NORTH Sea-focused Serica Energy has suffered a costly setback in its efforts to develop a find east of Aberdeen but still expects to generate a good return on its investment.
Serica said it would have to complete additional work at a cost of around £4 million after encountering problems while drilling the development well for the Columbus field.
The additional work is expected to take around a month to complete. However, Serica chief executive Mitch Flegg said: “Whilst frustrating, the additional operations on Columbus are not expected to affect the timing of first production and the economic returns of the project remain very attractive for the Company.”
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Serica expects to start producing gas from Columbus during the fourth quarter of this year.
The firm has become one of the leading independents in the North Sea after acquiring assets that bigger fish appeared to have lost interest in. It has an operations centre in Aberdeen and headquarters in London.
The company is also preparing to increase production from the giant Rhum gas field off Shetland. It expects to start pumping gas in the third quarter from a well that was originally drilled in 2005 but never brought into production. The well has now been cleared of all equipment installed when it was originally completed in 2005.
Serica bought a 50 per cent stake in the Rhum field from BP in 2017. The Iranian oil company owns the other 50%.
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In April Mr Flegg made clear that Serica was in the market for more acquisitions in the North Sea.
Serica has managed to generate plenty of cash from its North Sea production in spite of the challenges posed by the fallout from the coronavirus crisis. Its production costs averaged $14.12 per barrel oil equivalent last year.
The Brent crude price has risen to around $68 per barrel, from less than $40 in November, amid the rollout of coronavirus vaccines.
Serica said it encountered difficulties while trying to install sand screens in a section of the Columbus well.
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