26th Mar 2026 12:03
(Alliance News) - Serica Energy PLC on Thursday said it has acquired North Sea exploration blocks from TotalEnergies SE, as it reported a profit slump due to weaker oil prices in 2025 but remained confident in its outlook.
The London-based oil and gas producer in the UK North Sea reported USD601.4 million in annual sales revenue, down 17% from USD727.2 million in 2024. Pretax profit halved to USD80.3 million from USD160.5 million the year prior.
This partly reflected a decline in Serica's average realised oil price, which fell to USD67 per barrel of Brent from USD75, though gas prices improved to USD84 per therm from USD76.
What's more, the company's daily production rate fell 20% to 27,600 barrels of oil equivalent in 2025 from 34,600 in 2024. Free cash flow widened to a loss of USD24 million from the previous year's USD1 million loss.
Nonetheless, Serica on Thursday proposed to keep its final dividend flat on-year at 10 pence per share.
Serica shares were up 1.4% to 257.95 pence on Thursday morning in London and are up 92% over the past 12 months.
Looking to the year ahead, Serica sees production rising to "significantly over 40,000 boepd", and "cash generation significantly higher at current commodity prices" when compared with previous guidance, though it had estimated "material free cash flow" in 2026 at an oil price of USD63 per barrel and gas price of 69p per therm.
"Serica has been proactively and opportunistically building its hedge book mostly since early March, taking advantage of sharp increases in the front end of the curve in both oil and gas while bolstering downside protection," the company stressed on Thursday.
It has left its 2026 capital expenditure target unchanged, between USD175 million and USD195 million, following 2025's drop in capex spending to USD250 million from USD278 million. Serica sees operational expenditure ranging from USD380 million to USD400 million in the new year, with opex having grown to USD366.6 million in 2025 from USD329.8 million the year prior.
Also on Thursday, Serica reported that it had closed its acquisition of 40% operated interest in the West of Shetland basin's Greater Laggan Area from Paris-based oil major TotalEnergies.
The purchase includes infrastructure and operated licences in four near-field exploration blocks, Serica said, adding about 5,000 barrels of oil equivalent in daily net production. As of December 31, the GLA was estimated to contained net 2P reserves of 4.0 million barrels of oil equivalent and 2C resources of 5.4 million barrels.
"The growth opportunities include the Glendronach tie-back, infill potential on the Tormore field, four exploration licences, and third-party business at the Shetland gas plant," Serica said.
Closing of the deal follows Serica's 100% acquisition of Prax Upstream Ltd from Prax Exploration & Production PLC, which is in administration. Prax Upstream had an agreement with TotalEnergies facilitating the 40% stake in the GLA, alongside 10% interest in the Catcher Field and 5.21% interest in the Golden Eagle Area development.
Serica's purchase of Prax Upstream was for USD25.6 million cash upfront. As of Thursday, It has settled a consideration of GBP1 in relation to the GLA, and has received a payment of USD55.7 million, reflecting interim post-tax cashflows.
Serica added that completion work for its Catcher, Golden Eagle and Spirit Energy assets is on track for 2026.
"The company continues to be active, but highly selective, in screening a broad range of cash-generative and value accretive M&A opportunities, in both the UK North Sea and overseas," it said.
In parallel, the company noted: "Serica remains committed to moving from AIM to the Main Market of the LSE at the earliest viable opportunity in 2026," now expected to be during the third quarter.
By Holly Munks, Alliance News reporter
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