Serica maintains production guidance as year-end reserves expand

UK North Sea-focussed oil and gas firm Serica Energy said in an update on Thursday that as of 31 December, it had net proved plus probable, or ‘2P’, reserves totaling 140 million barrels of oil equivalent.

The AIM-traded firm said that was a notable increase from the figure of 130 million equivalent barrels reported a year earlier, despite the extraction of 14 million barrels in 2023 on a proforma combined Serica and Tailwind basis.

It said there was an overall addition of 24 million equivalent barrels to 2P reserves during 2023, representing a reserves replacement ratio of 179%.

Serica noted that over 90% of the reserves were situated in fields already in production, adding that there was an equal distribution between oil and gas reserves within the portfolio.

In terms of production, Serica Energy maintained an average net production of about 45,500 barrels of oil equivalent per day during January and February.

Looking ahead, the company anticipated a production range of 41,000 to 48,000 equivalent daily barrels for the entirety of 2024.

“I am delighted that Serica has maintained its record of more than replacing reserves since 2018, with the company ending 2023 with higher reported reserves than from the combined Serica and Tailwind portfolios at the start of the year even after allowing for the oil and gas we produced in 2023,” said chief executive officer Mitch Flegg.

“Nearly all the additions to reserves reported today are associated with fields that are already producing which limits incremental emissions.

“This record of delivery is a testament to the hard work of our staff and the underlying quality of the asset portfolio.”

Flegg described production in the early part of 2024 as encouraging, adding that the firm looked forward to the future impact of executing its investment programme this year.

“We are on track to commence the planned well intervention and drilling activities on the Bruce and Triton assets during the coming month.

“It would be remiss not to express considerable disappointment with the extension of the EPL announced in the Budget yesterday.

“Current oil and gas prices do not represent windfall conditions for UK producers and increasing the tax burden on domestic oil and gas production again will be damaging for UK jobs and the economy.”

The achievements delivered by Serica had added to domestic sources of energy, Mitch Flegg asserted.

“The kind of approach exhibited in the Budget will lead to more imports and reduce the ability of our industry to enhance the UK's resilience to potential energy shocks in the future.”

At 1040 GMT, shares in Serica Energy were up 3.26% at 177.6p.

Reporting by Josh White for Sharecast.com.