Serica Energy revenue, earnings fall in full-year results

Serica Energy reported a shift in average realised sales prices in its final results on Wednesday, with post-hedging prices averaging around $63 per barrel of oil equivalent for 2023, a decrease from $104 in 2022.

The AIM-traded firm said the decline primarily reflected lower natural gas prices, partially offset by contributions from the Tailwind assets.

Revenue for the year totaled £632.6m, a decrease from £812.4m in 2022, while its EBITDAX stood at £381.4m, down from £616.5m in 2022.

Profit before tax amounted to £305.6m, compared to £488.2m in the prior year, with a subsequent profit after tax of £103m, reflective of current tax charges.

Operationally, Serica noted the completion of the acquisition of Tailwind Energy Investment on 23 March 2023, contributing to proforma production averaging 40,121 barrels of oil equivalent per day throughout the year.

Additionally, the company's 2P reserves increased to 140.3 million equivalent barrels at the end of 2023, with net upward revisions of 23.5 million barrels.

Operational achievements included successful interventions on several Bruce wells, the start of production from the GE-04 well on the Gannet E field, and ongoing maintenance efforts to enhance facility performance, including the replacement of the Triton control system.

Looking ahead, Serica said it had initiated an extensive drilling campaign in the Triton area, aiming to enhance production and development activities across various fields.

Capital expenditure for 2024 was estimated at around £170m, with production guidance ranging from 41,000 to 46,000 barrels of oil equivalent per day, reflecting ongoing operational optimisation efforts.

Serica said it was actively managing commodity price exposure through new hedging strategies, while pursuing major capital projects such as the Buchan Horst field, contingent on future tax regime considerations.

Serica said it remained committed to delivering shareholder value through initiatives such as a proposed final dividend for 2023 and a £15m share buyback programme.

“The completion of the Tailwind acquisition in March 2023 represented a step change in the scale and diversity of Serica's portfolio,” said the firm’s outgoing chief executive officer Mitch Flegg.

“The merits of seeking diversity and organic growth opportunities through the transaction have been borne out by the sharp decline in gas prices relative to oil prices during 2023 and Serica maintaining its track record of more than replacing production through reserves additions in both the Bruce and Triton production hubs.

“Moreover, there are further growth opportunities within the company's existing producing fields and other assets in Serica's portfolio, such as the potential Buchan Horst project.”

At 1229 BST, shares in Serica Energy were up 0.88% at 195.5p.

Reporting by Josh White for Sharecast.com.