Serica Energy Plc · LSE:SQZ
Serica Energy — Shareholder Meeting (June 2024)
27 slides from Serica Energy's shareholder meeting presentation, Jun 27, 2024
Slide 1: Focused On Value
Focused On Value Annual General Meeting, 27 June 2024
Slide 2: 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 ("Relevant Persons"). Any person who i
Slide 3: Presenters
Presenters Dave Latin Martin Copeland Chairman and Interim CEO CFO • Appointed to Serica Board in 2021 • Joined as CFO in February 2024 • Non-Executive Chairman since July 2023 and Interim CEO • 30+ year career in Investment Banking across the energy (effective 24 April until 1 July 2024) space incl
Slide 4: Serica 3.0
Serica 3.0 Dave Latin, Chairman and Interim CEO Annual General Meeting I 27 June 2024 4
Slide 5: Business confidence in UK upstream uniquely affected
Business confidence in UK upstream uniquely affected Aberdeen & Grampian CC UKCS Confidence Survey 2004 – 2024YTD Confidence in UK and rest of the world ‘disconnected’ for the first time Annual General Meeting I 27 June 2024 5
Slide 6: Our purpose
Our purpose To contribute responsibly towards meeting the world's energy needs through the safe and efficient production of hydrocarbons • Experienced and safe operator • Growing production • Strong balance sheet • Track record of successful M&A • Significant returns to shareholders Annual General M
Slide 7: History of sustained growth through acquisitions and investment
History of sustained growth through acquisitions and investment Acquisitions 2P reserves 140 mmboe 2015 - 18% non-operated interest in Erskine field from BP at end 2023 2018 - operated interests of BP in Bruce, Keith and Rhum fields 2018 - non-operated interests of TotalEnergies, BHP and Marubeni in
Slide 8: Serica today
Serica today • AIM listed with Head Office in London • UKCS portfolio focused around two 1. Diversified and Operations based in Aberdeen productionportfolio hubs • Top 10 UK North Sea producer • Balance of oil and gas • Portfolio focused around two 2. Debt-free • Established production hubsSea opera
Slide 9: A clear M&A strategy being executed by a strong team
A clear M&A strategy being executed by a strong team Screening criteria • Accretive to value • Conservatively financed • UKCS and/or overseas (NW Europe lens) • Operated or non-operated • Creates opportunities for further investment • Preference for unlocking ‘special’ situations • Includes current
Slide 10: Operational review
Operational review Dave Latin, Chairman and Interim CEO Annual General Meeting I 27 June 2024 10
Slide 11: 2023 highlights
2023 highlights Investment Growth Returns • Completed acquisition of • Production 40.1 kboe/d1 • EBITDAX £381 million despite Tailwind in March compared to 26.2 kboe/d in 2022 average NBP gas price half that in • Successful multi well • Net 2P reserves additions of 24 2022 intervention campaign on m
Slide 12: Key operational metrics
Key operational metrics 2023 2022 Comment Addition of Tailwind in 2023 Production 40.1 kboe/d1 26.2 kboe/d Longer than planned summer shutdowns of Bruce and Triton hubs Significant inflationary pressures in offshore costs Unit opex ~US$19/boe2 US$16/boe Planned shutdown overruns Reserves Replacement
Slide 13: Reserves replacement across the portfolio
Reserves replacement across the portfolio Proforma Net Proven and Probable Reserves1 140 • Reserves estimate based on 5 7 9 2 5 19 49 independent Competent Person’s 120 7 Report 49 100 • Balance of oil and gas 80 • 179% reserves replacement ratio2 mmboe 84 72 • Upward revisions include 60 • Bruce in
Slide 14: Good underlying production
Good underlying production Average Net Weekly Production (boe/d)1 70,000 • 2024 YTD2 production 43,781 boe/d GE-04 • Triton outage during May 2024 due to gas Triton well start 60,000 compressor compressor being offline outage • Initial results from recently completed LWIV 50,000 campaign has boosted
Slide 15: Converting reserves to production
Converting reserves to production Field Activity Serica interest 2024 2025 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 B6 well 64.63% Gannet E GE-05 well 100.00% Guillemot NW EC1 well 10.00% Evelyn EV02 well 100.00% Belinda BE01
Slide 16: Encouraging results from Bittern well
Encouraging results from Bittern well East West Well B1 Well A3z Well B4Y (producing) (now abandoned and Well B6 (producing) side-tracked to B6) (planned 1st production Q3 2024) Depth (ft) below Seabed Approx, 700ft of reservoir section (excellent quality sandstone) Estimated oil/water contact (dete
Slide 17: Financial Results
Financial Results Martin Copeland, CFO Annual General Meeting I 27 June 2024 17
Slide 18: FY 2023 performance at a glance
FY 2023 performance at a glance Production1 Unit operating cost1 EBITDAX2 Profit before tax Net Income 40.1 kboe/d ~US$19/boe £381 million £306 million £103 million Total Capex2 Current tax3 CFFO4 post tax2 Dividends Paid Adjusted Net Cash2 £79 million £183 million £195 million £89 million £78 milli
Slide 19: Income Statement
Income Statement Continued strong operating margins and profitability with impact of Tailwind tax shelter partially offsetting weaker commodity price backdrop £ million 2023 2022 Revenues and EBITDAX reflect lower realised prices (US$63/boe v US$104/boe) NBP Revenue 633 812 average c. 50% of 2022, o
Slide 20: Balance Sheet
Balance Sheet Serica continues to enjoy a very strong Balance Sheet with differentiated low decom provisions and net cash position New Reserve Based Loan Facility Assets 2023 2022 £ million £ million completed in January 2024 E&E Assets 2 1 • Serica reached financial close on its US$525 million mult
Slide 21: Significant cash returns to shareholders
Significant cash returns to shareholders Dividends Paid and Proposed1 100 25 • Proposed final dividend of 14p/share in 90 respect of 20232 80 20 • Dividends of >£200 million paid or 70 proposed to date 60 15 • £15 million share buyback initiated as part £ million p/share 50 of 2024 shareholder cash
Slide 22: Tax losses and capex mitigating impact of increased tax rates
Tax losses and capex mitigating impact of increased tax rates Effective tax rate1 vs. Marginal tax rate (%) • Tax comprises RFCT, Supplementary Effective tax rate on EBITDAX Marginal tax rate Charge and EPL 75.0% • 2022 marginal tax includes pro-rata impact of EPL introduction and increase 55.1% • 2
Slide 23: Possible tax increase on UK production hits independents
Possible tax increase on UK production hits independents 2024E Production1 Percentage Share Price Movement 14th June 2024 (by Company Type) (Day of Labour Party Manifesto Release) NOC 9% Major 33% Independent 58% Independent Major NOC Only circa one third of UK The combined market cap Production is
Slide 24: Inaugural £15 million share buyback completed
Inaugural £15 million share buyback completed Period 24 April to 21 June 2024 Number of shares purchased 8,437,478 Total consideration £15 million Volume weighted average price 177.78p/share Lowest price 143.00p/share Highest price 206.20p/share Number of shares in issue1 393,468,408 Number of share
Slide 25: Outlook and closing remarks
Outlook and closing remarks Dave Latin, Chairman and Interim CEO Annual General Meeting I 27 June 2024 25
Slide 26: Serica 3.0
Serica 3.0 Pursuing a new phase of growth, building on the achievements and firm foundations established over the last several years • Safe and effective North Sea operator • High level of subsurface expertise • Significant financial firepower • Refreshed leadership at Executive and Board levels • I
Slide 27: Q&A
Q&A David Latin / Martin Copeland Annual General Meeting I 27 June 2024 27