Jersey Oil & Gas says it’s now close to a final farm-out deal for the Greater Buchan Area (GBA) after years of negotiations and delays.
The London-listed independent (AIM:JOG) said Friday it was now in “advanced exclusive negotiations” with a significant UK operator for the central North Sea area.
Heads of terms have been agreed for the farm-out of a “material interest” in the GBA licences to the undisclosed company, with both parties now working towards signing a fully termed agreement in the near future.
Accordingly, Jersey said they had agreed an exclusivity period until 30 April 2023.
Chief executive Andrew Benitz said: “We are pleased to be in advanced exclusive negotiations with a well-funded industry heavyweight and whilst there can be no guarantees of a successful conclusion, we are aiming to finalise the farm-out in the near future and look forward to updating shareholders shortly.”
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.
It has since noted that the project will likely tap into plans to develop wind farms in the Outer Moray Firth as part of INTOG leasing round process.
Jersey said it was in talks with multiple parties last April and had hoped to complete farm-out discussions last year, with a stretch timeline of Q1 2023 at the latest.
Panmure Gordon research director Ashley Kelty said Friday’s update was “great news” and should allow the development of the area’s substantial resources.
“A partner would reduce the net capex spend required which is currently outwith the means of a company of JOG’s size. This shows that deals can still be done despite the negative impact of the EPL in the UK. Investors will keenly await further details of the farm-out,” he said in note following the announcement.
Jersey was also last year given more time to develop its long-held Verbier discovery in the North Sea, with the North Sea Transition Authority (NSTA) extending the expiry of licence P2170 to align with that FOR GBA, due to elapse in August 2023.
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