Jersey Oil & Gas, an independent upstream oil and gas company, has signed a sales and purchase agreement with Azinor Catalyst Limited (Catalyst) for the farm-out of its 50 percent interest in Seaward Production Licence P.1989 Blocks 14/11, 12 & 16, in the UK North Sea.
The licence is held via Jersey Oil & Gas’ wholly owned subsidiary Trap Oil Limited (Trap).
The balancing 50 percent interest in the licence is currently held by Norwegian Energy Company UK Limited (Noreco).
The Licence area, located in the North West Witch Ground Graben in the Moray Firth, was awarded as a Traditional licence in the Department of Energy and Climate Change’s (DECC) 27th Licensing Round and prospectivity has been identified in Early Cretaceous sediments. Under the terms of the agreement, Catalyst has agreed to acquire 100 percent of the licence from both Trap and Noreco, and on completion of the transaction will be appointed as operator. The sales and purchase agreement is subject to approval by DECC.
According to Jersey Oil & Gas, by way of consideration, Catalyst will undertake to carry out certain firm work commitments, as set out in the terms of the licence, including the drill-or-drop obligation in respect of an exploration well; and make certain payments to each of Noreco and Trap contingent on the occurrence of certain future events. Namely, Catalyst will pay $2m within 90 days of the date when an exploration well, drilled within the Licence area, exceeds a threshold of net-pay with a vertical extent of no less than twenty metres of sands with a hydrocarbon saturation above sixty percent and a permeability cut-off of 1mD; and a further $2m within 90 days of the date when a Field Development Plan in respect of the exploration well is approved by the Secretary of State for Energy and Climate Change.
Andrew Benitz, CEO of Jersey Oil & Gas, commented: “We are pleased to announce this farm-out to Catalyst. In line with our stated strategy, Jersey Oil & Gas is actively managing and de-risking its existing exploration portfolio and this transaction ensures that the Company maintains exposure to the potential upside from this Licence, at no further cost to the Company.”