REG - Serica Energy PLC - Trading and operations update

Serica EnergyAnnouncement

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RNS Number : 6764P  Serica Energy PLC  21 January 2026

 

21 January 2026

 

Serica Energy plc

('Serica' or 'the Company')

 

Trading and operations update

 

Serica Energy plc (AIM: SQZ) issues 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."

 

2025 performance(( 1  (#_ftn1) ))

( )

 (boepd)                            Q1      Q2      Q3      Q4      Average
 Bruce Hub                          17,200  16,300  15,400  15,400  16,100
 Triton Hub                         5,100   -       7,700   10,700  5,900
 Other Producing Assets             5,200   5,600   4,400   6,000   5,300
 West of Shetland(( 2  (#_ftn2) ))  -       -       -       1,400   300
 Total                              27,500  21,900  27,500  33,500  27,600

 

·    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  (#_ftn3) ))

·    Our 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

 

 

Serica will host a live presentation on the Investor Meet Company platform
today at 0900 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 (Group Investor Relations Manager)

 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

 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 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. In the second half of 2026 Serica also
intends to complete the acquisition from Spirit Energy of a portfolio of
Southern North Sea assets, including a 15% non-operated working interest in
the Cygnus field; a 25% non-operated working interest in Clipper South; and
operated positions across various assets in the Greater Markham Area, subject
to satisfaction of regulatory and other customary conditions and completion of
the consultation with the works council of Spirit Energy in the Netherlands.

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.

 

 

 1  (#_ftnref1) All figures are unaudited and subject to amendment at the
full-year results

 2  (#_ftnref2) 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  (#_ftnref3) Where forward looking GBP spend has been converted to USD, an
exchange rate of £1:$1.35 has been used

 

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