Serica maintains outlook after fall in full-year profits
By Josh White
Date: Tuesday 01 Apr 2025
(Sharecast News) - Serica Energy reported a fall in profit for 2024 on Tuesday, as lower production volumes and realised gas prices weighed on performance, though positive drilling results and a restructured maintenance schedule at the Triton FPSO were expected to support a recovery in output from mid-2025.
The AIM-traded firm said pre-tax profit fell to $160m from $380m in 2023, reflecting a 14% decline in production to 34,600 barrels of oil equivalent per day and a reduction in average realised gas prices to 76p per therm from 94p.
Revenue dropped to $727m from $917m, while EBITDAX fell to $379m from $475m.
Production was particularly impacted by unplanned downtime at the Triton FPSO, which led to first quarter 2025 volumes falling to around 27,600 daily equivalent barrels.
In response, the Triton joint venture had brought forward summer maintenance to integrate it into the current work programme.
Triton production was expected to resume in June, with no further shutdowns planned for the rest of the year.
Drilling progress was described as encouraging, with strong results from the Bittern, Gannet, Guillemot North West and Evelyn fields.
The final well in the Triton campaign, Belinda BE01, had now spud with first production expected in early 2026.
Despite increased capital expenditure of $260m and a resulting free cash outflow of $1m, Serica said it remained financially robust, ending the year with $148m in cash and adjusted net debt of $83m.
The company also retained over $1 billion in ring-fenced tax losses, with that position set to improve further following completion of the Parkmead acquisition.
A final dividend of 10p per share was declared, down from 14p last year, bringing total 2024 shareholder returns to $114m, in line with the prior year.
The company said the dividend adjustment reflected a rebalancing of capital allocation to preserve flexibility for investment and future buybacks.
Serica maintained its guidance for 2025 capital expenditure and operating costs, adding that it expected full-year production between 33,000 and 37,000 barrels of oil equivalent per day.
Output in the second half was projected to be materially higher than the full-year range once Triton operations resumed.
The firm said it was also continuing preparations for a possible move from AIM to the Main Market later this year.
"The highly positive results of the drilling campaign at Triton are not yet being reflected in our production and cash flow due to ongoing issues at the Triton FPSO," said chief executive officer Chris Cox.
"Our frustration is exacerbated by the fact that the Triton area alone could be delivering up to 30,000 barrels of oil equivalent per day net to Serica with the addition of the wells already drilled.
"We are confident, after detailed discussions with the Operator, Dana, of the work required to fix the issues, and we are pleased that the joint venture has agreed a plan to take advantage of the current downtime to bring forward the maintenance work scope originally scheduled for July."
Cox said that removed the need for a summer maintenance shutdown, which combined with the activities undertaken, should "significantly increase" uptime going forward.
"I have previously stated my confidence in the excellence of the Serica subsurface team and the potential of the rocks across our portfolio, and we have increasing clarity on the work needed to convert that potential into shareholder value.
"Ongoing analysis has seen a small decrease in our 2P reserves but materially increased our 2C resources - and there is more to come as work continues.
"This indicates the strength of our organic pipeline, with a clear route to converting resources to reserves - the Kyle redevelopment looks particularly attractive, and multiple infill drilling opportunities around the Bruce Hub have been identified."
With that in mind, Chris Cox said the company had chosen to implement a prudent rebalancing of our capital allocation approach, giving it increased flexibility over the medium-term to allocate capital to the areas where it would deliver best value for shareholders.
"This adjustment will allow us to invest in the exciting drilling and development programmes in our portfolio and be opportunistic in accretive mergers and acquisitions, all while retaining our highly competitive shareholder distributions."
At 1004 GMT, shares in Serica Energy were up 7.61% at 143.6p.
Reporting by Josh White for Sharecast.com.
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