Serica Energy Plc · LSE:SQZ
Serica Energy — H1 2024 Earnings Presentation
26 slides from Serica Energy's earnings presentation, Sep 10, 2024
Slide 1: Half-year results 2024
Half-year results 2024 Contributing responsibly towards meeting the world's energy needs through the safe and efficient production of hydrocarbons 10 SEPTEMBER 2024
Slide 2: Disclaimer
Disclaimer This document has been prepared by Serica Energy PLC (the "Company") and is for information purposes only. The information contained in this document is being made available to, and is only directed at, persons to whom it may lawfully be communicated to ("Relevant Persons"). Any person wh
Slide 3: Initial impressions - a well-positioned business
Initial impressions - a well-positioned business Asset quality Strong team with right experience to create value for shareholders Positive ESG culture Robust financial position, material cash generation Half-year Results 2024 I 10 September 2024 3
Slide 4: Producing assets provide a strong bedrock
Producing assets provide a strong bedrock • Subsurface properties are robust • 140 mmboe 2P reserves, even split of oil and gas • Untapped potential on Bruce • Right team in place to unlock potential • Focused on safety and operational delivery • Striving for more consistently positive and predictab
Slide 5: HY 2024 performance at a glance
HY 2024 performance at a glance Production Unit operating cost CFFO post tax Cash 43,700 boepd $19/boe $193 million $362 million Capex 1 Cash tax paid Free cash flow Interim dividend $124 million $72 million $98 million 9p per share 1. Includes ABEX of $4.5 million and $7.5 million on Buchan Horst a
Slide 6: Material cash generation from existing production assets
Material cash generation from existing production assets 2,500 Indicative cash flow 2024-27 1 ($ MILLION) • Serica is well positioned to generate material free cash flow in coming years 2,000 • Optionality over capital allocation, with limited committed spend 1,500 • In the right fiscal environment,
Slide 7: Operating review
Operating review Half-year Results 2024 I 10 September 2024 7
Slide 8: Production from two key hubs
Production from two key hubs Production Post-period end – annual maintenance (BOEPD) programmes 50000 40000 30000 20000 10000 0 January February March April May June July August Bruce Hub Triton Hub Other Assets • Continuing to invest in wells and facilities to optimise production and economic recov
Slide 9: Bringing increased rigour to operating efficiency
Bringing increased rigour to operating efficiency • A small number of items to get right in order to deliver best in class production efficiency • Remove bottlenecks, reduce maintenance backlog, repair quickly, equipment ownership, shutdown planning, performance management etc… • We will measure our
Slide 10: BKR – extending field life and adding value
BKR – extending field life and adding value • Robust production of 23,400 boepd from Bruce hub • Asset optimisation ongoing, Light Well Intervention Vessel programme on Bruce and Keith completed in May • Better understanding of complex geology offers untapped potential at Bruce • Other opportunities
Slide 11: Five-well Triton programme progressing
Five-well Triton programme progressing Field Activity Serica interest 2025 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May June Bruce Well work 98% Keith Well work 100% Bittern B6 well 64.63% Gannet E GE-05 well 100% Guillemot NW EC1 well 10% Evelyn EV02 well 100% Belinda BE01 100% Indicative duration P
Slide 12: Positive signs from Triton well campaign
Positive signs from Triton well campaign • 14,200 boepd from Triton in H1 • Annual maintenance programme now complete, later than the initial operator forecast • B6 well on Bittern (SQZ: 64.6%) completed in July - Eagerly anticipate initial flow rates in coming days • GE-05 (SQZ: 100%) drilled to TD
Slide 13: Read across from Bittern B6 to Gannet GE05 well
Read across from Bittern B6 to Gannet GE05 well Bittern B6 Amount of Percentage Average Ultra-deep resistivity readings indicate oil Average producible producible porosity of Oil gravity saturated, excellent quality reservoir permeability reservoir reservoir reservoir Gamma ray log showing high prop
Slide 14: Buchan Horst – material potential in right fiscal environment
Buchan Horst – material potential in right fiscal environment • One of the largest remaining undeveloped fields in UKCS • Good quality oil (33.5° API) • CO2 emissions <10 kgCO2 /boe in early years without electrification • FPSO ‘electrification ready’ • Awaiting clarity around the UK regulatory and
Slide 15: Financial review
Financial review Half-year Results 2024 I 10 September 2024 15
Slide 16: H1 2024 income statement
H1 24 H1Income 2024Statement income statement $ million H1 2024 H1 2023 • Lower like-for-like production volumes Revenue 462 422 largely due to the May Triton outage Direct Operating Costs (151) (121) Lifting costs (5) (2) • Sales mix of 56% Gas, 41% Oil and 3% NGLS DD&A (87) (79) Other Cost of Sale
Slide 17: Robust financial position
Robust financial position H1 2024 gross cash bridge ($ MILLION) 900 462 (156) • Material liquidity available from which to 800 make targeted investments in areas that 700 (11) deliver maximum shareholder returns (28) (72) • Tax efficient investment in 2024 set to 600 (8) (116) deliver returns in com
Slide 18: Cash payments weighted to second half of 2024
Cash payments weighted to second half of 2024 H2 2024 CASH FLOW DRIVERS ($ million) • Production expected at the lower end of the guidance range, weighted to H1, due Tax payments 72 to annual maintenance programmes in H2 • Final and interim dividend payments totalling $112 million to be paid in H2 •
Slide 19: Shareholder returns a capital allocation priority
Shareholder returns a capital allocation priority 100 25 90 • Dividends of over £200 million paid to 80 20 shareholders 70 • £15 million share buyback completed in H1 2024 Pence p/share 60 15 £ million 50 • Shareholder returns remain a key strategic priority 40 10 30 20 5 10 0 0 2019 2020 2021 2022
Slide 20: Capital allocation priorities
Capital allocation priorities Maintenance of production Ongoing dividend distributions Diversify portfolio through M&A assets Triton drilling programme Share buybacks Infill wells at BKR Buchan Horst / other potential developments Value-accretive for Maximising the value of Direct shareholder shareh
Slide 21: Focus and priorities
Focus and priorities Half-year Results 2024 I 10 September 2024 21
Slide 22: Creating value through growth
Creating value through growth ORGANIC M&A Seeking to create shareholder value through adding Significant potential within existing portfolio material cash flow via diversification Strengthened subsurface expertise acquired through Proud track record of successful M&A Tailwind has led to identificati
Slide 23: Focused on creating value for shareholders
Focused on creating value for shareholders Ensure safe and reliable operations and best in class ESG Deliver more consistent and greater predictability in Create value for shareholders through our operational performance distributions and capital growth Reprioritisation of our organic investment opp
Slide 24: Appendix
Appendix Half-year Results 2024 II 10 10September September2024 2024 24
Slide 25: Ongoing focus on ESG
Ongoing focus on ESG • Actively reducing emissions - Scope 1 emission reduction targets aligned to UK North Sea Transition Plan - Emissions Reduction Action Plan embedded into Serica business • Portfolio Carbon Intensity below North Sea Average • Serica business supporting UK jobs and communities -
Slide 26: Balance sheet
Balance Balance sheet Sheet RBL Assets H1 2024 FY 2023 $ million $ million • Financial close on $525 million multi-currency RBL facility on 23 January 2024 E&E Assets 16 2 • First redetermination in June 2024 increased Borrowing Base to a level capped by PP&E 956 906 the $525m facility size Deferred