(Alliance News) - Serica Energy PLC on Wednesday said its drilling operations on the North Eigg exploration well in the North Sea has encountered delays, which will cost the company GBP3 million.
Shares in the London-based oil & gas company were down 5.1% to 369.20 pence each in London on Wednesday morning.
Serica said that drilling operations on the North Eigg exploration well have encountered delays and, following a recent equipment failure, operations are now expected to take six weeks longer to complete than the original schedule.
The company explained that during the third section of the well there was a failure of a vital piece of rig equipment during routine pre-job testing. A replacement has now been found, it noted, and planning is underway to transport this to the drilling rig.
Serica said the delays will have no geographical impact on the well and that all costs will benefit from the investment allowances available under the recently introduced Energy Profits Levy.
However, the company expects the net well cost after tax to be around GBP3 million, as a result of delays and it now anticipates that results from the well will be available in December.
Chief Executive Mitch Flegg said: "This high-impact exploration well is the latest in a series of capital investment projects undertaken by Serica with the objective of increasing our production in an environmentally sensitive manner. This programme is designed to help increase the UK's security of supply and reduce its reliance on imports."
"The technical delays encountered on this project are extremely frustrating but do not impact either the chance of success or the significant prospective volumes of this exploration prospect," Flegg added.
By Sophie Rose; sophierose@alliancenews.com
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Serica Energy (SQZ)