Serica maintains full-year production guidance

The AIM-traded company, which was holding its annual general meeting, said its operating costs remained consistent with its target of $20 per equivalent barrel, reflecting stable financial management.

It said the Bruce Hub had shown steady production for the year-to-date, with an uptick in June following a successful Light Well Intervention Vessel (LWIV) campaign.

That intervention was yet to establish a steady production state from the worked-over wells.

Additionally, production from the K1 well in the Keith field resumed on 8 June, although it had been intermittent as topsides operations were optimised.

The upcoming Bruce field platform well interventions were set to start in mid-July, with a planned duration of 90 days, focusing on enhancing production and routine monitoring.

A brief outage of the Forties Pipeline System in July would coincide with maintenance activities on the Bruce Hub, scheduled for a seven-day shut-in.

At the Triton Hub, the floating production, storage and offloading (FPSO) vessel was operating with a single gas export compressor, with repairs for a second compressor expected in October.

A compressor trip in May halted production for three weeks, but full production has since resumed.

However, the firm said the vulnerability would persist until repairs were completed, while the planned summer shutdown of the Triton FPSO would start on 1 July for 40 days.

Other assets were said to be performing well, except for the Erskine field, which had been offline since 26 January due to a compressor issue on the host Lomond platform.

After briefly resuming in early May, production would restart in late July following the Lomond turnaround.

In the Triton area, the reservoir section of the B1z sidetrack, now referred to as the ‘B6’ well, on the Bittern field had been successfully drilled.

Initial well logging indicated a high-quality, oil-filled reservoir.

The well completion and testing were scheduled for August, post the Triton summer shutdown.

Subsequently, the COSL Innovator rig would move to the Gannet E field to drill the GE-05 well, with production expected to begin in November.

As of 26 June, Serica held £301.6m in cash and equivalents, with debt drawings of $231m (£182m).

That followed significant expenditures, including £58.3m in tax payments, £80m in capital spending, £17.3m in asset acquisitions, and a £15m share buyback.

The company anticipated a pre-tax capital expenditure of about £200m for 2024, with tax and dividend payments heavily weighted towards the second half of the year.

“Over just a few years Serica has been transformed from a small international exploration focussed company into one of the top 10 producers in the UK North Sea, safely and responsibly operating complex facilities offshore and growing its 2P reserves some 35 times since the beginning of 2015,” said chairman and interim chief executive officer David Latin.

“To deliver these achievements we have navigated operational challenges, oil and gas prices hitting historic lows - remember gas prices of 10 pence a therm in May 2020 - and pulled off multiple good acquisitions.

“With the assets, financial strength, staff and leadership now in place, we have a very solid platform for entering the next phase of growth.”

Latin said the company was “proud” of its track record of growth and value creation, aiming to repeat the same in the future.

“Unfortunately, recent and potential future increases in UK oil and gas taxes make that increasingly difficult.

“Consequently, while we remain watchful for opportunities in the UK that might be attractive despite this increasingly challenging context, we are also looking very actively overseas.”

At 1037 BST, shares in Serica Energy were down 9.93% at 137p.

Reporting by Josh White for Sharecast.com.