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magazineJersey milking North Sea opportunity
Play momentum in £12.4m small cap oil explorer Jersey Oil & Gas (JOG:AIM) at 147.2p ahead of drilling at the Verbier well on its P2170 licence in the North Sea.
The drilling effort is backed by Norway’s Statoil (STLO:STO) after a farm-out (Jersey retains an 18% working interest). The licence operator has formally communicated to the UK Oil & Gas Authority its intention to drill in 2017. A £1.6m placing (30 Nov) means Jersey’s share of the costs are now fully covered.
Asset manager Toscafund, known for its activist investing, has a position through Toscafund Micro Cap (IE00B68Z1V62) and noted in October that Verbier has a unrisked value to Jersey of £10 per share. The fact Statoil is choosing to drill this prospect in the near-term, despite restrictions on capital spending, implies confidence in its potential.
Jersey is also sitting on tax losses of £24m. It plans to take advantage of the majors scaling back their portfolios and financially distressed peers being forced to sell to pick up producing assets against which it can offset these losses.
There could be further upside to come as we move towards the drilling of this key well. Buy at 147.2p.
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