Serica Energy awarded Kyle block in UK licensing round

(Sharecast News) - Serica Energy announced the award of a 100% interest in UK block 29/2a to its wholly-owned subsidiary Tailwind Energy Chinook on Tuesday as part of the UKCS 33rd Offshore Licensing Round. The AIM-traded firm said the award was contingent on the execution of licence documentation.

It said block 29/2a encompasses the decommissioned Kyle oil field, which ceased production in June 2020, leading to the subsequent removal of the host floating production, storage and offloading (FPSO) vessel.

Importantly, Serica Energy assumed no obligations related to the prior decommissioning as a result of the licence award.

Over the initial two-year licence period, Serica said it would conduct feasibility studies to redevelop the Kyle field through a subsea tie-back to the Triton FPSO vessel using the Bittern field facilities.

Serica holds a 46.42% interest in the Triton FPSO vessel and a 64.63% interest in the Bittern field, both operated by Dana Petroleum.

Serica said its preliminary mid-case estimate of recoverable resources from the redeveloped Kyle field stood at around nine million barrels of oil.

"A key aspect of Serica's strategy is maximising the utilisation of existing infrastructure associated with its Bruce and Triton production hubs," said chief executive officer Mitch Flegg.

"An important element of this is adding hydrocarbon throughput from new sources as well as enhancing the contribution from fields that are already producing."

Flegg said the licence award added another potential project to the company's "hopper" of near- and in-field opportunities.

"The decision whether to proceed with the redevelopment of Kyle will depend on the results of our studies and the fiscal and regulatory situation at the end of the initial two-year term of the licence."

At 1028 BST, shares in Serica Energy were up 1.39% at 235.03p.

Reporting by Josh White for Sharecast.com.