Jersey Oil and Gas PLC (AIM: JOG) has recently finalized an agreement to divest a 30% stake in the Greater Buchan Area (GBA) licenses to Serica Energy.
This deal ensures that JOG retains a fully funded 20% share in the GBA and contributes to the progress of the Buchan field redevelopment.
This arrangement with Serica mirrors the terms of a previous farm-out agreement JOG had with NEO Energy earlier in the year. As a result, JOG is poised to receive $18 million, which is part of the total $38 million in cash payments associated with the GBA farm-outs, upon completing the Serica agreement.
Furthermore, JOG will benefit from a 7.5% contribution towards the estimated $25 million cost required to advance the Buchan field to the stage of field development approval.
Andrew Benitz, JOG’s CEO, emphasized the significance of the deal: “This transaction not only brings in multiple cash payments for JOG but crucially secures a fully funded 20% interest in the Buchan redevelopment, marking a transformative phase for the company and laying the groundwork for long-term shareholder value.”
The strategic value of JOG’s 20% interest is notable, especially considering the projected £850-£950 million development costs of the field. The Buchan field, estimated to contain around 70 million barrels of oil equivalent, is expected to reach a peak production rate of approximately 35,000 barrels per day.
The development schedule indicates that the Buchan Field Development Plan (FDP) will be approved in 2024, with the first oil production targeted for late 2026.
CEO Benitz expressed great satisfaction with the Serica Energy farm-out deal, highlighting its role in bringing a high-calibre partner into the joint venture and unlocking substantial value for the company, aligning with their overall strategy for the GBA farm-out.
