TIDMJOG
RNS Number : 5560V
Jersey Oil and Gas PLC
06 April 2023
6 April 2023
Jersey Oil and Gas plc
("Jersey Oil & Gas", "JOG" or the "Company")
Greater Buchan Area Farm-out
Jersey Oil & Gas (AIM: JOG), an independent upstream oil and
gas company focused on the UK Continental Shelf region of the North
Sea, is pleased to announce that it has agreed to farm-out a 50%
interest in the Greater Buchan Area ("GBA") licences to NEO Energy
("NEO").
Highlights
-- Material value : The transaction delivers material value to
JOG, including cash payments, funding through to Field Development
Plan ("FDP") approval and a minimum 12.5% development expenditure
carry to first oil for the 50% interest retained by the Company
-- Unlocks GBA resources : Unlocks the route to finalising the
GBA development solution and monetisation of resources in excess of
100 million barrels of oil equivalent
-- Strong industry partner : NEO is a major UK North Sea
operator producing approximately 90,000 barrels of oil equivalent
per day and is backed by HitecVision, a leading private equity
investor focused on Europe's offshore energy industry with $8
billion of assets under management
-- Value catalysts : Clear path to development sanction and
first oil, with opportunity to create further value through
additional farm-out transactions
-- Low carbon development : NEO and JOG are 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
Transaction Summary
In exchange for entering into definitive agreements to divest a
50% working interest and operatorship in the GBA licences to NEO,
the Company will receive:
-- 12.5% carry of the Buchan field development costs included in
the FDP approved by the North Sea Transition Authority ("NSTA");
equivalent to a 1.25 carry ratio
-- Carry for JOG's 50% share of the estimated $25 million cost
to take the Buchan field through to FDP approval
-- $2 million cash payment on completion of the transaction
-- $9.4 million cash payment upon finalisation of the GBA
development solution
-- $12.5 million cash payment on approval of the Buchan FDP by
the NSTA
-- $5 million cash payment on each FDP approval by the NSTA in
respect of the J2 and Verbier oil discoveries
The primary conditions precedent to completing the transaction
are receipt of the approvals from the NSTA for the transaction and
the associated extension of the Company's two GBA licences.
Following completion of the transaction, operatorship of the
licences will transfer to NEO.
The Company will be working in partnership with NEO to select
the preferred development solution, having confirmed a short list
of attractive options for the GBA which utilise existing North Sea
infrastructure. The unstable fiscal conditions resulting from the
introduction and revision of the Energy Profits Levy during 2022
have been challenging. As the joint venture moves forward towards
first oil, which is targeted for 2026, it will be mindful of the
future fiscal attractiveness of the UK.
The Company intends to farm-out additional equity in the GBA
licences in order 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 licence 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.
JOG remains well funded for its on-going and planned work
programmes, with a cash balance of approximately GBP6.5 million as
at 31 December 2022. It is intended that the cash payments
anticipated to be received from NEO following completion of the
transaction will be utilised to pursue the Company's stated growth
strategy and provide additional working capital for the
Company.
The Company intends to issue its financial results for the year
ended 31 December 2022 in the second half of May 2023.
Andrew Benitz, CEO of Jersey Oil & Gas, commented :
"We are delighted to announce this transaction with NEO Energy,
a well-funded industry heavyweight and the fifth largest producer
in the UKCS. The farm-out marks a major value creation moment for
JOG, 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."
Enquiries :
Jersey Oil and Gas Andrew Benitz, CEO C/o Camarco:
plc Tel: 020 3757 4980
Strand Hanson Limited James Harris Tel: 020 7409 3494
Matthew Chandler
James Bellman
Zeus Capital Limited Simon Johnson Tel: 020 3829 5000
finnCap Ltd Christopher Raggett Tel: 020 7220 0500
Tim Redfern
Camarco Billy Clegg Tel: 020 3757 4980
Rebecca Waterworth
Additional Information
The Company's GBA interests comprise the P2498 and P2170
licences, which contain the Buchan oil field, the J2 and Verbier
oil discoveries and a number of exploration prospects.
The farm-out agreements contain representations, warranties and
indemnities given by the Company to NEO in relation to, amongst
other things, title and capacity to the GBA licences. The Company's
maximum aggregate liability under such warranties and indemnities
is limited to an amount equal to the aggregate of the cash payments
and costs carried by NEO under the agreement (to the extent such
amounts are received). The agreement is governed by English
law.
Notes to Editors :
Jersey Oil & Gas is a UK E&P company focused on building
an upstream oil and gas business in the North Sea. The Company
holds a significant acreage position within the Central North Sea
referred to as the Greater Buchan Area ("GBA"), which includes
operatorship and prior to completion of today's farm-out
transaction, 100% working interests in blocks that contain the
Buchan oil field and J2 oil discovery and an 100% working interest
in the P2170 Licence Blocks 20/5b & 21/1d, that contain the
Verbier oil discovery and other exploration prospects.
JOG is focused on delivering shareholder value and growth
through creative deal-making, operational success and licensing
rounds. Its management is convinced that opportunity exists within
the UK North Sea to deliver on this strategy and the Company has a
solid track-record of tangible success.
About NEO
NEO Energy is an independent full-cycle North Sea operator in
the UK Continental Shelf backed by HitecVision. NEO is focused on
combining value creation from the prospective North Sea basin with
high Environmental, Social and Governance standards. It has a high
quality, sustainable asset base with a significant scope to grow
production organically, by extending the life of its assets, and
through acquisitions.
About HitecVision
HitecVision is a leading private equity investor focused on
Europe's energy industry, with USD 8 billion under management.
HitecVision is headquartered in Stavanger, Norway, with other
offices in Oslo, London and Milan. Since 1994, the HitecVision team
have invested in, acquired or established more than 200 companies,
including more than ten E&P companies, such as Vår Energi, the
second-largest independent E&P company in Norway.
Forward-Looking Statements
This announcement may contain certain forward-looking statements
that are subject to the usual risk factors and uncertainties
associated with an oil and gas business. Whilst the Company
believes the expectations reflected herein to be reasonable in
light of the information available to it at this time, the actual
outcome may be materially different owing to factors beyond the
Company's control or otherwise within the Company's control but
where, for example, the Company decides on a change of plan or
strategy.
All figures quoted in this announcement are in US dollars,
unless stated otherwise.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018, as amended by virtue of the Market Abuse
(Amendment) (EU Exit) Regulations 2019.
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END
UPDUPUPPCUPWGRA
(END) Dow Jones Newswires
April 06, 2023 02:00 ET (06:00 GMT)
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