NORTH Sea-focused Serica Energy has underlined its confidence in the potential of a big field off Shetland as it moves to increase output amid the downturn triggered by the coronavirus.
Serica is pressing on with a plan to bring another well into production on the Rhum field in the fourth quarter although the outlook for commodity prices is very uncertain.
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Many firms are cutting non-essential spending in the North Sea to the bone to help them save cash.
However, Serica’s chief executive Mitch Flegg said the company was well-placed to weather the wider industry downturn related to the coronavirus.
The company has used the cash generated from North Sea production to build up a strong balance sheet.
It feels confident enough about the longer-term outlook for the market to be prepared to proceed with its previously stated work programmes.
These include a plan developed amid brighter market conditions last year to bring a third well on the Rhum field into production.
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The move is particularly notable given the challenges Serica has faced on Rhum, in which it has a 50 per cent stake.
The other 50% is owned by the Iranian national oil company. Serica had to win an exemption from the US authorities to ensure production from the field could continue after Donald Trump imposed fresh sanctions on Iran.
Serica’s work on Rhum could encourage other firms to consider investing in mature North Sea fields.
The field was brought onstream in 2005.Serica acquired its stake in Rhum with interests in the Bruce and Keith fields nearby in a series of deals struck in 2017 and 2018. The vendors included BP.
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Last month Mr Flegg said Serica could buy more assets in the North Sea, where it has been making money amid the recent market turbulence.
Serica’s production costs averaged $12.60 per barrel oil equivalent last year. Brent crude sold for around $30 per barrel yesterday.
The work on Rhum will provide a modest boost for the supply chain.
Serica has contracted a rig to complete a programme of remedial work which will allow it to start production from the existing R3 well.
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