Serica Energy PLC (AIM:SQZ) chief executive Chris Cox described the North Sea fiscal regime as “unjustifiably punitive” and said it may make future investment on the UK continental shelf challenging.
“What is clear is that, thanks to our investment in our assets and our lean operating model, our producing assets remain cash generative, even after paying taxes at a rate of 75% today and due to rise to 78% from 1 November.
"Our confidence in our cash generation outlook, together with our strong balance sheet, gives us capital allocation options," Cox said in a statement.
Serica meanwhile remains committed to supporting shareholder returns, retaining a 9p per share interim dividend.
Cox told investors that the company wants to invest in its UK assets, but “it will only be able to make these investments if the fiscal environment allows us to generate a fair return on capital.”
Serica will otherwise look to build through value-accretive M&A abroad.
Today, Serica reported unaudited financial results for the six months ending 30 June, in which its revenue reduced due to lower volumes as well as oil and gas prices to $462 million, from $545 million a year ago.
The British firm saw production of 43,700 barrels of oil equivalent per day (boepd), down from 49,350 boepd.
Earnings (EBITDAX - earnings before interest, taxes, depreciation, amortization, and exploration) reduced to $279 million from $290 million
Cash flow from operations amounted to $301 million for the half, and free cash flow was marked at $98 million.
Serica retains a robust balance sheet, with $131 million of net cash.
"I am delighted to introduce my first set of results as Serica CEO. Prior to joining, I felt that the company stood out due to the quality of the team, its strong financial position, and the opportunities for growth both organically and through acquisition - my opinion of the company's potential to create value for shareholders has only increased since my arrival,” Cox said.
He added: “Whatever the outcome of the Autumn Budget, my focus will not waver from safety, operational delivery, and growth.
“The potential in the fields we operate is demonstrated by the positive early signs we are seeing from the Triton drilling programme, and I have been deeply impressed by the talented team we have within Serica that will enable us to unlock further value.
“Serica will continue to pursue a returns-led investment strategy, and I am confident that we are set to deliver materially cash-generative production for many years to come."