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Serica Energy
(LSE:SQZ)
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Rating:67Neutral
Price Target:
299.00 p
▲(19.60% Upside)
Action:Reiterated
Date:08/17/26
The score is driven primarily by solid underlying financial strength—especially strong cash generation—and a positive earnings-call outlook with reiterated production and cash-flow guidance plus improved liquidity. This is tempered by recent earnings volatility (loss-making TTM and negative P/E) and only moderate, not strong, technical momentum.
Positive Factors
Strong cash generation
Robust operating and free cash flow show that Serica converts production into meaningful liquidity despite volatile reported earnings. This supports reinvestment, debt management, shareholder distributions, and resilience across the next several quarters.
Negative Factors
Hedging reduces realized earnings
Material hedge losses reduce the benefit Serica receives when underlying oil and gas prices rise and can create substantial reported earnings volatility. This remains relevant while the hedge book is in place, limiting near-term cash-price upside and complicating performance assessment.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong cash generation
Robust operating and free cash flow show that Serica converts production into meaningful liquidity despite volatile reported earnings. This supports reinvestment, debt management, shareholder distributions, and resilience across the next several quarters.
Read all positive factors
Serica Energy (SQZ) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£1.08B
Dividend Yield5.8%
Average Volume (3M)1.47M
Price to Earnings (P/E)―
Beta (1Y)0.55
Revenue Growth64.39%
EPS Growth97.39%
CountryUK
Employees242
SectorEnergy
Sector Strength52
IndustryOil & Gas Exploration & Production
Share Statistics
EPS (TTM)>-0.01
Shares Outstanding393,026,430
10 Day Avg. Volume1,117,085
30 Day Avg. Volume1,466,912
Financial Highlights & Ratios
PEG Ratio0.09
Price to Book (P/B)1.02
Price to Sales (P/S)1.12
P/FCF Ratio-32.32
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
£340.00Price Target Upside36.00% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
EPS Forecast (FY)0.31
Revenue Forecast (FY)£1.24B
Serica Energy Business Overview & Revenue Model
Company Description
Serica Energy plc operates as an upstream oil and gas enterprise, dedicated to the discovery, procurement, appraisal, and production of hydrocarbon reserves. The company boasts full ownership of the Keith oil fields, a 98% stake in the Bruce gas f...
How the Company Makes Money
Serica Energy primarily makes money by producing and selling hydrocarbons (mainly natural gas, plus liquids such as condensate and oil) from its UK North Sea assets. Revenue is generated from: (1) Natural gas sales: produced gas is sold under a mi...
Serica Energy Earnings Call Summary
Earnings Call Date:Aug 06, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Apr 29, 2027
Earnings Call Sentiment Positive
Overall the call conveyed a strongly positive operational and financial momentum: substantial production increases (notably at Triton), robust H1 cash generation ($280m post‑tax CFFO) and a strengthened liquidity and capital structure position the company for organic drilling and opportunistic M&A (including the Pharos recommended offer). The principal negatives are accounting and hedging effects that depress reported earnings and near‑term operational/seasonal constraints (Lancaster costs, Q3 maintenance, Triton gas export limits). Management has clear plans to capitalize on high‑return drilling opportunities and integration of Spirit/Pharos to lift production and cash generation.Positive Updates
Material Production Uplift
Average production in the period was just over 45,000 barrels of oil per day, Q2 averaged ~50,000 bpd, and the company maintains full-year production guidance of >40,000 bpd. Management expects to reach >65,000 bpd as Spirit assets are integrated and Q4 momentum builds.
Negative Updates
Hedging Losses Reduced Near‑Term Realized Prices
Realized (and mark‑to‑market) hedging losses were material: realized hedging losses of $89 million (~$11/boe) in H1 and sizeable unrealized MTM hedge losses at 30 June, which materially reduced reported P&L and constrained upside to higher commodity prices.
Read all updates
Q2-2026 Updates
Positive
Negative
Material Production Uplift
Average production in the period was just over 45,000 barrels of oil per day, Q2 averaged ~50,000 bpd, and the company maintains full-year production guidance of >40,000 bpd. Management expects to reach >65,000 bpd as Spirit assets are integrated and Q4 momentum builds.
Read all positive updates
Company Guidance
Serica reiterated production and cash guidance for 2026: average production expected to be over 40,000 barrels a day for the year, with rates expected to exceed 65,000 b/d in Q4 (65,000 b/d post-completion of the Spirit acquisition on 1 Oct), and H1 averaged just over 45,000 b/d (Q2 ~50,000 b/d; Triton Q2 ~20,300 b/d with >95% uptime since 9 Mar). Post-tax cash flow from operations for the year is guided to $450–$475m (H1 post-tax CFFO was $280m, ≈$40/boe), interim dividend declared at 6p (policy 15–30% of post-tax CFFO; 6p ≈11% of H1 CFFO; a 16p full‑year example ≈18% of the midpoint). Balance sheet and liquidity measures: $300m five‑year bond raised, new RBL $750m (initial borrowing base $458m undrawn), $326m cash at 30 June and pro‑forma liquidity of nearly $800m, having moved from $200m net debt at start‑year to $26m net cash mid‑year. Other metrics underpinning guidance include realized pre‑hedge oil $93/bbl and gas 101p/therm (post‑hedge realized oil $73/bbl, gas 97p/therm), realized hedging losses $89m (~$11/boe), reported operating & lifting costs $247m but underlying ~US$25/boe (Lancaster had ~$89/bbl), and near‑term growth catalysts: imminent signing of a ~400‑day rig (drilling from Q3 next year) targeting potentially +30,000 b/d of incremental production with >40% IRR (Bruce wells could add ~10,000 b/d), and Spirit’s free cash flow now expected to be more than double the prior ~$100m estimate by end‑2028.Serica Energy Financial Statement Overview
Summary
Income Statement
56
Neutral
Balance Sheet
62
Positive
Cash Flow
71
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.46B | 614.05M | 727.18M | 632.64M | 813.99M | 514.14M |
| Gross Profit | 377.98M | 57.13M | 223.20M | 303.49M | 595.42M | 386.82M |
| EBITDA | 601.89M | 200.34M | 380.03M | 390.23M | 558.39M | 172.68M |
| Net Income | -3.99M | -52.91M | 92.43M | 81.50M | 177.80M | 79.29M |
Balance Sheet | ||||||
| Total Assets | 1.95B | 2.17B | 1.46B | 1.25B | 862.38M | 686.67M |
| Cash, Cash Equivalents and Short-Term Investments | 324.45M | 30.91M | 118.58M | 208.22M | 414.43M | 80.08M |
| Total Debt | 295.21M | 227.29M | 224.32M | 168.59M | 213.00K | 0.00 |
| Total Liabilities | 1.33B | 1.50B | 668.29M | 587.12M | 453.66M | 414.14M |
| Stockholders Equity | 621.88M | 669.82M | 796.46M | 660.12M | 408.72M | 272.53M |
Cash Flow | ||||||
| Free Cash Flow | 209.69M | -21.20M | 21.39M | 24.12M | 463.94M | 105.44M |
| Operating Cash Flow | 486.46M | 226.46M | 281.56M | 92.71M | 561.22M | 157.60M |
| Investing Cash Flow | -183.31M | -263.94M | -253.91M | -86.07M | -186.83M | -134.35M |
| Financing Cash Flow | -67.12M | -98.46M | -213.28M | -122.16M | -45.72M | -9.25M |
Serica Energy Technical Analysis
Positive
250.00
Price Trends
244.27
Positive
247.46
Positive
228.94
Positive
Market Momentum
8.50
Negative
64.79
Neutral
89.68
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:SQZ, the sentiment is Positive. The current price of 250 is below the 20-day moving average (MA) of 259.65, above the 50-day MA of 244.27, and above the 200-day MA of 228.94, indicating a bullish trend. The MACD of 8.50 indicates Negative momentum. The RSI at 64.79 is Neutral, neither overbought nor oversold. The STOCH value of 89.68 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:SQZ.
Serica Energy Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | £879.16M | 1.72 | 64.44% | 7.80% | ― | ― | |
68 Neutral | £422.03M | 16.47 | 7.38% | 3.94% | 5.77% | 100.39% | |
67 Neutral | £1.08B | -1,065.89 | -0.62% | 5.84% | 64.39% | 97.39% | |
65 Neutral | $15.17B | 7.61 | 4.09% | 5.20% | 3.87% | -62.32% | |
63 Neutral | £502.49M | 5.04 | 27.37% | 2.97% | 3.33% | ― | |
56 Neutral | £154.74M | -7.82 | -7.79% | 10.50% | -38.72% | 52.39% | |
56 Neutral | £727.29M | -13.35 | -17.25% | ― | ― | ― |
* Energy Sector Average
GB:SQZ
Serica Energy
275.80
127.54
86.03%
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GB:GKP
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194.00
30.79
18.87%
Serica Energy Corporate Events
Business Operations and StrategyM&A Transactions
Serica Energy Withdraws Final Offer for Pharos After Rival Bid Prevails
Negative
Aug 13, 2026
Serica Energy has withdrawn its previously announced final cash offer for Pharos Energy, after Pharos’ board switched its support to a higher competing bid from Ratio Petroleum Energy. Serica had declared its 32.6683 pence-per-share proposal...
Business Operations and StrategyDividendsM&A Transactions
Serica Holds Firm on Final Offer Terms for Pharos Energy
Neutral
Aug 10, 2026
Serica Energy has confirmed that its recommended cash offer for Pharos Energy will remain at a total value of 32.6683 pence per share, despite a higher competing bid from Ratio Petroleum. The package comprises 28.6683 pence in cash plus a 4.0 penc...
Business Operations and StrategyDividendsFinancial DisclosuresM&A TransactionsPrivate Placements and Financing
Serica Energy boosts output, swings to net cash and ramps up growth plans
Positive
Aug 6, 2026
Serica Energy reported a strong first half of 2026, with production rising to 44,700 boepd from 24,700 boepd a year earlier, driven by improved uptime, notably at Triton, and new West of Shetland assets. Revenue more than doubled to $677 million, ...
Business Operations and StrategyM&A Transactions
Serica Energy to Acquire Pharos in Cash Deal, Boosting International Scale
Positive
Jul 27, 2026
Serica Energy has agreed a recommended cash acquisition of Pharos Energy, with Pharos shareholders to receive a total of 32.6683 pence per share in cash, plus retain a recently paid final dividend, valuing Pharos’ equity at about £145.7...
Business Operations and StrategyDelistings and Listing ChangesPrivate Placements and Financing
Serica secures $750m RBL to bolster UK North Sea growth push
Positive
Jul 23, 2026
Serica Energy, a UK-focused independent oil and gas producer, operates key hubs in the Northern and Central North Sea and holds a major position West of Shetland, supplying about 10% of the UK’s gas and investing heavily in the domestic supp...
Business Operations and StrategyDelistings and Listing ChangesRegulatory Filings and Compliance
Serica Energy reports no new share issuances under incentive schemes, voting rights unchanged
Positive
Jun 30, 2026
Serica Energy has reported that no shares were issued or allotted under its Employee Share Incentive Plan, 2018 Sharesave Plan, 2005 Share Option Plan and 2017 Long Term Incentive Plan during the six-month period to 29 June 2026, leaving all previ...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.