17th Mar 2016 08:38
LONDON (Alliance News) - Serica Energy PLC Thursday said production in the first quarter of 2016 will be considerably lower than planned after production from the Erskine field in the UK North Sea was temporarily suspended due to a pipeline blockage.
The issue will hit production in the first quarter and potentially stretch into the second as production is not expected to start until mid-April at the earliest. Serica said production should still be within the range of 2,500 to 3,000 barrels per day once the field has restarted.
First quarter production will now be around 2,100 barrels of oil equivalent per day as a result of the problem, and will likely drag down full-year production depending on how long the suspension lasts.
Production at Erskine was suspended on February 28 whilst "essential" maintenance work was carried out, and Serica said the equipment needed to clear the blockage is on route to the site, with production expected to resume in "mid-April".
"The impact on April production will depend upon how quickly the field can be restarted," said Serica.
"Our 2016 guidance once production has restarted therefore remains in the range 2,500 to 3,000 barrels of oil equivalent per day net to Serica, outside a planned one-to-two month mid-year maintenance shutdown, including work on the Central Area Transportation System through which Erskine gas is transported. There are no major capital expenditures planned on the Erskine facilities in 2016," the company added.
On a slightly more positive note, Serica said operating costs in the first quarter were below USD20 per barrel, which is lower than its previous guidance range of USD20 to USD24 per barrel.
Serica also said revenue in the first quarter has been "boosted" by low-cost hedging options that were acquired last year covering 1,000 barrels of oil per day at a price of USD37.50 per barrel.
Brent was trading at over USD41 per barrel on Thursday.
Serica shares were down 1.6% to 9.22 pence per share on Thursday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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