Serica finalises purchase of Spirit Energy North Sea assets

Serica Energy has completed the acquisition of Spirit Energy’s remaining North Sea production assets, a transaction that significantly expands its portfolio in the United Kingdom continental shelf. The deal involved a net payment of £33 million to the Centrica-owned operator, alongside an upfront consideration of £57 million. This strategic move secures stakes in multiple assets, including a 25 per cent interest in the Clipper South gas field and operated positions across the Greater Markham Area. Additionally, Serica has obtained interests in various Southern North Sea gas fields and a 15 per cent stake in the Cygnus field, which is operated by Ithaca Energy and described as one of the largest producing gas fields on the UK Continental Shelf.

Chris Cox, chief executive of Serica, stated that the completion of the deal will materially boost production and reserves while increasing the company’s commodity weighting towards gas. He described the transaction as immediately cash generative, noting that it strengthens Serica’s position in the UK gas market and adds a significant new Southern North Sea hub to the portfolio. Cox indicated that the new assets are expected to deliver a free cash flow of $200 million, equivalent to £150 million, by the end of 2028. However, the acquisition also brings with it £44 million in decommissioning liabilities, although Centrica has reserved 75 per cent of the cost of decommissioning the transferred assets.

The acquisition, which was announced in December last year, marks a significant reduction in Spirit Energy’s presence as an operator in the UK oil and gas industry. As part of the deal, Serica has onboarded approximately 100 workers from Spirit’s base in Hoofddorp, Netherlands, along with employees from Aberdeen. Cox expressed excitement about welcoming the new colleagues and moving quickly into integration to build a stronger and more resilient North Sea business. This development follows Spirit’s announcement of job-slashing measures amid a broader business restructuring. In April, the Centrica-owned business confirmed it would cut 100 jobs in Aberdeen as it moved to split its gas production business from its carbon storage operations, leaving just 50 people employed in the Granite City once the cuts are complete.

Spirit Energy will now focus on production activity from its remaining Morecambe Hub, which Centrica believes contains reserves of up to 9 million barrels of oil equivalent. The company stated its intention to maximise value from Morecambe while progressing the Morecambe Net Zero carbon storage project. This shift in focus aligns with Spirit’s strategic move to separate its operational divisions, allowing it to concentrate on specific areas of its business while divesting other assets to Serica.