Serica Energy Plc (AIM: SQZ): High production at Triton. More to come
• Net production at Triton has averaged 20 mboe/d over the past two weeks. This reflects the progressive restart of all the fields, with further upside expected as additional wells are brought online. These include (1) productive wells from Bittern and Gannet E, and (2) newly drilled wells at Guillemot North West and Evelyn, which have yet to commence production.• As a reminder, Serica has a 100% interest in the Evelyn field, and has already stated that the well showed ‘encouraging results’ when drilled.
• Total net production across Serica’s portfolio averaged over 50 mboe/d in the lead-up to the scheduled 12-day maintenance shutdown at Bruce, delivering on the stated objective of achieving this level of output in August.
• At current Brent and NBP pricing, and assuming 43 mboe/d production in 2H25, we estimate Serica could generate ~US$100 mm in free cash flow during 2H25. This comfortably covers the combined final dividend for 2024 and preliminary dividend for 2025 (~US$82 mm).
• We reiterate our target price of £2.70 per share. The current dividend yield is ~9.5%. With lower capex and higher production volumes anticipated in 2026, Serica could generate free cash flow in excess of US$300 mm.
Valuation
Our forecasts are unchanged. Our Core NAV and ReNAV are £2.41 per share and £2.71 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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