Proposed Placing & Subscription to Raise up to £15M

Source: 3/17/2021, Location: Europe

Jersey Oil & Gas, an independent upstream oil and gas company focused on the UK Continental Shelf ("UKCS") region of the North Sea, is pleased to announce its intention to undertake a fundraising of, in aggregate, up to £15 million (gross) by way of a placing (the "Placing") of, and a subscription by certain of the Company's directors (the "Subscription") for, new Ordinary Shares. In addition, the Company intends to launch an offer to Qualifying Participants to raise up to a further £2 million (gross) (the "Offer", together with the Placing and the Subscription, the "Fundraising") at the Issue Price.

The Placing will be effected by way of an accelerated bookbuild (the "Bookbuild") at a price of 165p (the "Issue Price") per Placing Share.

Andrew Benitz, Vicary Gibbs, Ronald Lansdell and Marcus Stanton (the "Participating Directors") have indicated their intention to subscribe for up to £60,000 in aggregate for up to 36,361 new Ordinary Shares at the Issue Price. Further details of such Subscription by the Participating Directors will be set out in the announcement to be made following closure of the Bookbuild.

Following the successful completion of the Fundraising, and in consideration of the strong performance of the Company, the Remuneration Committee is minded to make a grant of options under the Jersey Oil and Gas plc 2016 Enterprise Management Incentive and Unapproved Share Option Plan, within the terms of the schemes.

Completion of the Placing and Subscription is subject, inter alia, to Shareholder approval of the Resolutions to authorise the issue of the Placing Shares and Subscription Shares, which will be sought at a General Meeting of the Company to be held at 10.00 a.m. on 14 April 2021.

The Offer
It is proposed that the Offer will comprise an offer to Qualifying Participants of Offer Shares with the aggregate consideration to be received by the Company limited to £2 million, being the Offer Maximum. Qualifying Participants can apply for as many Offer Shares as they wish. However, the Directors reserve the right to exercise their absolute discretion (with the agreement of the Joint Brokers) in the allocation of successful applications, including, without limitation, to ensure that no Offer Shares are issued so as to exceed the Offer Maximum.

It is proposed that the Offer will only be available to Qualifying Participants and, save as set out in the preceding paragraph, there is no maximum or minimum subscription per Applicant. No Qualifying Participant may subscribe for Offer Shares in excess of the Offer Maximum and multiple applications may be submitted. Qualifying Participants who are joint Shareholders may only apply for Offer Shares as joint Applicants. A Circular will be posted on or around 29 March 2021, containing, interalia, details of the Offer. In order to apply for Offer Shares, Qualifying Participants should complete the Application Form in accordance with the instructions to be set out therein and in the Circular. A further announcement setting out timings in respect of the Offer will be made in due course.

The Offer is not being underwritten. The Application Form and accompanying procedure for application will set out, in detail, how Qualifying Participants may participate in the Offer.

Background to and reasons for the Fundraising
On 3 March 2021, the Company announced the key findings of its Concept Select Report in respect of its Greater Buchan Area ("GBA") development project , which set out a three-phase development approach centred around a single integrated wellhead, production, utilities and quarters platform located at the Buchan field - the GBA hub. The development concept is based on P50 technically recoverable resource estimates of, in aggregate, 172 million barrels of oil equivalent ("MMboe") of light sweet crude and associated gas within the core GBA, which includes the Buchan oil field and J2 and Verbier oil discoveries.

Jersey Oil & Gas aims to deliver production from the planned GBA development project at an industry leading carbon intensity level due to platform electrification, as seen in certain fields in the Norwegian sector. Overall carbon emissions from the proposed GBA development with platform electrification are estimated by management at <1kg/boe.

The project economic estimates by management for the core GBA development selecting platform electrification as the preferred low carbon power solution, are as follows:
· Pre-tax free cashflow of US$6.4 billion with an NPV (pre-tax) of US$1.7 billion
· Payback period under 3 years
· Project internal rate of return greater than 25%

The development costs (Capex and Opex) based on current day values are estimated by management to be approximately US$30/boe:
· Capex estimate for Phase 1 of approximately £1 billion (including 20% contingency)
· Opex estimate during plateau production of US$8/boe to US$9/boe

The GBA hub nameplate capacity has been set at 40,000 barrels of oil per day ("bopd"), with expected plateau production of more than three years. There is significant upside potential from four drill ready exploration prospects within the GBA that have combined prospective resource estimates totalling an additional 219 MMboe:

· The close proximity of the GBA exploration prospects will enable their development, on discovery, as low cost subsea tie-backs to the planned GBA hub
· A discovery in line with P50 estimates at any of the drill ready exploration prospects has the potential to extend plateau production significantly and materially increase project economics.

With the preferred development concept identified, as announced on 3 March 2021, Jersey Oil & Gas has recently formally launched its planned and previously announced farm-out process seeking to secure an industry partner for the GBA development project.

The Directors believe that, upon successful completion of the farm-out process, the market may value the Company at a premium relative to its current share price.

Expected Use of Proceeds
The net proceeds from the Fundraising, together with the Company's existing cash reserves, will be used to strengthen the Company's balance sheet ahead of anticipated commercial negotiations for the GBA development project during the farm-out process and to maintain momentum and ensure that time and funding pressures do not interfere in the efficient delivery of the overall project. Costs for the next stages of the GBA development project will include surveys, license fees, pre-FEED and FEED work and project management.

Summary use of net proceeds:
In summary, the net proceeds of the Fundraising will be utilised as follows:
· To maintain the momentum of the GBA development project's workstreams, namely:
- To ensure that progress is maintained into the FEED phase until the farm-out process has been concluded, currently anticipated to occur during 2021
- To preserve the value of a 2025 start-up date, with marine surveys to support the Environmental Statement required for the Field Development Plan required to be initiated imminently

· The balance of the net Fundraising proceeds not required for specific operational expenses will be utilised to provide general working capital for the Group and strengthen the Company's balance sheet ahead of anticipated commercial farm-out negotiations, thereby providing more time and flexibility to seek to deliver the optimum result for Shareholders.

Andrew Benitz, CEO of Jersey Oil & Gas, commented :
"Over the past three years, Jersey Oil & Gas has made significant progress in developing what has become a flagship project for the North Sea. Our recently announced development concept for the Greater Buchan Area is based on 172 MMboe of 2C contingent resource estimates with significant exploration upside potential and aims to deliver initial production of up to 40,000 bopd. The GBA hub is planned to be one of the first electrified platforms in the basin as we seek to deliver future production at industry leading carbon intensity levels.

"Given this potential, it is imperative that, as we move into the next key phase for the project, namely, the farm-out process, which I am pleased to report has recently formally been launched, Jersey Oil & Gas is financially robust such that it can conduct negotiations from a position of greater strength whilst at the same time maintaining momentum on the project's other workstreams."

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