Jersey Oil&gas Regulatory News (JOG)

6 April 2023

Jersey Oil and Gas plc

("Jersey Oil & Gas", "JOG" or the "Company")

Greater Buchan Area Farm-out

Jersey Oil & Gas (AIM: JOG), an independent upstream oil and gas company focused on the UK Continental Shelf region of the North Sea, is pleased to announce that it has agreed to farm-out a 50% interest in the Greater Buchan Area ("GBA") licences to NEO Energy ("NEO").

Highlights

§ Material value: The transaction delivers material value to JOG, including cash payments, funding through to Field Development Plan ("FDP") approval and a minimum 12.5% development expenditure carry to first oil for the 50% interest retained by the Company

§ Unlocks GBA resources: Unlocks the route to finalising the GBA development solution and monetisation of resources in excess of 100 million barrels of oil equivalent

§ Strong industry partner: NEO is a major UK North Sea operator producing approximately 90,000 barrels of oil equivalent per day and is backed by HitecVision, a leading private equity investor focused on Europe's offshore energy industry with $8 billion of assets under management

§ Value catalysts: Clear path to development sanction and first oil, with opportunity to create further value through additional farm-out transactions

§ Low carbon development: NEO and JOG are committed to evaluating options to give the GBA development flagship status for its low carbon credentials through the use of existing infrastructure and potential low carbon electrification options

Transaction Summary

In exchange for entering into definitive agreements to divest a 50% working interest and operatorship in the GBA licences to NEO, the Company will receive:

§ 12.5% carry of the Buchan field development costs included in the FDP approved by the North Sea Transition Authority ("NSTA"); equivalent to a 1.25 carry ratio

§ Carry for JOG's 50% share of the estimated $25 million cost to take the Buchan field through to FDP approval

§ $2 million cash payment on completion of the transaction

§ $9.4 million cash payment upon finalisation of the GBA development solution

§ $12.5 million cash payment on approval of the Buchan FDP by the NSTA

§ $5 million cash payment on each FDP approval by the NSTA in respect of the J2 and Verbier oil discoveries

The primary conditions precedent to completing the transaction are receipt of the approvals from the NSTA for the transaction and the associated extension of the Company's two GBA licences. Following completion of the transaction, operatorship of the licences will transfer to NEO.

The Company will be working in partnership with NEO to select the preferred development solution, having confirmed a short list of attractive options for the GBA which utilise existing North Sea infrastructure. The unstable fiscal conditions resulting from the introduction and revision of the Energy Profits Levy during 2022 have been challenging. As the joint venture moves forward towards first oil, which is targeted for 2026, it will be mindful of the future fiscal attractiveness of the UK.

The Company intends to farm-out additional equity in the GBA licences in order to ultimately retain a 20-25% carried interest in the development following FDP approval. NEO has an option to increase its 50% interest in the Buchan licence by up to an additional 37.5% in exchange for a further cash payment should any of JOG's equity share in the development remain unfunded ahead of FDP submission, with such payment being the pro-rated balance of future cash payments due to JOG post completion in relation to the GBA development solution and Buchan FDP as outlined above.

JOG remains well funded for its on-going and planned work programmes, with a cash balance of approximately £6.5 million as at 31 December 2022. It is intended that the cash payments anticipated to be received from NEO following completion of the transaction will be utilised to pursue the Company's stated growth strategy and provide additional working capital for the Company.

The Company intends to issue its financial results for the year ended 31 December 2022 in the second half of May 2023.

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

"We are delighted to announce this transaction with NEO Energy, a well-funded industry heavyweight and the fifth largest producer in the UKCS. The farm-out marks a major value creation moment for JOG, a significant de-risking of the GBA development programme, from both an operational and funding perspective, and provides the springboard from which to grow the long-term value of the business. We are looking forward to working collaboratively with NEO Energy to select the optimal development solution for the GBA and taking the project through to sanction and on into future production."

Enquiries:

Additional Information

The Company's GBA interests comprise the P2498 and P2170 licences, which contain the Buchan oil field, the J2 and Verbier oil discoveries and a number of exploration prospects.

The farm-out agreements contain representations, warranties and indemnities given by the Company to NEO in relation to, amongst other things, title and capacity to the GBA licences. The Company's maximum aggregate liability under such warranties and indemnities is limited to an amount equal to the aggregate of the cash payments and costs carried by NEO under the agreement (to the extent such amounts are received). The agreement is governed by English law.

Notes to Editors:

Jersey Oil & Gas is a UK E&P company focused on building an upstream oil and gas business in the North Sea. The Company holds a significant acreage position within the Central North Sea referred to as the Greater Buchan Area ("GBA"), which includes operatorship and prior to completion of today's farm-out transaction, 100% working interests in blocks that contain the Buchan oil field and J2 oil discovery and an 100% working interest in the P2170 Licence Blocks 20/5b & 21/1d, that contain the Verbier oil discovery and other exploration prospects.

JOG is focused on delivering shareholder value and growth through creative deal-making, operational success and licensing rounds. Its management is convinced that opportunity exists within the UK North Sea to deliver on this strategy and the Company has a solid track-record of tangible success.

About NEO

NEO Energy is an independent full-cycle North Sea operator in the UK Continental Shelf backed by HitecVision. NEO is focused on combining value creation from the prospective North Sea basin with high Environmental, Social and Governance standards. It has a high quality, sustainable asset base with a significant scope to grow production organically, by extending the life of its assets, and through acquisitions.

About HitecVision

HitecVision is a leading private equity investor focused on Europe's energy industry, with USD 8 billion under management. HitecVision is headquartered in Stavanger, Norway, with other offices in Oslo, London and Milan. Since 1994, the HitecVision team have invested in, acquired or established more than 200 companies, including more than ten E&P companies, such as Vår Energi, the second-largest independent E&P company in Norway.

Forward-Looking Statements

This announcement may contain certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with an oil and gas business. Whilst the Company believes the expectations reflected herein to be reasonable in light of the information available to it at this time, the actual outcome may be materially different owing to factors beyond the Company's control or otherwise within the Company's control but where, for example, the Company decides on a change of plan or strategy.

All figures quoted in this announcement are in US dollars, unless stated otherwise.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018, as amended by virtue of the Market Abuse (Amendment) (EU Exit) Regulations 2019.

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