REG - Serica Energy PLC - Acquisition of assets from Spirit Energy

Serica EnergyAnnouncement

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RNS Number : 7372L  Serica Energy PLC  16 December 2025

 

16 December 2025

Serica Energy plc

('Serica' or 'the Company')

 

Acquisition of assets from Spirit Energy Limited and affiliates

 

Serica Energy plc (AIM: SQZ) is pleased to announce the entry into a sale and
purchase agreement, via two of its newly acquired subsidiaries following the
completion of the Prax Upstream transaction, to acquire a portfolio of
Southern North Sea assets(( 1 )) (the 'Acquired Assets') from Spirit Energy
Limited ('Spirit Energy'), and certain affiliates ('the Transaction'). The
upfront consideration is £57 million (c.$74 million) with the effective
economic date being 1 January 2025. Completion is expected in H2 2026.

 

The Acquired Assets comprise a 15% non-operated working interest in the Cygnus
field, one of the largest producing gas fields on the UK Continental Shelf; a
25% non-operated working interest in Clipper South; operated positions across
various assets in the Greater Markham Area ('GMA'); and further operated and
non-operated interests in gas fields across the Southern North Sea, being Eris
(54% operated working interest), Ceres (90% operated working interest), and
Galleon (8.4% non-operated working interest). Following completion, the seller
will retain decommissioning liabilities on the operated assets, expected to
constitute over 75% of the total estimated decommissioning liability.

 

Chris Cox, Serica's CEO, stated:

"This transaction is a further step towards delivering on our strategy and
diversifying our asset base through the addition of high-quality assets,
adding over 15% to our reserves and significantly boosting production. These
are also assets I personally know well, and the Cygnus field in particular is
an attractive addition to our portfolio given its high uptime, low emissions,
and low operating costs. There is also the potential for further infill
drilling opportunities across the portfolio, most significantly at Cygnus,
where drilling is ongoing.

 

The transaction will require only modest cash outflow on completion and is set
to generate material cash flows, while also limiting our exposure to future
decommissioning costs, enhancing Serica's ability to create further value for
shareholders through investing in growth and delivering attractive cash
returns."

 

BENEFITS OF THE ACQUISITION

·    Immediately cash generative, with c.$100 million of free cash flow to
be generated by the Acquired Assets by the end of 2028, supporting and
enhancing Serica's strategy of investing for growth and delivering attractive
shareholder returns

·    The Transaction adds 18.7 mmboe(( 2 )) of 2P reserves (as at 1
January 2025) to Serica's portfolio, increasing Serica's 2P reserves(( 3 )) by
16%, at a cost of approximately $3.9/boe of 2P reserves

·    Addition of pro-forma production of around 13,500 boepd in H1 2025,
of which 96% was gas

·    Establishes an operated production hub in the Southern North Sea in
which to deploy Serica's leading subsurface and mature asset operatorship
expertise, while also further diversifying our UKCS presence and hydrocarbon
evacuation routes

·    The Cygnus field is a low-cost, low-emission field with high uptime
and sustained production into the next decade:

-     Opex of c.$11/boe

-     97% operating efficiency in H1 2025

-     Carbon intensity of 7 kgCO(2)/boe, well below the North Sea average

·    Interim period cash generation between effective economic date to
completion in H2 2026 expected to result in modest payment on completion and
no new financing requirement

·    Addition of 3.4 mmboe of 2C resources, and the potential for
incremental growth through further wells at Cygnus, Clipper South, and Grove,
as well as wider exploration and appraisal opportunities around Cygnus

·    Decommissioning of the operated assets, although funded by Spirit
Energy, will be undertaken by Serica, permitting the Company to strengthen its
operational capacity in this important activity

 

KEY TERMS OF THE ACQUISITION

·    The Transaction has an effective economic date of 1 January 2025 and
an upfront cash consideration of £57 million (c.$74 million) to be paid on
completion, subject to customary working capital adjustments, and is expected
to be significantly offset by the receipt of a payment reflecting interim
post-tax cashflows between the effective economic date and the completion
date, expected in H2 2026

-     The amount due from Serica at completion is therefore expected to be
modest, reflecting the contribution of more than 18 months of interim period
cash flows

·    The terms of the Transaction also include provision for two potential
further cash payments by Serica: (1) £2.5 million contingent on sanction of
the drilling of an additional development well on Cygnus; and (2) £1 million
contingent on the drilling of, and subsequent first production from, an infill
well on Clipper South

·    Following completion of the Transaction, the seller will retain
decommissioning liabilities on the operated GMA, Eris and Ceres fields up to a
cap, set at 115% of the current estimated decommissioning costs. In total,
across the portfolio of Acquired Assets, it is expected that the seller will
be retaining over 75% of the total decommissioning liabilities, with
decommissioning spend for non-operated assets expected to be $60-70 million
(on a pre-tax undiscounted basis) with the majority of this spend not before
the early to mid-2030s

 

ACQUIRED ASSETS

 

                   Field      Spirit Energy equity  Operator          2P (mmboe)  Net production H1 2025 (boepd)
 Cygnus            Cygnus     15%                   Ithaca Energy     8.6         4,000
 GMA               Markham    37.5%                 Spirit Energy     --          7,000
                   Chiswick   100%                  Spirit Energy     5.6
                   Grove      92.5%                 Spirit Energy     1.2
                   Kew        100%                  Spirit Energy     0.3
                   J3C (NL)   4%                    TotalEnergies NL  0.0
 Eris & Ceres      Eris       54%                   Spirit Energy     0.5         1,000
                   Ceres      90%                   Spirit Energy     0.2
 Non-op            Clipper S  25%                   INEOS             1.4         1,200
                   Galleon    8.4%                  Shell             0.8         300
 Infrastructure    NOGAT      1.8%                  ENI               N/A         N/A
 Total                                                                18.7        13,500

 

 

Cygnus field (15% working interest)

Cygnus is one of the largest producing gas fields in the UK North Sea, and is
located in the Southern North Sea in blocks 44/11a, 44/11b and 44/12a in
shallow water depths of 15 to 25 m. The field, operated by Ithaca Energy, who
owns the remaining 85%, has a carbon intensity of 6 kgCO(2)/boe, considerably
below the UK North Sea average of 21 kgCO(2)/boe, lowering the overall carbon
intensity of the Serica portfolio.

 

Cygnus is a mid-life field, having begun production in 2016. There are 11
wells, which produced a total of 4,000 boepd net to the acquired Spirit Energy
stake in H1 2025, with an infill drilling campaign ongoing. The first of the
four firm wells in the campaign is now on production, and the second well
underway. Two further wells are set to follow, with the potential for further
development drilling beyond the currently approved wells.

 

Greater Markham Area (working interests: Markham 37.5%, Chiswick 100%, Grove,
92.5%, Kew 100%, J3C (NL) 4%)

The GMA sits on the median line between the UK and Dutch segments of the North
Sea, and comprises the operated Markham, Chiswick, Grove and subsea tieback
Kew fields, along with the TotalEnergies' operated J3C, K1a, and K4aD fields.
Gas from all of these fields is processed across the operated Markham J6A
platform and exported via the Wintershall operated K/13 facilities and into
the 160 km long Westgas transport pipeline system to the Den Helder onshore
terminal in the Netherlands, where it undergoes separation, conditioning, and
distribution.

 

GMA produced c.7,000 boepd net to Spirit Energy in H1 2025, with the majority
of production from the Chiswick field. Further infill and production
enhancement opportunities exist in the Grove, Chiswick, and Kew fields and
Serica expects to evaluate the merits of pursuing these opportunities promptly
on completion of the Transaction.

 

Clipper South (25% working interest)

Clipper South is a tight gas field operated by Ineos Energy and located in
blocks 48/19 and 48/20 in the Southern North Sea, approximately 100 km east of
the Lincolnshire coast. Situated in water depths ranging from 22 m to 26 m, it
lies south of the Galleon and Ensign fields. The field's production, c.1,200
boepd net to Spirit Energy in H1 2025, has demonstrated exceptionally high
operational efficiency coming from four long, horizontal, multi-fractured
wells tied to a Normally Unattended Installation and controlled from the
Shell-operated Clipper installation with gas landed at the Bacton Gas Terminal
on the North Norfolk coast.

 

Clipper South is a relatively young asset with significant remaining reserves,
ensuring its continued contribution to the region's gas supply. There are
multiple identified future drilling opportunities on the block and in adjacent
areas that have the potential to extend the production life of the field
significantly.

 

Galleon (8.4% working interest)

Galleon is located in blocks 48/14a, 48/15a, 48/19a and 48/20 in the Southern
North Sea, east of Clipper and west of Audrey in the Sole Pit Area, at a water
depth of 28m. The field consists of 11 producing wells, delivering c.300 boepd
net to Spirit Energy in H1 2025. Galleon is operated by Shell with the
Shell/ExxonMobil JV having an 83.2% stake, and is set to be transferred to
Viaro Energy upon completion of their acquisition of the Shell operated
Southern North Sea portfolio.

 

Eris (54% working interest) and Ceres (90% working interest)

Eris and Ceres are single-well subsea tiebacks located approximately 34 km and
44 km, respectively, east of the Easington Gas Terminal in the Southern North
Sea. Eris sits in block 47/8c-4 at a water depth of 41m, and Ceres in 47/9c-11
at a water depth of 29m. The two late-life fields, currently producing c.1,000
boepd net to Spirit Energy in H1 2025, are set to cease production in
2026/2027, following which Serica, subject to completion of the Transaction,
will undertake planned decommissioning work, with the costs retained by Spirit
Energy under the terms of the Transaction.

 

NOGAT (1.8% working interest)

The Northern Offshore Gas Transport ('NOGAT') pipeline system transports
natural gas from Denmark and Dutch fields to a landing point at Den Helder in
the Netherlands. The pipeline is owned by an incorporated joint venture (NOGAT
B.V.) owned jointly by Eni (15.0%, operator), EBN (45.0%), PGGM (38.2%) and
Spirit Energy (1.8%) who receive tariff income from third party users of
NOGAT.

 

Move from the AIM to Main Market

The Transaction does not impact Serica's intended move from the AIM to the
Main Market of the London Stock Exchange, which continues to be expected at
the earliest viable opportunity in 2026.

 

Presentation for investors

Serica will host a live presentation on the Investor Meet Company platform
today at 1000 GMT. The presentation is open to all existing and potential
shareholders. Questions can be submitted at any time during the live
presentation. Investors can sign up to Investor Meet Company for free and add
to meet Serica Energy plc
via https://www.investormeetcompany.com/serica-energy-plc/register-investor
(https://www.investormeetcompany.com/serica-energy-plc/register-investor) .

 

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the company's obligations under Article 17 of
MAR.

 

The technical information contained in the announcement has been reviewed and
approved by Carla Riddell, Chief Technical Officer at Serica Energy plc. Ms.
Riddell (B.Sc. Geology from University of Durham University, M.Sc. Palynology
from University of Sheffield) has over 25 years of experience in oil & gas
exploration, development and production and is a Fellow of the Geological
Society of London and Energy Institute.

 

-end-

 

Enquiries:

 

 Serica Energy plc                                                   +44 (0)20 7487 7300
 Martin Copeland (CFO) / Andrew Benbow (Head of Investor Relations)

 Peel Hunt (Nomad & Joint Broker)                                    +44 (0)20 7418 8900
 Richard Crichton / David McKeown / Emily Bhasin

 Jefferies (Joint Broker)                                            +44 (0)20 7029 8000
 Sam Barnett / Cameron Jones

 Rothschild & Co (Financial Adviser)                                 +44 (0)20 7280 5000

 James McEwen / Murray Yuill

 Vigo Consulting (PR Advisor)                                        +44 (0)20 7390 0230
 Patrick d'Ancona                                                    serica@vigoconsulting.com

 

NOTES TO EDITORS

Serica Energy is an independent British oil and gas company with a broad
portfolio of assets located in the UK Continental Shelf (UKCS). The Company is
responsible for about 5% of the UK's natural gas, which plays a significant
role in supporting the country's energy transition, and has invested over £1
billion in the UK supply chain since 2020. Serica maintains a balanced output
of oil and gas across its operations.

 

The Company's key producing assets are grouped around two major hubs: the
Bruce, Keith, and Rhum fields in the Northern North Sea, where Serica is the
operator; and a mix of operated and non-operated fields connected to the
Triton FPSO in the Central North Sea.

 

Serica aims to create shareholder value through a mix of production from
existing oil and gas fields, organic investment and M&A.

 

Having now completed on the acquisition of Prax Upstream Limited, in H1 2026
Serica is also set to complete the acquisition of a 40% operated stake in the
Greater Laggan Area offshore fields and associated Shetland Gas Plant from
TotalEnergies, and non-operated interests in the Catcher and Golden Eagle Area
Development fields from ONE-Dyas.

 

Serica's shares trade on the AIM market of the London Stock Exchange (ticker:
SQZ). More information about Serica is available on the Company's website
(www.serica-energy.com (http://www.serica-energy.com) ). To receive news
updates by email, interested parties can subscribe through the website.

 

Important Notice

This announcement has been issued by, and is the sole responsibility of,
Serica Energy plc. No representation or warranty, express or implied, is or
will be made by, or in relation to, and no responsibility or liability is or
will be accepted by any adviser to the Company or by any of their respective
affiliates or agents as to or in relation to the accuracy or completeness of
this announcement or any other written or oral information made available to
or publicly available to any interested party or its advisers, and any
responsibility or liability therefore is expressly disclaimed.

 

Peel Hunt LLP ('Peel Hunt'), which is authorised and regulated in the UK by
the FCA, is acting for the Company in connection with the Acquisition and
neither Peel Hunt nor any of its affiliates will be acting for any other
person or otherwise be responsible to any person for providing the protections
afforded to clients of Peel Hunt or for advising any other person in respect
of the Transaction or any transaction, matter or arrangement referred to in
this announcement. Peel Hunt's responsibilities as the Company's nominated
adviser under the AIM Rules for Nominated Advisers are owed solely to the
London Stock Exchange and are not owed to the Company or to any Director or to
any other person in respect of his decision to acquire shares in the Company
in reliance on any part of this announcement.

 

N. M. Rothschild & Sons Limited ('Rothschild & Co'), which is
authorised and regulated by the FCA in the United Kingdom, is acting as
financial adviser to the Company and no one else in connection with the
Transaction and will not regard any other person as its client in relation to
the Transaction and will not be responsible to anyone other than the Company
for providing the protections afforded to clients of Rothschild & Co or
its affiliates nor for providing advice in relation to the Transaction, nor
for providing advice in relation to the contents of this announcement or the
Acquisition or any transaction, arrangement or matter referred to in this
announcement.

 

Apart from the responsibilities and liabilities, if any, which may be imposed
on Peel Hunt  or Rothschild & Co by FSMA or the regulatory regime
established thereunder, none of Peel Hunt or Rothschild & Co accepts any
responsibility whatsoever for the contents of this announcement, including its
accuracy, completeness or verification or for any other statement made or
purported to be made by it, or on its behalf, in connection with the Company
or the Acquisition. Each of Peel Hunt and Rothschild & Co accordingly
disclaims all and any liability whether arising in tort, contract or otherwise
(save as referred to above) in respect of this announcement or any such
statement.

 

The contents of this announcement do not constitute or form part of an offer
of or invitation to sell or issue or any solicitation of any offer to purchase
or subscribe for any securities for sale in any jurisdiction nor shall they
(or any part of them) or the fact of their distribution form the basis of, or
be relied upon in connection with, or act as an inducement to enter into, any
contract or commitment to do so.

This announcement includes statements that are, or may be deemed to be,
forward-looking statements, beliefs or opinions, including statements with
respect to the Company's business, financial condition and results of
operations. These forward-looking statements can be identified by the use of
forward-looking terminology, including the terms "believes", "estimates",
"plans", "anticipates", "targets", "aims", "continues", "expects", "intends",
"hopes", "may", "will", "would", "could" or "should" or, in each case, their
negative or other various or comparable terminology. These statements are made
by the Company's directors in good faith based on the information available to
them at the date of this announcement and reflect the Company's directors'
beliefs and expectations. By their nature these statements involve risk and
uncertainty because they relate to events and depend on circumstances that may
or may not occur in the future. A number of factors could cause actual results
and developments to differ materially from those expressed or implied by the
forward-looking statements. No representation or warranty is made that any of
these statements or forecasts will come to pass or that any forecast results
will be achieved. Forward-looking statements speak only as at the date of this
announcement and the Company and its advisers expressly disclaim any
obligations or undertaking to release any update of, or revisions to, any
forward-looking statements in this announcement. As a result, you are
cautioned not to place any undue reliance on such forward-looking statements.

Nothing in this announcement is intended as a profit forecast or estimate for
any period and no statement in this announcement should be interpreted to mean
that earnings or earnings per share or dividend per share for the Company for
the current or future financial years would necessarily match or exceed the
historical published earnings or earnings per share or dividend per share for
the Company.

 

Certain figures included in this announcement have been subjected to rounding
adjustments.

 1  The Transaction is being effected through a combination of asset
transactions as well as the acquisition of Spirit Energy's two Dutch holding
companies, Spirit Energy Nederland B.V. and Spirit Energy Infrastructure B.V.

 2  The 2P reserves stated in this announcement are based on an independent
evaluation carried out by Sproule ERCE. Reserves quantities have then been
adjusted from the 30 June 2025 date of the Sproule ERCE evaluation to the
Transaction effective economic date (1 January 2025) by adding back the actual
sales volumes over the period 1 January to 30 June 2025.

 3  Stated as at 31.12.24, not inclusive of the pro forma reserves added from
the Prax Upstream acquisition and related deals with TotalEnergies and
ONE-Dyas

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