Serica Energy (LSE:SQZ) — Investor Presentation

0:01 Good afternoon, ladies and gentlemen, and welcome to the SERICA ENERGY PLC investor presentation. Questions are encouraged. They can be submitted at any time via the Q and A tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all of the questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I'd now like to hand you over to CEO, Mitch Flegg. Good afternoon, sir. Good afternoon. Thank you. Thanks everyone for joining. I appreciate your your time.

0:47 I think you all know what we're what we're speaking about today. On the December 20, we announced that we're we're buying a tailwind. And yesterday, we issued the circular on the on the proposed allotment of the new shares. And associated with that, we put out a presentation,

1:04 which I'm gonna go through here this afternoon. Then so I'll try and go through this relatively quickly. There's a lot of detail in here, but I'll go through this fairly quickly. I've then got a a quite a number of pre submitted questions, and we'll go through those questions and the answers to them. And then, hopefully, we'll have time to to pick up on on questions that I can see are already coming in through the through the q and a. And as as as we said earlier, if if we can't get through all of the questions, we'll we'll provide a a a written summary of of where we are. So to start off with the the rationale for this deal, I mean, it's been it's been portrayed in in in some quarters as as a complex deal, but I I think you can kinda strip it back to to the fact that these are some some really good assets, and there is a really good business case at the at the center of this deal. And and the assets that we're talking about are delivering fantastic performance now and and provide us with with, you know, excellent short term growth potential projects to get after.

2:09 The the key issue here is that we're introducing a a new production hub to SERICA. At the moment, SERICA, 80% issue of our production goes through the the Bruce platform, which has been performing really well for us and continues to perform well, and we'll have some numbers on that shortly. But we've always wanted to have more diversity in our portfolio. And and having an additional hub alongside Bruce, we feel will give us far more risk mitigation and and security. It also balances our mix between gas and oil, which in the current climate, the current taxation climate, and the current volatility in gas prices in particular, we feel gives us some some again, you know, protects us from some of the risks that are out there in the in the industry.

2:58 It increases our our production and our reserves significantly. So, you know, our 2023 production will be up by somewhere in the 50 to 80% range. Again, we'll come back and talk about that. It it it it adds a huge amount of reserves to the portfolio. So just on the two p case, and again, we'll talk about two p and two c. But on the two p case, on the last available CPR, this will add something like two thirds to our our production. So that's 67%. And that's before we take into account the good work that's been done during 2022, which we believe will have even more two p reserves. It works for shareholders from from year one. It will be a 20% increase in in reserves per share, something like a 50% increase over the next three years in projected cash flow per share. Again, we'll look at some of those some of those numbers in more detail.

3:52 The the financial strength of the company will be enhanced. You know, obviously, we will have more cash generation, more cash incoming to the company, But we will still retain the the position as a net cash company, and so we will still retain our firepower for future m and a for for actually executing the short term growth projects that we see, and we'll be able to continue to return cash to shareholders. And I I think finally, probably in in that financial strength part, one of the benefits from this is that both of the portfolios, the SERICA portfolio and the tailwind portfolio that we're acquiring, are characterized by the fact that they actually have very low decommissioning obligations.

4:37 There's a lot of similarities between what SERICA and Tailwind have done in the last few years. We've kind of both built substantial organizations in buying assets from majors. So we bought assets from BP and Total. Tailwind bought assets from Shell and Exxon and and others. By leaving the majority of the decommissioning liabilities with the sellers, by investing in those assets and by growing those assets and adding value and and extending life. So there's there's a lot of similarities in what we're doing, which is why we are really attracted to this portfolio. And finally, the deal brings in Mercurial as a as a strategic shareholder in in in SERICA. From the conversations we've had with Mercurial to date, we we know that we share a common goal. We know that we share a similar view on the strategy of of the resulting company.

5:32 And we do believe that that Mercuria will enhance the skills that we already have within within SERICA. So I I don't think there'll be anything on here that that comes as a surprise to anyone. There's a map there. I hope you can you can see this. I must have not on my screen. It's looking fairly small. But it it demonstrates that that we're getting some some geographical divert or more geographical diversity in our portfolio, which which takes away the risk of being a single asset company. The the doughnut chart to the top there shows that we would expect the Bruce Hub to contribute something like 50% of our production, Triton area 35. I actually hope it's gonna be slightly more than that, and then 15% coming from from the other areas.

6:20 But as the as the bottom plot shows, we will be quite we will have a balanced gas and oil portfolio. I think we'll still be slightly on the gassy side of of of that equation. But the important thing is that the oil assets in this in a combined portfolio do have very good carbon intensity level. And so the combined entity will have the combined portfolio will remain below The UK average in terms of carbon intensity. So a few slides of graphs now. I apologize if if this becomes a little bit dull. But just to we'll we'll try and whip through these fairly quickly. The first slide the first chart on the left hand side here showing that the the the two p reserves that we're acquiring as part of this deal.

7:14 Now this is as of the last competent person's report, and that unfortunately is a year out of date. But the two two p reserves at that stage were around 42,000,000 barrels. But what we're thinking is is more important is the two p plus the two c resources, I e, the the the the resources that we know that are there, but we still have to to to access are are in excess of 70,000,000 barrels of oil equivalent. It is largely oil, but we're still talking in barrels of oil equivalent throughout this. So what will this do to to our production in in the middle plot here? Well, in 2022, SERICA was sitting at at we just over 26,000 BOE per day was the production level. We expect in 2023 that will go up to between forty and forty seven thousand BOE per day, increasing slightly in '24 and slightly further in in '25.

8:10 We believe also that the combined entity will have a competitive operating cost level. Our expectation for for SERICA alone would be that we would be just over $18 per BOE next year. Now there's no getting away from the fact that that we're in an inflationary cycle. We see that in the you know, throughout the industry. I think the the SERICA operating cost for this year will be on order of, you know, $16.17 dollars per BOE. We think they'll be closer to 18 next year. But with the combined entity, we still expect the the operating cost to be significantly below $20 per barrel. So I think the the the the competitiveness of the combined company will will still be good.

8:58 If we look about look at what the production is going to do, there's a series of plots here which are just each before the transaction and after the transaction. And, you know, everything is in a unit a per share or sometimes per thousand shares. And, obviously, in the in the right hand of each cases, there's there's more shares in circulation than the left hand. So what we see that this does is the net production per share at the moment is is around 32 to 36. Well, it's it's yeah. That's that's per thousand shares. Sorry. So it's around 32 to 36 BOE per thousand shares. That will increase to by something like 23% in the first in the first year. The the number of reserves increases by something like 20% per share in in the first in the first year. The cash flow increases by 14% per share in the first year, and the earnings per share increased by just over 14% as well. So on on each of those metrics in the first year, this is this is this is accretive.

10:09 If we then go on to look at some of these measures over a slightly longer period, that that increase is sustained and and to a certain extent increased. So the production per share goes up more in that in that first three year period from 2023 to 2025. And the cash flow per share over that period is increased by something like 50%. So in on every metric, this works in one year and it works over the first three year period. So what does this do to us as a as a company? We will it will move SERICA ENERGY PLC the the top 10 UKCS producers and will be the third largest listed independent. So there are a number of well, a couple of non listed companies ahead of us and a couple of majors.

11:00 But it will still provide a company that has significant net cash and a company that has low decommissioning liabilities. So we're not just chasing scale for scale's sake, but we do believe that this the company that we create through this mechanism will be better placed for the next phase of growth. So this is not about putting these two companies together and and saying that that's it. Job done. This is about creating the springboard for the for the next step in the in in in in in the evolution of the company. This is about creating a company that is better positioned to do further m and a work and to further grow this this portfolio. So that's the background to it. That's what we're trying to do. How are we doing it? Well, the the transaction is structured such that we are issuing a 111,000,000 new shares.

11:54 Something like 28% of the enlarged company will will be these new shares. And and additionally, a relatively modest cash payment of £59,000,000. This gives an equivalent price based on our our closing share price on the day we announced. SQZ an equivalent price of £367,000,000. And in addition, we're assuming £277,000,000, which was Tailwind's net debt. Again, that was at the end of November. Now that's already being paid down, and we'll come back to to

12:45 taking into account the the balance sheets of each company, the cash in our case, the debt in in Darwin's case, and the the relevant tax positions. The the the deal always included the impact of the energy profits levy, so we have fully incorporated that into into the thinking. But we haven't included the synergies that may be achieved, particularly the tax synergies, the overheads, and GNA synergies that may be achieved. So we think there are prizes still to be still to be won as we go forward from those synergies. There are a number of completion conditions that I won't bother going through at this stage, but happy to come back to if if people if people want. Where we will end up is a company where the existing SERICA shareholders hold 71.1% of of the shares.

13:37 The the tailwind founder founders will hold 3.7%, And Mercuria, our new strategic investor, will hold just over 25% of being enhanced company. We believe, as I think I've already said, that there will be very good alignment between Mercuria and SERICA with regard to to to future m and a and future growth and the future direction of the company. We've had some really, really encouraging discussions from day one with with Mercuria about what we want to do going forward. We we do have in place a relationship agreement that will well, it's in place, but it'll be effective on completion under which Mercurial nominate two nonexecutive directors to our board. So they will not have a any executive role in the running of the company, but there will be two nonexecutive directors.

14:34 We'll we'll talk a little more about about those guys as we go on, but people that we really will welcome to the board that that will, we think, make us much stronger and much more efficient and much more ready to to to take the next steps. There are customary lockup and standstill restrictions that that actually govern, you know, what Mercurial can do in terms of selling or indeed buying more shares. And and there'll be I know because I've seen the pre pre submitted questions. I know there are a number of questions about that, and we'll come back and we'll talk about that in in more detail. There are provisions in in our agreement to look at whether we can extend some of the services that Mercuria already provide to Tailwind. There's I I must stress at this stage, there is absolutely no obligation for SERICA to to take out future hedging instruments with with Mercurial, for for example.

15:29 And there's no obligation for us to take out future marketing agreements to sell our product, but we have the option to do so. And and if we can find a good deal at market prices, we will and would like to continue to work and to build our relationship with Mercurial. But, you know, we've seen a number of comments of people suggesting that that we're obliged to do all future hedging with with Mercurial, and that that that that isn't really the case. It's probably beyond the scope of of of the time that we have available this afternoon to to talk too much about Mercurial other than to say that they are a global trading outfit. They have, you know, interests in, you know, 25 plus countries around the world, And we believe can can really, really help us with our our future m and a, particularly if we do get into new country entries. We we we the the fact that Mercurio have a footprint in so many areas will can only be useful to us and can only help our our efforts.

16:39 So excuse me. So just to to to to talk a little bit more now about the the the portfolio. I'll start off with with with SERICA. We had a pretty good year last year. Our net production was just over 26,000 barrels of oil equivalent per day despite the fact we had, you know, an unfortunate shutdown and an issue on on our rum field back in the early part of the year. We the production during 2022 was, in fact, 17% higher than than 2021. And I think in any declining commodity industry, you know, if you do nothing, production will go down year on year. So to have actually increased production by 17% last year, we think was was an outstanding performance.

17:31 And we we know and it kinda gets a little bit lost in in everything we're talking about at the moment, but we believe we can continue to to replace reserves and continue to increase production. We had a couple of projects last year, the light well intervention campaign, which was a real success, which we intend to do the second Lightwell Intervention Campaign this year, and we think we can continue to to to boost production. So, you know, we have some short term growth opportunities within our own portfolio, but probably not as many really good short term opportunities as as Tailwind have in the Tailwind portfolio. I think the Tailwind performance of this portfolio during 2022 has been outstanding. You know, a lot has been made that that, you know, the average production through the year is, I think, 11 and a half thousand BOE per day, something like that. But I think this plot really, really shows the the the the story.

18:27 Production was on a very slight decline in the first half of the year, then there was a long shutdown during the summer during which some some good maintenance work was done on the on the Triton FPSO, and we'll we'll come back and talk more about that. But that also enabled the the tie in of the Evelyn field, which came on production in the late in the second quarter. And we really saw the benefit of Evelyn and Orlando in the in the fourth quarter of the year such that although the annual average was something like $11.11 and a half thousand BOE per day, in q four, we were seeing from the tailwind portfolio 19,500 BOE per day. So that was an excellent excellent outturn for for the year. We saw, you know, December was 20 over 23,000 and at times peaking very close to to to to 25,000.

19:19 So so, yeah, a really, really strong performance throughout the year. And when you add the the the the the two portfolios together, again, you can see that trending up in the in in in the particularly in the fourth quarter such that in in December, we were just just shy of 50,000 BOE per day from the from the combined portfolios. But over the fourth quarter, the average daily production was in excess of 47,000 BOE per day, which is is really quite significant and quite a performance and something that both companies should be should be really proud of. Against that, there's the background of of commodity prices. You know, we we can't ignore that the the the success or otherwise of our industry is linked to to commodity prices.

20:09 We've seen continued strong oil and gas prices throughout 2022. This, for reference, goes back to 2020 when you can see that gas prices in particular really took a bit of a hammering. So what we've seen really for the last eighteen months is is a continued strength in in oil and gas prices. And and interestingly, I think you can see in this plot that there there isn't really a very strong linkage between oil and gas prices. I I I would argue, in fact, that when we saw the weakest gas prices in in the last year, particularly through through May here when and and this is a monthly average, so it hides some of the some of the daily and weekly variations that we see. But when when we saw gas prices going very low in May, it was actually the the the the the the time that oil prices in orange were were were at their strongest.

21:04 I think this kind of backs up one of the points we were making earlier about having the expanded portfolio with a mix with a with with an exposure to both oil and gas does mitigate our our corporate exposure to to gas price volatility. So we can expect that if we do see poor gas prices, even for a short period of time, we've got the the insurance, if you like, of of good oil prices. And that all leads to to stability in the combined company. That leads to the ability to to make shareholder returns with confidence. At least the ability to invest in our capital programs with confidence knowing that we have this resilience that is provided by having both oil and gas in the in the portfolio.

21:55 So where does that lead us? What what happens going forward? The the the the left hand slides left hand bars here are SERICA's performance in the last three years, and and the right hand shows where we expect the combined range to be. So as I've said, I think previously, we expect in in 2023 that the combined production will be between forty and forty seven thousand BOE per day in 2024. It'll be between forty one and forty eight. In 2025, between forty two and forty nine. These numbers actually already are slightly higher than we showed in the the presentation that went out on the December 20. And I'll I'll come back to why that why it says on here why that is. The the recently drilled Gannett GE o four well, which we've got a slide on in a a couple of slides time, has has really come in way ahead of of expectation.

22:55 And this really is still, you know, news that is fairly hot off the presses. I mean, I think the the rig was on location until late last night. I think that the rig came off location eight or 09:00 yesterday evening. So, you know, we've only just been able to incorporate the the findings of this, but that does give us, you know, added confidence that we're going to be able to to to to maintain these sorts of levels through the next couple of years. Now you you you would have seen already. I said that the, you know, the the exit rate from 2022, so the the combined entities were were producing something like 49,000 or 47,000 barrels per day, think I said in the in the final quarter of last year. And so you might ask, well, why aren't we predicting that that's gonna be the average for the year to come? Well, you know, obviously, the q three last last year was a a period of uninterrupted production.

23:45 During 2023, in both portfolios, there will be planned summer shutdowns for for ongoing maintenance. That is is absolutely normal. So that's why we we expect to to comfortably be within these within these minimum, maximum or high and low ranges that we've we've put here. But we do feel there's there's the opportunity to to outperform and to to improve over over this. The net effect of this, as I said, is that our net production per share will be increasing by something like between 1030% in in future years. Talk a little bit, and this slide divides people. I I think we're trying to show a lot of information on this this slide.

24:31 And and you remember at the start, I talked about the fact that the two p reserves and and so this is now just looking at the the the the the tailwind portfolio and the opportunities that are within that tailwind portfolio. At at at January 1 this year, the the the two p sales number was around 42,000,000 BOE. There was some production, obviously, during 2022, which would bring that number down. The early results of the GE o four well look like they're going to add they're gonna add back some reserves. And we already have two sanctioned projects where we've signed the rig contracts, and we're ready to go on the next Gannett well, the GE o five well and the b one zed sidetrack. So we think these will be early illustrations of turning some of the vast quantities of two c resources into two p reserves.

25:25 And we want to continue to do that. So, you know, within the portfolio, mean, I Evelyn has just come on on on on stream this year. There is a phase two for Evelyn, which will which will add will will will add two p resources, we believe, or convert two c to two p. There is the Belinda field, which is the the the next cab off the rank, if you like, after Evelyn. And then there's the Mansell field, which is, you know, under study and feasibility studies at the moment. Hasn't been sanctioned just yet, but but we do look to bring these these projects forward. And then the big prize, of course, is in this middle section here. At the moment, all of our all of our work and all of our estimates have been have assumed that the there will be a cessation of production or an end of field life for Triton in 2030.

26:18 We believe that there is a huge prize in extending life beyond 2030. We understand technically what is what is needed. We know technically that the the the FPSO is capable of providing what we need. And there will be a number of projects which will be undertaken in the next few years to increase the or extend the life of that of that asset in order to to to realize the value, you know, significant value of, you know, ten, twelve million barrels of of reserves. If we did the same sort of plot here for SERICA, we would see the same effect. There is a huge prize there to extend the life of these assets beyond beyond 2030. I talked already a little bit about about Gannett and GEFOR.

27:05 Really, really fantastic project. You know, I think a testament to the really high quality subsurface work that's been carried out within within Tailwind to identify the price, to identify the the feeling that the the southern area of Gannett was was not being swept and that an additional well would would address that. And then a testament to the to the to the good work of the operations team who've managed to drill that well, and and and it's come in with better than predrill estimates. So the reservoir quality was significantly higher than had been anticipated. The the the reserves or the the oil in place encountered in that sub scenario of the field is twenty twenty or 23% higher than than had been expected.

27:59 And the modeling indicates that that this this well on its own could start up at something like 8,000 barrels of oil a day, which is higher than the the predrill estimate. The well has been suspended. As I said, the rig's just gone off contract, and we would expect this well to be tied in in February with first production before the end of this quarter. So I think a real good success story. And just an example of what is in this portfolio and and and the value that can still be brought out of this portfolio. I talked a little bit about the the Triton FPSO. The the FPSO has there's eight producing fields of which Tailwind has interest in in five. And the you know, there's been there's been a lot of comment, a lot of questions, and we'll come back to them about about the the the quality of that FPSO.

28:48 People suggesting that, you know, it it it's it's gonna have to come off of station for, you you you know, upgrades and and whatever. There's been a lot of work done recently to to verify the integrity of that piece of kit and and to determine that it is fit for purpose until at least 2030 with with no with no dry dock or off stationing required. There's a campaign of upgrade and maintenance work. There was a big amount of work done with a walk to work program during 2022. There'll be another one during 2023. But the result is that the uptime on that on that on that FPSO is really good. It was more than 95% in in 2022. So it's performing absolutely brilliantly, and we expect it to do so.

29:36 As we said, you know, there is an ongoing investment program. So so we brought on Evelyn. We brought on bit and a two and four, and we've got the rig now signed up for the for further wells to go to go forward. Conscious of time, a lot of questions around tax losses. We in the in the announcement on the December 20, we we talked about the tax losses within the Tailwind companies. We can now update those to the end of twenty two. The the numbers we gave previously were at the end of twenty one. At the end of twenty two, the the tax losses sat at around 1,400,000,000 of of corporation tax, 1.2 of supplementary charge, and a small amount of of of EPL.

30:25 So that creates losses available for utilization against future taxable profits in the region of £470,000,000. There are some potential upward adjustments in future years, but we can use that as as a current estimate of the losses available. We think yeah. And I think we've shown given the, you know, the the the huge acceleration of production and the continued high prices that we would expect those tax losses to be utilized within the next three years against the assets that that are in the current tailwind portfolio. We have not here assumed any synergies for accelerating the use of those. The the timing of these tax losses is very difficult to to predict, and it's very difficult to be accurate about because, you know, if if you're gonna predict the use of tax losses, you have to predict accurately the the the profits that you're going to make. And that we know depends upon the performance of the assets, the level that we produce at. It depends upon the the the price that we receive for the oil and gas, and it depends upon our capital investment programs. And as I said, we want to continue to to invest.

31:31 But there there is a material future taxable benefit available to the group. We are we've always been very, very conscious of our our responsibility, our our ESG responsibility. And I don't have time in in in this talk to go through all of the elements of ESG, but but we feel that, you know, our s and g are are absolutely first class. But I think I think a lot of people are more interested in the e part of it at at the moment. As I said earlier, this transaction creates an entity that has a a a lower than UK average carbon intensity and is really forward focused on on reducing that.

32:17 And and from the measures we already have in place, we can see that we predict that that will continue to decrease in in both portfolios and, obviously, therefore, the the combined portfolio over the next three years. And we know that the Triton operator already has a defined program of of GHG reduction opportunities. SERICA is is committed and will remain committed to the North Sea transition deal. We are we have adopted the the North Sea transition deal GHG reduction targets, which include a basin wide reduction target of 50% by by 2030. So we already have for for SERICA a GHG emissions reduction action plan, and we look forward to working with the Triton operator to to to to help them implement their plans.

33:05 So we are not changing our our our standing or our ethos or our strategy. We are fully committed to to that North Sea transition deal. So you'd be glad to know that I'm I'm I'm hitting the hitting the home straight now, and we are I'll I'll start to try and wrap things up a little bit. I think this is we we've labeled this a, you know, a new growth phase for for SERICA, but it's it's really doing many of the things that that we already do. So, you know, the the first point here is that the new portfolio gives us, you know, an enhanced it's an enhanced portfolio. It gives us more growth opportunities. It gives us more projects to get after.

33:52 It it gives us more opportunities to to add value and extend the life and replace reserves. And it gives us the benefit to the access to two teams who have both been doing this for a number of years. So although I call this a new growth phase, it is actually both companies and both sets of people carrying on what they demonstrating what they've demonstrated they can do very well. And and and that is to to take advantage of of of those opportunities. Whether that's deals or projects, we've got a bigger portfolio to to to work on. We've got the second point here is the the increased firepower for for organic growth. We will, as a as a bigger entity, have more cash flow. We still keep the the firepower that we have in our portfolio at the moment.

34:39 We still have a, you know, a very, very strong balance sheet. We will still be a net cash company even after we take on board the the the the the the relatively small level of debt that we're inheriting from from Tailwind. We still will have the firepower. We will have greater lending capacity or borrowing capacity should we should we need it. And we do believe that we'll be in a much, much better position to be an industry consolidator and to carry on with the with the M and A effort. And we do believe that the relationship with Mercurial will give us an even better platform and even better support to to to be able to do that. So, again, this is not new. You know, both companies have been involved in in m and a and deal making and and and and have been doing that for for for the last several years, but we've we believe we'll be doing it from a position of more strength going going forward.

35:36 And finally, all of this gives us the the opportunity for enhanced shareholder returns. I've, you know, I've said several times that we believe the diversity in the portfolio is is hugely, hugely beneficial and will give us that stability in what we have at the moment. We will no longer be exposed to one off shutdowns here or there. We expect this deal to be accretive at at every level, reserves production, cash flow, and earnings. And that we believe is a strong basis from which we can sustain and keep growing our our return to shareholders. So, you know, that I think brings me to pretty much to the to the end of of the sales pitch, if you like. I mean, this is is strongly, strongly recommended by by the board of SERICA.

36:23 And the timeline is such that if I can make this work. Timeline is such that you you've seen the first two two steps on this ladder now. We we made the announcement on the December 20. We published the shareholder to to sorry. Published the circular to shareholders yesterday, and that announces the general meeting to vote on the allotment of the consideration shares, which will take place at the office of Peel Hunt, our known madam and broker, on the January 27, which I believe is Friday, and I believe it's at 11AM. It gives us we expect probably to have fulfilled all of the conditions precedent prior to completion during by by mid March, and we would expect then to be able to to complete the transaction and admit the new shares to trading in in late March this year.

37:22 So that was fairly quick. And really because I wanted to get on to the to the questions, I think I'm obliged now to hand you back to our our hosts. Mitch. Absolutely. And thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab that's situated on the top right hand corner of your screen. But just while Mitch takes a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published q and a can be accessed via your investor dashboard. Mitch, as you mentioned, we did receive a number of pre submitted questions ahead of today's event. And as you can see there in the q and a tab, we have received a number of questions throughout your presentation as well. So firstly, thank you to all of those on the call for taking the time to submit their questions. Mitch, if I could just please hand back to you to respond to those questions where it's appropriate to do so. And, of course, given the significant number of investors on today's call, if there are any questions that perhaps we don't get around to addressing, we'll be able to give you back all those questions submitted today to then add any additional responses where it's appropriate to do so. But perhaps now, Mitch, if I may just hand back to you. Thank you.

38:33 Thank you. I've had a I've had a quick scan through some of the questions that that have been posted. I'm still looking, and that that probably are over a 100. And so I'm I'm not going to I I don't think we're gonna be able to answer every one. But from what I can see, the majority of the questions that are being asked have been covered by the the questions that were pre submitted. So I'm gonna go through the pre submitted questions as quickly as I can. If we have time, I'll I'll pick up on some of the others. But I assure you that if we don't get to any that have been submitted today, we will provide a a a written a written solution. So I'll go to the pre submitted questions, and some of them are quite aggressive, and and I'll I'll I'll start I'll start off with with one which says that the 40% share dilution to existing shareholders is unfathomable.

39:24 They've supported the company as I have for several years. How is this acceptable? Where do you see the share price market cap on the day of the additional shares being added? Why is this acceptable? If directors had actually put their hands in their pockets and bought shares on the open market, Second part of the question, how is the company not seeing the 25% stake handed to Mercurial is too large? Yeah. It doesn't have much to that. And then the third is how do you answer claims of empire building and that this is not in the interest of shareholders. So thanks for the question. I mean, obviously, I, you know, I think that is fairly harsh. I I I my my answers to that would have been included or are included in in in in the in the presentation and what we said so far.

40:09 You know, the the the we are giving or or in exchange for the for the assets, Mercuria are receiving 25% of the of the shares in the in the large company. But the fundamental rationale is in the quality of the assets that we're exchanging for that 25% of the company. I believe that that these assets have yeah. Are are uncommonly good fit to the assets we have. The people are really good, and the people are a really good fit to the people that we already have. And the growth opportunities that are out there actually make this an an equitable transaction. And if we can get this right and if we can can can extract the value from those assets, then this is an outstanding opportunity for for for SERICA.

40:58 So, you know, we've always we've always said that, you know, we don't do deals for size. This is not just for, you know, it it's not empire building. And I think anyone who has seen anyone in in in in action in in in SERICA would know that we've we've actually looked at a lot of opportunities over the last couple of years, and and there are lots of things that we could have done that that that might have been we might have been accused of being empire building, but we're not like that. We are looking for opportunities that give us diversity that that that don't mean that we expose ourselves to to huge decommissioning. That is very, very important. We're looking for opportunities that do have the right environmental credentials, and this is a rare opportunity to achieve all of those things. So so we think that that this deal actually is is is is de risking for for for shareholders, and it gives us it gives us a great opportunity for future growth. And it brings in an ally in in Mercuria that that who we believe will are incentivized in the same way that we are to to to grow this company. So I I think, you know, we don't look at it in terms of giving 25% of the company away. We look at it in terms of the fantastic opportunities to to grow this portfolio with a with a really good set of assets coming in.

42:20 The next question builds on on that same theme, and it says, basically, it it it repeats about people putting in their hard earned monies only to allow Mercurial to control the company. What is to stop Mercurial to taking the company where it wants to go, I e, by purchasing more shares in eighteen months time and eventually taking the company private? I mean, I I don't think there's if if you look at at Mercurious record in in other areas where where they have taken a stake in companies, I don't think there's anything to support the the hypothesis that they're trying to to to take the company by by stealth.

43:09 SERICA retains a fully independent board. SERICA, as a company, you know, we have experience of having had large shareholders. We had an 18% shareholder up until something like eighteen months ago, I think, who who who had representation on board. So we do have experience of working with large shareholders. I don't think there's there's any evidence to to support that hypothesis that that Mercurial want to take us private. I don't believe that that that that that we would allow that to happen. There are, you know, obviously, there are in in corporate law and takeover code, there are there are some protections against companies being taken over by stealth. So so we don't have any sense that that is the case.

43:55 And, you know, and and you but you could just as easily say, well, what's to stop any other company building up a stake and buying shares in the open market and taking us private? As a listed company, there is always a risk that that somebody wants to build up a stake in you, but we have no reason to believe that that this creates risk that we that we don't understand. There is a question then, again, related to to Mercuria. Why with SERICA having such a strong financial position, why does it not renegotiate with Mercurial on more favorable terms, reducing the allocation of shares or fully cash? If Mercurial want in so much, they must be open to renegotiate, or is it that they want to decide what happens to the money SERICA has built up on the books?

44:45 Again, I can only really stress what, you know, what I what I said previously. The the the the board and management are are focused on taking this deal through to completion. We believe that the opportunity is is what really counts here. And there is a shareholder vote to to vote on the issue of new shares. And and we believe that that, you know, the the the issue of the future use of use of cash is is is I don't really understand how that can be related to this. The board is independent. Mercurial cannot dictate what company does with with its cash and and will not be able to. So, yeah, I I I can't see how we could believe that this is Mercurial trying to get the cash from the company.

45:33 The next question, why are SERICA deciding to remain remain on the AIM market? And again, it comes through to say, is this something Mercurial wants? We we've always said that we will look at the appropriate time of moving to the main market. It wasn't considered as part of this transaction, as part of the timing. That's that's that's not a something that Mercurio have insisted upon. We do talk to all our shareholders regularly about this fact, and it's fair to say that not all shareholders are as keen on immediately going to the main market. There are a number of shareholders who see benefits from remaining on AIM. I'd be happy to to discuss that, but I think it's probably slightly without the scope of of today's meeting. But but, yes, we at the correct time, we are we've always said it will be it will be appropriate. There will come a time when we're right ready to go on to the main market. But at the moment, AIM works works very well for us.

46:32 Next question is on production guidance, and it's a long question. And I'm not gonna read out all of the numbers because I think we'll tie ourselves in knots. But, basically, it kinda it it it it's asking about some of the things I talked about in in the presentation here. And it says, with a production guidance of 40 to 47,000 BOE per day for the combined entity, and as we've already stated, tailwind guidance of 15 to 20, it suggests that SERICA's guidance is therefore very low and and and asks why the the guidance on SERICA's production portfolio isn't higher. I think, you know, the guidance for for and SERICA, as I've said, this year produced 20 just over 26,000 BOE per day, which we think was a very, very good performance.

47:22 And we would expect it to be in that region next year. So I you know, and and, obviously, with any of these fields, with any of these assets, if you do nothing to an asset, you would expect production to decline year on year. So maintaining production at its current level, particularly when that level is 17% above where it was two years ago and well above where it was three years ago. I think maintaining production at that level is a good performance. This particular questioner says, in November this year, your rate was 29,000. So why can't you keep it at that? And, you know, I mean, I think really this is just the difference between instantaneous rates and what we can average over a year. We have to do maintenance on on the assets. So just because we're hitting 29 or thirty thirty thousand barrels a day in one particular month, I I would never predict we're gonna do that for the whole year because I know that during the year, we are gonna have periods of of of planned and sometimes periods of unplanned shutdown. So, you know, we're comfortable with with with those with the guidance we give. I think we can beat it. I think I would love to beat it, and I think we've got a good chance of beating it, but the guidance for next year is 40 to 47,000 BOE per day.

48:39 The next question, the Triton FPSO arrived in Teeside in December 1998 and was commissioned in 1999. The design life of the vessel was twenty years. That makes the vessel approximately twenty three years of age beyond its design life. My questions are, have you considered how the age of the vessel will impact future production? And b, when will the Triton FPSO need to be replaced? So, I mean, the flippant answer is that most of the North Sea is beyond this design life. Know, there are platforms out there that had twenty, twenty five year design life sort of operated for forty years. I think the the important thing is is not the age of an asset, but it's how it's been maintained and how it's been preserved and and and looked after. As I said, we carried out we carried out a lot of due diligence on on the FPSO based on work done by the operator.

49:33 We we spent a lot of time. We had an external expert engineering company come in and and look at this, they have determined that the the maintenance work that has been performed by Dana, the current operator, and the the upgrades that have been performed in the water work program last year and this year do mean that there will be no need to replace that vessel before 2035. And I think as I said earlier, the the the the fact is that, you know, the the the the uptime is is remarkably good. And, you know, 95% uptime in in q four of last year is is is outstanding. And so we do not see that the the FPSO is is the weak link in in any way in in in this production scheme.

50:23 Question seven. Well done on a great deal. What assurance and work has been done on the estimated £470,000,000 value of tax losses? You know, as as you'd expect, we we've taken we've taken the top tax advice, top legal advice on on the applicability of these these tax losses. We don't call that a value. The $4.70 is a is a mechanical result just of a, you know, multiplying the tax losses by the rates of tax, and it doesn't take into account the the the timing of of utilization. And it doesn't take into account the fact that the investment that both company both Tailwind and SERICA are doing at the moment will add more tax losses. So there should be more shelter going forward.

51:14 So we've we've had a lot of of tax advice on this, and and and nothing in that tax advice believes leads us to believe that that that we should doubt the ability to utilize these tax losses. People have talked about whether there is, you know, going likely to be changes in The UK tax regime. And, you know, I mean, I'm I'm I'm probably not qualified to talk about political changes or or or legislation changes in the future, but we can't rule that out. But what we do know is given the really high production levels that we have and given the continuing high commodity prices, those tax losses will be extinguished in a in a relatively short period of time. We said three years in the in in in the in the presentation.

52:05 So I think, you know, we we will concentrate on on doing everything we can to utilize those tax losses as efficiently and as promptly as as possible because that is what we do. You know? We we concentrate on producing as much as we can, as quickly as we can, and and maximizing our profit by making sure that we achieve that production at at at at as lower cost as as absolutely possible. And, you know, we haven't baked in any synergies into this into this transaction, but we do believe there will be synergies. We do believe that, you know, the the the two operating companies or or the two teams from SERICA ENERGY PLC will be better than the sum of the parts. I mean, both companies have have high points and strengths. I'm not gonna not gonna go through those now and embarrass embarrass individuals.

52:55 But we believe that that we will have a far better operating capability as a combined company, and we do believe that that will lead to to to cost savings. We, SERICA, have got a lot of experience, and and some of you will have heard me talk previously about what we've done on Erskine where we're the nonoperating partner and where Erskine is, you know, is, I think, a great success story since we bought that asset. We've produced more reserves than we than we were buying, and we still got the same amount left. And we've driven costs down there, and we've helped the operator drive costs down there. And I think we can bring some of those skills in going forward. So so so, yeah, I think we're gonna end up with an organization that is that is better than the sum of the parts. Next question. Given the current market weakness, a share buyback feels like a sensible short to medium term plan alongside the acquisition. And there are a number of questions on this thing. And I and I must say, you know, the questions I'm reading out now, there are there are a number of you know, I've just chosen the the most representative question because there are a number of there are a number of questions on all of these things.

53:59 So I think we've I've I've said in the presentation that that we think this transaction actually, you know, enhances our ability to to make returns to shareholders. And and we've got to be really clear on that. That's one of the reasons for doing this is we want to take out the risks associated with being a a single asset company. We want to give us ourselves more stability. We will have more more cash income. And and so we think that just enhances our our ability to make returns to shareholders. We want to continue to establish ourselves as a dividend player. It's quite unusual for companies of our size to be independents, to be dividend players. We've only been a dividend player for a couple of years now, but we've established that quite well. We do intend to to continue to do that, and we are able to continue to look at larger, more irregular returns to shareholders through buybacks or or or special dividends.

54:55 So we we will always consider that alongside the other investment opportunities we have. So we do have M and A opportunities. As I've said, one of the reasons we're doing this is to do more M and A. But, you know, we're we're looking at M and A at the moment, as I know, tailwind worth for for for for, you know, in in the recent in the recent past. So, you know, we're looking at other M and A opportunities in parallel to what we're announcing here at the moment. So we will make the appropriate returns to shareholders alongside with the alongside the other opportunities we have for investment, whether that is through organic or or or inorganic means. Next question is is is kind of just a variation on that theme. And it says, SERICA have stated its dividend policy will remain.

55:45 However, it's not clear what SERICA's dividend policy actually is. Could you explicitly state what the policy is? Is it x percent of net profit, x percent of net free cash flow? The concern is with significant debt and hedging activities tying up cash, SERICA shareholders will be left guessing. So, I mean, to to be clear, our our dividend policy does is has never been related to net profit or or or net free cash flow. Our dividend policy has, you know, has had to take into account issues like hedging activities with the cash security. But as as I think everybody knows, we we have we've we've managed that that that that issue very well such that the SERICA hedging security issue is effect has effectively gone away now. So that that doesn't come into our our dividend policy.

56:44 Our program has our policy has always been to maintain and hopefully have a a rising dividend in terms of of pence per share, and we would expect that to carry carry on. So the fact is we're gonna have more shares in circulation, so our our distribution through dividends, would expect to increase dramatically this year compared to to to last. And I'll come back to the hedging because I know that's in one of the other questions here. I'll we'll get to that in a moment. We're getting on a little bit to to hedging already. The next question is about Mercurial conflict of interest. And it says, what formal legal documentation is in place to ensure Mercurial's role as a provider of hedging futures contracts is not to the detriment of other SERICA shareholders?

57:34 As a crude example, Mercuria received a 100% of profits from their hedging, but only 25% of any SERICA profits. So it's in their interests to prioritize their hedging. What's the formerly legally stopped Mercuria quoting excessive above market prices? Yeah. I can't stand where where where the question's coming from, but but there's nothing to stop Mercurial quoting excessive above market prices, but there's everything to stop us accepting excessive above market prices. So we're under no obligation to to to to put future hedging contracts in place with Mercuria. We can see advantages of having a business relationship if if Mercuria can provide competitive competitive products for us.

58:27 But we have an independent board, And and and our independent board would not allow the you know, us to enter into excessive above market contracts. So I I I can't see how it how it, you know, how that would occur. And we yeah. I I I, you know, I I I just I think I think we need to to to actually all be clear that that we're under no obligation to to enter into any such any any such contracts. The next one is around hedging strategy. And it says, just when SERICA was winding down its costly hedging book and about to enjoy the risk reward of market prices, this strategy takes us appears to take us back to one of significant hedging activity.

59:16 We will naturally be forced to hedge with tailwinds, significant gross debt, and when we're curious as the largest single shareholder, I'm not gonna go through the rest of it. It it just amplifies that point. So let let let's let's be clear. I mean, SERICA's hedging policy was was not excessive. We were hedging something like 20% of our of our or 25% of our gas, 25 20% of our total production. It served us really, really well through low low gas prices of of the early twenty twenties. In the last couple of years, the or last year in particular, the the the commodity prices were such that the margin calls were difficult, but we we've actually solved that. We're not putting any new gas hedges in place. We have no intention to put any new gas hedges in place.

1:00:02 We now have the balance sheet strength that provides us the the security against that. The the the the the the the suggestion in here is that we're gonna be forced to hedge more going forward. That is not correct. There are some hedges in position that are associated with the the the the debt position that the Tailwind has. These hedges are totally in line with what would normally be expected by a reserve based lending facility, so they're they're they're quite modest. Importantly, the hedges are on oil. Now there has been far less volatility in in in oil, and so the requirement for margin calls, those of you that have been SERICA investors for a long time, will know that the the requirement for margin calls was caused by the volatility in gas prices.

1:00:54 Oil has nothing like the same volatility, and so we wouldn't expect to see the same margin call issues with oil hedges. So there are modest hedges in place that is absolutely customary for for an RBL, and we we that that's not gonna change. And just to reiterate, we don't have we we we're not gonna suddenly go out and and change our hedging policy, and we're not obligated to use Mercuria in in in future. So I hope that that kind of is is clear. Next one, and we're dotting around a little bit now with the questions. Could you indicate what decommissioning liabilities SERICA will be taking on with the Tailwind acquisition? Blah blah blah blah blah. So I won't read the rest of the question in the interest of time.

1:01:42 The decommissioning obligations of both companies are very low. I think I've already touched on that, and that's one of the reasons that we, you know, we think we're financially strong going forward. You you can't really compare decommissioning liabilities between SERICA and and Tailwind. Basically, in in the Tailwind case, most of well, all of the decommissioning liabilities were left with the sellers up to a cap, which is a very, very high level. With with with with SERICA, it was a slightly different mechanism that we're gonna pay a small deferred contribution towards the the the the ultimate decommissioning cost at the time of decommissioning. I I think what I do know is that on a discounted post tax basis, the tailwind decommissioning liabilities are less than £1 per BOE.

1:02:34 So and as you said as I said earlier, we're buying roughly $4,040,000,000 BOE. So it it's you know, that that I hope gives you a a feeling for where the numbers are. I think I said at the start, I wasn't gonna dodge any questions, but there is one I'm gonna dodge. I'll tell you about the question. I'll tell you why I'm dodging it. And it it it it starts off it's it's about admin synergies, and it's unfortunately talks a lot about the salaries of people within Tailwind. And I I really think it would be totally wrong of me to talk about people's salaries. But it does give me an opportunity to talk about what we want to do. I mean, we want all of the people in Tailwind to to come across and and work for SERICA.

1:03:24 We we are offering all Tailwind employees and the founders positions within SERICA, and we're excited to bring those guys on board because as I said already, they can they will add a lot to to to to our capabilities. The Tailwind team is a small team. There's there's less than 20 employees and and a few good long term contractors that that support those guys, and it's it's it's a well skilled and highly experienced team. We're gonna bring those guys on. They will come into into SERICA initially on on their existing terms and conditions during the first year on board. Our aim will be to normalize their terms and conditions with those of our existing staff. We've got some experience of doing this previously. We did a deal with BP when we brought a 100 BP people into our our organization, and we successfully managed to to to to normalize the the two packages.

1:04:16 And, you know, we're we're we're really excited about doing that going forward. I think that's one of the big benefits this this gives. So yeah. But I I I don't wanna go into to individual salaries because I think that would just be unfair of me. I I realized that I've gone over time already, and I've got more questions that I want to get through. So I hope you can can bear with me, and I hope the the organizers aren't gonna cut us off or anything. But I think it's important we we carry on. The next one, yeah, touches on on some of the issues that that we talked about already. And it says, the deal seems structured much more favorably towards Mercuria. If they're gonna be a straight if they're gonna be this straight great strategic partner, could it not be structured where they get rewarded as we see the benefits they are going to give us, I. E, when the share price hits certain milestones?

1:05:11 Dilution at this stage greatly under undervalues SERICA when the share price is near six month lows. Why wasn't a six or twelve month average share price used? Right. I gotta go back to the fundamentals of of of the deal to to answer that. You know, the the the the process of negotiating the terms were were were based on the underlying value of the assets of both companies. And so, you know, I we we do believe, and I I've tried to spend a lot of time indicating that that we think the value of the assets that we're buying is is is exceptional, and the unlocked value in there is is even greater. So I wouldn't characterize this deal as being favorable to Mercurial. And and if I did, then I, you know, I wouldn't be recommending it.

1:05:59 The the nature of this is largely that it's effectively you can think of it as a as a share swap, And it means that the risks and rewards are are being shared between between us and Mercurial. So Mercurial are coming in as a shareholder in SERICA. They're not being paid cash for this. They're not taking any cash off the table. They live and die as we do. Well, in this deal, they live and die by the success of the of the organization going forward. So they are just as incentivized for for us to succeed. And and I really do believe from all the conversations we've had, and I know the guys that that are coming in to sit on our board, I really do believe that their skills will help us, and they will benefit as as we benefit. So, yeah, I'm I'm afraid I I I don't and I can't agree that this is this is structured favorably towards towards Mercurial.

1:06:50 The next one is is financial again, and it goes, given Tailwind's last known cash position, net production, 19 and a half thousand barrels a day, and net debt, £277,000,000, One can extrapolate revenue for the ninety day period from announcement to completion in the region of £122,000,000. I, you know, I can't confirm or deny those numbers, but they're not unreasonable. Therefore, how much debt are Tailwind expected to pay off prior to completion, and how much cash will be withdrawn from Tailwind in the form of dividends or other benefits to either the founders or Mercuria prior to completion? So it follows how much debt cash are SERICA actually forecasting to finally come across onto our balance sheet. So I think what this questionnaire is driving at is that, yeah, as as I've been saying, this is a really profitable portfolio.

1:07:48 It will it will generate considerable cash in in the short term. Then this questionnaire is going on to say, how much of that will be withdrawn in dividends and and go to tailwind and Mercurio? And the answer is is nothing. None. I mean, the structure of this transaction is is what is commonly called a a locked box arrangement. So what that means is that since we signed the the the SBA, that there is no ability for for for tailwinds to to to take cash out of the org out of the out of the entity other than for the normal course of business. So there there there is no mechanism for for tailwinds to to pay itself a dividend or to to to pay Mercurial a dividend. You know, what what is in the company at this at the time of the SPA is is is in the is in that lockbox and and and whatever else comes in during the period between signing the SBA in on the December 20 and completion in in in March.

1:08:49 Yeah. I mean, what that stays in in the lock box. So, you know, I I've not yet put a a an estimate on what the net debt level will be at that time, but we've already seen it's decreasing. So there was a, you know, a level of of debt repayments at the end of December. So so, yeah, any anything that comes out of the company now will be to to repay debt rather than to to go into the pockets of of the tailwind founders or or shareholders. So so yeah. I mean, I I think we take I I think if I'm understanding the the the question correctly, I think that particular questioner thought that we were yeah. That that money was gonna leak out of this, but there is no there is no ability for leakage going forward.

1:09:41 I think that really gets me through the majority of the questions that that have been asked. The the rest are variations on a theme. There is I I I have I've been trying to to to to look at at at themes that are coming through on the on the q and a, and honestly, there are hundreds. I can see that that there's a couple of a couple of questions here and a couple of things that I haven't picked up on. Someone has I won't name names, but I can see names. Someone says firms such as HARBOR ENERGY are looking outside The UK. What makes The UK so attractive for SERICA? And I probably haven't picked up on that. It's a it's a good reminder. Thank you. We are looking outside The UK. We continue to look outside The UK, and we will will do. And, you know, having had that conversation with with Mercuria, I know that Mercuria are aligned with us on on that ambition.

1:10:37 So I know that both ourselves and Mercuria do like the the the the North Sea. We do like the UKCS. We do have, you know, good experience here. We have good relationships with with the regulator, with the supply chain as as do as to tailwind, and we think we can capitalize on that. But we are alongside this looking at at overseas, and we will continue to do so. I don't think we're gonna be quite as vociferous as as Harbor have been and shout about it quite as much as they have. But but we do have ambitions to to do more. As I keep on saying, and you'll be getting bored of me by now, I think this was a really, really unusual opportunity to get some assets that were really complementary to our existing portfolio to really cement our place and our ability in in The UK North Sea.

1:11:28 And so this stood clearly as a an opportunity that stood up against the things that we are looking at overseas. And we've only only quite recently started looking overseas. I think having the the backing of Mercurial will help us a lot on that because Mercurial has this footprint in a number of countries and and we'll probably we'll probably be able or or or say that they will be able to bring opportunities to us from from the the fact that they are in the oil and gas business in a numb number of countries. But but but but also will be able to assist us with relationships and startups in new countries if we if we decide to go that way. So I think it's I think that is to to answer that question, that is something that we are looking at and we'll continue to continue to to to look at. And ultimately, I I think, you know, we we haven't really touched on it here, but, you know, we are we're we're fundamentally an oil and gas company.

1:12:28 But I I think eventually, we will look. And again, I know that Mercuria are in the same place that eventually we will look to broadening into, you know, wider energy projects and and and transition projects as we go forward. So as we're looking at and now we've established this base position, I think we will be better positioned to be able to consider other opportunities. I'm not I'm not sure we're immediately gonna rush into to doing, you know, wind or or or solar, but we will gradually look at whether we can use the skills that we've got to to to expand the portfolio. There are a couple of questions I've seen in here about North Egg, and we have as as you know, the the the the egg well TD ed in December and made a yeah. It was a disappointing result. The the objective sands that we were looking for were were were underdeveloped or or possibly not even there.

1:13:35 We did, however, find find some sands at a deeper horizon than we had expected that were were hydrocarbon bearing, looked like good quality sands, good quality hydrocarbon. And the fact that they were were deeper than than we've seen water in in adjacent wells, which, you know, in our model, theoretically, we shouldn't have been able to have found hydrocarbon that deep, means that we are having to, you know, completely remap and reevaluate our model of not just of that prospect, but of Southlake, which is adjacent to it and and the whole area. So we're actually going back to to to to to basics, the first principles. Look getting out the old seismic, possibly re reprocessing the original seismic, certainly reinterpreting everything to see if we can if we can design a sidetrack to to go back to and and reenter the well to to sidetrack it.

1:14:30 So we have now suspended that well, we will be evaluating whether we whether we whether it's worth going back to drill a sidetrack from that well. It's one of those things that particularly with the benefit of the investment allowances under the energy profits levy, you know, that that may that may impact the the economics of that, and we may yeah. It it there's there's a chance we will want to go back and and reenter and and sidetrack that well. But it's not gonna be a short process to do that processing work and and reinterpretation. We were talking to the guys this morning. I think I think it's a several month project still to to get to that situation. So so egg is not forgotten about, but it's we're we're not gonna see any activity in the in in the short term.

1:15:20 Just going through here. I think most of the other questions are around things that we talked about. Will there be any changes in the leadership of SERICA? At the moment, as we said, no. The things things stay exactly the same. I there's questions about tax losses, which we've answered. I I I will I'd say it's probably a 100 questions here. We're gonna have to go through them in in in detail. There's a couple of questions on here about have we looked at partnering with firms such as x y zed and doing certain things with this company and have we looked to investing in you know, you know that I just can't comment on that. You know? I I feel like one of these football managers who's who's asked to comment on someone else's players in the transfer market.

1:16:16 We can't I I I can't do that. But I can assure you that everyone that is mentioned on here, we have looked at. We, you know, we are still active in m and a. We are looking at opportunities whether they are asset purchases or partnering with with people in in in new projects, particularly development projects. We're looking at at lots of opportunities, but I'm I'm not gonna comment on on any individual ones. So I think at that stage, I'm I'm done. Mitch Mitch, thank you very much indeed for addressing all of those questions that came in from investors this afternoon. And, of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation's ended for you to review. So then then, to then add any additional responses, of course, where it's appropriate to do so, and we'll publish all those responses out on the investment company platform.

1:17:11 But, Mitch, perhaps before redirecting those on the call to provide you their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments to wrap up with, that'd be great. Yeah. Thank you. Yeah. I'm probably gonna sound like a like a stuck record here. You know, we started off looking at this transaction from the point of view of the assets. The more we looked at the the opportunity, we more the more we realized that that this you know, the these assets are a fantastic fit to to to the assets that we already have in the company. Probably haven't mentioned it, but I but I actually think having that diversity in the portfolio adds value to what we've got already because I think I think there was, you you know, the market was was appreciated, the risk that we have in our existing portfolio. So I I I think this this adds value to the to the portfolio.

1:18:02 It it is accretive at at at reserves production, earnings per share, and and at cash levels. It does still allow us to maintain our a very, very strong financial power. It enables us to to to to maintain our balance sheet. It enables us to to maintain our environmental credentials, and it doesn't mean that we're picking up huge decommissioning liabilities. It's not empire building. It is adding value to to an existing portfolio. I think it's being done at an appropriate price. I believe Mercurial will be a really supportive and and and helpful shareholder. And we we, you know, we we we thoroughly recommend this deal. So I'm always happy to to to take on any any questions that people have.

1:18:54 I think anyone who has ever emailed me has has received a reply, and and I and I wanna keep that up. So so feel free to send in questions. Feel free to, you know, send in criticism if if if you want. I mean, you know, we're we're big enough to take it. I you know, and we we do believe this is this is a good deal. So, you know, we want to answer the questions. I appreciate the feedback, and it's good to it's good to get the questions because it helps me understand the the bits where we're not if we're not getting the message across properly, it helps me to understand that. So so that's it. You've I've had enough of your afternoon. So so thank you very much for your time. Mitch, that's great. And thank you very much indeed for updating investors this afternoon. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations?

1:19:47 This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of SERICA ENERGY PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.