Jersey Oil takes whole share in licence with Cieco acquisition
UK North Sea-focussed upstream energy company Jersey Oil & Gas has entered into a conditional sale and purchase agreement to acquire Cieco V&C UK, it announced on Thursday, which is currently owned by Itochu Corporation and the Japan Oil, Gas and Metals National Corporation (Jogmec).
The AIM-traded firm said the acquisition would secure an additional 12% working interest in blocks 20/5b and 21/1d on licence P2170, providing Jersey with complete ownership and full control of licence P2170, located within its Greater Buchan Area development project.
It said Cieco V&C's sole portfolio asset was the licence interest.
The board said the acquisition would increase its ownership of the Verbier oil discovery, the majority of which lay within licence P2170, and would increases ownership of multiple high-impact exploration opportunities within the licence, including three drill-ready prospects, namely Verbier Deep, Wengen and Cortina.
It would also simplify the licence ownership, ahead of the company’s planned farm-out process on the Greater Buchan Area.
Cieco V&C had about £15m of tax losses, which was expected to provide additional value to Jersey following first oil/
The acquisition terms included a completion payment of £0.15m in cash, and contingent payments of £1.5m in cash on consent from the UK Oil & Gas Authority (OGA) for a field development plan on the Verbier discovery, and £1m in cash payable with one year of first oil from all or any part of the field development plan area.
Jersey said completion of the acquisition remained subject to OGA approval.
The acquisition was also contingent on Itochu acquiring Jogmec’s shares in Cieco V&C ahead of completion, the timing for which was expected to coincide with the OGA's approval process.
“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 and positions us perfectly ahead of completion of concept select and the planned launch of Jersey’s wider Greater Buchan Area sales process,” said chief executive officer Andrew Benitz.
“This acquisition increases Jersey’s discovered resources, adds material value and exploration upside in addition to useful tax losses.”
At 1243 GMT, shares in Jersey Oil & Gas were up 11.13% at 111.12p.