Page 15 - EurOil Week 23 2022

EurOil PROJECTS & COMPANIES EurOil

Serica reassures investors after

share slump

UK LONDON-LISTED Serica Energy has sought realised in early October.
to allay investor concerns about the impact of Serica added that it will also be “evaluating
Serica says there are a recently announced windfall tax on the UK additional candidate projects” to boost pro-
opportunites to be have North Sea industry, saying it can use incentives duction at the Bruce hub comprising the Bruce,
from the windfall tax built into the levy to reduce its bill. Keith and Rhum fields.
scheme. Serica, which operates the Rhum, Bruce, In short, CEO Mitch Flegg said the company
Keith, Columbus and Erskine fields and is was “well placed” to exploit the new investment
responsible for 5% of UK gas production, incentives, and that its cash position and balance
suffered a 20% fall in its share price on May sheet provided the “leverage and resources” to
26 when the government announced the levy, do so.
which increases the current headline rate of “Although Serica has financial strength, our
tax on oil firms from 40% to 65%. Reports in industry operates within unusually long invest-
the City of London suggested that the devel- ment horizons against a backdrop of often highly
opment would mean Serica paying out an volatile commodity markets and business cycles,”
extra $64mn in tax this year and $99mn next Flegg said. “We therefore encourage policymak-
year. ers to consider the importance of fiscal stability
“Although fiscal instability is unwelcome in enabling government and industry to meet the
in an industry with long lead times for capital mutually set objectives of sustaining investment
expenditure, this new levy is part of a package in the UK Continental Shelf [UKCS] at a level
that includes significant investment incentives capable of ensuring security of oil and gas supply
designed to encourage companies like Serica to in volatile markets and delivering energy transi-
continue to reinvest profits,” Serica said in a state- tion targets.”
ment on June 6. Serica’s production averaged more than
The company noted it already had a $75mn 28,000 barrels of oil equivalent per day (boepd)
investment programme underway that will in May, while its total cash and deposits rose
include a light well intervention campaign at the to GBP246mn ($308mn), with a further
Bruce M1 well, aimed at adding resources and GBP246mn lodged as security. Furthermore, it
extending production from several subsea wells. lacks any debt and has limited decommissioning
It also plans to spud the North Eigg exploration liabilities.
well in the third quarter. Production in 2022 is benefiting from
North Eigg will target over 60mn barrels of past investments, including at the third well
oil equivalent (boe) in P50 unrisked recovera- at the Rhum field and the Columbus gas
ble prospective resources, with results due to be development.™

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