Serica hits six-week delay at North Eigg well

The AIM-traded firm said that, following a recent equipment failure and the required mobilisation of a replacement, operations were now expected to take around six weeks longer to complete than originally planned.

It said operations had been progressing successfully despite some drilling delays in the top-hole sections.

During recent preparations for drilling the third section of the well, there was a failure of a “vital” piece of rig equipment during routine pre-job testing.

A replacement was sourced and planning was underway to transport it to the drilling rig.

Serica said that would have “no impact” on the ultimate geological outcome of the well, adding that it expected that all well costs would benefit from the investment allowances available under the recently-introduced Energy Profits Levy.

The company said its net well cost after tax was expected to increase by around £3m as a result of the delays, adding that it now expected results from the well to be available in December.

“This high-impact exploration well is the latest in a series of capital investment projects undertaken by Serica with the objective of increasing our production in an environmentally-sensitive manner,” said chief executive officer Mitch Flegg.

“This programme is designed to help increase the UK's security of supply and reduce its reliance on imports.

“The technical delays encountered on this project are extremely frustrating but do not impact either the chance of success or the significant prospective volumes of this exploration prospect.”

At 1333 BST, shares in Serica Energy were down 4.76% at 370.5p.

Reporting by Josh White at Sharecast.com.