Serica Energy subsidiary Serica Energy (UK) has reached an agreement to acquire a 30% non-operated stake in the Greater Buchan Area (GBA) oil field from Jersey Oil & Gas (JOG).

The GBA comprises the P2498 and P2170 licences on the UK Continental Shelf (UKCS).

Serica said the GBA has multiple oil and gas accumulations about 150km north-east of Aberdeen. The largest of these accumulations is the Buchan field, which stopped production in 2017.

The GBA partners are considering a two-phase development plan, with phase one focusing on the redevelopment of the Buchan field and phase two exploring the J2 and Verbier discoveries.

With an estimated 70 million barrels of oil equivalent in mid-case dependent resources, the Buchan field is the third-largest pre-development asset on the UKCS.

The UK’s North Sea Transition Authority (NSTA) has issued a no objection letter for the concept select report for the redevelopment of the Buchan field.

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By GlobalData

Soon the GBA partners Serica Energy (UK), NEO Energy and JOG, will submit a field development plan (FDP) for Buchan field.

For the 30% stake in GBA licences, Serica will pay $6.8m (£5.4m) in cash to JOG.

If Serica participates in the development of GBA assets, it will make further payments to JOG that include $7.5m following NSTA approval for the Buchan FDP and a 7.5% carry of the Buchan field pre-final investment decision and development costs.

The company also agreed to make a payment of $3m after J2 FDP approval by the NSTA and $3m when the Verbier FDP is approved.

Serica CEO Mitch Flegg said: “We are delighted with this transaction, which gives Serica a significant interest in the proposed Greater Buchan Area project, potentially adding a third production hub and further resilience to Serica’s North Sea portfolio.

“The transaction is structured such that most of the consideration payable by Serica is contingent and linked to making progress in the project. Our participation will also be financially efficient with Serica benefitting from tax reliefs on its investment.”

Following the transaction, NEO Energy will own a 50% stake in GBA licences, 30% will be owned by Serica Energy (UK) and the remaining 20% will be held by JOG.

In June, JOG sold a 50% stake in GBA licences to NEO Energy.