Serica Energy Production Rebounds

Serica Energy plc (SQZ.L) has reported a rebound in production and provided updates on its acquisition strategy and the evolving UK fiscal landscape. The company's operational performance and strategic moves are poised to influence its financial trajectory.

Production averaged 25,700 boepd for the first nine months of 2025, impacted by downtime at the Triton FPSO. Q3 production was also affected by scheduled maintenance at the Bruce Hub and other assets. However, November saw a strong recovery to 50,300 boepd before planned outages at Triton.

Revenue for the first nine months reached $439 million, with $134 million in Q3, slightly below the $139 million reported in Q3 2024. The average realised Brent oil price stood at $70/bbl, down from $76/bbl in the previous year, while the average realised NBP gas price rose to 89p/therm from 71p/therm.

Capital expenditure remained consistent at $200 million, primarily allocated to the Triton drilling program and subsea work for Belinda. The company paid $8.5 million in cash tax, benefiting from group relief, which also resulted in a $71 million tax refund.

Cash reserves stood at $41 million as of September 30, 2025, down from $174 million at the end of June. Borrowings remained steady at $231 million, resulting in a net debt position of $190 million. Total liquidity, including undrawn committed RBL facility availability, was $300 million.

Operational challenges at the Triton FPSO impacted production in Q3, but subsequent work has led to a rebound. The planned subsea work on the Bittern export pipeline, expected to complete in mid-December, temporarily shut in production from several fields. Production from the Bruce Hub has returned to over 20,000 boepd following the resumption of bull-heading operations.

The acquisition of Prax Upstream, anticipated to close in mid-December, will add approximately 5,900 boepd from the Lancaster field. Completion of the TotalEnergies and ONE-Dyas acquisitions is still projected for H1 2026. Serica also acquired a 40% stake in the P2530 Licence, containing the Wagtail oil discovery.

The UK government's decision to retain the Energy Profits Levy (EPL) until 2030 and introduce the Oil and Gas Price Mechanism (OGPM) post-EPL provides greater fiscal clarity. CEO Chris Cox noted that while the Budget announcements were a “missed opportunity to kick-start investment across the UK North Sea, we now have greater clarity about the fiscal and regulatory regimes in which our investment decisions will be made.”

Serica expects average production for FY 2025 to be between 27,000 and 28,000 boepd, with capital expenditure around $250 million. Opex is projected to be 10% above the previously guided $330 million. The company is still aiming to move from the AIM to the Main Market of the London Stock Exchange following the publication of its audited FY 2025 accounts.