Serica Energy Plc · LSE:SQZ
Serica Energy — Investor Presentation (July 2015)
28 slides from Serica Energy's investor presentation, Jul 16, 2015
Slide 1: Transforming Serica: The Erskine Deal
Transforming Serica: The Erskine Deal Strategic and operational update 16 July 2015 London
Slide 2: Disclaimer
DISCLAIMER The information presented herein is subject to amendment and has not been independently verified. Serica Energy plc (“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 omission
Slide 3: Serica: Covering the Full Cycle
SERICA: COVERING THE FULL CYCLE • Production: Erskine Field – 3.3mmboe booked at 30 June 2015 – Can deliver up to *4,300boed net to Serica – Average rate since production restart >2000boepd net • Development: Columbus – Plans are progressing to develop 5.2mmboe contingent resource • Exploration: Wel
Slide 4: Serica: Near Term Objectives
SERICA: NEAR TERM OBJECTIVES • Erskine – Benefit from expected improvements on Lomond following major investment – Improve performance by identifying and solving downstream bottlenecks – Deliver solutions to cut costs and extend field life • Columbus – Use experience as Erskine partner to select opt
Slide 5: Serica Asset Base: Production, Development, Exploration
SERICA ASSET BASE: PRODUCTION, DEVELOPMENT, EXPLORATION UK/NORWAY ATLANTIC MARGIN Production, development and High impact exploration exploration assets portfolio focussed on underexplored Atlantic Margin UK Central North Sea basins • Production • Development • Exploration Ireland: • Rockall UK Sout
Slide 6: Erskine: Transaction
ERSKINE: TRANSACTION • Consideration: US$11.1million cash plus 13.5 million Serica shares effective 1 January 2014 • Cash consideration payable in four equal instalments: June 2015, 2016, 2017 and 2018 • Final payment adjusted for: – Field revenues and expenditures from 1 January 2014 to 4 June 2015
Slide 7: Erskine: Transformational
ERSKINE: TRANSFORMATIONAL Material benefits to Serica: • 3.6 million barrels of oil equivalent acquired at 1 January 2014 at $4 per boe • Ongoing cash flow on a tax efficient basis • BP retain Serica’s share of decommissioning liability up to £174million (gross), £31million (net) adjusted for inflat
Slide 8: Erskine: Offtake Route & Infrastructure
ERSKINE: OFFTAKE ROUTE & INFRASTRUCTURE • Erskine Platform – Unmanned wellhead platform with 5 production wells – Access to wells for wireline intervention – Multiphase pipeline from Erskine to Lomond • Lomond Processing – Condensate and Gas are separated through the Erskine Production Module (EPM)
Slide 9: Erskine: Sub Surface
ERSKINE: SUB SURFACE RESERVOIR MODEL • Five wells drain the four reservoir regions • Field has produced for 16 years • Produced Reserves: ~120mmboe (gross)* • Remaining Reserves acquired (gross): 20mmboe** • Remaining reserves at 30 June 2015 (net): 3.3mmboe** * DECC figures 9 ** Serica internal est
Slide 10: Erskine: Well Potential
ERSKINE: WELL POTENTIAL WELL PERFORMANCE Net boepd – Serica share • 3 of 5 wells producing in 6,000 W2 May/June ‘15 W1 5,000 W5 • 4 out of 5 wells now on production 4,000 W4 and have exceeded estimated W3 potential (achieved >4,000 boe/d 3,000 net on three days in July ‘15 ) 2,000 • Well interventio
Slide 11: Erskine: boepd History – Net to Serica
ERSKINE: BOEPD HISTORY – NET TO SERICA Lomond restricted Erskine in 2014 Lomond shutdown for investment 5000 4500 Transaction 4000 Completed. Erskine restart 3500 3000 2500 2000 1500 1000 500 0 11
Slide 12: Erskine: Field Performance Since Restart
ERSKINE: FIELD PERFORMANCE SINCE RESTART IMPROVED FACILITY Serica Net Erskine Production boe/d – since restart PERFORMANCE 5000 4500 • Erskine restarted end May 2015 4000 Daily Production boe/d 3500 • 2014/15 investment has 3000 improved facility up-time significantly (83% uptime since 2500 Average
Slide 13: Central North Sea Development: Columbus Field
CENTRAL NORTH SEA DEVELOPMENT: COLUMBUS FIELD • Located in the UK Central North Sea, 8km from Lomond platform • Serica holds 50% of block 23/16f and operates the field 13
Slide 14: Columbus Field: Fully Appraised
COLUMBUS FIELD: FULLY APPRAISED • 5.2mmboe contingent resources net to Serica • Field has been delineated with four exploration/appraisal wells • Individual development wells estimated to flow at up to 40mmscfd gas and 1,500bbls/d condensate North South Columbus Lomond Well 14
Slide 15: Columbus and Erskine Synergies
COLUMBUS AND ERSKINE SYNERGIES COLUMBUS PRODUCTION THROUGH LOMOND • Extends Lomond platform life and availability for Erskine, defers abandonment • Reduces cost per boe for Erskine and Lomond • Encourages innovation and new ways of thinking • Commercial and technical discussions are making progress
Slide 16: Columbus Development Options
COLUMBUS DEVELOPMENT OPTIONS LOMOND PREFERRED OPTION • Produce Columbus with a single well initially with scope for a second well, depending on production data • Production combines with Erskine production at base of Lomond platform (SSIV) • Alternative designs for Lomond tie-back are under consider
Slide 17: Columbus Development Options: Lomond Platform Modifications
COLUMBUS DEVELOPMENT OPTIONS LOMOND PLATFORM MODIFICATIONS • Columbus and Erskine fluids could share processing facilities on Lomond • Very little modification required at Lomond • Targeting sub $10/boe total development costs • Targeting $15 – $20/BOE operating costs Lomond Compression Separator Lo
Slide 18: Columbus Roadmap
COLUMBUS ROADMAP MILESTONES TO SANCTION TARGET LOMOND OPTION DATE P50 case economic NOW • Lomond platform to demonstrate: Lomond – Significant improvement in uptime Platform 2H 2015 – Acceptable operating costs • Submit revised FDP 1H 2016 • Achieve financing 2H 2016 • Project sanction 2H 2016 Lomo
Slide 19: Fully Carried High Impact Exploration: 22/19c
FULLY CARRIED HIGH IMPACT EXPLORATION: 22/19c BLOCK 22/19c • Located in proven play area – Analogous discoveries in the area – Close to Columbus field and infrastructure in which Serica has an interest • Prospects – Three high impact prospects on block – Rowallan, Sundrum and Dundonald – All High Pr
Slide 20: 22/19c Prospects
22/19c PROSPECTS MAIN PROSPECT subsea Metres • Rowallan West Rowallan East – Two reservoir targets – Triassic and Middle Eocene Jurassic 3000 – Structural prospect on 3D seismic Palaeocene – Analogue to Culzean discovery in Block 22/25a Upper Cretaceous (Chalk) • Forward Plan 3500 – Planning underwa
Slide 21: Financial Highlights: Well Balanced
FINANCIAL HIGHLIGHTS: WELL BALANCED • End year cash balances $9.9 million, increasing to over $14 million upon Erskine completion in June with no borrowings • UK tax losses of $186 million available for offset against taxable income from Erskine, Columbus and any additional North Sea field acquisiti
Slide 22: Enterprise Value: Peer Comparison
ENTERPRISE VALUE: PEER COMPARISON SERICA HAS THE LOWEST EV/boepd IN PEER GROUP Reserves and production based on Woodmac estimates 22
Slide 23: Conclusions
CONCLUSIONS THE ERSKINE TRANSACTION TRANSFORMS SERICA’S ABILITY TO GROW • Serica now has a significant production stream • With zero debt, a strong tax position and limited commitments • Holds a strategic position in Erskine/Columbus/Lomond area • Serica’s market cap is $20million with considerable
Slide 24: Additional Slides
ADDITIONAL SLIDES By DB y SERICAENERGY
Slide 25: Group Income Statement December 2014
GROUP INCOME STATEMENT DECEMBER 2014 Group Income Statement for the year ended 31 December 2014 2014 2013 • 2014 loss includes US$000 US$000 Columbus impairment and Morocco drilling Continuing operations Pre-licence costs (512) (330) Impairment and write-offs Administrative expenses (30,269) (4,296)
Slide 26: Group Balance Sheet December 2014
GROUP BALANCE SHEET 31 DECEMBER 2014 Group Balance Sheet as at 31 December 2014 2014 2013 • Excludes Erskine Non-current assets US$000 US$000 acquisition (completed Exploration & evaluation assets Other receivables 57,843 247 74,609 1,293 Jun ’15) 58,090 75,902 Current assets Inventories Trade and o
Slide 27: Exploration Portfolio: NW Europe
EXPLORATION PORTFOLIO: NW EUROPE UK • Southern North Sea – Greater York Area – Ranking prospects to identify drilling target. Close to infrastructure (York) • East Irish Sea – Doyle Prospect, – Carry on well (up to £11million gross cap). – Well deferred awaiting partnership decision • Central North
Slide 28: Exploration Portfolio: Africa
EXPLORATION PORTFOLIO: AFRICA MOROCCO • Tarfaya-Ifni Basin, Sidi Moussa – SM-1 well encountered oil. Evaluating drilling and fluid analysis results – Further work under review including possible drilling – Requesting licence extension • Tarfaya-Ifni Basin, Foum Draa – Relinquishment planned followin