Jersey Oil and Gas plc
Annual Report 2023

Plain-text annual report

Annual Report Year ended 31 December 2023 Jersey Oil and Gas plc CONTENTS Overview Chairman & Chief Executive Officer’s Report Strategic Report Strategic Report Our Assets Financial Review Section 172 Statement Risks Our Governance Board of Directors Corporate Governance Report Environment, Social and Governance Report Directors’ Report Directors’ Responsibilities Audit Committee Report Remuneration Report Independent Auditors’ Report Financial Statements Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cashflow Notes to the Consolidated Financial Statements Company Statement of Financial Position Company Statement of Changes in Equity Notes to the Company Financial Statements 01 04 06 08 10 13 16 18 24 31 33 34 35 40 47 48 49 50 51 73 74 75 Jersey Oil and Gas plc Jersey Oil and Gas is a UK energy company focused on creating shareholder value through the development of oil and gas assets and the execution of accretive transactions. 2023 was a pivotal year for the Company. Having successfully aggregated the Greater Buchan Area (“GBA”) resource base and progressed the development planning, two farm-out transactions were executed, bringing in credible industry partners and the funding required to monetise the area. Ambition Backed by Actions Securing the means and the finance to move the GBA project forward into the development phase of activities has been the key ambition of the Company since taking over sole ownership of the licence area in 2021. The farm-out transactions with NEO Energy (“NEO”) and Serica Energy (“Serica”) do just that and have transformed the outlook for the business. By bringing in leading industry partners, closing out the selection of the GBA development solution and securing a high-quality floating production, storage and offloading vessel (“FPSO”), JOG has secured the path to delivering a material long-term income stream from the Buchan redevelopment project. Importantly, the structure of the farm- out transactions ensure that the Company has secured a series of cash payments, which comfortably finance the on-going operations of the business, and funding for its remaining 20% interest in the Buchan redevelopment project.  Fully funded: The transaction delivers material value and results in the Company having a funded 20% interest in the on-going Buchan redevelopment project  Strong industry partners: NEO (50% interest, Operator) and Serica (30% interest) are major, well-financed UK North Sea oil and gas operators and the Company has created a strong and credible GBA joint venture  Milestone payments: $18 million of the $38 million cash payments attributable to the two GBA farm-outs has been received, with a further $20 million due following approval by the North Sea Transition Authority (“NSTA”) of the Buchan Field Development Plan (“FDP”) and associated regulatory and legal consents  Value creation: Clear path to development sanction and first oil, with JOG's fully funded position meaning the Company is underpinned by the benefit of zero-capex flowing barrels  Future cash generation: Once onstream, JOG will be a non-operated partner entitled to 20% of the production from the Buchan field (formally named “Buchan Horst”)  Low carbon development: Redeployment of an existing FPSO vessel that is planned for future connection to a nearby floating wind power development makes the selected Buchan redevelopment solution the option with the lowest full-cycle carbon footprint Strategic Focus The Company’s vision is centred on successfully growing the business in a smart and sustainable way, developing important domestic energy supply in response to society’s energy needs and creating value for our stakeholders. The business is focused on unlocking the organic value of its existing assets in the GBA, combined with the pursuit of accretive asset acquisitions that bring cash flow, diversity and quality investment opportunities into the portfolio. Such opportunities are thoroughly assessed in terms of their potential strategic fit, being mindful of the quality and unencumbered strengths of our existing portfolio. Solid Outlook The Company is well positioned to deliver on its strategic objectives. With a cash balance following completion of the Serica farm-out in late February 2024 of over £15 million, the business is financially secure and funded for the planned Buchan redevelopment programme. This backdrop provides an attractive springboard from which to realise the full potential and ambitions of the business for delivering long-term shareholder value. CHAIRMAN & CHIEF EXECUTIVE OFFICER’S REPORT Jersey Oil and Gas plc The financial year under review, 2023, was a transformational one for JOG and we were delighted to deliver on the key corporate objectives we had set for creating real shareholder value from our GBA and establishing the path forward for the GBA development project. interests licence longer While the GBA farm-out process than originally took anticipated complete, to throughout it we were mindful of the fundamental requirement to deliver a credible and sustainable result. In short, we were focused on attracting industry partners and agreeing upon the optimal solution, development being one that aligns with the oil and gas industry’s support for the UK’s energy transition and path towards achieving net zero in 2050. right the in, interest Double Farm-out Success In April 2023, we were pleased to announce a farm-out transaction with NEO. NEO acquired a 50% working and operatorship of, both the licences that cover the GBA, which includes the Buchan oil field, the Verbier and several J2 exploration prospects. Following swiftly on from completing the NEO transaction, we were then able to announce a further farm-out of a 30% non-operated working interest in in November 2023. discoveries to Serica licences and the These transactions, executed on identical pro-rata deal terms, deliver material value to JOG, including certain cash milestone payments, funding through to Buchan Field Development Plan (“FDP”) approval and development expenditure carry on the costs included in the approved Buchan FDP (a 1.25 carry ratio). NEO is a major UK North Sea operator 20% a 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 US$8 billion of assets under management. Serica is a leading listed UK oil and gas London company producing more than 40,000 barrels of oil equivalent per day in the North Sea. These transactions serve to unlock the route to monetising gross GBA resources in excess of 100 million barrels of oil equivalent and creating a major new production hub in the Central North Sea. Following completion of the Serica transaction in late February 2024, we have so far received a total of $18 million in cash payments from the farm-outs, with a further $20 million due following and FDP Buchan completion of regulatory consenting process in due course. With Buchan first oil targeted for late 2026, our net 20% carried is working anticipated to generate material cash flow, with an estimated breakeven cost in the initial years of approximately $15/boe. approval the in the field interest the Isles" FPSO. Development Solution Secured A critical component for making the redevelopment planned Buchan project a long-term success was to secure right development solution. In November 2023 we were very pleased to announce the execution of agreements to acquire The the "Western FPSO will be utilised as the production processing facility at the centre of the redevelopment. This high-quality FPSO, which has only been operational since 2017 and is already partly owned by our partner, NEO, is an excellent fit for the GBA. Transfer of the vessel is subject to completion of the necessary handover activities by the existing Operator, Dana Petroleum, and Buchan FDP approval, which is targeted for the second half of 2024. this critical piece of Securing the removes infrastructure to construct new requirement processing which facilities, significantly de-risks the execution phase of the project. The FPSO’s limited existing specification and age mean that the modifications required for the FPSO to meet Buchan’s development plan are relatively modest. These are key factors for minimising the timeline risks associated with the ultimate project execution plan. Importantly, JOG’s 20% cost of acquiring the vessel is also fully carried under the terms of the farm-out agreements and we will benefit from vessel ownership as opposed to expensive vessel leasing, which is often a path taken similar North Sea developments. for the transfer Operational Progress Following of operatorship of the GBA licences to NEO post completion of the initial farm-out transaction, we have been pleased with the pace at which the project has moved forward and the level of on-going collaboration. NEO has formed a high-quality and experienced project team. The draft FDP was submitted to the NSTA in December and the Environmental Statement was submitted to the Offshore Petroleum Regulator for the and Environment Decommissioning (“OPRED”) at the These beginning of 2024. submissions pave for obtaining the necessary regulatory Buchan approvals the redevelopment project the in second half of 2024. the way for In terms of the activities that need to be completed ahead of project sanction, we are pleased to report 1 is and that all the required Front-End Engineering and Design (“FEED”) work the on-going, engineering is progressing to plan. The planned use of shuttle tanker offload for oil export from the FPSO has been endorsed by the NSTA and finalisation of the preferred gas export option is moving forward as and planned. Geotechnical surveys are scheduled the coming in for completion months, with initial vessel the mobilisation scheduled for May 2024. The results of these activities will be used to finalise the subsea and drilling rig contract tendering process and the FPSO inform mooring design. Geophysical In line with the strategy for the future connection of the FPSO to one of the anticipated floating wind power developments in the area, engagement is on-going with the that were awarded companies acreage licencing round conducted by Crown Estate Scotland in 2023. Securing a source of green power feeds into the post start-up electrification plan for the FPSO and does not have an impact on our target date for first oil. INTOG in the Supporting Energy Transition is a The Buchan redevelopment show case example of energy transition in the making. Our unique “R³” development characteristics have been designed to deliver the lowest full-cycle carbon footprint solution achievable, enabling us to produce a vital homegrown energy resource and thereby providing meaningful support for the North Sea energy transition plan. We are Redeveloping an existing and known reservoir to maximise economic We are Re-using production. infrastructure the redeployment of an existing FPSO, and we are modifying the vessel so that it is Ready for electrification, which means that involvement in the exciting our project has opportunity accelerate to into offshore wind investment through projects – Energy Transition Motion. in Throughout JOG’s history, a key part of our strategy has been to identify and evaluate low cost, early- stage entry points into energy investment opportunities with the objective of adding value through maturation. Through our work on the Buchan redevelopment project we important forged relationships with major players in offshore wind development. As a these result, working alongside sector experts, we are evaluating the Jersey Government’s potential interest in creating a utility scale wind farm in the Channel Islands. have This is currently early-stage work with nominal expenditure, utilising our existing offshore engineering and commercial expertise, which has been effectively demonstrated Buchan in advancing redevelopment from inception to where it is now. the project Developing Homegrown Energy The future of the UK North Sea as a single holistic integrated energy hub is hugely exciting and it has the potential to unlock £200 billion of investment this decade. Oil and gas investment remains the key catalyst to make this happen, an approach that countries such as Norway are capitalising on so effectively. long threatening Now more than ever, the North Sea needs cross party-political backing. Unfortunately, domestic oil and gas has been leveraged for short term the political gain, energy security of the UK and damaging term economic growth. The ownership landscape in the North Sea has dramatically from Big Oil shifted away to independents like us and our partners, that are fully invested in UK waters. Whilst it might be to advocate headline grabbing taxing ‘Big Oil’ to pay for green energy, it is having the adverse effect, making domestic energy less Jersey Oil and Gas plc damaging competitive and forcing increased reliance on costly imports. Last year the UK spent more on importing hydrocarbons than it spent on the entire defence budget, a direct consequence of short-term fiscal long-term policy investment homegrown into energy. Whilst demand for oil and remains, domestic energy gas provides the most effective, lowest carbon and provides an economic bridge to the future as new energy infrastructure is created. available option The UK energy sector contributes to significantly the economic the country and strength of generates needed much employment opportunities. The Buchan redevelopment project is a great example. The project has the potential to unlock approximately £900 million of private sector investment, create over 1,000 jobs across the UK and contribute millions in value creation and tax payments into the UK economy. It will also help facilitate billions of pounds of investment into cutting edge, floating offshore wind power technology. this unleash the UK’s potential to power our future and this is the message to our we are communicating politicians. Projects like Our industry as a whole is engaging with the major political parties and in more other key stakeholders detail than ever before, with a clear narrative on the benefits of backing low carbon, homegrown energy resources. We continue to monitor the political landscape closely and we believe that there is a path forward to unlock the considerable benefits that the GBA project can deliver for the UK economy. Financial Strength We ended the 2023 year with cash of £10.5 million (2022: £6.6 million) and this was further boasted by a $6.8 million net in (approximately £5.4 million) receipt of 2 February 2024 upon completion of the Serica farm-out. With JOG now fully carried for its 20% share of both pre-sanction costs and the capital expenditure to be set out in the approved Buchan FDP, the only remaining committed cash expenditure relates to the core running costs of the business. We have moved quickly to right-size the business following the change to being a non-operated partner on the GBA and expect the underlying core cash spend going forward for the business to reduce to under £3 million per year, a reduction of 25% compared to the forecast of £4 million per annum this time last year. A full Financial Review is provided on page 8 of this report. low Summary and Outlook JOG had an exceptional 2023 and we are delighted to have NEO and Serica as our partners on the GBA. The Buchan field is one of the exciting and most largest developments of carbon homegrown energy in the UK North Sea. NEO has hit the ground running with a first-class project team in place and is progressing the pre-sanction engineering activities at pace. Having submitted the draft FDP and Environmental Statement to the regulators, we continue to make good operational progress on moving the project towards the target of regulatory approval later this year. As always, we are very grateful to our loyal shareholders who have backed us to deliver on the key Jersey Oil and Gas plc We objectives we have had for the business for some time and we were delighted to achieve such key objectives over the course of last look year. to set of the next completing milestones that will take us closer to unlocking the full value of the business and move us into a phase of substantial cash flow generation. forward Les Thomas, Non-Executive Chairman Andrew Benitz, Chief Executive Officer 10 May2024 3 STRATEGIC REPORT Our vision is to become a highly profitable UK independent oil and gas company through successfully growing the business in a smart and sustainable developing way, important domestic energy supply in response to society's energy needs and creating value for all our stakeholders. Business Review & Future Activities The principal activity of the Company is that of an upstream oil and gas business in the United Kingdom. JOG is a public limited company incorporated in England and Wales (Company number 07503957) and is quoted on the Alternative Investment Market the London Stock (AIM) of Exchange under the ticker AIM:JOG. The Company is required by the Companies Act 2006 to set out in this report a review of the business during the year ended 31 December 2023 and the position of the Company at the end of the year, as well as the principal risks and The uncertainties it information these that requirements, including discussion of future and in the developments, is set out Chairman and Chief Executive Officer’s the Strategic Report. the business faces. fulfils report and joint Business Strategy We are focused on building a resilient business, able to deliver on our value-led growth strategy with the aim of generating material long term returns for our shareholders. Our strategy is focused on unlocking the organic value of our existing assets in the GBA, combined with the pursuit of potential accretive asset acquisitions that bring cash quality flow, investment opportunities into the portfolio. diversity and Central to our strategy is identifying and stewarding the right assets, where we can add value. Our key strategic priorities set out how we will achieve this, namely:  Leveraging the value of our core GBA assets the  Capitalising on team’s experience and track record of successfully developing and growing energy businesses  Engaging in strategic M&A  Maintaining a prudent and disciplined financial structure. has Company History & Growth The grown organically and through strategic transactions to become one of the highest quality small-cap oil and gas companies quoted on the AIM market in London. The company was formed in 2014 via a c.£500k combination with London quoted company Trap Oil Limited in 2015. We recapitalised the business, refocused the asset portfolio on the core UK North Sea licence area we have today and established an exciting and fully funded position in one of the UK’s most material oil development projects. The delivery of this strategic plan has been made possible by funding and industry attracting investment capital our into expenditure programmes, along with prudent cost management, resulting in only £43 million of equity being raised since inception. With the in redevelopment project progress for our core asset, the Buchan oil field, which lies at the heart of the GBA, we are poised to potentially unlock multiples of this value for our shareholders. The GBA is estimated to contain gross discovered and recoverable oil volumes of over 100 million barrels Jersey Oil and Gas plc across the Buchan field and the Verbier and J2 discoveries, along additional with exploration upside opportunities. significant Greater Buchan Area 2023 was a pivotal year for the Having successfully Company. aggregated the GBA resource base over recent years and progressed the development planning required to monetise the area, the farm-out transactions required to bring in credible industry partners and funding were executed during the year. for entering In exchange into agreements with NEO and Serica to divest an aggregate 80% interest in the two licences that comprise the GBA, the Company receives:  A carry for JOG’s 20% share of the estimated $25 million cost to take the Buchan field through to FDP approval  A 20% carry of the Buchan field development costs, as approved in the FDP; equivalent to a 1.25 carry ratio – estimated capital expenditure of £850-950 million (100%)  $3.2 million cash on completion of the transactions  $15 million cash payment for the GBA of finalisation solution development associated with acquisition of the Western Isles FPSO  $20 million cash payment following approval by the NSTA of the Buchan FDP and receipt of associated regulatory and legal consents  $8 million cash payment on each FDP approval by the NSTA in respect of the J2 and Verbier oil discoveries Having completed the transactions with NEO in June 2023 and Serica in February 2024, along with finalising 4 Jersey Oil and Gas plc the development securing the acquisition of the solution and Western Isles FPSO, the Company has received a total of $18 million of the agreed abovementioned milestone cash payments so far. Growth Through Acquisitions Our primary focus remains on meeting the next key milestone for the GBA, being FDP approval for the Buchan redevelopment project, and unlocking the full value of the wider area. At the same time we continue to review and consider potential asset acquisition opportunities that our could bring cash flow, diversity and investment opportunities quality Such portfolio. into opportunities thoroughly are assessed in terms of the potential strategic fit, being mindful of the quality unencumbered strengths of our existing portfolio. and 5 OUR ASSETS the assets JOG has constructed a high-quality UK North Sea licence portfolio focused on the GBA. At the heart of our planned is redevelopment of the Buchan oil field “Buchan Horst”), for which first production is targeted in late 2026.  Quality portfolio: (formally named the GBA consists of two licences, P2498 and P2170, which contain the Buchan redevelopment project, the J2 and Verbier oil discoveries and drill-ready exploration prospects several  Strategic focus: JOG established the GBA by consolidating the licence interests and taking sole ownership of the portfolio, thereby providing control and flexibility to shape the optimal way to monetisation forward and route  Material resource base: in aggregate the GBA licences are estimated to contain gross discovered oil and gas resources of over 100 MMboe  Route to monetisation: JOG completed pivotal transactions in 2023 to secure two high- quality industry partners and funding to develop the GBA  Valuable equity interest: JOG owns a 20% non-operated interest in the GBA, with funding to Buchan first oil provided by the GBA partners following its farm-out transactions completed in 2023  Strong Industry Partners: NEO (50% interest, Operator) and Serica (30% interest) are leading independent gas oil operators, with the companies being the fifth and ninth largest producers in the UK North Sea respectively and Greater Buchan Area The GBA is well positioned to deliver material long term income from a high-quality development solution that is aligned with the UK’s energy transition strategy.  High-quality infrastructure : The GBA is to be developed using the redeployment of the ‘Western production, Isles’ storage and offloading vessel (FPSO), a vessel that has only been in operation in the UK North Sea since 2017 floating  ‘Hub and Spoke’ solution: The FPSO will be deployed as the central oil and gas processing facility for the area, with initial production coming from Buchan followed by the planned tieback of the other GBA feeder fields  Low carbon development: Combining re-use of an existing FPSO, made electrification- ready for connection to one of the planned nearby floating power wind offshore it the developments, makes lowest carbon full-cycle footprint solution for the area is of new involves The plan Central to the creation of the GBA production the hub redevelopment of the Buchan oil field. the subsea installation production gathering infrastructure tied back to the Isles’ FPSO. Agreements have been executed for acquisition of the vessel, with handover of the FPSO scheduled following to occur approval of the Buchan FDP. ‘Western to The Buchan field is to be produced through up five gas-lifted production wells, supported by two water injection wells. Oil will be offloaded from the FPSO via shuttle tanker and excess gas will be exported via a new gas export pipeline. The FPSO will be modified to be ‘electrification-ready’ prior to redeployment to the field, such that it can be connected to one of the floating anticipated third-party Jersey Oil and Gas plc located wind power developments that are intended to be in close proximity to the GBA following the Innovation and Targeted Oil & Gas (INTOG) licence awards made by Crown Estate Scotland in 2023. from is Approval of the Buchan FDP scheduled for the second half of 2024, with first production targeted for late 2026. Following start-up of Buchan, production subsequent development activities are expected to involve the tie-back of the J2 and Verbier oil discoveries that lie within the GBA licence area and the potential for regional third- party discoveries to be tied back to the FPSO. industry’s Buchan Redevelopment The Buchan field is considered one of the largest development projects in the UK North Sea and forms the central element of creating a production hub that is in-sync with the decarbonisation strategy.  Material resources: the Buchan field is estimated to contain gross discovered oil and gas resources of approximately 70 MMboe (95% oil), representing the third largest development in the UK North Sea  Well understood reservoir: Buchan was in production for 36 years, under the ownership of BP, Talisman and Repsol- Sinopec. field was The prematurely shut-in during 2017 issues with the host due to processing leaving significant untapped potential that is being targeted by the field redevelopment plan facilities,  Optimised subsurface plan: Deviated production wells are to be drilled in the crest of the latest 3D structure using the seismic, with reservoir pressure support provided by water 6 injection, recovery from the field to maximise oil The P2498 Buchan licence was awarded to JOG in 2019, as part of a wider area development strategy for the GBA. The Buchan oil field lies in approximately 110 metres of water and is located in UKCS blocks 20/05a and 21/01a, 150km northeast of Aberdeen in the UK North Sea. The field was discovered by well 21/01-1 in 1974, which encountered a ~600 metre oil column in over- pressured, fractured, sandstones of the Upper Devonian to Lower Carboniferous Buchan Formation. The field comprises a horst-like, tilted, and eroded fault block with four-way dip closure. Following appraisal drilling to delineate the field, Buchan was bought into production by BP plc in 1981 with nine development wells and had initial peak oil production of approximately 55 kbbl/d. Over a period of 36 years the Buchan field produced 148 MMbbl of 33 °API sweet crude oil, together with 37 Bscf of associated gas. The field ceased production in 2017 due to the certification limitations of the Buchan Alpha floating production vessel the processing facility for the field. At the time the field was shut-in, only around 29% of the estimated mid case oil in place had been produced at a water-cut of approximately 50%. that was used as termination of The premature production subsequent and relicensing of the acreage to JOG, has provided the opportunity to implement an optimised and fit-for- purpose plan designed to maximise economic recovery and exploit the significant potential of the field. redevelopment the springboard GBA Feeder Fields The Buchan redevelopment plan provides for monetising the wider GBA portfolio.  FPSO feeder fields: The Verbier & J2 oil discoveries contain estimated mid case gross resources of over 40 MMboe  Phased lie development plan: within Discoveries approximately 12km of the GBA infrastructure planned central for field Buchan the redevelopment and can be tied back to the FPSO to extend GBA peak production rates  Potential exploration upside: The drill-ready Cortina, Wengen and Verbier Deep exploration prospects all lie within the GBA licences  Potential third party tie-backs: The opportunity exists to secure potential tariff revenue from the tie-back of third party discoveries that lie in the vicinity of the GBA processing Verbier Discovery The “Verbier” oil discovery is located in Blocks 20/5b and 21/1d in licence P2170. Having completed farm- outs to Equinor and CIECO in 2016, an exploration well, followed by an the appraisal well, delineated JOG Verbier oil discovery. subsequently the consolidated licence interests to obtain sole control of P2170 and established the discovery as part of its wider GBA development strategy. The Verbier discovery, drilled by well 20/05b-13Z, is considered to be an extension of the Kimmeridge Clay Burns Sandstone J2 discovery and is located some 3-4 km due west of well 20/05a-10Y. The Upper Jurassic sequence is relatively thin over the upthrown Buchan and Jersey Oil and Gas plc Scotney highs but thickens rapidly into the North Buchan Trough to the north and east. This stratigraphic interval has been tested by well 20/05a-10Y and has also proved to reservoir contain good quality within the Kimmeridge Clay Formation in wells 20/05b-13 and 13Z drilled in 2017 by Equinor. J2 Discovery The “J2” oil discovery is located in the P2498 Buchan licence area (Blocks 20/05a and 21/01a) and was drilled by well 20/5a-10Y in 2006. The well was drilled as a deviated well to test the westerly culmination of a 3-way dip and fault closed structure mapped at Late Jurassic, Sgiath Formation level and located on a structural terrace downthrown to the north of the Buchan field. The well encountered hydrocarbons within the objective shallow marine Sgiath Formation Sandstone that flowed at 2,850 bopd plus 1.2 mmscfd (37 degree API, GOR 426 scf/bbl) on test. The well also encountered of excellent quality, deep marine, intra Kimmeridge Clay Formation, Burns Sandstone that flowed at 4.8 kbbl/d plus 2.6 mmscfd (39 degree API, GOR 500 scf/bbl) on test. JOG estimates that the J2 oil field contains approximately 20 MMboe of mean case recoverable oil volumes across the two reservoirs. ~16 metres 7 FINANCIAL REVIEW As a consequence of the GBA farm- the Company materially outs, its financial outlook transformed The transactions during 2023. unlocked receipt of cash the milestone payments, which means the business is well covered for its running costs prior to the start-up of planned GBA production. Critically, the deals also provided the finance required for the Company’s retained the Buchan in 20% redevelopment project. This means that the business has secured a path to monetising the GBA without recourse to either shareholders or the debt markets. This uniquely positions the Company amongst its UK listed peers. interest Cash Resources and Short-Term Investments The Group ended 2023 in a comfortable position, with cash and £10.5m deposits term (2022:£6.6m) and no debt. of of Statement Consolidated Comprehensive Income The Group had no trading revenues in 2023. Administrative expenses increased from £3.2m in 2022 to £5.7m while Income increased 39% from the prior year to £0.1m. interest fees incurred Expensed Costs The year was defined by the successful double farm-out of the GBA licences, which resulted in the Group incurring associated external consultancy fees. The deal related in 2023 external totalled £0.8m (2022:nil) and were in respect of M&A, tax and legal services. The transactions also crystallised bonus payments to staff and Executives of £0.9m (2022:nil). In addition, there was non-cash share-based charges of £1.6m during the year (2022:£1.2m). The core cash overheads of the business absent the above deal- Jersey Oil and Gas plc specific and non-cash costs were £2.4m (2022:£2.0m) and £2.3m (2022: £1.9m) net of interest. Capitalised Costs Costs directly associated with the GBA development project continue to be capitalised and amounted to £1.1 million in 2023, net of partner recharges. (2022: £2.9 million). These costs were a combination of of license engineering studies and manpower costs required to select the optimal and development to approval regulatory advance through submission of a Concept Select Report to the NSTA. completion solution fees, During the year, £0.4m of costs were recovered as a result of NEO becoming a GBA partner, effective 1 April 2023, and Operatorship subsequently transferring in June 2024. Recovery in the second half of the year mainly related to secondment of JOG personnel to the NEO project team. Simplified Summary of 2024 (refer page 48-50 for Full Audited Group Financial Statements) Cash Movement in Year Cash & Deposits 1 Jan 2023 NEO Farm-Out - Receipt - Fees / Bonuses Overheads (incl. interest) - Expensed - Capitalised Cash & Deposits 31 Dec 2023 Loss in Year Overheads (incl. interest) NEO Farm-Out Fees / Bonuses Non-Cash - Share Option Charges Balance Sheet (Intangible Assets) Cost Capitalised NEO Farm-Out Receipts £ million 6.6 9.1 • -1.7 • -2.3 • -1.2 • 10.5 £ million -2.3 • -1.7 • -1.6 -5.6 £ million 1.2 • -9.1 • -7.9 8 Underlying Cash Costs The combined core cash overhead and capital expenditure spend during the year was £3.5m. This compares to the £4.0m forecast in last year’s financial statements. the With of GBA transfer operatorship and completion of the farm-outs the Group has moved swiftly to prune underlying forecast cash costs further to under £3m per annum. the Group’s Cash Receipts from Farm-outs As a result of the NEO farm-out, two payments were received during the year totalling £9.1m. In accordance farm-out with accounting policy these payments were credited against the book value of the GBA (exploration and evaluation asset) carried on the Consolidate statement of financial position. Completion of the Serica farm-out in Feb 2024 resulted in a further cash receipt, net of a £0.5m cost carry reimbursement pass- through to NEO, of £5.5 m. and (50%) concept Key Performance Indicators The Group’s Key Performance Indicators (“KPIs”) in 2023 were dominated by the key driver for the business – the farm-out of the GBA progress licences towards FDP through finalising the development selection process (30%) These were met through the farm-outs agreed with NEO and Serica and obtaining alignment on the concept select captured FDP. Additionally, there was a financial tightly related KPI which controlled cash expenditure (20%) and non-financial KPIs which relate to Health, Safety, Security and the Environment (“HSSE”) (10%). These were delivered through the absence of any HSSE incidents and the continued delivery of core cost cost through reduction management reduced manning. the draft tight and to in In summary, on all fronts the KPI’s were fully achieved, resulting in a highly successful year. Jersey Oil and Gas plc Going forward the central KPI is securing FDP approval for the Buchan redevelopment project. The importance cost management and safe, ESG- conscious operations are also reflected in the 2024 KPI’s. prudent of redevelopment of Outlook Having delivered a full carry on both pre-sanction costs and the capital expenditure to be set out in the approved Buchan FDP, the Group has secured full funding for the the planned Buchan field. In addition, the end of 2023 cash position of £10.5m has been materially increased by the receipt upon £5.5m net cash completion of the Serica farm-out in February 2024. This sits aside a where right-sized spend going underlying forward has been reduced to under £3m per year. As a consequence of these substantial advances, the Group entered 2024 in a financially robust position. business cash Graham Forbes Chief Financial Officer 10 May 2024 9 Jersey Oil and Gas plc SECTION 172 STATEMENT The Directors are required by law to act in a way that promotes the success of the Company for the benefit of shareholders as a whole. In so doing they must also have regard to wider expectations of responsible business behaviour and have regard to the Company’s stakeholders and the matters set out in Section 172(1) of the Companies Act 2006. The Board fully recognises the need to balance the contrasting and, at times, conflicting interests of various stakeholder groups, whilst focusing on the Company’s purpose, values and strategic priorities. Such engagement underpins the governance framework embedded throughout our business and helps to ensure we maintain the highest standards of business conduct. During the year the Directors have actively engaged with a number of our stakeholders to build understanding of their position and what matters to them. This understanding is factored into the Board’s decision-making process. In relation to the decisions made by the Board during the year ended 31 December 2023, the Board consider, both individually and together, that they have acted in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its shareholders as a whole, having regard to its stakeholders and the matters set out in Section 172(1) of the Companies Act 2006. Set out below are examples of the Board’s key decisions made during the year, which illustrate how the Directors have fulfilled their duties. Decision NEO Energy Farm-Out Transaction  Context & Link to Strategy In April 2023, the Company entered into a farm-out agreement with NEO to divest a 50% interest in, and operatorship of, the GBA licences in return for a number of cash milestone payments and a carry for certain elements of JOG’s retained 50% interest in the Buchan field redevelopment capital expenditure programme.  Stakeholders Investors, Employees, Regulator  Process The Board considered the terms of the agreement and decided that it was in the best long- term interest of the Company based on a number of factors, including:  The transaction was key to delivering upon the Company’s core strategic objective of unlocking the value of the GBA, by establishing a path forward for the development of the Buchan field and the associated financing requirements.  The transaction provided the Company with the critical first step required to bring in credible and financially robust GBA joint venture partners.  Through the transfer of operatorship to NEO Energy, a technically strong partner capable of executing the required development programme was secured.  Both NEO and JOG were aligned on the optimal development solution for the GBA and the strategy required to secure the necessary infrastructure.  The transaction secured the necessary financing to take forward the Buchan redevelopment project to regulatory sanction and on to first production, as well as delivering cash payments to fund the running of the business in the medium to long term.  The execution of this financially prudent and value accretive transaction creates value for shareholders and job security, while ensuring regulatory compliance and the generation of additional potential opportunities for the business. 10 Jersey Oil and Gas plc Decision Serica Energy Farm-Out Transaction  Context & Link to Strategy In November 2023, the Company entered into a further farm-out agreement with Serica to divest a 30% interest in the GBA licences in return for a number of cash milestone payments and a carry for certain elements of JOG’s retained 20% interest in the Buchan field redevelopment capital expenditure programme.  Stakeholders Investors, Partners, Employees, Regulator  Process The Board considered the terms of the agreement and decided that it was in the best long- term interest of the Company based on a number of factors, including:  Delivering an overall solution for the Company’s funding requirements for retaining a material 20% interest in the GBA licences and in particular, the Buchan redevelopment project.  By augmenting the GBA joint venture with the addition of Serica Energy, the transaction further strengthened the technical and financial robustness of the partnership.  The transaction further enhanced the financial strength of the Company by unlocking additional cash milestone payments.  The transaction removes the need for the business to raise additional equity to fund its share of the Buchan field redevelopment programme.  By securing a complete farm-out solution for the GBA, the transaction is fully aligned with the Company’s stakeholder objectives. Engaging with our stakeholders is an integral part of how we operate as a business. This engagement enables us to continue building the business and maintain a motivated workforce, dependable supply chains, close relationships with Government Regulators, while providing good returns for our shareholders and a positive social impact on our local communities. We set out below our key stakeholder groups and how we engage with them. Human Resources  Employees  Contractors  Advisers Shareholders  Shareholder Communication Our staff and contractors are key to delivering on 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. We are proud of what we have built and achieved and work to ensure the business applies good governance practices, based on strong principles and leadership. We value all employees and we ensure that our communications are inclusive, providing full transparency across the business. As a Company, we are focused on sustaining a positive business culture and continue to promote our values and behaviours through performance reviews and communication. It is important that our shareholders understand our strategic priorities and ambitions and their views help inform our decision-making. Communication and engagement are critical to this aim. We held our last Annual General Meeting in June 2023. Our financial results are announced twice a year, and regulatory news announcements provide communication to our shareholders throughout the year, along with our Annual Report which is designed to help investors and other stakeholders understand our business and its performance. In conjunction with our announcements our Chief Executive Officer and other members of the Executive Team meet regularly with, and update, our investors. Substantial work has gone into revamping the Company’s website in order to provide useful information on our operations and investment outlook. The new website is now live. 11 Jersey Oil and Gas plc Suppliers  Procurement and Contracting The Company’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 governance, risk management and prompt payment protocols. Our effort is to always be 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, in order to make sure they are consistent with our values and compliance requirements. We keep our suppliers informed of our business performance through public disclosures and communication where appropriate. Joint Venture Partners  NEO Energy & Serica Energy The success of the GBA development will be closely linked to successful engagement and communication between the GBA joint venture partners. Regular engagement takes place at all levels within the three organisations, through both regular dialogue and written communication. Formal meetings where all three partners are present include Steering and Technical committee meetings, which are held on a monthly basis. Community  Corporate Citizenship Government  Industry Regulators We aim to be a contributor to economic growth by providing investment opportunities and creating jobs. 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 disabilities and/or autism. As a result of a recent office downsizing, we donated surplus office equipment to help meet the needs of a local school in London. We also sponsor the Jersey Oil and gas curling team, who play in the Aberdeen Finance League. Regulators are key external stakeholders across various aspects of our business and particularly in activities that require statutory permits or consents. Briefings and meetings with the various regulators occur at regular intervals, typically corresponding to entering a new phase of activity or key project phases on the GBA, to provide updates on schedules, a look-ahead on work to be undertaken and to advise of any forthcoming regulatory submissions or notifications. The Company maintains an active dialogue with its principal regulator, the NSTA. Throughout the year under review and during the period up to the publication of the Annual Report, we discussed the Company’s progress on developing and farming out the GBA and ultimately obtained approval for both the GBA farm-outs, approval for the transfer of licence Operatorship to NEO and agreement on the Buchan development concept; all of which culminating in assisting NEO with the submission of the draft Buchan FDP in late 2023. Throughout the period we were also actively engaged with the owners of nearby infrastructure and future developments. 12 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 must be carefully balanced to maximise the chances of providing attractive returns for our shareholders. These risks are managed with the oversight of the Board. A risk register is reviewed on a routine basis with the primary risks being presented and discussed 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  Material changes in Governmental approach towards continued hydrocarbon exploration, development and production  Regulatory obligations  Judicial review  Adverse taxation and legislative changes  Material oil price movements The primary risk to the Group, having secured the GBA farm-outs, is securing sanction of the Buchan redevelopment project – both from our industry regulators, the NSTA and our joint venture partners. 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 the Department for Energy Security and Net Zero / OPRED. However political uncertainty, due to an upcoming UK general election, may result in a wide disparity in the resultant government approach and attitude towards approval of future UK hydrocarbon development projects. 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 February 2025 and August 2026 respectively. Retention of each licence requires the relevant FDPs 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. Joint Venture sanction (Final Investment Decision, “FID” approval) of the Buchan redevelopment project is dependent on successful completion of the ongoing FEED activities and finalisation of the subsurface modelling work. This will allow an FID decision to be taken by the joint venture partners based on the projected budget and perceived financial prospects for the project set against the anticipated risks. The major external risk factors which are likely to influence project sanction are long term views on oil prices and the anticipated attractiveness and stability of the UK’s fiscal regime for the oil and gas sector. Widely diverging taxation rules for the UK offshore sector have been suggested by the various political parties in the run up to the General Election, thereby introducing risk and uncertainty. Post-election however, the underlying economic logic of seeking to maximise UK jobs and tax revenues by supporting the sector while hydrocarbon demand remains, is anticipated to prevail. Approval of the FDP for the redevelopment of the Buchan field, along with partner sanction, is key to achieving future cash flows from the field. Obtaining the necessary approvals cannot be guaranteed, although the Company will continue to work closely with the various regulatory authorities and its joint venture partners to ensure a robust and socially responsible development plan is approved and developed for the field. External challenges to NSTA’s approval of any FDP are possible, which may result in judicial review, potentially resulting in substantial delays to both the project and receipt of the remaining $20m of farm-out payments from NEO and Serica. 13 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’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. The Group may expand its portfolio through the acquisition of growth assets in the future to provide asset diversification. This could result in the Group facing additional risks. The market price of oil has seen relative stability over the last 18 months broadly trading within the $70 –90 range. However, commodity prices can be volatile and are outwith the control of the Group. Financial Risks  Availability of industry funding and / or access to capital markets By securing the GBA farm-out deals with two strong industry partners the Group has addressed the key near term funding risks identified in last year’s Annual Report.  Oil and gas price movements  Long term cost overruns and inflation  Regulatory and compliance risks In addition to substantial cash payments, the Group is carried for all pre- sanction costs associated with its remaining 20% equity holding in the Buchan redevelopment project. Furthermore, the Group is also fully carried through the work programme for the Buchan redevelopment project included in the FDP budget approved by the joint venture partners and the NSTA. It should be noted that the Group is exposed to the risk of potential cost overruns in the event that the approved development budget is exceeded. This is mitigated by agreement amongst the joint venture partners on actions regarding contracting strategy to lock in costs and the provision of appropriate contingencies. Close relationships are maintained with banks and the investor community as the Group may require additional capital to facilitate potential future acquisitions or to meet project development cost over-runs. While no needs currently exist the ability to flexibly access such funding is invaluable. We are also regularly in talks with various third parties and shareholders, regarding the potential provision of capital, with which to execute any future acquisitions. Based on current budgets and forecasts, the Group is well-funded to pursue its 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 expects to be able to operate during 2024 and beyond within its existing cash reserves based on its current work programme, subject to there not being any material unforeseen 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, nevertheless the underlying medium/long term strength of oil prices can impact on development sanction decisions and the ability to raise funds, if required, as it can impact the value of its 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 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. 14 Operational Risks  Co-venturer and other counterparty risk  Loss of key employees  Delay and cost overruns, including weather related delays  HSSE incidents  Failure of third-party services  Inherent geological risks and uncertainties Jersey Oil and Gas plc During the year the operational risks of the business have evolved substantially as a result of the GBA farm-outs to NEO and Serica. The introduction of these experienced and knowledgeable partners to the GBA licences, and the inherent risk diversification resulting from working in a joint venture partnership, have been positive factors in mitigation of operational risk. The GBA development is now being operated by an established, experienced and diverse team with the capabilities, skills and knowledge, to tackle many of the operational risks associated with current and planned activities including HSSE and the management of third-party contractors and service suppliers. With the farm-outs, and transfer of Operatorship in the GBA to NEO, the Group is exposed to the usual range of co-venturer risks, including the ability of co- venturers to finance their own share of asset expenditures. Such risks should however be mitigated by the scale and capabilities of both new co-venturers. 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 it is leanly but appropriately staffed and that employees are working under contracts that provide the Group with a degree of protection, should people leave its employ. Retention of key staff is aided by the award of share options and a bonus scheme 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. Full operational risk cover is provided as required through the Group’s insurance brokers. The Group monitors and evaluates all aspects of HSSE performance including those of the GBA Operator 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, and oversee those of its asset operators, to ensure they are carried out 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. 15 BOARD OF DIRECTORS Jersey Oil and Gas plc Les Thomas Non-Executive Chairman Andrew Benitz Chief Executive Officer Graham Forbes Chief Financial Officer Les Thomas has over 40 years’ in the oil and gas experience in various subsurface, industry engineering, operational and senior management positions. He has been instrumental in growing large a number of small and publicly listed businesses, through phases of organic growth and via asset acquisitions and corporate He has also transactions. delivered upon the successful sale and exit of various assets and companies. its Les was formerly the CEO of Ithaca Energy from 2013 to 2020 and previously served for eight years on the Board of John Wood Group plc, as the Chief Executive of Facilities Production 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. Les is an independent director of Repsol Resources UK Limited, which has a significant UK North Sea portfolio, a Non-Executive Director of privately owned Denholm Energy Services Ltd, as well as serving as a Non-Executive Director of Avingtrans Plc, an AIM and engineering quoted manufacturing business. Les has a BSc (1st class hons) in Civil Engineering and a master’s degree in petroleum engineering, both from Heriot Watt University in Edinburgh. 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 Andrew has management. significant experience in leading and growing ambitious and focused oil and gas businesses listed and has a wealth of company experience. Prior to founding Jersey Oil and Gas, Andrew was CEO of Longreach Oil and Gas Ltd, a TSX-V quoted company. He joined Longreach in 2009 as Chief Operating Officer when it was a company and small private oversaw the company’s growth, by building a significant portfolio of oil and gas assets in Morocco. Prior to his move into 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 and equity- related financings. Andrew is a Non-Executive Director of Kalahari Copper Ltd, an African copper exploration business and a founder and Director of Titan Properties SL, a real estate business in Spain. Andrew has a BSc (Honours) in Commerce Edinburgh from University. Graham Forbes is a Chartered Accountant with over 20 years’ in the oil and gas experience industry. Graham has a wealth of experience of managing and financing growing private and publicly listed oil and gas companies, along with significant M&A experience. both Prior to joining Jersey Oil & Gas in 2021, Graham was the CFO of Ithaca Energy from 2010 to 2020. During this period, Graham was instrumental in transforming the a major company into operator independent UKCS organic through 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 sale Ithaca subsequent delisting of Energy. billion of operational Graham qualified as a Chartered Accountant at PricewaterhouseCoopers before moving to ExxonMobil, where for over five years he worked on a variety and acquisition-based projects. Prior to his move to Ithaca Energy, Graham joined First Oil Group in 2002 where, as Finance Director and then Executive Director, he helped develop the business into the UK’s then largest privately owned E&P company. Graham has a MA(Hons) in Economics with Accountancy from Aberdeen University. 16 Jersey Oil and Gas plc Frank Moxon Senior Independent Director Marcus Stanton Non-Executive Director a as Frank Moxon has nearly 35 years’ experience corporate financier and financial adviser to companies, ranging from start- ups to businesses over £3 billion in size, in a wide range of industry sectors. For the last 26 years, he has specialised in the oil & gas and mining sectors, where he has successfully growth- focused companies on financial structuring, equity and debt capital and M&A transactions across a variety of different strategic contexts and geographic locations. He played a key role in facilitating the reverse takeover the Company to its initial oil & gas asset portfolio. introduced raisings advised that Frank has held several senior management roles within the financial services industry and, in addition to having been Senior Independent Director at Cove Energy Plc, has been a director of various oil & gas and mining in London, companies listed Australia and Canada. He is currently also President of the East of England Co-operative Society. Frank has a BSc in Economics and is an Honorary Chartered Fellow Institute for of the Chartered Securities & Investment, a Fellow of the Energy Institute and of the Institute of Materials, Minerals & Mining and a member of The Geoscience Energy Society of Great Britain. of AIM 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 number quoted 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. Through these various Board positions, Marcus has been in providing strategic guidance on all of the many complex aspects of developing and financing growing publicly companies operating across the oil and gas sector. involved listed roles Marcus qualified as a Chartered Accountant at Arthur Andersen, where he worked in the oil and gas division. His previously held include Chief banking Operating 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. Marcus is a Fellow of the Institute of Chartered Accountants in England and Wales and a Chartered the Fellow Chartered Institute for Securities and Marcus graduated from Oriel College, Oxford. Investment. of 17 Jersey Oil and Gas plc CORPORATE GOVERNANCE REPORT Jersey Oil and Gas is committed to maintaining a high standard of corporate governance and believes that effective governance is essential to its success As Chairman of the Board it is my responsibility to ensure that appropriate policies and procedures are in place and operate efficiently. The Board of Directors of Jersey Oil and Gas believes that a sound corporate governance policy, involving a transparent set of procedures and practices, is an essential ingredient to the Company’s success both in the medium and long term. The application of this policy enables key decisions to be made by the Board as a whole, and for the Company to function in a manner that considers all stakeholders, including employees, suppliers and business partners. The Board of Directors has overall responsibility for setting the Company’s strategic aims, defining the business plan, strategy and managing the financial and operational resources of the business. The delivery and implementation of the business plan and strategy resides with the Chief Executive Officer and the executive team. At the current stage of the Company’s development, the Board believes it appropriate to work in line with the Corporate Governance Code prepared by the Quoted Companies Alliance. The code is designed for growing companies and provides an effective and proportionate governance framework that is reflective of our Company’s culture and values. Corporate Governance Framework The Quoted Companies Alliance (QCA) Code requires the Company to apply the ten principles of corporate governance as set out below and to publish related disclosures in the Annual Report, on the corporate governance section of the website: www.jerseyoilandgas.com, or a combination of the two. Jersey Oil and Gas has followed the QCA Code recommendations and is pleased to set out the information below in relation to all the principles. 1. Business Strategy Jersey Oil and Gas is a UK energy focused on creating company shareholder value the development of oil and gas assets and the execution of accretive transactions. through The strategy of the business is focused on unlocking the organic value of our existing assets in the GBA, combined with the pursuit of potential acquisitions that bring cash flow, diversity, and quality investment opportunities into the portfolio. Central to the strategy is identifying and stewarding the right assets, where the Company can add value. The key strategic priorities for achieving this involve:  Leveraging the value of our core GBA assets the  Capitalising on team’s experience and track record of successfully developing and growing oil and gas businesses  Engaging in strategic M&A  Maintaining a prudent and disciplined financial structure risks and on Information uncertainties that may represent challenges to the execution of the Company’s strategy and business model and how such risks and uncertainties are managed by the Company are set out in the Risks section of this Annual Report. 2. Shareholder Communication The Board considers that good communication with shareholders, based on the mutual understanding In is of objectives, addition to the publication of the Company’s Annual and Interim reports, there is regular dialogue important. between the Board (led by the Chief Executive Officer) and shareholders, as well as the issuance of the required public announcements. The Chief Executive Officer and the Chief Finance Officer give regular presentations to investors, including one-to-one meetings with major shareholders during the year. and as well and as An up-to-date information flow is also maintained on the Company’s website, which contains all press financial announcements investor reports operational presentations the Company’s information on activities. also The 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. The Board is kept informed of the views of major shareholders by Board 18 briefings from the Executive the Company’s Directors and brokers. Analyses of the share register periodically also circulated to the Board, together with updates from analysts. are the execution of achieve the Company’s strategic objectives and business model. These controls include Board approval for all policies, procedures, and significant projects. the 3. Stakeholder Responsibilities The Board takes an active role in environmental, addressing social and governance aspects of the business, with the Company’s led by operating activities the principles of the UN Global Compact. and small the Company It is well recognised that the long- term success of the Company is reliant upon the efforts of the employees of the Company and its contractors, suppliers, regulators and other stakeholders. As a inclusive relatively organisation, is readily aware of any employee practices that are inconsistent with its values and plans. The Company nevertheless has in place many of the procedures found larger companies, together with a wealth in of experience on the Board related addressing matters. employee in to The Board firmly believes that high Health, Safety, Security and the Environment (HSSE) standards are crucial Company’s the operational success. All Directors, officers, managers, employees and contractors are required to comply with is reviewed periodically by the Board and, if necessary, updated and re- issued. Our overall approach to stakeholder social responsibilities, is covered in further detail in the Sustainability Report contained in this Annual report. its HSSE Policy, which and system of 4. Risk Management The Board is responsible for the internal Company’s its controls and effectiveness. The is designed to manage, rather than eliminate, the risk of failure to reviewing system for The Board monitors financial controls through: a) a budgeting and planning process, requiring approval by the Board; b) the receipt of monthly management reports covering the Company’s financial internal controls as affairs; c) the Company’s in articulated Financial Reporting Procedures; and d) a review by the Audit Committee of the draft annual and interim reports, and the Company’s annual budget, being before recommended to the Board. As regards non-financial risks and opportunities, and given the current size of the Company, it is considered preferable for this part of the Company’s risk management to be the responsibility of the Board as a whole, rather than a subcommittee. As part of this process, a company- wide Risk Register is maintained and discussed at Board meetings. 5. Board Management The Board is the main decision- making body of the Company 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 All the Executive Directors are employed under service contracts and work full time for the Company. The Non-Executive Directors work part time, the extent of which varies Jersey Oil and Gas plc are independent depending on the ongoing activities of the business. The Board considers that all three of the Non-Executive Directors in character and judgement. All three have shareholdings (acquired with their own funds) and a limited number of share options (granted as part of the annual remuneration the process and approved by Board), and the Board considers that this does not impair their judgement and aligns them well with the interests of shareholders. and its Committees The Board and receive appropriate and timely 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. In addition, at the end of each month the Chief Executive Officer briefs the Non-Executive Directors on current developments. is necessary time as The Board considers and aspires to achieve increased diversity where possible when making new appointments, whilst recognising the practical constraints of a small, focused Company. from independence The QCA Code highlights that non- executive directors must maintain their the executive members of the Board and therefore where their term extends beyond 9 years the judgement that this independence remains should be set out. During 2024 both Frank Moxon and Marcus Stanton will reach their nine-year anniversary of service with JOG. The Board believes that both Frank and Marcus continue to display an of attitude independence of 19 character and judgement in their roles. With the Chairman and CFO both joining the company within the last four years the Board remains relationships refreshed remain the members between appropriately independent. and Board Additionally, has the concluded that Board continuity through the FDP approval phase of the GBA has substantial value and once achieved the future growth trajectory and direction of the business will best determine the appropriate Board At this stage of composition. growth is the business appropriate for JOG to retain a small Board that is nimble and capable of executing our strategic ambitions in a timely manner. future in it 6. Board Experience The Board seeks to maintain an appropriate mix of experience, skills, personal qualities and capabilities in order to deliver the strategy of the Company. The size of the Board is considered to provide the necessary experience its decision- and perspective to making process given the size and nature of the Company. to be sufficient as representing The skills and experience of the Board are set out in this Annual Report and are considered by the Board an appropriate range of capabilities needed to deliver the strategy of the Company for the benefit of its shareholders over the medium to long term. The experience and knowledge of each of the Directors, and the steps taken to keep these skill sets up to date, gives them the ability to constructively challenge strategy scrutinise performance. and to itself be 7. Board Performance The Board has determined that it for shall assessing the effectiveness and contributions of the Board as a and whole, committees responsible its individual Directors. The Directors believe that the size of the Board allows for open discussion, with an evaluation of Board performance being undertaken on an annual or on an ad hoc basis, as considered appropriate. The performance of the committees is also evaluated by the Chairman of the Board. the level of Succession planning is reviewed periodically both at the Board level and at senior management. This is undertaken the the perspective of from development of the Board as a whole as the business develops and in the scenario of any unanticipated departures. in an 8. Corporate Culture The Board believes that the long- term success of the Company 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 the Company’s rules, policies and procedures. Those values, which the Company the seeks business, include integrity, respect, honesty and transparency and are led by the behavioural example of members, Board individual particularly the Chief Executive Officer and the Chief Financial Officer. throughout instil to values ethical The Company also operates a well- defined organisational structure through which it seeks to determine that and the recognised and behaviours are respected, in addition to which every employee is aware of the established whistleblowing procedures. These include a formal Anti-Bribery and Corruption Policy under which is committed to acting legally, fairly and ethically in all its activities and engagements. The Company does not tolerate bribery and corruption in any of its forms, nor will it tolerate the Company Jersey Oil and Gas plc in those with whom it business. it does Company 9. Governance structures The maintains appropriate governance structures and processes according to its size and complexity. The Company is committed its corporate governance policies and procedures to ensure they remain appropriate as it continues to grow and in response to any changes in regulatory and other relevant guidance. reviewing to The Board is responsible for: a) the overall direction and strategy of the monitoring b) business; performance; c) understanding risk; is and d) reviewing controls. collectively the for responsible success of the Company. It is key The Chairman’s role is part-time, and he is a Non-Executive Director. His the responsibility 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 of the is The Chief Executive Officer the day-to-day responsible for running Company’s the operations and for implementing the strategy agreed by the Board, in conjunction with other members of the executive team. is The Chief Financial Officer the Company’s responsible for finances, to other in addition aspects of the business, including risk property insurance and human matters, resources. management, There is a formal schedule of matters specifically reserved for the Board, in addition to the formal matters required to be considered by the Board under the Companies 20 list Act. This includes matters relating to: a) strategy and policy; b) acquisition divestment and proposals; c) approval of major capital risk investments; management policy; e) proposals from the Audit Committee, the Remuneration Committee and the Nomination f) significant financing matters; and g) statutory reporting to shareholders. Committee; d) At formal meetings of the Board an agenda is prepared by the Chairman includes presentations by which each of the executive directors and together with recommendations the relevant sub-committees of the Board. The Board has established four Committees – the Audit the Remuneration Committee, reports from Jersey Oil and Gas plc Committee, Nominations Committee and the Sustainability Committee. Regulatory News Releases, the Company’s’ website and the Annual General Meeting. 10. Stakeholder Communications The Board considers that good communication with shareholders and other relevant stakeholders, based on the mutual understanding important. The is of objectives, Company maintains an ongoing dialogue with shareholders as set in Principle 2 (Stakeholder out Responsibilities), to in understand and meet shareholders is needs and expectations. This achieved direct engagement and meetings with shareholders, as well as through communications such as the Annual Report, Report, Presentations, Corporate through seeking Interim the to regard With industry stakeholders, the Company holds regular meetings with all the key regulatory authorities, including the North Sea Transition Authority, the Health and Safety Executive and the Offshore Petroleum Regulator for Environment and Decommissioning. The Company also actively engages with industry bodies such as Offshore Energies UK, its peers in the oil and gas operator community and the wider supply chain that directly serves the those businesses industry and involved in supporting and leading the energy transition. 21 Jersey Oil and Gas plc Board Committees The Group operates an Audit Committee, a Remuneration Committee, a Nomination Committee and a newly formed Sustainability Committee. 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 determined 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 2023 as its functions have been properly carried out as part of the work of the Remuneration Committee and the Board. Sustainability Committee Chair: Les Thomas, Other Members: Frank Moxon, Marcus Stanton Under its terms of reference, it is required to meet at least once a year and its responsibilities include:  Reviewing and assessing the company's current sustainability practices and policies;  Reviewing the regulatory and policy developments designed to tackle climate change, as well as the requirements and initiatives set for the industry in response to decarbonisation targets and supporting the energy transition and route to net zero; Identifying and addressing climate-related risks associated with the company's operations; and   Reviewing and monitoring the Company's obligations and plans for climate-related financial disclosures. The Sustainability Committee was formed in March 2024 22 Jersey Oil and Gas plc 2023 Board and Committee Meeting Attendance Board Meetings Audit Committee Remuneration Committee Nominations Committee Sustainability Committee** Held Attended Held Attended Held Attended Held Attended Held Attended 8 8 8 8 8 8 8 8 8 8 4 4 4 4* 4* 4 4 4 4* 4* 3 3 3 - - 3 3 3 - - - - - - - - - - - - - - - - - - - - - - Non-Executive Directors L J Thomas M J Stanton F H Moxon Executive Directors J A Benitz G A Forbes * By invitation ** Formed in March 2024 Les Thomas, Non-Executive Chairman 10 May 2024 23 Jersey Oil and Gas plc ENVIRONMENT, SOCIAL AND GOVERANANCE REPORT We are committed to conducting our operations safely, protecting the natural environment and actively participating in the energy transition Our strategic focus on developing homegrown energy resources sits in tandem with our pursuit of doing so in a sustainable manner. We are seeking to create long term value from the natural resources that are readily available to us, contributing to society’s energy needs and pursuing oil and gas development solutions our environmental footprint. that minimise We take global climate challenges seriously and are committed to conducting our activities, whether directly or through our joint venture partners, in accordance with the highest environmental, social and governance standards. that recognise UN Global Compact Sustainability Development Goals We responsible behaviour, which creates value while protecting the environment, and contributing is central to our licence to operate. to sustainability Our approach the to ensure therefore seeks business the with international reporting frameworks of the UN Global Compact (UNGC). to society, aligns 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 by a company to direct its corporate and operational activities while adhering to the 10 UNGC principles. an Using industry-standard methodology, we have undertaken a review of the 17 SDG’s to determine and prioritise those goals to our business most relevant activities. These are presented below. SDG 3: Sustainable development cannot be achieved unless everyone’s primary health needs are met. The health and safety of our employees and contractors is central to the way in which we conduct business and is our number one priority. We work to ensure all our operations and activities are performed safely, using robust policies and systems with the aim of achieving zero harm in the workplace SDG 5: Achieve gender equality and empower all women and girls. We seek to maintain a high performing, productive and engaged organisation and adopt policies to ensuring non-discrimination and gender equality SDG 7: Deliver access to affordable, reliable, sustainable and modern energy for all. Through the development of homegrown oil and gas resources, we contribute to the availability of affordable energy and seek to do this in tandem with supporting the energy transition and the government’s target for increasing investment in renewable energy production and the achievement of carbon net zero by 2050 SDG 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. We contribute to economic growth in the UK through our business activities, including employment, support for the local supply chain and the transparent payment of taxes SDG 13: Prioritising the climate. Protection of the environment is part of our license to operate. As part of this, we recognise our responsibility to reduce greenhouse gas emissions and in doing so support the energy transition SDG 14: Protecting biodiversity around our operations. We seek to minimise the impact to flora and fauna and conserve biodiversity in ecosystems where we operate, carrying out environmental impact assessments and monitoring campaigns SDG 16: Responsible business practices contribute to social and economic stability. We strive to ensure that all activities throughout the business are conducted to the highest standards in ethics, integrity and transparency 24 Sustainability in the Buchan Redevelopment Project The Company’s principal activity is the Buchan redevelopment project. Working with our joint venture partners, NEO and Serica, we actively participate and contribute to the strategic decision-making process for the project, ensuring that sustainability-related decisions reflect our policies and beliefs. The key activities this area are in described in the following sections. it are and of Health, HSEQ Planning The Company considers is necessary to set out how high standards Safety, Quality Environmental (“HSEQ”) performance will be achieved throughout the Buchan redevelopment project lifecycle. Organisations that do not prioritise HSEQ performance do not attract investment or talented individuals to support the business. NEO, in its capacity as the Buchan Operator, is an established North Sea business that has existing HSEQ policies and procedures being that implemented on the project. Risk assessments are conducted for all activities, with of eliminating risks where practicable, and appropriate control and mitigation measures for joint venture residual risks. The partners HSEQ monitor performance through a variety of metrics, each designed to reflect the risks associated with the respective phase of and with activity, management reviews conducted on a regular basis. In accordance with the Joint Operating Agreement that governs the partnership, the joint venture partners have the right to conduct audits of the Operator’s performance as deemed necessary by management. establishing aim the Climate Action Prior to the completion of the farm- out and transfer of Operatorship of the GBA licences to NEO, the Company undertook a detailed of assessment potential development concept solutions for Buchan and wider resources in the GBA. This evaluation was aligned to the central obligations of the NSTA’s strategy, namely, to take the necessary steps to:  Ensure that the maximum value of economically recoverable petroleum is recovered from the strata beneath relevant UK waters; and, in doing so,  Take appropriate steps to assist in the Secretary of State meeting the net zero target, including the reduction, as far as reasonable the circumstances, of greenhouse gas emissions from sources such as flaring and venting and power generation, supporting and carbon capture and storage projects. in studies Accordingly, were performed to evaluate the lifecycle from each resulting emissions potential Buchan field development concept, considering both the construction / installation phase and production phase. The decision to redeploy an existing FPSO was shown to result lowest lifecycle emissions, as it:  Minimises energy consumption by reducing the use of new raw materials during construction when compared with other development solutions in the  Through the re-use of existing infrastructure, it minimises the onshore construction scope and hence minimises the associated energy usage associated with these activities  Minimises emissions associated with diesel usage to power installation vessels as it has the lowest vessel activities during the offshore installation phase number of  Provides a solution that eliminates the need for routine flaring and venting during the normal operations as Jersey Oil and Gas plc selected FPSO has existing flare gas recovery systems, regarded as Best Available Technology  Reduces nitrous oxide emissions which are known to contribute to the greenhouse effect and negatively impact air quality as the selected FPSO has existing Dry-Low-Emission power generators, regarded as Best Available Technology. of The results of these evaluations were presented to the NSTA as part of a Concept Select Report that was submitted to support the selection of the preferred GBA development solution. Concept Select Reports are submitted by licence operators as regulator’s part requirements for planning and consenting to field developments on the UK Continental Shelf. Based on the information provided the NSTA issued a letter of no objection to licencees preparing an FDP based on the redevelopment solution set out in the report. the Buchan field the including Emissions Reduction Central to the license to operate obligations set out in the NSTA’s strategic plan is the requirement for UK operators to undertake their upstream operations in line with the NSTA Stewardship Expectations (SE) Stewardship Expectation 11 – Net Zero (SE11). SE11 imposes that for each UK offshore operated asset or hub, a Greenhouse Emissions Gas Reduction Action Plan (ERAP) is developed, and Buchan maintained. redevelopment project Environment Statement (issued in January public consultation) confirms that an ERAP will be prepared during the course of the project for implementation in the production phase of activities. implemented, 2024 The for Buchan Importantly, redevelopment project is aligned to the NSTA’s strategic objectives the 25 to come ready’. requiring new developments with a first production date before 1 January 2030 to be at a minimum online delivered ‘electrification These requirements were recognised by the Buchan joint venture during the concept select phase of activities and chosen development concept, along with its associated costings, are fully aligned to this emissions reduction strategy. the the The Buchan field partners are future committed to electrification of the redeployed FPSO and are currently working towards ultimately connecting the vessel to one of the future offshore wind power developments that are being planned under the terms of the UK Government’s Innovation and Targeted Oil & Gas (INTOG) licencing process. The switch to import power will utilise well proven technology been that successfully deployed in Norway. Engineering studies are currently being conducted as part of the on- going Front End Engineering Design (FEED) phase of activities to identify the modifications required to the redeployed FPSO to facilitate this switchover. has the than lower to a times cleaner FPSO, of Electrification anticipated to take place around 2030, will result in a reduction in emissions from power generation, leading forecast carbon industry intensity average performance and at least two (mid case) compared to the average global well-to-refinery intensity of crude oils. Future connection to a new offshore windfarm would deliver a solution that contributes to the decarbonisation of both the FPSO and the UK grid, supporting the UK Government and NSTA in reaching its net zero target, whilst at the same time delivering important domestic energy supply. Jersey Oil and Gas plc Buchan field into the reservoir will minimise such potential discharges. In addition, as set out in the Environment Statement, a chemical selection process will be followed that aims to select chemicals with the lowest environmental impact in accordance with the Offshore Chemical Regulations and Oil Pollution Prevention and Control Regulations. ability to manage Risk Management In addition to the Company-wide processes used to monitor and manage corporate and ESG risks, specific risk management processes are also used for the Buchan project. risk The effectively is essential for realising the project schedule and in turn the overall value of the project. A project-specific risk management process has been implemented and is actively monitored and managed by the joint venture partners to ensure could risks potentially jeopardise the Project Execution Plan can be identified and prioritised for prevention, control and mitigation. The project risk registers are subject to monthly review. that that to this offers the project. Life Below Water We recognise the importance of protecting biodiversity in the seas around our operations, and our commitment is demonstrated through the selected Buchan concept for The redevelopment redeployed the FPSO following key benefits compared to other development solutions:  Utilisation of the existing shuttle tanker offloading capability for export of oil minimises seabed disturbance by eliminating the requirement for installation of a new oil export pipeline that the other potential development solutions involve potential  It has the lowest number of the phase, to minimise vessel activities during offshore which underwater noise pollution installation helps  It minimises overboard discharge of oil in water through the re-injection of produced water into the reservoir for pressure maintenance. Should any overboard discharge of produced water be required the FPSO has existing systems designed to reduce oil content in produced water to a level that regulatory discharge meets limits. Environmental studies to support Environment Statement show that discharges at these limits do not result in any measurable deterioration of water quality in the area local to the FPSO. the To maximise production from the Buchan field it will be necessary to utilise certain chemicals during the drilling and production phases. Once mixed with produced fluids there is the potential for discharge to sea of these chemicals in diluted form through the discharge of produced water. The plan to re- inject produced water from the 26 Jersey Oil and Gas plc Recommendations of the Task Force for Climate-related Financial Disclosures (”TCFD”) Whilst the Group is not required to and does not comply with the recommendations of the TCFD, it has applied the below principles in developing a roadmap to compliance by 31 December 2025. The TCFD framework is designed to identify climate-related risks and opportunities to aid companies’ and investors’ understanding of the financial implications of transitioning to a lower-carbon economy and the changes in physical risks associated with climate change. The TCFD disclosures are structured around the four pillars of Governance, Strategy, Risk Management and Metrics & Targets with eleven recommended disclosures. Scenario analysis is recommended as part of the TCFD process to identify the range of risks and opportunities a company may face across different climate scenarios. TCFD Index Table Recommendation Description Details Describe Board’s the oversight of climate related risks and opportunities. Governance: Disclose the organisation’s governance around climate related risks and opportunities. The Board recognises climate change to be a significant risk to both the Company and the wider oil and gas industry, with potentially material implications. Building resilience to such risks and ensuring the business maintains its social licence to operate, by actively playing a responsible role in the on-going energy transition, is necessary for long-term success of the Company. is ultimately governance the Climate-related responsibility of the Board. Corporate and ESG risks are cyclically reviewed by the management team and discussed with the Board. The results of such reviews are incorporated into the strategic decision-making process of the Company. in Describe management’s and role managing climate-related risks and opportunities. assessing Due to the relatively small number of employees within the Company, there is not a management committee solely appointed for the management of climate risks and opportunities. However, in 2024 a Sustainability Sub- Committee to the Board was established to facilitate more detailed oversight of the strategic and operational the management of environmental Company and the wider industry, including the evolution of regulatory requirements. facing issues 27 the risks climate Describe and related opportunities the organisation has identified over the short, medium, and long term. 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. Jersey Oil and Gas plc The Company’s ESG Risk Register includes assessment of the following climate-related risks: 1. 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. 2. 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 evolving investment mandates relating to the natural resources sector. Describe impact of the climate-related risks and the opportunities organisation’s businesses, strategy, financial and planning. on Some risks may have an impact in the short and medium term. For example, changes in environmental levies and taxes, leading to a near term impact on the Company’s activities. Other risks, such as the effect of technological developments on the demand for hydrocarbons, may have an impact in the longer term. The Board readily appreciates that climate-related risks have the potential to significantly affect the activities of the Company. The risk reviews that are undertaken by the Company and reported to the Board are designed to routinely monitor and review the business landscape to determine those aspects of the evolving regulatory and taxation regime that may have a significant impact and the mitigation measures the Company can take. Describe the resilience of the organisation’s strategy, into consideration taking different climate-related scenarios, including a 2°C or lower scenario. to transparent and auditable approach risk A management at both strategic and operational levels helps make the business resilient to change, including climate change scenarios which necessarily affect UK and international energy markets. The Company’s activities in the UKCS are as resilient to climate change scenarios as other companies engaged in offshore oil and gas activities, insofar as achieving a ‘Low Carbon Future’ (i.e. a 2°C or lower scenario) may be contingent on restricting the longer-term activities of existing oil and gas companies 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 more aggressive net zero solutions. Therefore, the Company’s strategy of taking an engaged role in energy transition assists in making the business’ strategy resilient to either scenario. the Board and It places management team to consider and assess ESG-related responsibility on both 28 Jersey Oil and Gas plc issues and formally record their effect for relevant stakeholders. At the centre of the Company’s strategy for the redevelopment of the Buchan oil field is a future connection of the infrastructure that is to be installed for the field to one of the nearby planned offshore wind power developments that are currently being progressed by specialist wind developers. By making the Buchan facilities electrification-ready ahead of deployment to the field and engaging with the wind power developers, the joint venture partners are able to play an active role in helping to facilitate the regulatory imperative for oil and gas companies to participate in the energy transition and contribute towards meeting the sector’s net zero objectives. Risk Management: Disclose how the organisation identifies, assesses, and manages climate related risks. Describe the organisation’s identifying for processes and climate related risks. assessing The Company’s approach to identifying, assessing, and managing climate-related risks is integrated into the overall risk management assessments of the business, and guided by principles of transparency and responsible stakeholder engagement. Describe the organisation’s processes for managing climate related risks. The Board of Directors provides oversight of climate- related risks as part of its broader risk management strategy and acts to ensure that they receive appropriate attention at the highest levels of governance. A new Sustainability Board Committee dedicated to overseeing the company's sustainability efforts, with a particular focus on climate-related risks and TCFD compliance, was established in 2024. The committee is responsible for:  Reviewing and assessing the company's current sustainability practices and policies.  Reviewing the regulatory and policy developments designed to tackle climate change, as well as the requirements and initiatives set for the industry in response to decarbonisation targets and supporting the energy transition and route to net zero.  Identifying and addressing climate-related associated with the Company's operations. risks  Reviewing and monitoring the Company's obligations and plans for climate-related financial disclosures. Describe how processes for identifying, assessing, and managing climate related risks are integrated into the organisation’s overall risk management. Risk reviews, including climate-related risks, are carried out by the Company on a cyclical basis. Given the status and size of the Company, such reviews are mostly focused on the strategic aspects of the business and future plans for the GBA. 29 Disclose the metrics and targets used to assess and manage relevant climate- related and opportunities where such information is material. risks Metrics and Targets: Disclose the metrics and targets used to assess and manage relevant climate related risks and opportunities where such information is material. Jersey Oil and Gas plc The Company compiles emissions data for its day-to-day office activities (e.g. electricity usage), which represent Scope 2 emissions. These are relatively modest given the size of the business. Predicted full-cycle emissions have been assessed as part of defining the preferred development solution for the Buchan redevelopment project and were set out in the Environmental Statement that was submitted to the Regulator in early 2024. Emissions were estimated for each potential development concept, from raw material manufacturing facilities installation and operation. Emissions were estimated using publicly available data to enable transparency and auditability, with the emissions representing a mixture of Scope 1-3. The selected development concept has been shown to represent the lowest lifecycle emissions of all the technically feasible development concepts. fabrication, through to Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks. Given the current status of the asset portfolio, the only recordable emissions produced by the Company at this time relate to office electricity consumption. The Company’s emissions in 2023 were 2,457kg/CO2e, which was broadly flat year-on-year. Describe the targets used by to the organisation related manage climate risks and opportunities and performance against targets The most significant contribution the Company can make to minimising emissions and supporting the energy transition, while contributing to society’s energy needs, is by focusing on oil and gas development solutions with a minimal environmental footprint. This has been a core component of the GBA development strategy and selection criteria for the preferred Buchan redevelopment project. 30 DIRECTORS’ REPORT The Directors present their report together with the audited Group and Company financial statements for the year ended 31 December 2023. Annual General Meeting The Annual General Meeting will be held on 5th June 2024 as stated in the Notice of Meeting. Results and Dividends The Group’s loss for the year was £5.6m (2022: loss of £3.1m). The Directors do not recommend the payment of a dividend (2022: Nil). the 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 has substantial cash reserves following the successful farm-out of the GBA licences and receipt of initial funds resulting from the two transactions with NEO and Serica. The Group now has a fully funded 20% interest Buchan on-going in redevelopment project. 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 financial of statements. Even in an extreme Buchan scenario where development did not progress for any unforeseen reason and any 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 from next utilisation cash resources. The directors have also considered the risk associated with solely of its existing 12 months these issue the of to contractual arrangements associated with the farm-outs and are satisfied that the group is not exposed contractual any 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 the consolidated financial statements. preparing in comprise Financial Instruments financial The Group’s principal cash 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 the Financial Statements. Consolidated the Board Committees Information Audit, on Remuneration, Nomination and Committees is Sustainability Corporate included the in the Audit Governance section, Committee the and Report Remuneration Report contained in this Annual Report. 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, relevant audit there 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 that establish auditors are aware of that information. Jersey Oil and Gas plc This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006. 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 economic factors is performance. The Group to being an equal committed opportunities and engages employees with a broad range of skills and backgrounds. employer Independent Auditors A resolution to reappoint BDO LLP as Auditors will be proposed at the General forthcoming 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 Ltd and Cavendish Financial plc. Share Capital At 31 December 2023, 32,665,960 (2022: 32,554,293) ordinary shares of 1p each were issued and fully paid. Each ordinary share carries one vote. Post Balance Sheet Events See note 23 statements. the to financial 31 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 2023 were: 1p Ordinary Shares As at 31 Dec. 2023 As at 31 Dec. 2022 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 25,000 83,333 55,000 420,000 400,000 Shares 33,000 112,411 87,026 702,176 - Vested Options - 66,667 40,000 286,667 116,667 Substantial Shareholders At 31 December 2023, 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, Stockbrokers Interactive Investor Mr J Baldwin AJ Bell, stockbrokers Barclays Smart Investor HSDL, stockbrokers Mr Nicholas Robinson UBS collateral account Janus Henderson Investors Mr Ronald Lansdell Ravenscroft 17.18% 8.39% 6.75% 4.78% 4.32% 3.97% 3.95% 3.77% 3.58% 3.27% 3.16% 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 in substantial shareholders are contained on the Company’s website (www.jerseyoilandgas.com). On behalf of the Board Graham Forbes Chief Financial Officer 10 May 2024 32 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 financial statements in accordance with applicable law and regulations. material accounting standards subject to departures any disclosed and explained in the financial statements; Company law requires the directors to prepare financial statements for each financial year. Under that law the directors are required to prepare the group financial statements in accordance with UK adopted international accounting standards company and financial the in accordance with statements Generally United Practice Accepted Accounting Accounting (United Standards and applicable law). 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 group for that period. Kingdom Kingdom these financial the directors are preparing In statements, required to:  Select suitable accounting policies and then apply them consistently;  Make judgements and accounting estimates that are reasonable and prudent;  State whether they have been prepared in accordance with UK international adopted  Prepare the financial statements on the going concern basis unless inappropriate to presume that the group and the company will in business. continue is it the explain adequate The directors are responsible for keeping accounting records that are sufficient to show company’s and transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Website Publication The Directors are responsible for ensuring the Annual Report and the financial statements are made available on a website. Financial statements are published on the company's website in accordance the United with Kingdom governing the preparation financial and dissemination of legislation in statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company's the website responsibility of the directors. The also Directors' extends to the ongoing integrity of the financial statements contained therein. responsibility is 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, relevant audit there 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 themselves aware of any relevant audit information and to establish that the Group’s auditors are aware of that information. Graham Forbes Chief Financial Officer 10 May 2024 33 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 four times during 2023, 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 2023 Annual Report and Accounts (financial statements), a few days before a formal meeting to discuss the same. To greater understanding and involvement in the work of the Audit Committee, the Chief Executive Officer, the Chief Financial Officer and the Chief Commercial Officer attended certain of these meetings. The external audit partner also attended the meeting held in connection with the Company’s 2023 Report and Accounts. encourage a Role of the Audit Committee The Terms of Reference for the Audit Committee, which have been prepared in accordance with the the QCA Code, provide Committee’s main responsibilities to include:  Monitoring the independence for 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 and corruption in addition to appropriate ensuring whistleblowing arrangements are in place. that 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 2023 Annual Report and the accounting for our licence interests,  Review of the interim results for the six months ended 30 June 2023;  Giving consideration to areas of significant judgement such as concluding on going concern and existence of impairment triggers; to as  Consideration the appointment of new financial auditors following a retendering exercise (see below);  Review of the 2024 cash budget. Appointment of New Auditors Following many years with PwC as the Group’s external financial auditor, a retendering exercise was carried out in 2023 in respect of the 2023 year end audit. Based on the criteria set by the Audit Committee including of independence and objectively, BDO LLP were appointed as the new auditors of the Group. assessment an 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 sub- whole, committee. A risk summary is presented and discussed at Board meetings. rather being than a Marcus Stanton Chairman of the Audit Committee 10 May 2024 34 REMUNERATION REPORT Jersey Oil and Gas plc The to Introduction This Remuneration Report has been prepared by the Remuneration Committee and approved by the Committee Board. is committed transparent and quality disclosure. Our report for 2023 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 three times during 2023. 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:  That remuneration support the Group’s strategy; levels  An appropriate link between performance and reward;  Alignment of Directors, senior management and shareholder interests;  Linking of long-term incentives to shareholder returns;  Recruitment, retention and motivation of individuals with the and experience to achieve Group objectives; and, capabilities skills,  Good teamwork by enabling all the employees to share success of the business. in There are four possible elements that can make up the remuneration packages for Executive Directors, senior and management employees:  Basic annual salary or fees;  Benefits in kind;  Discretionary annual bonus; and, (“EMI”)  A long-term incentive plan, the Jersey Oil and Gas PLC 2016 Management Enterprise and Incentive 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”). Performance of the Group in 2023 The Group’s focus during 2023 was on completing the farm-out process for the GBA licences, securing a fully carried position for its interest in the Buchan redevelopment project and associated finalising the concept. These redevelopment objectives were fully delivered during the year. On 6 April 2023, the Company announced that it had agreed to farm-out a 50% interest in its GBA licences to NEO. This was followed on 23 November 2023 with the announcement of the farm-out of a further 30% interest to Serica. In aggregate the agreements provide for the Company to receive a series of milestone cash payments and a 20% fully carried interest in the Buchan redevelopment project. As part of concluding the farm-out process, the Company also finalised the use and acquisition of the Western Isles FPSO for the Buchan redevelopment and obtained a letter of no objection from this the NSTA development solution. project for Key Activities in 2023  Recommended option awards to Directors and employees, which were granted 2023;  Approved in April the vesting, in accordance with their terms, of the second tranche (of three) of share options granted to employees in January 2021, the first tranche (of three) of share options granted to Executive Directors and employees in April 2022 and the final tranche (of three) of share options granted to an Executive Director and a senior manager in November 2021.  Carried out interim (post farm- out) and full year remuneration reviews. In carrying out its responsibilities the has Remuneration Committee taken ad hoc external advice from h2glenfern, remuneration its adviser. Basic Salary The basic salaries of Executive Directors are normally reviewed by the Committee (taking into account individual performance, market factors and sector conditions) around the end of each year with any changes usually taking effect from 1 January of the following year. However, the end of 2022 review was deferred until April 2023 after the NEO farm-out had been secured. The annual salary of Andrew Benitz as at 1 January 2023 was £250,000 (2022: £250,000). The salary of Graham Forbes as at 1 January 2023 was £240,000 (2022: £240,000). These were increased in May 2023. As a result, the salary of Andrew Benitz as at 31 December 2023 was £275,000 (10% increase), and that of Graham Forbes was £259,200 (8% increase). Both salaries remained unchanged at the start of 2024. 35 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, Andrew Benitz received a 10% matching pension contribution while Graham Forbes took an 8% cash alternative until August 2023 when he transferred to the 10% matching pension contribution option. Discretionary Bonuses As a result of the pivotal NEO farm- out completed during the year and the subsequent signing of the agreement to secure the Western Isles FPSO (thereby finalising the Buchan Development solution) the Executive Directors were awarded performance bonuses during 2023. Andrew Benitz and Graham Forbes Jersey Oil and Gas plc were each awarded a bonus equivalent to 100% of their salary transformational reflecting progress. This was first the performance bonus awarded to the Executives since 2019. this performance and not materially more easy or difficult to satisfy as a result. Upon any change of control, all options vest in full and any performance conditions are not applied. Plan, Directors Share Option Plan Under the terms of the Old Share and Option employees are eligible for awards. EMI options are subject to an limit of £3m and an aggregate limit of £250,000 by individual shares. of value market Performance conditions are not required but options can be granted conditions, with both. or vesting Performance conditions can apply to individual tranches within grants. Performance conditions can be amended, provided they are still fair measure of deemed performance schedules a The New Share Option Plan (adopted on 23 November 2021) contains no EMI provisions since JOG no longer meets the relevant eligibility requirements. In New share option awards were made to Directors and employees during April 2023. line with previous grants, options have an exercise period of seven years for Executive Directors and staff and five for Non-Executive Directors, although both the Old and New Share Option Plans provide for exercise periods of up to ten years. 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 save 11.03.19 Rolling Contract 12 months in certain (including material circumstances changes to contract terms or non- consensual relocation), the Executive may provide 30 days’ notice that, 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 2023, the annual fees for L J Thomas (Non-Executive Chairman), F H Moxon (Senior Independent Director) and M J Stanton (Non-Executive Director) were: Role Fee 2023 Date of Change L J Thomas F H Moxon M J Stanton Non-Exec. Chairman Senior Independent Director Non-Exec. Director £66,000 £54,000 £48,600 May 2023 May 2023 May 2023 Fee 2022 £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. 36 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 Presented in £’000s Salary / Fees Year Ended 31 Dec. 2023 Year Ended 31 Dec. 2022 Pension Benefits Bonus Total Salary Pension Benefits Bonus Total 267 253 520 59 53 53 165 27 11 38 - - 2 2 4 6 10 - - - - 250 240 490 - - - - 548 510 1,058 59 53 55 167 / Fees 250 259 509 65 40 50 155 25 - 25 - - 2 2 6 7 13 - - - - 685 40 10 490 1,225 664 27 13 J A Benitz G A Forbes (note 1) Executive Directors L J Thomas M J Stanton F H Moxon Non-Exec. Directors Total Directors Notes: 1. Until August 2023 salary includes an 8% cash contribution as an alternative to a matching 10% pension contribution. - - - - - - - - 281 266 547 65 40 52 157 704 37 Jersey Oil and Gas plc Options held by Directors at 31 December 2023 are set out below. Presented in ‘000s Grant date Exercisable By At 1 Jan 2022 Issued Exercised Lapsed At 31 Dec Issued Exercised Lapsed At 31 Dec 2022 2023 Executive Directors J A Benitz At 200.0p At 175.0p At 210.0p (note 3) At 230.0p (note 6) At 247.5p (note 8) G A Forbes At 147.0p (note 5) At 230.0p (note 6) At 247.5p (note 8) Non-Executive Directors L J Thomas At 230.0p (note 7) At 247.5p (note 9) F H Moxon At 200.0p (note 1) At 175.0p (note 2) At 210.0p (note 4) At 230.0p (note 7) At 247.5p (note 9) M J Stanton At 200.0p (note 1) At 175.0p (note 2) At 210.0p (note 4) At 230.0p (note 7) At 247.5p (note 9) Total 29.01.18 17.01.19 18.03.21 29.04.22 19.04.23 29.01.25 17.01.26 18.03.28 29.04.29 19.04.30 23.11.21 29.04.22 19.04.23 23.11.28 29.04.29 19.04.30 29.04.22 19.04.23 29.04.27 19.04.28 29.01.18 17.01.19 18.03.21 29.04.22 19.04.23 29.01.24* 17.01.24 18.03.26 29.04.27 19.04.28 29.01.18 17.01.19 18.03.21 29.04.22 19.04.23 29.01.24* 17.01.24 18.03.26 29.04.27 19.04.28 180 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 - - - - - 150 150 - - 100 100 - 45 45 - - - - 20 20 - - - - 20 110 1,415 20 335 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 180 70 110 290 150 800 350 150 100 600 75 45 120 20 15 15 30 20 100 40 20 20 30 20 130 1,750 Notes: 1. These options were exercisable at any time up to 29 January 2023. The expiry date of this tranche of options was extended during 2023 to have an expiry date of 29 January 2024 due to the Company being in a close period. 2. All the options have vested, are exercisable up to 17 January 2024 and will lapse if not exercised by such date. 3. 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. 4. Options vest in three equal tranches (one, two and three years from the date of grant) and have no performance conditions. 5. Upon the 6 April 2023 announcement of a farm-out in respect of the Group’s GBA development project, these options vested in full and became exercisable from such date. 6. 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. 7. Options vest in three equal tranches (one, two and three years from the date of grant) and have no performance conditions. 8. 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. 9. 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 19 April 2028. 38 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 10 May 2024 39 Independent auditor’s report to the members of Jersey Oil and Gas Plc Jersey Oil and Gas plc Opinion on the financial statements In our opinion: • • • • the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2023 and of the Group’s loss for the year then ended; the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards; the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements of Jersey Oil and Gas Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended 31 December 2023 which comprise the consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, consolidated statement of cash flows, company statement of financial position, company statement of changes in equity and notes to the financial statements, including a summary of material accounting policies. The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and UK adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice). Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s 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 remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Conclusions relating to going concern 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. Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to continue to adopt the going concern basis of accounting included: - - - Obtaining and examining management’s base case forecasts and downside scenarios and verifying that these forecasts had been subject to board review and approval. Challenging and corroborating the future cash flows included in the base case to ensure these are consistent with our understanding of work performed over other key areas of the financial statements. Assessing the downside scenarios applied by management, ensuring that these represented reasonably plausible downside scenarios in the context of the business, and overlaying additional sensitivities to understand the impact of changes in cash flows of the Group. 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 and the Parent 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. 40 Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. Jersey Oil and Gas plc Overview Coverage Key audit matters 98% of Group loss before tax 99% of Group total assets Materiality Group financial statements as a whole Impairment of intangible assets Accounting for farm-out arrangements £418,000 based on 1.5% of total assets 2023   An overview of the scope of our audit Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement. Our Group audit focused on the Group’s significant components, being Jersey Oil and Gas Plc (the Parent Company), and Jersey Petroleum Limited. The Group audit team perform the audit of the Parent Company and all significant components. The remaining components of the Group were considered insignificant and were principally subject to analytical review procedures which were performed by the Group audit team. Climate change Our work on the assessment of potential impacts of climate-related risks on the Group’s operations and financial statements included:  Enquiries and challenge of management to understand the actions they have taken to identify climate-related risks and their potential impacts on the financial statements and adequately disclose climate-related risks within the annual report; and  Our own qualitative risk assessment taking into consideration the sector in which the Group operates and how climate change affects this particular sector. We challenged the extent to which climate-related considerations, could impact the assumptions made in the Directors’ going concern assessment and in management’s intangible asset impairment trigger assessment. We also assessed the consistency of managements disclosures included as Other Information in the Group’s Environment, Social and Governance report with the financial statements and with our knowledge obtained from the audit. Based on our risk assessment procedures, we did not identify there to be any Key Audit Matters materially impacted by climate- related risks. Key audit matters Key audit matters (“KAMs”) are those matters that, in our professional judgement, were of most significance in our 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) that we identified, 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 were addressed in the context of our 41 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. Jersey Oil and Gas plc Key audit matter Impairment of Intangible assets Refer to notes 10 and 2 (Exploration and evaluation costs section) At 31 December 2023, the group held intangible assets on its statement of financial position, as detailed in note 10, with a value of £16.4m (2022: £24.4m). the Given the financial significance of the intangible assets in the context of the Group’s statement of financial position and significant degree of judgement involved in the assessment of whether of any impairment exist, we considered this to be a key audit matter. indicators Accounting for farm-out transaction Refer to notes 10 and 2 (Acquisitions, Asset Purchases and Disposals section) In 2023, the entity announced a farm- out agreement for operatorship and 50% of the Group’s exploration licences in exchange for a series of cash payments and both pre development and development carry’s on the development of the licences. In the absence of an accounting standard for farm-out accounting, the Directors’ have used their judgement in forming an accounting policy with reference to commonly adopted approaches in the industry. The cash proceeds received from the farm out partner in the year of £9,103,944 have been deducted from the carrying value of the Exploration and Evaluation assets. the Given the financial significance of the intangible assets in the context of the Group’s statement of financial position significant degree of and judgement involved in forming and farm out accounting policy, we considered this to be a key audit matter. How the scope of our audit addressed the key audit matter In addressing the KAM, we have performed the following audit procedures: - We have reviewed and impairment challenged management’s indicator assessment and considered whether there are any indicators of impairment in line with criteria set out under IFRS 6; - We have obtained and reviewed relevant license agreements relating to the GBA assets and NSTA correspondence to consider any indicators that the licenses will not be extended past current term; - We have corroborated the independence and competence of management’s expert opining on reserves and resources and assessed whether these are indicative of the GBA asset not being recoverable; - We have considered information obtained during our audit work to assess whether there are any other potential indicators of impairment that have not identified by Management. In doing so, we have reviewed the results of studies undertaken in the year on the GBA asset, to evaluate whether there are indicators of impairment; - We have assessed the impact of climate change and how it has been factored into management’s assessment; and - Reviewed and assessed management’s financial included within the disclosures statements. Key observations: Based on the procedures performed, we have found the Directors’ assessment of the carrying value of intangible assets to be acceptable. In addressing the KAM, we have performed the following audit procedures: - We have obtained management’s assessment of the understanding and the nature of the farm- the out judgement in selecting and applying an accounting policy; arrangement, challenged and - We have agreed the underlying arrangement to the signed contracts between the respective entities; - We have corroborated the cash consideration received, and have verified that it has been adequately reflected in the financial statements; and - Reviewed and assessed management’s financial included within the disclosures statements. Key observations: Based on the procedures performed, we concur with the accounting treatment for the farm out transaction, deeming it to be acceptable. 42 Jersey Oil and Gas plc Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows: Materiality Group financial statements 2023 £ 418,000 Parent company financial statements 2023 £ 165,000 Basis for determining materiality 1.5% of total assets 1.7% of total assets Rationale applied for the benchmark We considered total assets to be the most significant determinant of the Group’s financial performance for users of the financial statements, given the Group’s exploration focus. We considered total assets to be the most the parent significant determinant of company’s financial performance for users of the financial statements, given the nature of the entity as a holding company within the group. Performance materiality 271,700 107,200 determining for Basis performance materiality Rationale applied materiality for for the percentage performance 65% of overall materiality Performance materiality was set considering factors including the nature of activities and expected total value of known and likely misstatements, based on our understanding of the group. Component materiality For the purposes of our Group audit opinion, we set materiality for each significant component of the Group, apart from the Parent Company whose materiality is set out above, based on a percentage of between 55% and 85% of Group materiality dependent on the size and our assessment of the risk of material misstatement of that component. Other than the parent company, component materiality ranged from £229,000 to £355,000. In the audit of each component, we further applied performance materiality levels of 65% of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated. Reporting threshold We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £12,500. We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds. Other information The directors are responsible for the other information. The other information comprises the information included in the annual report other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. 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 course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. 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. 43 Jersey Oil and Gas plc We have nothing to report in this regard. Other Companies Act 2006 reporting Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below. Strategic and report report Directors’ Matters on which we are required to report by exception In our opinion, based on the work undertaken in the course of the audit:  the information given in the Strategic report and the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements.  In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the Directors’ report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:     adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or the Parent Company financial statements are not in agreement with the accounting records and returns; or certain disclosures of Directors’ remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. Responsibilities of Directors As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors 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 Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so. Auditor’s 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 auditor’s 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. Extent to which the audit was capable of detecting irregularities, including fraud 44 Jersey Oil and Gas plc 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: Non-compliance with laws and regulations Based on:  Our understanding of the Group and the industry in which it operates;   Obtaining and understanding of the Group’s policies and procedures regarding compliance with laws and regulations Discussion with management and the Audit Committee, and; We considered the significant laws and regulations to be UK adopted International Accounting Standards, UK tax legislation, Petroleum Act 1998, the AIM Listing Rules and Companies Act 2006. The Group is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the amount or disclosures in the financial statements, for example through the imposition of fines or litigations. We identified such laws and regulations to be the Petroleum Act 1998. Our procedures in respect of the above included:      Review of minutes of meeting of those charged with governance for any instances of non-compliance with laws and regulations; Review of correspondence with regulatory and tax authorities including the NSTA and HMRC for any instances of non- compliance with laws and regulations; Review of financial statement disclosures and agreeing to supporting documentation; Involvement of tax specialists in the audit; and Review of legal expenditure accounts to understand the nature of expenditure incurred. Fraud We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included: Enquiry with management and those charged with governance regarding any known or suspected instances of fraud;   Obtaining an understanding of the Group’s policies and procedures relating to: o Detecting and responding to the risks of fraud; and o Internal controls established to mitigate risks related to fraud.     Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud; Discussion amongst the engagement team as to how and where fraud might occur in the financial statements; Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; and Considering remuneration incentive schemes and performance targets and the related financial statement areas impacted by these. Based on our risk assessment, we considered the areas most susceptible to fraud to be management override of controls, and areas of judgment due to the level of subjectivity involved in them. Our procedures in respect of the above included:   Holding fraud inquiries with management and those charged with governance to identify whether any instances of fraud were noted in the period; Testing the financial statement disclosures to supporting documentation, performing testing on account balances which were considered to be a greater risk of susceptibility to fraud. These balances relate to our key audit matters as disclosed above;  Making enquiries of management as to whether there was any correspondence with regulators and the Government,  in so far as the correspondence related to the financial statements and reviewed this correspondence; Performing targeted journal entry testing based on identified characteristics the audit team considered could be indicative of fraud to address the presumed risk of management override of controls. For example, we tested 45 Jersey Oil and Gas plc capitalisation to the exploration assets with the opposite entry being processed against bank and cash accounts and not against liability accounts. Reviewing the Group’s year end unadjusted entries, consolidated entries and investigating any that appear unusual as to nature or amount by agreeing to supporting documentation; and Assessing significant estimates made by management for bias.   We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non- compliance with laws and regulations throughout the audit. Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that 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, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it. further description of our A responsibilities www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. is available on the Financial Reporting Council’s website at: Use of our report This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. /s/BDO LLP John Black (Senior Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor London, UK 10 May 2024 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). 46 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2023 Jersey Oil and Gas plc Continuing operations 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 7 6 6 7 8 9 9 2023 £ (5,706,675) (5,706,675) 114,825 (3,503) (5,595,353) - (5,595,353) (5,595,353) 2022 £ (3,185,103) (3,185,103) 82,842 (4,730) (3,106,991) - (3,106,991) (3,106,991) (5,595,353) (3,106,991) (17.19) (17.19) (9.54) (9.54) The notes on pages 51 to 71 are an integral part of these financial statements 47 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2023 Jersey Oil and Gas plc 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 Term deposits 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 2023 £ 2022 £ 10 11 12 13 14 15 16 20 17 18 12 16,421,797 - 139,661 2,692 16,564,150 478,234 5,482,935 5,000,000 10,961,169 27,525,319 2,574,529 110,535,059 3,890,986 (89,960,102) (382,543) 26,657,929 71,309 71,309 740,927 55,154 796,081 867,390 27,525,319 24,372,882 10,203 81,328 31,112 24,495,525 167,060 6,579,349 - 6,746,409 31,241,934 2,573,395 110,309,524 2,566,343 (84,600,273) (382,543) 30,466,446 - - 688,796 86,692 775,488 775,488 31,241,934 The financial statements on pages 47 to 50 were approved by the Board of Directors and authorised for issue on 10 May 2024 They were signed on its behalf by Graham Forbes – Chief Financial Officer. O v e r v i e w O u r G o v e r n a n c e Graham Forbes Chief Financial Officer 10 May 2024 Company Registration Number: 07503957 The notes on pages 51 to 71 are an integral part of these financial statements 48 Jersey Oil and Gas plc CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2023 Called up share capital £ 2,573,395 Share premium account £ 110,309,524 Share options reserve £ 1,397,287 Note Accumulated losses £ Reorganisation reserve £ (81,551,730) (382,543) Total equity £ 32,345,933 - - - (3,106,991) - (3,106,991) 20 20 - - 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 - - - (5,595,353) - (5,595,353) 20 20 20 20 1,134 - - - - 2,574,529 225,535 - - - - 110,535,059 - - (148,178) (87,346) 1,560,167 3,890,986 - - 148,178 87,346 - (89,960,102) - - - - - (382,543) 226,669 - - - 1,560,167 26,657,929 At 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 and 1 January 2023 Loss and total comprehensive loss for the year Transactions with owners in their capacity as owners Issue of share capital Expired share options Lapsed share options Exercised share options Share based payments At 31 December 2023 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 49 CONSOLIDATED STATEMENT OF CASH FLOWS Jersey Oil and Gas plc For the year ended 31 December Cash flows from operating activities Cash from/(used in) operations Interest received Interest paid Net cash used in operating activities Cash flows from investing activities Farm-out proceeds Purchase of intangible assets Investing cash flows before movements in capital balances Changes in Term deposits: Net cash used in investing activities Cash flows from financing activities Principal elements of lease payments Net cash (used in)/generated from financing activities Decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Note 22 6 6 10 15 22 14 14 2023 £ 2022 £ (4,185,049) 114,825 (3,503) (4,073,727) 9,103,944 (1,013,081) 8,090,863 (3,319,445) 82,842 (4,730) (3,241,333) - (3,092,186) (3,092,186) (5,000,000) 3,090,863 - (3,092,186) (113,550) (113,550) (1,096,414) 6,579,349 5,482,935 (125,520) (125,520) (6,459,039) 13,038,388 6,579,349 The notes on pages 51 to 71 are an integral part of these financial statements 50 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 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. Material 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 2023 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 has substantial cash reserves following the successful farm- out of the GBA licences and receipt of initial funds resulting from the two transactions with NEO and Serica. The Group now has a fully funded 20% interest in the on-going Buchan redevelopment project. 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 project did not progress for any unforeseen reason and any 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. 51 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 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 2023:  Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);  Definition of Accounting Estimates (Amendments to IAS 8);  Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12);  IFRS 17 Insurance Contracts (Amendments to IFRS 17). 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 2023 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.    IFRS 16 Leases (Amendment – Liability in a Sale and Leaseback); IAS 1 Presentation of Financial Statements (Amendment – Classification of Liabilities as Current or Non- current); IAS 1 Presentation of Financial Statements (Amendment – Non-current Liabilities with Covenants). 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 the 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 judgement of the existence of impairment triggers (note 10). The estimation of share-based payment costs (note 20). The judgement associated with the treatment of farm-out transactions. 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. 52 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 Jersey Oil and Gas plc Share-Based Payments The Group currently has several share schemes that give rise to share-based payment charges. The charge to operating profit for these schemes amounted to £1,560,167 (2022: £1,227,504). 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 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. Farm-out transactions Determining the value of the consideration received for a farm-out disposal of assets with proven resources can be challenging. This is even more the case for assets which are farmed out in the pre proven resources phase. A judgement has been made that for such farm-outs only cash payments received will be recognised and no recognition will be made of any consideration in respect of the future value of work to be performed and carried by the farmee. Rather, the Group will carry the remaining interest at the previous full interest cost reduced by the amount of any cash consideration received from entering into the agreement. The effect will be that there is no gain recognised on the farm-out unless the cash consideration received exceeds the carrying value of the entire asset held. Upon FID, the Group will start recognising both cash payments received and the value of future carried assets to be received, and will recognise a future asset receivable with an accompanying gain in the income statement for the equity share of the asset disposed of. 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. 53 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 Jersey Oil and Gas plc 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. The following subsidiaries which are included in these consolidated accounts are exempt from the requirements of the Companies Act relating to the audit of their accounts under section 479A of the Companies Act 2006: Subsidiary Jersey North Sea Holdings Ltd Jersey Petroleum Ltd Jersey V&C Ltd JOG Fox Ltd Jersey E & P Ltd Jersey Oil Ltd Jersey Exploration Ltd Jersey Oil & Gas E & P Ltd Registration number 06451896 06490608 10853027 15224480 SC319467 SC319461 SC319459 115157 Acquisitions, Asset Purchases and Disposals Country of Incorporation England & Wales England & Wales England & Wales England & Wales Scotland Scotland Scotland Jersey 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 a 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. 54 Jersey Oil and Gas plc Notes to the Consolidated Financial Statements For the year ended 31 December 2023 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 soon 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 2023, the carrying value of intangible assets was £16.4m, 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 2023. S t r a t e g i c R e p o r t O u r G o v e r n a n c e 55 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 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 payments 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. 56 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 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. 57 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 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. 58 Jersey Oil and Gas plc Notes to the Consolidated Financial Statements For the year ended 31 December 2023 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 19). 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 u r F i n a n c i a l s During 2023 and 2022 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. 59 Jersey Oil and Gas plc Notes to the Consolidated Financial Statements For the year ended 31 December 2023 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. With the completion of the NEO Energy farm-out during the year and the Serica Energy farm-out post year end (refer to Note 23, Post Balance Sheet Events) the Group expects ’s that the introduction of these two industry partners will deliver sufficient cash to progress its assets to first oil in return for a capital (equity) contribution via the farm-outs. As the GBA development project progresses towards first oil, debt becomes available and may be sought in order to enhance equity returns. As at 31 December 2023 there are no borrowings within the Group (2022: 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 2023 £ 410,011 - - 410,011 2023 £ 613,067 - - 613,067 2023 £ 14,585 14,585 102,095 131,265 2022 £ 69,735 - 31,112 100,847 2022 £ 620,713 - - 620,713 2022 £ 31,971 32,212 22,509 86,692 60 S t r a t R e p o r t Notes to the Consolidated Financial Statements For the year ended 31 December 2023 5. Employees and Directors Wages and salaries Social security costs Share-based payments (note 20) Other pension costs Jersey Oil and Gas plc i O u r F n a n c i a l s 2023 £ 2,860,964 289,654 1,560,167 265,538 4,976,323 2022 £ 2,312,653 194,332 1,227,504 209,394 3,943,883 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 20) Benefits 2023 No. 5 1 8 14 2023 £ 1,174,317 39,047 853,551 9,585 2,076,500 2022 No. 5 1 9 15 2022 £ 664,200 26,500 618,914 12,645 1,322,259 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 2023 No. 2 2022 No. 2 2023 £ 520,586 324,902 26,667 872,155 2022 £ 255,699 228,648 25,000 509,347 61 Jersey Oil and Gas plc Notes to the Consolidated Financial Statements For the year ended 31 December 2023 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 20) Pension Contributions 6. Net Finance Income Finance income: Interest received Finance costs: Interest paid Interest on lease liability Net finance income 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 Foreign exchange gain 2023 £ 1,193,901 853,551 39,047 2,086,499 2022 £ 698,513 618,914 26,500 1,343,927 2023 £ 2022 £ 114,825 114,825 82,842 82,842 - (3,503) (3,503) 111,322 (7) (4,723) (4,730) 78,112 2023 £ 10,203 94,988 85,000 - - (26,774) 2022 £ 29,873 103,680 105,000 25,000 - (6,735) O v e r v i e w S t r a t e g i c R e p o r t 62 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 8. Tax Reconciliation of tax charge Loss before tax Tax at the standard rate of 23.5% avg. (2022: 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 2023 £ (5,595,353) (1,314,908) (671,854) 370,622 1,616,140 – 2022 £ (3,106,991) (590,328) (90,204) 234,654 445,878 – No liability to UK corporation tax arose on ordinary activities for the year ended 31 December 2023, or for the year ended 31 December 2022. In April 2023, the rate of corporation tax rose 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 £63 million (2022: £62 million). i O u r F n a n c i a l s 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. The share options (note 20) issued in the Group that would potentially dilute earnings per share in the future have not been included in the calculation of diluted loss per share as their effect would be anti-dilutive. Year ended 31 December 2023 Basic and Diluted EPS Basic & Diluted Year ended 31 December 2022 Basic and Diluted EPS Basic & Diluted Loss attributable to ordinary shareholders £ Weighted average number of shares Per share amount pence (5,595,353) 32,557,964 (17.19) (3,106,991) 32,554,293 (9.54) 63 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 10. Intangible assets Cost At 1 January 2022 Additions At 31 December 2022 Additions Farm-out At 31 December 2023 Accumulated Amortisation At 1 January 2022 Charge for the year At 31 December 2022 At 31 December 2023 Net Book Value At 31 December 2023 At 31 December 2022 Jersey Oil and Gas plc Exploration costs £ 21,689,394 2,858,729 24,548,122 1,152,860 (9,103,944) 16,597,038 175,241 – 175,241 175,241 16,421,797 24,372,882 At the start of 2022 and 2023 the Company owned 100% interests in two licenses; P2498 containing the Buchan field and J2 Discovery, and P2170 containing the Verbier discovery. At the end of 2023 the costs incurred in acquiring and advancing the licenses to their current state was £25,700,982 (2022: £24,548,122). During 2023 the farm-out of a 50% interest in both licenses to NEO energy was completed in exchange for a series of cash payments and both a predevelopment and development carry on the Buchan Redevelopment project. In accordance with our farm-out policy for assets at this stage of development (please refer to section on Acquisitions, Asset Purchases and Disposals on page 54) the cash proceeds in the year of £9,103,944 have been deducted from the carrying value of the assets. 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 2023 there are not deemed to be indicators that the licences are not commercial and the carrying value of £16,475,394 continues to be supported by ongoing exploration and development work on the licence areas with no impairments considered necessary. 64 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 11. Property, Plant and Equipment Cost At 1 January 2022 Additions At 31 December 2022 Additions At 31 December 2023 Accumulated Depreciation At 1 January 2022 Charge for the year At 31 December 2022 Charge for the year At 31 December 2023 Net Book Value At 31 December 2023 At 31 December 2022 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 - 228,447 188,370 29,873 218,244 10,203 228,447 - 10,203 2022 £ 81,328 81,328 86,692 - 86,692 2023 £ 139,661 139,661 55,154 71,309 126,463 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 2023 remained at 3% and the leases relate to office space. A new lease agreement was entered into in June 2023 for a total of 9 years with break clauses after 3 and 6 years The interest rate implicit in the agreement was 3% over the Bank of England’s base rate. Given the 3-year break clause and the future plans for the business it was deemed appropriate to recognise the liability relating to a 3-year period. This lease was in relation to an office in Jersey. Amounts Recognised in the Statement of comprehensive income Depreciation charge of right-of-use asset Buildings Interest expenses (included in finance cost) 2023 £ 94,988 94,988 (3,503) 2022 £ 103,680 103,680 (4,723) 65 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 13. Trade and other receivables Current: Other receivables Value added tax Prepayments Jersey Oil and Gas plc 2023 £ 328,166 81,846 68,222 478,234 2022 £ 30 69,702 97,328 167,060 Included within other receivables is an amount of £233,055 relating to monies outstanding from the exercise of share options. 14. Cash and cash equivalents Cash in bank accounts The cash balances are placed with creditworthy financial institutions with a minimum rating of ‘A’. 2023 £ 5,482,935 2022 £ 6,579,349 15. Term deposits Maturing within ten months Term deposits are placed with a creditworthy financial institution with a minimum rating of ‘A’. The £5m was placed in Dec 2023 with an interest rate of 5%. 2023 £ 5,000,000 2022 £ - 16. Called up share capital Issued: Number: 32,667,627 (2022: 32,554,293) 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. Included in the above are ordinary shares of 1,667 (2022; nil) which were committed to be issued at the year end but not allotted until January 2024. In 2023, 113,334 new ordinary shares were issued to satisfy the exercise of share options which raised £233,053 (gross) which was not paid at year end and is included in other receivables. All other issued share capital was fully paid. 2023 £ 2,574,529 Nominal value 1p £ 2,573,395 Class Ordinary 2022 17. Trade and other payables Current: Trade payables Accrued expenses Other payables Taxation and Social Security 2023 £ 345,814 256,283 10,970 127,860 740,927 2022 £ 459,461 161,253 - 68,082 688,796 66 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 18. Lease liabilities Non-Current Lease Liabilities 19. Contingent Liabilities Jersey Oil and Gas plc 2023 £ 71,309 71,309 2022 £ - - (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 consisted 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 included 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 FDP. The earliest of the milestone payments in respect of the acquisition is not currently anticipated being payable before the start of 2025. 67 Notes to the Consolidated Financial Statements For the year ended 31 December 2023 Jersey Oil and Gas plc 20. 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 the number of shares that will eventually vest. The Group’s share option schemes are for Directors, Officers and employees. The charge for the year was £1,560,167 (2022: £1,227,504) and details of outstanding options are set out in the table below. Exercise price (pence) 1,500 1,500 200 200 200 200 172 175 175 175 175 175 175 200 110 155 155 155 210 210 210 210 210 210 147 147 147 230 230 230 230 230 230 247.5 247.5 247.5 247.5 247.5 247.5 Date of Grant May-13 May-13 Jan-18 Jan-18 Jan-18 Jan-18 Nov-18 Jan-19 Jan-19 Jan-19 Jan-19 Jan-19 Jan-19 Jun-19 Jun-19 Jan-21 Jan-21 Jan-21 Mar-21 Mar-21 Mar-21 Mar-21 Mar-21 Mar-21 Nov-21 Nov-21 Nov-21 Apr-22 Apr-22 Apr-22 Apr-22 Apr-22 Apr-22 Apr-23 Apr-23 Apr-23 Apr-23 Apr-23 Apr-23 Vesting date May-14 May-15 Jan-21 Jan-18 Jan-19 Jan-20 Nov-21 Jan-20 Jan-21 Jan-22 Jan-20 Jan-21 Jan-22 Jan-21 Jun-19 Jan-22 Jan-23 Jan-24 Mar-22 Mar-23 Mar-24 Mar-22 Mar-23 Mar-24 Nov-22 Nov-23 Nov-24 Apr-23 Apr-24 Apr-25 Apr-23 Apr-24 Apr-25 Apr-24 Apr-25 Apr-26 Apr-24 Apr-25 Apr-26 Expiry date May-23 May-23 Jan-25 Jan-23* Jan-23* Jan-23* Nov-25 Jan-26 Jan-26 Jan-26 Jan-24 Jan-24 Jan-24 Jun-29 Jun-29 Jan-28 Jan-28 Jan-28 Mar-26 Mar-26 Mar-26 Mar-28 Mar-28 Mar-28 Nov-28 Nov-28 Nov-28 Apr-29 Apr-29 Apr-29 Apr-27 Apr-27 Apr-27 Apr-30 Apr-30 Apr-30 Apr-28 Apr-28 Apr-28 Options lapsed/non vesting during the year No. of shares for which options outstanding at 31 Dec 2023 No. of shares for which options Options Options outstanding at Exercised issued 1 Jan 2023 - (9,500) - - 9,500 - (9,500) - - 9,500 420,000 - - - 420,000 - (40,000) 36,666 - 76,666 - (40,000) 36,667 - 76,667 - (33,333) 36,667 - 70,000 150,000 - - - 150,000 88,333 - - - 88,333 88,333 - - - 88,333 68,333 - - - 68,333 11,667 - - - 11,667 - - - 11,667 11,667 - 11,667 - - 11,667 120,000 - - - 120,000 - - - 40,000 40,000 83,333 - 83,333 - - 75,000 - - - 75,000 - (15,000) 60,000 - 75,000 11,666 - - - 11,666 11,667 - - - 11,667 11,667 - - - 11,667 - (6,667) 130,001 - 136,668 - (6,667) 86,666 - 93,333 - (15,000) 78,333 - 93,333 233,334 - - - 233,334 233,333 - - - 233,333 233,333 - - - 233,333 - (6,667) 278,333 - 285,000 - (16,667) 268,333 - 285,000 - (16,667) 268,333 - 285,000 45,000 - - - 45,000 45,000 - - - 45,000 45,000 - - - 45,000 - (2,500) 169,167 - 171,667 - (2,500) 169,167 - 171,667 - (2,500) 169,166 - 171,666 28,334 - - - 28,334 28,333 - - - 28,333 28,333 - - - 28,333 *The share options issued in January 2018 had their expiry dates extended due to the Company being in several close periods whereby according to the scheme rules the options were unable to be exercised. The amended expiry date for these options was 29 January 2024 with the remaining outstanding balances expiring on this date. Total 3,910,832 68  Notes to the Consolidated Financial Statements For the year ended 31 December 2023 Jersey Oil and Gas plc The weighted average value 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 3.9% and 4.1%. The volatility measured at the standard deviation of continuously compounded share returns is based on a statistical analysis of daily share prices from over a four year period. The weighted average exercise price for the options granted in 2023 was 247.50 pence, the weighted average remaining contractual life of the options was 6 years (for all schemes 4 years), the weighted average volatility rate was 115% and the dividend yield was nil. During the year 19,000 share options from the May 2013 issuance expired, these had an exercise price of 1,500 pence, a further 90,835 share options were forfeited due to the departure of employees, these had a weighted exercise price of 213 pence. In December 2023 113,333 share options that were granted in January 2018 were exercised by former employees, these had an exercise price of 200 pence. The weighted average exercise price for all outstanding options at 31 December 2023 was 200 pence. For details of the schemes and scheme rules, please refer to the Remuneration Report. 21. 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 JOG Fox 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% 100% Country of Incorporation England & Wales England & Wales England & Wales England & Wales Scotland Scotland Scotland Jersey Principal Activity Non-Trading Oil Exploration Oil Exploration Oil Exploration Non-Trading Non-Trading Non-Trading Management services Registered Office 1 1 1 1 2 2 2 3 10 The Triangle, ng2 Business Park, Nottingham, NG2 1AE 7 Queen’s Gardens, Aberdeen, AB15 4YD 1. 2. 3. First Floor, Tower House, La Route es Nouaux, St Helier, Jersey JE2 4ZJ 22. 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 Depreciation right-of-use asset Share-based payments Finance costs Finance income (Increase)/decrease in trade and other receivables Decrease in trade and other payables Cash from/(used in) operations 2023 £ (5,595,353) 10,203 94,988 1,560,167 3,503 (114,825) (4,041,317) (109,685) (34,047) (4,185,049) 2022 £ (3,106,991) 29,873 103,680 1,227,504 4,730 (82,842) (1,824,046) 186,054 (1,681,452) (3,319,445) 69 O v e r v i e w S t r a t e g i c R e p o r t Jersey Oil and Gas plc Notes to the Consolidated Financial Statements For the year ended 31 December 2023 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 2023 Cash and cash equivalents Year ended 2022 Cash and cash equivalents 31 Dec 2023 £ 5,482,935 31 Dec 2022 £ 6,579,349 Cash and cash equivalents Net cash £ 6,579,349 6,579,349 At 1 Jan 2023 Analysis of net cash Cash outflow £ 01 Jan 2023 £ 6,579,349 01 Jan 2022 £ 13,038,388 At 31 Dec 2023 £ In December 2023 £5m was placed on 10-month deposit at a fixed rate of 5%. (1,096,414) (1,096,414) 5,482,935 5,482,935 70 Jersey Oil and Gas plc Notes to the Consolidated Financial Statements For the year ended 31 December 2023 23. Post balance sheet events On 26 February 2024, Jersey Oil & Gas plc announced that, further to the press release issued on 23 November 2023, the Company had completed its farm-out of a 30% interest in the Greater Buchan Area (“GBA”) licences to Serica Energy (UK) Limited (“Serica”) and received the associated milestone cash payment of $6.8 million. The farm-out transaction with Serica is on identical pro-rata terms to that previously completed with NEO Energy ("NEO") earlier in 2023. In aggregate, the two transactions result in JOG retaining a 20% interest in the GBA licences, a full carry on the capital expenditure required to bring the Buchan field into production and a number of milestone cash payments. Upon completion of the Serica Farm-out, the combined cash payments received from the two farm-outs were approximately $18 million, with up to a further $20 million due to be paid to JOG upon Buchan Field Development Plan ("FDP") approval. In exchange for entering into definitive agreements to divest a 30% working interest in the GBA licences, the Company is set to receive from Serica:      a 7.5% carry of the estimated $25 million cost to take the Buchan field through to FDP approval a 7.5% carry of the Buchan field development costs, up to the budget included in the approved FDP; equivalent to a 1.25 carry ratio a $6.8 million cash payment on completion, which includes a $5.6 million payment associated with the finalisation of the GBA development solution and associated acquisition of the "Western Isles" FPSO – this payment has been received a $7.5 million cash payment on approval of the Buchan FDP by the NSTA a $3 million cash payment on each FDP approval by the NSTA in respect of the J2 and Verbier oil discoveries The primary condition precedent to completing the Serica Farm-out was receipt of approval from the NSTA for the transaction. 24. Availability of the annual report 2023 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. 71 Contents for the Company Financial Statements For year ended 31 December 2023 Company Statement of Financial Position Company Statement of Changes in Equity Notes to the Company Financial Statements Jersey Oil and Gas plc Pages 73 74 75 O v e r v i e w S t r a t e g i c R e p o r t O u r G o v e r n a n c e i O u r F n a n c i a l s 72 COMPANY STATEMENT OF FINANCIAL POSITION As at 31 December 2023 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 Term deposits 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 4 5 6 7 8 9 10 6 11 6 Note 2023 £ 2022 £ - 10,010 45,649 55,659 - - - - 377,091 4,520,924 5,000,000 9,898,015 9,898,015 31,842,163 6,436,069 - 38,278,232 38,333,891 2,574,529 110,535,059 3,890,981 (112,653,103) 4,347,466 2,573,395 110,309,524 2,566,338 (77,623,549) 37,825,708 - - 5,550,549 - 5,550,549 9,898,015 471,893 36,290 508,183 38,333,891 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 £35,265,078 (2022: Loss of £1,395,692). The financial statements on pages 73 and 74 were approved by the Board of Directors and authorised for issue on 10 May 2024. They were signed on its behalf by Graham Forbes – Chief Financial Officer. Graham Forbes Chief Financial Officer 10 May 2024 Company Registration Number: 07503957 The notes on pages 75 to 80 are an integral part of these financial statements 73 COMPANY STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2023 Jersey Oil and Gas plc At 1 January 2022 Total comprehensive loss for the year Transactions with owners in their capacity as owners Expired share options Transactions with owners (share- based payments) At 31 December 2022 Total comprehensive loss for the year Transactions with owners in their capacity as owners Issue of share capital Lapsed share options Exercised share options Transactions with owners (share- based payments) At 31 December 2023 Note Called up share capital £ 2,573,395 – Share premium account £ 110,309,524 – Share options reserve £ 1,397,282 – Accumulated losses £ (76,286,305) (1,395,692) Total equity £ 37,993,896 (1,395,692) 5 5 – – – – (58,448) 1,227,504 58,448 – – 1,227,504 2,573,395 – 110,309,524 – 2,566,338 – (77,623,549) (35,265,078) 37,825,708 (35,265,078) 1,134 – – – 225,535 – – – – (148,178) (87,346) 1,560,167 – 148,178 87,346 – 226,669 – – 1,560,167 2,574,529 110,535,059 3,890,981 (112,653,103) 4,347,466 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 profit and loss and other comprehensive income or loss The notes on pages 75 to 80 are an integral part of these financial statements O v e r v i e w i O u r F n a n c i a l s 74 Jersey Oil and Gas plc Notes to the Company Financial Statements For the year ended 31 December 2023 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 material 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. 75 Jersey Oil and Gas plc Notes to the Company Financial Statements For the year ended 31 December 2023 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 has substantial cash reserves following the successful farm- out of the GBA and receipt of initial funds resulting from the two transactions with NEO and Serica. The Group now has a fully funded 20% interest in the on-going Buchan redevelopment project. 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 any 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 2023 £ 2,110,259 270,036 1,560,167 219,753 4,160,215 2022 £ 1,499,246 198,718 1,227,504 165,019 3,090,487 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 2023 4 1 6 11 2021 4 1 7 12 For details relating to the remuneration for the Directors and highest paid Director please refer to note 5 of the consolidated financial statements. 76 Jersey Oil and Gas plc O u r G o v e r n a n c e Notes to the Company Financial Statements For the year ended 31 December 2023 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 £35,265,078 (2022: Loss of £1,395,692). Auditors’ remuneration is disclosed in note 7 in the consolidated financial statements. 4. Investment in subsidiaries Company – shares in subsidiary undertakings: 2023 £ – 2022 £ – Following the waive of the intercompany balance owed by Jersey Petroleum Limited by way of a deed or forgiveness, £27.5m was capitalised as an investment in subsidiary then subsequently impaired due to a doubt in recoverability. The subsidiary undertakings at 31 December 2023 were as follows: % owned Subsidiary Jersey Petroleum Ltd* Jersey North Sea Holdings Ltd* County of Incorporation England & Wales England & Wales Jersey V&C Ltd* England & Wales JOG Fox Ltd* England & Wales Jersey E & P Ltd** Scotland Jersey Oil Ltd** Scotland Jersey Exploration Ltd** Scotland 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% 100% ** Registered address: 7 Queen’s Gardens, Aberdeen AB15 4YD *** Registered address: First Floor, Tower House, La Route es Nouaux, St Helier, Jersey, JE2 4ZJ 5. Property, plant and equipment Cost At 1 January 2023 At 31 December 2023 Accumulated depreciation At 1 January 2023 Charge for year At 31 December 2023 Net book value At 31 December 2023 At 31 December 2022 Principal Activity Non-Trading Oil Exploration Oil Exploration Oil Exploration Non-Trading Non-Trading Non-Trading Management services Office equipment £ 178,960 178,960 168,950 10,010 178,960 - 10,010 77 Notes to the Company Financial Statements For the year ended 31 December 2023 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 2023 £ - - - - - 2022 £ 45,649 45,649 36,290 - 36,290 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 2023 remained at 3% and the leases relate to office space. A new lease agreement was entered into in September 2023 with a lease end date of September 2024 this had a rolling 3-month notice clause, this was in relation to the London office, 3 months’ notice on this lease was served in January 2024. The lease was treated as a short-term lease and not a right-of-use asset. Amounts Recognised in the Statement of comprehensive income Depreciation charge of right-of-use asset Buildings Interest expenses (included in finance cost) 2023 £ 45,649 45,649 (410) 2022 £ 60,865 60,865 (2,430) 78 Notes to the Company Financial Statements For the year ended 31 December 2023 7. Trade and other receivables Current: Other receivables (net) Value Added Tax Amounts due from Group undertakings Prepayments Deposits Jersey Oil and Gas plc 2023 £ 233,054 79,862 - 61,483 2,692 377,091 2022 £ - 67,532 31,704,534 67,405 2,692 31,842,163 On 19th May 2023, the 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. The balances in previous years 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. The amounts due from Group undertakings are unsecured, non-interest bearing, have no fixed date of repayment and are repayable on demand. 8. Cash and cash equivalents Cash at bank 2023 £ 4,520,924 2022 £ 6,436,069 Cash deposits are placed with creditworthy financial institutions with a minimum rating of ‘A’. 9. Term deposits Maturing within ten months Term deposits are placed with creditworthy financial institutions with a minimum rating of ‘A’. £5m was placed in December 2023 at a rate of 5%. 5,000,000 2023 £ 2022 £ - 10. Called up share capital Issued: Number: 32,667,627 (2022: 32,554,293) Class Ordinary Nominal Value 1p 2023 £ 2,574,529 2022 £ 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. Included in the above are ordinary shares of 1,667 (2022; nil) which were committed to be issued at the year end but not allotted until January 2024. 79 O v e r v i e w S t r a t e g i c R e p o r t Notes to the Company Financial Statements For the year ended 31 December 2023 11. Trade and other payables Current: Amounts due to Group undertakings Trade payables Other payables Accrued expenses Jersey Oil and Gas plc 2023 £ 5,192,160 96,135 130,914 131,340 5,550,549 2022 £ 211,678 79,002 61,996 119,217 471,893 Amounts shown as Current: Amounts owed to Group undertakings are unsecured, interest bearing, have no fixed date of repayment and are repayable on demand. 12. Post balance sheet events For all Group related post balance sheet events please see note 23 of the consolidated financial statements. 80 Jersey Oil and Gas plc Ground Floor 5 St Andrew’s Place St Helier, Jersey Channel Islands JE2 3RP +44(0)1534 858 622 

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