Jersey Oil & Gas PLC on Thursday said it agreed to farm-out a 30% interest in the Greater Buchan Area licenses to Serica Energy UK Ltd, a subsidiary of Serica Energy PLC.

Jersey Oil & Gas PLC is an upstream oil and gas company focused on the UK continental shelf region of the North Sea, while Serica Energy is a UK North Sea-focused oil and gas company.

Once complete, Jersey Oil will hold a 20% interest in the licenses, and a fully carry on the capital expenditure needed to bring the Buchan field to production.

Jersey Oil said the terms are identical to those completed with Neo Energy earlier this year. The combined cash payments from the two farm-outs will be over $18 million, with a further $20 million due once the field development plan is approved.

Approval of the Buchan field development plan is scheduled for 2024, with first production expected in late 2026.

‘We are thoroughly delighted to announce the farm-out transaction with Serica Energy. 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,’ said Jersey Oil Chief Executive Officer Andrew Benitz.

Serica CEO Mitch Flegg said: ‘The transaction demonstrates the benefits of Serica’s strong balance sheet. Our financial strength enables us to take advantage of suitable opportunities to expand the portfolio and we will continue to take a very proactive approach to business development, while also investing in our existing portfolio and paying dividends to shareholders. The transaction is structured such that most of the consideration payable by Serica is contingent and linked to making progress in the project.’

Jersey Oil shares jumped 24% to 244.20 pence each on Thursday morning in London, while Serica shares rose 1.2% to 209.20p each.

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