Serica to deepen North Sea presence through Total oilfield tie-up

NORTH Sea oil producer Serica Energy will deepen its interest in two of the region’s most important oil and gas assets in a new deal with French major Total.

The $20m (£15m) acquisition of Total’s stakes in the Bruce and Keith oil assets emerged as the explorer battles to push through a separate deal to buy BP’S stakes in the same fields, which has become mired in US sanctions.

Under the fresh deal, Serica will acquire a 42.25pc interest in the Bruce field and a 25pc interest in the Keith field and its infrastructure for $5m up front, followed by a further three $5m payments. Its shares surged 19.5pc to 84p on the deal.

However, the 11m barrel a day boost depends on Serica’s sanction-hit deal with BP moving ahead. Serica agreed to buy a package of BP assets worth $300m, including stakes in the Bruce, Keith and Rhum fields, which together make up around 5pc of the country’s oil production.

The Rhum field has since emerged as a key stumbling block following the announcement of US sanctions against Iran, because the field is half-owned by the nation’s state-backed oil company. The trio of oil companies are locked in negotiations with US authorities to agree a deal that would allow the acquisition to move ahead, in spite of the crackdown on Iran following the collapse of the nuclear agreement earlier this year. “We’re not underestimating the scale of the challenge,” said Mitch Flegg, Serica’s chief executive. “But things are moving forward.”

He told The Daily Telegraph that he had been “surprised” by the “huge” amount of cross-government support given to the negotiations.

The Oil and Gas Authority and the Department for Business, Energy and Industrial Strategy have been joined by officials from the Treasury and the UK embassy in Washington DC to help in negotiations with the US authorities. “Everyone has been very clear that this is important for UK plc,” he added.

Serica has been on the hunt for acquisitions in the North Sea since oil prices began to lift from their nadir in early 2016. A couple of years ago, this would have been huge news for Serica but this deal is “business as usual now”, said Mr Flegg. “We’ve always said we didn’t want to stop at the BP deal and we continue to look for opportunities. This just arrived slightly quicker than we expected,” he added.