Serica Energy said a little “imagination” is what is needed to secure its North Sea assets through the next decade.
In its latest operational report, the firm confirmed low oil prices had an unintended, positive side-effect.
A company spokesperson said: “A positive side-effect of the more than halving of oil prices and the reduction in tax rates announced earlier this year has been a renewed focus on capital and operating costs and on better utilisation of existing infrastructure throughout the North Sea.
“We believe that with imagination and commitment to cut costs and protect existing infrastructure, this will underpin profitability and extend field lives well into the next decade. This gives us added confidence in the future of the sector, the role of smaller companies to extend and enhance production and in our ability to deliver value to our investors despite current market pessimism. Serica is strongly placed to achieve this.”
The firm posted an average daily production of 3,300boe in its latest update.
The company confirmed it had reduced operating costs below the $20/boe mark.
Source chief executive, Tony Craven Walker, said: “During this severe industry downturn Serica has managed to improve its asset mix and its financial resilience, creating a position of strength relative to many of its peers.
“The company intends to use this as a platform for further growth, with a focus on development opportunities and extending the life, and therefore reserves, of existing fields in the area surrounding our core asset holdings in the Central North Sea as well as further afield in the UKCS.”
The company currently cash reserves in excess of $20million, according to its latest financial update.
The firm’s Erskine field also posted a strong performance, realising revenues of approximately $7.8million at an average price of US$39/boe from oil and sales.
A company spokesperson added: “Although the current market forward curve anticipates improving oil prices for 2016, near-term prices continue to show significant volatility.
“Consequently we took advantage of an early October oil price peak to purchase low-cost hedging options setting $40 and $3 floor prices, each for 500 boe per day on a calendar month basis for the period until June 2016, still well above our projected field break-even level.
“In addition approximately half of our Erskine gas production to September 2016 is sold under contract at pre-determined prices mitigating the impact of potential spot price volatility.”
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