings
Trade payables
Other payables
Accrued expenses
2022
£
2021
£
211,678
79,002
61,996
119,217
471,893
211,678
159,424
346,892
306,566
1,024,560
Amounts shown as Current: Amounts owed to Group undertakings are unsecured, interest bearing, have no fixed date
of repayment and are repayable on demand.
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Jersey Oil and Gas plc
Notes to the Company Financial Statements
11. Post balance sheet events
On 19th May 2023 Jersey Oil and Gas PLC (Company) waived the balance owed by Jersey Petroleum
Limited as at 31st March 2023, totalling £97,253,142 by way of a deed of forgiveness.
For all Group related post balance sheet events please see note 22 of the consolidated financial
statements.
79
JJeerrsseeyy OOiill aanndd GGaass ppllcc
Ground Floor
5 St Andrew’s Place
St Helier, Jersey Channel Islands
JE2 3RP
+44(0)1534 858 622