Serica Energy H1 2026 Results: Free Cash Flow Reaches $184 Million as Production Jumps

Serica Energy PLC has delivered a much stronger first half of 2026, supported by improved production reliability, newly acquired assets and higher oil and gas prices.

The UK North Sea producer generated $184 million of free cash flow during the six months to 30 June 2026. That helped Serica move from net debt of $200 million at the end of 2025 to net cash of $26 million.

The operational improvement is particularly important. Average production reached 44,700 boepd, meaning barrels of oil equivalent per day, compared with 24,700 boepd in the same period last year.

However, the results were not entirely straightforward. Hedging limited the benefit of higher commodity prices, the company recorded a pre-tax loss due to large non-cash charges, and the delayed Spirit Energy transaction has resulted in reduced 2026 guidance.

The figures and management commentary are available in the original company announcement.

Serica Energy's key H1 2026 figures

Metric	H1 2026	H1 2025
Average production	44,700 boepd	24,700 boepd
Revenue	$677 million	$305 million
EBITDAX	$301 million	$118 million
Post-tax CFFO	$280 million	$173 million
Capital expenditure	$81 million	$138 million
Free cash flow	$184 million	$26 million
Cash and restricted cash	$326 million	$174 million
Net cash / (net debt)	$26 million	($57 million)
Interim dividend	6p per share	6p per share

EBITDAX is earnings before interest, tax, depreciation, amortisation and exploration costs. Post-tax CFFO refers to cash flow from operations after tax. Both are alternative performance measures used by Serica to show the cash-generating performance of its underlying assets.

Revenue more than doubled to $677 million, while post-tax CFFO rose to $280 million. Capital expenditure also fell to $81 million from $138 million, creating a favourable combination of higher operating cash generation and lower investment spending during the period.

Triton drives a step-change in production

The biggest operational improvement came from the Triton Hub, where H1 production rose to 15,700 boepd from just 2,500 boepd a year earlier.

Triton had suffered substantial downtime during 2025. Following maintenance work and a 24-day outage ending on 9 March 2026, uptime exceeded 95% for the remainder of the half. This supported Q2 production of 20,300 boepd net to Serica.

Across the wider portfolio, Q2 production averaged 50,200 boepd, up from 39,200 boepd in Q1.

Producing area	H1 2026 production
Bruce Hub	18,100 boepd
Triton Hub	15,700 boepd
Other producing assets	4,600 boepd
West of Shetland	6,300 boepd
Total	44,700 boepd

The Bruce Hub remained the largest contributor, with production increasing from 16,700 boepd to 18,100 boepd. Asset uptime was 86%, and production exceeded 20,000 boepd during June.

West of Shetland production included the Lancaster field until output ceased as expected on 3 May. Serica also gained production from the Greater Laggan Area following completion of its acquisition from TotalEnergies on 26 March. Greater Laggan contributed 4,200 boepd in Q2, with uptime of 98%.

Strong cash flow, but hedging reduced the upside

Serica benefited from average pre-hedging oil and gas prices of $93 per barrel and 101p per therm respectively. These compared with $70 per barrel and 96p per therm in H1 2025.

The hedge book reduced the prices actually achieved across the portfolio to $73 per barrel for oil and 97p per therm for gas. Realised hedging losses totalled $88.6 million, while unrealised hedging losses reached $110.8 million.

Those unrealised losses are non-cash accounting movements based on the value of outstanding contracts at the reporting date. Alongside a $95.6 million goodwill expense, they contributed to a pre-tax loss of $75.6 million despite the strong operating cash performance.

After a net tax credit of $81.7 million, Serica reported a modest post-tax profit of $6.1 million, equivalent to basic earnings per share of 2 cents.

This distinction matters for investors. The statutory income statement looks weak at first glance, but the underlying assets generated substantial cash. Equally, hedging is not irrelevant simply because some charges are non-cash. It reduced the prices received during a strong commodity market and remains an important factor when assessing future cash generation.

Balance sheet transformed by cash generation and refinancing

Cash and restricted cash increased from $31 million at the end of 2025 to $326 million at 30 June 2026. This included strong operating inflows, acquisition-related receipts and proceeds from a new $300 million Nordic bond.

The five-year bond carries a fixed annual coupon of 7.875%. Its proceeds were mainly used to repay the previous reserve-based lending facility.

After the period end, Serica completed a new six-year reserve-based lending facility totalling $750 million. On a pro forma basis, this left the company with liquidity of $784 million at 30 June 2026.

That gives Serica greater flexibility to fund drilling, provide security for decommissioning obligations and pursue acquisitions. The trade-off is that the company has issued $300 million of debt carrying a meaningful fixed interest cost, while total decommissioning provisions increased to $515.8 million following acquisitions.

Dividend held at 6p per share

Serica declared an interim dividend of 6p per share, unchanged from the 2025 interim payment. It is payable on 19 November 2026 to shareholders on the register on 23 October, with an ex-dividend date of 22 October.

The company has introduced a distribution policy targeting 15% to 30% of post-tax CFFO from the 2026 financial year onwards. The interim payment will be included when the board assesses the final dividend.

Maintaining the payment demonstrates confidence in cash generation, although the full-year distribution will remain dependent on operating results, investment requirements and the board's application of the new policy.

Growth plans gather momentum

Serica plans to contract a rig for a drilling programme lasting around 400 days, with the potential to drill up to six wells. The programme is expected to begin at Bruce in Q3 2027, with possible first production around 12 months after drilling starts.

Management says its short-cycle project portfolio could add 30,000 boepd of production and deliver average rates of return above 40%. These projects are intended to support annual average UK production above 50,000 boepd into the next decade.

The company also expects to complete its acquisition of assets from Spirit Energy on 1 October 2026. The delayed completion means 2026 production guidance is now above 40,000 boepd, rather than significantly above 40,000 boepd.

Post-tax CFFO guidance has been reduced to $450 million to $475 million. Capital expenditure guidance remains $175 million to $195 million, while operating cost guidance remains $380 million to $400 million, excluding $65 million of Lancaster spending.

Readers can compare this update with Serica's previous 2025 results and production outlook.

What investors should watch next

The first-half performance shows what Serica's portfolio can produce when Triton operates reliably. Higher production and commodity prices generated material free cash flow and repaired the balance sheet rapidly.

The next tests are sustaining operational reliability through planned maintenance, completing the Spirit Energy transaction, signing the rig contract and progressing the proposed Pharos Energy acquisition. The latter would begin Serica's expansion outside the UK, but completion is not yet certain.

Investors should also monitor hedging, decommissioning obligations and execution risk as the company increases investment and integrates more assets. The financial platform is considerably stronger, but Serica's growth strategy now involves several moving parts that will need to be delivered successfully.