Serica Energy Refocuses on UK Oil and Gas Despite Tax Hikes
By Arunima Kumar
(Reuters) -Serica Energy said on Tuesday it would return to focus on growing oil and gas operations in the British North Sea, reversing earlier plans to shift overseas in the face of rising taxes on the sector.
North Sea producers have warned a UK windfall tax on the industry, first imposed in the wake of a surge in energy prices in 2022, would lower investments in the basin.
Some companies have sold assets, while others have merged operations and sought to diversify to other regions.
But Serica CEO Chris Cox said he now saw new investment opportunities in the North Sea.
"I don't think the tax regime can get any worse than it is today ... I think the UK is at the bottom of the cycle at the moment. That's a great time to be buying assets or consolidating," Cox told Reuters.
Serica had previously said it would seek to invest in other geographies, including the Norwegian North Sea.
"The focus was all on Norway ... It's really, really competitive and the expectations of sellers I think are unrealistic for Norway ... We've actually shifted our focus quite strongly back to the UK," said Cox.
Serica said in a trading update ahead of 2024 results on April 1 that it expects a 15.6% increase in 2025 production to 40,000 barrels of oil equivalent per day (boepd), helped by its assets' improved reliability.
Serica has boosted production through acquisitions and investments in recent years. But it struggled in 2024 due to an outage at its Triton floating production storage and offloading (FPSO) operation in the North Sea, which impacted output.
Following the resumption of production into the Triton FPSO, output has been ramping up, with a five-well drilling campaign at Triton now halfway through.
Serica shares were up 2% in morning trade.
It added that production would be weighted to the first half of 2025, with maintenance at the Bruce Hub and Triton FPSO expected to take production offline in the third quarter for 12 and 45 days, respectively.
(Reporting by Arunima Kumar in Bengaluru. Editing by Rashmi Aich and Mark Potter)
