Serica Energy plc

Serica said H1 revenue was more than double the prior year period, driven by production up 20,000 barrels of oil equivalent per day year on year. Average realized oil price was $93 a barrel, up 33% year on year, and realized gas price was 101p per therm, roughly 50% higher year on year. Post-hedging, realized oil price was $73 a barrel and gas was 97p per therm, after $89 million of realized hedging losses. Operating and lifting costs were $247 million as reported, though management said the underlying portfolio cost was just under $25 per barrel of oil equivalent once Lancaster was removed. Post-tax CFFO was $280 million, cash rose by just under $300 million, and Serica ended the half with $326 million of cash and $26 million of net cash, versus $200 million of net debt at the start of the year. Full-year guidance was reaffirmed at over 40,000 boe/d of production and $450 million to $475 million of post-tax CFFO, with Spirit expected to complete on 1 October and add to Q4 production, while the company still expects production to reach over 65,000 boe/d in Q4.

Chris Cox framed the first half as a strong operational turnaround, emphasizing improved reliability at Triton and better uptime across the asset base. He said production is still not at full potential, but the company is now focused on squeezing more out of Bruce and Triton while preparing to start a high-return drilling program next year. His tone was upbeat and execution-focused, with repeated references to momentum, flexibility, and multiple growth catalysts ahead.

Martin Copeland highlighted that stronger production and commodity prices drove H1 revenue to more than double the prior year period, with realized oil at $93/bbl and gas at 101p/therm. He explained that $89 million of hedging losses, $247 million of reported operating and lifting costs, and accounting items including tax-loss-related goodwill kept reported profit figures below the cash performance, but post-tax CFFO still reached $280 million. He also detailed liquidity at period end: $326 million of cash, a $300 million 5-year bond, a new $750 million RBL with $458 million initial borrowing base and no drawings, giving pro forma liquidity of nearly $800 million. On capital returns, he said the interim dividend was held at 6p per share and reiterated the 15% to 30% payout framework, while leaving buybacks as a possible but secondary option to dividends and investment.

Analysts pressed management on why Bruce “can do more,” and Cox said the field is constrained by facilities and well interactions rather than lack of reserves, with optimization opportunities including interventions, bullheading, compression settings, and possibly gas lift. Questions also focused on the apparent mismatch between strong cash generation and weak reported profit; Copeland said unrealized hedge mark-to-market losses and accounting treatment of acquired tax losses and goodwill explained the gap, and stressed that cash is the better measure of performance. Management was also asked about buybacks, the dividend, taxes, the main market move, and hedging; they said the bias is toward dividends, buybacks remain possible, the energy profits levy should be removed, the move to the main market is delayed by transaction complexity but still targeted for this year, and hedging remains conservative with no material new positions since early March.