North Sea firm Serica said it was on the acquisition trail despite a decline in turnover and profitability last year.
In a year that the Erskine Field, in which it has an 18% stake, faced a six-month shut-in, Serica’s turnover fell 11% to $21.4million (£17.2million) and pre-tax profits slumped 23% to £2.6million.
Nevertheless, a tax credit boosted the firm’s after-tax profits to the tune of £8.7million, a 66% increase in the prior year as boss Tony Craven hailed strong fourth-quarter production and “tax efficiencies and opportunities” in the UK North Sea.
As the North Sea faces a potential boost from new ownership, AIM-listed Serica also held out high hopes for its Columbus prospect, where it said first gas is now targeted for late 2019.
The owners of Columbus, in which Serica has a 50% operator stake, are considering two potential development options in collaboration with nearby operators.
One of these includes an extended-reach development well drilled from the Lomond platform.
In recent years a plan to export gas from the discovery through the Lomond installation stalled after its then-owner BG Group rejected the scheme.
Lomond is now owned by Chrysaor, following its £3billion deal to buy Shell assets – Shell having acquired Lomond in its mega-merger with BG in 2016.
Another export plan involving a scheme to connect the Arran field – operated by Dana Petroleum – to the Shell-operated Shearwater platform is also being considered.
Serica said a full field development plan (FDP) is now expected to be submitted by the end of 2017.
Serica is also planning to drill on its Rowallan prospect, a high-temperature, high-pressure discovery that it says would have a “material impact” if successful.
Shares spiked 7% to 28.38p on the update.
Mr Craven said: “Serica has continued to strengthen its financial position after a particularly strong fourth quarter.
“Following an especially good performance in terms of production rates and efficiencies, lower opex
and improved sales prices since the restart of Erskine field production in late August, we enter 2017 with a strong balance sheet, no borrowings, growing cash resources and increasing opportunities to add value from our existing oil and gas resources.
“We are looking to build on this strong financial base. Our immediate focus is to broaden and expand our producing asset base through progressing the Columbus field to development and by acquiring additional production where we believe Serica can add value.
“The UK North Sea, where there are strategic benefits, tax efficiencies and opportunities on offer and where we feel we have an edge, remains a prime area of focus.
“On the exploration front, we are delighted that operations have now commenced in preparation for drilling a well on the Rowallan prospect on which we have a 15% carried interest. A successful outcome of this well would have a material impact on Serica.”
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