Serica Energy Plc · LSE:SQZ
Serica Energy — FY2020 Earnings Presentation
29 slides from Serica Energy's earnings presentation, March 2021
Slide 1: 2020 Full Year Results and Outlook
2020 Full Year Results and Outlook Emerging strongly from a challenging year, reporting profits before and after tax, enabling an increased dividend
Slide 2: Disclaimer
Disclaimer • This document is personal to the recipient and has been issued by Serica Energy plc (the "Company"). This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares in the Company, nor
Slide 3: Dynamic Innovative Independent: 2020 Results
Dynamic Innovative Independent 2020 Results
Slide 4: 2020 – Summary
2020 – Summary Serica is emerging strongly from a challenging year and is reporting profits for the year both before and after tax, enabling an increased dividend payment despite a severe industry downturn. Solid results in a difficult year combined with financial resilience enables an increased div
Slide 5: COVID-19
COVID-19 Serica has experienced no interruption in production due to the COVID-19 outbreak Manning levels reduced on the Bruce platform from over 130, initially to below 90 but now to around 110 in order to: • Reduce the risk of an outbreak • Allow social distancing offshore • Provide isolation area
Slide 6: 2020 Group Income Statement
2020 Group Income Statement 2020 2019 (£000) (£000) Revenue 125,641 250,533 Average: sales price US$20/boe (2019: US$30/boe), lifted volumes 22,400 boe/d (2019: 29,300) Operating costs (89,723) (105,148) US$14.12/boe (2019: US$12.60/boe) – costs spread over lower lifted volumes Depletion (38,495) (5
Slide 7: Group Balance Sheet (as at 31 December 2020)
Group Balance Sheet (as at 31 December 2020) 2020 2019 (£000) (£000) Exploration & evaluation assets 1,043 3,652 Namibia costs written off following decision to exit Property, plant and equipment 311,125 325,404 Spend on Rhum R3 well (£15.8 million) and Columbus (£9.7 million) net of depletion charg
Slide 8: Oil & gas prices
Oil & gas prices Heren NBP day-ahead gas prices (p/th) (Brent spot shown as comparison) 70 • Average oil and gas prices were depressed during 2020 60 • Serica’s production is over 80% gas 50 • The recovery in gas prices in Q4 2020 was spectacular with year- end gas prices significantly higher than t
Slide 9: Gas price hedging
Gas price hedging Swaps* Puts** Weighted Average Volume of gas Volume of gas • Actual hedging cash income for 2020 was approximately Price (p/th) covered (th/day) Price (p/th) covered (th/day) £12.3 million Q1 20 46.6 160,000 35.0 160,000 • For 2021 & 2022 Serica has swaps in place covering up Q2 20
Slide 10: 2020 – Financial performance
2020 – Financial performance • Reductions in 2020 absolute operating costs of around 10% • 2020 realised product sales price of US$20/boe (2019: were achieved US$30/boe), before realised hedging gains of £12.3 million (2019: £3.9 million) • FY operating costs* of US$14.12/boe (2019: US$12.60/boe) –
Slide 11: Updated reserves report
Updated reserves report • Serica commissioned a new Competent Person’s Report (“CPR”) effective 1 January 2021 • This identified several upgrades to 2P Reserves estimates particularly due to the successful efforts to extend the prognosed Cessation of Production (“COP”) on Bruce which impacts Bruce,
Slide 12: Maiden dividend paid in July 2020; increased dividend recommended for 2021
Maiden dividend paid in July 2020; increased dividend recommended for 2021 • Our prime objective is to increase shareholder value both through technical excellence and acquisition in order to diversify risk, grow our asset base and fully utilise the Company’s operational and financial strengths • We
Slide 13: ESG Pedigree
Dynamic Innovative Independent ESG Pedigree Serica Energy plc Corporate Update 2020 13
Slide 14: ESG 2020 commitments and delivery: 2021 targets
ESG 2020 commitments and delivery: 2021 targets Emissions Transparency Decision Making Workforce Engagement • 2020 total CO2 emissions • Reporting Frameworks: • ESG updates to main • Active committees: charity, over 10% lower GRI, SASB, TCFD and UN board and HSE committee emissions reduction, D&I, G
Slide 15: Moving Forward
Dynamic Innovative Independent Moving Forward
Slide 16: R3 Intervention – the challenges inherited with the asset
R3 Intervention – the challenges inherited with the asset Initial Status & Challenges • Well not produced or integrity tested since operational issues encountered in 2005 • Gas hydrates had plugged wellbore following gas influx from reservoir • Attempts to recover a mechanical barrier by the previou
Slide 17: R3 Intervention – current status
R3 Intervention – current status Objective Status Safe operation with no reportable incidents No incidents despite severe weather conditions and COVID-19 pandemic Remove wire, toolstring, plug and prong Completed successfully at first attempt Dissociate hydrate plug Completed successfully using coil
Slide 18: Columbus development project
Columbus development project • The Columbus development area will be drained by a single producing well tied into the Arran to Shearwater pipeline. Production will be processed on the Shearwater platform • Close collaboration between Columbus and Arran Operators, with development benefitting product
Slide 19: Columbus development progress
Columbus development progress Key Events Timeline Event Status Export Pipeline Installed Controls Umbilicals Installed C & AN Manifolds Installed Arran South Wells Drilled Arran North Wells Drilling Columbus Well Drilling Arran South Manifold Q2 2021 Shearwater Tie-in Q3 2021 Arran Start-up Q3 2021
Slide 20: North Eigg – exploration well to be drilled in 2022
North Eigg – exploration well to be drilled in 2022 • The North Eigg exploration prospect is estimated to contain 367 bcf (P50) and potentially over 1Tcf (P10) of recoverable Unrisked Prospective Resources (Recoverable) Serica Internal Estimates gas (unrisked) • North Eigg is interpreted to share ma
Slide 21: Financial strength
Financial strength • Serica’s diverse portfolio has limited decommissioning liability due to the terms of the Erskine transaction and the various BKR Percentage of Net Cash Flow Retained transactions (BKR Net Cash Flow Sharing) 100 • Serica’s share of BKR net cash flow increases to 100% on 1 Jan 90
Slide 22: Summary
Dynamic Innovative Independent Summary
Slide 23: Our Ongoing M&A Strategy and Characteristics of Future Targets
Corporate activity Our Ongoing Characteristics M&A Strategy of Future Targets We continue to seek, via a rigorous screening • REGIONAL FOCUS: Our operating expertise is in the Central process, new acquisition opportunities to add & Northern North Sea and, coupled with potential tax further value by
Slide 24: Continuing strategy to deliver growth: Generate Value
Continuing strategy to deliver growth Maximise production and reduce costs with full emphasis on GENERATE Health, Safety and the Environment • Talented, motivated team in place and delivering results VALUE • Focus on maximising economic recovery of oil & gas by reducing costs and remaining profitabl
Slide 25: Summary
Summary • Pre and post-tax profit reported for 2020 • Increased dividend of 3.5p per share to be recommended at 2021 AGM • Significant reduction in carbon emissions and flaring during 2020 • Investment in three capital growth projects • R3 Intervention (ongoing) • Columbus development (ongoing) • No
Slide 26: Appendix
APPENDIX
Slide 27: Major shareholders
Major shareholders Number of Shares % of issued Share Capital AXA Framlington Investment Management 32,141,728 11.99% GRG UK Oil LLC 32,113,403 11.98% Mr D Hardy & Mrs D Hardy 28,391,271 10.60% Canaccord Genuity Wealth Management 18,964,484 7.08% BP Exploration Operating Company 13,500,000 5.04% Har
Slide 28: Our board
Our board Tony Craven Walker Mitch Flegg Kate Coppinger Trevor Garlick Neil Pike Ian Vann Malcolm Webb Executive Chairman Chief Executive Non-executive Director Non-executive Director Non-executive Director Non-executive Director Non-executive Director Serica Energy plc 2020 Full Year Results and Ou
Slide 29: For further information visit
For further information visit Website www.serica-energy.com Email info@serica-energy.com Linkedin linkedin.com/company/serica-energy-plc