Jersey Oil & Gas (JOG:207p), a UK North Sea-focused upstream oil and gas company that owns an 18 per cent interest in the P2170 licence (Blocks 20/5b & 21/1d) in the Outer Moray Firth, which contains the Verbier oil discovery, has been awarded a 100 per cent working interest and ownership of an Block 21/2a that includes the Glenn oil discovery in the UK Oil & Gas Authority’s (OGA) 31st supplementary offshore licensing round.
It adds 14m barrels of oil equivalent (boe) mean prospective resources to an estimated 85m boe in the Buchan oil field acreage that Jersey was awarded in last month’s OGA licensing round (‘Jersey gushes higher on transformational licensing award’, 22 July 2019). Progression of the Buchan development is highly supportive of the development of both Verbier (minimum 25m boe), and now Glenn, most likely through a tie-in.
The latest award also improves the likelihood that the three-month option agreement Jersey entered into with Equinor, operator of Verbier, over a 50 per cent equity interest in respect of the two blocks containing the Buchan oil field and the nearby J2 oil discovery, is even more likely to be exercised. That’s because Glenn is likely to be included in Jersey’s fully-funded field development plan (FDP) to deliver a Jersey operated area hub development.
| Simon Thompson's 2019 Bargain Shares portfolio performance | ||||||
| Company name | TIDM | Market value | Opening offer price 1.02.19 | Bid price 27.08.19 | Dividends | Percentage change |
| Futura Medical | FUM | £88m | 14.85p | 43p | 0p | 189.6% |
| TMT Investments | TMT | $161m | 250¢ | 570¢ | 20¢ | 136.0% |
| Inland | INL | £143m | 57.75p | 69p | 0.85p | 21.0% |
| Ramsdens Holdings | RFX | £58m | 165p | 188p | 4.8p | 16.8% |
| Litigation Capital Management | LIT | £97m | 77.5p | 89.2p | 0.28p | 15.5% |
| Augmentum Fintech | AUGM | £129m | 102.4p | 110p | 0p | 7.4% |
| Bloomsbury Publishing | BMY | £172m | 229p | 231p | 6.75p | 3.8% |
| Jersey Oil & Gas | JOG | £45m | 205p | 205p | 0p | 0.0% |
| Mercia Technologies | MERC | £89m | 29.57p | 29.4p | 0p | -0.6% |
| Driver Group | DRV | £29m | 74p | 53p | 0.5p | -27.7% |
| Average | 36.2% | |||||
| FTSE All-Share Total Return index | 6,852 | 7,191 | 4.9% | |||
| FTSE AIM All-Share Total Return index | 1,023 | 989 | -3.4% | |||
| Source: London Stock Exchange opening offer prices at 8am on 1 February 2019 and bid prices at 10.50am on 27 August 2019. | ||||||
Moreover, based on a long-term real oil price of $65 a barrel, analyst Daniel Slater at Arden Partners has raised both his risked and unrisked net asset value (NAV) per share estimates by around 10 per cent to 597p and 1,352p, respectively, highlighting the value in Jersey’s strategic development assets.
True, Jersey’s shares have been volatile this year and are trading around the 205p entry point in my market-beating 2019 Bargain Shares Portfolio. However, progress on development work and/or an emergence of an industry partner to commercialise the valuable acreage could see the share price discount to risked net asset value narrow dramatically. Buy.
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Simon Thompson has been named 2019 Small Cap Journalist of the year at the 2019 Small Cap Awards, a prestigious event celebrating the best and rewarding the finest professionals and companies that work within the AIM and NEX communities. It is attended by institutions, fund managers, brokers and advisors operating in the sub-£100m market cap quoted company sector.
