(Alliance News) - Jersey Oil & Gas PLC on Thursday said it has agreed to acquire CIECO V&C UK Ltd for up to a maximum of GBP1.7 million.
Shares in the North Sea-focused exploration and production firm were up 17% at 117.00 pence in London in morning trading.
This includes a GBP150,000 cash completion payment plus contingent payments of GBP1.5 million in cash upon UK Oil & Gas Authority consent for a field development plan for the Verbier discovery in the upper Jurassic Burns Sandstone reservoir located on Licence P2170.
It also includes GBP1.0 million in cash payable no later than one year after first oil from all or any part of the areas subject to the field development plan.
Jersey O&G is acquiring CIECO V&C from ITOCHU Corp and Japan Oil, Gas & Metals National Corp, securing a further 12% working interest in licence P2170 Blocks 20/5b and 21/1d. This gives the firm 100% ownership and full control of licence P2170.
Additionally, the deal increases Jersey O&G's ownership of the Verbier oil discovery, most of which is located within licence P2170 and increases its ownership of a number of "high-impact exploration opportunities" within licence P2170. This includes three drill-ready prospects: Verbier Deep, Wengen and Cortina.
The buy also simplifies licence ownership ahead of a planned Greater Buchan Area farm-out process.
The company also noted that: "CIECO V&C has approximately GBP15 million of tax losses which are expected to provide additional value to [Jersey O&G] following first oil."
In 2019, CIECO V&C posted no revenue and recorded a GBP13.6 million pretax loss.
Completion of the buy is subject to Oil & Gas Authority approval and is also contingent on ITOCHU acquiring Japan Oil, Gas & Metals National's shares in CIECO V&C ahead of completion.
Jersey O&G Chief Executive Andrew Benitz said: "The corporate acquisition of CIECO V&C completes 100% ownership of the final component of our [Greater Buchan Area] project that was not previously wholly owned by [Jersey O&G] and positions us perfectly ahead of completion of concept select and the planned launch of JOG's wider GBA sales process."
"This acquisition increases JOG's discovered resources, adds material value and exploration upside in addition to useful tax losses."
By Anna Farley; annafarley@alliancenews.com
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Jersey Oil&gas (JOG)