The group signed a farm-out deal over the summer with Statoil, the Norwegian oil giant and North Sea expert
Jersey Oil and Gas PLC (LON:JOG) has seen their shares perform quite well over the past few months. Malcolm Graham Wood, a veteran commentator on the region, believes the circumstances of the North Sea market are perfect for junior exploration firms to capitalize on.
Shares have climbed almost three-fold from the 14.25 pence they were trading at near the end of March to the 37.75 pence they are currently trading at.
During the summer, the group agreed to a farm-out deal with Statoil for exploration license P.2170, allowing the drilling of a well to commence in the upcoming year. Wood describes the deal in question as being impressive, especially since P.2170 shows promise as a prospect. The larger of the two sites that fall within the clauses of the deal has a potential of 300 million barrels of oil equivalent.
Wood explained that Statoil is certainly at the top of the list of partners in the North Sea region because of their size, their ability to create long-term profile assets and choose regions that are not expensive combines will with smaller firms like Jersey Oil & Gsa.
He points out that giants like BG and Shell are shifting away from the North Sea, except for areas with significantly sized prospects, which means they are selling off their prospects, thereby offering smaller firms a host of opportunities.
Companies like Jersey are considering developing assets like these but with lower expenses, namely approximately US$20 per barrel in operational expenditure. With Brent crude maintaining its high of US$40 per barrel, it looks like it will prove a profitable approach.