StockMarketWire.com - North Sea oil company Serica Energy posted a drop in first-half profit after rising revenue was offset by hedging costs.

Pre-tax profit for the six months through June fell to $2.2 million, down from $20.4 million year-on-year and included an unrealised hedging expense of $30.3 million.

Revenue more than doubled to $100.8 million, up from $46.0 million.

'In the current environment Serica's focus on gas production and investment in new projects is expected to generate very significant returns for shareholders and help support further investment,' chief executive Mitch Flegg said.

'In the first half of the year, we continued to pursue our strategy of capital investment in our assets.'

'This has allowed us to recomplete the Rhum R3 well and bring it into production in August and to drill the Columbus development well which is now ready to produce.'

'Serica's production is over 80% gas and we are delighted that we are already seeing the benefits of our investment strategy in the second half through increasing production levels at a time of record high wholesale gas prices.'

Flegg said the company expected first production from Columbus in the fourth quarter of this year.

'Later in 2022 we intend to drill the North Eigg well which, if successful, will enhance gas reserves in the BKR area and potentially extend the life of Bruce and related infrastructure,' he said.


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