Serica Energy PLC · LSE:SQZ
Serica Energy — Shareholder Meeting (June 2022)
27 slides from Serica Energy's shareholder meeting presentation, June 2022
Slide 1: Delivering Energy: 2022 AGM Presentation
DELIVERING ENERGY 2022 AGM Presentation
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: Nimble, dynamic and experienced
Nimble, dynamic and experienced Serica is now one of the UK’s leading mid-tier independent oil and gas companies. We are responsible for delivering, through the Bruce platform, over 5% of the UK’s gas production, a vital contribution to the country’s security of supply. Key attributes: • A portfolio
Slide 4: Delivering Results: 2021 Highlights
2021 Highlights Delivering Results • £386.8 million group gross profit (2020: loss of £2.9 million) • £157.6 million cash flow from operations (2020: £44.1 million) • 62.2 million boe 2P reserves and 2021 Group production more than replaced (2020: 61.0 million boe) • £218.4 million year end cash, ca
Slide 5: Financial Performance
FINANCIAL PERFORMANCE 2022 AGM Presentation 5
Slide 6: Financial highlights
Financial highlights Sales Revenue (£million) Gross Profit (£million) Profit before taxation (£million) 2021 514 2021 387 2021 135 2020 2020 -3 2020 13 126 2019 86 2019 109 2019 251 2018 20 2018 39 2018 36 YE Net 2P Reserves (million boe) YE Cash Resources* (£million) Dividend (p/sh) 2021 62.2 2021
Slide 7: Serica has a strong and growing cash position
Serica has a strong and growing cash position £218.4 million During 2021: £81.3 million £52.2 million BKR acquisition liabilities paid Net capital expenditure Cash, cash equivalents and hedging advances at 31 December 2021 (£102.7 million 30 June 2021) (mainly Columbus and the Rhum R3 project) Cash,
Slide 8: Intense commodity price fluctuation
Intense commodity price fluctuation Heren NBP day-ahead gas prices (p/th) (Brent spot shown as comparison) 300 • Average oil and gas prices were depressed during 2020 creating 280 difficult trading conditions 260 • The rise in gas prices since mid-2020 has been unprecedented 240 220 • 2021 market ga
Slide 9: Capital returns
Capital returns 2022 Dividend • Serica’s financial performance supported the introduction of a dividend policy in 2020 despite a challenging environment at that time • 3p per share was paid in respect of full year 2019 • 3.5p per share was paid for 2020 maintaining yield level • Increased cashflow d
Slide 10: Impact of Energy Profits Levy
IMPACT OF ENERGY PROFITS LEVY The Levy is damaging but Serica is well placed to mitigate the short term impact 2022 AGM Presentation 10
Slide 11: Serica's response to the Levy
Serica’s response to the Levy Excerpts from the “Energy Profits Levy Factsheet” • On 26 May 2022 the Energy Profits Levy (“EPL”) was announced • Introduces a new 25% levy on profits arising on or after 26 May so Serica’s profit prior to that date is unaffected • Legislation will include a sunset cla
Slide 12: EPL increases tax rate but encourages taxpayer investment
EPL increases tax rate but encourages taxpayer investment BEFORE 26 MAY 2022 AFTER 26 MAY 2022 Tax: 40% Tax: 65% Max Investment Relief: 46.25% Max Investment Relief: 91.25% 100 90 80 20 70 60 25 25 50 6.25 6.25 40 10 10 10 10 30 20 30 30 30 30 10 0 Tax Rate Relief Rate Tax Rate Relief Rate Corporati
Slide 13: North Eigg – Infrastructure-led exploration
North Eigg – Infrastructure-led exploration • The North Eigg exploration prospect is estimated to contain 60mmboe (P50) and potentially over 236 mmboe (P10) of recoverable resources (unrisked) • North Eigg shares many geological similarities with the adjacent Rhum field. It is clearly defined on 3D
Slide 14: Light Well Intervention Vessel (LWIV) campaign
Light Well Intervention Vessel (LWIV) campaign • The 2022 Light Well Intervention Vessel campaign has commenced using the MV Seawell Low risk – short payback • Operations on the first well (Bruce M1) which had been underperforming for some time • Identified a severe restriction caused by produced wa
Slide 15: Production Enhancement Programme
Production Enhancement Programme • Potentially over £500 million 2 7 in capital investment North Eigg Development Potential Future Development Drilling projects* identified for BKR and surrounding areas, Open for 3rd party business designed to: Bruce Area • Increase production • Add reserves 6 • Ext
Slide 16: Facilities Investment Programmes
Facilities Investment Programmes • Serica has identified a large Low Pressure programme of capital Gas Plant Export Machine Compression Export Machine Control Emissions Upgrade Upgrade Electrification Flare Gas Recovery investment projects on the Dehydration Obsolescence Bruce platform Oil Plant Oil
Slide 17: Environmental, Social, Governance
ENVIRONMENTAL, SOCIAL, GOVERNANCE ESG is now part of the Serica psyche 2022 AGM Presentation 17
Slide 18: Constant focus on ESG
Constant focus on ESG Our ESG report demonstrates our progress and commitment Total flaring volumes 53% lower than 2019 12,000 10,000 8,000 TONNES 6,000 4,000 2,000 0 2019 2020 2021 Scope 1 CO2 emissions 13% lower than 2019 250,000 200,000 TONNES 150,000 100,000 50,000 0 2019 2020 2021 Waste to land
Slide 19: Serica's ESG strategy looks at reducing emissions now and in the future
Serica’s ESG strategy looks at reducing emissions now and in the future • Engineering projects underway to reduce Bruce emissions by Focus of our strategy: People-led approach 20% over five years and 50% over 10 years* • Studies kicked off to reduce emissions further • Engineers and offshore technic
Slide 20: Promoting a flexible and listening culture
Promoting a flexible and listening culture ESG in practice: Working life • Continued flexible working beyond lockdown • Changed offshore rota for staff wellbeing • Energy Services Agreement rewards contractors during good Flexible working times and protects them during downturns • Introduced electri
Slide 21: Outlook
OUTLOOK Our investment strategy is to use technology and innovation to maximise the productive life of our assets while improving the environmental impact of our operations Serica has the balance sheet to fund this investment and also take advantage of the EPL Investment Allowance 2022 AGM Presentat
Slide 22: Significant contribution to UK gas supply
Serica is making a significant contribution to UK gas supply, a vital part of the UK’s energy mix With the introduction of R3 and Columbus, Serica’s production is now >85% GAS • The UK’s new Energy Security Strategy recognises the importance of domestic production to our energy security, and that pr
Slide 23: Contributing to domestic fuel supply
Serica’s production is a vital part of the UK’s energy mix Contributing to • At any given time around 9,000* personnel are at work on energy industry installations in the UK's waters, providing the gas that will fuel UK homes, schools and hospitals domestic fuel supply • Our industry supports almost
Slide 24: 2021 production increases in H2, maintained in 2022
2021 production increases in H2, maintained in 2022 • BKR production levels in the first half of 2021 were impacted Serica net production (boe/d) by the planned shutdown of the Forties Pipeline System from 30,000 late May until late June • During this period valuable maintenance programmes were 25,0
Slide 25: Value before volume: M&A strategy
Serica’s business development focus is on opportunities to spread risk and enhance returns Principles of our M&A Strategy • The UKCS presents a wide range of merger and acquisition opportunities • The recent imposition of the EPL adds complexity to the UKCS M&A market • Recent commodity price volati
Slide 26: Well positioned for the future
Serica is in a strong position and looking to grow further Well positioned for the future Production > 85% gas • Investing to provide essential low carbon energy for the UK market • Benefitting from sustained high wholesale gas prices • Reducing the country’s reliance on higher emission hydrocarbon
Slide 27: For further information
For further information visit Website www.serica-energy.com Email info@serica-energy.com Linkedin linkedin.com/company/serica-energy-plc 2022 AGM Presentation 27