Serica Energy PLC (AIM:SQZ) told investors it is looking at potential new drilling opportunities in the vicinity of its Bruce Hub, in the North Sea, as well as eyeing portfolio expansion through acquisition.
As a North Sea focussed independent oil and gas producer (i.e. not a multi-national giant like Shell or BP) the company is among those disrupted by the UK government’s extension and expansion of the so-called ‘windfall’ tax.
Nevertheless, Serica today noted that Rachel Reeves autumn budget gave “much needed” clarity over investment allowances, providing tax relief under the Energy Profits Levy, and, had raised thresholds for long-term projects.
“The remainder of the Triton well campaign will continue to benefit from full tax relief, and the retention of allowances opens up opportunities in the wider portfolio,” Serica chief executive Chris Cox said in Tuesday’s trading update.
“Our subsurface team are continuing to work up options for the untapped potential around the Bruce Hub.”
As it eyes new opportunities, Serica said it is screening both in the North Sea and other geographies whilst at project level, it is prioritising “cash-generative and value accretive” assets.
At the same time, Serica said it is continuing to explore a move from the AIM market to London’s main market in 2025.
In terms of current performance, Serica reported average production of 37,800 barrels of oil equivalent per day (boepd) for the first nine months of 2024, up from 31,500 boepd in the year before.
Production in the third quarter however was impacted by scheduled maintenance and gas compressor issues at the Triton field, where repairs are now complete, with production expected to restart shortly. The rate for Q3 was 26,000 boepd.
Serica generated $139 million of revenue in the quarter, broadly in line with $135 million a year ago. It reported a realised oil price of 77p per therm for the quarter, but noted significantly higher prevailing gas price which will see ‘higher realisations’ in the fourth quarter.
The firm’s realised oil price for the quarter was $71 per barrel (versus an average brent price of $80 in the period) and it noted that it was impacted by hedging positions that are set to unwind in the current quarter.
Serica had $258 million of cash and $231 million of drawn debt at the end of the quarter.
Operationally, in the period, Serica connected the Gannet GE-05 well to the Triton FPSO, and its set to come online shortly.
It added that the EC1 well, on the Guillemot NW field, is expected to begin production in Q1 2025.
New drilling is planned in early 2025, at the Evelyn and Belinda fields.