Serica Energy, a British independent upstream oil and gas company with operations in the UK North Sea today announces its audited financial results for the year ended 31 December 2021.

Commenting on the results, Mitch Flegg, Serica's CEO stated:
"2021 was an outstanding year of progress for Serica, which demonstrated the value of our through-cycle investment strategy resulting in the R3 and Columbus projects reaching first production. This increases Serica’s gas output to over 85% of our total production, further increasing our contribution to the provision of vital lower carbon gas to the UK’s energy market.

Our latest Competent Persons Report (“CPR”) has again indicated a significant increase in Serica’s remaining 2P Reserves which stand at 62.2 million boe at 1 January 2022, an increase during the year despite allowing for 2021 production.

We will continue to pursue our investment-led strategy this year with a planned well intervention programme on the Bruce, Keith and Rhum fields (“BKR”) in addition to our exploration well at North Eigg. As always, we continue to look for acquisition opportunities that fit our criteria and will add value for our stakeholders.”

2021 Summary

• Group gross profit of £386.8 million (2020: loss of £2.9 million) and cash flow from operations of £157.6 million (2020: £44.1 million).
• Average net production of 22,200 boe per day (2020: 23,800 boe per day) after extended 2021 maintenance programmes.
• Completion of Rhum R3 and Columbus well programmes bringing increased production starting in August and November 2021 respectively.
• 2P reserves increased to 62.2 million boe (2020: 61.0 million boe) with Group 2021 production more than replaced. 

Operational

• Rhum R3 well, brought into production in August after overcoming series of challenges arising from the original drill programme in 2006.
• Columbus development well completed in mid-year and brought into production in late November once Arran-Shearwater pipeline and associated Shearwater facilities available.
• Bruce, Keith and Rhum fields produced approx. 20,300 boe per day net to Serica for 2021 compared to 21,500 boe per day for 2020 after extended summer maintenance programme.
• Erskine field production averaged 1,650 boe per day net to Serica during 2021 (2020: 2,300 boe per day) after three-month summer shut-in to upgrade production module.

Reserves

Updated independent audit of field reserves reported Serica’s share of estimated remaining 2P reserves as 62.2 million boe as at 1 January 2022;

• approximate 14% increase over the 61.0 million boe reported as at 1 January 2021, after adjustment for 2021 production
• result of outcome of R3 operations, general well performance and improved forward commodity prices.

Outlook

• New production from the Rhum R3 and Columbus wells benefitting from strong commodity prices and the retention of 100% of our BKR net cash flows effective from 1 January 2022.
• Production guidance range for 2022 narrowed and slightly reduced from 27,100-33,600 boe/d to 26,000 boe/d-30,000 boe/d reflecting lower Columbus production rates and current supply chain limitations causing 2022 programme delays.
• North Eigg exploration well is due to spud in early Q3 2022 with the prospect of a rapid route to development in the event of a discovery – P50 recoverable resources estimated at 60 mmboe unrisked.
• Light Well Intervention Vessel campaign to enhance production on BKR wells planned for the summer.
• Ongoing commitment to reduce our emissions through engineering projects, improved working practices and collaboration with supply chain.
• Subject to shareholder approval at the AGM, a dividend of 9 pence per share will be payable on 22 July 2022 to shareholders registered on 1 July 2022 with an ex-dividend date of 30 June 2022.
• Shareholder approval will also be sought at the AGM to enable repurchases of Serica shares of up to 10% of the Company’s share capital though we have no current plans to utilise this.
• With strong operating, ESG and financial credentials Serica is well-placed to grow through developing the potential of its existing assets as well as building on new opportunities to diversify risk, provide new growth prospects and achieve economies of scale.

KeyFacts Energy: Serica Energy UK country profile

If you would like a complimentary 7-day trial to our Energy Country Review resource, free access to our daily news alert service, details of marketing opportunities or if you would like to contribute to KeyFacts Energy, click here. We can provide access, sign you up, send full details or set up a quick online meeting to review our services in more detail.