Kickstart North Sea production to dodge Iran fallout, Serica warns
Serica Energy has urged the government to prioritise domestic production in the North Sea, as oil and gas supplies continued to be held in the Strait of Hormuz amid the Iran war in its latest annual results.
Serica noted that confidence in the UK North Sea sector had been “eroded” and while the government has undertaken consultations, it is yet to be “translated into actions”.
The company called on the government to approve the development of new oil and gas fields in order to reduce the risks of future oil and gas crises and potentially “help with the current crisis”.
Roughly a fifth of the world’s oil supply comes through the Strait of Hormuz, which has been facing disruption since 28 February, choking supply and forcing the release of emergency oil reserves.
Making changes
The company also called on the government to reconsider its decision to not award new exploration licences, as some companies are willing to take the financial risk, replace the Energy Profits Levy with a permanent mechanism for raising the level of tax on UK oil and gas production and talk about the sector as a “national asset”.
Chair of Serica, David Latin, said: “Maximising the benefits available to the UK from domestic oil and gas and achieving net zero by 2050 are not mutually exclusive objectives.
“Indeed, they complement each other, not least when oil and gas imported over thousands of miles typically comes with significantly higher emissions than the equivalent domestic production.
“These facts are understood and are being acted upon by other oil and gas producing countries in western Europe…for the benefit of ourselves and regional security, we should exploit to the full that position of good fortune and much skill.”
James Hosie, equity analyst at Shore Capital, said: “The UK North Sea oil and gas industry’s consistent lobbying for fiscal reform earned it renewed engagement from HM Treasury and a meeting between the Chancellor and industry leaders yesterday.
“The Chancellor’s reported comments indicate to us that global events have merely delayed her plans for the early retirement of the Energy Profits Levy (EPL).
“Taking an upbeat view, the industry now has recognition from the government that the EPL is undermining UK oil and gas investment, and it wants to make the changes needed to support industry jobs and improve energy security.”
Slowing production
Serica experienced a fall in revenue in the previous financial year, hitting $601m (£449m) from $727m in 2024, while profit before tax $160m to $80m.
The AIM listed company pinned this fall on lower production, with the group averaging 27,600 barrels of oil per day (boepd) down from 34,600 boepd the year before.
Production was primarily impacted by maintenance work at its Triton FPSO site, which was shut down for 24 days.
But production picked up following the completion of the work last March, averaging 50,000 boepd.
Serica declared a final dividend of 10p per share.
Shares soared 3.7 per cent in early morning trading, to 264.5p.
Looking ahead
The group maintained its 2026 outlook, expecting to produce over 40,000 barrels of oil equivalent per day, with the potential to exceed rates of 65,000 barrels per day by the end of 2026, upon the completion of all its acquisitions.
The group also confirmed its acquisitions of Catcher, Golden Eagle Area development and Spirit Energy assets remain on track for completion.
Serica also plans to move from AIM to the main market of the London Stock Exchange during the third quarter of 2026.