NEO strikes deal to take command of North Sea GBA project

Offshore staff

LONDON – NEO Energy has agreed to take a 50% operating interest from Jersey Oil & Gas (JOG) in the Greater Buchan Area (GBA) licenses in the UK central North Sea.

This opens the path to a phased development of 100 MMboe-plus from various discoveries in the area, starting with a redevelopment of the decommissioned Buchan oil field.

Under the terms of the transaction, NEO will provide cash payments to JOG, also funding JOG’s 50% share of the estimated $25 million cost to take the Buchan Field through field development plan approval, and a minimum carry to first oil of 12.5% of associated development expenditure.

NEO already produces about 90,000 boe/d from its UK North Sea operations. The company is backed by private equity investor HitecVision.

The companies are assessing options for a low-carbon development connected to existing infrastructure with electrification options.

Once the North Sea Transition Authority approves the transaction and the associated extension of JOG’s two GBA licenses, operatorship will formally transfer to NEO.

JOG also cautioned that unstable fiscal conditions resulting from the UK’s new Energy Profits Levy “have been challenging,” and that while the target is first oil in 2026, the companies will “be mindful of the future fiscal attractiveness of the UK.”

If JOG can farm out additional equity in the licenses, its goal would be to ultimately retain a 20% to 25% carried interest in the development following field development plan approval. NEO also has an option to increase its 50% stake in the Buchan license by up to an additional 37.5%.

04.06.2023