Serica Closes GBA Stake Acquisition from Jersey Oil

Serica Energy plc subsidiary Serica Energy (UK) Limited has completed the acquisition of 30 percent non-operated interest in the P2498 and P2170 licenses in the North Sea, or the Greater Buchan Area (GBA), from Jersey Oil & Gas (JOG).

The transaction provides Serica with the option of participating in the re-development of the Buchan field and other potential projects in the GBA, such as the development of the J2 and Verbier discoveries. Subject to project sanction and regulatory approval, Serica said in a news release Monday that the target for first production from Buchan is the fourth quarter of 2026.

The GBA encompasses several oil and gas accumulations around 93.2 miles (150 kilometers) northeast of Aberdeen, in the Outer Moray Firth. The largest of these accumulations is the Buchan field which has produced for over 30 years, ceasing production in 2017 due to the end of the useable life of its floating production facility.

Serica made a cash payment to JOG of $7.5 million, which was the original 6.8 million amount adjusted to reflect an economic date of April 1, 2023. The remainder of the potential consideration is in the form of a Buchan development cost carry and contingent amounts linked to certain future events, according to the release.

“We are pleased to have completed this transaction which creates the possibility of adding a third production hub to Serica’s North Sea portfolio”, Serica Chief Executive Mitch Flegg said. “As a potential domestic source of oil and gas with a low level of production emissions, a provider of quality jobs for UK [United Kingdom] workers and a generator of much needed future tax revenues, Buchan is the sort of project the UK needs as part of the energy transition”.

The transaction was structured as a farm-in, with modest up-front and contingent consideration payments, and a carry of pre-financial investment decision (FID) and development costs. JOG said in a separate statement that the GBA farm-out transactions provide it with up to $38 million in cash payments, $18 million of which has been received, as well as “a full carry on both pre-sanction costs and capital expenditure in the approved Buchan Field Development Plan”.

NEO Energy retains a 50 percent interest in the GBA and remains its operator, with Serica and JOG holding 30 percent and 20 percent, respectively.

Serica Energy describes itself as a British independent oil and gas exploration and production company with a portfolio of UK Continental Shelf assets. The company claims to be responsible for about five percent of the natural gas produced in the UK.

Serica’s producing assets are focused around two main hubs: the Bruce, Keith and Rhum fields in the UK Northern North Sea, which it operates, and a mix of operated and non-operated fields tied back to the Triton floating production, storage, and offloading unit (FPSO). Serica also has operated interests in the producing Columbus and Orlando fields and a non-operated interest in the producing Erskine field in the UK Central North Sea.

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