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BP raises £49.3m in ‘virtually all profit’ Serica stake sale ahead of first quarter results

The Bruce field has recently changed hands from BP to Serica Energy
The Bruce field has recently changed hands from BP to Serica Energy

Energy giant BP sold its 5% stake in North Sea operator Serica Energy for £49.3 million ahead of its latest quarterly results statement next week.

BP acquired the stake in the independent back in 2015, in a trade-off for BP’s 18% stake in the Erskine field in the North Sea.

Serica’s main assets are the Bruce, Keith and Rhum fields, which produce via the Bruce platform around 210 miles north-east of Aberdeen.

Ashley Kelty, an analyst at investment bank Panmure Gordon, said, based on the earlier deal, this is “virtually all profit”.

The sale, through a share placing process, represents 13.5 million ordinary shares in Serica at 365 pence each and is expected to close on May 3.

Kelty said: “This is virtually all profit as the shares were acquired as part of the Erskine deal in 2015.”

The earlier Erskine deal did see BP agree to pay for decommissioning costs of up to a gross of £174 million.

Last week, Serica the firm hailed an “outstanding year” in its 2021 financial results, as gross profits surged to £386.8 million, reversing £2.9m losses in 2020, amid a huge bump to commodity prices.

Another quarter of profits

On Tuesday, BP will reveal its first quarter results and dividends while Shell will do the same on Thursday.

The super-majors are predicted to report a combined $13 billion (£10.5bn) in profit from the first three months of the financial year, a massive hike from the same time in 2021.

It will likely spark renewed calls for a windfall tax on the companies – an idea already backed by Labour.

Earlier this week, the Chancellor appeared to distance himself from such a tax but did not entirely rule it out.

Chancellor of the Exchequer Rishi Sunak wants oil and gas companies to invest their profits in the UK. Photo by WIktor Szymanowicz/NurPhoto/Shutterstock

He called on companies making big profits to invest the cash back into the UK.

Rishi Sunak’s comments, and talk of a meeting with Business Secretary Kwasi Kwarteng on Friday, where the companies were reportedly told to keep investing, will likely be ringing in executives’ ears.

Shell expects to report adjusted earnings of $8.7bn (£7bn), according to a company-compiled consensus of analyst estimates.

BP is forecast to report $4.5bn (£3.6bn) in replacement cost profit.

But it is not all plain sailing for the businesses. The same war in Ukraine that has pushed up the price of the oil and gas they sell has also forced them to deal with significant costs.

Earlier this month, Shell increased its estimated costs of exiting Russia from $3.4bn (£2.7bn) to closer to $5bn (£4bn).

“Quite who the buyer of these assets will be remains to be seen, given that the list of those prepared to ignore sanctions and do business in Russia is relatively short,” said AJ Bell investment director Russ Mould.

But this cost will not be seen in the adjusted earnings, mentioned above, as it is considered a one-off.

BP reports its first quarter results on Tuesday and Shell on Thursday.

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