Jersey Oil and Gas (LON: JOG) has completed its Great Buchan Area farm-out deal with NEO Energy, the company confirmed on Thursday.
It means both firms now hold a 50% interest in the licences that comprise the development, with NEO poised to become operator.
A $170 million deal to farm-in to the assets in the Moray Firth was agreed by the private-equity backed player, the fifth-largest producer in the UK North Sea, earlier this year.
Jersey sold a 50% working interest in Buchan in return for up to US$33.9m in cash payments, plus US$12.5m carry to take the development through to sanction and a 12.5% carry of the Buchan development costs capped at the approved Field Development Plan cost.
With first phase development costs likely to be up to US$1bn to first oil, that makes a farm out valuation worth up to $170m.
Studies to find a suitable solution for redeveloping the area are also well advanced, Jersey said, and an update on that is expected to be made shortly.
Andrew Benitz, chief executive of Jersey, commented: “We are delighted to have completed the farm-out transaction and to be swiftly moving forwards with finalisation of the GBA development solution. With the route and the funding secured for preparation of the Buchan Field Development Plan, our attention now turns to unlocking further value by securing an additional GBA partner ahead of FDP approval and retaining a fully carried 20-25% interest in the development programme.”
Located on licence P2498 across Blocks 20/5A, 20/5E and 21/1A, the GBA comprises the Buchan oilfield, as well as the J2 and Verbier oil discoveries, and boasts estimated gross 2C economic resources of 162 million barrels of oil equivalent (boe) – making it one of the biggest pre-FID developments in the UK North Sea.
Buchan came on stream in 1981, but production halted in 2017 because the Buchan Alpha platform was unsafe and had to be removed by then-operator Repsol Sinopec.
Jersey has been working on plans for the area for several years, but extended its development timeline in late 2021 to allow for further studies on electrification.
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