EnQuest drops takeover bid for North Sea rival Serica Energy

North Sea operator EnQuest will no longer proceed with a takeover bid for UK independent Serica Energy, the firm announced today.

Serica is one of the UK’s top ten oil and gas producers, with its assets producing around 34,600 barrels of oil equivalent per day (boepd).

Meanwhile, EnQuest reported average production of 40,736 boepd in 2024 across its operations in the UK and Malaysia.

In a statement, EnQuest said the company had not been able to reach an agreement with Serica “in light of current market volatility”.

Meanwhile, Serica said that while there would have been “strategic and financial benefits” to the merger, an agreement between the two operators “was not possible at this time”.

Serica said its board remains “very confident” in its ability to “generate significant cash flow and deliver shareholder value” from its assets.

The company said it will continue to pursue its growth strategy, including “numerous organic growth opportunities” and other potential merger deals “in both the UK North Sea and other geographies”.

EnQuest launched its bid for Serica in March, with an initial 4 April deadline extended until today.

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Earlier this year, EnQuest chief executive Amjad Bseisu said the firm is progressing several UK transaction processes.

Meanwhile, Serica Energy boss Chris Cox has previously laid out plans to explore merger and acquisition (M&A) deals in the North Sea.

Cox said the decision to pursue mergers came as he believes the North Sea’s fiscal regime “can’t really get any worse than it is right now” amid disappointing financial results for Serica.

North Sea mergers

While the proposed combination of EnQuest and Serica seems to no longer be going ahead for now, the North Sea has seen other major deals go through in recent months.

Supermajors Shell and Equinor announced last year they would combine their North Sea assets, while Ithaca Energy and Eni have also announced a tie-up.

More recently, Spanish operator Repsol is set to combine its North Sea assets with NEO Energy.

Harbour Energy also completed its $11.2bn buyout of German rival Wintershall Dea last year.

Meanwhile, North American firms Apache and Canadian Natural Resources (CNRL) have announced plans to decommission their assets early and leave the basin.

The flurry of mergers and combinations led EnQuest’s Bseisu to observe that ““the writing is on the wall for the North Sea”.