LONDON (Alliance News) - Jersey Oil & Gas PLC Tuesday said, alongside its partner, it has agreed to farm-out a 70% working interest in one of its offshore licenses in the UK Central North Sea to Norwegian firm Statoil.
The London-listed company owns a 60% interest in the UK seaward licence P2170 which contains blocks 20/gb and 21/1d with its partner, CIECO Exploration & Production (UK) Ltd, holding the other 40%.
Together, they have signed a binding but still conditional sale and purchase agreement to jointly give Statoil a 70% interest in the licence. Statoil will become the operator of the asset and will pay a total upfront consideration of USD2.0 million, of which USD1.2 million will be paid to Jersey Oil.
Following completion of the transaction, Jersey Oil would own an 18% stake, of which 10% will continue to be carried by CIECO under the pre-existing arrangements. CIECO will own the other 12%.
Statoil will fund all the costs for the first exploration well up to USD25.0 million, with any cost-overruns being split on a pro-rata basis between the trio of companies.
The first exploration well is expected to be "potentially" drilled in 2017, with planning underway, Jersey Oil said.
The farm-out will need customary regulatory approvals before it can be completed.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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Jersey Oil & Gas plc (JOG)