AIM-listed Jersey Oil & Gas, an independent upstream oil and gas company focused on the UK Continental Shelf region of the North Sea, has provided an update on the Buchan redevelopment project ahead of today's Annual General Meeting ('AGM').
Following the announcement of an earlier than expected UK General Election in July 2024, the Buchan joint venture partners have assessed the implications and their plan for progressing the project. While activities continue in order for the Buchan project to be ready for Field Development Plan ('FDP') approval by the end of this year, the exact timing for achieving this key milestone and enabling project sanction is naturally linked to securing fiscal clarity from the next government and ensuring that the project remains financially attractive.
The Buchan Operator, NEO Energy, continues to make good progress on advancing the work programme required to enable project sanction. Completion of the necessary engineering work is on track and the first offshore survey was completed in May, obtaining the geophysical data used for the subsea and drilling rig contract tendering process. A second survey to obtain geotechnical data is scheduled to commence this month. Work is also advancing on completion of the other two key remaining workstreams, being the subsurface studies required to finalise the drilling programme and operational verification and preparation for the handover of the 'Western Isles' floating production, storage and offloading vessel ('FPSO') to the Buchan joint venture. Alongside these activities, engagement on the Buchan FDP and associated regulatory consents is progressing to plan with the North Sea Transition Authority ('NSTA') and the Offshore Petroleum Regulator for the Environment and Decommissioning.
Following the receipt of fiscal clarity and subject to FDP approval, the major contract awards and capital commitments for the project are now expected in 2025, which leads to Buchan first production being targeted for late 2027. Under the current fiscal policy, the Company's valuation of the Buchan redevelopment project does not materially change as a result of the later first production date.
JOG remains fully funded with a current cash position of over £13 million and a forecast annual base cash spend of £3 million. The Buchan project remains fully carried to FDP with a further $20 million payment due following approval by the NSTA of the Buchan FDP and receipt of the associated regulatory and legal consents. The Company also has a full carry to first oil for its 20% equity interest in the Buchan field development costs, which are to be approved in the FDP.
Andrew Benitz, Chief Executive Officer, commented:
'With a UK General Election now announced, we are hopeful that fiscal clarity will be forthcoming in short order so that the industry can continue to do what it does best, namely investing in major capital projects that deliver vital low carbon homegrown energy and highly skilled jobs. In the case of the Buchan field, we have a project that will deliver a meaningful contribution to the energy transition process through our electrification strategy, which helps facilitate investment in cutting-edge floating offshore wind.'
Source: Jersey Oil & Gas
