Serica Energy losses widen due to production shut-down

Serica Energy announced its interim financial results for the six months to30 June on Friday, posting a net loss after tax for of $2.8m, widening from $0.64m year-on-year, as a result of the field shut-in during the period.

Production was interrupted during the period, the company said, due to a blockage in the downstream condensate export route and a scheduled maintenance programme.

It did report strong production for January and February, however, averaging over 3,200 boepd net.

The AIM-traded firm reported an end period cash position of $20.8m, and confirmed the Erskine field was back to producing in late August and generating cash return at current oil prices.

Cash at 29 September was reduced to $13.1m, after a second stage-payment to BP and ongoing Erskine costs, but before September’s sales receipts.

The board said the cash resources were “successfully managed” during period of shut-down and were now expected to build.

Its operating and G&A costs were also “reduced materially” to accommodate low oil prices.

“Though the blockage in the Erskine condensate offtake route impacted first half income, the field is now back onstream and underlying reservoir performance continues to offer strong encouragement,” said chairman Tony Craven Walker.

“Our net reserves, which have increased over 50% to 4.2 million boe as of 1 January 2016 according to NSAI estimates, will now hopefully be producing in a stronger oil price environment than at the start of the year.

“We also welcome the plans of Shell, the new Lomond facility operator, to target further cost reductions and improve offtake route reliability.”

At 1147 BST, shares in Serica Energy were down 4.07% at 14.15p.