Serica Energy PLC · LSE:SQZ
Serica Energy — Investor Presentation (July 2013)
28 slides from Serica Energy's investor presentation, July 2013
Slide 1: Value creation through successful risk management
Value creation through successful risk management Investor Presentation - July 2013
Slide 2: Disclaimer
Disclaimer The information presented herein is subject to amendment and has not been independently verified. Serica does not represent that the information and opinions contained herein are necessarily adequate or accurate and no liability is accepted for any errors or omissions. This presentation c
Slide 3: Strategy and value case
ENERGY Strategy and value case
Slide 4: UK & Atlantic Margin focus – multiple plays
UK & Atlantic Margin focus – multiple plays UK/Norway: Field developments (Columbus & Bream). Focussed on gas (Columbus, Doyle, York, 22/19c). Carried on Doyle and 22/19c. Partial carry on Spaniards. Ireland: Rockall & Slyne Basins. Extensive, high quality 3D seismic coverage. Large prospects close
Slide 5: Serica has been very successful controlling risk
Serica has been very successful controlling risk Secure Mitigate the Maximise Realise Gains Opportunities Risk Upside • Sell mature assets • UK • Conserve cash • Seismic • Book growth • Namibia • Farm-out • Drilling • Re-cycle • Morocco exploration risk • But with Carried • Ireland • Operate to cont
Slide 6: Farm-outs have raised significant capital
Farm-outs have raised significant capital Farm-outs in past 15 months: Asset Farm-out Retained Namibia – Luderitz blocks Farmed out to BP for carry on 3-D 55% Seismic ($50m) & option on well. Morocco – Foum Draa blocks Farmed out to Cairn Energy for 81/3% firm well ($60m) Morocco – Sidi Moussa block
Slide 7: Front end cost exposure small as a result
Front end cost exposure small as a result Asset Net Exposure Gross Potential Namibia – Prospect B Nil 670 mmboe (P50) Serica Estimate Morocco – Fig Prospect $3.5m 142 mmboe (mean) Cairn Estimate Morocco – Nour Prospect $1.1m 200 mmboe Genel Estimate UK – Block 22/19c HPHT prospect Nil 155 mmboe (P50
Slide 8: Upside - value lying in Columbus and Bream
TTTT Upside - value lying in Columbus and Bream Potential to unlock value in Columbus & Bream post project sanctions Exploration potential not 45 valued Low on-going costs for Columbus - nil for 40 Bream Bream 35 Cash and Oil/Gas Reserves Both contenders for de-risking and sale 30 25 Columbus shows
Slide 9: Upside - value potential in exploration portfolio
Upside - value potential in exploration portfolio Carried interests in UK, Namibia and Morocco has Serica Net P50 Prospective Resources materially reduced risk. Net Prospective Risked Resources (mmboe) 80 Ireland 70 Technical work is reducing risk further and increasing 60 250 chance of success 50 N
Slide 10: Summary: Risk protected – material upside
Summary: Risk protected – material upside Asset Downside Upside UK Development: Limited – controlled asset Large value on sanction Columbus Valorise with tax losses Norway Development: None - carried Cash due on production Bream UK Exploration: Limited – largely carried Drilling success on any Doyle
Slide 11: Forward programme & asset overview
Forward programme & asset overview
Slide 12: Forward programme & funding
Forward programme & funding Carried Carried BP Option Carried Carried Serica cost Farm-out Farm-out Serica cost Farm-out Carried Carried Carried Carried Columbus funded from loan or sold Bulk of forward programme funded by 3rd parties
Slide 13: UK Activity – 2013/14
UK Activity – 2013/14 Blocks 15/21a (part) & 15/21g – Serica 21% (part carried on next well). Spaniards discovery. Block 22/19c - Serica carried for 15%. Two HPHT targets. One prospect with stacked potential estimated 155 mmboe gross P50 Block 23/16f – Columbus. Commercial gas field – Serica 33.2%.
Slide 14: Morocco - Atlantic Margin activity
Morocco - Atlantic Margin activity Highly prospective and active frontier area. Serica in Tarfaya-Ifni Basin, offshore Morocco. Licences covered by high-quality 3D seismic. In 2012 Serica farmed-out both licences to large, reputable exploration companies: Foum Draa now operated by Cairn (Serica 8.33
Slide 15: Morocco drilling – Foum Draa & Sidi Moussa
Morocco drilling – Foum Draa & Sidi Moussa Serica carried on two wells capped at $60m and $50m respectively First well planned by Cairn for 4Q 2013 in Foum Draa to target an early Cretaceous turbidite channel stratigraphic play Operator estimates gross mean prospective resources for prospect at 142
Slide 16: Namibia - Atlantic Margin activity
Namibia - Atlantic Margin activity Luderitz licence: Serica 55% (operator), BP 30%, NAMCOR 10%, IEPL 5%. Presence of major undrilled prospects Serica carried on all costs to-date 4,180 km2 high-quality 3D seismic survey completed successfully by Serica in 2012. Costs borne by BP BP have option to be
Slide 17: Namibia Luderitz 3D survey - very encouraging
Namibia Luderitz 3D survey - very encouraging 3D fast track processed data confirms Prospect B (which may consist of multiple plays): is in excess of 700 km2 with vertical closure up to 300 metres has potential gross resource potential (P50, un-risked) of 670 million barrels* with multi- billion bar
Slide 18: Atlantic Margin activity - Ireland
Atlantic Margin activity - Ireland High-reward frontier exploration with large structures and proven hydrocarbon systems. Shared geology with prospective UK and Norwegian Atlantic margins. Serica strongly placed. Licences covered by high-quality 3D seismic data. Fully interpreted. Both basins have p
Slide 19: Ireland Rockall & Slyne Basin Licences
Ireland Rockall & Slyne Basin Licences Dooish Rockall Basin is proven hydrocarbon province – Discovery Dooish discovery. Serica 100%. LO 11/1 Muckish Muckish: Large gas/gas condensate prospect in Prospect proven hydrocarbon area close to gas markets. Gross resource gas potential (P50) of 1.3 tcf plu
Slide 20: Financial Overview
ENERGY Financial Overview
Slide 21: Financial strategy - basis for future growth
Financial strategy - basis for future growth • Maximise gearing of shareholder equity via industry funding • Limit recourse to shareholders where possible – no equity raised since Jan ‘08 • Farm-out high risk – 5 farm-outs have raised c. $60m for Serica in past 15 months • Crystallize value for rein
Slide 22: Track record of gearing shareholder funds
Track record of gearing shareholder funds Equity provided least funding Geared equity via industry funding: Source of funds (period from Jan ‘08 funding) Sales at optimal point in cycle provided re-investment capital Revenue 23% Revenue from Kambuna Near term 13% Farm-outs (near term): Farm-outs Dis
Slide 23: Financial management of African interests
Financial management of African interests Significant potential upside for shareholders at minimal cost 50 Serica used shareholder equity to: 40 Fund entry costs Namibia Support initial commitment: 30 Morocco Namibia 3D - $15mm Morocco seismic repro. - $3mm 20 US$ mm Serica accessed industry farm-ou
Slide 24: Conclusion
ENERGY Conclusion
Slide 25: 2013/14 targets
2013/14 targets 1. Resolve Columbus export route & commence development 2. Decide forward drilling programme in Namibia 3. Secure partners for Rockall and Slyne 4. Foum Draa well (4Q2013) – carried by Cairn 5. Sidi Moussa well (1Q2014) – carried by Genel 6. Drill well to test Doyle prospect – carrie
Slide 26: Current funds meet 2013 commitments
Current funds meet 2013 commitments Activity Period $mm Luderitz 3D processing (cost carried by BP) 1H 2013 - York 3D seismic survey 1H 2013 1.8 Kambuna abandonment (estimated) 2H 2013 1.6 Foum Draa drilling (Cairn carry capped at $60m) 2H 2013 3.5 Sidi Moussa drill estimate (Genel carry capped at $
Slide 27: But future needs financing:
But future needs financing: Drilling programme about to start – Serica carried but needs to plan beyond Resources are required to add new opportunities Alternatives under review:- • Sale of UK assets when markets improve. Farm-outs to continue • Corporate transactions to achieve synergies and expand
Slide 28: Why Serica is an investment opportunity
Why Serica is an investment opportunity Value case Exposure to several “company maker” events Largely carried by industry Pipeline of further farm-outs and asset disposals Numerous new venture opportunities available based on existing position Track record of gearing shareholder funds to industry fu