Proactive Investors - Jersey Oil and Gas PLC (LON:JOG) has agreed to farm out a 30% interest in the Greater Buchan Area (GBA) licences to Serica Energy, securing a fully funded 20% stake and advancing the Buchan field's redevelopment.
The transaction with Serica was struck on the same terms as a farm-out deal it concluded with NEO Energy earlier this year.
It means that JOG is set to receive US$18 million out of a total of US$38 million in cash payments linked to the GBA farm-outs on the completion of the Serica tie-up.
In addition to the milestone payments, JOG will get a 7.5% carry of the estimated US$25 million cost to take the Buchan field through to field development approval.
"The transaction provides JOG with multiple cash payments, but most importantly, a fully funded 20% working interest in the Buchan redevelopment project, transforming the company and providing us with the springboard from which to realise long-term shareholder value," said chief executive Andrew Benitz.
The importance of JOG's 20% carry should not be underestimated given the predicted £850-£950 million costs to develop the field, which is host to around 70 million barrels of oil equivalent, and which should have peak production of around 35,000 barrels a day.
In terms of the development timeline, the Buchan Field Development Plan (FDP) is scheduled for approval in 2024, with first oil production forecast for late 2026.
"We are thoroughly delighted to announce the farm-out transaction with Serica Energy," said CEO Benitz.
"Not only does it bring a further high-quality partner into the joint venture, but it unlocks exceptional value for the company and delivers upon our overall objectives for the GBA farm-out strategy."