Norwegian oil major Statoil has signed a Sales and Purchase Agreement (SPA) with Jersey Oil and Gas and CIECO Exploration and Production to acquire 70 percent ownership and operatorship of the P.2170 license on the UK Continental Shelf.
Statoil said on Tuesday that it would acquire 70 percent working interest and operatorship in the license for a total cash consideration of $2 million.
The license is located in the UK part of the North Sea in the Buchan Graben, within the Outer Moray Firth region, an area containing the Buchan, Buzzard, and Ettrick oil discoveries.
Jez Averty, Statoil’s senior vice president for Exploration, Norway and the UK, said: “This transaction underpins Statoil’s exploration strategy of exploiting prolific basins and deepening in core areas. It further strengthens our position on the UKCS and brings a potential impact opportunity into our portfolio.”
This agreement is subject to approval by UK’s Oil and Gas Authority (OGA).
Jenny Morris, Statoil’s Head of UK Exploration, said: “The opportunity looks promising, and we are looking forward to further evaluating the data to assess the feasibility of testing the prospect. It adds additional acreage and volume potential to our UK portfolio, and we could potentially drill this prospect next year.”
In a separate release, Jersey Oil and Gas stated that the company currently holds a 60 percent interest in the license with CIECO holding the remaining 40 percent.
Following the transaction, Statoil will have a 70 percent stake and operatorship of the license by acquiring a 42 percent stake from Jersey Oil and Gas and a further 28 percent from CIECO. Both companies will remain on board with Statoil as partners on the license with the remainder of their respective stakes.
Jersey said that of the $2 million total up-front cash consideration, $1.2 million will be paid to the company.
Andrew Benitz, CEO of Jersey Oil & Gas, said: “We are delighted to have secured a farm-out partner of the caliber of Statoil. The P.2170 Licence area has significant exploration potential for the discovery of oil and we look forward to drilling one of the prospects with our partners, potentially next year. This farm-out deal exposes our shareholders to 18% of a prospect with significant potential and a carry in respect of the costs of the budgeted Exploration Well.
“The company continues to deliver on its strategy of managing and de-risking its existing exploration portfolio whilst actively seeking to acquire interests in more mature producing assets.”
The P.2170 license was awarded in the Department of Energy and Climate Change’s 28th Seaward Licensing Round. The blocks concerned are located in the UK Central North Sea in water depths of between 100-128 meters.
Prospectivity has been confirmed following extensive geological and geophysical evaluation by Jersey Oil & Gas, with two medium risk independent oil prospects identified with unaudited estimated mean in place volumes of 300 and 212 Mmstb respectively. The P.2170 license has a drill-or-drop option which can currently be exercised until November 30, 2016, under which the licensees can commit to drill a well within a further two year period.