RE: Capital Markets Day2 Jun 2026 07:53
Auctus Advisors research note out : Increased share price target to £3.60 per share :
Organic growth unlocks material value
• Serica is tendering for a rig for a 400‑plus‑day drilling campaign to potentially develop 34 mmboe of 2Preserves + 2C resources, adding ~30 mboe/d of aggregate production capacity.
• The programme is costed and deliverable. We have increased our production forecast by 4–15 mboe/d over 2027–2030, with output peaking at >57 mboe/d in 2029. Management indicates that the programme delivers an average IRR of ~40% across the portfolio.
• Total programme capex is estimated at US$700–800 mm over 2027– 2029, in addition to US$100–120 mm per year of sustaining capex.
• The campaign is likely to begin with 3 Bruce infill wells targeting 18.6 Organic growth unlocks material value
• Serica is tendering for a rig for a 400‑plus‑day drilling campaign to potentially develop 34 mmboe of 2P reserves + 2C resources, adding ~30 mboe/d of aggregate production capacity.
• The programme is costed and deliverable. We have increased our production forecast by 4–15 mboe/d over 2027–2030, with output peaking at >57 mboe/d in 2029. Management indicates that the programme delivers an average IRR of ~40% across the portfolio.
• Total programme capex is estimated at US$700–800 mm over 2027– 2029, in addition to US$100–120 mm per year of sustaining capex.
• The campaign is likely to begin with 3 Bruce infill wells targeting 18.6 mmboe of undeveloped 2P reserves in 2027, with ~US$400 mm of associated drilling costs. These wells are highly tax efficient, and are expected to add >10 mboe/d across 2028–2029. Bruce remains Serica’s most material asset, with >20 further infill opportunities and 46 mmboe of 2C contingent resources, suggesting this could be the first phase of a
multi‑year programme.
• The Kyla development (10.1 mmboe 2P) can potentially be executed as a 12 km tie‑back to Bittern/Triton from 2028, requiring US$225 mm of
capex and adding ~5 mboe/d.
• The Glendronach (West of Shetland) development involves recompleting an existing well and could add ~5 mboe/d. FID is possible in 2026, which could convert 5 mmboe into 2P reserves. Tormore, an infill opportunity in the same area, could add further reserves and ~4
mboe/d. Two new infill wells (C16 and C17) will be drilled at Cygnus, while a potential infill opportunity in the north‑west of Clipper South is currently under technical review.
• Reflecting the uplift in development activity, we have increased our target price from £3.35/sh to £3.60/sh, in line with our new ReNAV.
Dividend policy
Serica has introduced a dividend policy of 15–30% of cash flow from operations (post‑tax, pre‑interest; CCFO). On our 2026 CCFO estimate of US$480 mm, this implies a dividend range of US$72–144 mm, equivalent to £0.13–0.27/sh. This compares with £0.16/sh for 2025.
Valuation
Triton uptime has been very high in 2Q26 at >90%, delivering 20.4 mboe/d from the FPSO and ~49.5 mboe/d for Serica ov
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