Serica Energy falls on operations update

Shares in Serica Energy fell over nine per cent Monday following news the oil and gas company abandoned two blocks in the North Sea and was operating on 'limited cash resources'.

In an operations update, the company said it has decided to relinquish blocks 210/19a and 20a in the northern North Sea as it "did not receive sufficient proposals to enable a well to be drilled".

However, the group reported significant progress in other projects in the North Sea, Namibia, Morocco and Ireland.

The Department of Energy and Climate Change approved the Columbus field development plan in the North Sea which is expected to achieve first gas production by mid-2015.

In Namibia, Serica received the fast-track on-board processed data from the 4,180 square kilometre 3D seismic survey at blocks in the Luderitz Basin. The company said a preliminary review was 'very encouraging' but will be evaluating its potential further through full-scale processing and interpretation with BP.

Serica has put forward proposals to drill two blocks in Morocco which is expected to kick off in the fourth quarter of 2013.

The group is evaluating the Rockall Basin in Ireland and is reviewing the potential to bring forward drilling of the Muckish prospect. They are in discussions with potentially interested partners to share costs.

Serica is also involved in several UK offshore initiatives which are expected to see progress in 2013.

Tony Craven Walker, Chairman and Interim Chief Executive Officer, said: "Serica has a very busy year ahead of it during which we expect to see a number of the projects, which we have worked hard to bring forward, start to demonstrate their real value.

"In difficult financial markets the company has had to operate with limited cash resources, and that continues to be the case, but the success of our 2012 farm-out programme has resulted in the major benefit of carried interests over large parts of our portfolio, where the potential for high impact exploration success is large.

"Our resources, although limited, are sufficient to meet our current programme and we are confident that we will be able to raise the funding required for our share of the Columbus field development when that is needed."

He added the projects were an opportunity for steady growth and transformational success this year.

RD