26 November 2024
Serica Energy plc
('Serica' or 'the Company')
Trading and Operations Update
Serica Energy plc (AIM: SQZ) issues the following trading and operations update in respect of the third quarter and first nine months of 2024.
Chris Cox, Serica's CEO, stated:
"Our ability to unlock production from mature fields has been illustrated through the positive drilling campaign at Triton and well work on Bruce. With the successful results from the B-6 well on Bittern expected to be followed shortly by the Gannet GE-05 well, our key focus is now working to translate these results into more robust production performance than we have seen in recent months.
The Autumn Budget has provided much needed clarity over future investment allowances. The remainder of the Triton well campaign will continue to benefit from full tax relief, and the retention of allowances opens up opportunities in the wider portfolio. Our subsurface team are continuing to work up options for the untapped potential around the Bruce Hub.
Our portfolio is set to provide material cash generation going forward and we are confident of growing both organically and through acquisitions, delivering significant returns to shareholders."
Update on operations
(boepd) |
Q1 |
Q2 |
Q3 |
Average |
Bruce Hub |
22,700 |
24,200 |
18,000 |
21,600 |
Triton Hub |
16,100 |
12,300 |
4,300 |
10,900 |
Other Assets |
6,300 |
5,900 |
3,700 |
5,300 |
Total |
45,100 |
42,400 |
26,000 |
37,800 |
· Production of 37,800 boepd in the first nine months of 2024 (31,500[1] boepd in first nine months of 2023)
- Production of 26,000 boepd in Q3, (Q3 2023: 16,300 boepd), impacted by the previously announced annual maintenance programme at Triton and short scheduled maintenance at BKR
· Following the suspension of production at Triton on 26 October, there has been an extended outage which again resulted from problems with the gas export compression availability. The necessary repairs on the compressor have been completed and production is anticipated to begin this week. The operational vulnerability remains until the ongoing maintenance works are completed, which is likely to be in Q1 2025
· The Gannet GE-05 (SQZ: 100%) well was tied in to the Triton FPSO on 25 October, under budget and ahead of time, and is now set to start production in the coming days, with a stable flow rate expected to be achieved shortly afterwards
· The COSL Innovator rig has now reached target depth on the next well in the campaign, the EC1 well on the Guillemot NW field (SQZ: 10%), with a similarly positive outcome to the B-6 and GE-05 wells. The EC1 well is expected to start production in Q1 2025
· The high-impact drilling campaign for Serica will continue with wells on Evelyn and Belinda (SQZ: 100% in both) in H1 2025
Key figures
· Realised gas price of 77p/therm in Q3 (average NBP price: 82p/therm), with the current NBP gas price of c.120p/therm meaning Q4 realisations expected to be significantly higher
· Realised oil price of
· Revenue of
· Cash of
- Debt drawn of
- The cash change in Q3 was in line with expectations, reflecting the timing of certain cash payments, including the final dividend totalling
· Capex of
Impact of
· The Chancellor's announcement in the Autumn Budget that First Year Allowances against the Energy Profits Levy ('EPL') would be retained at 100%, along with confirmation that there would be no further changes to the EPL or to associated reliefs, removed significant uncertainty
· Accordingly, Serica will receive full tax relief against EPL on the costs of the remainder of the Triton drilling programme
· The increase in the rate of EPL and extension until March 2030, combined with uncertainty about the longer term fiscal regime, however, has increased the economic threshold for longer cycle investments
· Serica is reviewing its Bruce infill drilling plans both in terms of costs and priortisation of specific targets. This work, which includes additional subsurface studies, has identified potentially attractive new opportunities around Bruce, where no wells have been drilled since 2012
· As previously announced by Neo, the operator of the Buchan Horst field (SQZ: 30%), activities on this project were slowed pending clarity regarding the long term fiscal regime and guidance for environmental statements ('ESs'). Together with the Autumn Budget, the government announced consultations on the post EPL tax regime after and on the ESs. The timetable for the former has not been announced and the latter is due to close in January 2025
Outlook
· Production for 2024 expected to be around 37,000 boepd
· Full-year 2024 pre-tax capital expenditure guidance unchanged at around
· 2024 operating costs expected to be around
· Serica expects to end the year in a modest net debt position, following a further cash tax payment of
· BKR on track to have lowest carbon intensity since 2018, 20% below North Sea average
· The Company continues to be very active in screening a broad range of cash-generative and value accretive M&A opportunities in both the North Sea and other geographies
· The Company is continuing to explore a potential move from the AIM to the Main Market in 2025
· Guidance for 2025 will be provided in a trading and operations update in late January 2025
The technical information contained in the announcement has been reviewed and approved by Fergus Jenkins, VP Technical at Serica Energy plc. Mr. Jenkins (MEng in Petroleum Engineering from Heriot-Watt University,
This announcement is inside information for the purposes of Article 7 of Regulation 596/2014.
-end-
Enquiries:
Serica Energy plc |
+44 (0)20 7487 7300 |
Martin Copeland (CFO) / Andrew Benbow (Group Investor Relations Manager) |
|
|
|
Peel Hunt (Nomad & Joint Broker) |
+44 (0)20 7418 8900 |
Richard Crichton / David McKeown / Emily Bhasin |
|
|
|
Jefferies (Joint Broker) |
+44 (0)20 7029 8000 |
Sam Barnett / Will Soutar |
|
|
|
Vigo Consulting (PR Advisor) |
+44 (0)20 7390 0230 |
Patrick d'Ancona / Finlay Thomson |
serica@vigoconsulting.com |
NOTES TO EDITORS
Serica Energy is a British independent oil and gas exploration and production company with a portfolio of UKCS assets. Serica has a balance of gas and oil production. The Company is responsible for about 5% of the natural gas produced in the
Serica's producing assets are focused around two main hubs: the Bruce, Keith and Rhum fields in the
Serica has a two-pronged strategy for growth comprising investment in its existing portfolio and M&A. Further information on the Company can be found at www.serica-energy.com. The Company's shares are traded on the AIM market of the London Stock Exchange under the ticker SQZ and the Company is a designated foreign issuer on the TSX. To receive Company news releases via email, please subscribe via the Company website.
[1] Serica equity production excluding Tailwind volumes prior to completion of the acquisition on 23 March 2023
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.