Europa Oil & Gas (AIM: EOG) has warned that its Serenity oil development in the Central North Sea could be hit by a new government changing its fiscal policy.
According to a statement in its unaudited interim results for the six-month period ended 31 January 2024, Europa said: “Whilst we continue to assess various development scenarios for Serenity, we are concerned about possible future UK fiscal changes in the event of a change of government which could negatively impact the economics of the project.”
Europa is developing the Serenity oil development alongside partner i3 Energy, with the results saying that both companies are making progress.
The partners stated that they believe that Serenity offers a commercially viable development opportunity with several potential development scenarios available given local infrastructure.
With Europa’s 25% stake, a future development could result in approximately 1,000bpd of net oil production for the company.
The companies’ licence for the field is set to expire in September 2024.
Europa and i3 Energy had previously floated a plan to pick up the Tain North Sea discovery, which Repsol passed over.
The two companies had been seeking to connect Serenity to Tain via Repsol’s Bleo Holm FPSO. However, their plan was setback when Repsol and its partners walked away from the Tain project.
Europa and i3 have been looking to salvage the discovery and progress without Repsol’s involvement.
In addition, the company’s results reported lower revenue for the period, £1.4 million, compared to £3.7m from the corresponding half of 2023.
This amounted to a gross loss £0.1m for the first half of 2024, down from a £1.5m profit in the first half of 2023.
Will Holland, CEO of Europa, said: “Despite the lower revenues during the interim period, due to the temporary shutdown to install the jet pump at Wressle, our balance sheet remains robust and we expect to continue generating meaningful cashflow from our UK assets. This sets Europa up well for the future and will allow us to work up our well balanced portfolio and deliver value for shareholders.”
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