Energy Voice | Serica ‘could not afford to miss out’ on new North Sea deal

Serica Energy’s boss said yesterday that the North Sea oil firm “could not afford to miss out” on its latest acquisition.

The company will buy 42.25% of Total’s stake in the Bruce field and 25% of Keith, boosting its production by about 4,700 barrels of oil per day.

The deal hinges on Serica completing a separate acquisition for BP’s stakes in the Bruce, Keith and Rhum fields.

It follows media reports claiming French oil major Total was preparing to sell North Sea assets worth £1 billion.

Serica chief executive Mitch Flegg said the firm was in the “right place at the right time”.

Mr Flegg also said the deal, effective January 1, 2018, would not put a big strain on Serica’s finances.

The initial cash consideration of £3.8 million will be funded by Serica’s share of the profits from the fields this year.

A further £11.5m will be paid in three instalments.

London-listed Serica will cover 30% of Total’s share of future decommissioning costs, with the Paris-headquartered seller retaining liability.

Mr Flegg said: “We are very pleased with this acquisition. This is very much what we hoped would happen on the back of the first deal with BP. It has opened up new opportunities for us.

“We could not afford to miss out. The upfront costs are very low. We don’t have to raise cash or put our hands in our pockets.

“We wanted to be in a position to take advantage of opportunities and there was one here. Both sides wanted it to work.”

Serica believes the Total deal can be completed immediately after the BP acquisition goes through, probably during the current quarter.

If it can get both acquisitions over the line, London-listed Serica will own 78.25% of Bruce, 59.83% of Keith and 50% of Rhum.

Doubt was cast on the BP transaction earlier this year when Serica said it was “evaluating the implications” of US President Donald Trump’s decision to re-impose sanctions on Iran.

Iran’s national oil company owns 50% of Rhum, with BP holding the 50% Serica intends to buy.

Serica is trying to obtain certain regulatory consents for Rhum, including a licence from the US Office of Foreign Assets Control (Ofac).

Mr Flegg added Serica was still on track to move employees into an office at the Hill of Rubislaw complex in Aberdeen later this month.

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