Serica Energy Boosts Portfolio with Strategic North Sea Acquisition

Serica Energy (SQZ.L) is set to expand its North Sea footprint through the acquisition of Prax Upstream Limited, marking a significant step in its growth strategy.

The deal, announced today, includes key assets from TotalEnergies and ONE-Dyas, promising increased reserves and near-term cash flows.

The acquisition encompasses a 100% stake in the Lancaster field, a 40% operated interest in the Greater Laggan Area (GLA), a 10% interest in the Catcher Field, and a 5.21% interest in the Golden Eagle Area Development (GEAD). The total upfront consideration for these assets is $25.6 million.

This move is projected to add 11.0 mmboe of 2P reserves, acquired at a cost of $2.3/boe. Production associated with the Existing SPAs for H1 2025 was 7,900 boepd, with an additional 5,900 boepd from the Lancaster field.

Upon completion, Serica expects to receive approximately $100 million, reflecting interim post-tax cashflows between the economic dates of each transaction and estimated completion dates. Moreover, an incremental $50 million of Free Cash Flow is anticipated from the acquired assets in 2026.

CEO Chris Cox stated: “This transaction represents a further step in the delivery of our growth strategy – it diversifies our portfolio, increases our reserves and resources, and enhances near-term cashflows at an attractive valuation.”

While the deal is strategically sound, Serica faces significant decommissioning liabilities. Near-term costs for plugging and abandoning two wells at Lancaster are estimated at $60 million.

Catcher and GEAD decommissioning is expected toward the end of the decade, with a net cost of $90 million. GLA decommissioning, planned for the 2030s, could range from $200 to $250 million.

As operator, Serica aims to extend the life of these facilities through increased production and third-party throughput.

Completion of the Acquisition is expected in Q4 2025, with the Existing SPAs to follow in Q1 2026. The addition of the GLA brings Serica operatorship of the Shetland Gas Plant (SGP).