Serica Energy Plc (AIM: SQZ): Another very good well result. Triton on track, robust production and cashflow expected in 2H25
• From January to April 2025, production averaged 26.5 mboe/d. This is consistent with 1Q25 production of 27.6 mboe/d, which benefited from one month of output from Triton.• Repairs at Triton have been completed, and production remains on track to restart in June. The FY25 production guidance of 33–37 mboe/d, with US$220–250 mm in capex, has been reaffirmed. Assuming 2Q25 production of 25 mboe/d (excluding Triton), this implies 2H25 production of 41–47 mboe/d.
• The BE01 well (SQZ: 100% WI) has been flow tested at 7.5 mboe/d, with rates constrained by surface equipment. This marks the third well in the campaign in a row to demonstrate excellent productivity.
• Before shutdown, Triton was producing ~25 mboe/d. Upon restart in mid-2025, adding the W7z and EV02 wells could increase Triton’s output to 30 mboe/d, with the tie-in of BE01 in early 2026 also boosting production.
• Over 20 potential infill targets have been identified at Bruce, with 5-6 high-graded drilling targets to be identified in the near term. Serica estimates 33.4 mmboe contingent resources at BKR, while FID for Kyle (11.1 mmboe, 6–8 mboe/d production in 2028) could be taken in early 2026.
• We continue to expect that Serica could distribute a total of £0.16 per share in dividends in 2025, representing a yield of ~11.4%. We re-iterate our target price of £2.70 per share.
Reflections on the financials
As of April 2025, net debt stood at US$102 mm, in line with forecasts. The cash position has declined by only US$19 mm compared to year-end 2024, despite Triton contributing for just one month out of four. No cash tax is currently due on Triton production, making it disproportionately cash generative. This bodes well for strong cash flow generation in 2H25, once Triton is fully back online.
Valuation
Our forecasts are broadly unchanged. Our Core NAV and ReNAV are £2.38 per share and £2.68 per share respectively. We continue to forecast that the aggregate FCF from 2025 to 2027 will be equal to the current market cap.
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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