North Sea independent Serica Energy, which is in a buyout standoff with smaller rival Kistos, has quadrupled production from a 24-year-old BP well as it further bolsters its defences against a takeover.
The company made no mention of the Kistos bid in yesterday’s market update, but instead unleashed a flurry of news underlining “significant progress” across its operations. This is expected to lead to an increase in its independently-assessed oil and gas reserves, giving directors “increased confidence” that further uplifts can be achieved from future well interventions.
“The impact of the substantial investment programmes undertaken in the last three years has increased production levels providing responsibly-sourced gas to the UK domestic market, protecting security of supply, and reducing the UK’s reliance on imports as part of the transition to a lower-carbon future,” Serica chief executive Mitch Flegg said.
READ MORE: North Sea independents reveal details of extended deal dialogue
He added: “Serica has no debt, limited decommissioning liabilities and with growing cash reserves is well-positioned to continue to invest in further projects and other opportunities to add shareholder value.”
Intervention work on the Bruce M1 well, which Serica re-entered for the first time since 1998 when it was operated by BP, has been completed resulting in production rates of more than 1,800 barrels of oil equivalent per day (boe/d) compared to 400 boe/d previously. A similar intervention on a second well, Bruce M4, saw rates increase from 450 to 2,400 boe/d.
Details emerged earlier this month of the takeover showdown with Kistos, in which both companies have dismissed offers from the other as undervaluing their respective operations. An original proposal from Kistos in May put a value of 382p on each share in Serica, while a follow-up proposal from Serica would have valued Kistos at 483p per share.
READ MORE: Shares in Serica soar as it hails impact of North Sea tax breaks
Also in yesterday’s update, Serica said its new Columbus well reached the milestone of producing one million barrels of oil equivalent (gross).The company also highlighted again the potential of its North Eigg exploration well, which is estimated to contain 60 million barrels of oil equivalent and “potentially” more than 236 million barrels of reserves.
Shares in Serica closed yesterday’s trading 15p higher at 353.5p.
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