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Highlights
- Serica Energy’s production reaches 37,800 boepd for the first nine months of 2024, driven by Q3 growth of 26,000 boepd.
- Cash position stands at $258 million with a modest net debt of $27 million, following significant tax and dividend payments.
- Company on track for full-year production around 37,000 boepd and continues to explore M&A opportunities and potential move to Main Market in 2025.
Serica Energy PLC (LSE:SQZ) has reported a solid operational performance for the third quarter and the first nine months of 2024, with production significantly higher than the same period in 2023. In the first nine months of 2024, production averaged 37,800 barrels of oil equivalent per day (boepd), up from 31,500 boepd in the same period of 2023. The third quarter saw production of 26,000 boepd, an impressive increase compared to 16,300 boepd in Q3 2023, although this was impacted by scheduled maintenance at its Triton platform and short maintenance at its BKR assets.
Revenue Growth and Gas Price Performance
Serica Energy generated revenue of $139 million in Q3 2024, up from $135 million in Q3 2023, reflecting stable financial performance. The company’s realised gas price for the quarter was 77p/therm, slightly below the average NBP price of 82p/therm. However, with the current NBP gas price at around 120p/therm, Serica expects Q4 realisations to be significantly higher. On the oil side, the realised price was $71 per barrel, slightly lower than the average Brent price of $80 per barrel, due to hedging positions which are set to unwind in Q4, allowing the company to align more closely with Brent prices.
Strong Cash Position and Strategic Payments
As of 30 September 2024, Serica had a cash balance of $258 million, although this represents a decrease from $362 million at the end of June 2024. The reduction in cash was primarily due to significant payments made in Q3, including a final dividend of $70 million paid in July 2024 and a $40 million cash tax payment in the same month. The company ended Q3 with a net cash position of $27 million after drawing down $231 million in debt.
Capital Expenditure and Future Outlook
In terms of capital investment, Serica spent $78 million in Q3, bringing its total capital expenditure for the first nine months of 2024 to $202 million. The company is maintaining its full-year capital expenditure guidance at around $260 million. Operating costs for 2024 are expected to be approximately $330 million, in line with initial forecasts.
Looking ahead, Serica expects to finish 2024 with production around 37,000 boepd, and it remains committed to maintaining a modest net debt position by the end of the year. This outlook accounts for the anticipated pattern of liftings and cash receipts from Triton, following an unscheduled outage earlier in the year.
Sustainability and Strategic Initiatives
Serica Energy continues to make strides in sustainability, with its BKR asset on track to achieve its lowest carbon intensity since 2018, with emissions 20% below the North Sea average. The company is also actively pursuing a range of cash-generative mergers and acquisitions (M&A) opportunities, both within the North Sea and internationally. Additionally, Serica is considering a potential move from the AIM to the Main Market in 2025, further demonstrating its ambition for growth.
