Serica Energy PLC (AIM:SQZ) drew renewed backing from Jefferies, which reinstated coverage on Tuesday as production growth prospects outweighed cuts to output and cash flow forecasts.
In Wednesday trading, the shares stood at 275.21p, up 4%, while the broker reinstated coverage with a 'buy' rating and a 320p price target.
Underpinning the call, Jefferies assumes the Spirit Energy acquisition closes on 1 October, adding 12,300 barrels of oil equivalent per day (boepd) to 2027 production.
Including those assets, the bank raised its 2027 average production forecast by 15% to 50,540 boepd, with new drilling supporting output above 50,000 boepd from 2027 through 2030 and beyond.
For 2026, the analysts cut estimated production by 7% to 41,710 boepd to account for summer maintenance at Triton.
To bankroll longer-term growth, Jefferies models annual capital spending of around $450 million in 2027 and 2028, more than double its $195 million estimate for 2026.
Reflecting the heavier investment, the bank cut its 2027 free cash flow forecast by 81% to $49 million, while still projecting $39 million of 2027 year-end net cash.
Alongside this expansion, Serica's dividend policy targets distributions of 15% to 30% of operating cash flow after tax, with further UK and international acquisitions offering additional upside.
Next, Bruce drilling expected from the third quarter of 2027 could add more than 10,000 boepd, with first production expected around 2028.
