NORTH Sea-focused Jersey Oil & Gas has agreed a settlement to a legal dispute with a Norwegian contractor, which the company said had left its finances in a stronger than expected position.
The company paid $850,000 (£625,000) to TGS-Nopec Geophysical Company ASA after what it described as a one-off and isolated dispute.
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“Following this payment …. the group’s estimated cash position at 31 December 2020 was c.£5million, which is c.£3m ahead of our initial 2020 budgeted year-end cash balance,” said Jersey, which is working on plans for a big development in the Moray Firth.
The update came on a day of renewed volatility on oil markets.
The Brent crude price rose in morning trading amid hopes that members of the Opec + group of exporters would maintain curbs on production, that are due to be eased in February. However, the price went into reverse as the surge in the number of coronavirus cases around the world stoked concern about the outlook for demand.
Reports of disagreement between Saudi Arabia and Russia about whether output should be increased may have worried traders.
Bjornar Tonhaugen, head of oil markets at the Rystad Energy consultancy, noted: "While Saudi Arabia, supported by most Opec + members, aims at keeping oil output steady in February, Russia this time seems to have had enough."
He added: "Different assumptions over the vaccine effect on demand recovery could be at the core of disputed market views."
Brent crude sold for $51.19 per barrel yesterday afternoon, down $0.61/bbl on the day.
The price fell from around $70/bbl in January last year to an 18-year low of less than $20/bbl in April. It recovered some ground after Opec Plus members curbed output and governments around the world subsequently relaxed coronavirus lockdowns.
Companies operating in the North Sea have faced big challenges amid the turmoil in oil and gas markets triggered by the coronavirus crisis.
Led by chief executive Andrew Benitz, Jersey Oil & Gas hopes to enlist partners to support its plans to complete a major development in the North Sea. This is expected to include restarting production from the Buchan field and bringing the Verbier find onstream. The fact its cash position was better than expected at the year-end has given it greater freedom of manoeuvre.
TGS Nopec had claimed payments totalling $1.05m from Jersey concerning conditions associated with a contract to provide seismic survey data in connecton with Verbier.
Jersey said it had disputed the validity of the claims, following which two hearings had taken place in the Norwegian courts. On the basis of legal advice received, it negotiated and agreed a final settlement payment to TGS of $0.85m. In its first half results announcement in September, Jersey noted it had provided £200,000 in respect of the payments claimed.
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