Serica Energy Plc · LSE:SQZ
Serica Energy — FY2019 Earnings Presentation
39 slides from Serica Energy's earnings presentation, Apr 23, 2020
Slide 1: 2019 Full Year Results
2019 FULL YEAR RESULTS Strong performance in a challenging environment 23 April 2020 Serica Energy plc Corporate Update 2020 1
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: Strong Performance in a Challenging Environment
Strong Performance in a Challenging Environment Serica is well-positioned to deal with twin challenges of COVID-19 and commodity price uncertainty ROBUST FINANCES • Very strong balance sheet • Steady cash build GENERATING OPPORTUNITY • No borrowings • Limited decommissioning liabilities • We have th
Slide 4: Health, Safety and the Environment
DYNAMIC INNOVATIVE INDEPENDENT HEALTH, SAFETY AND THE ENVIRONMENT
Slide 5: Environmental, Social and Governance
Environmental, Social and Governance • As a demonstration of transparency, Serica has published its first ever Environmental, Social and Governance (“ESG”) Report • This report covers our approach and performance during 2019, our first full year as operator of the BKR asset • We have chosen to struc
Slide 6: Environment: Gas Production, Carbon Intensity, Flaring
Environment Gas Production Carbon Intensity Flaring Over 80% of our production is 2019 BKR Carbon Intensity was 2019 BKR flaring was 30% lower natural gas, which has significant around 18,000 Tonnes CO2/million than 2018 levels due to increased environmental advantages over boe compared to the 2018
Slide 7: Environment: Energy Consumption and Flaring
Environment Energy Consumption Flaring Lowering our energy consumption Initial data indicates 2019 BKR will have the biggest impact on our flaring to be 30% lower than 2018 green house gas emissions levels due to increased operational efficiencies 2020 plan to audit energy usage offshore and target
Slide 8: COVID-19
COVID-19 • Serica has experienced no interruption in production due to the COVID-19 outbreak We continue to work with the government and industry bodies to protect our staff and ensure • The Bruce platform is responsible for around 5% of the UK’s gas production and it is that all precautions are in
Slide 9: 2019 Results
DYNAMIC INNOVATIVE INDEPENDENT 2019 RESULTS Serica Energy plc 2019 Annual Results 9
Slide 10: 2019 – Strong Performance in a Challenging Environment
2019 – Strong Performance in a Challenging Environment • A British-based independent upstream oil and gas company with operations centred on the UK North Sea with a full range of exploration, development and production assets • Serica has no borrowings and limited decommissioning liabilities NET PRO
Slide 11: 2019 Group Income Statement
2019 Group Income Statement 2019 2018 (£000) (£000) Revenue 250,533 35,708 Based on lifted volumes – approximately 80% gas. Price mix approx. $30/boe Cost of sales (164,748) (15,690) $12.60 cost per boe shows 30% reduction from equivalent 2018 level Gross Profit 85,785 20,018 Demonstrates contributi
Slide 12: Group Balance Sheet (as at 31 December 2019)
Group Balance Sheet (as at 31 December 2019) 2019 2018 (£000) (£000) Exploration & evaluation assets 3,652 3,183 Limited licence exploration spend in 2019 Property, plant and equipment 325,404 373,721 Also limited capital spend with most current asset enhancement work expensed Total non-current asse
Slide 13: 2019 – Production Increased by 18%
2019 – Production Increased by 18% Bruce, Keith & Rhum Erskine FY 2019 FY 2019 27,300 boe/d 2,700 boe/d • Serica net daily production FY 2019: 30,000 boe/d (at upper end of. 2019 guidance of 26,000-30,700 boe/d) • Total Net FY 2019 daily production is 18% higher than FY 2018 Serica Energy plc 2019 A
Slide 14: Cash Position
Cash Position Cash, cash equivalents and term deposits / £ million • 31 December 2019 cash, cash equivalents and term 120 deposits totalled £101.8 million (this compares with Total cash £101.8 million (Outstanding prepayment £27.2 million of net cash at 31 December 2018) facility nil) 100 • During 2
Slide 15: Reserves Upgrade
Reserves Upgrade • Serica has commissioned a new Competent Person’s Report (“CPR”) effective 1 January 2020 • This has identified several upgrades to 2P Reserves estimates particularly due to the successful efforts to extend the prognosed Cessation of Production (“COP”) on Bruce • The latest CPR est
Slide 16: Commodity Price Hedging
Commodity Price Hedging • At the time of entering into the BKR transaction with BP, Serica purchased ‘put’ options* at 35p to cover 60% of the retained gas production, after net cash flow sharing, purchased from BP for 2018 and 2019 and 40% of retained production for the first half of 2020 • Since t
Slide 17: Maiden Dividend
Maiden Dividend • Our prime objective is to increase shareholder value both through technical excellence and acquisition in order to diversify risk, replenish our basket of assets and fully utilise the Company’s operational and financial strengths • We enter 2020 in an extremely robust financial pos
Slide 18: Technical & Operational
DYNAMIC INNOVATIVE INDEPENDENT TECHNICAL & OPERATIONAL 18
Slide 19: North Sea Portfolio
North Sea Portfolio PRODUCE • Serica is operator of and has a 98% interest in Bruce, a 100% interest in Keith and a 50% interest in Rhum • Serica has an 18% non-operated interest in the Erskine field DEVELOP • Serica is operator of and has a 50% interest in the Columbus development • First productio
Slide 20: Bruce, Keith and Rhum
Bruce, Keith and Rhum One of the UK’s major producing assets • Keith and Rhum fields are subsea tie-backs to the Bruce platform • By reducing costs and increasing uptime, Serica intends to prolong the life of the Bruce facilities • The extensive infrastructure associated with Bruce offers significan
Slide 21: 2020 Bruce Caisson Issue
2020 Bruce Caisson Issue • During a Bruce platform inspection in late January 2020, the condition of an unused seawater return caisson on the platform was observed to have deteriorated. This caisson had been taken out of service in 2009 • Production through the Bruce facility was halted while the pr
Slide 22: 2020 Bruce Caisson Issue
2020 Bruce Caisson Issue • Our expert teams onshore and offshore successfully designed and executed a programme of repairs using a Remotely Operated Vehicle launched from a Survey Vessel • This work was performed during some of the most difficult weather conditions experienced in the North Sea for s
Slide 23: 2020 Bruce Caisson Issue – Revised restart procedures
2020 Bruce Caisson Issue – Revised restart procedures • During the restart of the BKR wells in March Gas Flared Gas Flared Flaring CO2 equivalent 2020 following the Bruce caisson issue, it was Day 2018 2020 Reduction Flaring saving Reduction decided to implement a new procedure in order (tonnes) (to
Slide 24: The Rhum Field - Summary
The Rhum Field - Summary Rhum wells producing over • Serica acquired BP’s 50% interest and operatorship in 13,700 boe/d (net) November 2018 following the removal of Iranian ownership and involvement • Arrangements permitting the continuation of field operations were agreed with both UK and US govern
Slide 25: Multiple Growth Opportunities in the Bruce Catchment Area
Multiple Growth Opportunities in the Bruce Catchment Area Existing fields • Well work: planning commenced for R3 project • Optimising the management of Bruce facilities: lowering suction pressures for Bruce and Keith wells has increased gas production • Infill drilling: Serica is evaluating infill w
Slide 26: Eigg Licence Award (Serica 100%)
Eigg Licence Award (Serica 100%) • In December 2019, Serica Energy (UK) Limited, received an out of round award of a 100% interest in the UK petroleum licence P2501, blocks 3/24c and 3/29c. These are located in the area adjacent to the Serica operated Rhum field • The award contains the HPHT North E
Slide 27: Eigg Prospects – Potential additional reserves in Bruce Area
Eigg Prospects – Potential additional reserves in Bruce Area • The primary prospect is North Eigg which is estimated to Unrisked Prospective Resources (Recoverable) contain 367 bcf (P50) and potentially over 1Tcf (P10) of Serica Internal Estimates recoverable gas Dry Gas (bcf) Condensate (mmbbls) •
Slide 28: Erskine (Serica 18%) – Continued Improved Performance
Erskine (Serica 18%) – Continued Improved Performance Demonstrates the ability of focused operators to add value to mid and late life assets • The independent CPR evaluation of Serica net 2P reserves at the effective date of purchase (1 Jan 14) was 3.6 million boe • In the six years since then, net
Slide 29: Columbus (Serica 50%) - Operated Development Project
Columbus (Serica 50%) - Operated Development Project • Columbus will be drained by a single subsea well, which will be connected to the Arran-Shearwater pipeline, through which Columbus production will be exported along with Arran field production • At Shearwater the production will be separated int
Slide 30: Moving Forward
DYNAMIC INNOVATIVE INDEPENDENT MOVING FORWARD
Slide 31: Financial Strength
Financial Strength Diversified portfolio with • Serica’s diverse portfolio has limited decommissioning liability due to the innovative nature of the Erskine transaction and the various BKR low decommissioning liability transactions • Serica’s share of BKR Net Cash Flow increased by one-fifth at 1 Ja
Slide 32: Corporate Activity
Corporate Activity • We continue to seek new acquisition opportunities to add further value by building on operating efficiencies, reducing cost, exploiting synergies and managing risk ONGOING STRATEGY • During 2019 we made proposals in a number of acquisition processes but we were unable to justify
Slide 33: 2020 Expenditure
2020 Expenditure • Serica has no borrowings and healthy cash reserves. However, in light of recent commodity price weakness, a thorough evaluation of operating costs OPERATING COSTS has been undertaken • Despite the additional costs associated with the Bruce caisson repairs it has been possible to i
Slide 34: Continuing Strategy to Deliver Growth
Continuing Strategy to Deliver Growth Maximise production and reduce costs with full emphasis on Health, Safety and the Environment • Talented, motivated team in place and delivering results GENERATE • Focus on maximising economic recovery of oil & gas by reducing costs and remaining profitable at l
Slide 35: Delivering value with strong focus on ethics, safety and the environment
Delivering value with strong focus on ethics, safety and the environment “With significant cash balances at “As a modern, dynamic energy year end, no borrowings or major company operating in a rapidly commitments, strong ongoing evolving energy landscape Serica production and flexibility in recognis
Slide 36: Appendix
APPENDIX Serica Energy plc 2019 Annual Results 36
Slide 37: Major Shareholders
Major Shareholders As at 31 March 2020 Number of Shares % of issued Share Capital GRG UK Oil LLC 46,090,576 17.23% AXA Investment Management 31,757,260 11.87% Mr David Hardy 28,622,418 10.70% Canaccord Genuity Wealth Management 17,744,285 6.64% BP Exploration Operating Company 13,500,000 5.05% Polar
Slide 38: 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 Appointed April 2020 Serica Energy plc 2019 Ann
Slide 39: www.serica-energy.com
For further information visit www.serica-energy.com Email info@serica-energy.com Linkedin linkedin.com/company/serica-energy-plc Serica Energy plc Corporate Update 2020 39