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Serica Energy posts maiden sales and profits as Kambuna oil field ramps up

Serica Energy (LON:SQZ) has emerged from a transformational six months to post its first sales and profits as production from the Kambuna field ramped up.

Average  sales from the Indonesian offshore development averaged 35 million standard cubic feet per day (mmscfd)  in June, which jumped to 39 mmscfd in July.

Average field production rates of 40 mmscfd are expected in 2011, while  further field evaluation will determine whether additional facilities will be required to extend plateau production at this level.

The company booked sales of US$11.9 million, giving gross profits of US$5.7 million. It has cash of US$40 million on the balance sheet compared with US$29 million a year ago, which should bankroll its exploration activities.

The only fly in the ointment was a 2P reserves restatement by the Kambuna field’s operator, Salamander Energy (LON:SMDR).  It reckons proved and probable reserves are now 18.2 million barrels of oil equivalent, down 1.8 million barrels on previous estimates.

On the exploration front, Serica is currently drilling the Oates well in the North Sea and will be following this with two wells in Indonesia.

Each has the potential to add material value to the company if successful.

Chief executive Paul Ellis said: "The Kambuna Field is now achieving its targeted field plateau rates and we are expecting these rates to be maintained over the next few years with resultant cash flow benefit to the company.

"The reduced projection of ultimate field recovery announced today by the field operator is not expected to affect near term production rates.

"This projection is based on preliminary down-hole pressure data and will be reviewed again by Serica at the end of the year when more production information is available.

"In the UK we are pleased with the significant progress that has been achieved with the Columbus development and look forward to gaining project sanction before the end of the year."