Serica sets sights on North Sea assets amidst challenging fiscal regime

Serica Energy, under the leadership of CEO Chris Cox, is realigning its strategic focus towards acquiring aging assets in the UK's North Sea. This shift is driven by the current unattractiveness of the basin, heightened by the UK's steep tax regime and upcoming fiscal policies. Previously interested in acquiring Norwegian assets, the company finds the competitive and unrealistic pricing in Norway as a deterrent. Serica aims to capitalize on assets in the North Sea as major oil companies like Apache and Harbour Energy diversify or exit. As the company looks to mitigate the impacts of the UK’s Energy Profits Levy (EPL), it is utilizing historical tax losses on its oil assets to shield itself from high taxation. Further, the retention of first-year capital allowances on investments offers a silver lining for ongoing and future drills, including Serica's joint venture Triton Project and the upcoming Bruce, Keith, and Rhum drilling campaigns. This tactical move marks a significant shift in Serica's investment strategy as it seeks to acquire assets at a potentially low point in the economic cycle.