TIDMSQZ
RNS Number : 7093B
Serica Energy plc
12 October 2020
Serica Energy plc
("Serica" or the "Company")
Operations Update
London, 12 October 2020 - Serica Energy plc (AIM: SQZ) is
pleased to provide the following operations update.
Highlights
-- Commencement of offshore operations to prepare the Rhum R3 well for production
-- Successful installation of first Columbus subsea equipment
-- Significantly improved gas prices
-- No COVID-19 interruptions to operations or production
Rhum Field: R3 Intervention Project
Offshore operations on the R3 Intervention project have
commenced. Awilco Drilling's WilPhoenix semi-submersible drilling
rig, has arrived on location and is safely installed over the R3
well.
The Rhum field is situated some 380 km NE of Aberdeen in a water
depth of 109 metres. Field development was sanctioned in 2003 and
production started in December 2005. Rhum has subsea completions
which are tied back to the Bruce platform complex which lies 44 km
south of Rhum. The original development plan consisted of three
wells but the third of these wells (R3) has never been put into
production.
The current work programme will involve recovering equipment
left in the well by the previous operator and removing an
obstruction that is believed to be in place across parts of the
downhole completion. The well will then be recompleted. Rig
operations are planned to last approximately 70 days. R3 is already
connected to the subsea production infrastructure and it is
expected that operations to commence production from R3 will take
place in early 2021.
Rhum wells produce predominantly gas with minor levels of
condensate. Average Rhum production from the existing two wells in
2019 was 13,775 boe/d net to Serica's 50% field interest. A
successful recompletion of R3 will increase the production capacity
utilising the existing production facilities located on the Bruce
platform and will, therefore, not lead to any significant
additional CO(2) emissions. This is in line with Serica's stated
objective of reducing the carbon intensity of the operations
associated with our production. Further details on Serica's
commitment to ESG (Environment, Social & Governance) can be
found at www.serica-energy.com/downloads/ESG-report-2019.pdf
A further update on the R3 Intervention project will be provided
when rig operations are completed.
Columbus Development
In late September an important milestone was achieved in the
Columbus development project with the successful installation of
the seabed tie-in structure.
Columbus will be developed by a single subsea well, which will
be connected to the Arran to Shearwater pipeline through which
Columbus gas and condensate production will be exported co-mingled
with Arran field production.
The Arran to Shearwater pipeline has been installed and the
first Arran well has been spudded. The installation of the
Shearwater to Columbus umbilical is complete and the Columbus
tie-in structure has been placed on the seabed adjacent to the
proposed wellhead location.
The jack-up rig Maersk Resilient has been contracted to drill
the Columbus development well which is planned for the first half
of 2021. First production is expected from Columbus in the second
half of 2021 with expected production rates net to Serica of 3,500
- 4,000 boe/d to be achieved shortly thereafter.
Commodity Prices
Over 80% of Serica's production is gas and spot gas prices have
continued to strengthen following the historically low prices
encountered earlier this year. In January this year, average Heren
NBP day-ahead spot prices were around 28p/therm but then fell
significantly during the early stages of the COVID lock down
reaching below 10p/therm on a number of days.
Subsequently, the recovery in gas prices has been strong and in
September average spot prices were over 29.5p/therm, a substantial
increase over the low point in the first half of the year. The
average price in October to date has exceeded 35p/therm. Serica's
gas price hedging programme yielded significant gains in the first
half of the year and provides further support into 2022.
COVID-19
There have been no confirmed cases of COVID-19 on any of our
installations nor, to date, any interruptions to production caused
from COVID-19 infections on our or third-party facilities. Serica
has not furloughed or laid off any staff during 2020 nor utilized
any of the various government schemes that have been made available
to support industry during the current pandemic.
Serica has assessed the risk of COVID-19 related matters
impacting the availability of equipment and/or personnel for the R3
and Columbus projects and has determined that any such risk
currently is insufficient to prevent the execution of these
projects.
Mitch Flegg, Chief Executive of Serica Energy, commented:
"We are entering an exciting period of value-adding operations.
The R3 Intervention project has the potential to add significant
production volumes and can provide valuable optionality to the
management of Rhum wells and reservoir. The Columbus development
will add further production and diversity to our portfolio.
Serica's net production levels remain strong despite the added
complexities associated with operating remote installations in a
socially distanced manner. Gas prices have recovered significantly
and the gas futures price outlook is good. Our balance sheet
remains robust with significant cash reserves, no debt and limited
decommissioning liabilities. This will enable us to execute these
projects whilst simultaneously continuing to look to take advantage
of current market conditions by pursuing opportunities to further
expand our portfolio."
Additional Information
Rhum is a gas condensate field producing from two subsea wells,
R1 and R2, tied into the Bruce facilities through a 44km pipeline.
Rhum production is predominantly gas which is exported to St Fergus
for delivery into the National Transmission System. Small
quantities of associate condensate are exported onshore via the
Forties Pipeline System. The field has produced at relatively
constant rates through the past year.
The third well, R3, requires intervention work before it can be
brought on production. In 1H 2019, investigative work to assess the
condition of the well and associated control systems was
successfully carried out and the data gathered was incorporated
into planning for the R3 intervention. On 12 May 2020 Serica
announced that it had entered into a contract for the provision of
a drilling rig for the intervention work on R3 well on behalf of
the Rhum partners.
Regulatory
This announcement is inside information for the purposes of
Article 7 of Regulation 596/2014.
The technical information contained in the announcement has been
reviewed and approved by Fergus Jenkins, VP Technical at Serica
Energy plc. Mr. Jenkins (MEng in Petroleum Engineering from
Heriot-Watt University, Edinburgh) is a Chartered Engineer with
over 25 years of experience in oil & gas exploration,
development and production and is a member of the Institute of
Materials, Minerals and Mining (IOM3) and the Society of Petroleum
Engineers (SPE).
Enquiries:
Serica Energy plc +44 (0)20 7457 2020
Tony Craven Walker, Executive Chairman
Mitch Flegg, CEO
Peel Hunt (Nomad & Joint Broker) +44 (0)20 7418 8900
Richard Crichton / David McKeown / Alexander
Allen
Jefferies (Joint Broker) +44 (0)20 7029 8000
Tony White / Will Soutar
Instinctif Partners +44 (0)20 7457 2020
Mark Garraway / Sarah Hourahane / Dinara +44 (0)7493 867
Shikhametova 435
+44 (0)7580 817
276
serica@instinctif.com
NOTES TO EDITORS
Serica Energy is a British independent oil and gas exploration
and production company with a portfolio of exploration, development
and production assets.
Serica is the operator of the producing Bruce, Keith and Rhum
fields in the UK Northern North Sea, holding interests of 98%, 100%
and 50% respectively. Serica also holds an 18% non-operated
interest in the producing Erskine field in the UK Central North Sea
and a 50% operated interest in the Columbus Development.
Further information on the Company can be found at
www.serica-energy.com .
The Company's shares are traded on the AIM market of the London
Stock Exchange under the ticker SQZ and the Company is a designated
foreign issuer on the TSX. To receive Company news releases via
email, please subscribe via the Company website.
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