Jersey Oil and Gas PLC (AIM:JOG, OTC:JYOGF) shares started Wednesday on the front foot as it confirmed that the UK authorities have extended its licence for the Buchan field in the North Sea.
The junior oil and gas company, in a statement, told investors that the North Sea Transition Authority (NSTA) approved its request to extend the second term of P2498, otherwise referred to as the Buchan licence, and at the same time approved the transfer of a 50% interest in the project to farm-in partner NEO Energy.
It means that the current exploration term now runs until the end of February 2025.
Jersey noted that it allows the company and its new partner to prepare a Field Development Plan for the redevelopment of the Buchan field, which is planned for submission to the NSTA during 2024.
A third term of the licence would comprise the development and production phase of activities and bring the asset toward production.
Additionally, Jersey noted that the extension and the NSTA approval satisfies a key condition for the agreed farm-out transaction with NEO and that the new partners are now in the process of completing the final outstanding documentation.
It is expected that the deal will complete before the end of June.
In London, Jersey shares moved up just over 4% to trade at 196.6p – valuing the AIM-quoted company at just over £65mln.
Jersey in April announced its farm-out to NEO with the transaction value subsequently estimated by analysts at up to US$170mln.
The transaction - which gives NEO a 50% stake - delivers “material value”, according to Jersey, as it includes cash payments and funding through to the approval of the field development plan. A total of US$28.9mln of staged payments were outlined and analysts suggest the real deal value is closer to US$170mln when the 'carry' on the field development is factored in.
Jersey will retain a 37.5% interest in the Greater Buchan Area project and it was noted, by analysts, that it would therefore have further scope to divest partially to secure further funding for its participation in the project.