Jersey Oil & Gas (JOG) has completed the acquisition of an additional 70 per cent working interest in Licence P2170 (Blocks 20/5b and 21/1d) located in the UK North Sea from Norway’s Equinor.
JOG, now the operator of the license and an 88 per cent stakeholder, said on Wednesday that the consideration for the acquisition would consist of two milestone payments and a royalty based on potential future oil volumes produced from the Verbier Upper Jurassic (J62-J64) reservoir oil discovery.
Namely, JOG will pay $3 million upon the UK’s Oil & Gas Authority sanction of the field development plan for the Verbier and another $5 million upon first oil.
Royalty terms include a gross revenue royalty on the oil production generated from the Verbier Field calculated on a 70 per cent working interest for on-block volumes at the following levels: 5 per cent for the first 12 million barrels of oil produced and sold; 4 per cent for the subsequent 13 million barrels of oil produced and sold; and 2 per cent for the next 10 million barrels of oil produced and sold.
According to the company, this acquisition, which is not subject to upfront cash payments, provides JOG with an opportunity to create significant value through potentially developing the Verbier discovery as part of the Greater Buchan Area (GBA) hub.
Licence P2170 also benefits from multiple material exploration prospects that have high-value potential through tie-backs to the proposed new GBA hub.
Andrew Benitz , CEO of JOG, said: “ I am pleased that JOG has completed this important step to acquire an additional interest and operatorship in the Verbier discovery together with material exploration upside to facilitate our plan to develop Verbier as part of our GBA development.
“ We continue to make solid progress on concept select for the GBA and work closely with contractors, other area stakeholders and the OGA on this important project “.
It is worth reminding that the two companies entered into a conditional sale and purchase agreement for the 70 per cent stake back in January.
Another noteworthy fact is that Equinor and JOG drilled a dry and “disappointing” Verbier appraisal well in April 2019. As a consequence, Verbier’s resource estimates had to be downgraded.