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Verbier delay a setback for Jersey, but not a major blow, analyst says

Jersey Verbier TGS
West Phoenix drilled an appraisal of Jersey's Verbier discovery in April 2019.

Norwegian oil giant Equinor’s decision to delay an appraisal well on a North Sea field is only a minor setback for project partner Jersey Oil and Gas, an analyst has said.

Daniel Slater, research director at Arden Partners, said Jersey’s budget for the well campaign should not change, and that the rig booked for the task is suited to drilling in harsher winter weather.

Drilling on Verbier, which is thought to contain 25-130million barrels of oil, was expected to take place in the outer Moray Firth this summer.

But Jersey has now been informed by licence-operator Equinor that the West Phoenix rig will drill two other wells before moving onto Verbier in the fourth quarter of 2018.

Mr Slater said Equinor’s decision did not mean that it had lost any enthusiasm for Verbier, which it continues to “progress at pace”.

He also said the drilling results could still be combined with data gathered by Petroleum Geo-Service as part of a recently completed 3D seismic survey on the licence containing Verbier.

That data is not expected to be delivered until the first quarter of 2019.

News of the delay caused Jersey’s shares to drop by more than 10% in early trading in London.

But Mr Slater said Jersey’s “fundamentals” remained sound and that any short-term share price weakness should be viewed as a buying opportunity.

Mr Slater said: “The delay to the spudding of Verbier is a setback for Jersey, but not fundamentally so.

“This important well will still be spudded this year, potentially allowing the commencement of early stage development planning on success.”

Equinor holds 70% of Verbier, Jersey has 18% and Cieco is on 12%.

Equinor said in March that it had booked West Phoenix to drill Verbier, along with the Pip prospect, about 100 miles north-east of Aberdeen, and the Bigfoot prospect, 20 miles south of the Mariner field.

Verbier was expected to be drilled first, but has now moved down to third spot.

Equinor, the new name for Statoil, holds the operatorship and 50% of Pip and Bigfoot. BP has the remaining 50%.

Exploration of Verbier brought the project partners mixed results last year. Jersey’s shares plummeted in September after the company revealed an exploration well on the field had ended in disappointment.

But a week later the company said it hadn’t given up hope for the prospect and that a sidetrack exploration well would be drilled.

The sidetrack well paid off, as it indicated the presence of commercial reserves.

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