Jersey Oil & Gas Hoping to Make a Killing in the North Sea with Little Expenditure

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.

About the Author

Dave R. Brown
Dave moved to Gulf Feed from Burnbrae Asset Management, where he headed up the new business team of the financial services division. Aside from his expertise in delivering value for a large network of clients, Dave has a wealth of experience in the areas of the financial markets and implementing change management. This was gained from his time managing GECR, an equity research company, where he returned it to profitability from a period of heavy losses. Dave has a background in mathematics and his previous experience, prior to Burnbrae Asset Management, was as an investment analyst for MSCI.