An important piece of news for Jersey Oil & Gas (LON:JOG) in the finalising of the Great Buchan Area development with NEO Energy having been announced as the new 50% working interest partner in those licences.
That unlocks the development solution and monetisation resources in excess of 100m barrels of oil equivalent.
Jersey Oil & Gas is a UK exploration and production company which is focused on building an upstream oil and gas business in the North Sea.
It holds a significant acreage position within the Central North Sea referred to as the Greater Buchan Area, which includes operatorship and 100% working interests in blocks that contain the Buchan oil field and J2 oil discovery and an 100% working interest in the P2170 Licence Blocks 20/5b & 21/1d, that contain the Verbier oil discovery and other exploration prospects.
CEO Andrew Benitz stated that:
"We are delighted to announce this transaction with NEO Energy, a well-funded industry heavyweight and the fifth-largest producer in the UKCS.
The farm-out marks a major value creation moment for JOG, a significant de-risking of the GBA development programme, from both an operational and funding perspective, and provides the springboard from which to grow the long-term value of the business.
We are looking forward to working collaboratively with NEO Energy to select the optimal development solution for the GBA and taking the project through to sanction and on into future production."
At finnCap their analyst Jonathan Wright considers that this transaction represents a strong validation for the GBA project from a significant North Sea operator.
He reckons that the ‘farm-out’ is worth over 400p a share to JOG.
Under his conservative assumptions on the group’s prospects he notes that there is a significant upside potential for the group’s shares. He has a risked valuation of 660p a share.
Analyst Daniel Slater at Zeus Capital following this deal reckons that he has a very positive outlook on the group’s prospects and upon his company’s total unrisked net asset value has a massive 952p price objective.
Analyst Brendan Long at WH Ireland believes that it is ‘game on’ for the energy crisis and that the timing in respect of the commodity price cycle is excellent for both the counterparty and Jersey Oil & Gas. He is also very positive about the news.