WTI (Mar)* $60.36 +64c, Brent (Mar) $64.92 +99c, Diff -$4.56 +6c*
USNG (Feb) $3.91 +81c, UKNG (Feb) 89.0 -4.0p, TTF (Feb) €35.84 -€0.57
*Denotes WTI February contract expiry

Oil price

Oil is unchanged today ahead of Trump’s speech at Dav-Oh this afternoon, maybe the interview with Joe Kernen may be more illuminating…

Kazakstan has been on the radar recently, firstly as drone strikes had hit the CPC terminal again which resulted in the suspension of shipments and then fires at power generation units at the Tengiz and Korolev fields added to the export restrictions. Finally a big demo outside the hall at Dav-Oh saw protests about, you’ve guessed it…

Serica Energy

Serica has issued the following trading and operations update in respect of the year ending 31 December 2025. Serica will issue 2025 full-year results on 26 March 2026.

Chris Cox, Serica’s CEO, stated:
“Serica enters 2026 as a stronger, more resilient company, with increasingly diversified production and revenues that are set to rise materially from 2025 levels. Our recently announced acquisitions, as they complete throughout the year, will more than double the number of producing fields in our portfolio and materially add to cash generation, supporting our strategy of delivering value to investors through both growth and shareholder returns. 

The expansion of our portfolio is delivering a greater number of attractive organic growth options, allowing us to cherry-pick those that offer the greatest return on investment, growing and sustaining material cash-generative production for Serica into the next decade.”

At the webcast Serica were keen to point out that, while last year was a disappointing one for the company from an operational viewpoint, with the majority of issues of course not of their own making, they are clearly looking forward to 2026, which has so much potential. 

This is accentuated by the production numbers, 27,600 last year was in line with reduced guidance, but investment has been significant, with capex of $250m and opex of $365m, which cannot be sneezed at and bodes well for the future.

So, production this year is already 43/- boe/d and currently producing at ‘around 50/- boe/d with a forecast of ‘significantly over 40/- boe/d’ guided to, although when recent acquisitions are completed (Prax, OneDyas and Spirit) there is potential for it to ‘exceed rates of 65/- boe/d with a number of fields set to more than double’. 

After a year in which the company ended the year with a high net debt figure ($200m), primarily due to a cash owed underlift, the debt will fall significantly all other things being equal mainly as ‘material cash flow is set to be generated in 2026 at prevailing commodity prices’. Cash at the year end was $31m which gives total liquidity of some $290m. 

This is worth a mention and as I actually wrote about natural gas prices in yesterdays blog it is important to note that, especially with recent M&A activity, gas is going to be a favourable 60:40 split compared to oil going forward.

The webcast was fairly quiet on the M&A front, but I am convinced that the team are as busy as ever and with the Serica mantra of taking tax efficient inorganic opportunities when offered we should expect more. 

Serica is in a very strong position and I expect guidance to be firmed up as the year goes on, results are in March which would give an ideal opportunity as would the much talked about Capital Markets Day which has now been pushed into May, when Glendronach will have completed and more colour can be given on how the numerous opportunities stack up. On that front the move to the main market, still scheduled, can’t happen until after the results so expect that in 2H…

Serica has been a hugely preferred stock in the sector and it hasn’t disappointed, performance is good, +13% on 1M, +24% on 6M and +30% year on year totally justifies its place in the Bucket List and it will undoubtedly remain in the upcoming annual review. 

2025 performance(1)

• Production of 27,600 boepd in 2025 (2024: 34,600 boepd), in line with guidance 
• Revenue of $601 million (2024: $727 million)
• Average realised Brent oil price of $67/bbl (2024: $75/bbl)
• Average realised NBP gas price of 84p/therm (2024: 76p/therm)  
• Capital expenditure of $250 million (2024: $260 million), in line with guidance, the majority of which was spent on the Triton drilling programme 
• Opex of $365 million (2024: $330 million), in line with guidance 
• Cash tax paid of $9 million in 2025 (2024: $153 million) 
• Negative free cash flow of $22 million (2024: negative free cash flow of $1 million)  
• Dividends paid of $84 million, equating to 16p/share in 2025 (2024: 23p/share) 
• Cash of $31 million (31 December 2024: $148 million) as at 31 December 2025, with outflow weighted to H2 due to both dividend payments being made in the period and H1 benefitting from the receipt of the $71 million cash tax refund  
• Total liquidity of $290 million, comprising cash and undrawn committed RBL facility availability of $259 million  - 
• Borrowings of $231 million (31 December 2024: $231 million), resulting in a net debt position of $200 million as at 31 December 2025 
• Serica continues to manage its hedge book in line with its stated hedging policy. For calendar years 2026 and 2027, the Company has hedged approximately 12,300 boepd and 7,100 boepd of production respectively. These hedges provide downside protection at effective floors of $60/bbl for oil and 67p/therm for gas. As of the latest valuation, the hedge portfolio has a mark-to-market value of $30 million in-the-money 

Operational update

• Year to date production in 2026 of 43,000 boepd, with current rates of around 50,000 boepd  
• The Bruce Hub continues to produce with high-uptime, albeit at rates that have not matched the asset potential as sustained bull-heading has not been possible through much of Q4 and the early part of this year while resilience integrity repairs were undertaken. Bull-heading operations have now recommenced and production returned to around 20,000 boepd net to Serica. Main activity on Bruce in 2026 is focused on enhancing reliability and the ability to deliver optimal well stock performance, and the extension of asset life. The planned shutdown in Q3 is expected to last approximately 24 days 
• At the Triton Hub, work on the Bittern pipeline completed as planned in mid-December. Work on the second compressor has also now completed, the compressor has been commissioned, and the availability of two compressors is expected to deliver enhanced operational efficiency going forward. The operational focus in 2026 continues to be on increasing reliability, with refinement of the well mix in order to optimise stable production through one compressor, currently around 21,000 boepd net to Serica. The Evelyn EV-02 and Belinda wells (both Serica 100%) are now available to form part of this production mix. Following a period of stability on one compressor, there is the potential to move to twin compressor operations, increasing production net to Serica through allowing enhanced flow rates from new wells. The Operator of the Triton FPSO forecasts that the planned shutdown in Q3 will last for approximately 65 days 
• West of Shetland, the Lancaster field (Serica 100% and operator) is producing at levels of around 6,000 boepd. The field is expected to remain around this level until production ceases, which is expected to be in Q2 2026. Bluewater, the FPSO operator, has advised Serica that the FPSO will leave the field in that period

Organic growth projects

• The Company is continuing to work intensively on high-grading its organic growth options, with a diverse and attractive opportunity set that with judicious investment can grow and sustain material cash-generative production for Serica well into the next decade
• Management will set out more details of Serica’s next steps of investment, specifically the potential for infill drilling at the Bruce field, in the 2025 full-year results presentation on 26 March 2026
• Serica expects to follow this with an investor event in the Spring that will provide more details on the Company’s capital allocation framework and portfolio of organic growth projects across our current and newly acquired assets

2026 outlook and guidance(3) 

• Serica’s materially expanded portfolio and increased asset reliability are expected in combination to result in a material year-on-year increase in average annual production to significantly over 40,000 boepd in 2026, with the extent to which production is above that 
• level dependent on completion dates of acquisitions announced in H2 2025 
• Subject to the completion of acquisitions announced in H2 2025, production from Serica’s enlarged portfolio has the potential to exceed rates of 65,000 boepd, with the number of producing fields in the Serica portfolio set to more than double, significantly increasing the diversification and hence the reliability and predictability of overall Company production and revenues 
• Opex of $380-400 million expected in 2026, excluding around $65 million related to the Lancaster FPSO charter up to the expected cessation of production
• Base capital expenditure expected to be $125-145 million in 2026. Over half of this relates to spend at the Bruce platform which is highly tax efficient. The range of projects being undertaken include investment on increasing the operational lifetime of both the Bruce and Triton hubs, with spend of around $30 million on replacement of the WAD umbilical line at Bruce, and emissions reduction work on commissioning our Bruce flare gas recovery project
• In addition, ahead of a potential infill drilling campaign, approximately $50 million (the majority of which relates to Bruce infills) is expected to be spent on preparation and long lead items subject to Serica making a sanction decision on these activities 
• Decommissioning spend set to total c.$20 million, of which c.$15 million relates to Lancaster 
• Material free cash flow is set to be generated in 2026 at prevailing commodity prices, strengthening Serica’s balance sheet in support of Serica’s strategy and track record of growing the Company through organic portfolio investment while and delivering attractive shareholder returns 
• Serica remains committed to moving from AIM to the Main Market of the LSE at the earliest viable opportunity in 2026 
• The Company continues to be active in screening a broad range of cash-generative and value accretive M&A opportunities, primarily focused on the UK North Sea

(1) All figures are unaudited and subject to amendment at the full-year results
(2) West of Shetland consists of production from the Lancaster field from and including 11 December 2025, when the acquisition of Prax Upstream Limited completed
(3) Where forward looking GBP spend has been converted to USD, an exchange rate of £1:$1.35 has been used

Sintana Energy

Sintana has announced that it has entered into a Letter of Intent (“LOI”) providing for a period of exclusivity in relation to an investment providing for an indirect interest in PEL 37 in the Walvis Basin, offshore Namibia.

PEL 37

PEL 37 is located in the heart of the Walvis Basin, offshore Namibia, immediately to the north of PEL 82 currently operated by an affiliate of Chevron Corporation (“Chevron”) and where Custos Energy (Pty) Ltd (“Custos”), an indirect affiliate of Sintana, is a working interest owner. Chevron has previously announced its intention to accelerate exploration activities on PEL 82 including drilling an exploration well. Custos is carried for the initial operations.

PEL 37 is currently held 100% and operated by Paragon Oil and Gas Pty Ltd (“Paragon”), a local Namibian company. PEL 37 covers an area of 17,295km², in relatively shallow water (100 – 1500m), with identified prospects at water depths between 300 and 600m, and with multiple large fans directly overlying a proven, mature oil-prone Aptian source rock.

The LOI provides Sintana with a period of exclusivity, initially through to 30th April 2026, to undertake technical, commercial and legal due diligence on Paragon and PEL 37, and to negotiate appropriate terms and documentation for contribution of capital by Sintana to enable work obligations to be satisfied, and which would result in Sintana becoming a shareholder of Paragon and thus an indirect holder of an interest in PEL 37.

Sintana will pay a deposit of $1 million to secure the exclusivity, of which 1/3 is non-refundable in the event that Sintana, for any reason, elects not to proceed.

Robert Bose, CEO of Sintana, said: 
“The LOI we have entered into provides, at low cost, exclusivity over a material indirect interest in PEL 37, which is a high-impact block at the heart of the Walvis Basin. In particular, PEL 37 is immediately adjacent to PEL 82, where we already have an interest and where an initial exploration well is expected over the coming quarters. Investing for a material stake in PEL 37 would thus afford additional optionality associated with upcoming activity in our existing portfolio. In the coming months, and with the benefit of the exclusivity secured, we will undertake the work needed to assess whether we wish to pursue this strategic expansion of our core portfolio – further announcements will be made in due course”.

Now that the Sintana/CEG merger has concluded it is clear that the new company is very much in the big boys league and they are being shown all the best opportunities in their areas of excellence. With the board keen to grow the portfolio, the best are high-graded and only those with the very best fit in the portfolio will be shortlisted.

In this respect PEL 37 does indeed fit and has remarkable technical interest so this deal, whereby Sintana can use the option to assess it, will tick many boxes. Also worth noting is that Chevron are planning to drill the block right next door which adds to the excitement.

The optionality here is important, with a decent amount of time to analyse the licence and to understand the potential of it, Sintana can then elect to farm-into it maybe via a stake in Paragon. I expect to see plenty of such activities as the company expands and with such an impressive portfolio it will undoubtedly keep its place in the upcoming Bucket List as it has serious embedded value.

Rockhopper Exploration

Rockhopper has announced the appointment of Richard Slape to the Board as a Non-Executive Director, with immediate effect.

Richard will join the Remuneration, Nomination and Audit and Risk Committees. Alison Baker, Senior Independent Director, will retire from the Board at the next Annual General Meeting, currently anticipated to be in June 2026, and Richard will at that point take on the role of chair of the Audit and Risk Committee, currently led by Alison. Paul Mayland will assume Alison’s position as Senior Independent Director.

Richard has extensive board level experience within the energy sector and was also an oil and gas analyst for over 25 years prior to moving into corporate roles within the industry. He has fulfilled a number of senior executive roles including Chief Financial Officer of Kistos Holdings (and its predecessor) from 2021 to 2024. Prior to joining Kistos, he was the Chief Financial Officer of RockRose Energy and he has also served on the board of Lansdowne Oil & Gas. 

Simon Thomson, Chairman of Rockhopper Exploration, commented: 
“We are delighted to welcome Richard, a hugely experienced industry figure, to the Board at such an exciting time for the Company and with the development of Sea Lion now under way following its recent sanction. Richard has assisted Rockhopper previously so knows the business extremely well, meaning we will be able to fully benefit from his insights and contributions quickly. I would also like to thank Alison for her unstinting support and contribution to the Company’s progress in her time on the Board and wish her the very best for her future endeavours. I am very pleased she was able to see the sanction of Sea Lion achieved during her tenure.”

Whilst I don’t normally comment on NED appointments this is an exception. Rockhopper has done very well to secure the services of Richard Slape who is an outstanding operator in the E&P sector with great experience and will without doubt add to the strength of the board. With the upcoming development of Sea Lion imminent Rockhopper will value his input tremendously.

Original article   l   KeyFacts Energy Industry Directory: Malcy's Blog