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North Sea operator Serica Energy reports £194.5 million in profits as household bills soar

Serica's Bruce platform.
Serica's Bruce platform.

Serica Energy has seen its profits rocket amid a boost to new production.

The North Sea operator reported pre-tax profits of £194.5 million for the first half of 2022, up from £2.2m in the same period last year when oil and gas prices were lower.

Serica has also seen net production increase year-on-year.

Output for the six months to June 30 was up by 41% at 26,600 barrels of oil equivalent (boe) per day, from 18,855 previously.

This was thanks to new investments coming online at the Columbus and Rhum R3 wells, alongside an intervention on the Bruce field.

Revenue in the latest period totalled £353.4m, up from £100.8m in H1 2021.

Serica chief executive Mitch Flegg announced an interim shareholder dividend of 8p per share.

Mr Flegg said Serica’s operational and financial performance allowed the company to steadily increase its return to shareholders.

He added: “Following the recent payment of a 9p per share final dividend for full year 2021, we are today announcing our first interim dividend of 8p per share which will be paid in November 2022.”

Results from Serica’s much-anticipated North Eigg exploration well, targeting 60 million boe, are due in December.

Serica Energy
Serica Energy chief executive Mitch Flegg.

The time-limited incentives of the UK Government’s windfall tax scheme mean rapid development would be needed on North Eigg, likely as a tie-back to the Bruce platform.

Serica and North Sea rival Kistos Energy made offers for each other during the reported perid, but no deal was struck.

Mr Flegg added: “Although it proved not possible to reach agreement with Kistos on the terms of the respective potential offers between the two companies, Serica continues to actively seek opportunities at both the asset and corporate level that would strengthen the company, diversify its asset base and deliver incremental value to shareholders.”

Full year 2022 production guidance for Serica is expected to be in the range of 26,000-28,000boe per day.

North Sea oil and gas producers have racked up enormous profits this year on the back of higher commodity prices.

It comes as high oil and gas prices continue to hit consumers hard in the pocket.

UK households are facing record high energy prices this winter as gas supplies from Russia tighten.

More than 85% of Serica’s production is gas, providing much needed domestic energy during a time of heightened concern around the UK’s security of supply.

Mr Flegg said: “This gas will continue to be an important energy source during the net-zero transition.”

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