Canaccord Genuity lifts target price on Serica Energy following Prax asset deal

(Sharecast News) - Canaccord Genuity raised its target price on Serica Energy from 215p to 240p on Friday following the group's acquisition of upstream assets from Prax E&P, which recently entered administration. The $25.6m deal secures current production of around 13,800 barrels of oil equivalent per day and will be completed in stages, with Serica set to acquire Prax Upstream on 1 January 2026. Two additional sales and purchase agreements initiated by Prax were expected to close by the end of Q126.

While Canaccord Genuity noted that the assets provided Serica with immediate output, it also noted that they were largely late-life, with decommissioning on the horizon. The Lancaster field, producing 5,900 boepd, was scheduled for shutdown in Q326 as the Aoka Mizu FPSO will be repurposed, potentially for the Sea Lion project in the Falklands.

Canaccord Genuity highlighted two strategic upsides - a 40% working interest and operatorship in the Shetland Gas Plant, positioning Serica as a hub operator alongside its Greater Laggan Area assets; and approximately $1.3bn in tax losses carried by Prax Upstream, offering near-term shielding and longer-term portfolio optionality.

The Canadian bank, which reiterated its 'buy' rating on the stock, described the acquisition as being both accretive and well-timed, enhancing Serica's production base, asset diversity, and tax efficiency at a "compelling entry cost".

Reporting by Iain Gilbert at Sharecast.com