North Sea oil agency Serica cuts output steering after Storm Éowyn delays

Serica Energy has reduced its annual output guidance following troubles at a major offshore vessel.

The AIM-listed group now expects to generate between 33,000 and 37,000 barrels of oil equivalent [boepd] per day this year, compared to a previous forecast of 40,000 boepd.

Several unplanned outages have hit the firm’s Triton floating production storage and offloading (FPSO) unit in the North Sea for almost a year.

A gas export compressor problem led to shutdowns last May and October, while a summer outage overran by three weeks due to longer-than-expected maintenance work.

Storm Eowyn has forced Serica to suspend operations at Triton again since late January after the company discovered damage to a cargo tank.

Serica had expected to complete repairs in time for production to recommence in mid-to-late March.

Outlook: Serica Energy now expects to deliver between 33,000 and 37,000 barrels of oil equivalent [boepd] per day this year, compared to a previous forecast of 40,000 boepd

But following an agreement with the Triton vessel operator, Dana Petroleum, to bring forward its scheduled summer repairs programme, Serica now expects the restart to happen in June.

Chris Cox, chief executive of Serica, said: ‘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.

‘This removes the need for a summer maintenance shutdown, which, combined with the activities undertaken, should significantly increase uptime going forward.’

Problems at Triton caused Serica’s total production levels to decline by about 14 per cent to 34,600 boepd in 2024 and revenue slumping by $190million to $727million.

Turnover was also impacted by the average realised sales price for gas contracting by around 19 per cent to 76 pence per thermal unit.

Consequently, Serica’s earnings before nasties shrank by approximately a fifth to $379million and pre-tax profits plummeted by 58 per cent to $160.5million.

But Serica Energy shares jumped 8.4 per cent to 145.2p by late Tuesday afternoon, although they have still fallen by around 23 per cent in the past year.

Serica is currently in talks regarding a possible merger with fellow energy company EnQuest, which it believes would result in greater synergies, scale and diversification.

They said a deal would probably involve a reverse takeover by EnQuest and current Serica shareholders owning most shares in the enlarged business.

A potential tie-up comes as many energy firms shrink production in the North Sea because of the Energy Profits Levy [EPL], a windfall tax on oil and gas profits.

In the recent Autumn Budget, the UK Government hiked the EPL by three percentage points to 38 per cent and axed the 29 per cent investment allowance for new North Sea oil and gas extraction.

The new measures mean UK oil and gas producers pay a headline tax rate of 78 per cent, among the world’s highest.