A difficult session for Serica Energy and Pan African Resources
Both these resource companies have had a strong run but have just suffered a sharp reversal. Graeme Evans explains why.
27th November 2025 16:02
by Graeme Evans from interactive investor
The FTSE 250-bound shares of North Sea-focused Serica Energy (LSE:SQZ) and gold miner Pan African Resources (LSE:PAF) today weakened despite highlighting recent operational progress.
Serica fell 7.6p to 172.6p and is down 15% in the past week, while the £2 billion-valued Pan African retreated the day after it traded above 100p for the first time.
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The South Africa and Australia-focused miner switched from AIM to the main market in October and is on course for a place alongside Hochschild Mining (LSE:HOC) in next month’s FTSE 250 reshuffle.
The shares have surged by more than 160% this year as unhedged gold production since 1 July has enabled the company to fully benefit from the record high gold price above $4,000 an ounce.
The group is now on track to be fully de-geared from a net debt perspective by February, despite plans for the payment of a record dividend of 1.64p a share on 9 December.
The shares were marked ex-dividend today, while the company also announced its preferred method for driving significant long-term production growth at its Mogale tailings retreatment (MTR) complex in South Africa.
City firm Berenberg welcomed the company’s move towards brownfield expansion at MTR, which it said represented a lower-risk approach compared with a standalone operation.
It said the strong cash flow from MTR and the remainder of the group will allow Pan African to grow volumes, improve margins and continue to return cash to shareholders, as well as maintain a strong balance sheet. The broker has a target price of 112p on Pan African shares.
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Serica Energy shares fell despite the company reporting that November production had rebounded to a level that “more accurately reflects the potential of our portfolio”.
The company, which owes its scale to the Bruce, Keith and Rhum assets acquired from BP in 2018, has been impacted by downtime and maintenance outages over recent months.
It reported production of 25,700 barrels of oil equivalent a day (boepd) in the first nine months of 2025, rising to 27,900 boepd in October. This month’s average of 50,300 boepd is prior to this week’s planned outage at the Triton infrastructure and export hub.
Serica expects 2025 to average 27,000 to 28,000 barrels, which compares with Peel Hunt’s forecast of 27,300 barrels.
The company added that it continues to analyse multiple M&A opportunities, focused on the UK North Sea, while also progressing organic growth options in the existing portfolio.
It said that Budget announcements yesterday were a “missed opportunity to kick-start investment across the UK North Sea”, although it now has greater clarity about the fiscal and regulatory regimes in which its investment decisions will be made.
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The government said yesterday that the Energy Profits Levy (EPL) will be retained in its current form until 2030, when it will be replaced by a new permanent mechanism. Unlike EPL, this will be applied separately to oil and to gas and will tax only the proportion of revenue earned above new trigger levels.
Peel Hunt left its target price unchanged at 252p following today’s update.
The broker said the company had delivered a resilient performance despite operational challenges, while maintaining strong liquidity, progressing acquisitions and reaffirming guidance in the face of the evolving UK fiscal and regulatory frameworks.
Serica said it remains committed to moving from AIM to the main market, which it expects will happen after the publication of 2025 results. With a market value of £675 million, the company is large enough for inclusion in the FTSE 250 index.
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