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23 Apr 2020 | 17:02 UTC — London
By Nick Coleman
Highlights
Serica operating costs fall 30% to $12.6/boe in 2019
Bruce and Rhum fields producing more this year than in 2019
Confirms Columbus gas project delay due to Shell hold-up
London — UK independent Serica Energy Thursday reported strong production from its partly Iranian-owned Rhum gas field and other North Sea assets and said it was well positioned to weather the recent market turmoil.
In a statement, Serica said oil and gas output at the Rhum, Bruce and Keith field cluster had risen 15% last year to just over 27,300 b/d of oil equivalent, following the company's purchase of stakes in the fields from BP and other partners in 2018.
Production this year from the two main fields, Rhum and Bruce, had been even stronger, thanks to a focus on maintaining "up time" at the facilities, CEO Mitch Flegg told S&P Global Platts.
Serica bought BP's 50% stake in Rhum after obtaining from Washington a waiver of US sanctions against Iran, which has owned the other 50% of the license since before the Iranian Revolution. The field first started producing in 2005, but production had to be suspended in 2010-14 due to sanctions.
The current sanctions waiver, which has to be renewed annually, entails placing Iranian revenues in an escrow account. Rhum produced 159 MMcf/d of gas last year, plus around 1,000 b/d of oil, according to regulator the Oil & Gas Authority.
BP originally planned for Rhum to produce from three wells, but technical problems at one well meant only two have ever been used. Serica plans remediation work for the third well, but said Thursday this might be deferred to 2021, adding that production from the third well might anyway hit constraints with processing capacity at the Bruce facility.
Serica also confirmed its Columbus condensate development had been set back by a delay to Shell's Shearwater infrastructure development, to which Columbus would be connected.
Shearwater is now expected on stream next year rather than this year, reflecting spending cutbacks by the Anglo-Dutch major, and Serica therefore expects Columbus to start producing in the second half of 2021. Columbus is expected to produce 8,000 boe/d.
Serica increased its overall oil and gas production by 18% last year to 30,000 boe/d. With no debt, and operating costs reduced to $12.60/boe of production last year, the company was in a "strong position to weather" market turbulence related to coronavirus and the oil price crash, it said.