UK regulator gives its blessing for farm-out deal related to North Sea oil project

UK-headquartered Jersey Oil & Gas plc has received approval from the North Sea Transition Authority (NSTA) for its sale of a partial stake in an asset on the UK Continental Shelf (UKCS) to the HitecVision-backed NEO Energy.

As a result, Jersey Oil & Gas will be able to assign a 50 per cent working interest in both licence P2498 and licence P2170 to NEO Energy, as part of the recently announced Greater Buchan Area (GBA) farm-out transaction. The company further revealed that the North Sea Transition Authority had approved an extension to the second term of its P2498 Buchan licence. This has now been extended by 18 months to 28 February 2025.

Jersey also explained that the extension was requested in order to provide the licensees with the time required to prepare a field development plan (FDP) for the redevelopment of the Buchan field, which is planned for submission to the NSTA during 2024. Following FDP approval the licence will move into the third term, which covers the development and production phase of activities for the life of the field.

With these approvals in the bag, Jersey has now satisfied the conditions precedent associated with the farm-out of the 50 per cent interest in licence P2498 to NEO and is in the process of completing the final outstanding condition precedent for the P2170 licence assignment. It is anticipated that completion of both licence assignments will occur in June 2023.

Located in the Central North Sea, Jersey’s stake in the GBA project includes operatorship and 100 per cent working interests in blocks that contain the Buchan oil field and J2 oil discovery and a 100 per cent working interest in the P2170 Licence Blocks 20/5b & 21/1d, that contain the Verbier oil discovery and other exploration prospects.

The total GBA acreage is estimated to contain 172 million barrels of oil equivalent (MMboe) of discovered P50 recoverable resources net in addition to the significant exploration upside potential of approximately 168 MMboe of prospective resources close to the firm’s planned Buchan platform.

Based on Jersey’s plans disclosed in 2021, Phase 1 facilities are expected to be designed to accommodate Phase 2 and Phase 3 of the development. While Phase 2 is expected to develop the J2 West, J2 East, and Verbier East discoveries via a subsea tie-back to the GBA platform, Phase 3 is planned to develop the Verbier West discovery via connection to the Phase 2 subsea infrastructure. The facilities will be powered from shore.

Back in March 2021, Jersey revealed its preferred development concept for the Greater Buchan Area development with Phase 1 being a single integrated wellhead, production, utilities, and quarters (WPUQ) platform located at the Buchan field.