Serica Energy Share News (SQZ)

(Sharecast News) - UK North Sea-focussed upstream oil and gas company Serica Energy announced the start of production from the Rhum R3 well on Thursday.
The AIM-traded firm said first production from the well was achieved on 23 August, and since then, work had continued to optimise production rates from the Bruce, Keith and Rhum fields.

In the last seven days, gross Rhum production averaged more than 190 million standard cubic feet of gas and 1,400 barrels of condensate per day.

That equates to an average gross production of more than 34,000 barrels of oil equivalent per day for the Rhum field, which compared to a maximum rate of 26,000 barrels equivalent per day immediately prior to the start of R3 production.

Further work would continue in the coming weeks to optimise and stabilise production, and if necessary, Serica said it would update its production guidance at the time of its half year results.

Serica has a 50% working interest in the Rhum field.

The board explained that the successful recompletion of R3 increased the Rhum production capacity using the existing facilities on the Bruce platform.

That was in line with the company's stated objective of reducing the carbon intensity of its production operations.

"This is a significant result for Serica and the addition of a third prolific Rhum well is excellent news," said chief executive officer Mitch Flegg.

"Despite the challenges we faced, the additional production and accelerated cash flows will lead to a rapid payback on the capital invested, particularly as we are immediately benefitting from the current high gas prices.

"Not only will this well enable enhanced production rates from the field, but it will also provide redundancy to help maintain future production."

Flegg described the R3 project as a "demonstration" of Serica's ongoing strategy of investment in capital growth projects designed to boost its production levels, while continuing to reduce its carbon intensity.

"The next project will be Columbus, where we expect first production in the fourth quarter of this year."

At 0859 BST, shares in Serica Energy were up 2.2% at 167.6p.