UK-headquartered Jersey Oil & Gas plc and the HitecVision-backed NEO Energy have chosen a solution for the
development of their oil project on the UK Continental Shelf (UKCS). This entails the redeployment of a floating,
production, storage, and offloading (FPSO) vessel, which will be modified to enable electrification via floating
offshore wind in a bid to further curb emissions.

This comes after Jersey Oil & Gas wrapped up the sale of a 50 per cent working interest in both licence P2498
and licence P2170 to NEO Energy, as part of the Greater Buchan Area (GBA) farm-out transaction, which was
disclosed in March 2023. As a result, the latter was revealed as the new operator of this oil project.

At the start of June 2023, the North Sea Transition Authority approved an extension to the second term of the
P2498 Buchan licence, which was extended by 18 months to 28 February 2025. The UK regulator has now
followed this up with an extension to the second term of the P2170 Verbier licence, which has been extended by
three years to 29 August 2026.

The extension was requested in order to provide the licensees with the time required to prepare a field
development plan for the Verbier discovery, as part of a phased Greater Buchan Area development plan. The first
phase of the planned GBA work programme involves the re-development of the Buchan field, with the start-up of
production targeted for 2026.

According to Jersey Oil & Gas, the Greater Buchan Area development solution has been finalised together with
NEO. As it includes the redeployment of an FPSO, it is expected to benefit from being not only the lowest cost
development option but also the one that results in the lowest full-cycle carbon footprint of all the potential
options evaluated, driven by the ability to re-use existing infrastructure.

This infrastructure can be located directly at the Buchan field while limited modifications will make the FPSO
electrification-ready upon its redeployment, enabling the vessel to have the potential to be connected to one of
the anticipated floating wind power developments that are intended to be located in close proximity to the GBA,
following the recent Innovation and Targeted Oil & Gas (INTOG) licence awards made by Crown Estate Scotland.

Furthermore, the UK player highlights that the preferred GBA development solution aligns with the NSTA's
obligations to maximise the economic recovery of reserves and assist with achieving the UK government's net-
zero target. In line with this, the UK regulator has issued a letter confirming it has no objections to the concept
select report submitted to support the Buchan re-development programme.

With the GBA development solution now identified, Jersey underscores that work is progressing on the
engineering studies that are required prior to the submission of the development plan in 2024. The total capital
expenditure for the Buchan field re-development, including the cost of acquiring the FPSO, is estimated to be in
the region of $900 million (gross cost).

However, the estimate will be assessed and refined with NEO as part of completing the front end engineering
and design and contract tendering activities that precede the field development plan (FDP) finalisation. Thanks to
the expenditure carry arrangements agreed with NEO, Jersey will be carried for 12.5 per cent of the Buchan field
re-development costs. As the firm plans to farm out a further interest in the GBA licences, the UK player intends
to ultimately retain a fully carried 20-25 per cent interest in the Buchan re-development.

In tandem with the specification of the preferred development solution, the GBA partners have agreed on the key
commercial terms for the proposed acquisition of an existing FPSO. This acquisition is conditional on the
negotiation and execution of relevant transaction agreements, including a sale and purchase agreement. The
acquisition would form part of the carry arrangements agreed between NEO and JOG.

Andrew Benitz, CEO of Jersey Oil & Gas, commented: “We are delighted to have finalised the GBA development
solution and agreed key commercial terms for securing an FPSO for redeployment on the Buchan field. This
marks a major step forward for the project, not least by providing the GBA partners with a solution that minimises
the overall carbon footprint of the project and provides the opportunity to be an early participant in the UK oil and
gas industry's offshore electrification plans.

“We look forward to working closely with NEO, as the incoming operator of the GBA licences, on preparing the
overall Buchan field re-development plan that is anticipated to be submitted to the NSTA during the first half of
2024.”

Located in the Central North Sea, the GBA project covers blocks that contain the Buchan oil field and J2 oil
discovery along with the P2170 Licence Blocks 20/5b & 21/1d, which include the Verbier oil discovery and other
exploration prospects.

The total GBA acreage is estimated to contain 172 million barrels of oil equivalent (MMboe) of discovered P50
recoverable resources net in addition to the significant exploration upside potential of approximately 168 MMboe
of prospective resources close to the firm's planned Buchan facility.