Serica Energy (LON: SQZ) has seen its profits surge 88-times over year-on-year amid a boost to new production.
The North Sea operator has reported pre-tax profits of £194.5m in the first half of 2022, up from just £2.2m in the same period last year gas and oil prices were lower.
Over that period, the company has seen net production increase 41%, from 18,855 barrels of oil equivalent per day to 26,600 boe per day thanks to new investments coming online at the Columbus and Rhum R3 wells, alongside an intervention at the Bruce field.
Revenues totalled £353.4m, up from £100.8m in H1 2021, and operating cash flow stands at £312m, from £72.8 million previously.
Following the huge profits, Serica Energy CEO Mitch Fleggttoday announced an interim shareholder dividend of eight pence per share, to be paid in November.
Results of the highly-anticipated North Eigg exploration well, targeting 60 million barrels of oil equivalent, are due in December having spudded in July.
© Supplied by DCT MediaIf successful, the time-limited incentives of the government’s windfall tax scheme means a rapid development will be required, likely as a tie-back to the Bruce platform, with a significant cash requirements.
For that reason, and issues around hedging securities, Mr Flegg said now is not the time to execute buybacks to boost the share price.
He said, despite this, the board “will continue to monitor the scope for buybacks as each of these matters evolves and balance this against retaining funds for further investment and acquisition”.
During the period, Serica and rival Kistos Energy both made offers for each other, but no M&A deal could be agreed on the terms.
Mr Flegg added: “Although it proved not possible to reach agreement with Kistos on the terms of the respective potential offers between the two companies, Serica continues to actively seek opportunities at both the asset and corporate level that would strengthen the company, diversify its asset base and deliver incremental value to shareholders.”
Full year 2022 production guidance for Serica is expected to be range at 26,000-28,000 boepd.
