Serica to pay dividend despite Covid-19 crunch

While oil has plunged to 20-year lows, gas prices have remained fairly stable, if still far lower than 2018. Serica bought the Bruce, Keith and Rhum assets (known as BKR) from BP (BP.), Total (Fr:FP) and BHP (BHP) in 2018, and last year was the test over whether it would start generating cash. It did.

Operating cash flow for the year came in at £137m, versus a £9.9m outflow in 2018. Serica has paid off its debt and is in a £102m net cash position. The BKR deal means the vendors took 50 per cent of net cash flow from the assets, and this will drop to 40 per cent in 2020, reaching zero by 2022. 

It’s not all smooth sailing, however. The company reported an issue on its Bruce platform in January, and repairs meant production stopped between 30 January and 9 March. The three fields – which feed into the Bruce platform – produced 27,300 barrels of oil equivalent per day (boepd) in 2019. 

Chief executive Mitch Flegg said the company could grow further this year. "We're seen as a strong, responsible, well-funded operator, and I think that will help our ambition to do more deals in the coming year," he said. 

Several North Sea operators have reported Covid-19 cases on rigs. Serica says it has not had any positives, but has cut back the number of workers on its rigs, stopping non-essential maintenance and upgrades. Mr Flegg said production would not be affected.