Jersey Oil & Gas farms out North Sea licence

Jersey Oil & Gas continued its de-risking programme on Tuesday, farming out its share in a North Sea production licence.

The AIM-listed independent upstream oil and gas company, focused on the UK Continental Shelf area of the North Sea, said it had signed a sales and purchase agreement for the farmout of its half interest in Seaward Production Licence P.1989, Blocks 14/11, 12 and 16, to Azinor Catalyst Ltd.

Jersey said the balancing 50% interst in the licence was currently held by Norwegian Energy Company UK. Under the terms of the agreement, Azinor Catalyst agreed to acquire the full licence from both Jersey, through it subsidiary Trap Oil, and Norwegian Energy.

Azinor Catalyst agreed, by way of consideration, to carry out certain "firm work commitments", which Jersey said included the drill-or-drop obligation in respect of an exploration well.

Catalyst would also make a $2m (£1.36m) payment each to Norwegian Energy and Trap Oil within 90 days of the date an exploration well is drilled in the licence area, should it meet certain technical terms.

A further $2m would be paid within 90 days of the date a field development plan for an exploration well is approved by the Secretary of State for Energy and Climate Change.

"In line with our stated strategy, Jersey Oil & Gas is actively managing and de-risking its entire exploration portfolio and this transaction ensures that the company maintains exposure to the potential upside from this licence, at no further cost to the company", said Jersey CEO Andrew Benitz.