A major UK gas producer has reported an 8.700% increase in profits, despite rising prices and increased production.
AIM-listed Serica Energy reported pre-tax profits in the first half of 2022 at £194.5m, compared with £2.2m in the first half of 2021.
The company sold its gas for almost three times what it paid last year amid global shortages caused by Russia’s war against Ukraine.
The company also saw an increase in production of 41% following last year’s investments. However, it does not share cash flow with its former owners.
Serica is the latest oil-and-gas producer to report record profits amid high prices following Russia’s invasion. FTSE 100 giant BP posted profits of $8.45bn (£6.9bn) in April and June.
North Sea drillers were subject to a windfall Tax in May to help pay for support for businesses and households with their energy bills.
Prime Minister Liz Truss has indicated that she is against any further windfall taxes. However, there are calls for her to go further after she announced that energy bill support will cost the exchequer approximately £60bn in the next six months.
Chief executive Mitch Flegg stated that Serica and the entire industry were heavily investing in the North Sea. Serica spent around £50m last fiscal year.
He stated that it was difficult to make only one set profit in isolation.
“The amount of investment we have made is very significant. These results show that we have significant profits and will be paying a lot of taxes. We invest our profits in new investments to increase our production.
Serica is a producer from the North Sea’s Bruce, Keith, Rhum and Columbus fields. It also holds an interest in the Erskine area.
About 85% of its output is made up of gas. About 5% of the North Sea’s output is from it.
It produced on average 26,600 barrels of oil equivalent per day (boepd), compared with 18,855 boepd in the first half of 2021.
After system entry fees and including fixed-price volumes, it sold gas at an average of 136 pence per thermal. This is a significant difference from the average 50 pence/therm in 2021’s first half.
