Shares in Jersey Oil and Gas dipped 0.8pc to 178.5p this morning after the business announced a further delay in the drilling of its much-anticipated North Sea Verbier discovery. In an update, the firm said an appraisal well at the North Sea-based site is now expected to spud in the first quarter of 2019, rather than Q4 2018 as previously planned.
Verbier, in which Jersey Oil owns an 18pc stake, is thought to contain between 25-130MMboe based on initial operator estimates of gross recoverable resources. Alongside fellow stakeholders Equinor and Cieco, Jersey plans to drill an appraisal well at the site to get a better idea of exactly how much oil it contains.
If the site’s total reserves come in at the upper end of expectations, it would make it one of the most significant North Sea oil discoveries in the last 20 years. Assuming continued success on Verbier, Jersey expects first oil to come from Verbier in 2022. If the partners pursue a standalone development scenario, Jersey has run notional economics with a peak of around 60,000boepd. It estimates that lifecycle costs under this scenario could be under $35 Barrel Of Oil Equivalent (boe).
Today’s setback marks the second delay in the planned drilling of Verbier. In July, operations were pushed back to mid-to-late-Q4 2018 from late-Q3 to-early-Q4 on the news that the site would now be the third target in its drilling rig’s UK campaign, rather than the first. At the time, Jersey Oil said the delay is not expected to result in any additional costs.
Alongside Verbier, Jersey has other exploration opportunities at licence P2170 up its sleeve. The most significant of these is the Cortina prospect. This site contains estimated recoverable resources of 39MMboe in the low-case scenario, 123MMboe in the mean-case, and 240MMboe in the high-case according to an independent CPR commissioned last year.
The second, smaller opportunity is the Meribel lead, which contains estimated recoverable resources of 6MMBoe in the low-case scenario, 13MMboe in the mean-case, and 19MMboe in the high-case. Other exploration opportunities across the block are being interpreted, possibly leading to additional exploration drilling next year. As seen in the table below, collectively, Jersey’s three sites have projected valuations of £83.7m in the low-case scenario, £130.2m in the mid-case, and £400.5m in the high-case.