Jersey Oil and Gas : Annual Report and Financial Statements 2022

GBA Farm-out

In April 2023 we were delighted to announce the farm-out of an interest in our GBA development to

NEO Energy ("NEO"). We have agreed terms for NEO to acquire a 50% working interest and operatorship in both licences that cover the GBA, including the Buchan oil field, the Verbier and J2 oil discoveries and various

exploration prospects. This transaction unlocks the route to finalising the GBA development solution and monetisation of resources in excess of 100 million barrels of oil equivalent in total. The transaction delivers material value to JOG, including cash milestone 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 (a 1.25 carry ratio). NEO is a major UK North Sea operator producing approximately 90,000 barrels of oil equivalent per day and is owned by HitecVision AS, a leading private equity investor

focused on Europe's offshore energy industry with approximately $8 billion of assets under management.

Operational Update

Our operational focus during 2022 has been on advancing technical studies on various development solutions in collaboration with infrastructure owners. This included studies such as flow assurance work for assessing tie back options to regional platform infrastructure, the topside modification requirements for the potential receiving infrastructure, and for potential FPSO options. With this work now completed, the Company will be working in partnership with NEO to select the preferred development solution, having already confirmed a short list of attractive options. We also continue to proactively

collaborate on potential joint development opportunities with other industry parties who own regional assets that could be tied back to a GBA development.

Low Carbon Development

The GBA development has the exciting potential to be one of the

lowest full-cycle carbon development projects in the UK North Sea through the use of existing infrastructure and potential low carbon electrification options. In late 2022, we were pleased to provide letters of support as a potential power user to the offshore wind developers applying for leases in the vicinity of the GBA in the Innovation and Targeted Oil & Gas

("INTOG") offshore wind licence round. Awards were announced in March 2023, with licences granted by Crown Estate Scotland in close proximity to the GBA. Powering the GBA from low carbon wind power can reduce our carbon emissions to less than 2kg of CO2/bbl versus the average in the UK North Sea of 22kg. We will be evaluating the potential to make the GBA development solution that is

ultimately selected "electrification

ready", so that it can be powered with green energy upon completion of a proximal wind farm.

Licensing Activity

JOG continues to work closely and constructively with the North Sea Transition Authority ("NSTA") on our licence commitments. In

keeping with the Company's stated strategy of developing the GBA as an area-wide development plan, we were pleased to receive a licence extension to the Second Term of our

P2170 "Verbier" licence, such that it is now aligned with the P2498

"Buchan" licence, with the current term being until the end of August 2023. Following the farm-out to NEO, we are in close consultation with the North Sea Transition

Authority to seek an extension on both licences to allow delivery of a

Field Development Plan ("FDP").

JOG's Business Development

Strategy

At the forefront of our business development plans is to farm-out additional GBA equity such that the Company ultimately retains a 20- 25% carried interest in the development. Building a full cycle upstream business focused on the UKCS remains the ultimate goal for JOG and having now announced a farm-out in respect of the GBA development, we will also be seeking to advance our acquisition strategy. We believe the North Sea can be the crucible for the energy transition and that oil and gas companies can lead investment into new energies. We see JOG as being no different to our larger peers such that in addition to upstream asset and corporate opportunities, we are also actively looking at new energy investment opportunities.

Financial Review

The Company's cash position was approximately £6.6 million as of 31 December 2022, well within our forecast. As an oil and gas exploration and development company, JOG had no production revenue during the year and received only a modest amount of interest on its cash deposits.

The loss for the period, before and after tax, was approximately £3.1 million (2021: £4.2 million). Our main expenditure during 2022 related to technical studies on parallel development options for the GBA Development project. Having successfully negotiated the farm-out to NEO, the Company remains appropriately funded as we move forwards towards approval of the Buchan Field Development Plan.

Tax

The Energy Profits Levy (EPL) that was introduced by the UK Government in May 2022 caught the industry off guard, particularly those that have invested and built production portfolios in the UKCS over the past few years. A second change in September 2022 increased the tax rate further to 75% through to March 2028. With no price floor on when this windfall tax would fall away, the industry has no option other than to plan as if it is a permanent tax and consequently this has significantly harmed the

industry's borrowing capacity. We believe it is sensible for the Government to provide some guidance on a price floor to facilitate the continuation of vital domestic energy supplies. The silver lining of these changes, however, was the introduction of an investment allowance that is specifically ring fenced to attract capital spend into new investments. A full taxpayer in the North Sea has the ability to secure substantial tax relief through investing into new projects such as the GBA Development.

Macro Backdrop

1. significantly improved macro- economic outlook for the oil and gas sector compared to 2021 ushered in significant profits for the oil majors. The pandemic and the war in Ukraine have masked the underlying issue that is challenging

the upstream sector - a looming supply crunch. Our industry has been starved of capital since 2015 and this has led to chronic under investment. The energy transition is underway, and our industry is at the forefront of the challenges that this evolution brings. The approach must be managed appropriately as hydrocarbons currently continue to

provide the world with approximately 80% of our daily energy supply. Unfortunately, we are already seeing the inflationary pressures that result from a restricted energy supply and an even more concerning prospect of energy poverty. We need urgent and responsible investment in the upstream sector in order to address the supply shortfall against a backdrop of significantly increasing global demand for energy. It will take time for supply to catch up and strong commodity prices are expected.

Summary and outlook

We are excited to be starting our journey with NEO, who, in partnership with JOG, will be working to close out the selection of the preferred GBA development solution and take the project through the Front End Engineering

and Design ("FEED") phase of activities and on to project sanction, which is targeted for next year. The Company intends to farm-out additional equity in the GBA

licences in order to ultimately retain

1. 20-25%carried interest in the development. Discussions with companies potentially interested in non-operated stakes have been underway as part of the farm-out process and these remain ongoing.

Finally, we would like to extend our gratitude to the JOG team, who have delivered a transformational farm-out for the Company. We are a small team of dedicated professionals and we will use this excellent result as a springboard to grow the long-term value of the business. We also thank our shareholders for the ongoing support they have shown as we have advanced the GBA farm-out process. We were delighted to announce the transaction with NEO and look forward to building upon this success.

Les Thomas,

Non-Executive

Chairman

Andrew Benitz,

Chief Executive Officer

23 May2023

Business Review & Future Activities The principal activity of the Group is that of an upstream oil and gas business in the United Kingdom. The Company is a public limited company incorporated in England and Wales (Company number 07503957) and is quoted on the AIM market of the London Stock

Exchange ("AIM") under the designation JOG. The Company is required by the Companies Act 2006 to set out in this report a review of the business of the Group during the year ended 31 December 2022 and the position of the Group at the end of the year, as well as the principal risks and uncertainties facing the Group. The information that fulfils these requirements, including discussion of the business and future developments, is set out in the Chairman and Chief Executive

Officer's joint report and the Strategic Report.

Business Strategy

The Group has a two-pronged approach to its strategy, which is aimed at delivering strong shareholder returns. The first is a Core Area Strategy, which is focused on the area surrounding our principal assets, UK licences P2498 and P2170 (collectively known as the Greater Buchan Area), to create and increase value in the licences and surrounding areas. The second is the pursuit and execution of asset acquisitions in the UK North Sea area. The continued evolution of the UK North Sea and wider industry environment are expected to result

in some interesting acquisition opportunities that we, as a Group unencumbered by debt or decommissioning liabilities, may be able to exploit beneficially.

The Greater Buchan Area

During the year, JOG maintained its focus on its Core Area Strategy, which culminated in the April 2023 announcement that NEO will acquire a 50% working interest and operatorship in the two licences comprising the GBA. The licences contain the Buchan oil field, the Verbier and J2 oil discoveries, and various exploration prospects. It is expected that this deal will unlock the route to finalising the GBA development solution and move the project onwards to first production, which is targeted for 2026. The Group will look to build upon this cornerstone farm-out and seek to divest additional equity in the GBA licences in order to ultimately retain

1. 20-25%carried interest in the Buchan development.

GBA Farm-out to NEO Energy

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:

• a 12.5% carry of the Buchan field development costs included in the FDP to be approved by the North Sea Transition Authority
  ("NSTA"); equivalent to a 1.25 carry ratio
• a 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. Completion of the transaction is anticipated around the end of the second quarter of 2023, following which, operatorship of the licences will transfer to NEO.

NEO Energy is an independent full- cycle North Sea operator in the UK Continental Shelf backed by HitecVision AS.

UK North Sea Growth Through Acquisitions

Our primary focus remains on our flagship GBA Development project, but JOG remains active in reviewing a number of potential acquisitions and/or opportunities for possible business combinations.