Serica Energy plc said it reached 85% production and doubled its cash following high gas prices and the introduction of Rhum R3 well and Columbus field in the North Sea.
PRODUCTION
In a corporate presentation for the year ended 31 December 2021, the company reported that the Rhum R3 well, put into production in late August, had added up to 6,000 boed net to Serica.
First production from the Columbus field was achieved in late November 2021 with average rates of 3,270 boe/d net to Serica in the period up to year-end.
The operator of Bruce, Keith and Rhum (BKR) added its production had a “significantly lower carbon footprint than imported LNG”, supplying more than 5% of the UK’s gas.
FINANCES
Serica said that gas prices closed 2021 at a market average for the year of over
113p/therm (2020: 25p/therm).
Oil was also higher at an average of more than $70/bbl (2020: $45/bbl).
Gas prices combined with growing production volumes resulted in total cash resources for the company of £218.4 million at 31 December 2021.
Cash and deposits were £103.0m (2020: £89.3m) and a further £115.4m was lodged as temporary security with gas price hedge counter parties (2020: £1.8m).
The BKR net cash flow sharing arrangements ended on 31 December 2021.
From 1 January 2022, Serica will retain 100% (2021: 60%) of the net cash flow from the BKR fields.
OUTLOOK
Serica has contracted a rig to drill the North Eigg exploration well during the summer of 2022.
North Eigg is a gas prospect located close to Serica’s BKR fields.
The company expects that a successful discovery could be tied back to existing infrastructure in a carbon neutral manner.
Serica also plans a well intervention campaign during 2022 to improve production potential of several Bruce and Keith wells during subsequent years.
The company will additionally look at options for further investment, acquisition and distributions.