Serica Energy reports huge profit jump as gas prices surge

(Alliance News) - Serica Energy PLC on Tuesday reported a huge increase in profit as it benefited from high gas prices.

In the six months to June 30, the London-based oil and gas company reported a pretax profit of GBP194.5 million, up from GBP2.3 million the year before.

Serica increased average production to 26,600 barrels of oil equivalent per day in the first half, up 41% from 18,855 the year before. This represents 5% of the gas produced in the UK. The increased production combined with an average price of 175 pence per therm, as against 50p per therm the year before, led to its huge increase in profit.

The company's revenue also multiplied to GBP353.4 million from GBP100.8 million the year before.

Serica will pay its first interim dividend of 8 pence per share. It paid a final dividend of 9p at the end of the last financial year.

The company narrowed its 2022 production guidance to between 26,000 and 28,000 boepd, down from 26,000 to 30,000 it said in July. Serica noted that its investment programme in the North Sea has continued, with results expected from its North Eigg exploration well in December.

The firm said it continues "to implement projects to deliver North Sea Transition Deal emissions reduction targets."

Looking forward, Serica stated that gas prices were likely to remain volatile but said that its proportion of unhedged sales was going to increase as remaining hedges expire.

It also noted that the UK government's Energy Profits Levy did not impact the company's first half results, since the policy was not enacted until July, but could result in "a significant impact in future periods."

Chief Executive Officer Mitch Flegg said: "Serica's production levels in the first half of 2022 have benefitted significantly from our ongoing capital investment campaign which commenced in 2020. We are now seeing the full contribution from the 2021 Columbus and R3 projects and additionally we have recently completed a successful Light Well Intervention Vessel campaign on Bruce. As a result of these investment projects, Serica's net production in the first half of 2022 was 41% higher than the first half of 2021."

Shares in Serica were trading 2.5% higher at 350.50 pence each in London on Tuesday morning.

By Chris Dorrell; chrisdorrell@alliancenews.com

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