Serica Energy PLC · LSE:SQZ
Serica Energy — Corporate Update (January 2021)
34 slides from Serica Energy's corporate update, Jan 21, 2021
Slide 1: Corporate Update
Corporate Update 21 January 2021 Serica Energy plc Corporate Update 21 January 2021 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: 2020 Performance
DYNAMIC INNOVATIVE INDEPENDENT 2020 PERFORMANCE Serica Energy plc Corporate Update 21 January 2021 3
Slide 4: COVID-19
COVID-19 Serica has experienced no interruption in production due to the COVID-19 outbreak As a response to the outbreak we reduced manning levels on the Bruce platform from over 130, initially to below 90 but now to around 100 in order to: • Reduce the risk of an outbreak • Allow social distancing
Slide 5: BKR and Erskine 2020 – Solid performance in a challenging environment
2020 – Solid performance in a challenging environment BKR • BKR production impacted by 45 day shut down for C18 caisson repairs in Q1 2020 FY 2020 Daily net • Adjusted BKR net production for non-shutdown period is equivalent to 24,600 boe/d 21,500 production boe/d FY 2020: • (Net FY 2019 production
Slide 6: Commodity prices
Commodity prices Heren NBP day-ahead Gas Prices (p/th) (Brent spot shown as comparison) 70 • Commodity prices have been depressed during 2020 60 • Serica’s production is over 80% gas 50 • The recovery in gas prices in Q4 2020 was spectacular 40 with year-end gas prices significantly higher than the
Slide 7: Gas price hedging
Gas price hedging • Actual hedging cash income for 2020 was approximately £12.3 million • For 2021 & 2022 Serica has swaps in place covering up to 25% of retained gas sales after adjustment for 2021 net cash flow sharing • This protects against severe downside gas prices while allowing most of the u
Slide 8: 2020 – Financial performance
2020 – Financial performance • Reductions in 2020 absolute operating costs were achieved • Unaudited FY operating costs* are estimated at $14/boe (2019: $12.60/boe) • 2020 production was lower than 2019 and the pound strengthened against the US dollar *operating costs (including production, processi
Slide 9: Maiden dividend paid in July 2020
Maiden dividend paid in July 2020 • 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 remain in an extremely robust financial
Slide 10: 2H 2020 – cash focused on investment
2H 2020 – cash focused on investment • Net cash income returned to growth in 2H 2020 after being around breakeven in 1H 2020 • BKR consideration included final US$5 million payment to Total E&P • Consideration payments flexed down in 2020 and likely to flex upwards in 2021 • Dividend announced in Ap
Slide 11: ESG Pedigree
DYNAMIC INNOVATIVE INDEPENDENT ESG PEDIGREE Serica Energy plc Corporate Update 21 January 2021 11
Slide 12: ESG performance
ESG performance • Daily flaring reduced and ‘start-up’ flare drastically reduced Emissions • Emissions reduction group hopper of opportunities • New focus on drilling and supply chain • Zero general waste to landfill Waste • New waste reduction targets • Improved metering and sampling to improve fla
Slide 13: ESG strategy
ESG strategy • Inspire our workforce to understand ESG, get involved and create opportunities • Look at near-term opportunities and longer term net zero solutions ONGOING STRATEGY • Lower emissions • Reduce waste • Use technology • Focus on supply chain Flared Gas (thousand tonnes per annum) 14.7 MA
Slide 14: ESG employee engagement
ESG employee engagement Serica Energy plc Corporate Update 21 January 2021 14
Slide 15: ESG supply chain
ESG supply chain Using Lerwick ferry for logistics Front loading packaging pods Sharing a supply vessel with another operator Serica Energy plc Corporate Update 21 January 2021 15
Slide 16: Moving Forward
DYNAMIC INNOVATIVE INDEPENDENT MOVING FORWARD
Slide 17: 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 18: R3 Intervention – Serica approach and target well status
R3 Intervention – Serica approach and target well status Approach Target Well Status • Assemble highly experienced team with HPHT and workover knowledge • Work closely with JV partners, supply chain, relevant regulators and authorities • Take lowest risk approach e.g. assume high- pressure gas trapp
Slide 19: 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 20: Columbus development project
Columbus development project • Columbus approved by OGA in October 2018 and immediately moved into development - major contracts placed before the end of 2018 • Close collaboration between Columbus and Arran Operators, with development benefitting production from both fields • The Columbus developme
Slide 21: 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 Arran South Manifold Q2 2021 Columbus Well Q2 2021 Shearwater Tie-in Q3 2021 Arran Start-up Q3 2021 C
Slide 22: Financial strength
Financial strength Diversified portfolio with • Serica’s diverse portfolio has limited decommissioning liability due to the terms of the Erskine transaction and the various BKR transactions low decommissioning liability • Serica’s share of BKR Net Cash Flow increases to 100% on 1 Jan 2022 Share of B
Slide 23: Our Ongoing M&A Strategy
Corporate activity Our Ongoing M&A Characteristics Strategy of Future Targets We continue to seek, via a rigorous screening process, new • REGIONAL FOCUS: Our operating expertise is in the Central acquisition opportunities to add further value by building on & Northern North Sea and, coupled with po
Slide 24: Continuing strategy to deliver growth
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: Appendix
APPENDIX Serica Energy plc Corporate Update 21 January 2021 25
Slide 26: Serica's Opportunity in a Changing World
DYNAMIC INNOVATIVE INDEPENDENT SERICA’S OPPORTUNITY IN A CHANGING WORLD
Slide 27: Energy White Paper – published December 2020
Energy White Paper – published December 2020 • ITS FOCUS? “net zero and our effort to fight climate change at its core, following the Prime Minister’s Ten Point Plan for a Green Industrial Revolution” • THE GOAL? “to transform the UK Continental Shelf to be a net zero basin by 2050” • OUR ROLE? “the
Slide 28: Serica fully supports the industry's 'Vision 2035' initiative
Serica fully supports the industry’s ‘Vision 2035’ initiative “Current government forecasts suggest that gas will remain a vital part of the UK’s energy mix as we move towards Net Zero. As long as this demand exists, managing declining North Sea production to maximise value, minimising greenhouse ga
Slide 29: Serica – reduced emissions vs. imported LNG
Serica – reduced emissions vs. imported LNG 59 kgCO2e/boe* Imported LNG 22 kgCO2e/boe* UKCS average <18 kgCO2e/boe Serica Imported Liquid Natural Gas (LNG) Gas extracted from the UKCS has an Since becoming Bruce operator, creates over twice as much average emission intensity of Serica has achieved a
Slide 30: What is the role of an independent oil and gas producer?
So, what is the role of an independent oil and gas producer? • The slowdown in new development activity and investment will impact UKCS production within the next decade • The UK will consume far more oil and gas on the path to net zero, and beyond, than it is able to produce from current known rese
Slide 31: The niche for Serica?
The niche for Serica? SERICA HAS THE SKILLS TO THRIVE AS PART OF THE NET ZERO TRANSITION There will be continued gas demand during the transition to Net Zero Over 80% of Serica’s production is gas There is continued support for UK production Serica is already making a contribution to security of sup
Slide 32: Major shareholders
Major shareholders Number of Shares % of issued Share Capital GRG UK Oil LLC 36,886,004 13.77% AXA Framlington Investment Management 31,309,674 11.69% Mr David Hardy 28,618,271 10.68% Canaccord Genuity Wealth Management 17,847,234 6.66% BP Exploration Operating Company 13,500,000 5.04% Hargreaves La
Slide 33: 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 Corporate Update 21 January 2
Slide 34: 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 Serica Energy plc Corporate Update 21 January 2021 34