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‘Extra 1.1bn barrels of oil found in North Sea

Discovery risks inflaming row over future of energy industry after ban on new drilling’

Martin Copeland, the chief financial officer at Serica Energy, a North Sea oil and gas producer, said: “This NSTA report shows that there at least 11 billion barrels of oil and gas which could still be developed in the North Sea.

“This almost meets the amount that the Climate Change Committee says we will need before the net zero target year of 2050 of 13 billion to 15 billion barrels.

“So with the right policy changes and tax regime, the UK could effectively be self-sufficient on the oil and gas it will need and would otherwise have to import.”

https://www.telegraph.co.uk/business/2025/10/17/extra-11bn-barrels-of-oil-found-in-north-sea/

So my rough calcs & provided both recent deal announcements complete, & with a very strong wind behind Triton… we could be looking at circa 85,000 boepd in 2026.. the obvious fall back here is of course Triton & the scepticism felt by shareholders…

Current operations including Triton (up & running for 2026) - circa 50,000

Additional from new fields to be added to Triton in 2026 - unknown

Prax deal - circa 8-10,000 (Auctus Advisors pencilled in for 2026.

BP deal - circa 25,000

2/3rds roughly Gas - stands us well…

Auctus Research Note : share price target unchanged (£3.05 per share) to rise on completion.

Major potential acquisition

• Serica has agreed to acquire BP’s 32% interest in the P111 and P2544

licences in the Central North Sea. P111 includes the Culzean gas

condensate field—the UK North Sea’s largest producing gas asset.

• Culzean commenced production in 2019, with remaining net 2P

reserves of ~33 mmboe attributable to BP as of 1 January 2025. Net

production to BP in 1H25 was 25.5 mboe/d. The remaining interests

are held by TotalEnergies (49.99%) and NEO NEXT (18.01%).

• The transaction consideration includes an upfront cash payment of

US$232 mm. The final amount payable at closing (~YE25) will be

adjusted for potentially significant free cash flow generated from the

effective date (1 September 2025). Two additional contingent

payments may be triggered by: (1) successful exploration and

production from a material opportunity on the P2544 licence, and (2)

changes to the UK ring-fence fiscal regime.

• Should this complete, it would represent a transformational

acquisition for Serica. Culzean’s 1H25 net production to BP exceeds

Serica’s entire 1H25 output, offering immediate scale, diversification

via a new hub, and a >25% uplift to 2P reserves (including Prax). There

is also potential upside from infill drilling and exploration.

• Culzean opex is currently only US$10.7/boe. Assuming an NBP price

of £0.80/therm, this implies netbacks of ~US$54/boe and 2025 annual

pre-tax operating cash flow of ~US$490 mm at a full-year rate of 25

mboe/d. Following completion, applying Serica’s CT and SCT tax

losses going forward could reduce tax exposure. Additional EPL tax

losses (~US$0.18 bn for Serica ex-Prax and ~US$0.34 bn for Prax)

would further enhance future cash flows.

• The acquisition is subject to a 30-day pre-emption period.

That’s some write up NewKOTB on Culzean, would definitely be some acquisition if it goes through..

Is this the Second Bus that’s come along Martin Copeland mentioned in the last Prax Investor Meet Presentation… plus he said they’d been speaking separately with Total Energies (appreciate that’s the Peax deal) but surely covers all goings on..

ABOUT CULZEAN

• Culzean is a mid-life gas condensate field, operated by TotalEnergies, located in the Central North

Sea. It was discovered in 2008, and came onstream in 2019

• It is currently the largest gas field on the UK Continental Shelf by production, with production net

to BP of c.25,500 boepd in H1 2025, at an exceptionally high operating efficiency of 98%

• Remaining net 2P reserves estimated at c.33 mmboe, as of 01.01.251

• Upside potential from future infill drilling and licensed exploration

1 Source: Wood Mackenzie

• Production cost of $10.7/boe2

, with one of the lowest carbon footprints in the UK North Sea, with

emissions significantly below the 20 kg CO2/boe sector average

Malcy’s take on yesterdays Triton news, sums it up :

Here we go again as an issue with the flare system on the Dana Petroleum operated Triton FPSO has resulted in a temporary suspension of production from 30 September. Serica say ‘curtailed’ ie deferred and not lost but it will mean production dipping below guidance, yet again…

There remains no reason to think that there is anything fundamentally wrong with the FPSO as I imagine that there was DD carried out on it very stringently when in discussions with EnQuest, but as I understand it the ongoing issues at the moment are the problems you can get after a cold start up when a plant hasn’t been running for 6 months which is little relief.

What it does do is remind me that Serica are in the process of an M&A campaign to diversify and also to distribute risk, after recent deals that makes Triton less of the whole and I am expecting more to come.

That is not to say that they don’t believe in the asset, they clearly do but the comment that ‘We are stepping up talks with the operator regarding the future running of the Triton FPSO, aiming to deliver a more robust performance for all stakeholders with production levels that match the subsurface potential’.

To me that means that they could take over the operatorship of the field which would make a great deal of sense which changing out the FPSO does not, watch this space..

Finally as I often say the company are confident of an exit rate net to Serica of over 50,000 boepd across the portfolio and I remain fully committed to Serica as a key member of the bucket list.

Malcy’s perspective on the deal for those interested:

Serica has announced that it has signed an SPA to acquire Prax from administration, it shows what incredible deals can be done for companies that have a good fit. And here Serica do have a fit and they have bought the assets for c.$2.3 pb which given the huge potential and significant tax losses is an excellent fit – “like the Parkmead deal on steroids”, I have heard it called already. The tax losses will be very valuable for Serica going forward obviously, and there is also some exciting asset potential.

It is NAV accretive from the start and will add some 8-10/- b/d next year. The GLA asset is very much a sweet spot at the moment with the Shetlands seeing majors such as Acura and BP still buying assets – I also note Shell’s Victory gas field has today been announced as having come onstream, flowing through Serica’s newly acquired Shetland Gas Plant. The GLA has ‘material potential’ and probably the most prospective basin in the UKCS right now.

The deal has plenty of cash, expect about $150m of FCF in 2026 bolstered by completion payments, with more to come in the following year. The deal more than covers any medium-term decommissioning costs and then any others to come are much later down the line, potentially past the mid 2030’s. Finally they get Catcher and Golden Eagle cash flows which might be in later life but add to that cash flow.

I’m very impressed with this deal for all of the above reasons, add the serious growth potential across the portfolio and, as confirmed on the conference call, Triton is back in business, Serica is still a very attractive play at the top of the Bucket List.

The FPSO currently on Lancaster is owned by Bluewater (mentioned in today’s presentation) & earmarked for the Sealion Project (Falklands) also this similar question was asked to Chris Cox in the previous Investor Meet Presentation, he explained (from memory) FPSO are pretty bespoke bits of kit tailored specific for purpose.. also fields would be shut in for 12 to 18 months taking one out & putting one in…. listen back to today’s & previous presentations…

https://www.upstreamonline.com/rigs-and-vessels/uk-north-sea-fpso-owner-agrees-terms-for-contract-extension/2-1-1822578

Just seen there’s an investor meet presentation at 9.00am this morning for those interested…

Auctus Advisors research note out on the news, increased price target to £3.15 per share :

Depth, breadth, and a cash windfall

• Serica is acquiring Prax Upstream from administrators for ~US$26 mm,

adding 8–10 mboe/d net production in 2026 and 11 mmboe of 2P

reserves, diversifying exposure to a key growth basin.

• Prax holds a 100% WI in Lancaster with 2.6 mmbbl 2P oil reserves, 3-4

mbbl/d production forecast in 2026 (given COP in 3Q26).

• Prax has also executed two SPAs (closing in 1Q26). Serica will acquire

from TotalEnergies a 40% WI in the Greater Laggan Area (GLA), a gas

producing hub (4.6 mmboe 2P reserves and 5.4 mmboe 2C resources,

5 mboe/d in 1H25) in the West of Shetland. The second SPA covers

ONE-Dyas’ 10% WI in Catcher and 5.21% in the Golden Eagle Area

(GEAD), contributing 2.9 mboe/d of production in 1H25, with 3.7

mmboe of 2P reserves (mostly crude).

• The transaction is immediately cash accretive. Net of the ~US$26 mm

consideration, we estimate that the deal could boost Serica’s YE26 net

cash by ~US$200 mm, including US$100 mm on completion of the

various transactions (interim free cash flow since effective dates),

US$50 mm incremental FY26 free cash flow from the acquired assets

and the balance from using Prax’ US$0.3 bn EPL tax losses.

• The ~US$200 mm net cash uplift by YE26 alone more than offsets the

c.$150 mm decommissioning costs related to Lancaster, Catcher and

GEAD. The remainder of the decommissioning is estimated at US$200-

250 mm post tax at GLA, and it is only due well into the 2030s, with

plenty of opportunity for this to be pushed out. We have increased our

target price from £2.70/sh to to £3.15/sh in line with our new ReNAV.

Strategic access to the last UK North Sea growth area

GLA, to be operated by Serica, is the cornerstone of the acquisition for

several strategic reasons. First, the area is gas-rich, aligning more closely

with Westminster’s energy priorities than oil. Second, while production at

Laggan, Tormore, Glenlivet, and Edradour is declining, the West of

Shetland remains underdeveloped and offers substantial growth potential

- including organic opportunities such as a Tormore infill well, the

Glendronach development, and over 400 mmboe of net prospective

resources across exploration blocks. Third, the acquisition includes the

Shetland Gas Plant (SGP), only commissioned as recently as 2016, which is

central to the region’s gas gathering system. With limited new

infrastructure in place or planned, control of SGP provides strategic

leverage for future asset consolidation. Importantly, new production also

defers GLA’s decommissioning timeline.

Valuation and financials

Our Core NAV and ReNAV increase from £2.39/sh and £2.69/sh to £2.94/sh

and £3.18/sh respectively.

https://www.serica-energy.com/downloads/research/Auctus%20-%2030.09.25%20Prax.pdf

EnQuest: Government's windfall tax has made North Sea oil 'globally uncompetitive'

https://www.thisismoney.co.uk/money/markets/article-15128405/EnQuest-Governments-windfall-tax-North-Sea-oil-globally-uncompetitive.html

Here we go again!!

Serica Energy plc (AIM: SQZ) announces that, following a successful ramp up which helped wider portfolio production reach over 55,000 boepd in mid-August, the operator of the Triton FPSO, Dana Petroleum, has notified Serica of a temporary reduction in production while further maintenance takes place. In addition, Dana has also notified the Company that subsea intervention work on the Bittern field has been scheduled for November 2025. The resultant production deferrals mean that Serica's production guidance for 2025 has been reduced to 29,000 to 32,000 boepd (previously 33,000 to 35,000 boepd).

Due to a vibration issue within the compression trains on the Triton FPSO, production is currently running at a significantly reduced rate. Following the required repairs, normal production operations are expected to resume around the end of September. Work is currently continuing to deliver two compressor operations, which will facilitate the full ramp up of production at the FPSO. Production net to Serica from the Triton FPSO reached over 25,000 boepd in August, and running with two compressors can deliver an increase from this figure through the addition of production from the EV-02 well on the Evelyn field.

You could add to that : Christopher Cox, CEO is in for 432027 shares, average price of £1.379, just shy of £600k of his own money.. purchased within the first few days of his tenure…

Good to get an update on production at Triton with more wells to come online …

‘Serica Energy plc has resumed oil production from the Triton FPSO, with a recent average of 20,000 boepd net to Serica and production expected to increase as more wells are brought online. Total portfolio production averaged over 50,000 boepd prior to a maintenance period at the Bruce Hub. The company maintains a production guidance of 33,000 to 35,000 boepd for the year.’

https://www.serica-energy.com/downloads/releases/Update%20on%20production%20at%20Triton%20FPSO.pdf

Nice to see….. Dividend Reinvestment??…. (around 10% of it…) Largest Shareholders updated & the Hardy’s have increased their holdings: 182,981 shares & now hold 7.87% in the company :

Mr D Hardy and Mrs D Hardy* 30,963,295 7.87 %

As at 11 August 2025, the Company had 393,568,408 ordinary shares in issue of which 24.75% is not in public hands. Of the issued share capital there are currently no ordinary shares are held in treasury.

Nothing to get excited about…. The Hardy’s (or family) are in for a few more : 6726 shares added to their account…

Mr D and Mrs D Hardy* 30,780,314 7.82% 07/08/2025

Previous :

Mr D and Mrs D Hardy*

30,773,588 7.82 %. 08/07/2025

As at 7 August 2025, the Company had 393,568,408 ordinary shares in issue of which 24.75% is not in public hands. Of the issued share capital there are currently no ordinary shares are held in treasury.

One to watch on the largest shareholders is Man GLG first appeared on 11/03/2025 crossing the 3% threshold : 11863202 / 3.03% , they’ve been increasing month on month & now hold 12821570 / 3.26% ….

Auctus Research Note out:

https://www.serica-energy.com/downloads/research/SQZ%2005.08.2025.pdf

Robust 1H25 cashflow ahead of production

boost in 2H25. Dividend in line.

• While 1H25 production was only 24.7 mboe/d with BKR producing 16.7

mboe/d, Serica’s FY25 production guidance of 33-35 mboe/d implies a

significant 2H25 uplift to 41.3–45.3 mboe/d, as Triton ramps up to full

production and BKR rebounds. We continue to forecast 4Q25

production of ~48 mboe/d, supported by expected contributions of 21–

22 mboe/d from BKR and ~25 mboe/d from Triton.

• Production in 2H25 will benefit from new wells coming onstream as a

result of Triton drilling, with five successful well delivered nearly a

month ahead of schedule and ~US$31 mm under budget. We maintain

our 2026 production forecast of ~43 mboe/d, as the Belinda field comes

online, now expected at the start of 2026.

• FY25 capex is now expected to be at the upper end of the US$220–250

mm guidance range, partly driven by £ strength against the US$ and the

acceleration of early FY26 Belinda-related spend into the 2025 budget.

• Net debt declined to US$57 mm at end-June, representing a reduction

of US$26 mm since YE24. While this improvement was boosted by a

US$71 mm cash tax refund received in June 2025 (attributable to 2024

group relief), it is an encouraging outcome given elevated capex and the

prolonged production outage at Triton since January.

• Despite anticipated dividend payments exceeding US$80 mm in 2H25,

and a return to tax payments, we forecast YE25 net debt to remain

broadly in line with end-June levels. We forecast FY25 free cash flow in

excess of US$120 mm.

• We reiterate our target price of £2.70 per share. The total 2025

dividends to be paid in 2025 is £0.16 per share (implying a ~10% yield).

With lower capex and higher production volumes anticipated in 2026,

Serica could generate free cash flow in excess of US$300 mm.

Reflections on operations

In addition to reduced production at Rhum in January and unscheduled

downtime in May due to maintenance on the export pipeline, BKR

production was also constrained due to the main oil line booster pump

being offline for the majority of the period. The booster pump was replaced

in June, and BKR production averaged 21.6 mboe/d in July. 1H25 production

of 2.1 mboe/d at Erskine was very high, offsetting lower volumes at Orlando

(1.9 mboe/d). No surprise, the Mansell licence will be relinquished (we did

not carry any value for Mansell). Development activities at BKR and Kyle are

expected to start in late 2026/early 2027 (in line).

Valuation

Our forecasts are broadly unchanged. Our Core NAV and ReNAV are £2.41

per share and £2.71 per share respectively.

I think it’s more to do with our supreme Chancellor’s comments :

Chancellor defies Aberdeen critics on ‘fair’ oil and gas windfall tax

https://x.com/energyvoicenews/status/1952262117299790311?s=46&t=uz3in5yMdDdYvqnOjeh9vg

Rachel Reeves claimed the windfall tax on North Sea oil and gas firms “remains fair” as she ignored growing calls from the sector to scrap it.

The Labour chancellor defended the levy – saying it’s right that companies who make big profits “pay a bit more”.

Ms Reeves believes the tax currently strikes the “right balance” and said it is crucial to help fund UK Government investment in the energy sector.

“I believe the windfall tax remains fair,” she told the Press and Journal.

“It is the same rate as the Norwegian tax, and there is a sunset clause so it finishes in 2030.

“I think that is the right balance.

“Energy prices are still very high compared to where they were a few years ago.

“I think it’s right we ask companies who have made big profits to pay a bit more.”

Major oil and gas firms currently pay a headline rate of 78% on profits.

Aberdeen and Grampian Chamber of Commerce (AGCC) led renewed calls for Ms Reeves to scrap the levy before her visit to the north-east.

In May, Harbour Energy blamed the effect of the windfall tax for its decision to axe 250 jobs in Aberdeen.

The chamber of commerce criticised Ms Reeves for standing by the tax.

Ryan Crighton, policy director, said: “If the chancellor wants North Sea oil and gas for decades to come, then we need the energy profits levy to be removed as soon as possible.

“Comparing the UK’s North Sea tax regime to Norway’s is misleading, because Norway offers fiscal stability, state investment, and generous incentives that the UK system simply doesn’t match.”

‘Money has to come from somewhere’

But Ms Reeves said Westminster investment in a carbon capture energy scheme at St Fergus showed how the levy is beneficial.

“If you look at things like the Acorn investment, that money has to come from somewhere,” she said.

“No industry wants more taxes, but also the industry benefits hugely from government investment.”

The chancellor spoke as she visited the St Fergus gas plant, just days after her boss, Sir Keir Starmer, was in Aberdeenshire to meet Donald Trump at the US President’s Balmedie estate.

The prime minister faced a backlash for prioritising the American leader having failed to visit the north-east since his election win last year.

But Ms Reeves defended the Labour chief.

“When he was leader of the opposition, he absolutely did go to Aberdeen,” she said.

“I’ve been in Scotland twice in two weeks.

“This is a government that’s committed.”

Ms Reeves was criticised for her determination to stick by the windfall tax, which was first introduced by the Tories in 2022.

Thought I’d share this on your chat as all NS related :

Serica Energy CFO Interview:

From the Serica Energy Linkedin page from earlier in the week, interesting interview well worth a watch:

‘Last week our CFO Martin Copeland sat down with Simon French, Panmure Liberum's Chief Economist and Head of Research, to discuss the UK government's evolving policy stance towards the North Sea, how it is impacting the outlook for the oil and gas industry, and the wider implications for UK net zero objectives.’

https://fast.wistia.net/embed/iframe/r3sqho1omp?web_component=true&seo=true

From the Serica Energy Linkedin page from earlier in the week, interesting interview well worth a watch:

‘Last week our CFO Martin Copeland sat down with Simon French, Panmure Liberum's Chief Economist and Head of Research, to discuss the UK government's evolving policy stance towards the North Sea, how it is impacting the outlook for the oil and gas industry, and the wider implications for UK net zero objectives.’

https://fast.wistia.net/embed/iframe/r3sqho1omp?web_component=true&seo=true