Press

Serica Energy Interim Results for the Six Months Ended 30 June 2018

Posted by OilVoice Press - OilVoice

28-Sep-2018


London, 28 September 2018 - Serica Energy plc (AIM: SQZ) today announces its financial results for the six months ended 30 June 2018. The results are included below and copies are available at www.serica-energy.com and www.sedar.com.

Results Highlights

Financial

  • First half loss of US$8.4 million compared to a profit of US$10.3 million for the equivalent period last year resulting from suspension of Erskine production for the majority of the period and transition expenditure required to implement the BKR Transaction.

  • Balance sheet remains robust with cash and cash equivalents plus term deposits at mid-year standing at US$21 million.

  • No Group debt other than US$3.9 million drawn-down under a prepayment facility arranged with BP as part of the BKR Transaction with liquidity remaining strong throughout the period.

BKR and BK Transactions

  • Good progress achieved on all elements of the transaction to acquire BP interests in theBruce, Keith and Rhum fields (“BKR Transaction”).

  • Further acquisition of interests in Bruce and Keith from Total announced in August (“BK Transaction”).

  • Completion of both transactions targeted for 1 November to enable regulatory approval processes to complete.

  • On completion Serica to benefit from receipt of 40% of post-tax net cash flows from the fields since 1 January 2018.

  • Following completion Serica will assume operatorship and be the major partner in the Bruce, Keith and Rhum fields with 78.25%, 59.83% and 50% interests respectively.

Operations

Erskine Field (Serica 18%)

  • Production from the Erskine field was suspended on 16 January and remained suspended throughout the period due to a blocked export pipeline carrying Erskine condensate from the Lomond platform to link into the Forties Pipeline System.

  • A new 26km section of the line has been laid with construction recently completed and line tested and production is expected to recommence shortly.

Columbus Field (Serica 50% - Operator)

  • Serica submitted a Field Development Plan (“FDP”) to the Oil and Gas Authority on scheduleat the end of June.

  • The FDP is contingent on the construction of a new pipeline proposed by participants in the Arran field linking the fields to the Shearwater platform.

  • Final approval of the FDP is expected before the end of 2018 with Columbus production start- up projected for the second quarter of 2021.

Exploration

  • The Ensco 121, a modern high specification jack-up rig, has been contracted by ENI the Operator to drill the Rowallan prospect, a high pressure, high temperature prospect located close to the Erskine and Columbus fields.

  • The well is targeted to commence drilling in December with Serica fully carried on all costs.

  • P50 Prospective Resources in the Rowallan Prospect net to Serica are independently estimated to be 19.7 mmboe.

Commenting on the Results, Mitch Flegg, Serica's Chief Executive stated:

“The Company has made good progress in the first six months of 2018 despite the issues related to the Lomond condensate export pipeline. Serica has a solid cash base and is about to enter an exciting period of activity. Production from Erskine is expected to restart shortly, final approval of the Columbus FDP is due before the end of the year and the high-impact, fully-carried Rowallan exploration well will spud in December.

Most importantly, the BKR transaction is targeted to complete at the start of November. Preparations are almost complete and the Company has developed the necessary capabilities and processes to assume operatorship of these assets. Our new operational headquarters in Aberdeen are ready, our recruiting campaign has been extremely successful and we look forward to welcoming the members of BP staff who will transfer to Serica on completion of the BKR transaction.

We look forward to becoming operator of the Bruce, Keith and Rhum fields, so that we can take advantage of continued strong gas and oil prices and start to implement our plans to maximise recovery from these assets by prolonging field life. We will also continue to use our financial position in order to identify and pursue opportunities togrow our portfolio in the UK North Sea.”



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