REG - Serica Energy PLC - New US$525 million 6-year Borrowing Facility

Serica EnergyAnnouncement

18/12/2023 07:00

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RNS Number : 0632X  Serica Energy PLC  18 December 2023

Serica Energy plc

("Serica" or the "Company")

New US$525 million 6-year Borrowing Facility

London, 18 December 2023 - Serica Energy plc (AIM: SQZ) is pleased to
announce the signing of a new US$525 million secured Reserves Based Lending
("RBL") facility.

 

Mitch Flegg, Chief Executive of Serica, commented:

"I am very pleased to announce the signing of a new RBL facility which
substantially enhances Serica's financial firepower. This has been achieved in
a challenging market for upstream financing. The standing of the international
banks in the lending syndicate reflects the quality of Serica's asset
portfolio, strong balance sheet and ambitions for further growth. The new
facility, combined with our existing attributes, means that Serica can
approach acquisition and investment opportunities from a position of
considerable strength."

 

The new RBL facility replaces Serica's existing RBL and Junior facilities. The
existing RBL facility has US$271 million drawn and will be fully repaid upon
completion of the new RBL facility, which is expected to occur in January
2024. The Junior facility remains undrawn.

 

Facility Highlights

 

·      Significantly increased liquidity to support future acquisitions
and investments.

·      Option of potentially doubling RBL facility to over US$1 billion
through an accordion 1  feature.

·      Debt maturity deferred by more than two years to end 2029.

·      Establishes new relationships with a syndicate of leading
international banks.

·      Simplified financing arrangement with single facility.

 

Description of new RBL facility

 

·      US$525 million revolving credit facility available in multiple
currencies. Serica's existing RBL facility is in amortisation phase with
capacity falling to US$330 million at the end of 2023.

·     Maturity date of 31 December 2029 with amortisation commencing on 31
December 2026. Serica's existing RBL facility matures on 30 June 2027.

·    Additional uncommitted accordion option of a further US$525 million
increasing the potential total facility to US$1,050 million.

·      $100 million sub limit which can be utilised to issue Letters of
Credit without the need for cash security.

·      The Borrowing Base Assets comprise all of Serica's interests in
producing fields except the Rhum field.

·      Available amount under the facility is subject to semi-annual
redeterminations.

·     If 50% or more of the amount available is drawn, the minimum
commodities hedging requirement is equal to 50% of forecast production from
the Borrowing Base Assets in year one and 30% in year two. The hedging
requirement is halved if less than 50% of the amount available is drawn.

·     Initial interest rate for loan drawings of SOFR 2  plus a margin of
3.90% per annum. The margin under the existing RBL facility is 3.10% per
annum.

·      Net Debt to Adjusted EBITDAX financial covenant £ 3.5x, tested
semi-annually.

The Structuring & Coordination Banks include DNB (Facility Agent &
Documentation Bank) and ING Bank N.V.. The Bookrunner Mandated Lead Arrangers
include DNB, ING Bank N.V. and Nedbank CIB. The Mandated Lead Arranger is
Natixis, London Branch. The Lead Arranger is ICBC Standard Bank plc.

 

The syndicate of banks received legal advice from Bracewell LLP. Serica
received legal advice from Burness Paull LLP.

 

The financial advisor to Serica was Kirk Lovegrove and Company Ltd.

 

Regulatory

 

This announcement is inside information for the purposes of Article 7 of
Regulation 596/2014.

 

 

Enquiries:

 

 Serica Energy plc                                                             +44 (0)20 7390 0230
 Mitch Flegg (CEO) / Andy Bell (CFO) / Stephen Lambert (VP Legal and External
 Relations)

 Peel Hunt (Nomad & Joint Broker)                                              +44 (0)20 7418 8900
 Richard Crichton / David McKeown / Georgia Langoulant

 Jefferies (Joint Broker)                                                      +44 (0)20 7029 8000
 Sam Barnett / Will Soutar

 Vigo Consulting (PR Advisor)                                                  +44 (0)20 7390 0230
 Patrick d'Ancona / Finlay Thomson                                             serica@vigoconsulting.com

 

 

NOTES TO EDITORS

Serica Energy is a British independent oil and gas exploration and production
company with a portfolio of UKCS assets.

Serica completed the acquisition of the entire issued share capital of
Tailwind Energy Investments Ltd on 23 March 2023.

Following the addition of the Tailwind assets to its portfolio, Serica has a
balance of gas and oil production. The Company is responsible for about 5% of
the natural gas produced in the UK, a key element in the UK's energy
transition.

Serica's producing assets are focused around two main hubs: the Bruce, Keith
and Rhum fields in the UK Northern North Sea, which it operates, and a mix of
operated and non-operated fields tied back to the Triton FPSO. Serica also has
operated interests in the producing Columbus (UK Central North Sea) and
Orlando (UK Northern North Sea) fields and a non-operated interest in the
producing Erskine field in the UK Central North Sea.

Serica's portfolio of assets includes several organic investment opportunities
which are currently being pursued or are under consideration.

Further information on the Company can be found at www.serica-energy.com
(http://www.serica-energy.com) . The Company's shares are traded on the AIM
market of the London Stock Exchange under the ticker SQZ and the Company is a
designated foreign issuer on the TSX. To receive Company news releases via
email, please subscribe via the Company website.

 1  Uncommitted accordion feature provides option for additional financing of
up to US$525 million which can be exercised within thirty-six months of the
facility signing date, subject to certain conditions.

 2  "Secured Overnight Financing Rate" which has replaced previous customary
use of LIBOR.

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