Serica Energy Plc (AIM: SQZ): Compressor at Triton down for 2-4 weeks
• After resumption of production at the Triton FPSO last week, an issue with one of the compressor seals has been discovered which has resulted in production being suspended.• These repairs are expected to take 2-4 weeks. We are now cautiously assuming that Triton will be offline until YE24.
• Issues at Triton’s compressors have had a significant impact on production in 2024. With Triton and Bruce fully operational, production has exceeded 50 mboe/d. Current production is only 28 mboe/d.
• Addressing the Triton compressor issues is critical achieving a sustained high level of production. The second compressor at Triton continues to be expected to be repaired in 1Q25. This will provide critical redundancy and address the operational vulnerability at Triton.
• As a result of the shutdown at Triton, we now forecast FY24 production of 35.3 mboe/d with a YE24 net debt of ~US$80-85 mm.
• We have made cautious assumptions for uptime at Triton next year.
• Triton production is only deferred rather than lost and we re-iterate our target price of £2.90 per share.
Valuation
Our Core (2P) NAV and ReNAV are broadly unchanged at £2.41 per share and £2.82 per share.
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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