Serica to join forces with Tailwind Energy

20th Dec 2022 11:08

(Sharecast News) - Oil and gas firm Serica Energy is to buy fellow North Sea operator Tailwind Energy Investments in a £644m deal.

The AIM-listed group said it would issue £367m of new shares as well as taking on Tailwind's net debt of £277m. It will pay £58.7m in cash once the deal completes.

Serica said acquisition would "significantly" boost its scale, portfolio diversity and investment opportunities. Once completed, Serica will have 11 producing fields, compared to five currently, with a 2023 estimated proforma combined production of between 40,000 and 45,000 barrels of oil equivalent per day.

Geneva-based commodity trader Mercuria, Tailwind's largest shareholder, will also become a strategic investor, with a 25.2% stake in the combined business.

Mitch Flegg, Serica chief executive, said: "The transaction achieves our strategic objective of materially increasing the scale and diversity of our UK continental shelf portfolio of assets.

"The Tailwind portfolio also brings multiple organic investment opportunities for further material near-term growth in reserves and production.

"Moreover, through the introduction of Mercuria as a new strategic investor, we will be differentially positioned to take advantage of the opportunities we expect to arise through industry consolidation...and potentially overseas."

Tailwind chief executive Steve Edwards will join the enlarged group's senior management team. He said: "Since inception in 2016, Tailwind has been driven by creating value for its stakeholders. My colleagues and I are excited about this next step with Serica."

As at 1045 GMT, shares in Serica were down 6% at 262p.