Serica Energy Plc (AIM: SQZ): Temporary blip at Triton
• Production at the Triton FPSO is currently running at a reduced rate due to a vibration issue within the compression trains, requiring bearing replacement. Normal output is expected to resume by end-September. Triton achieved net production of over 25,000 boe/d in August using only one compressor. The restart of the second unit could push volumes above this level.• In parallel, subsea intervention work on a pipeline at the Bittern field, originally scheduled for 2026, has been scheduled for November 2025 (Serica’s previous expectation was 2026). The operation is expected to last three weeks and will necessitate a full production shutdown at Bittern, Evelyn, and Gannet, impacting approximately 20 mbbl/d net to Serica.
• As a result, FY25 production guidance has been revised downward from 33–35 mboe/d to 29–32 mboe/d. We have adjusted our own forecast from 34 mboe/d to 32 mboe/d, with deferred volumes expected to contribute in 2026.
• We now project Serica’s net debt at YE25 to be ~US$100 mm (vs. US$30 mm previously), following the anticipated US$80 mm dividend payment in 2H25.
• The Triton production deferral has minimal impact on our valuation. We reiterate our target price of £2.70 per share, supported by a ~9% dividend yield. Looking ahead, we continue to forecast free cash flow generation in excess of US$300 mm in 2026.
Valuation
Our Core NAV and ReNAV are now £2.39 per share and £2.69 per share respectively.
Serica Energy is an independent oil and gas company with production, development and exploration licence interests in the U.K. Continental Shelf and exploration interests in Ireland, Morocco and Namibia. As of Dec 31 2016, Co. had proved plus probable reserves of 3.8 million barrels of oil equivalent, which consisted of 2.1 million barrels of oil and 10.40 billion cubic feet of gas.
Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector.
The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy.
Auctus has been set up at the beginning of a new decade in which we see significant opportunities in the Energy space. Globally, demand for energy is at record levels and continues to grow. Conversely, investment in traditional energy sources has been severely constrained. We believe this imbalance creates opportunities for both companies and investors.
Auctus provides Corporate Broking, Equity Research and Investment Banking services.
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