Serica Energy Plc · LSE:SQZ
Serica Energy — Investor Day (February 2024)
49 slides from Serica Energy's investor day presentation, Feb 8, 2024
Slide 1: Investing for Growth
Investing for Growth Analyst day - 8 February 2024
Slide 2: Introduction
Introduction Mitch Flegg – Chief Executive Officer Analyst Day I February 2024 I Mitch Flegg 3
Slide 3: 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 4: Serica stands apart in the sector
Serica stands apart in the sector • Balanced portfolio of UKCS assets covering full upstream life cycle • Strategy of growth through organic investment and M&A • Record of delivery • 5-year history of replacing reserves and growing production • Multiple acquisitions including Tailwind • Extensive pr
Slide 5: Two-pronged strategy
Two-pronged strategy 1. Value 2. Growth Improved Cashflow Portfolio and Shareholder diversification Return predictability Serica will continue to invest in Serica will continue to seek its assets to add value through opportunities to expand its increased production, portfolio by means of M&A, decarb
Slide 6: Reserves consistently replaced and diversified
Reserves consistently replaced and diversified Year End 2P Reserves & RP Ratio • Reserves maintained 140.0 10.0 despite 36 mmboe of net production in the 4 years 9.0 to end 2022 120.0 8.0 • As a result of the Tailwind 100.0 7.0 acquisition: Reserves (mmboe) - Pro forma reserves RP Ratio (years) 6.0
Slide 7: Production above 40,000 boe/d in 2023
Production above 40,000 boe/d in 2023 Combined Portfolio 2023 Average Net Daily Production (boe/d) 70,000 • Pro forma net production from combined portfolio of 40,121 60,000 boe/d in 2023 50,000 • Pro forma net production in 2023 was 56% gas and 44% oil 40,000 • Average production in 4Q of 45,748 bo
Slide 8: Strong fundamentals
Strong fundamentals Notes 2023 Production1 40,121 boe/d 1. 2023 production and unit opex numbers are pro-forma (Serica + Tailwind from 1 Jan – 31 Dec 2023) Gas to liquids ratio 56 : 44 2. Year-end cash & cash equivalents includes £28 mm of cash security Unit operating cost ~US$19/boe temporarily lod
Slide 9: North Sea Strategy and Overview
North Sea Strategy and Overview Carol Stewart – North Sea Business Manager Analyst Day I February 2024 I Carol Stewart 10
Slide 10: Serica's UKCS-focused portfolio covers full life cycle of upstream assets
Serica’s UKCS-focused portfolio covers full life cycle of upstream assets Production • 11 fields • Two hubs with multiple tiebacks to central infrastructure: - Bruce platform - Triton FPSO • No infrastructure overlap between hubs • 86% of production operated • Balance of gas and oil • BKR now <50% o
Slide 11: Adding value through investment: extending field life
Adding value through investment EXTENDING Key themes of our successful organic investment FIELD LIFE: strategy: • Operate safely and responsibly ADDING VALUE - Policy of continuous improvement - In person process safety awareness training being rolled out • Invest in wells and facilities to increase
Slide 12: From opportunity to production
From opportunity to production AREA: BRUCE HUB TRITON ERSKINE COLUMBUS ORLANDO BUCHAN AREA OTHER * Serica operated Bruce LWIV1 in 2025+ * Bruce platform well interventions in 2025+ * Bruce infills SCW & SCE * Bruce/Keith LWIV1 in 2024* Bruce/Keith/Rhum * Bruce (THP2 reduction) * Rhum (THP2 reduction
Slide 13: Ambitious investment programme in 2024
Ambitious investment programme in 2024 BRUCE TRITON Guillemot NW infill well Gannet E GE-05 infill well Bruce and Keith LWIV and Evelyn EV-O2 well platform Intervention Campaigns Bittern B1z sidetrack Planned activity in 2024/25 Analyst Day I February 2024 I Carol Stewart 14
Slide 14: Triton Area Fundamentals
Triton Area Fundamentals Ian Macaulay – Commercial Manager Analyst Day I February 2024 I Ian Macaulay 15
Slide 15: Core area for Serica
Core area for Serica Bittern • Serica unit interest 64.6% (Dana operated) • Producing since 2000 • 5 producing Wells, 2 water injectors • B1z sidetrack planned for 1Q 2024 • Possible re-instatement of water injection Guillemot W/NW • Serica interest 10% (Dana operated) • Field producing since 2000 •
Slide 16: Production hub centred around Triton FPSO
Production hub centred around Triton FPSO • Situated about 120 miles east of Aberdeen • Hosts oil production from Bittern, Guillemot W/NW, Gannet E, Evelyn , Clapham, Pict and Saxon (Serica has no interest in Clapham, Pict and Saxon) • Oil - export by shuttle tanker - Triton Blend (34 deg API) trade
Slide 17: Net production increased since 2018
Net production increased since 2018 Extended summer GE04 shutdown onstream Evelyn onstream First ‘walk-to- work’ campaign Gannet E onstream Tailwind acquires interests Note: Production is net to interests acquired by Tailwind from Shell and Exxon in 2018 Analyst Day I February 2024 I Ian Macaulay 18
Slide 18: 2024 Investment Programme
2024 Investment Programme Rich Hiney – Subsurface Manager / Alex Pirie – Wells Manager Analyst Day I February 2024 I Rich Hiney I Alex Pirie 19
Slide 19: Continuous activity through 2024
Continuous activity through 2024 Field Activity Serica interest 2024 2025 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May June Bruce Well work 98.00% Keith Well work 100.00% Bittern B1z sidetrack 64.63% Gannet E GE-05 well 100.00% Guillemot NW EC1 well 10.00% Evelyn EV02 well 100
Slide 20: Triton Area Projects
Triton Area Projects
Slide 21: Subsurface led revitalisation of Triton Area
Subsurface led revitalisation of Triton Area • No drilling had taken place in Triton Area since 2010 • From 2018 Tailwind undertook a significant subsurface work program 6 to unlock the potential of the area • Opportunities arise from relatively young, shallower reservoirs in well- established plays
Slide 22: Further opportunities in Triton's catchment area
Further opportunities in Triton’s catchment area 30km tie-back radius • Approximately 30 km catchment area around Triton FPSO from Triton FPSO • Capacity within facility for additional owned and third-party tie- backs • Serica using equity ownership to bring new fields into Triton - Belinda B possib
Slide 23: Bittern B1z sidetrack
Bittern B1z sidetrack Top Bittern Bittern reservoir summary reservoir depth • Eocene aged turbidite sandstones structure map A • Excellent, high net to gross reservoir • >30% porosity and >2 Darcy permeability B1z target area • Expected ultimate recovery factor >70% • Good quality 40o API oil • Fiel
Slide 24: Gannet E GE05 infill well
Gannet E GE05 infill well Top Gannet E reservoir depth Gannet E reservoir summary structure map • Paleocene aged Forties formation turbidite sandstones • Good, high net to gross reservoir GE05 target area A’ • >28% porosity and >1 Darcy permeability A • Expected ultimate recovery factor >45% • Good
Slide 25: Evelyn EV02 infill well
Evelyn EV02 infill well Top Evelyn Evelyn reservoir summary reservoir depth • Eocene aged Tay formation turbidite sandstones structure map • Thinly bedded, low net to gross reservoir A’ • Where reservoir sands present, they are excellent quality >28% porosity and >1 Darcy permeability • Expected ult
Slide 26: Belinda field development
Belinda field development Top Belinda reservoir Belinda reservoir summary depth structure map A • Eocene aged Tay formation turbidite sandstones, analogous to Evelyn 21/30-25 BE01 • Thinly bedded, low net to gross reservoir • Where reservoir sands present, they are excellent BE01 target area quality
Slide 27: Kyle – 33rd Licence Round award
Kyle – 33rd Licence Round award Kyle reservoir summary • Palaeocene aged turbidite sandstones trapped on the flank of a salt swell • Additional upside potential in deeper cretaceous chalk reservoirs • >25% porosity & > 1 Darcy permeability in primary Palaeocene reservoir • Good quality, 34o API oil
Slide 28: Bruce Hub Projects
Bruce Hub Projects & SERIGAENERGY
Slide 29: Subsurface complexity brings drilling opportunities
Subsurface complexity brings drilling opportunities • Bruce field is geologically complex - highly faulted (compartmentalised) with multiple reservoir zones Top Bruce reservoir depth • No wells drilled since 2012 structure map • Geological complexity creates opportunities X • Different parts of the
Slide 30: Bruce South Central East (SCE) infill well
Bruce South Central East (“SCE”) infill well Top Bruce Bruce reservoir summary reservoir depth structure map • Bruce “A” sand primary target within Middle Jurassic aged Bruce Group shoreface sandstone reservoirs Tie-back to WAD manifold • Good reservoir quality to recover the Bruce fluids: >60% A SC
Slide 31: Bruce South Central West (SCW) infill well
Bruce South Central West (“SCW”) infill well Top Bruce Bruce reservoir summary reservoir depth structure map • Bruce “A” sand primary target within Middle Jurassic aged Bruce Group shoreface sandstone reservoirs Tie-back to WAD manifold A • Good reservoir quality to recover the Bruce fluids: >60% SC
Slide 32: Serica carried out interventions on >50% of BKR wells
Serica carried out interventions on >50% of BKR wells • New production; e.g., Rhum R3 • Restore production from shut-in wells • Enhance production from existing wells • Improve well integrity Pressure Control • Better data from increased surveillance Equipment • Systematic approach Wireline Unit Cam
Slide 33: Number of Well Interventions
Serica has more than doubled the rate of well intervention BRUCE AND KEITH INTERVENTION 10 YR HISTORY 4 • Interventions from 2019 to present have added around 13 mmboe of reserves 3 • Cost of additions c.£4 per boe Number of Well Interventions • Payback typically measured in months 2 • Intervention
Slide 34: Skerryvore Exploration Well
Skerryvore Exploration Well
Slide 35: Exploration prospect close to infrastructure
Exploration prospect close to infrastructure • Serica holds 20% interest with partners Parkmead (50% 30/13c-M Planned 30/13-8 Projected and operator) and CalEnergy (30%) • Single exploration well designed to test two prospects Mey sandstone Piche out before (Mey and Tor) the 30/13-8 • Licence commit
Slide 36: Project 2035+
Project 2035+ Mike Killeen – Chief Operating Officer Analyst Day I February 2024 I Mike Killeen 37
Slide 37: Aiming to extend Bruce Hub operations beyond 2035
Aiming to extend Bruce Hub operations beyond 2035 • Serica’s current business plan assumes permanent • Initial life extension study work completed and material cessation of Bruce Hub production at year end 2035 change to Safety Case submitted in January 2024 • Project 2035+ launched during 2022 • Em
Slide 38: Integrated approach to extending asset life
Integrated approach to extending asset life North Sea Transition Deal Bruce CoP pre-Serica Emissions Target Bruce CoP per CPR Facilities Integrity Maintain base platform reliability & integrity Maintain well / Subsea infrastructure / Pipelines integrity – Invest for the future Process upgrades & rep
Slide 39: CO2 Emissions: pathway to 50% reduction in Bruce emissions by 2030
Pathway to 50% reduction in Bruce emissions by 2030 Temporary HV ✓ Gas Plant projects Project Status Power Generation projects Temporary H.V Power MP Ex Upgrade • Much lower emissions/ lower diesel consumption in TARs • Execution complete: replicate in future TAR outages. MP & Export Compression Upg
Slide 40: Buchan
Buchan Ross Cameron – OBO Asset Manager Analyst Day I February 2024 I Ross Cameron 41
Slide 41: Material addition to the portfolio
Material addition to the portfolio • Buchan field is one of the largest remaining undeveloped fields in UKCS • Historical production established productivity of Devonian Old Red Sandstone reservoir • Original COP due to integrity of floating production vessel • Serica’s acquisition of 30% interest e
Slide 42: First oil possible late 2026
First oil possible late 2026 • FEED in progress • Project sanction and regulatory approval targeted for 2H 2024 • Development drilling and facilities installation expected in 2025-26 • Gross capex estimate of £850-950 million • Earliest 1st production is late 2026 • Good quality oil (33.5oAPI) • CO2
Slide 43: Potential production hub
Potential production hub S Schematic Buchan Area Play Cross Section N • FPSO has space for added tiebacks TWT Milli Sec • Opportunities within Greater Tertiary Buchan Area 1000 - Existing accumulations: Avalon Andrew - J2 (West and East) - Verbier (West and East) 2000 Upper Cretaceous - Exploration:
Slide 44: Decommissioning
Decommissioning Stephen Lambert – VP Legal and External Relations Analyst Day I February 2024 I Stephen Lambert 45
Slide 45: Liabilities limited by acquisition terms and types of facilities
Liabilities limited by acquisition terms and types of facilities Bruce, Keith • Nearly all costs of decommissioning ‘existing’ and Rhum property retained by sellers to Serica • Keith and Rhum are subsea tiebacks Triton Area • Costs of decommissioning ‘existing’ property retained by sellers up to cap
Slide 46: Sellers retain majority of liabilities for wells and facilities acquired through M&A
Sellers retain majority of liabilities for wells and facilities acquired through M&A Field Terms of transactions Erskine Serica’s share of decommissioning ‘existing’ property covered by BP up to a cap which above current estimate Serica liable for costs of decommissioning any ‘new’ property Bruce, K
Slide 47: Serica has low decommissioning provision per boe of reserves
Serica has low decommissioning provision per boe of reserves Reported Decommissioning Liabilities / 2P Reserves (US$/boe) • Metrics based on most recently reported 10 pre-tax decommissioning provisions and 2P reserves of selection of North Sea peers • Provisions for decommissioning typically 8 refle
Slide 48: Conclusion and Q&A
Conclusion and Q&A Mitch Flegg – Chief Executive Officer Analyst Day I February 2024 I Mitch Flegg 49
Slide 49: Serica stands apart in the sector
Serica stands apart in the sector • Balanced portfolio of UKCS assets covering full upstream life cycle • Strategy of growth through organic investment and M&A • Record of delivery • 5-year history of replacing reserves and growing production • Multiple acquisitions including Tailwind • Extensive pr