Serica Energy (LSE:SQZ) has strengthened its financial position after securing an oversubscribed six-year senior secured reserves-based lending (RBL) facility worth $750 million. The UK-focused oil and gas producer said the package comprises a $500 million revolving credit facility and a $250 million letter of credit facility, replacing its previous $525 million borrowing arrangement on improved terms while extending the maturity profile of its debt.
The refinancing follows strong cash generation during the first half of the year and builds on the company’s recent $300 million Nordic bond issue. Combined with an accordion feature that provides access to a further $750 million if required, the new facilities give Serica substantial financial flexibility to support drilling programmes, organic development projects and future acquisition opportunities while continuing to target shareholder returns.
Strong liquidity supports long-term growth strategy
Serica said the new lending facility is initially undrawn and requires no amortisation payments until mid-2029, providing significant headroom as it advances its investment plans across the UK Continental Shelf.
The company’s banking syndicate now comprises 11 international lenders, all of which participated in the previous financing arrangement, reflecting continued support for Serica’s asset portfolio and long-term strategy. Management intends to use the strengthened balance sheet to fund upcoming drilling activity, support development projects and capitalise on additional growth opportunities, including the planned acquisition of assets from Spirit Energy.
Serica also continues to prepare for the planned transfer of its listing from AIM to the London Stock Exchange’s Main Market in 2026 as part of its broader strategy to expand both organically and through acquisitions.
Outlook balances financial recovery with strong strategic momentum
The company’s near-term outlook reflects mixed underlying fundamentals. Financial performance weakened during 2025, with lower revenue, a net loss and negative free cash flow. However, these factors are partly offset by positive technical momentum in the shares and constructive management guidance, including reaffirmed 2026 production expectations, an improving net debt profile and a maintained dividend.
While the dividend yield remains an attractive feature of the investment case, the company’s loss-making position continues to result in a negative price-to-earnings ratio.
About Serica Energy
Serica Energy is an independent British oil and gas producer focused on the UK Continental Shelf, where it supplies around 10% of the UK’s natural gas production. Its portfolio includes the Bruce, Keith and Rhum fields in the Northern North Sea, interests in fields linked to the Triton FPSO in the Central North Sea, and a 40% operated stake in the Greater Laggan Area and Shetland Gas Plant. The company is expanding its portfolio through the planned acquisition of assets from Spirit Energy while pursuing long-term growth through organic investment, exploration and acquisitions. Since 2020, Serica has invested more than £1 billion in the UK supply chain.
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