SHARES in Serica Energy have surged eight per cent after the company continued its ambitious North Sea expansion drive with an acquisition which will bring it four million barrels reserves for an initial outlay of just £1m.
The rise in the shares also followed news the company had moved closer to completing a related deal that was at risk of falling apart amid the stand off between President Trump and Iran.
Read more: Big North Sea deal in geopolitical crossfire
London-based Serica said it had met the conditions imposed by US regulators regarding its plan to buy a 50 per cent stake in the Rhum gas field, which is half owned by the Iranian oil company.
Serica is confident the measures will clear the way to it completing the acquisition of the interest in Rhum from BP, which it agreed in November last year.
This was the first in a series of three deals clinched in the space of 12 months which directors reckon will transform Serica into a major player in the North Sea.
Read more: Oil firm ramps up North Sea expansion
Worth up to £52m, the deal with BP also included stakes in the Bruce and Keith fields.
After agreeing to buy further stakes in Bruce and Keith from Total in August, the company revealed yesterday it is set to acquire the interests in the fields held by Australia’s BHP.
However, the company and BP had to extend the deadline for completion of the original deal they agreed from the middle of this year as they lobbied to prevent it falling foul of the sanctions President Trump decided to reimpose on Iran.
Last month the companies won a licence from US authorities allowing production from Rhum to continue, which is valid until October 31 2019. The licence was granted subject to the conditions that Serica updated on yesterday.
Serica has committed to ensure that Iran’s share of the earnings from the Rhum field East of Shetland will be held in escrow while the US sanctions that came in to force yesterday remain in place.
The Iranian oil company will have no say in the management of the field.
Led by executive chairman Tony Craven Walker, Serica expects to complete the BP deal on November 30. This will allow it to complete the deal agreed with Total in August, which is worth up to $20m.
Serica said yesterday it had agreed to buy additional stakes in Bruce and Keith 200 miles north east of Aberdeen from Australia’s BHP, in a deal that will allow it to increase its reserves from 58.7m barrels oil equivalent to 62.7m boe.
Production attributable to the interests totalled 1,760 barrels oil equivalent daily in the first half.
Noting the deal with BHP is set to complete immediately after those with BP and Total, Serica’s chief executive Mitch Flegg said: “This will represent a major transformation for Serica in becoming one of the leading independent offshore operators and producers in the North Sea.”
Serica is developing an operations centre in Aberdeen. Around 110 staff will transfer to the firm from BP.
The progress of the company will be followed with interest amid hopes independents could breathe fresh life in to the North Sea by investing in assets bigger fish may have cooled on.
Read more: Serica shares rise as North Sea project gets green light
Mr Flegg said the increase in Serica’s scale following the three deals could make it easier for the firm to raise investment to fund work on its North Sea acreage and to acquire more assets.
Serica won clearance from the Oil and Gas Authority last month to develop the Columbus field in the Central North Sea.
The firm has agreed to buy stakes of 16% and 31.83% respectively in Bruce and Keith from BHP. It will hold 94.25% and 91.67% interests in the fields following completion of the three deals
Serica will pay BHP a share of the profits achieved on the production in the period to end 2021.
The profits on production from the interests totalled around $14.7m in 2017.
Shares in Aim-listed Serica closed up 9p at 128p.
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