UK's Serica Sees Bumper Year in 2019
London-listed Serica Energy increased production in 2019, while also cutting costs and boosting its cash position, according to a company stock filing on January 14.
Serica established itself as a significant UK North Sea player last year, taking shares in the Rhum, Keith and Bruce fields through a series of acquisitions. It netted 30,000 boe/day of output from its interests in the Bruce, Keith, Rhum and Erskine fields in 2019 – an increase of 13% yr/yr on a like-for-like basis. More than 80% of its production is gas.
The company also slashed operating costs from $18/boe to $13/boe, while its cash, cash equivalents and term deposits reached £101.8mn ($132mn) at the end of December up from only £43.1mn a year earlier.
Serica noted it no longer had any borrowings, after settling a £16.5mn BP gas prepayment facility in 2019.
Under its acquisition agreements with BP, France’s Total and Anglo-Australian BHP, Serica’s share of cash flow from the Rhum, Keith and Bruce fields rose from 50% to 60% at the start of this year. After 2021 it will grow to 100%.
"2019 has been a year of strong performance and achievement for Serica. We have established our position as a leading UK independent producer and we entered 2020 with no borrowings, low decommissioning liabilities and in a strong cash position,” Serica CEO Mitch Flegg said in a statement.
Serica aims to expand its business further, Flegg said, focusing on value rather than scale. The company snapped up 100% of a new licence next to Rhum in December, where it plans to spud an exploration well this year. The licence holds mainly gas potential.
In the second half of 2020 Serica intends to bring the Rhum R3 well into production, and spud a development well at the Columbus gas field north of Erskine.