Jersey Oil & Gas

Jersey has announced its unaudited Interim Results for the six month period ended 30 June 2024.

Highlights

• Significant progress has been made across all engineering, subsurface and regulatory workstreams to position the Buchan Horst (“Buchan”) project for formal approval
• The Company has been fully carried for its share of the £22 million that has been spent to date on the current phase of activities by the Buchan joint venture as a result of the farm-out agreements with NEO Energy (“NEO”) and Serica Energy (“Serica”)
• Multiple regulatory submissions have been made as part of moving towards Field Development Plan (“FDP”) approval – a draft FDP to the North Sea Transition Authority, an Environmental Impact Assessment to the Offshore Major Accident Regulator and a “Relocation Notice” to the Health & Safety Executive concerning the floating production, storage and offloading vessel
• As at 30 June 2024, the Company had a cash balance of approximately £13 million and no debt.  This reflects £5.5 million received during the first half of the year as a result of completing the Greater Buchan Area farm-out transaction with Serica
• The Company benefits from no financial exposure to its 20% share of the Buchan project’s costs as a result of the farm-outs that have been completed with NEO and Serica
• Whilst clarity is awaited on the fiscal and regulatory uncertainties currently facing the UK’s oil and gas industry, work on the project is being slowed down by the Buchan Operator and a licence extension is being requested
• Actions are being taken to further reduce the cash costs of the business in the near term ahead of Buchan FDP approval.  Through various measures, including a reduction in salaries, staff and Director numbers, the cash costs of the business are forecast to fall by 50% from £3 million a year to under £1.5 million in 2025
• While the Company continues to seek compelling M&A opportunities that could bring cash flow, portfolio diversification and quality investment opportunities into the business, it is now looking through a wider lens than the historic focus on purely UK oil and gas assets

Andrew Benitz, CEO of Jersey Oil & Gas, commented:

“The first half of the year has been marked by both highs and lows for the Company. In February 2024, we celebrated completion of our second GBA farm-out transaction to Serica Energy. Critically, this enabled us to secure a fully funded 20% interest in the Buchan development project. This achievement was testament to the quality of the asset we have nurtured from inception and to the expertise and tenacity of the team. 

The high of this farm-out success has been tempered over the course of the year by the fiscal and political turmoil the UK oil and gas industry has faced. Whilst demand for hydrocarbons continues during the energy transition, developing homegrown energy provides the UK with a cleaner and more secure solution than relying on carbon intensive imported fuels. The Buchan project has the potential to create over 1,000 jobs across many parts of the UK supply chain and over 200 project related jobs, attract private investment of around £1 billion into the UK economy, generate hundreds of millions in UK tax revenues and deliver accelerated investment in new offshore renewable electricity generation. 

Against that backdrop, we hope that the Government will ensure that sense prevails and the right fiscal and regulatory environment is established to enable the UK’s oil and gas industry to continue being a highly valuable contributor to the economy for years to come, whilst we transition to a lower carbon economy.”

Andrew Benitz makes it perfectly clear here, a high quality development at GBA with a ‘cleaner, more secure solution’ is on offer compared to relying on carbon intensive imported fuels. The opportunity he offers makes a lot of sense, GBA will be a huge low carbon contributor at a time when no alternative is obvious, accordingly it, and Jersey, offers a way to play the way to net zero whilst maintaining commitment to the UK energy industry. 

Touchstone Exploration

The board of directors of Touchstone notes Trinity’s announcement on 18 September 2024  that the board of directors of Trinity are seeking the permission of the Court to formally withdraw the Scheme at a Court hearing which has been scheduled for 25 September 2024.

Notwithstanding withdrawal of the Scheme, the Touchstone Board confirms that it does not intend to exercise its right to implement the Acquisition by way of a Takeover Offer for the Trinity Shares as an alternative to the Scheme (as provided for under paragraph 10 of Part B of Part Three of the Touchstone Scheme Document).

Consequently, the Touchstone Board has requested the Takeover Panel’s consent for the Acquisition to lapse upon Withdrawal taking effect, which consent has been granted.

As stated in the Announcement, assuming the Court grants its permission for Withdrawal at the Withdrawal Hearing, Withdrawal will take effect immediately following the Withdrawal Hearing, at which time the Acquisition will also lapse with immediate effect.

Paul Baay, President and Chief Executive Officer of Touchstone, commented:
“We are disappointed with the outcome of this process, and the fact that UK takeover rules make it possible for our offer not to complete at such a late stage in the process despite having obtained both shareholder and regulatory approvals. We believe our offer represented compelling value for all stakeholders.

However, Touchstone remains committed to maintaining strict discipline in all corporate activities. We will only pursue investments that align with our strategic and financial goals, ensuring they deliver value to our shareholders. 

As we continue to advance our operations to tie in the Cascadura-2ST1 and Cascadura-3ST1 wells towards their first production, along with our upcoming fourth-quarter drilling program, we look forward to updating our shareholders on our strategic and operational progress in the coming months. We will soon provide an updated presentation and host an investor forum to share our developments.“

Very little to commend the activities of the authorities here, but Trinity have escaped from a period of extensive lethargic and uninspired management to get out of this game, shareholders cannot expect much more from this under new management. Meantime Touchstone has a great portfolio to work with. 

Sound Energy

Sound Energy, the transition energy company, announces its unaudited half-year report for the six months ended 30 June 2024.

HIGHLIGHTS

Development of the Moroccan Tendrara Production Concession (the “Concession”)

Phase 1 Micro LNG (”mLNG”) project (”Phase 1”)

• Safely completed workover of both wells necessary for first gas,
• Erected the base and the first layer of mLNG tank shell and initiated the inner tank construction
• Extensive activity continued offsite with our contractor and its sub-contractors designing and constructing plant equipment for delivery on site end 2024
• Processed gas expected to be produced at plant in 2025

Phase 2 Gas (pipeline) development (”Phase 2”)

• Continued progress made for project financing from exclusive lead arranger, Attijariwafa Bank, Morocco’s largest bank

Corporate

• In June 2024 entered into a binding sale and purchase agreement with Managem SA, in respect of a partial divestment of the Group’s Tendrara Production Concession and Grand Tendrara and Anoual exploration permits, through the sale of the Company’s subsidiary, Sound Energy Morocco East Limited (SEME) which holds a net 55% working interest in the Tendrara Production Concession and 47.5% interests in the Grand Tendrara and Anoual exploration permits.
• Post period, entered into a bridge financing debt facility for up to £1.5 million to provide the Group with additional flexibility

Graham Lyon, Executive Chairman said:
”I am grateful for continued support of all our shareholders and partners, and I can say that the first half of 2024 saw the significant milestone of partnering at Tendrara move closer to fruition. Managem are a substantial company with a strong base in Morocco. They bring financing and in-depth local experience. Sound and Managem are working closely to effect a smooth transition of Operatorship control at Tendrara.  Whilst the Phase 1 development has been frustrated by delays, equipment, construction and well work has taken place at Tendrara, and a plan for delivery of LNG sales in 2025 established.

“Whilst the first half of the year has been busy with negotiation and agreement of the transaction with Managem, ensuring a smooth transition of operations and progressing Phase 2 towards a final investment decision will ensure the remainder of 2024 will be eventful. The Company will thereafter optimise its portfolio and structure to deliver optimum shareholder value, positioning the Company for production and for further growth. As our key project in Morocco is considered of strategic importance in the country, all efforts must be focused on ensuring a safe and efficient execution of our business plan within the resources available.

“I would like to thank the Ministries in Morocco and ONHYM, our state partner for their continued cooperation and increased support. Finally, a thank you to our staff who have and continue to drive the Company forward.”

As always interims provide little to guide on a forward looking basis, but more important is that the Managem deal is close to closing and Graham Lyon and his team are delivering the goods towards the FID at the end of this year. From next year the company has it all to deliver its project in Morocco which from here you would bet Sound is highly capable of.

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