Field deals see Serica boost North Sea gas production
BP staff to move to independent after stake sales Serica now seen as a ‘significant UKCS operator’
Oil and gas firm Serica Energy yesterday described the completion of a series of stakebuilding deals in North Sea fields which will dramatically increase its production as transformational for the company.
The deals with BP, Total E&P, BHP Billiton, and Marubeni Oil & Gas (UK) have seen Serica become the operator of three North Sea fields – Rhum, Bruce and Keith.
Serica now owns 98 per cent of the Bruce platform and field, 100 per cent of Keith and 50 per cent of Rhum. Together the fields produce up to 5 per cent of the UK’S domestic gas production.
Serica said the acquisitions, under which it will pay BP, Total and BHP a share of cash flows until 2021, would increase its “proven and probable” reserves by over 20-fold.
Analysts at house broker Peel Hunt said they had now pencilled in net production of some 25,600 barrels a day for the years ahead and that the deals will deliver a step change in profitability and cash generation. It expects Serica’s operating profit to increase from $9 million (£7.05m) this year to $175m next year.
Tony Craven Walker, Serica’s chairman, said the acquisitions were “transformational”.
“They firmly place us as one of the leading ‘mid-tier’ independent exploration and production companies operating in the UK North Sea. They bring a significant production and reserve base from which we can build our position further in the UKCS,” he said.
As part of the BP deal, which was struck for £12.8m at the end of last year, 111 staff from the oil giant will transfer over to Serica and a further 21 employees have been externally recruited.
Mitch Flegg, Serica’s chief executive, said: “We have spent a large part of the last year putting in place a detailed transition programme, of which the health, safety, welfare and future of our staff are the number one priority.
“We will highly value the knowledge and expertise of the transferring staff and our other new recruits and believe that our strategic vision and plans will provide an exciting operating environment in which to excel.”
Peel Hunt said the “operational and financial impact of the acquisitions on Serica is very dramatic”.
“The business has rapidly matured into a significant operating company,” it said in a research note.
“We understand that management is already taking a proactive approach to pursuing additional future growth opportunities with a view to continuing the process of building one of the North Sea’s leading independent oil and gas companies.”
Elsewhere in the sector, Shell yesterday completed the sale of its shares in the Corrib gas field in Ireland to the Canada Pension Plan Investment Board for around £900m.
businessdesk@scotsman.com