Jersey Oil & Gas (JOG) farmed out 50% interest in the Greater Buchan Area (GBA) licenses in the Central North Sea to NEO Energy.
JOG will work in partnership with NEO to select a preferred field development plan (FDP), having confirmed a short list of options using existing North Sea infrastructure.
JOG will receive 12.5% carry of Buchan field development costs (equivalent to a 1.25 carry ratio), carry for JOG's 50% share of the estimated $25 million cost to take Buchan field through to FDP approval, a $2 million cash payment on deal completion, a $9.4 million cash payment upon finalization of the development solution, $12.5 million cash payment Buchan FDP approval by the North Sea Transition Authority (NSTA), and $5 million cash payment on each FDP approval by NSTA in respect of the J2 and Verbier oil discoveries.
Deal completion requires approvals from the NSTA and the associated extension of JOG's two GBA licenses. At closing, operatorship of the licenses will transfer to NEO.
JOB plans to farmout additional equity in GBA licenses to ultimately retain a 20-25% carried interest in the development following FDP approval. NEO has an option to increase its 50% interest in the Buchan license by up to an additional 37.5% in exchange for a further cash payment should any of JOG's equity share in the development remain unfunded ahead of FDP submission, with such payment being the pro-rated balance of future cash payments due to JOG post completion in relation to the GBA development solution and Buchan FDP as outlined above.
In September 2020, JOG was awarded 100% working interest in, and operatorship of, partial Block 20/5e within the company's existing GBA development. The partial block lies within license P2498 (Blocks 20/5a, 20/5e, and 21/1a) awarded to JOG in the OGA's 31st Offshore Supplementary Licensing Round, which contains Buchan oil field and the J2 oil discovery and formed the basis of JOG's proposed GBA development plans (OGJ Online, Sept. 3, 2020).
GBA resources are estimated at more than 100 MMboe.
NEO currently operators five assets in the Central North Sea (Boa, Dumbarton, Balloch, Lochranza, and Finlaggan) and holds interests in an additional 15 assets.