Independent North Sea producer Serica Energy (AIM: SQZ) welcomed changes made to the UK’s offshore oil and gas tax regime in its most recent update.
It added it is also continuing to explore a potential move from AIM to the Main Market in 2025.
Serica chief executive Chris Cox said the UK’s Autumn Budget provided “much needed clarity over future investment allowances” that benefited some of its assets.
This includes its its flagship Bruce field, 211 miles north-east of Aberdeen, where it expects to pursue “attractive new opportunities”.
Last month chancellor Rachel Reeves confirmed the UK would extend the “windfall tax” energy profits levy (EPL) and remove of a 29% investment allowance but it would retain the 100% first-year capital allowance and a 66% decarbonisation allowance.
Cox, who joined Serica from Centrica’s upstream business, Spirit Energy, in July, said: “The remainder of the Triton well campaign will continue to benefit from full tax relief, and the retention of allowances opens up opportunities in the wider portfolio.
“Our subsurface team are continuing to work up options for the untapped potential around the Bruce Hub.
“Our ability to unlock production from mature fields has been illustrated through the positive drilling campaign at Triton and well work on Bruce.
“With the successful results from the B-6 well on Bittern expected to be followed shortly by the Gannet GE-05 well, our key focus is now working to translate these results into more robust production performance than we have seen in recent months.
“Our portfolio is set to provide material cash generation going forward and we are confident of growing both organically and through acquisitions, delivering significant returns to shareholders.”
In an update in the impact on its investment plans and the UK’s fiscal environment, Serica said the retention of the first year allowance and the pledge there would be “no further changes” to the EPL or to associated reliefs had “removed significant uncertainty”.
The changes meant the firm will enjoy “full tax relief” against EPL on the costs of the remainder of its Triton drilling programme.
But the company warned the increased rate of tax and its extension “combined with uncertainty about the longer term fiscal regime” had increased the economic threshold for longer cycle investments”.
Uncertainty cast over its share in the Buchan Horst field, in which it has a 30% stake however remain.
Operator NEO Energy, and its 100% owner HitecVision, had previously announced that they would slow investment activities due to UK fiscal and political instability.
Serica said: “The timetable for the former has not been announced and the latter is due to close in January 2025.”
Serica no new wells have been drilled on its Bruce field since 2012. Previously it had committed to extended the life field and extra four years through to 2030. It took over the asset in 2018 after the acquisition of stakes in three North Sea fields from energy giant BP (LON:BP).
Following the deal involving the Bruce, Keith and Rhum fields, Serica agreed to acquire further stakes in Bruce and Keith from Total (PARIS:TTE), BHP Billiton and Marubeni.
More than 100 BP employees moved to Serica, which then opened an office in Aberdeen.
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