A North-Sea focused oil and gas minnow has seen its shares surge around 25% after it increased estimates of the amount of oil remaining in a field it hopes to bring back into production by millions of barrels.

Jersey Oil & Gas said the results of a study of the Buchan field in the Moray Firth indicated that it could hold around 130 million barrels oil. That represents an increase of more than 50 per cent on the previous estimate of 80m barrels.

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The news could provide a big boost for Jersey in its attempts to revive a field that others decided had reached the end of its useful economic life.

Buchan was shut down in 2017 after the then operator Repsol Sinopec decided it made commercial sense to decommission the associated production facilities.

However, Jersey took on the licence in the belief that there was still lots to go for in Buchan and the surrounding area.

The company’s progress will be followed closely in the industry amid hopes that there could be lots more oil and gas to be recovered from well-worked areas of the North Sea. The regulator has tried to stimulate interest in the Greater Buchan Area (GBA).

Jersey helped to generate excitement about the Moray Firth area when it made the Verbier find during the last downturn, with Equinor.

It hopes to develop a major hub that could handle output from Buchan and Verbier and has noted the potential to make further finds nearby.

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The company has faced challenges after suffering a drilling setback in 2019 before the fallout from the coronavirus crisis engulfed the oil and gas industry.

Firms may find it hard to secure the funding required for North Sea projects while the outlook for the economy remains uncertain.

However, Jersey has stuck to its guns regarding the GBA project.

Led by Andrew Benitz, the company reckons it could generate good returns on investment in the area despite the fall in oil prices in recent months.

The Herald: Andrew Benitz Picture: Jersey Oil & GasAndrew Benitz Picture: Jersey Oil & Gas

Last month it said it had matured four prospects on the GBA acreage to “drill-ready” status. It reckons these contain around 220 million barrels oil.

Mr Benitz said yesterday that the results of a sophisticated modelling exercise demonstrate the substantial inherent value of the Buchan field and the wider GBA development.

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The company expects the results will help it enjoy success in a drive to enlist partners to buy in to the GBA project through a farm-out process. It expects to launch the process during the current quarter.

“The GBA development project presents a very compelling investment case that we believe will have wide industry appeal,” said Mr Benitz.

Jersey said the study by oil services giant Schlumberger found the core GBA fields, including Buchan and Verbier, could contain around 170m barrels oil equivalent.

The study took account of recent seismic survey data and production information in respect of Buchan dating from the 1980s.

Around 150 million barrels was pumped out of the Buchan field in the 36 years it was in production.

Arden Partners said the results of the study had provided significant positive news for Jersey.

“The GBA project is, post this resource upgrade, of sufficient size to be material to any existing North Sea operator, in our view,” said the brokerage.

Shares in Jersey Oil & Gas closed up 28.5p at 146.5p, leaving the firm with a market capitalisation of £32 million.

Equinor appeared to lose interest in Verbier after the results of an appraisal well drilled in 2019 suggested the find was smaller than had been hoped. It sold a 70% stake in the licence to Jersey in a low-cost deal in January last year.

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The Brent crude price plunged from around $70 per barrel in that month to less than $20/bbl in April. It has rallied to around $56/bbl amid expectations that coronavirus vaccines will be made widely available in coming months and moves by major exporters to support the market.

Jersey developed out of Trap Oil, which built a North Sea portfolio helped by the £30m acquisition of Banchory- based Reach Oil & Gas in 2011. Trap Oil suffered hefty losses during the last downturn.