TIDMSQZ
RNS Number : 7747V
Serica Energy PLC
06 December 2023
Serica Energy plc
("Serica" or the "Company")
Operations and Organisation Update
London, 6 December 2023 - Serica Energy plc (AIM: SQZ) provides
the following updates on operations, production, licencing and
organisation.
Mitch Flegg, Chief Executive of Serica, said:
"I am pleased to report the successful conclusion of the planned
summer shutdowns on Serica's Bruce and Triton hubs and the
re-establishment of strong levels of production at both. During the
last month Serica has been consistently achieving production rates
in excess of 50,000 boe per day. Overall production guidance for
the year is unchanged reflecting delayed production restarts and
slower than expected production ramp-ups after the summer
shutdowns.
I am also pleased to report successful well campaigns on the
Bruce and Guillemot fields during 2023. These are further proof of
the benefits to be had from low cost, short cycle investments in
our existing asset portfolio. The full impact on production of the
well work carried out this year is expected to be felt in 2024,
aided by the work on the Bruce facilities deferring the need for
another major shutdown until 2025.
The LWIV vessel used on Bruce is already booked for a third
campaign in 2024, which will target wells on both the Bruce and
Keith fields. We are also looking forward to the start of a four
well drilling campaign in the Triton area, with the first well on
the Bittern field scheduled to begin around the middle of the first
quarter. 2024 is anticipated to be a very busy and impactful year
of investments in Serica's North Sea portfolio.
The levels of production achieved and the range of organic
investment projects undertaken underlines the attributes of the
Tailwind acquisition. The Tailwind founders will substantially
cease their involvement in Serica during the early part of next
year. We are grateful for their openness and support during 2023.
Each has made important contributions to Serica including pivotal
roles in our Greater Buchan Area acquisition and achieving
important milestones in the Triton area. Their achievement in
creating and building Tailwind speaks for itself and we wish them
further success in their various endeavours.
I am very pleased to be announcing Mike Killeen's promotion to
Chief Operating Officer. At the end of November, we passed five
years since Serica became the operator of the Bruce, Keith and Rhum
fields. The manner and results of Serica's operatorship have been
crucial to establishing the Company as one of the UK's leading
independent oil and gas companies. Mike's promotion is richly
deserved. Moreover, it demonstrates the capacity within our
organisation for career development, which I hope will help us
attract and keep talented people."
Group Production
Serica's overall production entitlement during the last four
weeks has averaged just over 52,000 boe per day. Guidance for the
whole year remains at 40-45,000 boe per day reflecting a slower
than planned ramp up of production following the end of the planned
summer shutdowns on the Bruce and Triton hubs.
Bruce Hub
Production restarted on 11 September 2023 after the planned
Bruce summer shutdown. The shutdown work scope was successfully
completed including the upgrading of certain control systems and
fabric maintenance. This outcome means that the next major shutdown
is now not expected to be until 2025. The restart of production was
later than planned, as previously reported, mainly due to a
decision to carry out permanent rather than temporary repairs
following inspection findings on the flare tower. The carrying out
of these repairs at height was hampered by weather.
Strong levels of production have been established from both the
Bruce and Rhum fields with Serica's average production entitlement
being over 24,000 boe per day during the last four weeks.
Production has been constrained by being unable to run one of the
gas export compressors at full capacity. This issue is now
substantially resolved. There was also a short outage to make a
repair to the glycol dehydration system.
Commencing in September, Serica has been conducting its second
Light Well Intervention Vessel ("LWIV") campaign on the Bruce
field. This has involved successfully re-entering three wells to
identify areas of scale build-up, perform water shut offs and
perforate target intervals. With work on one well still to finish,
there has been an uplift in overall production from the re-entered
wells of about 2,500 boe per day so far. Serica has a 98% share
with gas representing about 85% of the incremental production.
Serica has now intervened on five of the subsea wells that form
the Western Area Development ("WAD") part of the Bruce complex.
Since taking over operatorship, Serica has also re-entered fourteen
Bruce platform wells. The results have demonstrated the benefits of
low cost well interventions and a third LWIV campaign is planned
during 2024 which will involve work on both Bruce and Keith wells.
The inventory of platform wells on the Bruce field is also being
high graded for potential future interventions.
Serica is currently carrying out vessel-based final abandonments
of four exploration and appraisal wells on the Keith field and the
North Eigg exploration well. This campaign is consistent with the
NSTA's initiative to reduce the number of suspended inactive wells
in the UK North Sea. The abandonments are scheduled to be completed
in late December 2023. Despite owning 100% of the Keith field,
Serica's share of the costs of the well abandonments under the
terms of the BKR sale and purchase agreements is 8.34%. The sellers
retain the remaining 91.66% of the liabilities with Serica paying
additional cash consideration equal to 30% of the sellers' post-tax
share of costs. The work does not affect the plan to bring the
Keith field back into production during 2024. Serica bears all the
cost of abandoning the North Eigg well.
Triton Area
The Triton summer shutdown was completed in September 2023. This
was supported by the 'walk to work' campaign which continued into
October. The activities carried out included essential fabric
maintenance and inspections, a further phase of the control systems
upgrade and preparation for the reinstatement of water injection on
the Bittern field, which is planned to restart in early 2024.
Good production rates are being achieved from all of Serica's
fields in the Triton Area. As previously reported, this is after a
slower ramp up in production than planned following the shutdown.
The reasons included an essential repair on a piece of equipment
identified during a pre-production inspection, a seawater lift pump
failure and initial difficulties operating the upgraded FPSO
control systems. These issues are now resolved.
During the middle of this year, a rig-based well intervention
campaign was carried out on the Guillemot West and North West
fields. These were the first such interventions on the fields in
over ten years and have resulted in incremental gross daily
production of about 1,500 barrels of oil from one well and 12
million cubic feet of gas from another, both of which had been
shut-in for lengthy periods. Serica's interest in these fields is
10%. As with the Bruce field, these outcomes demonstrate the low
risk returns which can be earned from diligent field
management.
Planning is continuing for the four well drilling campaign
scheduled for 2024 and early 2025. The campaign is being carried
out using the semi-submersible COSLInnovator drilling rig. All four
wells are production wells. The first well in the campaign will be
a sidetrack of an existing well (B1z) on the Bittern field (Serica
64.63%). The spud date is currently expected to be in mid Q1 of
2024 with completion of the well expected in about ninety days. The
other wells in the campaign are the GE-05 well on Gannet E (Serica
100%), the EC well on Guillemot North West (Serica 10%), and the
EV-02 well on Evelyn (Serica 100%).
Serica has also exercised an option to use the COSLInnovator to
drill a fifth well in the campaign. This may be the development
well on the Belinda field. The draft FDP for this project was
submitted to the NSTA in September 2023.
Licencing
The process of completing the acquisition of a 30% interest in
the Greater Buchan Area from Jersey Oil & Gas, announced on 23
November 2023, is ongoing.
Licence P2448, which contains the Mansell discovery, expires in
March 2024. Serica has requested an extension to the licence term
in order, primarily, to determine whether there is a viable
long-term export route for production.
The licence documentation for the award in the UKCS 33rd
Offshore Licensing Round of a 100% interest in UK block 29/2a,
containing the Kyle discovery in the Triton Area, is in the process
of being finalised.
Serica has relinquished Licence P2506, blocks 3/25b, 3/30, 4/26,
9/5a, in the Northern North Sea at the end of Phase A of the
Licence. This follows the fulfilment of its work programme
including sub-surface studies. Serica concluded that there are no
viable exploration targets.
Organisation
The integration of the Serica and Tailwind organisations and
processes has been progressed since the completion of the Tailwind
acquisition in March 2023. Steve Edwards, Dave Freeman and Tom
Ujejski will be ending their roles with Serica by the end of March
2024. Jacques Tohme is currently working for Serica in a
consultancy position, assisting with the integration of the
financial systems and other financing matters. This arrangement is
planned to continue into 2024.
As reported on 21 November 2023, Martin Copeland will succeed
Andy Bell as CFO in early 2024.
As part of the restructuring of the organisation, Mike Killeen
has moved from the position of Vice President Operations to Chief
Operating Officer. This role is not currently part of the Serica
Energy plc board.
Regulatory
This announcement is inside information for the purposes of
Article 7 of Regulation 596/2014.
The technical information contained in the announcement has been
reviewed and approved by Fergus Jenkins, VP Technical at Serica
Energy plc. Mr. Jenkins (MEng in Petroleum Engineering from
Heriot-Watt University, Edinburgh) is a Chartered Engineer with
over 25 years of experience in oil & gas exploration,
development and production and is a member of the Institute of
Materials, Minerals and Mining (IOM3) and the Society of Petroleum
Engineers (SPE).
Enquiries:
+44 (0)20 7390
Serica Energy plc 0230
Mitch Flegg (CEO) / Andy Bell (CFO)
/ Stephen Lambert (VP Legal and External
Relations)
+44 (0)20 7418
Peel Hunt (Nomad & Joint Broker) 8900
Richard Crichton / David McKeown /
Georgia Langoulant
+44 (0)20 7029
Jefferies (Joint Broker) 8000
Sam Barnett / Will Soutar
+44 (0)20 7390
Vigo Consulting (PR Advisor) 0230
Patrick d'Ancona / Finlay Thomson serica@vigoconsulting.com
NOTES TO EDITORS
Serica Energy is a British independent oil and gas exploration
and production company with a portfolio of UKCS assets.
Serica completed the acquisition of the entire issued share
capital of Tailwind Energy Investments Ltd on 23 March 2023.
Following the addition of the Tailwind assets to its portfolio,
Serica has a balance of gas and oil production. The Company is
responsible for about 5% of the natural gas produced in the UK, a
key element in the UK's energy transition.
Serica's producing assets are focused around two main hubs: the
Bruce, Keith and Rhum fields in the UK Northern North Sea, which it
operates, and a mix of operated and non-operated fields tied back
to the Triton FPSO. Serica also has operated interests in the
producing Columbus (UK Central North Sea) and Orlando (UK Northern
North Sea) fields and a non-operated interest in the producing
Erskine field in the UK Central North Sea.
Serica's portfolio of assets includes several organic investment
opportunities which are currently being pursued or are under
consideration.
Further information on the Company can be found at
www.serica-energy.com . The Company's shares are traded on the AIM
market of the London Stock Exchange under the ticker SQZ and the
Company is a designated foreign issuer on the TSX. To receive
Company news releases via email, please subscribe via the Company
website.
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END
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