Serica given Erskine boost. Eyes acquisition targets

UK oil and gas company Serica Energy turned profitable in the first half of the year, boosted by a relatively stable production from the Erskine field in the North Sea. The company is now looking at potential acquisition targets.

In a report on Thursday, the company posted a net profit of $10,3 million, compared to last year’s loss of $2,6 million for the period.

Serica said that Erskine – operated by Chevron – continued to perform well. Serica has an 18 percent stake in the field.

Production in the first half averaged 3,100 boepd net to Serica to the end of May and 2,800 boepd net for the full half.

Worth noting, production was suspended in August and September for facilities and pipeline maintenance, and has resumed a few days ago.

The suspension doesn’t change the Erskine production forecast for the full year, Serica said, meaning it expects to see 2,200-2,400 boepd net.

Tony Craven Walker, Serica’s Chairman said: “Serica has produced a strong set of first half results and, although production to-date in the second half has been reduced to resolve various pipeline and maintenance issues, our production guidance for the full-year remains in the 2,200-2,400 boepd net range.  We are now entering the winter months in the northern hemisphere, when hydrocarbon prices are traditionally stronger and this helps to underpin our financial performance.”

The Erskine field, operated by Chevron, is a High Pressure High Temperature (HPHT) gas condensate field and was originally discovered in 1981. Main reserves lie in three separate, but generally overlying, Jurassic sandstone-producing horizons. The field has been developed with five producing wells.

The production facilities comprise a normally unmanned platform located at Erskine with production handled and controlled from the Lomond platform operated by Chrysaor following a recent acquisition from Shell. The Lomond Platform lies 269 km east of Aberdeen.

Gas and liquids produced from Erskine are transported to the Lomond platform via a 16in nominal bore multiphase pipeline where the fluids are processed, with gas then transported via the CATS pipeline, and liquids via the Forties Pipeline System.

An updated independent audit of the Erskine field confirmed Serica’s share of estimated proven plus probable reserves at 3.8 million boe as of 1 January 2017, an increase of 50% from pre-acquisition estimates after adjusting for production.

Since Erskine is Serica’s only source of production, and given the fact the production has suffered several times for technical reasons this year, the company is now looking to diversify, and spread the risk through an acquisition.

The chairman said: “With this strong financial position Serica is well placed to take advantage of new opportunities to grow both through our existing portfolio and through acquisition in the UK North Sea, where our demonstrated capability and experience give us a competitive edge and where we continue to benefit from tax efficiencies.

“We have adopted a keen but measured approach to this potential and are currently actively reviewing a small number of value accretive opportunities that match our strategic objectives.”

Offshore Energy Today Staff