Serica Energy plc

('Serica' or 'the Company')

Results for the year ended 31 December 2024

 

London, 1 April 2025 - Serica Energy plc (AIM: SQZ), a British independent upstream oil and gas company with operations in the UK North Sea, today announces its audited financial results for the year ended 31 December 2024. The results are included below and copies are available at www.serica-energy.com and www.sedar.com.

 

Chris Cox, Serica's CEO, stated:

"The highly positive results of the drilling campaign at Triton are not yet being reflected in our production and cashflow due to ongoing issues at the Triton FPSO. Our frustration is exacerbated by the fact that the Triton area alone could be delivering up to 30,000 boepd net to Serica with the addition of the wells already drilled.

 

We are confident, after detailed discussions with the Operator, Dana, of the work required to fix the issues, and we are pleased that the joint venture has agreed a plan to take advantage of the current downtime to bring forward the maintenance work scope originally scheduled for July. This removes the need for a summer maintenance shutdown, which combined with the activities undertaken should significantly increase uptime going forward.

 

I have previously stated my confidence in the excellence of the Serica subsurface team and the potential of the rocks across our portfolio, and we have increasing clarity on the work needed to convert that potential into shareholder value. Ongoing analysis has seen a small decrease in our 2P reserves but materially increased our 2C resources - and there is more to come as work continues. This indicates the strength of our organic pipeline, with a clear route to converting resources to reserves - the Kyle redevelopment looks particularly attractive, and multiple infill drilling opportunities around the Bruce Hub have been identified.

 

With the above in mind, we have elected to implement a prudent rebalancing of our capital allocation approach, giving us increased flexibility over the medium-term to allocate capital to the areas where it will deliver best value for shareholders. This adjustment will allow us to invest in the exciting drilling and development programmes in our portfolio and be opportunistic in accretive M&A, all while retaining our highly competitive shareholder distributions." 

 

Results summary ($ million unless stated)

	2024	2023
Average realised Brent oil price ($/bbl)	75	67
Average realised gas price (pence per therm)	76	94
Production (boepd)1	34,600	40,100
Revenue1	727	917
Operating costs	330	273
EBITDAX	379	475
Cash Tax paid	153	348
Adjusted CFFO less tax	403	250
Capital expenditure2	260	97
Free cash flow	(1)	16
Cash	148	335
Total debt	219	271
Adjusted Net (debt) / cash3	(83)	99
Final dividend declared (pence per share)	10	14
Attributable shareholder returns4	114	112

 

1 2023 figures are pro forma following the completion of Tailwind acquisition on 23 March 2023

2 Includes pre-FID expenditure on E&E assets

3 Net of unamortised fees; See Reconciliation of non-IFRS measures

4 Attributable shareholder returns reflects Interim and Final Dividends in respect of the relevant year plus quantum of share buybacks

 

Highlights

Working to deliver more reliable and predictable production

·    Production of 34,600 boepd in 2024 (2023 pro forma: 40,100 boepd), of which 64% was gas, impacted by unscheduled downtime at the Triton FPSO

·    Production of c.27,600 boepd in Q1 2025, at a reduced level due to the shutdown of the Triton FPSO in February and March

·    Following discussions with Dana Petroleum, the operator, the Triton joint venture partners have decided to bring forward the summer maintenance period, integrating it into the current work programme

-     This will deliver increased uptime for the remainder of the year versus previous expectations

-     Production from Triton is now expected to resume in June, with no further planned shutdowns in 2025

-     The availability of the second compressor upon resumption will also mitigate the cause of instability that impacted 2024

 

Positive subsurface results set to boost production

·      With our ongoing drilling programme, Serica was one of the most active operators of development drilling in the UK North Sea last year and remains so in 2025

·      Initial results from this drilling activity have been encouraging, and the Triton FPSO produced over 25,000 boepd net to Serica on 23 January 2025, the day prior to production halting in the aftermath of Storm Éowyn, boosted by production from the first two wells in the five well Triton drilling campaign, Bittern B6 and Gannet GE05

·      Drilling on the subsequent two wells, the W7Z well on the Guillemot North West field (Serica: 10%) and the EV02 well on the Evelyn field (Serica: 100%), is now complete, with both wells showing encouraging results

-     W7Z is set to be hooked up for production shortly after the restart of production, with EV02 to then follow

·      The COSL Innovator rig has now relocated and drilling has begun on the BE01 well on the Belinda field (Serica 100%), the final well of the campaign, with first production expected in early 2026

 

Material increase in 2C resources

·      2P reserves of 117.5 mmboe as at end-2024 (140 mmboe at end-2023), broadly evenly split between oil (55.1 mmboe) and gas (62.4 mmboe), following production of 12 mmboe in 2024

·      Rigorous subsurface reassessment of the portfolio, focused on identifying deliverable opportunities, has resulted in a material increase in 2C resources to 88.7 mmboe at end-2024 (30.3 mmboe at end-2023), with the potential to convert significant resources into reserves in the medium-term

·      Work is continuing across the portfolio to high-grade the identified opportunities, with capital allocation to focus on those projects that can deliver maximum value to shareholders

 

Profitable and cash generative despite active investment programme

·      Profit before tax of $160 million (2023: $380 million) with reduction largely reflecting lower volumes sold and slightly reduced realised pricing largely driven by lower realised gas prices and increased gas mix (2024 61% gas as compared to 2023 pro forma 51%)

·      Profit after tax of $92 million (2023 $128 million) reflecting a lower P&L tax rate benefitting from the combined impact of loss pool and active capital investment programme

·      Adjusted CFFO less tax increased on the prior year to $403 million in 2024 (2023: $250 million), as a result of a significantly lower current tax charge in 2024 due to group relief effects resulting from the Q4 Triton performance

·      Cash tax paid in 2024 of $153 million (2023: $348 million)

-     Group relief in 2024 led to an overpayment of cash tax under the Instalment Payment Regulations. This will result in a $71 million cash tax rebate in 2025

·      No cash tax payment was made in the January 2025 instalment, and Serica expects significantly reduced cash tax payments in 2025

 

Robust balance sheet and continued tax losses shelter supports investment in growth and returns

·      Peer leading Balance Sheet strength with year-end leverage (Adjusted Net Debt to EBITDAX) of 0.2x (2023: Net Cash)

·      No near-term expenditure on decommissioning activities, with year-end decommissioning provision of $146 million maintaining Serica's position as having the lowest decommissioning liability per 2P boe compared to all our UK and wider North Sea peers⁵

·      As at 31 December 2024, Serica retained over $1 billion of recognised ring fence tax losses resulting in a year end Deferred Tax Asset of $577 million; upon completion of the Parkmead (E&P) Limited ('Parkmead') acquisition Group tax losses will be increased by c.25%

·      Cash of $141 million as at latest practicable date of 27 March 2025 (31 December 2024: $148 million), with borrowings of $219 million, essentially flat Net Debt from year end notwithstanding the continued capex programme and lack of Triton production in February and March

·      Final dividend declared today of 10 pence per share (2023: 14 pence per share) subject to approval at Serica's 2025 AGM

-     The final dividend is payable on 25 July 2025 to shareholders registered on 27 June 2025, with an ex-dividend date of 26 June 2025

·      Final dividend equates to an estimated $50 million⁶, bringing total shareholder returns in respect of 2024 to $114 million (including interim dividend of $45 million and $19 million of share buybacks), consistent with the comparable figure for 2023 of $112 million

-     The Company has elected to adjust the final dividend as part of a prudent rebalancing of the capital allocation mix

-     This rebalancing enhances flexibility to allocate capital to those areas where it will deliver best value for shareholders, combining a highly competitive level of shareholder returns with investment in exciting growth opportunities and retaining a resilient financial frame

-     Serica additionally retains capacity within its shareholder authorities to carry out further share buybacks as part of its capital allocation strategy and will look to renew these authorities at its 2025 AGM 

 

Focused and disciplined value accretive M&A strategy

·      Acquisition of Parkmead announced in December, providing optionality regarding future projects and bringing with it carried forward tax loss balances. The deal is moving towards completion, with NSTA consent now received

·      The Company continues to be very active in screening cash-generative and value accretive M&A opportunities in both the UK North Sea and other geographies. Serica will remain disciplined and will only conclude transactions with a demonstrable investment case and potential to deliver material value to shareholders

 

Outlook and guidance

·      Following operational issues at Triton in Q1, production guidance for 2025 has been amended to 33,000-37,000 boepd

-     With maintenance work at the Triton FPSO set to complete in June, and no summer shutdown to then follow, portfolio production in H2 is forecast to be materially ahead of the full-year 2025 guidance range

·      Capital expenditure and opex guidance unchanged, at $220-250 million and c.$330 million respectively

·      Poised for material cash flows, supporting Serica's strategy and track record of delivering direct returns of capital to investors through a mixture of a material dividend and, selectively, share buy backs

·      Work is ongoing regarding a potential move from the AIM to the Main Market of the LSE in 2025

 

⁵Serica defines its peers as listed independent E&P companies with material asset positions in the UK, Norway and Denmark

⁶ Approximated based on 10p per share and TVR ex Treasury shares as of 7 March and US$:GBP FX rate of 1.29

 

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:

 

Serica Energy plc	+44 (0)20 7487 7300
Martin Copeland (CFO) / Andrew Benbow (Group Investor Relations Manager)
Peel Hunt (Nomad & Joint Broker)	+44 (0)20 7418 8900
Richard Crichton / David McKeown / Emily Bhasin
Jefferies (Joint Broker)	+44 (0)20 7029 8000
Sam Barnett / Will Soutar
Vigo Consulting (PR Advisor)	+44 (0)20 7390 0230
Patrick d'Ancona / Finlay Thomson	[email protected]

 

 

Serica will host a live presentation on the Investor Meet Company platform today at 0900 BST. The presentation is open to all existing and potential shareholders. Questions can be submitted at any time during the live presentation. Investors can sign up to Investor Meet Company for free and add to meet Serica Energy plc via:

 

https://www.investormeetcompany.com/serica-energy-plc/register-investor. 

 

 

 

CHAIR'S STATEMENT

I am pleased to introduce my second set of results as the Chair of Serica Energy. 2024 was a year in which we accomplished a great deal, but it was not without its challenges both internally and externally. It was a year in which we delivered a tremendously successful drilling programme, but we experienced unplanned outages that hit our production, and of course meant that our revenues did not benefit as they should have done. It was also a year in which uncertainty about government policies dominated the political landscape for operators in the UK North Sea, something on which there have been recent tentative signs of changing for the better. During the year, we also saw a significant change in the management team, and I am confident that we have the right team to drive the Company forward and thrive in the face of current challenges.

 

UK political challenges

The adverse impact of multiple increases and extensions to the Energy Profits Levy ('EPL') in the last few years can be seen in the decline of production and activity in the UK North Sea. During 2024 the new Labour Government was formed, promising a further increase in the tax burden for UK oil and gas producers further eroding investor confidence in the long-term prospects of the basin. Although a small increase in the overall tax rate to 78% did materialise, the government listened to the industry's representations and preserved 100% first-year tax allowances for capital investment. This was essential with the alternative being a rapid curtailment of a valuable national resource.

 

The energy debate is sometimes posited as a choice between domestically produced oil and gas and renewable sources. The fact is that the UK needs all of the above. Homegrown oil and gas supports quality jobs in our communities, enhances the UK's security, enables an equitable energy transition, and generates government tax revenues. Serica alone has paid over £500 million of tax during the last five years.

 

Between now and achieving net zero in 2050, the Climate Change Committee's energy transition pathway estimates that the UK will need 13-15 billion barrels equivalent of oil and gas, during which period the UK is projected to import more than half its essential oil and gas requirements. Although production from the UK North Sea is in decline, the steepness of that decline is in part due to government policies over recent years. Of the barrels that the UK needs, only an estimated four billion are set to be produced in the North Sea, worth an estimated value of £200 billion to the UK economy. This figure could rise to seven billion barrels with supportive fiscal and regulatory frameworks in place, generating a further estimated £150 billion for the UK. Oil and gas in the UK North Sea remains a very valuable national resource and it is common sense to prioritise its exploitation over imports.

 

At the time of writing, the UK Government has recently launched two formal consultations on UK North Sea licensing and taxation. In addition, we await the outcome of the consultation on guidance for Environmental Impact Assessments for new projects. The combined impact of these three processes will be pivotal in determining the future of the North Sea and we hope that the government pursues policies that are consistent with, rather than effectively negate, the decision to retain full first-year tax allowances for investment.

 

I am proud of the role Serica is playing in the country's energy debate.  We have been and will continue to be at the forefront of the industry in speaking up in favour of homegrown oil and gas. A Town Called Bruce, the film we helped create with the GMB, illustrated the positive impact that we and our peers have on jobs and communities throughout the UK. As someone who has spent over three decades in the industry, I found the film both moving and inspiring. My thanks go to all those who contributed to creating the film. It can be found on our website and I thoroughly recommend a watch.

 

Heading into 2025, I am more positive on the direction of government policy than I was a year ago, but we are not out of the woods yet.

 

 

A new phase of Serica Energy, with a new team

We continue to remain prudent in how we allocate capital, and indeed are adjusting our framework in this regard with these results, focusing our capital spend where we see investment in our organic portfolio delivering rapid returns. Early production from the first two wells of the five due to be drilled in the Triton area has delivered excellent technical results and is a testament to our team's capabilities. A key focus is now on working with the operator of the Triton FPSO to make sure that we translate the excellent subsurface performance into sustaining strong production and cashflow.

 

Serica is continuing to evolve as a company. We started with our AIM listing some 20 years ago this year, with a very small team, trying and succeeding in growing the Company through innovative transactions. We are now moving into a new phase where we are cementing ourselves as a proven operator, focused on safety, operational delivery and GHG emissions reduction, and looking for other opportunities to become the operator of more assets, diversifying our portfolio and making it more robust, while retaining a balanced commodity mix. In this respect, it is fitting that we are also looking to move our listing to the main LSE market later this year.

 

As we move into this phase, the Board was delighted to appoint Chris Cox as CEO. Chris joined in July, bringing the experience of running a multi-asset business, understanding the necessary maintenance of similarly mid-to-late life fields, and delivering organic growth and building companies.

 

As we seek to grow further, we were also very pleased that Martin Copeland joined the business as CFO. Martin has the ability, energy and experience to identify and execute value-accretive M&A transactions, with the Parkmead acquisition an excellent example of a small but smart transaction, to optimise and deliver value from our portfolio. The importance of increasing our scale, but above all the diversification of our sources of production and revenue base, has been made only more apparent given the operational challenges we witnessed in Q4 2024 and the early part of 2025. We are continuing our drive for further diversification of our asset base, which we believe will allow us to deliver a more predictable and reliable financial performance - but we will only transact if we are convinced that doing so will deliver value to Serica's shareholders.

 

Building a stronger company

There remain challenges ahead, but I am confident that Serica is in a stronger position today than at any other point in its history. We have assets with the potential to generate significant cash, an attractive production mix of oil and gas, and a highly experienced management team and Board, with a strategy of optimising mid-to-late life assets in a way that has the potential to deliver significant shareholder value.

 

We continue to be very active in pursuing multiple M&A opportunities in both the UK North Sea and other geographies, firmly focused on deals that we believe will be accretive to shareholder value. As we seek to diversify and further strengthen the Company, we intend to retain a strong balance sheet to keep us resilient to uncertain future events, with the expectation of material cash generation going forward and multiple organic opportunities in which to allocate capital. Our confidence in our future prospects supports the ongoing payment of a substantial dividend, and the Board is pleased today to confirm a final distribution in respect of 2024 of 10 pence per share, bringing the total dividend for 2024 to 19 pence per share and overall shareholder distributions equivalent to 23 pence per share, in line with returns related to the 2023 financial year, when we also factor in the inaugural share buyback executed during the year.

 

The prudent rebalancing of our dividend reaffirms our commitment to material direct shareholder returns, takes into account the deferred revenues due to operational issues in 2024, and ensures that we retain liquidity to take full advantage of the many organic and inorganic opportunities ahead. As we do this, work is ongoing regarding a potential move from the AIM to the Main Market, which would increase our visibility and bring our investment story to the widest possible pool of investors. Serica is well positioned in the current environment, and I firmly believe that the best is yet to come.

 

----------------------

 

CHIEF EXECUTIVE OFFICER'S REVIEW

Since joining Serica in July, it would be fair to say that there have already been some ups and downs, and a couple of things that have surprised me. The first is the quality of the subsurface properties of our asset base. The number, and quality, of the opportunities for drilling more wells and accessing reserves at both BKR and in the Triton area is exceptional given the maturity of the assets and the fact that they have been operated in the past by major companies.

 

I have also been delighted with the team that we have in place to mature and deliver these opportunities. We effectively have the best of both from Serica and the team acquired from Tailwind, some of whom I was delighted to know from when I worked with them at BG. They are great at what they do, with the right people in the right roles, deploying key technologies in the right way, and they can be a real differentiator going forward. The tremendous results of the Triton drilling campaign illustrate what can still be achieved in delivering growth in our basin.

 

Of course, what we have not seen to date is our high-quality subsurface assets delivering appropriate production, cash flows, and in turn value to our shareholders. This has been disappointing and, put simply, our assets are not producing what they could be. While the majority of these issues have been on Triton, where Serica is not the operator, we are doing everything we can to work with the operator to ensure, as far as possible, that the issues that have caused the poor uptime of the FPSO do not happen again. The value we have created through the drill-bit is very much there, but it is being left in the ground, and we need to, and will, do more to stop this from happening.

 

Delivering value from mid-to-late life assets

Serica has the ability to continue delivering value from our portfolio of mid-to-late life assets, and the team is working hard to strengthen further a culture of performance excellence. This starts with safety, and everyone taking pride of ownership of their sphere of influence. The leadership team is totally committed to the safe running of operations, and we firmly believe that excellence in this area will also help deliver the production performance of which our asset base is so clearly capable.

 

This aspect was the other main surprise to me on coming into the Company - just how much more can be achieved from our current asset base if it can be made to run to its true potential. To date, there have been too many outages at Triton, and at BKR there is also very much the potential to do more and to optimise production. But this is a good problem to have - it is clearly far preferable to have a positive subsurface, with work to be done on facilities, than it is to have great facilities and bad rocks. We know the issues we face, and how to fix them - in contrast, you can't fix what nature has dealt you under the ground.

 

I have spent most of my career dealing with and managing the challenges of mid-to-late life assets, and it is not always straightforward. Facilities are designed to handle a particular flow rate and a particular type of fluid at a particular pressure, and these change over time. By the time they get to late life, fields are often producing a fraction of the fluid volumes for which they were designed, a lot of water may be coming through, and lower pressures mean facilities don't perform in the same way. These assets need care and attention, including detailed, well-planned and executed maintenance programmes. The operator needs to get the basics right, make sure everything runs within appropriate and optimised parameters, replace what is needed before it fails, and it is then entirely possible to ensure that the facilities are able to run safely and efficiently often well past their original design lives. This is hard, focused work but it is deliverable. We have the hydrocarbons, and we have the potential to continue supporting UK North Sea production for many years to come.

 

As part of our drive to increase reliability and performance, we are refining our structure in terms of operational roles and making sure the right people are laser focused on the right things. Amongst other high-quality appointments in key strategic roles, we are set to take on a Production Optimisation Manager imminently, tasked with helping to convert the subsurface quality into optimised production and cash flows.

 

The Triton area drilling campaign is a great illustration of the quality of our people. We have completed four wells out of five on Triton, with four positive results, and we will work hard to get the facilities functioning as they should to deliver this new production reliably. To have multiple wells come in that exceed pre-drill expectations and produce clean oil really is a fantastic outcome. We are confident that the fifth one to come, Belinda, will also be a good well, and we are excited by the value that could be unlocked now that the same subsurface team is turning its attention to the wider portfolio.

 

Opportunities ahead

We have announced today a material increase in our 2C resources to 89 mmboe, and the work done on our BKR hub to identify opportunities is not yet complete. At BKR our initial focus is on Bruce. Re-processed 3D seismic data is helping to unlock Bruce potential, and the team has built the first full field 3D simulation model. We have already identified multiple drilling opportunities, and while not all of those will turn out to be economic, as we do more work on them and run simulation models, we will high-grade the opportunity set throughout this year to create options for 2026 and beyond. No new wells have been drilled on Bruce since 2012 and new techniques and technologies can help access previously undrained and untargeted areas, and I look forward to updating you on our plans for BKR as they come together later in the year.

 

Given the ongoing lack of clarity over the long-term fiscal regime pending the outcome of the current consultations, our focus is largely on maturing possible infill drilling programmes, where these promise a similarly rapid payback to our Triton area drilling campaign. The retention of first year allowances in the Autumn Budget has allowed us to accelerate spend on resilience enhancement measures at both the Bruce Hub and on the Triton FPSO, and the Flare Gas Recovery project at Bruce qualifies for the decarbonisation allowance, meaning its c.$10 million cost will be more than fully offsetable against our tax liability. This will help our ongoing efforts regarding GHG emissions, with our carbon intensity from Bruce of 17.0 kgCO₂/ boe in 2024 remaining below the UKCS average of 21 kg CO₂/boe.

 

However, should the government provide clarity on a long-term fiscal and regulatory environment that supports the UK North Sea in providing a homegrown solution to the UK's hydrocarbon demand, then we have larger projects in the portfolio with the potential to deliver organic growth that would offset natural decline in our portfolio into the next decade.

 

Our next development project could be Kyle. Kyle is a redevelopment of an old field that was abandoned because its host infrastructure was removed. We were awarded the licence in the 33^rd licence round run by the last government in October 2023, and it is a classic example of the kind of hidden potential that we hope the ongoing licensing consultation will address. Kyle was a new licence for us, but it has discovered hydrocarbons able to add material value to an existing hub, and we very much hope that the government will continue to allow new licences in similar circumstances. Kyle is very close to Triton and can be easily tied back via a single well development with the potential to convert over 11 mmboe of 2C resources into reserves. Wells in the reservoir have produced oil from it in the past and were still producing when the field was abandoned. Beyond Kyle, we have options in the Buchan Horst redevelopment, and what we hope to be multiple further exciting drilling opportunities around Bruce.

 

Resilience through diversification

As we seek to deliver organic growth, further asset diversification would also be a real positive for us, reducing the extent of our vulnerability to any future operational issues at one of our two main hubs. The chance to achieve further diversification from our existing portfolio is therefore attractive, while we continue to seek meaningful additions through M&A. Our current focus is on the UK, where we are well placed to act as a consolidator in what remains a buyer's market. The soon to be completed Parkmead acquisition was a small deal but one that adds real value to Serica. We think there is more to come in the UK. We are also keen to find value creating opportunities to provide geographical diversification that, despite the improving tone of government policy signals, will reduce our dependence on a single political jurisdiction.

 

As we continue to run the rule over multiple opportunities, we will also take care of our base business and make sure that our assets run better than they clearly have in 2024 and 2025 year to date and deliver the value of our current portfolio. As we seek to grow the Company, we are aware that we need to prove to our shareholders that we are a top-tier operator that can be trusted to utilise your capital to deliver value from our assets. And we will.

 

Material cash generation

With all assets producing, our portfolio is capable of delivering over 50,000 boepd. Issues at Triton during the first quarter which, albeit different, compound on the challenges of Q4 2024, mean that we have been a long way from our production potential in the first quarter, and our production guidance for 2025 has today been set at a revised range of 33,000 to 37,000 boepd. Given the potential flow rates, a period of stable production will help us to strive for the top end of this range.

 

With a robust gas price and stable oil price, and our sizeable carried forward loss position at Triton providing a tax shelter from Corporation Tax and Supplementary Charge, we are confident that future production can deliver material free cash flow. This should enable us to fund our organic growth prospects, while also allowing us to continue delivering healthy returns to our shareholders.

 

----------------------

 

 

REVIEW OF OPERATIONS

Reserves and resources

Serica's assets contained 117.5 mmboe of 2P oil and gas reserves net to the Company as of 31 December 2024 (31 December 2023: 140 mmboe), with a broadly even split between oil (55.1 mmboe) and gas (62.4 mmboe). 2P reserves include, for the first time, 5.6 mmboe of gas that will be produced to fuel production assets.

 

As at 31 December (mmboe) 1	2P 2024	2P 2023	2C 2024	2C 2023
Bruce Hub	69.8	84.1	33.3	21.3
Triton Hub	41.8	49.1	16.4	-
Other Production Assets	5.9	7.1	9.0	9.0
Greater Buchan Area	-	-	30.0	-
Total	117.5	140.3	88.7	30.3

 

¹ boe figures have been determined using field specific calorific values for gas. The methodology has been updated from previous years, which used an industry standard conversion factor for gas from all fields

 

The reduction in reserves reflects production of 12 mmboe in 2024, as well as the result of a rigorous reassessment of well performance and opportunities across the portfolio. This, combined with the continued uncertainties of the fiscal and regulatory backdrop, resulted in the deferral of planned drilling of the SCE/SCW wells on BKR, with 2P reserves reduced by 9.5 mmboe. However, the same technical reassessment has high-graded other potential prospects, albeit not to a level of maturity necessary to constitute reserves as at 31 December 2024.

 

The result of the subsurface work undertaken in 2024 has though delivered a material upgrade in resources, with the clear potential to move a proportion of these from 2C to 2P as work continues to mature opportunities towards investment decisions. We are now reporting 88.7 mmboe of 2C resources (31 December 2023: 30.3 mmboe), of which the Greater Buchan Area, into which our farm-in transaction completed in February 2024, comprises 30.0 mmboe. Notable other opportunities across the portfolio include the addition of 11.1 mmboe relating to the Kyle redevelopment, and work at Bruce has resulted in the Company booking an additional 11.8 mmboe of 2C resources - with work ongoing that has the potential to see this figure increase further and/or be converted to reserves.

 

The Company continues to pursue a returns-led approach to organic investment, investing in its assets to add value through increased production, decarbonisation through reduced emissions, and the extension of field life. The current work programme, with its focus on the five-well Triton drilling campaign, has the ability to sustain production above an annual average of 40,000 boepd well into 2026. Plans for the resumption of drilling around BKR, and potentially the redevelopment of Kyle and Buchan Horst, can boost reserves, increase production, and further illustrate our ability to identify value-adding opportunities in a mature basin, and in turn create significant shareholder value.

 

Production net to Serica (boepd)

 

	2024	Pro forma 2023
Bruce Hub	19,800	19,100
Triton Hub	9,000	14,100
Other Assets	5,800	6,900
Total	34,600	40,100

 

 

 

Bruce Hub

Bruce Field - Blocks 9/8a, 9/9b and 9/9c, Serica 98% and operator

Rhum Field - Blocks 3/29a, Serica 50% and operator

Keith Field - Block 9/8a, Serica 100%

Production at the Bruce Hub averaged 19,800 boepd in 2024, a small increase on 2023. Production was robust in H1, with the Bruce Hub averaging 23,400 boepd ahead of the summer maintenance programme. Q4 was then impacted by a short period of unscheduled downtime on the Bruce platform, related primarily to a subsea intervention and consequent pause in production necessary to ensure enhanced longer-term production reliability on the Rhum field. 

 

On a field level, the Bruce Hub 2024 LWIV campaign undertaken with the Helix Well Enhancer was successfully completed in May, and the summer programme of Bruce field platform work included a range of activities designed to enhance production as well as routine integrity monitoring. Production at Bruce averaged 6,000 boepd in the year (2023: 6,500 boepd).

 

A number of minor projects are set to be undertaken in 2025 which will help improve resilience and efficiency, all managed by our soon to be appointed Production Optimisation Manager, helping to maximise the performance of BKR.  

 

Looking further ahead, extensive subsurface work is ongoing to identify and rank opportunities for infill drilling. A number of opportunities have been uncovered, not all of which are included in the 2C resources of 33.4 mmboe now booked on Bruce. Work will continue to high-grade these prospects and deliver a drilling programme, with the potential for drilling to resume on the field from late 2026, which would be the first since 2012.

 

The Rhum field produced consistently and in line with expectations, with minimal capital work, in the first half of 2024. Necessary subsea intervention work to install a hydraulic override tool and address an issue with the R3 well resulted in Q4 not meeting our expectations. Average field production in 2024 totalled 13,800 boepd (2023: 12,500 boepd) of gas net to Serica. Limited capital expenditure is expected at Rhum in 2025, with well scale removal to improve well delivery under consideration.

 

Work in H1 2025 is focused on improving production rates, with an operational failure on the productive R3 well impacting production in March from the field. Work to increase resilience will now be undertaken ahead of the resumption of production from the K1 well on the Keith field, which has not produced since 2022.

 

The annual maintenance shutdown at the Bruce Hub will take place in Q3 and is scheduled to last for 12 days.

 

Triton Hub

Bittern 64.63%, Evelyn 100%, Gannet E 100%, Guillemot West & North West 10%, Belinda 100%

The Triton Hub experienced a mixed 2024 - where positive subsurface results were achieved from infill well drilling, but production was disappointing due to a number of unplanned outages that resulted in a year-on-year average production decline from 14,100 boepd to 9,000 boepd.

 

The first shutdown in May followed a trip on the single gas export compressor that was available, a weakness that continued throughout 2024, causing another significant outage in Q4 commencing from 26 October. Production was also adversely impacted by the summer shutdown for annual maintenance work on Triton overrunning by three weeks.

 

Unfortunately, problems have continued into the start of 2025, as issues resulting from Storm Éowyn caused production to be suspended at the end of January. Safety critical maintenance was scheduled following damage to a storage tank, and then integrity issues were discovered in pipework which is used to inject inert gas into the cargo tanks. Following an investigation into the causes, Dana inspected all piping and valves in the inert gas/gas free venting system to the cargo oil tanks, resulting in a more significant work scope being undertaken to replace whole sections of pipework in this system on the FPSO.

 

In order to reduce overall downtime this year, following discussions with Dana, the decision was made to bring forward the scheduled summer maintenance programme and carry it out concurrently with the ongoing work. Through integrating the work programmes it removes the downtime inherent in shutting down and restarting the plant for a separate maintenance periods, which alone adds around two weeks of production potential. The work scope for the maintenance programme has been optimised to fit the current schedule, and production is expected to resume in June and then have no planned downtime for the remainder of the year.

 

Immediately prior to this late-January shutdown, production from Triton achieved rates of 25,000 boepd net to Serica, with production from wells at Guillemot North West and Evelyn still to come. An amendment to mode of operation in start up of the gas export compressors appears to have solved the repeated issue with the gas seal system that impacted 2024. The second compressor will also be brought into commission once the FPSO is back up and running and this, together with the current work being completed, should help to deliver more consistent and reliable uptime, and hence production rates, going forward.

 

Serica continues to work closely with the operator, Dana, to ensure that maintenance work is delivered in a way that will see enhanced reliability at Triton. Serica employees have been reviewing the plans of the operator's team, which has itself been enhanced in recent months. Discussions also continue with Dana regarding options for the future of the FPSO, with a view to securing a lasting improvement in the operating performance. As confirmed by a third-party review undertaken by the engineering firm Kent, the FPSO itself is structurally sound, with no material issues found with its key systems, those being the double hull, turret or swivel, and with continued and timely maintenance the Triton FPSO has the potential to produce 2035 and potentially beyond.

 

The outages have meant that Serica's production has not yet truly benefitted from the tremendous results of the first wells in the five-well Triton drilling campaign.

 

The first well completed was the B6 horizontal well (a sidetrack from the B1 well) on the Bittern field, which entered production in September at a rate of over 5,000 boepd net to Serica. This very positive result was then followed by the Gannet GE05 well, which was tied in to the Triton FPSO on 25 October, under budget and ahead of time, and was brought onto stable production at a rate of over 6,000 bopd after the late 2024 outage period, in January.

 

The outage of the FPSO in Q1 2025 did not adversely affect the drilling work. The W7Z well on the Guillemot North West field is set to be brought onto production following the resumption of production on the FPSO, and the EV02 on the Evelyn field, drilled on time and under budget, is set to follow shortly after restart. EV02 has shown similarly promising signs to the other wells in the campaign, a further endorsement of our subsurface team's ability to enhance production and deliver value from mid-to-late life fields.

 

The COSL Innovator rig has now moved to drill the final well in the campaign, the BE01 well on the Belinda field (SQZ: 100%). Drilling began on 20 March and the well is forecast to enter production in early Q1 2026, following the drilling and installation of subsea infrastructure required for Belinda as a new field development.

 

 

Other Production Assets

Erskine Field - Blocks 23/26a (Area B) and 23/26b (Area B), Serica 18%

Erskine averaged 1,200 boepd net to Serica in 2024 (2023: 1,325 boepd), in what was very much a year of two halves. Production issues during H1 2024 led to production averaging 500 boepd net to the Company, following a compressor problem on the host Lomond platform. Production was re-established in early May, but taken offline shortly thereafter for the planned Lomond turnaround. Since the restart of production on 26 August, the field produced consistently at a rate of well over 2,000 boepd net to Serica. A late life compression project to extend the life of the field is planned to be carried out this year.

 

Columbus Field - Blocks 23/16f and 23/21a (part), Serica 75% (operator)

During the first half of 2024, Columbus production was steady, averaging 1,800 boepd net to Serica in H1. Following maintenance in Q3, which resulted in no production in that quarter, production resumed in October, averaging 2,000 boepd in Q4 and 1,400 boepd for 2024 as a whole (2023: 2,180 boepd).

 

Orlando Field - Block 3/3b, Serica 100%

Orlando produced steadily in 2024, averaging 3,300 boepd net to Serica (2023: 3,500 boepd). Production has also begun steadily in Q1, ahead of a scheduled shut-in of 28 days, originally planned for late October for annual maintenance on its host platform Ninian, which began in March 2025.

 

Development

Kyle Redevelopment (P2616), Serica (Operator) 100%

The Kyle Redevelopment, located in Block 29/2c, is a previously producing oilfield, 20 km southeast of Triton, which was shut-in in 2020 solely due to the decommissioning of the Banff FPSO host facility. Kyle presents a potential redevelopment opportunity with a single horizontal well tied-back to Triton via Bittern, similar to other Triton tie-backs.  

 

Ongoing technical work since Serica was awarded the licence in the 33^rd Licence Round in October 2023 has led to an enhanced understanding of the subsurface, and our work to date has upgraded the Company's view of the potential of the asset. Subsurface and front-end design work tenders are now set to be issued later this year. With the appropriate fiscal and licensing environment, there is the potential for first oil in 2028 on a project that could be approximately twice the size of Belinda, carrying over 11 mmboe of 2C resources. 

 

Greater Buchan Area - Blocks 20/5a, 205d, 21/1d & 21/1a, Serica 30%

In February 2024 Serica completed the acquisition of a 30% working interest in the Greater Buchan Area ('GBA') licences P.2498 and P.2170 with co-venture partners Jersey Oil & Gas (20%) and NEO Energy (50% and operator). The GBA encompasses several proven oil and gas accumulations - including Buchan Horst - and exploration prospects, some 150 km north-east of Aberdeen in the Outer Moray Firth.

 

Buchan Horst is one of the largest remaining undeveloped fields on the UKCS, with an estimated 22.7 mmboe of 2C resources net to Serica, and the potential for 10,000 boepd peak net production. The development project would support an estimated 1,000 jobs in the UK and includes the possibility of powering the facilities from offshore wind to achieve UKCS leading low carbon emissions.

 

The viability of the project depends in large part on the future UKCS fiscal and regulatory regimes which are currently subject to government consultations.

 

 

Exploration assets

Skerryvore - Blocks 30/12c (part), 30/13c (split), 30/17h, 30/18c and 30/19c (part), Serica 20% working interest

The P2400 Licence is located in the Central North Sea, 60 km south of the Erskine field. Serica will take on the operatorship of the asset on completion of our acquisition of Parkmead's 50% holding in the licence, with CalEnergy holding the remaining 30%. The commitment work programme includes drilling an exploration well on the Skerryvore prospect by the end of September 2025. However, given the lack of clarity regarding the future fiscal and licensing regime, the joint venture has applied for an extension to the licence period.

 

----------------------

 

FINANCIAL REVIEW

Our financial performance in 2024 was impacted by the production issues experienced at Triton, which resulted in a material loss of production and revenue, albeit that our after tax results benefited from a substantial reduction in the tax charge in 2024 as compared to 2023.

 

Combining this with a year of material capital expenditure on our new wells in the Triton area 2024 was essentially neutral on a free cash flow basis. However, even though Q1 2025 has also witnessed unrelated production downtime at Triton, we view these as temporary issues that should not impact Serica's ability to continue delivering on our strategy. We retain a strong balance sheet with very low net debt and decommissioning liabilities, and an outlook that generates material free cash flow in coming years, enabling us to have capital allocation optionality to sustain our production and deliver returns for shareholders while retaining resilience for unforeseen events.

 

Capital allocation priorities

The United Kingdom continues to have an oil and gas tax rate that is unsuitable for a mature oil and gas basin, and the industry urgently needs clarity regarding the future regime to enable long-term investments to be made with confidence. The implementation of the new regime cannot wait, as the government currently intends, until 2030. Serica will be playing its part in responding to the recently launched consultations on the future tax regime and licensing and we expect to learn the outcome of these as well as the already concluded environmental consents consultation later in the year. Until this uncertainty is removed, will remain prudent in our capital allocation, focused on completing the tax-efficient, short-cycle investments in our portfolio which are delivering rapid returns.

 

Our investment in 2024 and continuing into 2025 has focused on the Triton drilling campaign, where individual wells can pay back comfortably within a year. In 2024, $260 million pre-tax capex was allocated towards drilling at Triton as well as some well intervention activity at BKR and certain pre-FID costs on our E&E assets. We are very pleased with the drilling results funded by this investment, and once steady production from the Triton FPSO is restored the wells drilled in 2024 will boost production and revenues.

 

Although the new government increased the headline tax rate to 78% and removed the EPL Investment Allowances, the Autumn Budget did importantly retain first year capital allowances at 100%. The retention of full expensing (in common with all other sectors of the UK economy) means that short-cycle investments will likely continue to deliver positive returns, and we expect them to remain a key component of our capital allocation priorities going forward. We expect pre-tax capex to be in the range of $220-250 million in 2025, with the majority of spend focused on the continuation of the Triton drilling programme, including the more extensive subsea work required for our Belinda development, where drilling has just commenced. Our subsurface team continue to mature other opportunities across the portfolio, especially in the Bruce area, and we are hopeful of being able to mature further infill opportunities enabling us at least to offset natural decline in the near-term.

 

The combined effect of our investment programme and the associated capital allowances, together with continuing to retain over $1 billion pool of ring-fence losses, materially benefitted our tax position in 2024. Although the blended headline tax rate in 2024 increased to 75.5% from 75% in 2023, as a result of the 3% increase in the EPL rate from 1 November, our book tax rate reduced from 66% in 2023 to 42% in 2024. Although we paid cash tax in 2024 of $153 million (2023: $348 million) our current tax charge for the year, before adjustment in respect of prior years, was reduced to only $14 million (2023: $226 million). This sharply reduced current tax charge reflected the impact of investment and capital allowances but, most materially, for the first time, also incorporated group relief for in year losses of the subsidiaries which hold our Triton area field interests being applied against the tax charge at our BKR entity.

 

The combination of these effects has also meant that our tax loss pool remained essentially unchanged at just over $1 billion dollars at 31 December 2024 (2023: $1 billion). In addition, following completion of the Parkmead acquisition we would expect to extend this tax shield by approximately a further $250 million of carried forward tax losses.

 

We now expect our loss pool to provide shelter for our Triton production through to the end of the decade and will continue to explore options to accelerate this use where possible.

 

Robust balance sheet

Our balance sheet remains robust, with material cash generation expected once we have Triton back onstream, enabling us to combine investment in sustaining and growing production with maintaining our strong track record of returning capital to shareholders. The resilience of this strategy for the delivery of shareholder value was illustrated in 2024, as we returned $132 million to investors, inclusive of dividends and share buyback, while investing approximately twice that amount in the portfolio, notwithstanding the production challenges we experienced especially in the latter part of the year.

 

Our liquidity position remains comfortable following the December redetermination of our RBL as well as available cash, and gives us material optionality over our expenditure, as we continue to invest in organic growth and seek M&A that will deliver further value to shareholders.

 

Change in presentational currency

Following the acquisition of Tailwind, which completed in March 2023, and the refinancing of the Group's RBL in January 2024, as communicated at the time of our 2024 half-year results, the Directors elected to change the Group's presentational currency from Pounds Sterling to US Dollars with effect from 1 January 2024. The Group believes that the presentational currency change will give investors and other stakeholders a clearer understanding of Serica's performance over time and align with the presentational currency of its peers. As a result of this change, the results for the year ended 31 December 2023 and the balance sheet as at 31 December 2023 have been restated in US Dollars ($).

 

Further analysis of the summary metrics provided in the Summary Financial Information table below is detailed in the following pages of this Financial Review.

 

 

Summary Financial Information	Units	2024	2023	PF 2023
Production and sales realised prices
Production	boepd	34,600	35,200	40,100
Sales volumes	mmboe	12.2	12.3	14.4
Natural Gas (net of NTS system charges)	p/th	76	93	94
Crude Oil	$/bbl	75	71	67
NGLs	$/MT	491	455	453
Income Statement			Restated	Restated
Revenue	$ million	727	789	917
EBITDAX(1)	$ million	379	475	n/a
Profit before taxation	$ million	160	380	n/a
Profit after taxation	$ million	92	128	n/a
Basic earnings per share	cents	24	35	n/a
Other key financial figures
Capital expenditure(2)	$ million	278	99	n/a
Operating cashflow	$ million	452	470	n/a
CFFO less current tax(1)	$ million	403	250	n/a
Dividends paid in year	$ million	113	110	n/a
Share buyback	$ million	19	-	-
(1)  See Reconciliation of non-IFRS measures for further detail (2)  Capital expenditure includes decommissioning costs

 

Production for 2024 was 34,600 boepd, compared to 35,200 boepd for 2023 and 40,100 boepd for 2023 on a pro forma basis. The 2 million boe lower annual production as compared to the 2023 Pro Forma level, largely reflected the operational challenges we experienced with the Triton FPSO. Realised sales prices for gas for the period were lower than for 2023, averaging 76 pence per therm (2023 pro forma: 94 pence per therm), although realised oil prices were slightly higher in 2024 averaging $75/bbl (2023 pro forma: $67/bbl).

 

Serica generated EBITDAX of $379 million in 2024 compared to $475 million for 2023 and a profit before taxation down nearly 60% to $160.5 million for 2024 compared to $380.4 million for 2023. However, after a materially lower tax charge of $68.1 million (2023: $252.6 million), profit after tax for the year was down by just under 30% to $92.4 million compared to $127.8 million for 2023.

 

Sales revenues

					Restated	Restated
Revenue		Units		2024	2023	PF 2023
Total revenue		$ million		727	789	917
Gas Sales		$ million		375	431	445
Crude Oil		$ million		317	332	446
NGLs		$ million		35	26	26

 

 

The total 2024 sales revenue was $727.2 million, compared to pro forma 2023 sales revenue of $917.2 million. The reduction in like for like sales is largely driven by the impact of 2024 Triton unplanned outages, which resulted in over 2 million bbls lower volumes of oil sales as well as a lesser impact from marginally lower realised commodity prices, primarily driven by the reduction in NBP market prices and realised gas prices.

 

Sales comprised gas revenue of $374.7 million (PF 2023: $445.0 million), oil revenue of $317.5 million (PF 2023: $446.6 million) and NGL revenue of $35.0 million (PF 2023: $25.6 million). The fall in gas revenue was driven by lower realised pricing (76 pence per therm as compared to 94 pence per therm PF 2023) while the like-for-like oil revenue was down by almost 30% reflecting oil production down nearly 40% partially offset by higher realised oil prices ($75.4 per barrel as compared to $66.8 per barrel PF 2023). Like-for-like NGL revenues were up by 36%, with 25% higher sales volumes as well as higher realised prices for NGLs ($491 per metric tonne as compared to PF 2023: $453 per metric tonne).

 

Total product sales volumes for the period comprised approximately 386.7 million therms of gas (PF 2023: 379.6 million therms), 4.2 million lifted barrels of oil (PF 2023: 6.7 million barrels), and 70,872 metric tonnes of NGLs (PF 2023: 56,630 metric tonnes). This amounted to overall sales volumes some 2 million boe lower in the period of 12.2 million boe (PF 2023: 14.4 million). 

 

Gross profit

The gross profit for 2024 was $223.2 million compared to $382.1 million for 2023. Overall cost of sales of $504.0 million compared to $406.8 million for 2023. This comprised $337.3 million of field operating and lifting costs (2023: $281.6 million), movements in oil over/underlift increased to a credit of $20.6 million (2023: credit of $11.5 million), and $187.3 million of non-cash depletion charges (2023: $136.3 million).

 

					Restated
Cost of sales		Units		2024	2023
Total operating costs		$ million		504	407
Field operating costs		$ million		330	273
Lifting costs/other		$ million		8	9
Movement in over / underlift		$ million		(21)	(11)
DD&A		$ million		187	136

 

The increase in total operating costs largely reflected a full year contribution from the enlarged business including Tailwind as compared to 2023, with a significant proportion of fixed element costs. Absolute field operating costs as reported were approximately 20% higher than 2023, largely reflecting a full year of the combined business. This translated into $/boe of $26 as compared to approximately $21 for 2023, with the increased unit rate mainly resulting from reduced production due to the unplanned Triton Area shut-ins during 2024.

 

 

EBITDAX, operating profit before net finance costs and tax

EBITDAX for 2024 was $379 million compared to $475 million for 2023.

 

			Restated
Operating profit to EBITDAX(1)	Units	2024	2023
Operating profit	$ million	186	400
Add back DD&A and depreciation	$ million	188	136
Add back E&E costs	$ million	2	13
Add back / (deduct) unrealised hedging	$ million	32	(25)
Deduct contract revenue - other	$ million	(31)	(30)
(Deduct)/add back transaction costs and other	$ million	(2)	18
Add back share-based payments	$ million	4	5
Deduct gain on acquisition	$ million	-	(42)
EBITDAX(1)	$ million	379	475
(1) See Reconciliation of non-IFRS measures for further detail.

 

The operating profit for 2024 was $186.5 million compared to $399.9 million (inclusive of a gain on acquisition of $41.9 million on the Tailwind transaction) for 2023. 

 

Net hedging expense of $43.5 million (2023: $5.8 million income) comprised unrealised hedging losses of $31.8 million (2023: gains of $25.3 million) and realised hedging losses of $11.7 million (2023: $19.5 million losses). Unrealised hedging losses arose from the non-cash movement in valuation of Serica's 2024 period-end commodity hedge positions, with the main contributor being mark to market of gas price derivatives which were entered into during 2024 to manage commodity price risks and to comply with minimum hedging requirements under the Group's RBL facility. Realised hedging expense during 2024 primarily related to out of the money UKA Emission Trading Scheme ('UKA ETS') carbon price swaps which have now rolled off.

 

Contract revenue of $31.3 million (2023: $30.0 million) arose from the partial unwind of an underlying revenue offtake contract that was fair valued in connection with the Tailwind acquisition in 2023. An original liability of $66.7 million was recognised which is released to the Income Statement across 2023, 2024 and 2025 as the underlying contract unwinds, with the final unwind impact of $5.4 million to be reflected in 2025.

 

Administrative expenses for 2024 of $21.6 million reflected a full year period of the enlarged group activities compared to $24.5 million for 2023. The 2023 comparable period also had additional, separately disclosed, transaction costs of $12.5 million relating to fees and other transaction costs associated with the Tailwind acquisition.

 

Profit before taxation and profit after taxation for the period

Profit before taxation for 2024 of $160.5 million (2023: $380.4 million) included a $2.5 million charge arising from an increase in the fair value of financial liabilities (2023: $9.4 million charge), $13.9 million of finance revenue (2023: $16.8 million) and $37.4 million of finance costs (2023: $26.9 million).

 

Finance revenue of $13.9 million (2023: $16.8 million) primarily represented interest income earned on cash deposits and decreased as a result of lower average cash balances held in the period compared to 2023. Finance costs of $37.4 million (2023: $26.9 million) included interest payable and other financing fees on the RBL facility, as well as the non-cash discount unwind on decommissioning provisions and other minor finance costs. The increase reflects the full period of interest charges and fees on the RBL in 2024 compared to the shorter post-acquisition period in 2023.

 

The 2024 taxation charge of $68.1 million (2023: charge of $252.6 million) comprised current tax charges, before adjustment in respect of prior years, of $14.1 million (2023: $225.8 million) and a deferred tax charge of $54.2 million (2023: $24.4 million). The sharply reduced current tax charge reflected the materially lower profit before tax but also the group benefiting, for the first time, from the application of in year group relief effects.

			Restated
Reported and Effective tax rate(1)	Units	2024	2023
Profit before tax	$ million	160	380
Current tax	$ million	14	228
Deferred tax charge	$ million	54	24
Tax charge for the period	$ million	68	252
Book tax rate	%	42%	66%
Applicable ring-fence aggregate tax rate	%	75.5%	75%

 

Overall, profit after taxation for 2024 was $92.4 million compared to a profit after taxation of $127.8 million for 2023. This resulted in an earnings per share of 24 cents (2023: 35 cents) after taking into account the weighted average number of ordinary shares in issue.

 

 

GROUP BALANCE SHEET

Serica retains a robust balance sheet with a conservative Adjusted Net Debt to EBITDAX ratio of 0.2x as at 31 December 2024. This position of balance sheet strength and ample liquidity gives the group flexibility in capital allocation including the ability to fund its ongoing capital investment programmes while continuing to support distributions to shareholders.

				Restated
Assets			31 December 2024	31 December 2023
			$ million	$ million
E&E			20	2
PP&E			992	906
Deferred tax asset			55	107
Inventory			15	14
Trade and other receivables, financial assets			164	177
Corporate tax receivable			71	-
DSA Security			-	35
Cash & cash equivalents			148	335
Total Assets			1,465	1,576
				Restated
Equity and liabilities			31 December 2024	31 December 2023
			$ million	$ million
Equity			797	834
RBL borrowings, drawn amounts			231	271
RBL unamortised fees			(12)	-
Provisions			146	149
Financial liabilities			124	93
Corporate tax payable			-	68
Contract liabilities			5	37
Trade and other payables, lease liabilities			174	124
Total Equity and Liabilities			1,465	1,576

 

Total property, plant and equipment increased from $905.8 million at year end 2023 to $991.6 million at 31 December 2024.

 

PP&E additions comprised book capital expenditure including accruals during 2024 of $264.0 million across the Triton Area ($200.0 million) and BKR ($54.3 million) asset hubs and Erskine field ($9.7 million). These were partly offset by depletion charges for 2024 of $188.3 million.

 

The net deferred tax asset of $55.1 million at 31 December 2024 compares to $107.1 million at year end 2023. This comprised the recognition of deferred tax assets in relation to tax losses and future relief available on decommissioning of $577 million, partially offset by deferred tax liabilities of $522 million arising on PP&E balances. Deferred tax liabilities arising upon the Group's PP&E balances will be released in future periods as those balances are depleted. The overall reduction in Net Deferred Tax Assets of $52.0 million as compared to 2023 largely arose from increased deferred tax liabilities recognised on higher PP&E balances and reflecting the increase in the EPL rate from 35% to 38%, and a reduction in the deferred tax asset recognised on the Group's oil revenue contract liability which substantially unwound during the year.

 

Decommissioning security advances of $35.1 million at 31 December 2023 were recovered and added to cash balances during H1 2024 when replaced shortly after completion of the new RBL facility by security in the form of letters of credit issued under the new financing facility.

 

The decrease in cash balances from $335.4 million at 31 December 2023 to $148.5 million at 31 December 2024 reflected cash flow from operations of $452 million offset by $153 million of cash tax payments, capital and abandonment expenditures paid of $278 million, $113 million of dividend payments, $19.0 million in respect of our inaugural share buyback programme conducted between April and June and $52.5 million on debt repayments in the period.

 

Current trade and other payables increased to $168.3 million at 31 December 2024 from $121.7 million at the end of 2023 reflecting the higher payable balances in relation to the Group's capital and decommissioning expenditure and higher deferred revenue in respect of certain revenue contracts. The UK corporation tax payable reversed from the prior year to a receivable of $71.0 million at 31 December 2024 (31 December 2023: $68.3 million payable) and reflects a recovery of overpayments of corporation tax, supplementary charge, and the EPL in respect of 2024 resulting primarily from the application of group tax relief.

 

Derivative financial liabilities of $42.4 million at 31 December 2024 represent the mark to market valuation of gas and oil hedging swap and collar products in place at the year end. New gas and oil hedging arrangements were entered into during 2024 to manage commodity price risks where management considered this prudent and/or available on attractive market terms and to comply with minimum hedging requirements under the Group's RBL.

 

Contract liabilities of $5.4 million at 31 December 2024 (31 December 2023: $36.7 million) reflect the outstanding portion of an underlying revenue offtake contract that was fair valued in connection with the Tailwind acquisition in March 2023. An original liability of $66.7 million was recognised in 2023 which is released to the Income Statement across 2023, 2024 and 2025 as the underlying contract unwinds.

 

Non-current financial liabilities of $81.9 million (31 December 2023: $82.8 million) comprise remaining deferred consideration projected to be paid under the BKR acquisition agreements of $49.7 million (31 December 2023: $44.9 million) and royalty liabilities of $32.2 million (31 December 2023: $37.9 million) for amounts payable to third parties under the terms of Triton asset acquisitions previously made by Tailwind. Current financial liabilities at 31 December 2023 reflected the final contingent consideration payment of shares issued in March 2024 in respect of the Tailwind acquisition.

 

Provisions of $146.0 million (31 December 2023: $148.8 million) predominantly relate to future decommissioning obligations and are split between current balances of $nil million (31 December 2023: $16.5 million) as decommissioning activities were undertaken during the year, and non-current balances of $146.0 million (31 December 2023: $132.3 million). The small decrease from the prior year was mainly due to expenditure in the period on the completed Arthur field programme partially offset by a charge from the unwinding of the discount applied. Increases were partially offset by currency translation adjustments.

 

Interest bearing loans of $219.1 million at 31 December 2024 represent drawn amounts of $231.0 million net of unamortised facility fees of $11.9 million under the $525 million RBL facility entered into in January 2024 which replaced the previous RBL facility assumed with the Tailwind acquisition (31 December 2023: $271.2 million).

 

The initial drawdown under the new RBL facility was $283.5 million (covering a repayment of $271.2 million for the previous RBL and $12.3 million of interest and new facility fees) in January 2024 and a repayment of $52.5 million was made in February 2024. The redetermined total amount available for drawdown under the facility at 31 December 2024 was at a level capped by the facility size of $525 million.

 

Overall, net assets have decreased from $834.2 million at year end 2023 to $796.5 million at 31 December 2024.

 

The increase in share capital from $245.3 million to $245.5 million arose from shares issued following the exercise of share options and the nominal value of shares issued for the Tailwind acquisition, while the decrease in other reserves from $37.7 million to $37.5 million arose from share-based payments related to share option awards. The merger reserve of $286.6 million in the consolidated Group accounts arose in connection with the shares issued for the 2023 Tailwind acquisition. 

 

CASH BALANCES AND FUTURE COMMITMENTS

Current cash position and price hedging

At 31 December 2024 the Group held adjusted net debt of $82.5million as compared to adjusted net cash of $99 million at 31 December 2023.

				Restated
Adjusted Net (Debt) / Cash			31 December 2024	31 December 2023
			$ million	$ million
Interest bearing loan			(219)	(271)
Add back unamortised fees			(12)	-
Cash & cash Equivalents			148	335
DSA Security			-	35
Adjusted Net (Debt)/cash			(83)	99

 

As at 27 March 2025, the Company held cash and cash equivalents of $141 million and debt drawings of $231 million.

 

 

Hedging

Serica carries out hedging activity to manage commodity price risk, to meet its contracted arrangements under its RBL facility and to ensure there is sufficient funding for future investments. Serica held the following instruments as at 31 December 2024:

 

Oil hedges

 

		2025					2026
Weighted Average	Units	Q1-25	Q2-25	Q3-25	Q4-25	Q1-26	Q2-26	Q3-26
Put Net	$/bbl	-	-	-	-	-	-	-
Swap price	$/bbl	68	75	75	75	75	-	-
Collar floor net	$/bbl	68	69	68	68	69	-	-
Total weighted average	$/bbl	68	69	69	69	70	-	-
Collar ceiling	$/bbl	96	88	88	86	86	-	-
Hedged Volume	Kboe/d	10	6	6	5	4	-	-

 

 

Gas hedges

 

		2025					2026
Weighted Average	Units	Q1-25	Q2-25	Q3-25	Q4-25	Q1-26	Q2-26	Q3-26
Put Net	p/therm	-	-	-	-	-	-	-
Swap price	p/therm	84	87	86	90	94	-	-
Collar floor net	p/therm	80	70	70	82	82	64	-
Total weighted average	p/therm	81	82	81	85	85	64	64
Collar ceiling	p/therm	125	121	121	135	135	99	99
Hedged Volume	Kboe/d	4	6	5	7	6	5	5

 

Included in the Q1 2025 hedged volumes are volumes at fixed pricing under oil offtake agreements for approximately 0.4 million barrels at an average price of $61 per barrel. These legacy hedges were applied to an individual oil tanker lifting from the Triton area FPSO and fully utilised during January 2025.

 

Field and other capital commitments

Serica's planned 2025 investment programme includes two remaining wells from the 2024-25 drilling campaign in the Triton Area (Evelyn Phase 2 (EV02) and Belinda) and further capital work on the Bruce facilities including resilience upgrades as well as a flare gas recovery project.

 

At 31 December 2024, the Group had commitments for future capital expenditure relating to its oil and gas properties which relate primarily to the remaining Triton Area well programme (including EV-02 and Belinda), other Triton area work (including a new water injection line) and other capital works on Bruce. The Group's only significant exploration commitment work programme includes drilling an exploration well on the Licence P2400 (Skerryvore) prospect by the end of September 2025. Given the lack of clarity regarding the future fiscal and licensing regime, the joint venture has applied for an extension to the licence period.

 

Cash projections are run periodically to examine the potential impact of extended low oil and gas prices as well as possible production interruptions. Serica currently has substantial net cash resources and relatively low operating costs per boe which means that the Company is well placed to withstand such risks and its capital commitments can be funded from existing cashflow in most scenarios.

 

OTHER

Asset values

At 31 December 2024, Serica's market capitalisation stood at $660 million based upon a share price of 135.2 pence which exceeded the net asset value of $796.5 million. By 28 March 2025 the Company's market capitalisation, based on a share price of 138p, had increased to $697 million.

 

 

Serica Energy plc
Group Income Statement
For the year ended 31 December 2024
		2024	2023
	Note	$000	$000
			(Restated*)
Continuing operations
Sales revenue	4	727,178	788,920
Cost of sales	5	(503,981)	(406,790)
Gross profit		223,197	382,130
Hedging (expense)/income	16	(43,474)	5,848
Contract revenue - other	16	31,292	29,951
Exploration and pre-licence costs		(1,595)	(2,622)
E&E asset write-offs	12	(851)	(10,871)
General and administrative expenses	6	(21,601)	(24,486)
Transaction costs	29	-	(12,539)
Foreign exchange gain/(loss)		3,234	(4,465)
Share-based payments	25	(3,735)	(4,942)
Gain on acquisition	29	-	41,889
Operating profit before net finance costs		186,467	399,893
and tax
Change in fair value of financial liabilities	19	(2,538)	(9,446)
Finance revenue	8	13,927	16,830
Finance costs	8	(37,358)	(26,906)
Profit before taxation		160,498	380,371
Taxation charge for the year	9	(68,069)	(252,614)
Profit for the year		92,429	127,757
Profit for the year attributable to:
Equity owners of the Company		92,429	127,757
Earnings per ordinary share - EPS
Basic EPS on profit for the year ($)	10	0.24	0.35
Diluted EPS on profit for the year ($)	10	0.23	0.34

*See note 2

 

 

Serica Energy plc

Group Statement of Comprehensive Income

For the year ended 31 December 2024

 

			2024	2023
			$000	$000
				(Restated*)
Profit for the year			92,429	127,757
Other comprehensive (loss)/profit
Items that may be subsequently reclassified to income statement:
Exchange differences on translation			(5,217)	22,594
Other comprehensive (loss)/profit for the year			(5,217)	22,594
Total comprehensive profit for the year			87,212	150,351
Total comprehensive profit attributable to:
Equity owners of the Company			87,212	150,351

*See note 2

 

Serica Energy plc

Registered Number: 5450950

Group Balance Sheet

As at 31 December 2024

		2024	2023	1/1/2023
	Note	$000	$000	$000
			(Restated*)	(Restated*)
Non-current assets
Exploration & evaluation assets	12	20,367	2,457	1,210
Property, plant and equipment	13	991,588	905,760	321,474
Deferred tax asset	9	55,139	107,071	-
		1,067,094	1,015,288	322,684
Current assets
Inventories	14	14,884	13,860	4,833
Trade and other receivables	15	158,117	176,455	162,761
Corporate tax receivable		71,013	-	-
Hedging security advances		-	-	29,402
Derivative financial assets	16	5,185	-	-
Decommissioning security advances	17	-	35,055	-
Cash and cash equivalents	17	148,460	335,433	522,914
		397,659	560,803	719,910
TOTAL ASSETS		1,464,753	1,576,091	1,042,594
Current liabilities
Trade and other payables	18	168,287	121,652	84,491
Corporate tax payable		-	68,311	181,343
Derivative financial liabilities	16	31,185	5,564	30,121
Contract liabilities	16	5,408	36,700	1,193
Financial liabilities	19	-	4,627	-
Lease liabilities	26	1,418	709	-
Provisions	20	-	16,467	-
Non-current liabilities
Derivative financial liabilities	16	11,201	-	-
Financial liabilities	19	81,923	82,751	35,517
Deferred tax liability		-	-	185,329
Lease liabilities	26	3,769	1,651	-
Provisions	20	145,974	132,291	30,465
Interest bearing loans	21	219,130	271,200	-
TOTAL LIABILITIES		668,295	741,923	548,459
NET ASSETS		796,458	834,168	494,135
Share capital	23	245,537	245,257	233,260
Merger reserve	23	286,590	283,367	-
Other reserve	25	37,540	37,650	32,708
Treasury/own shares	23	(8,931)	-	-
Accumulated funds		249,834	276,789	259,656
Currency translation reserve		(14,112)	(8,895)	(31,489)
TOTAL EQUITY		796,458	834,168	494,135

*See note 2

 

Approved by the Board on 31 March 2025

Chris Cox                                                                             Martin Copeland

Chief Executive Officer                                                  Chief Financial Officer