Statoil buys 70% of North Sea field

Jenny Morris of Statoil

Shares of Jersey Oil & Gas soared about 18% after Norwegian multinational Statoil agreed to acquire 70% of a licence in the Outer Moray Firth from Jersey and its partner CIECO Exploration and Production (UK).

The area — under the UK Seaward Licence P.2170 — contains the Buchan, Buzzard and Ettrick oil discoveries.

Statoil UK is the operator of the $7 billion Mariner field currently under development in the North Sea — which it says is the biggest field development in the UK Continental Shelf (UKCS) for more than a decade.

Statoil said it “has the ambition to be an active explorer on the UKCS with the belief that considerable hydrocarbon resource remains undiscovered.”

Jersey said Statoil would pay $2 million up front “and fund all costs up to $25 million in respect of the first exploration well to be drilled on the P.2170 licence …”

The deal is subject to approval by the Oil and Gas Authority (OGA).

“The opportunity looks promising and we are looking forward to further evaluating the data to assess the feasibility of testing the prospect,” said Jenny Morris, Statoil’s head of UK exploration.

“It adds additional acreage and volume potential to our UK portfolio and we could potentially drill this prospect next year.”

Andrew Benitz, CEO of Jersey Oil & Gas, said: “We are delighted to have secured a farm-out partner of the calibre of Statoil.

“The P.2170 Licence area has significant exploration potential for the discovery of oil and we look forward to drilling one of the prospects with our partners, potentially next year.

“This farm-out deal exposes our shareholders to 18% of a prospect with significant potential and a carry in respect of the costs of the budgeted Exploration Well. 

“Individual prospects of this materiality are increasingly rare in the North Sea and to have a leading international operator such as Statoil joining our partnership group, serves to demonstrate the significant value-potential of this asset.”

Statoil said that following the transaction, the equity ownership in the P.2170 licence would be Statoil with 70%, Jersey Oil & Gas with 18% and CIECO Exploration and Production (UK) with 12%.

“This transaction underpins Statoil’s exploration strategy of exploiting prolific basins and deepening in core areas,” said said Jez Averty, Statoil’s senior vice president for Exploration, Norway and the UK.

“It further strengthens our position on the UKCS and brings a potential impact opportunity in to our portfolio.”