Jersey Oil sells 50pc stake in Greater Buchan Area

6th Apr 2023 16:05

(Sharecast News) - Jersey Oil & Gas announced an agreement to sell a 50% stake in its Greater Buchan Area (GBA) licences on Thursday, to NEO Energy - an independent upstream oil and gas company backed by private equity investor HitecVision.

The AIM-traded firm said the deal would provide it with cash payments, funding through to field development plan approval, and a minimum of 12.5% development expenditure carry to first oil for the retained 50% interest.

It said the transaction would unlock the route to finalising the GBA development solution and monetisation of resources in excess of 100 million barrels of oil equivalent.

The two companies said they were committed to evaluating options to give the GBA development flagship status for its low carbon credentials, through the use of existing infrastructure and potential low carbon electrification options.

Jersey Oil said the agreement would also provide a clear path to development sanction and first oil, with the opportunity to create further value through additional farm-out transactions.

"We are delighted to announce this transaction with NEO Energy, a well-funded industry heavyweight and the fifth largest producer in the UK Continental Shelf," said chief executive officer Andrew Benitz.

"The farm-out marks a major value creation moment for Jersey Oil, a significant de-risking of the GBA development programme, from both an operational and funding perspective, and provides the springboard from which to grow the long-term value of the business.

"We are looking forward to working collaboratively with NEO Energy to select the optimal development solution for the GBA and taking the project through to sanction and on into future production."

At 1541 BST, shares in Jersey Oil & Gas were down 6.07% at 280p.

Reporting by Josh White for Sharecast.com.