Serica Energy has told investors it expects to nearly double production to between 40,000 and 47,000 barrels in 2023, after it completes its acquisition of Tailwind Energy.
Serica said before Christmas that it planned to buy Tailwind Energy via a mix of shares and cash worth about £377million and would take on Tailwind’s £277million of debt.
In an update published yesterday, Serica said it estimates a 50% to 80% production increase in 2023 and that this will be sustained at above 40,000 barrels of oil equivalent per day until 2025.
The Aberdeen-headquartered independent said Tailwind had $2.6billion of tax losses in 2022, but some £470m could be used as offsets against Serica’s taxable income over the next three years.
It comes as Serica seeks approval from its shareholders to approve the transaction as the company plans to issue 111m new shares – nearly a third of its equity.
A meeting to approve those shares is due to take place on January 27.
Mitch Flegg, CEO of Serica, said: “We’re pleased to be publishing the Circular to Serica shareholders today setting out why we think the acquisition of Tailwind delivers exciting benefits to Serica shareholders and enables the company to enter a new growth phase.
"We are delighted by the transaction which we believe will improve cashflow and capital return predictability for shareholders and be immediately accretive on key metrics while also maintaining a strong balance sheet, providing increased resilience through the diversification of the Serica portfolio and create a platform for further growth in the future.
"I look forward to working closely with our new colleagues to deliver on the range of opportunities this transaction creates for all our stakeholders.”
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Brent crude futures were 0.48% lower at $79.27 a barrel.
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