By Ian McConnell

NORTH Sea player Serica Energy yesterday revealed “extremely frustrating” delays to drilling operations on its North Eigg exploration well, which it said would increase costs by around £3 million but “not impact the chance of success”.

Serica’s shares dipped after it told the stock market that drilling operations on the well had encountered delays and that, “following a recent equipment failure and the required mobilisation of a replacement…operations are now expected to take some six weeks longer to complete than the original schedule”.

The company added: “Operations had been progressing successfully despite some drilling delays in the top-hole sections. During recent preparations for drilling the third section of the well there was a failure of a vital piece of rig equipment during routine pre-job testing. A replacement has been sourced and planning is under way to transport this to the drilling rig.”

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Serica said this would “have no impact on the ultimate geological outcome of the well and it is expected that all well costs will benefit from the investment allowances available under the recently introduced Energy Profits Levy”.

The company added that its net well cost after tax was anticipated to increase by approximately £3m as a result of the delays.

Serica told the stock market it was now expected results from the well would be available in December.

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Mitch Flegg, chief executive of Serica, said: “This high-impact exploration well is the latest in a series of capital investment projects undertaken by Serica with the objective of increasing our production in an environmentally sensitive manner. This programme is designed to help increase the UK’s security of supply and reduce its reliance on imports. The technical delays encountered on this project are extremely frustrating but do not impact either the chance of success or the significant prospective volumes of this exploration prospect.”

Serica shares yesterday fell 8.5p or 2.2% to 380.5p.